Document:

20-F

Exhibit 4.26  

AGREEMENT  

Made
and entered at Tel Aviv on the 23rd day of June 2006 

	Between:  	BLUE
SQUARE ISRAEL LTD.  

	 	
(hereinafter:
“the Lessor” or “the Company”)  

of the one part;  

	And:  	1. 	BLUE SQUARE CHAIN PROPERTIES & INVESTMENTS LTD. 

	 	
(hereinafter:
“Properties and Investments”) 

	 	2. 	BLUE
SQUARE CHAIN (HYPER-HYPER) LTD. 

	 	
Publ.
Co. 52-003667-4  

	 	
(hereinafter:
“Hyper-Hyper”) 

	 	
whose
address 2 Amal Street, Afeq Park, Rosh Ha’ayin 

	 	
(hereinafter
jointly and severally: “the Lessee”)  

of the other part;  

	WHEREAS: 	
On October 11, 2005 a framework agreement was signed between the parties (hereinafter:
“the Framework Agreement”) in the scope of which it was agreed that the
Lessor would let real estate properties owned by the Lessor to the Lessee and the Lessee
would hire such real estate properties from the Lessor; and 

	WHEREAS:  	The
parties wish to specify the full extent of the terms and  conditions of the lease in
                  connection  with  the  properties  on the  basis  of the  principles
 enunciated  in the                   Framework Agreement as follows.

Accordingly this
Agreement witnesses as follows: 

	1.  	Interpretation  

	 	1.1 	The
preamble to the Agreement and the appendices hereto constitute an integral part hereof. 

	 	       1.2 	No
use shall be made of the  headings  to clauses  for  purposes  of  interpretation  of the
              Agreement.

	2.  	Definitions  

	 	2.1 	“The
Leased Premises”: all the properties set forth in Appendix A to the Agreement.  

1

	 	2.2 	“The
proceeds” – means consideration, receipts and income of whatsoever nature,
excluding Value Added Tax, received by the Lessee and arising from its sales in the
Leased Premises, including receipts received from a sale on credit and/or by credit
cards, gift vouchers, buying coupons and electronic buying cards, and so forth. Sales on
credit or sales the consideration for which is received via credit cards or post-dated
checks, shall be recorded by the Lessee as part of the proceeds on the date of sale or
the providing of the service. In addition, the proceeds include proceeds from
franchisees, if any, but to the extent that the proceeds in respect of the activities of
the franchisees is not recorded via the Lessee’s cash registers, an annual report
will be given in respect thereof, at the end of the year, in accordance with the reports
of the franchisees. 

	 	
It
is hereby clarified that the proceeds do not include returns from customers, delivery
charges in respect of customers’ purchases, credit card commissions and amounts of
discounts given by the Lessee and which are not included as “income” for
purposes of reporting to V.A.T., including, without limitation, discounts to the Lessee’s
employees and to other customers.  

	 	2.2	
“The index” – the Consumer Price Index published by the Central
Bureau of Statistics, or any official index that may come in its stead.

	 	2.3	“The
new index” – the last index known on the date of effecting of any payment
pursuant to the provisions of this Agreement. 

	3.  	Purpose
of the lease  

	 	
The
purpose of the lease is to conduct and run a supermarket as is customary from time to time
in any of the chains operated by the Lessee and/or for any other legal purpose, subject to
any law and permit 

	4.  	The
lease  

	 	4.1	
The Lessor hereby undertakes to let the Leased Premises to the Lessee, and the Lessee
hereby undertakes to take the Leased Premises on hire from the Lessor, in accordance with
the conditions set forth below.

	 	4.2	
The Leased Premises will be leased in their current condition (“as is”). The
Lessee declares that it has seen and examined the Leased Premises, the physical, zoning
and legal condition thereof and every other detail in regard thereto, and has found same
to be fit for the Lessee’s use and suitable for the purposes of the lease, and that
it takes the Leased Premises on hire in their current condition (as is), and hereby waives
any allegation of non-conformity, fault or defect in the Leased Premises.

	5.  	Non-applicability
of Tenants Protection Law  

	 	5.1	
It is agreed between the parties that the lease, the Lessee and the Leased Premises are
not protected under the Tenants Protection Law (Consolidated Version), 5732-1972 and/or
any other law that may be enacted in the future, which protects a lessee or tenant,
inter  alia, by virtue of the fact that what is involved is a new building
the construction of which was completed after 5731 (1971), and because on August 20, 1968
there was no tenant entitled to occupy the Leased Premises and/or by virtue of the Lessee
not having paid and not having been requested to pay key money or any other payment likely
to be construed as key money.

2

	 	5.2	
It is hereby clarified that any renovation and/or improvement and/or investment in the
Leased Premises, or outside the Leased Premises, shall not be deemed under any
circumstances and/or in any form, to be payment in respect of use, key money, and so
forth, and shall not confer on the Lessee any right in or to such improvements,
alterations or renovation.

	6.  	Period
of lease  

	 	       6.1 	The
period of lease is 10 (ten) years,  commencing on September 1, 2005 and  terminating  on
August 31, 2015 (hereinafter: “the Lease Period”). 

