| Between  | TOYCORE      LTD., Pvte. Co. 511413916MR.      AVNER KATZ, I.D. 057807315MR.      DORON YANAI, I.D. 022206262MR.      RONEN LEVY, I.D. 059739573AVI KATZ MARKETING LTD., Pvte.      Co. 511675662(hereinafter:      “Katz      Marketing”)LEVY      R.S. MANAGEMENT AND INVESTMENT LTD.,Pvte. Co. 514032291      (hereinafter: “Levy      Management”)(hereinafter      jointly and severally and with joint guarantee:“Katz” or “the      Sellers”) |
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| And | BLUE      SQUARE – ISRAEL LTD. |
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| And | BEE GROUP RETAIL LTD.      (by its previous name – Kfar Hashashuim Central Warehouse Ltd.) Pvte. Co.      511884900(hereinafter:      “Bee Group” or      “the      Company”) |
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| WHEREAS: | At      the date of signing of this Agreement Blue Square holds 22,800 ordinary      shares of NIS 1 par value each and 200 preference A shares and 1,000      preference B shares, constituting 60% of the issued and paid-up share      capital of the Company, and the individual parties who make up the      Sellers, Toycore Ltd., Avner Katz, Doron Yanai, Ronen Levy and Mr. Shmuel      Katz hold 15,200 ordinary shares of NIS 1 par value each and 800      preference A shares, constituting 40% of the issued share capital of the      Company, each in accordance with the details set forth in Appendix      A1 to this Agreement; and |
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| WHEREAS: | Katz      Marketing and Levy Management declare and confirm that on June 25, 2008      they entered into a legally-binding agreement with Mr. Shmuel Katz,      pursuant to which they purchased (in equal shares) from Mr. Shmuel Katz      all the shares of the Company held by Mr. Shmuel Katz (hereinafter: “Shmuel Katz Shares”),      in a manner whereby on the date of closing, Katz Marketing and Levy      Management will be the owners of the Shmuel Katz Shares and entitled to      transfer same to the Purchaser, and Mr. Shmuel Katz has undertaken and      confirmed directly to the Purchaser, at the foot of this Agreement, that      he sold the Shmuel Katz Shares to Katz Marketing and to Levy Management,      in a manner whereby on the date of closing Katz Marketing and Levy      Management will be the owners of the Shmuel Katz Shares and entitled to      transfer same to the Purchaser, subject to payment of an amount of NIS      1,030,000 to Mercantile Discount Bank Ltd.;and |
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| WHEREAS: | On      February 15, 2005 the shareholders in the Company entered into a sale of      shares agreement which inter alia regulates      the relationship between the shareholders in the Company (hereinafter:      “the Sale of Shares      Agreement”); and |
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| WHEREAS: | On      April 16, 2007, simultaneous with Blue Square entering into an agreement      for the purchase of additional shares in the Company from Toycore Ltd.      (hereinafter: “Toycore”), the      shareholders in the Company entered into a shareholders’ agreement, which      alters some of the provisions of the Sale of Shares Agreement      (hereinafter: “the      Shareholders Agreement”);and |
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| WHEREAS: | The      Sellers wish to sell to Blue Square the shares sold, as hereinafter      defined, which constitute 25% of the issued and paid-up share capital of      the Company held by them, and Blue Square wishes to purchase the sold      shares from the Sellers; and |
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| WHEREAS: | The      parties are desirous of regulating a right to purchase and a right to sell      in relation to the remainder of the Sellers’ shares in the Company, as      hereinafter defined, which constitute 15% of the issued and paid-up share      capital of the Company; and |
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| WHEREAS: | The      parties wish to regulate all the terms and conditions of the transaction      and the relationship between them, all in accordance with and subject to      what is set forth below in thisAgreement; |
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|   | 1.1 | The      preamble to this Agreement and the appendices to the Agreement constitute      an integral part of the Agreement. |
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|   | 1.2 | The      headings to clauses have been inserted solely for the convenience of      reading and shall not be used in the interpretation of the      Agreement. |
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|   | 1.3 | In      this Agreement the following terms will have the meanings set opposite      them, unless otherwise expresslystated: |
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|   | “Ordinary      shares”     | -      | Ordinary      shares of NIS 1 par value of the Company.                                                                                                                            |
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|   |                                   |   |                                                                                                                                                                               |
|   | “Preference      A shares” | -      | Shares      of NIS 1 par value of the Company to which rights are attached to receive      an additional dividend, as specified in Clause 10 of the Sale of Shares      Agreement. |

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|   | “Preference      B shares”         | -      | Shares      of NIS 1 par value of the Company having rights identical to the ordinary      shares, as specified in Clause 10 of the Sale of Shares      Agreement.                                                                                                                                                                    |
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|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “The      Sold Shares”             | -      | 9,354      ordinary shares and 650 preference A shares, constituting 25% of the      issued and paid-up share capital of the Company, which are held by some of      the Sellers (each according to the details set forth in Appendix      A2 to this Agreement).                                                                     |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “The      remaining shares”        | -      | 5996      ordinary shares (including 150 preference A shares that on the date of      closing will become ordinary shares), constituting 15% of the issued and      paid-up share capital of the Company, which are held by some of the      Sellers (as described in Appendix      A3 to this Agreement).                            |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “The      Company”                 | -      | Bee      Group Retail  Ltd.                                                                                                                                                                                                                                                                                                      |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “The      Sellers’ shares”   | -      | 15,200      ordinary shares and 800 preference A shares (which include all the Shares      Sold and the Remaining Shares including the Shares of Shmuel Katz),      constituting 40% of the issued and paid-up share capital of the Company      (each proportionately as described in Appendix      A1 to this      Agreement). |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “Toycore”                          | -      | Toycore      Ltd.                                                                                                                                                                                                                                                                                                                     |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “Subsidiaries”                     | -      | The      private subsidiaries and the public company  subsidiaries.                                                                                                                                                                                                                                                                   |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “Private      subsidiaries”        | -      | Kfar      Hashashuim Marketing Ltd.; Kfar Hashashuim Chain of Toy Stores Ltd.; Yevu      International Ltd.; Sheshet Chain of Household Utensil Stores Ltd.; Dr.      Baby Ltd.; Doctor Baby Marketing & Distribution 888    Ltd.                                                                                                 |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “Public      company subsidiaries” | -      | Vardinon      and Na’aman                                                                                                                                                                                                                                                                                                       |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “Vardinon”                         | -      | Vardinon      Textile Ltd.                                                                                                                                                                                                                                                                                                            |
|   |                                           |   |                                                                                                                                                                                                                                                                                                                                  |
|   | “Na’aman”                    | -      | Na’aman      Porcelain Ltd.                                                                                                                                                                                                                                                                                                     |

