CLASSIFICATION SHEET

This document relates to the following request:

December 16, 2009

References: CEED/Q6709003M-SAD

PEPP 2 SA (Project Rosebud)- 2005 2228 957

I. Key to i~:_participation exc_n_,_1p_ti_on ______ --------

2. Name of the advisor : PwC

3. Corporate group' s name, or fund sponsor: Rosebud Real Estate

4. Name of the _project: Rosebud __ _ - --;=::.--=~:;___ __ _;;;;;,,,-- I s. Amount intended to be invested: BUREAU D'IMPOSITION SOC. 6 j

-~~~~~~~~~~~~~---~~1~_fo~_IETC_R·F_ .. 2Eo~~--J 6. Date of receipt:

For the attention of Mr Marius Kohl

Administration des Contributions Direetcs Bureau d'imposition Soci6tes VI 18, rue du Fort Wedell L-2982 Luxembourg

December 16, 2009

References: CEED/Q6709003M-SAD

PEPP 2 S.A. (Project Rosebud) - 2005 2228 957

Contribution of loan receivables

Dear Mr Kohl,

PriccwatcrhouscCoopcrs Socictc a rcsponsabilitc limitec Rcviscur d'cntrcpriscs 400, route d'Esch B.P. 1443 L..- 1014 Luxembourg Tckphonc +352 494848-1 Facsimile +352 494848-2900 www.pwc.com/lu info@lu.pwc.com

BUREAU D'IMPOSITION SOC. 61 EMTRtE

In our capacity of tax consultant of the above-mentioned client, please find below the tax treatment applicable to the transactions foreseen/implemented by our client. This letter aims at confirming the conclusions reached during our today meeting and will serve as a basis for the preparation of the tax returns of the Luxembourg companies involved.

A. Description of operations

1. Rosebud Real Estate group (hereafter "Rosebud") (please refer to Appendix 1 for a more detailed description of the group) is contemplating to reorganize the financing position of one of its Luxembourg subsidiaries, PEPP 2 SA, holding company of several Luxembourg entities.

2. PEPP 2 SA is currently held by Rose Real Estate BY, a Dutch company held by Rosebud Properties (Europe) Ltd. (Israel), which itself is held by Rosebud Real Estate Ltd. (Israel) (hereafter "Rosebud Israel"). PEPP 2 SA currently holds against Kamola BY, a Dutch indirect subsidiary of Rosebud Israel a loan receivable bearing interest at a rate of 5.5% p/a of approximately EUR 14,700,000 (including accrued interest). PEPP 2 SA also holds against GRAD BV 2 loan receivables in the global amount of EUR 6,200,000 (including accrued interest) both bearing interest at a rate of 11 % p/a. These 3 loan receivables will be hereafter referred to as "The Loan Receivables". Please refer to Appendix 2 for a simplified chaii of the group.

R.C.S Luxembourg ll 6S 477 - lVA LUl7564447

3. The following steps arc contemplated to be carried out:

Step 1 - PEPP 2 SA will incorporate a Belgian fully taxable company in the form of an Sprl or an SA (hereafter "New BclCo") with minimum capital;

Step 2 - Shortly after Step 1, PEPP 2 SA will contribute to New BelCo the Loan Receivables at their fair market value, which is not different from their accounting value.

4. New BelCo will issue shares with nominal value to Rose Real Estate BY

5. The above described transactions will be carried out before December 31, 2009.

B. Applicable tax regime

8.1 Step 1 - Incorporation of New BeICo with minimum capital

6. PEPP 2 SA will incorporate and own almost 100% of a New BelCo (Rose Real Estate BY holding nominal value) that will be a Belgian fully taxable resident company.