	 	6.2	
If the Lessee vacates the Leased Premises before the end of the Lease Period other than in
accordance with the provisions of this Agreement, then without derogating from any remedy
and/or relief available to the Lessor according to this Agreement and the law, the Lessee
will be liable for all the payments imposed on it pursuant to this Agreement until the end
of the Lease Period.

	7.  	Rentals  

	 	7.1	
The rentals for a period of one year in respect of properties in which stores are
operated  will be 9% of the amount of the investment as defined below (“Basic
Rentals”), or 2% of the proceeds from each of the properties that constitute the
Leased Premises in the relevant year (hereinafter: “the Rentals as a Percentage of
Proceeds”), whichever is the higher.

	 	7.2	
The rentals for a period of one year in respect of properties which do not serve as
stores  will be 9% of the amount of the investment as defined below.

	 	7.3	
“Amount of the Investment” for purposes of this clause means the total
cost of the Lessor’s investment in the Leased Premises, where such amounts are linked
to the known index at the date of each investment in the Leased Premises as against the
new index, prior to depreciation and amortization. Notwithstanding the foregoing, the
Amount of the Investment will not include:

	 	7.3.1	Costs
that are imposed on the Lessor in accordance with the provisions of Clauses 8.2 and 12.2
of this Agreement.  

	 	7.3.2	Costs
which the Lessor may incur for purposes of developing the Properties that comprise the
Leased Premises other than for purposes of the lease.  

	 	7.4	
The Basic Rentals will be paid once each year on June 30 for the period from January 1 to
December 31 of each calendar year.

3

	 	7.5	
For purposes of calculating the rentals, the Lessee shall deliver to the Lessor, within 60
days from the end of each calendar year, a statement regarding the volume of proceeds in
the preceding year, in respect of each and every one of the Properties that constitute the
Leased Premises (hereinafter: “the Annual Statements”), where the Annual
Statements are adjusted for inflation (in a manner that the proceeds for each and every
month are adjusted to the end of the calendar year) and certified by an accountant.

	 	7.6	
If it should transpire from the Annual Statement that the amount of “the Rentals
as a  Percentage of Proceeds” which is due to the Lessor for the year of
lease to which such Annual Statement relates, exceeds “the Basic Rentals”
(where same are adjusted from the date specified for payment according to this Agreement
and up to the end of the calendar year), the Lessee will pay the Lessor, concurrent with
the submission of the Annual Statement, the amount of the difference where same is linked
to the index from the date of drawing up the Annual Statement and up to the date of actual
payment.

	 	
It
is clarified that calculation of the differences between the basic rentals and the Rentals
as a Percentage of Proceeds shall be made in respect of each and every one of the
Properties that comprise the Leased Premises separately, and not on an omnibus basis with
respect to the Leased Premises as a whole. In other words, if in any Property the Rentals
as a Percentage of Proceeds exceed the basic rentals, Rentals as a Percentage of Proceeds
shall be paid in respect of that Property, even if on a cumulative basis the total Rentals
as a Percentage of Proceeds with respect to the Leased Premises as a whole have not
exceeded the basic rentals in respect of the Leased Premises as a whole. 

	 	7.7	
The Lessee shall add Value Added Tax to each payment of rentals, according to the rate in
force at the time of payment. The Lessee shall pay the Lessor the amounts of V.A.T. as
aforesaid not later than two days before the date on which the Lessor is obliged to make
payment thereof to the tax authorities in accordance with the law, against it receiving a
valid tax invoice.

	 	7.8	
The rentals and every other payment the Lessee is obliged to pay to the Lessor shall be
paid by way of a standing instruction or by way of a bank transfer or by way of checks,
all in accordance with the Lessor’s instructions, and the Lessee shall comply with
every such request according to the details thereof, within 15 days from receipt thereof.

	 	
The
giving of the standing instruction and/or delivery of checks shall be deemed to be payment
only upon actual collection of the moneys pursuant thereto in the Lessor’s account or
to its order, and every payment that is effected in accordance therewith shall be deemed
to be payment “on account” of what is due to it only. 

	 	7.9	
The Lessee will be liable for payment of the full rentals and the remaining payments
imposed on the Lessee according to law and/or agreement, for the entire Lease Period, even
if it does not make use of the Leased Premises or portion thereof for any reason.

4

	 	7.10	
In respect of any default of more than 10 business days in any payment for which the
Lessee is liable in accordance with this clause, the Lessee shall pay the Lessor arrear
interest at such rate and on such conditions as are equivalent to the interest charged by
Bank Hapoalim B.M. in respect of an unauthorized overdraft in current business accounts in
shekels during the relevant period, plus linkage differentials.

	8.  	Additional
payments  

	 	8.1	
It is agreed between the parties that the lease which is the subject of this Agreement is
a net lease type, and accordingly the Lessee will bear and/or make payment during the
Lease Period (including the Period of Extension) of the following taxes and payments:

	 	8.1.1	All
the taxes, fees, levies and other payments of any sort that are imposed and/or may in the
future be imposed on the Leased Premises and/or on the business conducted therein,
including municipal rates, business tax, signboard tax and/or fee, etc., as well as any
tax and/or levy and/or fee that may be imposed in the future and which are imposed and/or
will in the future be imposed according to law and/or custom on a occupier and/or tenant.
The Lessee undertakes to make payment on due date of any amount that may be imposed on it
by the authorities in respect of the business licenses and any tax or fines that may be
imposed, if imposed, that are connected with operating the Leased Premises.  

