Blue Square Announces Appointment of New Chief Executive Officer and President and Appointment of COO

22/01/08 Blue Square-Israel Ltd. announced that further to its announcement on December 17, 2007 regarding the resignation of its CEO, Mr. Zeev Kalimi, the Board of Directors has appointed Mr. Zeev Vurembrand as Blue Square's new Chief Executive Officer and President, effective, no later then May 1, 2008. The Board of directors also decided to appoint Mr. Uri Falach, as the Chief Operating Officer (COO) of the company, effective immediately.

Mr. Vurembrand is currently holding the position of CEO of Phoenix Investments and Finance Ltd, and Chairman of the Boards of its subsidiaries. Between 2002 and 2007 Mr. Vurembrand was the Chief Executive Officer of Clalit Health Services Group, Israel's largest health care organization, with an annual turnover of US $4 Billion and approx. 32,000 employees, as well as chairman of the boards of Clalit's various subsidiaries. Mr. Vurembrand was a director in Israel Discount Bank and in Ubank (formerly Investec Bank) in Israel. Mr. Vurembrand is familiar with Blue Square since he held position as an independent director and Chairman of the Audit Committee of Blue Square between 2001 and 2006. Mr. Vurembrand holds a B.Sc (Hons.) degree in Industrial Engineering and Management (Administration and Finance) from the "Technion"- Israel Institute of Technology, Haifa since 1976.

As part of Mr. Vurembrand's compensation, the Company will grant him options to purchase shares constituting up to 2% of the shares of the Company. Two-thirds of his options will vest at the end of two years of employment and the remaining third will vest at the end of his third year of employment, subject to accelerated vesting in the event of earlier termination by the Company. The option exercise price will be based on the average price of the Company's shares during the 30 trading days prior to his employment. The options will be cashless, thus, in the event of exercise Mr. Vurembrand will only be entitled to receive (in consideration for their par value), shares equal to the benefit factor (the difference between the fair market value of the exercised shares and their exercise price). In the event Mr. Vurembrand's employment is extended beyond 3 years, he will be entitled to additional option grants of 0.5% for the first additional year and another 0.5% for the second additional year, at a price to be determined by the parties at such time and on other similar terms.