B.1.1 Corporate income tax and Municipal Business tax consequences

7. As an Sprl or SA, New BelCo will fall within the scope of Article 2 of the EU Parent/Subsidiary Directive. Moreover, PEPP 2 SA will hold almost 100% of the shares in New BelCo. Thus, dividends and capital gains emanating from New BelCo will be tax exempt in the hands of PEPP 2 SA, pursuant to the provisions of Article 166 of the Luxembourg Income Tax Law ("LITL") and the Grand Ducal decree of December 21, 2001 for the application of Article 166 LITL provided that the 12-months holding requirement is met, and will be subject to the recapture rules as defined in such articles. Please refer to Appendix 3 for a detailed description of the conditions and application of the Luxembourg participation exemption regime for dividends and capital gains.

B.1.2 Net Wealth tax consequences

8. As mentioned above, New BelCo will fall within the scope of Article 2 of the EU Parent/Subsidiary Directive. Moreover, PEPP 2 SA will hold almost 100% of the shares in New BelCo. Thus, the shares held by PEPP 2 SA in New BelCo will be tax exempt in the hands of PEPP 2 SA, pursuant to Paragraph 60 of the Valuation Act. Please refer to Appendix 3 for a detailed description of the conditions and application of the Luxembourg participation exemption regime for Net Wealth Tax.

B.2 Step 2 - Contribution of the Loan Receivables to New BelCo in exchange for new shares in New BelC o

9. The contribution of the Loan Receivables to New BelCo will only have balance sheet impact since the Loan receivables will be replaced by an increase of the same amount of the value of the shares in New Bel Co.

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B.2.1 Corporate income tax and Municipal Business tax consequences

10. As mentioned in 8.1.1 above, the shares in New Be.ICo will benefit from the participation exemption reg1me for dividends and capital gains. Thus, the increase of the value of the shares in New BelCo will not have any impact from a corporate income tax and municipal business tax perspective and any dividends or capital gains emanating from New BelCo will remain tax exempt pursuant to the provisions of Article 166 of the Luxembourg Income Tax Law ("LITL") and the Grand Ducal decree of December 21, 2001 for the application of Article 166 LITL provided that the 12-months holding requirement is met, and will be subject to the recapture rules as defined in such articles.

B.2.2 Net Wealth tax consequences

11. As mentioned in B. l.2 above, the shares in New BelCo will benefit from the participation exemption regime for net wealth tax purposes. Thus, the increased value of the shares in New BelCo will be tax exempt from a net wealth tax perspective pursuant to Paragraph 60 of the Valuation Act.

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We remain at your disposal should you need any further information and would like to thank you for the attention that you will give to our letter.

Yours sincerely,

k ' /.\J...r~~~/") '\/---........._ u N -

Sarni Douenias Partner

Appendices

Appendix l: Appendix 2:

Description of the group Simplified chart of the group

Carine Epardaud Senior Advisor

Appendix 3: Luxembourg pruticipation exemption regime

171is tax agreement is based on !he fac/s as presented to PricewaterhouseCoopers Sari as at the date the advice was given. 171e

agreement is dependenl on specific facts and circumstances and may not be appropriate to any par~y other than the onefor which it was

prepared. 711is lax agreeml'nl was prepared with only !he interests of PwC Tel Aviv 's Client. Roseb11d Real Es tale in mind. and was 1101

planned or carried 0111 in con1e111pla1ion of any 11se by any other party. Pricewaterho11seCoope1:5 Sal"i. its panners. employees and or

age111s. neither owe nor accepl any duty of care or any responsibility to any other party. whether in contract or in tori (inc/11ding without

limitation, negligence or breach of s1at11t01y duty) however arising, and shall not be liable in respect of any loss, damage or expense of

whatever na111re which fa ca11sed to any other party.

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Description of the group

A Simplified holding structure

Free Float

17.7%

Interested Institutionals

17.5%

ROSEBUD Real Estate

B Description of the group

Avi Ben Sira

73%

Alon USA

Appendix 1

Biran I Wiessman

49.8%

39.2%

Alon

Dor Alon

70.5%

Blue square

80%

Blue square Real Estate

1. Rosebud Real Estate (hereafter "Rosebud") is an Israeli group currently mostly held by The Biran I Wicssman Group and Mr. Ben Sira, which have taken control in 2002. Since then, Rosebud has become a leader in real estate investment and development with an impressive track record of added value to shareholders. Globes, Israel's leading business newspaper, named Rosebud Real Estate Ltd. as one of the top public real estate companies of 2007.