	 	8.1.2	Payments
in respect of the consumption of water and electricity in the Leased Premises, the
telephone accounts therein, and payments of management charges and/or house committee
charges therein, and also any similar and/or identical payment, as well as any other
expense relating to the use of the Leased Premises and/or the operation thereof.  

	 	8.1.3	All
the payments in respect of approved divergent use for purposes of operating the Lessee’s
business in the Leased Premises in accordance with the purpose of the lease (including
expenses for attending to an application for a permit for approved divergent use, and
also in respect of a betterment levy and payments to the Israel Lands Administration,
etc., that are connected with the issue of the permit for approved divergent use), to the
extent that same may be demanded in the Lease Period and/or the Period of Extension.  

	 	8.2	
The Lessor shall bear and/or make payment in the Lease Period (including the Period of
Extension) of development fees and development levies to the local authority that may be
charged according to any law against property owners.

5

	9.  	Licensing,
licenses and permits

	 	9.1	
The Lessee declares that it is conversant with its business and with the conditions
required for obtaining every license and/or approval and/or permit for the purposes of
this Agreement, and that prior to the signing of this Agreement, it actually examined the
suitability of the Leased Premises for its needs and for the objective of the Leased
Premises and the possibility of obtaining all the licenses, the permits and the approvals
required according to law for operating the Leased Premises in accordance with the
objective of the Leased Premises, and has found the Leased Premises to be suitable for the
purpose of the lease.

	 	9.2	
The Lessee is obliged to comply with and to adhere to all the laws, the by-laws,
regulations etc., of every competent authority and to conform with all the standards that
apply and/or which may in the future apply to the Lessee’s uses of the Leased
Premises, and the business conducted by the Lessee.

	 	9.3	
The Lessor is not responsible to the Lessee for obtaining licenses and/or approvals and/or
permits from the competent authorities, that are required for operating and maintaining
the Lessee’s business in the Leased Premises.

	 	9.4	
The foregoing is intended only to add to and in no way to derogate from the Company’s
right to any additional and/or other remedy in accordance with the Agreement and according
to law.

	10.  	Liability
and insurance  

	 	
The
liability of the parties and the insurances imposed on each of them are as set forth in
Appendix B to this Agreement, which will be signed within 30 days, if
it is not signed at the time of signing of this Agreement. 

	11.  	Transfer
of rights  

	 	11.1	
The Lessee undertakes not to transfer, directly or indirectly, its obligations and its
rights under this Agreement to another/others, and not to grant any third party rights of
use of any sort in the Leased Premises, except with the Lessor’s prior written
approval.

	 	11.2	
Notwithstanding the foregoing, the Lessee will be entitled to let any of the Properties
that form part of the Leased Premises, under a sub-lease, subject to fulfillment of all
the following conditions:

	 	11.2.1 	The
giving of prior written notice of 30 days to the Lessor. 

	 	11.2.2	The
substitute tenant shall sign an undertaking directly to the Lessor to fulfill all the
provisions of this Agreement.  

	 	11.2.3	The
Lessee will remain liable for the fulfillment of all the provisions of this Agreement,
jointly and severally with the substitute tenant.  

6

	 	11.3	
In addition, the Lessee will be entitled to give a right of use as a licensee to
franchisees who operate in the chain of stores operated by the Lessee, as is customary
from time to time at the Lessee, provided that the Lessee shall continue to be fully
liable for all its obligations pursuant to this Agreement.

	 	11.4	
The Lessor will be entitled to transfer its rights and/or obligations pursuant to this
Agreement, in whole or in part, at its sole discretion, subject to the condition that the
Lessee’s rights under this Agreement shall not be adversely affected, and the Lessee
undertakes to fulfill its obligations under this Agreement to any such transferee.

	12.  	Maintenance
and repairs  

	 	12.1	
The Lessee will be solely responsible to repair any defect, fault or damage of whatsoever
nature that may come about in the Leased Premises, in the accessories, facilities and the
equipment therein, including mechanical breakdown and damage resulting from normal and
reasonable wear and tear (hereinafter: “the Damage”) and shall do so
immediately after the occurrence of the Damage and at its expense.

	 	12.2	
Notwithstanding the contents of Clause 12.1 above, the Lessor will be responsible for the
repair of a defect and/or fault and/or Damage that occurs in the construction frame of the
building of the Leased Premises and/or in the water proofing sealing thereof, provided
that these are not caused as a result of an act and/or omission on the part of the Lessee
and/or someone acting on its behalf.

	13.  	Alterations
to Leased Premises and building additions

	 	13.1	
The Lessor will be entitled, in its sole discretion, to add an addition of building areas
in each of the Properties that comprise the Leased Premises, to the extent that the town
planning schemes which apply and/or may in the future apply allow this, without it being
obliged to give prior notice to that effect to the Lessee or to obtain the Lessee’s
consent thereto, subject to this not adversely affecting the Lessee’s rights pursuant
to this Agreement, and without this leading to an increase in the rentals.