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|   | “The      financial statements” | -      | Audited      consolidated financial statements as at December 31, 2007 and reviewed      consolidated financial statements as at March 31, 2008, which are attached      to this Agreement as Appendices      B1-B2. |
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|   |                                        |   |                                                                                                                                                                                                                 |
|   | “Call      option”              | -      | The      option conferred on the Purchaser to purchase the Remaining Shares, as      stated in Clause 8.1 below.                                                                                                     |
|   |                                        |   |                                                                                                                                                                                                                 |
|   | “Put      option”               | -      | The      option conferred on the Sellers to sell the Remaining Shares, as stated in      Clause 8.2 below.                                                                                                           |
|   |                                        |   |                                                                                                                                                                                                                 |
|   | “The      Trustee”              | -      | Adv.      David Amid, of the S. Biran & Co. Law Office                                                                                                                                                           |
|   |                                        |   |                                                                                                                                                                                                                 |
|   | “Shareholders      in Toycore”  | -      | The      shareholders mentioned Appendix      C to thisAgreement.                                                                                                                                                    |

| 2. | Declarations and      undertakings by the Sellers The      Sellers hereby confirm, declare and undertake, jointly and severally, the      following declarations and undertakings, as at the date of signing of this      Agreement and as at the date of closing, in the knowledge that it is,      inter alia, in      reliance on these declarations, undertakings and representations that the      Purchaser is entering into this Agreement with  them: |
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|   | 2.1 | That      they are the sole owners and holders of the Shares Sold as defined above,      subject to the contents of Clause 2.2 below in relation to the Shmuel Katz      Shares, and that the Sellers’ shares are fully paid-up and are free and      clear of any debt, attachment, encumbrance or any other third party      rights, apart from a charge in favor of Mercantile Discount Bank Ltd.      (hereinafter: “Mercantile      Bank”), which will be removed on the date of closing, in accordance      with letters from Mercantile Bank dated July 21, 2008 which are attached      to this Agreement as Appendices      D1-D2. |
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|   | 2.2 | That      Katz Marketing and Levy Management entered into a legally-binding      agreement on June 25, 2008 with Mr. Shmuel Katz, pursuant to which they      (in equal shares) purchased the Shmuel Katz Shares from Mr. Shmuel Katz,      in a manner whereby on the date of closing Katz Marketing and Levy      Management will be the owners of the Shmuel Katz Shares where same are      free and clear of any debt, attachment, encumbrance or any other third      party right, and they will be entitled to transfer same to the Purchasers      subject to payment of an amount of NIS 1,030,000 to Mercantile Discount      Bank Ltd., in accordance with a letter from Mercantile Bank dated July 21,      2008, which is attached to this Agreement as Appendix      D3. |
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|   | 2.3 | That      the Shareholders in Toycore, as defined above, are the sole shareholders      in Toycore, and apart from them there is no person or entity who has      rights to acquire or receive shares or other securities in      Toycore. |
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|   | 2.4 | That      the sole shareholders in the Subsidiaries, the authorized share capital of      the subsidiaries and the division of shareholdings in the subsidiaries are      as set forth in Appendix      E, and apart from the aforesaid shareholders there is no person or      entity who has rights to acquire or receive shares or other securities in      any of the Subsidiaries, except as particularized in that      appendix. |
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|   | 2.5 | That      they are directors and/or officers and/or employees of the Company and/or      the Subsidiaries as described in Appendix      F to this Agreement. |
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|   | 2.6 | That      there is no restriction or prohibition or impediment or condition or      demand for approval or consent, whether at law or by agreement or in any      other manner, on or for purposes of (as the case may be) their entering      into this Agreement and performance of all their obligations pursuant      hereto, including the sale and transfer of the Shares Sold to the      Purchaser.  Included in this, the Sellers declare, confirm and      undertake that by their signing this Agreement they waive all their rights      of whatsoever nature vis-à-vis one another      (including a right of first refusal and a tag-along right as mentioned in      Clause 9 of the Sale of Shares Agreement), in connection with the sale and      transfer to the Purchaser of the SharesSold. |
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|   | 2.7 | That      Blue Square has no obligation to refer any offer of whatsoever nature to      any of them as a precondition for the implementation of this Sale      Agreement and/or as a consequence of its contracting with them under this      Agreement, and that by their signature to this Agreement they waive any      right, to the extent that such right is conferred on them according to any      law or agreement, in connection with the receipt of such offer (including      pursuant to Clause 9 of the Sale of Shares  Agreement). |
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|   | 2.8 | That      they are not a party to an agreement, arrangement or understanding of any      sort (including a founders agreement, voting agreements and so forth),      verbal or in writing as between them, save for the Sale of Shares      Agreement and the Shareholders Agreement as defined above, and that they      are not a party to an agreement with any third party and are not a party      to any obligation to any third party, in connection with the Sellers’      Shares and/or their holdings in the Company, except in relation to the      Shmuel Katz Shares as described in the preamble to this Agreement, and no      person or entity has rights to acquire or receive shares or other      securities in the Company. |
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|   | 2.9 | That      Toycore’s entering into this Agreement has been duly approved by the board      of directors and the general meeting of Toycore, and this Agreement has      been duly signed by Toycore through persons authorized to bind it by their      signature and is binding on it according to the provisions      hereof. |
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|  | 2.10 | That      their obligations to Blue Square pursuant to a side letter to the Sale of      Shares Agreement dated February 15, 2005 which is attached to this      Agreement as Appendix      G, will continue to remain in force unconditionally, and that the      signing of this Agreement by the parties shall not derogate from and/or      reduce and/or lessen the guarantee and/or the aforesaid      obligations. |
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|  | 2.11 | That      the guarantee of the individual parties who make up the Sellers, Avner      Katz, Ronen Levy and Doron Yanai, for the obligations of Toycore in      accordance with the Sale of Shares Agreement, which is attached to this      Agreement as Appendix      H, will continue to remain in force unconditionally, and that the      fact of the parties signing this Agreement shall not derogate from and/or      reduce and/or lessen the guarantee and the aforesaid      obligations. |
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|  | 2.12 | The      Financial Statements are full and correct and reflect, according to      accepted accounting principles and rules (which have been applied      consistently in relation to the statements that preceded them) the      business condition of the Company and the state of business of the      subsidiaries and their business results, their assets, liabilities and the      changes in their equity capital and in their cash flows for the reported      periods and/or the periods included therein,  respectively. |
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|  | 2.13 | That      since the date of the Financial Statements and up to the date of signing      of this Agreement, no event has occurred which has affected or which is      likely to have a materially adverse effect on the Company and/or the      subsidiaries and/or their business results and/or the state of their      assets and/or their liabilities and/or the activities of the Company      and/or the Subsidiaries, and no transactions have been entered into which      are not within the scope of the ordinary course of business of the Company      and/or the Subsidiaries, save and except events and/or transactions in      respect of which full and detailed disclosure was made by the board of      directors of the Company or the Subsidiaries, as the case may be, or in      respect of which full disclosure has been made to the chairman of the      Company’s board of directors. |
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|  | 2.14 | That      they are not aware of any event or circumstances likely to have a      materially adverse effect on the Company and/or the subsidiaries and/or      their business results and/or the state of their assets and/or their      liabilities and/or on the activities of the Company and/or the      Subsidiaries, apart from those matters that were reported to the board of      directors of the Company or the Subsidiaries, as the case may be, all      which were reported to the chairman of the Company’s board of      directors. |
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|  | 2.15 | To      the best of the knowledge of the Company and/or any of the Subsidiaries,      no material agreement has been breached to which they are bound, including      franchise agreements and that no demand and/or claim has been received in      respect of any material breach of an agreement of the Company and/or any      of the Subsidiaries which did not receive expression in the Financial      Statements, and that no person and/or entity has any grounds or cause of      action for a demand and/or allegation and/or claim in connection with any      material breach of agreement as aforesaid of the Company and/or the      subsidiaries. |
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|        | 2.16   | All      the agreements, arrangements, accords and understandings, whether verbal      or in writing, between the Company and/or any of the Subsidiaries, on the      one hand, and any of the Sellers or a corporation in which the Sellers are      shareholders and/or a family relative of the Sellers, are as set forth in      Appendix      I to this Agreement and a copy thereof is attached to this Appendix      I.  For the avoidance of doubt it is clarified that the      agreements mentioned in this Appendix      I above, include all the payments made by the Company and/or any of      the Subsidiaries to any of the Sellers and/or a corporation in which the      Sellers are shareholders and/or a family relative of any of the Sellers,      in respect of services and/or labor of whatsoever nature which are      provided to the Company by such Seller and/or corporation controlled by a      Seller and/or his family relative. |
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|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   | The      Sellers declare and confirm that as at the date of signing of this      Agreement they have received everything due to them from the Company      and/or from the Subsidiaries and/or they and/or a corporation in which      they are shareholders and/or a family relative of any of them do not have      any allegation and/or claim of whatsoever nature against the Company      and/or the Subsidiaries, directly and/or indirectly, except amounts to      which they are entitled in accordance with the agreements mentioned in      Appendix      I in respect of the period from the date of signing of this      Agreement and up to the date of termination of the contractual arrangement      under the aforesaidagreements.                                                                                                                                                                                                                        |