2. Rosebud is a significant real estate arm of the Biran I Wicssman Group, a leading Israeli investment group with major holdings in the energy, retail, and real estate sectors. The total market value of the group's listed companies is over EUR 900 million, with an annual turnover exceeding €5.5 billion. The major holdings of the Biran I Wicssman Group arc:

Alon USA Energy, Inc. (NYSE: ALJ) owns and operates 5 sour and heavy crude oil refineries in Texas, California, Oregon and Louisiana, with an aggregate crude oil throughput capacity of approximately 255,000 barrels per day. Alon USA is the second largest asphalt producer west of the Mississippi River. The company operates approximately I , 100 branded FINA gasoline stations and is the largest licensee of 7-Elcvcn with 300 convenience stores.

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Dor Alon (TASE: DRAL) is the fourth largest gasoline chain in Israel with 160 stations and convenience stores. Dor Alon is a major player in the liquid petroleum gas (LPG) market and is the exclusive importer and leading distributor to the industrial, institutional, and private sectors.

Blue Square (NYSE: BSI and TASE: BLSQ) is the second largest retail company in Israel with approximately 200 supennarket stores.

3. The Group is known in Eastern and Western European real estate markets for its expertise in identifying investment opportunities, investment appreciation, and real estate projects development. Over the past 3 years, Rosebud has been doing business in Gcnnany, France and Switzerland, mainly in the acquisition, leasing, and capital appreciation of more than 450,000 square meters of commercial and residential properties that have stable cash flows with reputable covenants. The Company has also launched a development project in Romania on which more than 250,000 square meters of commercial and residential properties will be constructed, and has realized investments in France and the USA.

4. Rosebud is present in Luxembourg with several holding companies held by PEPP 2 Luxembourg Sari, ie EDF 1 Sari, Pessac Sari, Meylan Sarl, La Boisse Sarl, Rosebud Investments Sari and PEPP 1 Sari (the latter held at 12%, the remaining 78% are held directly by Rose BV).

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Appendix 2

Simplified chart of the group

Rosebud Real Estate Projects (2005) Ltd.

(Israel)

Rosebud Real Estate Ltd.

(Israel)

I

Rosebud Properties (Eruope) Ltd.

(Israel)

··-·-·- ·-·-·-·-·-·-·- ·-·-·-·-·-·-·-· Rose Real Estate

B.V. (N.L.)

.-------"----. Kamola B.V.

(N.L.)

I

I

I

I

. -I •

EUR 14.7 mio

I ..

• ' ·, EUR 14.7 mio '---------' I

I ' '

EUR 6.2 mio

-----r---...._

I PEPP2 S.A. GRAD B.V.

I

I

I

I

I

(Luxembourg) (N.L.)

; . - . -·- ·-. - . -{-·- . - · - . -· - . -· - ·-· -1-----_...,._~'---------1 I I

I I -, .

_ - -·"EuR6.2mio · -·-·-·-·-·~- -·-·-·-·-·~ -·-·-·-· ·-....

New BclCo (Belgium)

!. . - · - ·-

'

I

Luxembourg Sari subsidiaries

I

-PEPP IS.A.

(Luxembourg)

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Appendix 3

Participation exemption regime

l. Participation exemption regime for dividends received

Dividends received by a Luxembourg fully taxable resident company should, in principle, be subject to corporate income tax and municipal business tax at the aggregate rate of 28.59% for the year 2009 (for Luxembourg city), potentially reduced to 25.5% in future years.