	 	13.2	
The Lessee shall be entitled to make any alteration to the Leased Premises which is in the
nature of being “an internal alteration”, as defined below in this
sub-clause, without the necessity for obtaining the Lessor’s consent thereto, subject
to the condition that execution of the alteration is for the continued running and
operation of a supermarket in the Leased Premises, and not for any other purpose. The
Lessee shall notify the Lessor about the alterations and the execution thereof in writing
and in advance.

	 	
“Internal
alteration” – means any alteration and/or addition, provided that such
alteration shall not adversely affect the systems that are common to the Leased Premises
and other units in the building in which the Leased Premises are located and/or of
creating external alterations to the Leased Premises and/or to the building in which the
Leased Premises are located and/or provided that same shall not constitute an exploitation
of building rights in the Leased Premises in excess of those that exist at the time of
commencement of the Lease Period. 

7

	 	13.3	
Should the Lessee wish to effect any alteration which does not constitute an internal
alteration, as defined above, it will only be entitled to do so subject to obtaining the
Lessor’s prior written approval thereto. The Lessor shall not unreasonably withhold
consent to the Lessee’s request. It is agreed that in the scope of reasonable and
pertinent reasons as aforesaid, the Lessor will be entitled to demand that at the end of
the lease the condition thereof be restored to its former state.

	 	13.4	
The Lessee will be solely responsible for obtaining from all the entities and the
authorities any permit and/or license and/or approval that is required according to any
law for executing the alterations, prior to performing any alteration.

	14.  	Vacation  

	 	14.1	
The Lessee shall vacate the Leased Premises at the end of the Lease Period, and shall
return sole possession of the Leased Premises to the Company, with the Leased Premises
being in good order and condition and fit for use and free and vacant of any person and
article not being the property of the Company.

	 	14.2	
All the works and/or alterations and/or additions and/or renovations that have been made
by the Lessee and which are affixed to the Leased Premises will, at the end of the Leased
Premises, pass into the possession and ownership of the Lessor, and the Lessee waives in
advance any allegation and/or any monetary demand in connection therewith. Notwithstanding
the foregoing it is clarified that the Lessor will be entitled to demand that the Lessee
restore any alteration that has been made in the Leased Premises without the Lessor’s
approval as required under the provisions of this Agreement to its former condition, and
in such case the Lessee will do this at its expense.

	 	14.3	
In addition the Lessee shall, as soon as possible after the end of the Lease Period or the
actual vacation of the Leased Premises, deliver confirmations from the Electric
Corporation and the local authority to the effect that the Lessee has no debt in respect
of the consumption of electricity and/or water and/or for taxes and/or fees to the local
authority in respect of the Leased Premises up to the end of the Lease Period or up to the
date of actual vacation, whichever is the later.

	 	14.4	
Should the Lessee fail to vacate the Leased Premises on due date, then without derogating
from the Lessor’s rights against the Lessee pursuant to the Agreement and according
to law, after a default of 7 days, the Lessee shall pay the Lessor agreed pre-estimated
liquidated damages in an amount of double the rental in respect of each day of default in
vacation.

8

	15.  	Breaches
and remedies  

	 	15.1	
The provisions of the Contracts Law (Remedies for Breach of Contract), 5731-1970 shall
apply to a breach of this Agreement.

	 	15.2	
Without derogating from the provisions of Clause 15.1 above, in each of the cases
mentioned below the Lessor will be entitled to cancel the Agreement and to demand
immediate vacation of the Leased Premises:

	 	15.2.1	Bankruptcy
or liquidation proceedings are taken against the Lessee and have not been withdrawn
within 60 (sixty) days.  

	 	15.2.2	A
receiver is appointed for the Lessee and/or in respect of a material portion of its
assets, and the appointment has not been set aside within 60 (sixty) days.  

	 	15.2.3	The
Lessee has applied to the court with an application to stay proceedings against it, or
with an application to reach an arrangement with creditors.  

	16.  	Set-off  

	 	
It
is hereby agreed that the amounts for which the parties to this Agreement are indebted
will not be capable of being set off. 

	17.  	Arbitration  

	 	17.1	
The Israeli law shall apply exclusively to this Agreement and to any dispute that may
arise in connection with this Agreement.

	 	17.2	
Sole jurisdiction on everything connected with this Agreement shall be vested in the
courts in the central district only.

	 	17.3	
Any dispute and/or disagreement that may arise in connection with the provisions of this
Agreement, including with regard to the interpretation hereof and/or to its validity
and/or implementation, shall first be brought for resolution within the scope of a forum
that shall include the CEO of the chain, a representative of Blue Square and a
representative of Properties and Investments, on a basis that the representatives will be
the chairman of the audit committee of each of the companies or another director of each
of the companies who has been appointed by the audit committee, provided that he has no
personal interest in the dispute. If the aforesaid forum is unable to reach a resolution
of the dispute by consensus agreement, the dispute will be referred for hearing before an
arbitrator who shall be agreed upon between the parties and who receives the approval of
the audit committee of each of them, and in the absence of such agreement shall be
appointed by the president of the Israel Institute of Certified Public Accountants
(hereinafter: “the Arbitrator”). For these purposes, the provisions of
this clause shall be deemed to be an arbitration agreement. The Arbitrator will not be
bound by the provisions of civil procedure, the rules of evidence or the substantive law
as applied by the courts. In addition, the Arbitrator will not be obliged to give reasons
for his award.