|  | 2.17 | That      all the material information, agreements and documents of the Company are      as set forth in Appendix      J and a full copy thereof is kept at the Company’s offices, and      that apart from what is stated in Appendix      J, the Sellers have no material information required for the      continued management of the Company’s affairs which are not to be found in      clear form in writing in the documents kept at the Company’s      offices. |
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| 3.     | Declarations by the      Purchaser                     |
|--------|--------------------------------------------------------|
|   |                                                   |
|   | The      Purchaser hereby declares to the Sellersthat: |

|   | 3.1 | Subject      to the fulfillment of all the conditions precedent, there is no      restriction and/or prohibition and/or impediment according to the      Purchaser’s founding documents and/or according to an agreement or any law      in regard to its entering into this Agreement and performing its      obligations pursuant hereto. |
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|   | 3.2 | It      possesses the financial ability and monetary means which enable it to      abide by all its obligations under this  Agreement. |
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|   | 3.3 | Subject      to the correctness of the Sellers’ declarations and representations and      fulfillment of the Sellers’ obligations under this Agreement, it is buying      the Sellers’ Shares in their current condition as  is. |
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| 4. | The sale      transaction |
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|   | 4.1 | On      the date of closing and subject to the fulfillment of all the conditions      precedent, the Sellers will sell and transfer the Shares Sold to the      Purchaser, and the Purchaser will buy and accept the Sold Shares from the      Sellers, where same are free and clear of any debt, attachment,      encumbrance or any third partyright. |
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|   | 4.2 | In      consideration for the Shares Sold and fulfillment of the Sellers’      remaining obligations pursuant to this Agreement, the Purchaser will pay      the Sellers an aggregate amount of NIS 35,400,000 (in words: thirty-five      million four hundred thousand new shekels) (hereinafter: “the Purchase Price”),      in a division between the Sellers asfollows: |
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|   | 4.2.1 | To      Mr. Avner Katz, a sum of NIS 5,969,179 (in words: five million nine      hundred and sixty-nine thousand one hundred and seventy-nine new      shekels). |
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|   | 4.2.2 | To      Mr. Doron Yanai, a sum of NIS 1,218,173 (in words: one million two hundred      and eighteen thousand one hundred and seventy-three new      shekels). |
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|   | 4.2.3 | To      Mr. Ronen Levy, a sum of NIS 6,972,648 (in words: six million nine hundred      and seventy-two thousand six hundred and forty-eight new      shekels). |
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|   | 4.2.4 | To      Toycore a sum of NIS 21,240,000 (in words: twenty-one million two hundred      and forty thousand newshekels). |
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|   | 4.3 | The      Sellers hereby instruct the Purchaser first to transfer any amount of the      Purchase Price to which they are entitled to Mercantile Bank for purposes      of removing the encumbrance over the Shares, in accordance with the      amounts as will be demanded by Mercantile Bank in accordance with      Mercantile Bank’s letters dated July 21, 2008 (Appendices      D1-D2 to this Agreement and any update thereof) and the balance      which remains after payment to Mercantile Bank to transfer to the      Purchasers [sic – Sellers].  In addition and without derogating      from the foregoing, Avner Katz and Ronen Levy hereby instruct the      Purchaser to transfer additional amounts out of the Purchase Price to      which they are entitled as aforesaid directly to Mercantile Bank for      purposes of removing an encumbrance over the Shmuel Katz Shares, all as      will be demanded by Mercantile Bank in accordance with a letter dated July      21, 2008, Appendix      D3 to this Agreement and any update thereof (in an equal division      between Avner Katz and Ronen Levy). |
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|   | 4.4 | For      the avoidance of doubt the Sellers confirm that the Purchase Price as      defined above is final and absolute and it is not linked to the index      and/or to any other linkagemechanism. |
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|   | 4.5 | If      the Company should declare a dividend where the effective date for the      entitlement thereto falls after the date of signing of this Agreement and      up to the date of closing, the Purchase Price will be adjusted in a manner      whereby an amount equivalent to the amount of the cash dividend that has      been declared in respect of the Shares Sold plus linkage differentials      commencing from the date of payment of any dividend and up to the date of      closing, shall be deducted from the Purchase  Price. |
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| 5.     | Interim      period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      Sellers in their capacity as shareholders in the Company and/or in the      subsidiaries, and/or as directors of the Company and/or of the      Subsidiaries, and/or as officers of the Company and/or the Subsidiaries,      and/or as employees of the Company and/or of the Subsidiaries, undertake      that during the period from the date of signing of this Agreement and up      to the date of closing of the transaction (hereinafter: “the Interim Period”), and without      derogating from the provisions of this Agreement above and      below: |

|   | 5.1    | The      Company and the Subsidiaries will continue to run their activities in the      ordinary course of business.  Any operation that constitutes a      deviation from the ordinary course of business, or a material transaction,      or a change in the managements and/or senior employees of the Company      and/or of any of the Subsidiaries, shall be subject to Blue Square’s prior      written approval. |
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|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   | The      foregoing in relation to the Public Company Subsidiaries shall apply      subject to the provisions of anylaw.                                                                                                                                                                                                                                                                                                                  |