However, Article 166 of the LlTL provides for the exemption of the dividends if the following conditions are fulfilled:

(1) the distributing company is:

and

a collective entity falling under article 2 of the amended version of the Parent I Subsidiary Directive; or a Luxembourg resident joint-stock company, which is fully taxable and does not take one of the forms listed in the appendix to the paragraph I 0 of article 166 LITL; or a non-resident joint-stock company that is fully liable (in its state of residence) to a tax corresponding to Luxembourg corporate income tax;

(2) the beneficiary company is:

and

a Luxembourg resident collective entity, which is fully taxable and takes one of the forms listed in the appendix to the paragraph 10 of article 166 LITL; or a Luxembourg resident joint-stock company, which is fully taxable and does not take one of the forms listed in the above-mentioned appendix; or a domestic permanent establishment of a collective entity falling under article 2 of the amended version of the Parent I Subsidiary Directive; or a domestic permanent establishment of a joint-stock company that is resident in a State with which Luxembourg has concluded a double tax treaty; or a domestic permanent establishment of a joint-stock company or of a cooperative society which is a resident of a EEA Member State (other than a EU Member State);

(3) at the date on which the income is made available, the beneficiary has been holding or undertakes to hold, directly, for an uninterrupted period of at least 12 months a participation in the share capital of the subsidiary of at least 10% or with an acquisition price of at least EUR 1.2 million. lf the participation is held through a tax-transparent entity falling under § 1 of article 175 LITL, this will be regarded as direct participation proportionally to the interest held by the Luxembourg holding company in the tax-transparent entity.

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A further benefit of the system by comparison with the one applicable in other countries is the ability to deduct related expenses (e.g. interest charges incurred in financing the shares). Ncvct1hclcss, according to the general principle in LITL which denies the deductibility of expenses connected to exempt income, any expenses incu1Tcd during the year in which a dividend is received and which are connected to the exempt participation may only be deducted insofar as they exceed the exempt dividend for the year in question.

Additionally, if a write-down in the value of the participation has been booked as a consequence of the distribution of dividends, this write-down will not be deductible up to the amount of the exempt dividend.

2. Par ticipation exemption regime on capital gains

Capital gains realised by Luxembourg fully taxable resident companies on the disposal of shareholdings should in principle be subject to corporate income tax and municipal business tax at the aggregate rate of 28.59% for the year 2009 (for Luxembourg city), potentially reduced to 25.5% in future years.

However, the Grand-Ducal decree of 21 December 2001 for the application of Article 166 of the LITL provides that capital gains realised from the disposal of shareholdings are tax exempt if the following conditions arc fulfilled:

( l) the subsidiary is:

a collective entity falling under article 2 of the amended version of the Parent I Subsidiary Directive; or a Luxembourg resident joint-stock company, which is fully taxable and does not take one of the forms listed in the appendix to the paragraph l 0 of article 166 LJTL; or a non-resident joint-stock company that is fully liable (in its state of residence) to a tax corresponding to Luxembourg corporate income tax;

(2) the beneficiary company is:

and

a Luxembourg resident collective entity, which is fully taxable and takes one of the forms listed in the appendix to the paragraph 10 of article 166 LITL; or a Luxembourg resident joint-stock company, which is fully taxable and does not take one of the forms listed in the above-mentioned appendix; or a domestic pcnnanent establishment of a collective entity falling under article 2 of the amended version of the Parent I Subsidiary Directive; or a domestic pennanent establishment of a joint-stock company that is resident in a State with which Luxembourg has concluded a double tax treaty; or a domestic permanent establishment of a joint-stock company or of a cooperative society which is a resident of a EEA Member State (other than a EU Member State);

(3) at the date on which the alienation takes place, the beneficiary has been holding or undertakes to hold the respective participation for an uninterrupted period of at

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least 12 months, and during this period the participation held does not fall below l 0% or an acquisition price of less than EUR 6 million. If the shares are held through a tax-transparent entity falling under § 1 of article 175 LITL, this requirement must be fulfilled not by the tax transparent entity itself, but by the beneficiary, proportional to the interest held by the latter in the tax-transparent entity.