9

	18.  	New
properties  

	 	18.1	
The letting of new properties by the Lessor to the Lessee shall be effected under the
conditions stipulated in this Agreement, provided that such contractual arrangement has
been approved by the audit committee and the board of directors of Properties and
Investments and of the Lessor, provided that the contractual arrangement shall be during
the Lease Period and for a period of 10 years, counted from the date of the contractual
arrangement in respect of each of the new properties and where all the new properties that
will be let shall not exceed an aggregate area of 80,000 sq.m. (an increase of 20% as
compared with the area of the Leased Premises as at the date of signing of the Framework
Agreement).

	 	18.2	
Blue Square Properties intends to erect and operate small filling stations as part of the
properties that constitute the Leased Premises. It is agreed between the parties that in
relation to each such station that is erected with the consent of the Lessor, the Lessor
shall bear the costs of erecting the station, apart from equipment, as shall be agreed.
The costs of establishment will be added to the Amount of the Investment. The income from
the sale of fuel shall not be taken into account for purposes of determining rentals as a
percentage of proceeds.

	19.  	Sending
of notices  

	 	
The
addresses of the parties are as set forth at the head of the Agreement and any notice that
may be sent by one party to other shall be deemed to have been delivered to its
destination at the end of 72 hours from the time of delivery for dispatch by registered
mail in Israel or within one business day if delivered by hand or by facsimile. 

	20.  	Additional
provisions  

	 	
Nothing
contained in the provisions of this Lease Agreement shall derogate from the remaining
provisions of the Framework Agreement which shall continue to apply as stipulated in the
Framework Agreement. In every case of a conflict between the provisions of this Agreement
and the provisions of the Framework Agreement in connection with the lease of the
Properties that are the subject of this Agreement and the Framework Agreement, the
provisions of the Framework Agreement shall prevail. 

	By: /s/ David Weissman

/s/ Yitzhak Bader
——————————————

Blue Square Israel Ltd.	By: /s/ David Weissman

/s/ Yitzhak Bader
——————————————

Blue Square Chain Hyper-

Hyper	By: /s/ David Weissman

/s/ Yitzhak Bader
——————————————

Blue Square Chain Properties 
& Investments Ltd.

10

	 	A	B	C	D	E 	F	G	H	I	J
		1
				Details of the Property 
	
		2
				Serial No. in relation

to all the Group's

properties 
	No. of property

in the system 
	 		Town or City 
	Name of Property 
		Value of

investment

adjusted to the

present 

	 					 					
						 					