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|   | 5.2 | The      conditions of employment of the Sellers and/or their family relatives in      the Company and/or in the Subsidiaries will not be altered and agreements      between the Company and/or any of the Subsidiaries, on the one hand, and      corporations in which the Sellers are shareholders, on the other hand,      shall not be altered, and no new agreements and/or undertakings shall be      signed as between any of the Sellers and/or a family relative and/or a      corporation in which the Sellers are shareholders, on the one hand, and      the Company and/or any of the Subsidiaries, except in accordance with the      provisions of this Agreement. |
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|   | 5.3 | The      Company and the Sellers shall transfer to the Purchaser all the      information, the data and the documents and the material particulars      required by the Purchaser in order to verify that no adverse material      changes have taken place in the activities and/or assets and/or      liabilities of the Company and/or the Subsidiaries in the period between      the date of signing of this Agreement and the date of    closing. |
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| 6. | Conditions      precedent |
|----|---------------------------|

|   | 6.1 | This      Agreement and its implementation are subject to and contingent upon the      fulfillment of all the following cumulative conditions (hereinafter: “the Conditions      Precedent”): |
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|   | 6.1.1 | Obtaining      the approval of the Purchaser’s board of directors to its entering into      this Agreement. |
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|   | 6.1.2 | Obtaining      confirmation from an attorney that all the approvals have been received      that are required from the competent organs in Toycore to entering into      this Agreement and to the implementation hereof (including a general      meeting and board of directors), and including with regard to the transfer      of the Shares Sold to thePurchaser. |
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|   | 6.1.3 | Receiving      confirmation from an attorney that all the necessary approvals have been      obtained from the competent organs in Katz Marketing and Levy Management      for purchase of the Shmuel Katz Shares and to their entering into this      Agreement and to the implementation hereof (including a general meeting      and board of directors), and including with regard to the transfer of the      Shares Sold and the grant of the CallOption. |
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|   | 6.1.4 | Receiving      approval of the board of directors and the general meeting of the Company      to the transfer of the Shmuel Katz Shares to Katz Marketing and to Levy      Management. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 6.1.5 | Receiving      the approval of the board of directors and the general meeting of the      Company to the transfer of the Sellers’ Shares and to the remaining      provisions of this Agreement. |
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|   | 6.1.6 | Receiving      approval from the Controller of Restrictive Trade Practices to the      satisfaction of the parties and unconditionally or subject to conditions      agreed to by the parties, each party in its sole discretion, or receiving      an exemption from the Controller of Restrictive Trade      Practices. |
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|   | 6.1.7 | Receiving      a confirmation that is in force from Mercantile Discount Bank Ltd.      regarding removal of the encumbrance which applies to the Sellers’ Shares      and including the Shmuel KatzShares. |
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|   | 6.1.8 | No      adverse material change has occurred in the businesses of the Company      and/or the subsidiaries and/or in their assets and/or in their activities      and/or in their liabilities, which the Purchaser has not pardoned after      the fact of same existing being brought to its notice by the      Sellers.  For these purposes “adverse material change” means –      an event or development which had the parties known about immediately      prior to the signing of this Agreement would have caused a reduction in      the price of the transaction to an extent of at least  15%. |
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|   | 6.1.9 | Receipt      of any additional approval that may be required according to any law for      implementation of the transaction that is the subject of this      Agreement. |
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|   | 6.2 | If      all the Conditions Precedent or any of them is not fulfilled within 90      days from the date of signing of this Agreement (hereinafter: “Period for Fulfillment of the      Conditions”), each of the parties will be entitled, by way of      written notice, to extend the Period for Fulfillment of the Conditions for      an additional period of 30 days (hereinafter: “the Deferred Date for      Fulfillment of the Conditions”).  It is agreed that if      the Conditions Precedent are not fulfilled up to the Deferred Date for      Fulfillment of the Conditions, it will not be possible to extend the      period a second time and this Agreement will be null and void, without      this being deemed to be a breach hereof and without any party having a      right to any remedy as a consequencethereof. |
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| 7. | Closing of the      transaction |
|----|---------------------------------|