A recapture system exists, under which the exempt amount of the gain is reduced by the sum of expenses connected with the participation (such as financing cost and write-downs in the value of the participation), to the extent that they have reduced the taxable base of that year or previous years. Basically, an effect of this rnle is that the capital gain realised wi ll become taxable up to the amount of the aggregate expenses and write-downs deducted during the respective and previous years in relation to the participation.

The purpose of the system is to avoid the taxation vacuum which could result if the deductibility of expenses and write-downs connected to the participation was to be allowed whereas the income arising from the participation was to be tax exempt.

NB: Whereas this system is (in the worst case scenario) tax neutral from a direct tax perspective, this might not necessarily be the case with respect to the contribution to the Chamber of commerce. The basis for the computation of the Chamber of commerce fee is indeed, to date, the taxable result before carry forward losses.

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3. Participation exemption regime for net wealth tax

Resident companies in Luxembourg are subject each year to net wealth tax, at the rate of 0,5%, assessed on I January of each year on the basis of the net operating assets, determined in accordance with the Property and Securities Valuation Act (hereafter the "Act").

Paragraph 60 of this Act provides that certain participations may be excluded from the net operating assets as long as:

(1) the subsidiary is:

a collective entity falling under article 2 of the amended version of the Parent I Subsidiary Directive; or a Luxembourg resident joint-stock company, which is fully taxable and docs not take one of the forms listed in the appendix to the paragraph 4 of §60 of the Act (sec enclosure); or a non-resident joint-stock company that is fully liable (in its state of residence) to a tax corresponding to Luxembourg corporate income tax.

(2) the holding company is:

and

a Luxembourg resident collective entity, which is fully taxable and takes one of the forms listed in the appendix to the paragraph 4 of §60 of the Act; or a Luxembourg resident joint-stock company, which is fully taxable and docs not take one of the forms listed in the above-mentioned appendix; or a domestic permanent establishment of a collective entity fall ing under article 2 of the amended version of the Parent/ Subsidiary Directive; or a domestic permanent establishment of a joint-stock company that is resident in a State with which Luxembourg has concluded a double tax treaty; or a domestic pemrnnent establishment of a joint-stock company or of a cooperative society which is a resident of a EEA Member State (other than a EU Member State);

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(3) the direct participation held represents at least 10% of the share capital of the subsidiary or has an acquisition price of at least EUR 1.2 million at the end of the operational year preceding the key date for the determination of the taxable base of the company for net wealth tax. If the participation is held through a tax­transparent entity falling under § 1 of article 175 UTL, this will be regarded as direct participation, proportionally to the interest held by the Luxembourg holding company in the tax-transparent entity.

In the case where the participation is exempt from net wealth tax in application of the above mentioned mies, the debts contracted for the financing of the participation are not deductible for the purpose of the calculation of the taxable base for net wealth tax.

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LE GOUVERNEMENT DU GRAND- DUCHE DE LUXEMBOURG Administration des contributions dircctes

Bureau d'imposition

Societes 6

For the attention of Sarni Douenias PricewaterhouseCoopers 400, route d'Esch B.P. 1443 L - 1014 Luxembourg

Companies involved : PEPP 2 SA (Project Rosebud). - Tax number 2005 2228 957

December 16, 2009

Dear Sir,

Further to your letter dated December 16, 2009 and referenced CEED/Q6709003M-SAD relating to the transactions that the group Rosebud Real Estate. would like to conduct, I find the contents of said letter to be in compliance with current tax legislation and administrative practice.

It is understood that my above confirmation may only be used within the framework of the transactions contemplated by the abovementioned letter and that the principles described in your letter shall not apply ipso facto to other situations.

18, rue du Fort Wedell

Luxembourg

Tel.: (352) 40.800-3118

Fax: (352) 40.800-3100

Adresse postale

L-2982 Luxembourg

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