						 					
	 	8	 	 	1	 	 	89	 	 	108	 	1120	 	 	 	 	50	 	Tel Aviv	 	 	Giborei Yisrael	 	 	Hyper 
Hyper	 	 	 	21,228,596	 
	 	9	 	 	1	 	 	40	 	 	46	 	1139	 	 	 	 	74	 	Kfar Saba	 	 	Ron Kfar Saba	 	 	Hyper
 Hyper	 	 	 	8,389,710	 
	 	23	 	 	1	 	 	4	 	 	4	 	2150	 	 	 	 	90	 	Eilat	 	 	Eilat-City Center Ind. Zone	 	 	Hyper
 Hyper	 	 	 	16,658,981	 
	 	35	 	 	1	 	 	45	 	 	53	 	2220	 	 	 	 	84	 	Modi'in	 	 	Malibu	 	 	Hyper
 Hyper	 	 	 	21,861,344	 
	 	36	 	 	1	 	 	43	 	 	50	 	2230	 	 	 	 	84	 	Lod	 	 	Ganei Aviv	 	 	Hyper
 Hyper	 	 	 	29,776,390	 
	 	37	 	 	1	 	 	73	 	 	91	 	2290	 	 	 	 	29	 	Ramat Hasharon	 	 	Mega Morasha	 	 	Hyper
 Hyper	 	 	 	28,128,631	 
	 	42	 	 	1	 	 	59	 	 	71	 	2370	 	 	 	 	73	 	Afula	 	 	Megal Afula Store	 	 	Hyper 
Hyper	 	 	 	26,606,645	 
	 	??	 	 	1	 	 	55	 	 	63	 	2380	 	 	 	 	90	 	Netivot	 	 	Shefa Shuk Netivot	 	 	Hyper
 Hyper	 	 	 	11,134,485	 
	 	45	 	 	1	 	 	46	 	 	54	 	2540	 	 	 	 	84	 	Modi'in	 	 	Modi'in Hashimshoni	 	 	Hyper
 Hyper	 	 	 	19,591,183	 
	 	46	 	 	1	 	 	47	 	 	55	 	2560	 	 	 	 	30	 	Modi'in Illit	 	 	Kiryat Safer	 	 	Hyper
 Hyper	 	 	 	19,577,127	 
	 	47	 	 	1	 	 	31	 	 	34	 	2590	 	 	 	 	40	 	Haifa	 	 	Mega Haifa (Castra)	 	 	Hyper
 Hyper	 	 	 	29,184,173	 
	 	48	 	 	1	 	 	44	 	 	52	 	2730	 	 	 	 	73	 	Migdal Haemek	 	 	Migdal Haemek	 	 	Hyper
 Hyper	 	 	 	8,002,283	 
	 	49	 	 	1	 	 	42	 	 	49	 	2850	 	 	 	 	40	 	Carmiel	 	 	Mega Carmiel	 	 	Hyper
 Hyper	 	 	 	20,149,101	 
	 	50	 	 	1	 	 	71	 	 	89	 	2910	 	 	 	 	84	 	Ramle	 	 	Ramle Fire Brigade Store	 	 	Hyper
 Hyper	 	 	 	36,790,355	 
	 	51	 	 	1	 	 	32	 	 	35	 	2930	 	 	 	 	40	 	Haifa	 	 	Mega Admiralty Store	 	 	Hyper
 Hyper	 	 	 	38,902,088	 
	 	56	 	 	1	 	 	69	 	 	87	 	3000	 	 	 	 	84	 	Rehovot	 	 	Mega Rehovot	 	 	Hyper
 Hyper	 	 	 	70,804,199	 
	 	??	 	 	1	 	 	93	 	 	114	 	3150	 	 	 	 	50	 	Tel Aviv	 	 	Central Bus Station Tel Aviv	 	 	Hyper
 Hyper	 	 	 	19,064,215	 
	 	??	 	 	1	 	 	52	 	 	60	 	3239	 	 	 	 	84	 	Nes Ziona	 	 	Mega Nes Ziona	 	 	Hyper
 Hyper	 	 	 	23,462,205	 
	 	64	 	 	1	 	 	19	 	 	20	 	3247	 	 	 	 	29	 	Bat Yam	 	 	Mega Bat Yam	 	 	Hyper
 Hyper	 	 	 	15,785,368	 
	 	66	 	 	1	 	 	5	 	 	5	 	3310	 	 	 	 	90	 	Eilat	 	 	Pharm Maale Eilat	 	 	Hyper
 Hyper	 	 	 	6,370,075	 
	 	74	 	 	1	 	 	37	 	 	43	 	3420	 	 	 	 	30	 	Jerusalem	 	 	Allenby Jerusalem	 	 	Hyper
 Hyper	 	 	 	21,327,969	 
	 	76	 	 	1	 	 	61	 	 	75	 	3600	 	 	 	 	29	 	Petach Tikva	 	 	Maccabim	 	 	Hyper
 Hyper	 	 	 	13,945,212	 
	 	79	 	 	1	 	 	41	 	 	48	 	4020	 	 	 	 	74	 	Kfar Saba	 	 	Mega Yakhin	 	 	Hyper
 Hyper	 	 	 	57,528,991	 
	 	95	 	 	 	 	 	59a	 	 	71	 	2370a'	 	 	 	 	73	 	Afula	 	 	Mega Afula vacant plot (parking)	 	 	Hyper
 Hyper	 	 	 	 	 
	 	99	 	 	 	 	 	32a	 	 	35	 	2930a	 	 	 	 	40	 	Haifa	 	 	Mega Admiralty (vacant plot)	 	 	Hyper
 Hyper	 	 	 	 	 
	 	105	 	 	23.00 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	564,271,326 	 

1120-F

Exhibit 4.27  

AGREEMENT FOR
PROVIDING OF SERVICES  

Made
and entered at Rosh Ha’ayin on the 13th day of August, 2006 

	Between:  		BLUE
SQUARE REAL ESTATE LTD.
of Afeq Park, Rosh Ha'ayin
 (hereinafter: "Square Real Estate" or "the Company")  

	 	
of
the one part;  

	And:  		BLUE
SQUARE ISRAEL LTD.
of Afeq Park, Rosh Ha'ayin
 (hereinafter: "Blue Square")  

	WHEREAS:  		The
parties are desirous  that Blue Square  provide the Company with  services in  connection
                  with the Company's activities, as described in this Agreement; and 

	WHEREAS:  		The
parties wish to put into writing the terms and  conditions of the services  agreement and
                  the services that will be provided pursuant hereto, as set forth below
in this Agreement; 

Now
therefore it is agreed, declared and stipulated by the parties as follows: 

	1.  	General  

	 	       1.1 	The
preamble to this Agreement constitutes an integral part hereof.

	 	1.2	Headings
to the clauses in this Agreement are intended solely for the sake of convenience, and no
use shall be made thereof in the interpretation of the Agreement.

	2.  	The
services  

	 	
Blue
Square undertakes to provide the Company, either itself and/or through its subsidiaries,
and the Company undertakes to accept from Blue Square and/or from its subsidiaries, as the
case may be, management, consultancy and on-going guidance services in relation to the
Company and to the Company’s subsidiaries (hereinafter collectively: “the
Company’s Group”) as follows: 

	 	2.1	Services
of the chairman of the board of directors of the Company, subject to the contents of
Clause 3.2 below.

	 	2.2	
Financial management, accounting management, including accounting department, collections,
guarantees and collateral security management, by the finance division of Blue Square;

	 	2.3	
Management of computer and communications networks and the maintenance thereof, by the
computers division of Blue Square;

1

	 	       2.4 	Supplementary
 legal  advice and  secretarial  services by the internal  legal  advisor of
              Blue Square;

	 	2.5	
Allocation of offices and the maintenance thereof in an area of not less than 120 sq.m.,
at a standard of finish that is customary in the administration offices of Blue Square and
in a location suitable to the nature of the activities of a real estate company.