|   | 7.1 | The      date of closing will fall on a date to be arranged between the parties      after all the Conditions Precedent required for the closing of the      transaction as set forth in Clause 6.1 above have been fulfilled, and not      later than 7 days after the fulfillment thereof (hereinafter: “the Date of      Closing”). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 7.2 | On      the Date of Closing, after the parties have verified that all the      Conditions Precedent have been fulfilled and all the approvals required      according to any law have been received, the parties will perform all the      following acts at one and the sametime: |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.1 | Approval      by the board of directors of the Company and the general meeting approving      the transfer of the Shmuel Katz Shares to Katz Marketing and to Levy      Management in the texts attached hereto as Appendices      K1-K2 shall be exhibited. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.2 | The      parties deliver notices to the Company regarding the conversion of all the      preference shares held by them (Preference A and Preference B) into      ordinary shares, in the text attached to this Agreement as Appendices      L1-L2. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.3 | Approval      by the board of directors of the Company and the general meeting approving      the transfer of the Sellers’ Shares to the Purchaser and to the remaining      provisions of this Agreement, in the texts attached to this Agreement as      Appendices      K1-K2 shall be exhibited. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.4 | The      Sellers shall deliver to the Purchaser confirmations from an attorney as      referred to in Clauses 6.1.2 and 6.1.3 above, in the texts attached to      this Agreement as Appendices      M1-M3. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.5 | The      Sellers shall deliver to the Purchaser an approval in the text of Appendix      N pursuant to which the Sellers have confirmed that no adverse      material change has taken place in the businesses of the Company and/or      the Subsidiaries and/or in their assets and/or activities and/or their      liabilities, save for a change which the Purchaser has pardoned after the      fact of its existence having been brought to the Purchaser’s notice by the      Sellers, and that the Sellers’ representations are correct as at the Date      of Closing as if given on thatdate. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.6 | Each      of the Sellers who serves as a director of the Company and/or of the      Subsidiaries and Mr. Yitzhak Laufer will deliver letters of resignation to      Blue Square resigning from their position as directors in the Company and      in each of the Subsidiaries in which they hold office as directors, with      effect from the Date of Closing, in the texts attached hereto as Appendices      O1-O5, effective as at the Date of  Closing. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.7 | The      Purchaser will deliver a notice to the Company and to the private company      subsidiaries regarding the appointment of directors on its behalf and if      necessary, minutes will be drawn up of the board of directors or a general      meeting with respect to suchappointment. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 7.2.8 | All      the documents required according to law for removal of the charge in favor      of Mercantile Bank from the Shares Sold, including the Shmuel Katz Shares      and including the share certificates if same are in the bank’s possession,      will be delivered to the Purchaser by Mercantile  Bank. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.9 | An      amendment to the Sale of Shares Agreement and the Shareholders Agreement,      as particularized in Clause 10      of this Agreement will come intoforce. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.10 | A      general meeting will be held of the shares of the Company as well as a      meeting of the board of directors of the Company, in the scope of which      the Company’s Articles will be replaced by articles in the text of Appendix      P to this Agreement (in this framework the rights attaching to each      share will be equalized in a manner whereby each share will have the      rights conferred on an ordinary share, and class meetings will be held for      such purpose or in the alternative irrevocable notices will be delivered      to the Company by the Sellers stating that they wish to convert Preference      A Shares into ordinary shares). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.11 | The      employment agreements of the Sellers will be amended or will be terminated      as shall be agreed between theparties. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.12 | Mr.      Shmuel Katz will sign deeds of transfer of the Shmuel Katz Shares in favor      of Katz Marketing and Levy Management and shall deliver the share      certificates in his possession. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.13 | The      parties will sign share transfer deeds pursuant to which the Shares Sold      are transferred from the Sellers to the Purchaser, and share certificates      will be issued to the Purchaser in respect of the Shares Sold and share      certificates to the Sellers in respect of the Remaining      Shares. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.14 | Each      of the Sellers shall sign documents of charge of the Remaining Shares held      by each of them in favor of Blue Square, and shall deliver to the Trustee      the share certificate in respect of the Remaining Shares together with      deeds of transfer of the Remaining Shares to Blue Square, signed by      him. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2.15 | The      parties will sign the trust agreement which is attached to this Agreement      as Appendix      Q. |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | 7.2.16 | Each      of the Sellers shall deliver to Blue Square an irrevocable power of      attorney in the text of Appendices      R1-R5 to this Agreement, empowering Blue Square to vote at the      general meetings of the Company on the strength of the Remaining Shares,      in its sole discretion and without any necessity for obtaining approval      from any of the Sellers, and to act with respect to the Shares as an owner      acts. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 7.2.17 | The      Purchaser will pay each of the Sellers his part of the consideration as      set forth in Clause 4.2 above (less the amounts which require to be      transferred to Mercantile Bank for purposes of removing the charge      mentioned in Clause 4.3 above), by way of a bank check or by bank transfer      to a bank account the details of which the relevant Seller will furnish to      the Purchaser not later than 3 (three) business days before the Date of      Closing. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.18 | The      parties will sign reports to the Registrar of Companies and will sign any      additional document that may be required for purposes of the      implementation and completion of the sale transaction which is the subject      of this Agreement. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.3 | All      the acts that will be performed on the Date of Closing will be deemed to      have been performed simultaneously, no separate act will be deemed to have      been completed and no single document will be deemed to have been      delivered, until all the acts have been completed at such time and all the      documents have been delivered. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   | For      the avoidance of doubt it is clarified that the Purchaser’s obligation to      complete the transaction is only to the extent that all the Sellers      complete the transaction.  The failure of any of the Sellers to      complete the transaction will give the Purchaser the right to refrain from      completing the transaction vis-à-vis all the      Sellers. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8. | Call option / Put      option / public flotation of theCompany |
|----|----------------------------------------------------------------|

|   | 8.1 | Call      option |
|--------|-----|------------------|

|   | 8.1.1 | Commencing      from the Date of Closing and for a period of 5 years, the Purchaser will      be entitled to buy all the remaining Shares held by the Sellers, for an      overall consideration for all the Remaining Shares held by all the Sellers      collectively in a sum of NIS 21,240,000 (twenty-one million two hundred      and forty thousand new shekels), plus 7.5% per annum on this amount      (without linkage differentials), commencing from the Date of Closing and      up to the date of payment in respect of the Remaining Shares (hereinafter      respectively: “the Call      Option; “the Exercise Price”; “the Call Option      Period”).  The share of each of the Sellers in the      Exercise Price is as follows: |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.1.1.1 | Mr.      Avner Katz, a sum of NIS 4,650,283 (in words: four million six hundred and      fifty thousand two hundred and eighty-three new  shekels). |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 8.1.1.2 | Mr.      Doron Yanai, a sum of NIS 2,321,888 (in words: two million three hundred      and twenty-one thousand eight hundred and eighty-eight new      shekels). |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.1.1.3 | Mr.      Ronen Levy, a sum of NIS 3,646,501 (in words: three million six hundred      and forty-six thousand five hundred and one new  shekels). |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.1.1.4 | Katz      Marketing, a sum of NIS 5,310,664 (in words: five million three hundred      and ten thousand six hundred and sixty-four new  shekels). |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.1.1.5 | Levy      Management, a sum of NIS 5,310,664 (in words: five million three hundred      and ten thousand six hundred and sixty-four new  shekels). |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The      Sellers confirm that the division of the Exercise Price between them as      set forth above is in accordance with their instructions and their      agreement, and none of them has or will have an allegation and/or demand      and/or claim against Blue Square in respect of the division of the      Exercise Price between the individual parties who make up the Sellers as      specified above in this Agreement.                                                                                                                                                        |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | 8.1.2  | If      the Company should declare a dividend the effective date for the      entitlement thereto falls after the date of signing of this Agreement and      before the date of payment in respect of the exercise of the option, the      Exercise Price will be adjusted in a manner whereby an amount equivalent      to the amount of the cash dividend that was declared plus a rate of 7.5%      per annum commencing from the date of payment of each dividend and up to      the date of payment in respect of the Remaining Shares shall be deducted      from the Exercise Price. |

|   | 8.2 | Put      option |
|--------|-----|-----------------|

|   | 8.2.1 | As      long as the Purchaser has not exercised the Call Option, the Sellers      collectively will be entitled, from the end of 24 months from the Date of      Closing and for a period of 30 days, to sell the Purchaser all the      Remaining Shares (and not less) which are held by each of them      (hereinafter respectively: “the Put Option”; “the Put Option      Period”), in consideration for the Exercise Price as defined in      Clause 8.1.1 above, which will be divided between the Sellers in the      manner stated in Clause 8.1.1above. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.2.2 | The      provisions of Clause 8.1.2 regarding adjustment of the Exercise Price will      also apply to the Sellers' Option. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------|