	 	       2.6 	Internal
auditing by Blue Square's internal auditor;

	 	
(hereinafter:
“Services”).  

The Services will be provided under
the conditions set forth in this Agreement. It is clarified for the avoidance of doubt
that the Services will include only the Services enumerated in Clause 2 above, and will
not include other services or the allocation of additional managerial resources. 

	3.  	Payment
in respect of the Services

	 	3.1	
In consideration for provision of the Services, the Company will pay Blue Square a
consideration as set forth below:

	 	3.1.1 	Basic
consideration – commencing from January 2006 onwards, a sum of NIS 2,500,000 per
annum, linked to the index for the month of December 2005, which was published on January
15, 2006.  

	 	3.1.2 	Additional
consideration – commencing from January 2007, the basic management charges will
be increased each year by a percentage equal to 0.2% of the increase in the cost of the
Company’s properties, according to the Company’s consolidated financial
statements, prior to depreciation and amortization, at the end of the preceding year, in
relation to the cost of the properties as at December 31, 2005, adjusted for rises in the
Consumer Price Index.  

	 	
(hereinafter
collectively: “the Consideration”).  

	 	3.2	
It has been agreed that if a chairman of the board of directors is appointed for the
Company who is not an officer in Blue Square, the Company will bear the cost of employing
him and the basic consideration will be reduced to NIS 2,000,000.

	 	3.3	
It is hereby clarified that expenses and payments to third parties, which are connected
with the management and activities of companies of the Company’s Group, including
attorneys’ and accountants’ fees, taxes, various payments and levies which are
imposed on the Company, are not included within the compass of the Consideration, and Blue
Square will not bear same. In the event that Blue Square should bear such payment or
expense, for any reason, the Company will indemnify it in respect of such payment or
expense, within 7 days from the date notice to that effect was delivered to the Company,
accompanied by written proof with regard to the effecting of such payment.

2

	 	3.4	
The Consideration will be paid to Blue Square in four equal quarterly payments, within 15
days from the start of the quarter in respect of which the payment is effected. A default
in payment of up to 7 days will not constitute a breach of this Agreement, but will bear
interest as prevailing in respect of unauthorized debit balances in a current account for
commercial customers at Bank Hapoalim B.M., in respect of the period of default in
payment.

	 	       3.5 	Value
Added Tax as prescribed by law will be added to the Consideration.

	 	3.6	
The Company shall deduct from the Consideration payable to Blue Square any tax and/or
compulsory payment which it is obliged to deduct from the Consideration according to law.

	 	3.7	
It is hereby clarified that the Consideration also includes a recompense also for
providing Services to the Company’s subsidiaries.

	 	3.8	
It is clarified, for the avoidance of doubt, that the directors who will be appointed by
Blue Square for the Company, apart from the director who serves as chairman of the board
of directors, will be entitled to directors’ remuneration in respect of their serving
as directors of the Company.

	4.  	Maintenance
Services  

	 	
The
Company will be entitled to receive Services from Blue Square’s maintenance division,
for purposes of the maintenance of its properties, in consideration for cover of the
direct costs of providing such Services, plus 2%. 

	5.  	Status
of Blue Square, payments to employees

	 	5.1	
It is agreed and declared by the parties to this Agreement that the status of Blue Square
as provider of the management Services to the Company is the status of an independent
contractor and that all the acts and/or omissions that may be performed or committed by
Blue Square and/or its employees and/or persons acting on its behalf, will be performed or
omitted by it as an independent contractor, at its sole risk and on its sole
responsibility; for the removal of doubt, it is clarified that there is not and there will
not be any employer-employee relationship between the Company and Blue Square and/or any
of its employees, and the provisions of this Agreement do not have the effect of creating
a link of an employer-employee relationship between of them and the Company, in any
respect;

3

	 	
It
is further agreed that in light of the foregoing, Blue Square waives any allegations
and/or claims against the Company, the grounds of which lie in an employer-employee
relationship and/or the termination thereof, and it will be estopped from instituting any
claim against the Company the cause of action for which arises from an employer-employee
relationship and/or the termination thereof. Without derogating from the foregoing and
from what is stated below, Blue Square declares and undertakes that if the Company is
called upon by Blue Square and/or by any of the employees of Blue Square to bear any
payment and/or expense and/or cost in respect of causes of action arising from an
ostensible employer-employee relationship, and/or from the cessation thereof, then Blue
Square will indemnify the Company in respect of any payment and/or expense and/or cost
that may be borne by Blue Square [sic] and/or may be demanded from it as aforesaid and/or
in respect of any damage that may be sustained by the Company and/or by virtue of such
demand or claim, including legal expenses and attorney’s fees. 

	 	5.2	
Without derogating from the generality of the foregoing, Blue Square declares and
undertakes that all the taxes and/or other compulsory payments which are imposed and/or
which may in the future be imposed, from time to time, on any of its employees and/or on
it, in respect of and/or in connection with the Services, by virtue of the provisions of
the Agreement and/or on the strength of provisions of any law, as well as any such tax
and/or compulsory payment that is due according to law from an employee and/or Blue
Square, will be paid by Blue Square and/or the employee, as the case may be, and at their
expense.

	6.  	Period
of the Agreement  

	 	       6.1 	This
Agreement will come into force commencing from January 1, 2006 (hereinbefore and
hereinafter: "Date of Coming into Force"). 

	 	6.2	
This Agreement will remain in force for five years commencing from the Date of Coming into
Force and up to December 31, 2010 (hereinafter: “End of Agreement
Period”). At the End of Agreement Period the Agreement will be extended from time
to time, by the consent of the parties, subject to receiving the approvals required
according to law, for periods of 5 years each, or for any other period that may be agreed
upon at the time of extension of the Agreement.

	 	6.3	
In addition it is agreed that Blue Square is entitled to cancel this Agreement during the
Agreement Period, by way of prior written notice of 6 months.

	 	6.4	
The elapse of time shall not in itself be construed under any circumstances as conferring
a right or as constituting grounds, for either of the parties, to terminate this Agreement
and/or for the cancellation hereof.

	7.  	Transfer
of rights  

	 	7.1	
The rights and obligations of the parties pursuant to this Agreement are not transferable
to any third party, without obtaining the prior written consent of the other party to such
transfer, except for a permitted transfer.

	 	7.2	
For purposes of this clause: “permitted transfer” means – a transfer
of rights and/or obligations of Blue Square, to the Company or to another body corporate
under the control of Blue Square and/or to a company that holds control in the Company;
“control”  – according to the definition thereof in the Securities
Law, 5728-1968.

4

	 	7.3	
Upon transfer of the management to the transferee company, all the rights and obligations
pursuant to this Contract will be transferred to the transferee company, commencing from
the date of transfer. This will be without derogating from any right and/or obligation of
Blue Square, pursuant to this Contract, in respect of the period preceding the transfer.

	 	
No
change will apply in the terms and conditions of this Contract by virtue of transfer of
the management as aforesaid. 

	 	7.4	
The transferee company will be entitled to transfer the management pursuant to the
Services contract, in the same manner and on the same conditions as set forth in Clause
7.1 above.

	8.  	Confidentiality  

	 	8.1	
The parties hereby undertake, subject to the provisions of any law which applies to the
parties, to mutually safeguard – both during the period of the Agreement and also
after the Agreement has reached its termination – the trade secrets, the professional
know-how and any other information which comes into their possession as a result of their
contracting under this Agreement, provided that the information has not passed into the
public domain at the time of its disclosure, subject to the condition that disclosure of
the information is required or necessary as a result of legal proceedings.

	 	8.2	
Upon termination of the validity of this Agreement each of the parties will deliver to the
other any asset which belongs to the other, including, but without prejudice to the
generality of the foregoing, agreements, correspondence, drawing equipment, plans,
products, formulas, samples and designs, including all copies thereof.

	9.  	Arbitration  

	 	9.1	
Any disputes and differences of opinion between the parties in relation to this Agreement
shall be referred for the decision of a single arbitrator, whose identity shall be
determined by consent between the two parties.

	 	9.2	
If the parties fail to reach agreement in regard to the identity of the arbitrator, the
arbitrator will be selected by consent by the internal legal advisor of Blue Square.

	 	9.3	
The arbitration shall be governed by the provisions of the Arbitration Law, 5728-1968. The
arbitrator shall be bound by the substantive law and shall give reasons for his award.

	 	9.4	
It is clarified that this clause constitutes an arbitration agreement between the parties.

5

	10.  	Miscellaneous  

	 	10.1	
The Company will not be entitled to set-off any amount against the amounts due from it to
Blue Square.

	 	10.2	
No modification and/or addition to this Agreement will be of any validity unless drawn up
in writing and signed by all the parties to this Agreement.

	 	10.3	
Unless otherwise stated in this Agreement, each party shall bear the taxes imposed on it
in respect of this Agreement, to the extent that same apply.

	 	10.4	
The parties shall bear stamp duty in respect of this Agreement, to the extent that it
applies, in equal shares.

	 	       10.5 	The
addresses of the parties are as set forth at the head of this Agreement.

	 	10.6	
A notice sent by registered mail according to the abovementioned addresses shall be deemed
to have reached the addressee party at the end of 3 business days from the date of its
posting, and if delivered by hand – at the time of its delivery; if a notice is sent
via facsimile, it shall be deemed to have reached the addressee party at the time
appearing in the confirmation of transmission produced by the transmitting fax appliance,
unless the contrary is proved.

In Witness Whereof We have Hereunto Signed

at the Place and on the Date first Aforewritten: 

	By: /s/ David Weissman
/s/ Ilan Kliger
——————————————

Blue Square Israel Ltd. 	By: /s/ David Weissman
/s/ Zeev Stein
——————————————

Blue Square Real Estate Ltd.

6

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