----

|   | 8.2.3 | The      Sellers will be entitled to charge the Put Option solely upon the      fulfillment of all the followingconditions: |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 8.2.3.1 | A      charge of the Put Option shall only be to a banking corporation      (hereinafter: “the      Bank”).                                                                                                                                                                                                                                                                                        |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | 8.2.3.2 | The      conditions of the charge shall be acceptable to the Purchaser in advance      and in writing, in a manner whereby there will be no prejudice to the      Purchaser’s rights pursuant to this Agreement, including its right to      exercise the Call Option in full, and no restrictions and/or obligations      will be imposed on it in excess of what is stipulated in this      Agreement. |

|   | 8.3 | Notice of      Exercise |
|--------|-----|-------------------------|

|   | 8.3.1 | If      the Purchaser decides to exercise the Call Option, it shall give written      notice of exercise to Avner Katz, in the text of Appendix      S to this Agreement.  All the Sellers hereby confirm that      the giving of notice of exercise to Mr. Avner Katz shall be deemed to be      the giving of notice to each and every one of them.  For the      avoidance of doubt, the Sellers hereby confirm that no decision and/or      additional approval is required from any of them for purposes of      exercising the Call Option on the date of delivery of the notice of      exercise. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3.2 | Should      the Sellers decide to exercise the Put Option, they shall deliver a      written notice of exercise to the Purchaser signed by all the Sellers,      together with a certification from an attorney in the text Appendix      T stating that resolutions have been passed by all the competent      organs of Katz Marketing and of Levy Management (including of a general      meeting and board of directors in each of the aforesaid companies) and all      the approvals required according to law with regard to exercise of the      Sellers’ option, together with copies of the      resolution.  Notwithstanding the foregoing, all the Sellers      hereby expressly empower Mr. Avner Katz and authorize him irrevocably to      sign in their name and stead in his sole discretion on the notice of      exercise, and they confirm that they are aware that the Purchaser’s rights      are dependent on such power of attorney aforesaid and therefore it cannot      be revoked. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3.3 | For      the avoidance of doubt it is clarified that the time of delivery of the      notice of exercise will constitute the date of exercise for purposes of      counting the times specified for the option  periods. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 8.4 | Completion of exercise      of the option |
|--------|-----|-------------------------------------------|

|   | 8.4.1 | Where      notice of exercise of the Call Option or the Put Option has been      delivered, as stated in Clause 7.3 above, the parties will meet on the      30th      day from the date of delivery of the notice of exercise (unless otherwise      agreed between the parties) at the offices of Blue Square for purposes of      completing and finalizing the exercise of the option (hereinafter: “Date of Completion of Exercise      of the Option”). |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4.2 | On      the Date of Completion of Exercise of the Option the Sellers will deliver      and will sell to the Purchaser all the Remaining Shares, where same are      free and clear of any debt, attachment, encumbrance and/or any other third      party right (save for the charge in favor of Blue Square), against and in      consideration for the ExercisePrice. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4.3 | On      the Date of Completion of Exercise of the Option, the parties will sign      all the documents and the reports required for purposes of implementing a      transfer of the Remaining Shares from the Sellers to the Purchaser, and      included in this shall perform all the following  acts: |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4.3.1 | The      Purchaser shall pay each of the Sellers his or its share of the Exercise      Price as set forth in Clause 8.1.1 above (subject to adjustments), by way      of a bank check or by bank transfer to a bank account the details of which      the relevant Seller will furnish to the Purchaser not later than 3 (three)      business days before the Date of Completion of Exercise of the      Option. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4.3.2 | The      Trustee shall transfer the deeds of transfer of the Remaining Shares and      the share certificates in respect of the Remaining Shares which were      lodged with him, to Blue Square. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4.3.3 | The      parties will sign reports to the Registrar of Companies and any additional      document that may be required for implementation and completion of      exercise of the option. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5 | Public      offering |
|--------|-----|----------------------|

|   | 8.5.1 | The      parties wish to promote a process for offering the Company’s Shares to the      public, and the Sellers undertake to cooperate and to sign any document      that may be required for purposes of the furtherance of a process for such      public offering and the completionthereof. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | 8.5.2 | If      in a period of up to the end of 36 months from the Date of Closing, the      Company’s Shares are offered to the public and are listed for trading on a      stock exchange in Israel (hereinafter: “Date of the Public      Offering”), then the following provisions will    apply: |
|--|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5.2.1 | The      Purchaser will exercise the Call Option not later than 3 days after the      commencement of trading in the Company’s Shares, and the Remaining Shares      will be sold to the Purchaser in consideration for the Exercise Price      which is adjusted for the public offering as defined below.  In      such case, a closing will take place in accordance with the provisions of      Clause 8.4 above, respectively. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5.2.2 | In      such case, the price in respect of the Remaining Shares will be a sum      equivalent to 15% of the value of the Company according to which the      Company’s Shares were issued to the public, less: (a) the expenses of the      public offering (b) investments in capital made after the Date of Closing      (hereinafter: “the      Exercise Price Adjusted for the Public  Offering”). |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 8.5.3 | If      at the Date of the Public Offering the Call Option or the Put Option has      already been exercised, the Sellers will be entitled to the difference (if      there is such) between the Exercise Price Adjusted for the Public Offering      and the Exercise Price that was paid on the Date of Completion of the      Exercise of the Option plus 7.5% per annum on the Exercise Price that was      paid, commencing from the date of payment of the Exercise      Price. |
|--|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 8.5.4 | For      the avoidance of doubt it is clarified that in the event of a public      offering after the Date of the Public Offering the provisions of Clauses      8.5.2 and 8.5.3 above will not apply.  It is further clarified,      for the avoidance of doubt, that the provisions of Clauses 8.5.2. and      8.5.3, if they apply, will apply only to the remaining    Shares. |
|--|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6 | Charge over the      remaining Shares and deposit thereof with a  trustee |
|--------|-----|---------------------------------------------------------------------------|

|  | 8.6.1 | The      Sellers undertake that commencing from the date of signing of this      Agreement and up to the end of the Option period, the Purchaser will leave      the Remaining Shares free and clear of any debt, attachment, encumbrance      or any other third party right, and that they will not contract with any      third party or amongst themselves, verbally or in writing, for any      undertaking in connection with the sale of the Remaining Shares in the      Company or in connectiontherewith. |
|--|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 8.6.2 | It      is agreed that with effect from the Date of Closing the Remaining Shares      are charged by way of a first-ranking fixed charge in favor of Blue      Square, and that on the Date of Closing each of the Sellers will sign all      the documents and forms required for purposes of charging the Remaining      Shares in favor of Blue Square asaforesaid. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6.3 | In      addition, on the Date of Closing the Sellers shall deposit the Remaining      Shares and share transfer deeds signed by them with the      Trustee.  At the Date of Closing the parties will sign the trust      agreement which is attached to this Agreement as Appendix      Q. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6.4 | Blue      Square undertakes that not later than 21 days from the end of the Call      Option Period, if the Call Option has not been exercised as stated in this      Clause 8, it will deliver to the Sellers all the documents necessary for      release of the charge that was imposed over the Remaining Shares, and      return of the share transfer deeds and the powers of attorney that were      lodged with it. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | Continuation of the      transaction |
|----|--------------------------------------|

|   | 9.1 | All      the agreements between the Sellers and the Company as described in Appendix      I to this Agreement will continue to apply until otherwise agreed      between the Purchaser and any of theSellers. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.2 | Without      derogating from the contents of Clause 9.1 above and/or any of the      Sellers’ obligations under this Agreement, the Sellers undertake that upon      termination of their contractual arrangement with the Company they will      carry out a properly-arranged handing over briefing process to the extent      that this is requested by the Company and/or the Purchaser.  In      addition the Sellers undertake to continue to assist the Purchaser in all      matters connected with the management of the Company and/or its      businesses, to whatever extent may be requested, even after termination of      their contractual arrangement with the Company, and all to whatever extent      is reasonably possible in the circumstances of the matter and against      customary consideration as shall be agreedupon. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | Amendment to      shareholders agreements |
|-----|-------------------------------------------|

|  | 10.1 | Clauses      7.2 to 7.10, 8.1 to 8.13, 8.15 of the Sale of Shares Agreement will be      cancelled. |
|--|------|-----------------------------------------------------------------------------------------------------|

|  | 10.2 | Clause      3 of the Shareholders Agreement will be  cancelled. |
|--|------|-----------------------------------------------------------------|

----

|  | 10.3 | Clause      9.7 of the Sale of Shares Agreement – will not apply during the Call      Option Period and will revert to being applicable only commencing from the      end of the Call Option Period (if up to that time the Call Option or the      Put Option has not been exercised).  In addition, the clause      will only apply to the Sellers in a manner whereby the Purchaser is not      bound by the right of refusal for the sale of its Shares, and only the      Sellers will be bound by a right of refusal in connection with the      Remaining Shares.  It is clarified, for the avoidance of doubt,      that nothing in the foregoing shall derogate from the Sellers’ obligations      to refrain from any action in connection with the Remaining Shares during      the Call Option Period, including as described in Clause 8.6.1      above. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 10.4 | Clause      10 of the Sale of Shares Agreement – will be  cancelled. |
|--|------|----------------------------------------------------------------------------|

|  | 10.5 | Clause      11.1 of the original agreement – will be  cancelled. |
|--|------|------------------------------------------------------------------------|

| 11. | Non-competition |
|-----|-----------------|

|  | 11.1 | Each      of the Sellers and of the shareholders in Toycore hereby undertakes that      so long as he is an employee of the Company (or the Subsidiaries) and/or      officers in the Company (or the Subsidiaries) and/or shareholders in the      Company (or in the Subsidiaries), directly and/or indirectly and for the      period of restriction specified below commencing from the date on which he      ceases to be an employee, officer or shareholder as aforesaid, whichever      is the later (hereinafter: “the Period of      Restriction”), any activity, business or matter of his, directly or      indirectly, including through a first degree family relative, whether as a      shareholder or an employee or as an officer, consultant, manager or in any      other way in Israel in connection with the fields of activity of the      Company and/or the Subsidiaries, shall be carried out solely through the      Company and under all circumstances the Sellers will refrain from      competing with the Company and/or with any of the Subsidiaries, directly      or indirectly, throughout the entire Period of  Restriction. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 11.2 | Throughout      the Period of Restriction the Sellers undertake not to employ, whether      directly or indirectly (including by way of giving consultancy or      management services) any of the employees of the Company or the      Subsidiaries (the employees of the Company or the Subsidiaries as at the      date of signing of this Agreement), even if such employees are dismissed      and/or resign from their employment in the Company or in the Subsidiaries,      as the case may be, except in a case in which the Company’s prior written      approval has been received to the employing of such    employee. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | 11.3 | It      is agreed that the non-fulfillment of the provisions of this Clause 11 by      any of the Sellers constitute a material breach of the Agreement which      entitles Blue Square to agreed damages in a sum of NIS 2 million, without      this derogating from any other remedy available to Blue Square according      to any law and/or agreement. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | Taxation |
|-----|----------|

| 13. | Insurance |
|-----|-----------|

| 14. | Indemnity |
|-----|-----------|

|  | 14.1 | The      Sellers undertake to indemnify the Purchaser and to hold it harmless in      respect of any damage and/or loss and/or shortage and/or failure and/or      expenses that may be incurred by it and/or by the Company, as the case may      be, due to any of the followingreasons: |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.1.1 | Any      breach of one of the representations and/or declarations of the Sellers      pursuant to this Agreement. |
|--|--------|-------------------------------------------------------------------------------------------------------------------|

|  | 14.1.2 | Any      breach of the Sellers’ obligation under this  Agreement. |
|--|--------|-------------------------------------------------------------------------|

----

|  | 14.2 | The      parties agree that the Purchaser’s right to indemnity as stated in Clause      14.1 above will only apply if the total damage exceeds a sum equivalent to      NIS 500,000 where such amount is linked to the Consumer Price Index from      the date of signing of this Agreement (hereinafter: “the Floor”) and is      limited to a sum of 60% of the Purchase Price where this amount is linked      to the Consumer Price Index from the date of signing of this Agreement      (hereinafter: “the      Ceiling”).  Notwithstanding the foregoing, it is agreed      that the Purchaser’s right to indemnity is not limited to the Ceiling in      the case of a demand for indemnity in connection with: (a) a breach of the      representations and/or declarations of the Sellers with regard to the full      and clean ownership of the Sellers’ Shares (b) a breach of the undertaking      for non-competition in accordance with this  Agreement. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.3 | The      parties further agree that only on matters connected with a breach of      Clauses 11.1 and/or 11.2 above will the obligation for indemnity apply to      an individual or to individuals who make up the Sellers who breached the      provisions of the aforesaid clauses only and not jointly and severally to      all the Sellers.  With the exception of the foregoing in this      sub-clause above, it is clarified that the obligation for indemnity      applies to all the Sellers jointly and  severally. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15. | Arbitration |
|-----|-------------|

|  | 15.1 | The      parties will endeavor to resolve the differences of opinion between them      by consensus agreement. |
|--|------|----------------------------------------------------------------------------------------------------------------|

|  | 15.2 | If      the parties are unsuccessful in resolving the differences of opinion by      agreement, the differences of opinion will be referred for the decision of      an arbitrator. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 15.3 | The      arbitrator shall be an attorney on whom the parties  agree. |
|--|------|----------------------------------------------------------------------|

|  | 15.4 | In      the absence of agreement regarding the identity of the arbitrator within 7      days from the date on which one party referred to the other, the      arbitrator will be appointed by the president of the Israel      bar. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | 15.5 | The      arbitrator will be bound by the substantive law and the provisions of this      Agreement, but will not be subject to the rules of evidence and of civil      procedure.  The arbitrator shall give reasons for his      decision. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 15.6 | The      parties agree that the award that will be given by the arbitrator will be      subject to appeal before the appeal instance of the Institute for      Commercial Arbitration in accordance with the rules of arbitration before      a single arbitrator, who will be appointed by the chairman of the      Institute for Commercial Arbitration.  The parties agree that if      an appeal is lodged and an award is given by the appeal instance, such      decision will be “an arbitration award”, within the meaning thereof under      the Arbitration Law, 5728-1968, in lieu of the award given by the      arbitrator in the trial hearingarbitration. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16. | Miscellaneous |
|-----|---------------|

|  | 16.1 | Each      party to the Agreement shall bear its own expenses, all the taxes, levies      and the compulsory payments imposed on it, if imposed, in connection with      its entering into this Agreement. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 16.2 | Each      party is represented by an attorney on its behalf, and each party shall      bear the fees of its attorney.  The Sellers confirm that they      have agreed to the Company and Blue Square being represented by the law      office of S. Biran & Co. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 16.3 | The      parties to this Agreement undertake to sign any document and to perform      any act that may be required in order to implement this Agreement and to      give it force. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 16.4 | This      Agreement fully and comprehensively expresses what has been agreed by the      parties in regard to the matters and subjects dealt with by this      Agreement. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 16.5 | Any      alteration and any amendment to this Agreement shall be binding on the      parties only if drawn up in writing and signed by all the      parties. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 16.6 | The      addresses of the parties for purposes of this Agreement are the addresses      set forth at the head of the Agreement, or any other address of which one      of the parties may give notice in writing to the other.  It is      expressly agreed that notice to Avner Katz constitutes notice to all the      Sellers. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 16.7 | The      sending of a notice by registered mail or the delivery thereof by hand      shall be deemed to be adequate for the giving of notices.  Any      notice sent by one of the parties to the other by registered mail shall be      deemed to have been received 72 hours after its delivery to the post      office.  A notice delivered by hand shall be deemed to have been      received on the same day on which it was delivered.  A notice      sent via facsimile, with confirmation of receipt, shall be deemed to have      been received on the day on which it was  transmitted. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| /s/ Zeev Vurembrand      and  Ilan Kliger |   | /s/ Avner Katz and Zeev    Vurembrand |   | /s/ Ronen      Levy |   | /s/ Doron Yanai                                |
|---------------------------------------------------------------|--------|---------------------------------------|--------|---------------------|--------|------------------------------------------------|
| Blue      Square – Israel Ltd.                          |   | Bee      Group Retail Ltd.            |   | Toycore      Ltd.   |   | Doron      Yanai                               |
|                                                          |   |                                  |   |                |   |                                           |
| /s/ Avner Katz                                                |   | /s/ Avner Katz                        |   | /s/ Ronen Levy      |   | /s/ Ronen Levy                            |
| Avner      Katz                                               |   | Avi      Katz Marketing Ltd.          |   | Ronen      Levy     |   | Levy      R.S. Marketing & Management Ltd. |
|                                                          |   |                                  |   |                |   | Levy      R.S. Management & InvestmentLtd. |

| July 31, 2008 | /s/ Hagit Shrem,Advocate |
|---------------|--------------------------|
| Date          | Lic.      No. 20015      |

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| ______________ | /s/ Hagit Shrem,Advocate |
|----------------|--------------------------|
| Date           | Lic.      No. 20015      |

| ______________ | /s/ Hagit Shrem,Advocate |
|----------------|--------------------------|
| Date           | Lic.      No. 20015      |

| July 31, 2008 | /s/ Hagit Shrem,Advocate |
|---------------|--------------------------|
| Date          | Lic.      No. 20015      |

| August 3, 2008 | /s/ Irit Philip,Advocate |
|----------------|--------------------------|
| Date           | Lic.      No. 19173      |

| July 31, 2008 | /s/ Ehud Bar-Noy,  Advocate |
|---------------|-----------------------------|
| Date          | Lic.      No.12178          |

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| 1. | We      are aware of all the provisions of this Agreement including the      obligations of Toycore as stipulated in the Agreement, and we undertake to      act in accordance with all the provisions of this Agreement and/or for the      implementation hereof and/or for the realization hereof, both directly and      also through Toycore. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | That      all the representations, undertakings and declarations of the Sellers in      the Agreement also apply to each and every one of us, and we are deemed to      have been a party to the Agreement itself and as part of the Sellers, and      any breach by any of the Sellers of the provisions of the Agreement shall      also be deemed to be a breach by us and will entitle the Purchaser to all      the remedies conferred on it according to the Agreement and to any      law. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Without      derogating from the foregoing, it is expressly clarified that we assume      the provisions of Clause 11 of the Agreement      (non-competition). |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| /s/ Avner Katz          |   | /s/ Ronen Levy                             |   | /s/ Doron Yanai                             |   |
|------------------------------|--------|-------------------------------------------------|--------|--------------------------------------------------|--------|
| Avi      Katz Marketing Ltd. |   | Levy      R.S. Management & Investment Ltd. |   | Yanai      A.D. Management & Investment Ltd. |   |
|                         |   |                                            |   |                                             |   |
| /s/ Avner Katz               |   | /s/ Yitzhak Laufer                              |   | /s/ Levy Ronen                                   |   |
| Avner      Katz              |   | Yitzhak      Laufer                             |   | Levi      Ronen                                  |   |
|                         |   |                                            |   |                                             |   |
| /s/ Levi Sigal               |   | /s/ Yanai Doron                                 |   | /s/ Yanni Olga                                   |   |
| Levi      Sigal              |   | Yanai      Doron                                |   | Yanai      Olga                                  |   |

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| July 31, 2008 | /s/ Hagit Shrem,Advocate |
|---------------|--------------------------|
| Date          | Lic.      No. 20015      |

| July 31, 2008 | /s/ Hagit Shrem,Advocate |
|---------------|--------------------------|
| Date          | Lic.      No. 20015      |

| July 31, 2008 | /s/ Hagit Shrem,Advocate |
|---------------|--------------------------|
| Date          | Lic.      No. 20015      |

| July 31, 2008 | /s/ Ehud Bar-Noy,  Advocate |
|---------------|-----------------------------|
| Date          | Lic.      No. 12178         |

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