June 2014

ACUM Ltd. – Articles of Association
as amended at a special general meeting of members held on March 30th 2014

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Table of Contents

Chapter One – General
1. Introduction
2. Private Company
3. Company objects
4. Limit of Liability
4a. Compliance with the terms set out by the Restrictive Trade Practices Tribuna

Chapter Two- Company Share Capital
5. Share Capital
6. Rights Attached to Each Class of Shares
7. Rights Awarded to Each Class of Shares
8. Criteria for Share Issue
9. Handling Copyright of Members or Affiliated Foreign Societies/Companies
10. Transfer of Rights to the Company
11. Restriction of Assignment of Rights in a Work
12. Inheritance Share
13. Expiry of Membership in the Company
14. Issue of Other Shares and Securities
15. Calls for Payment
16. Company Shareholder Register and Issue of Share Certificates
17.Trustee as Shareholder
18.Transfer of Company Shares

19. Bearer Share Certificates
20. Lien on Shares
21.Alteration of Share Capital

Chapter Three – General Meeting
22. Powers of the General Meeting
23. Annual, Extraordinary and Class General Meetings
24. Convening General Meetings
25. Agenda at the General Meeting
26. Deliberations at General Meetings
27. Member’s Votes
28. Minutes of the General Meeting

Chapter Four – The Board of Directors
29.Qualification of directors
29a Non-executive directors
30. Compositions of Board of Directors
31. Honorary Members of the Board of Directors
32. Officers in the Board of Directors
33. Powers of the Board of Directors
33a The Council
34. Election of Directors and Their Period of Office
35. Election proceedings for directors
36. The Election Committee
37. Termination of a Director’s Office
38. Proceedings of the Directors
39.Convening a meeting of the Board of Directors
40.Summoning a meeting of the Board of Directors
41.Agenda for meetings of the Board of Directors
42.Quorum for meetings of the Board of Directors
43.Company Rights of Signature and Power of Attorney On Its Behalf
44.Directors’ Powers with regard to expenses
45.Support Fund
46.Minutes of the Board of Directors
47.Company’s Registered Office
48.Board of Directors’ Committees
49. Other committees
50.Inspection Committee
51.Arbitration and Appeal Committee
51a Arbitration and Appeals Committee

Chapter 5 – Company Officers who are not Directors, Auditor
52.General Manager
53.Secretary and Other Officers in the Company
54.Company’s Auditor

Chapter 6 – Distribution of Royalties
55.Financial Regulations
56.Acum Member Welfare Fund

Chapter 7– Officers’ Insurance, Indemnification and Waiver of Liability
57.Officers’ insurance
58.Indemnification of Officers
59.Waiver of liability

Chapter 8– Dissolution and Reorganization of the Company
60.Dissolution
61.Reorganization of the Company

Chapter 9– Miscellaneous
62. Accounts
63. Notices

Chapter 1 – General

1. Introduction

1.1 Each of the words below shall have the meaning appearing opposite it below:

Affiliated Foreign Company or Society

Each of the Societies or companies in other countries whose objects are similar to those of the Company, affiliated with the Company from time to time.

Stage Performance

Public performance of dramatic or musical-dramatic works, as defined below, performed live on stage using means such as: acting, dance, direction, costumes, sets, all or any of the above.

In writing

In writing or printed, or part in writing and part printed.

Shareholder

Anyone registered as a shareholder in the Company’s shareholder’s register.

Financial statements

Balance sheets, statement of profits and loss, reports on changes in equity capital and cash flow reports, including the explanations thereto.

Law

The provisions of any law applicable in the State of Israel.

Director

Non-executive director

Making available to the public

As defined in section 1 of the Companies Act, including alternates and authorized representatives.

A– Non-executive director as set forth in section 29a of these Articles.

Doing an act in respect of a Work, so that the public will have access thereto from a place and at a time of their choosing

The Council

The Company’s Board of Directors sitting together with the substitute directors.

Public Performance Right

Including, the right to publicly perform any works from the Company’s repertoire anywhere in the world, using any means and any form, using methods known today or developed in future, including radio and television broadcasts, save for exceptions named below; the right does not include the right to perform or to authorize complete or partial stage performance of dramatic works and dramatic-musical works.

Synchronization Right

The right to reproduce a musical or literary work on a soundtrack of an audio-visual work, for any purpose, including for use on a computer or any other use existing today or to be developed in future, but not including any of the following:

(1) Reproducing a dramatic or dramatic-musical work in full or any material parts thereof, however, reproducing musical works, with or without words, separately – is included in the right of synchronization.

(2) Reproducing a literary work developed for a screenplay;

(3) Reproducing a work authored especially for the audio-visual work, save reproduction of a musical composition especially composed as stated, with or without the words of the soundtrack, for public distribution of tapes or other devices; however, for a musical composition ordered for broadcasting only, the right to reproduce for the purpose of producing tapes or other devices designated for public distribution belongs to the Company.

Reproduction Right

The right to reproduce works or any part thereof, in their original form or after processing and editing, using any means or form, after at least one edition of such a work has been printed and published.

Right to reproduce shall not apply when the reproduction in question is of a novel or play in full, a collection of works all by the same author, and/or of any musical composition in full which is not a melody with or without words only.

Rental Right

The right to loan or rent a recorded copy of any work for commercial purposes.

Recording Right

The right to record compositions using means existing today or to be developed in future, including sound recording or picture recording with sound, including reproduction of works.

Broadcasting Right

The right to transmit and distribute sound or pictures or a combination of sounds and pictures to the public, whether through land line, wireless or in any other form, existing today or to be invented or used in future, including television broadcasts, internet transmissions and broadcasts where a person transmits another person’s broadcast, simultaneously with the other person’s broadcast.

Holder of Inheritance Share

The heir of a deceased member who comes in place of the member.

Membership for Israel Only Share

An author who is not a resident of Israel, or a publisher whose main office is not located in Israel, and is a member of one of the Associated Societies and has transferred all his rights to the Company, at least with regard to the State of Israel; and an Israeli resident who the Board of Directors has resolved, at its exclusive discretion, to accept as a member for Israel only.

The Companies Act

The Companies Act, 5759 – 1999.

The Securities Act

The Securities Act, 5728 – 1968.

Business Day

Sundays to Thursdays, except official and national holidays in Israel.

Work

A work which the Company holds copyright for, or is under the Company’s supervision, and is set forth in the royalties distribution table as set from time to time.

Audio-Visual Work

Including a work made up of a series of pictures related to each other, and accompanying sound if any, designated to be presented by appropriate instruments.

Dramatic and Dramatic-Musical Works

(“Big Rights”) in these Articles means:

Works such as operas, plays, audio-visual shows, musicals, pantomimes and ballet with performance time of 20 minutes at least, having no more than four composers, where the words and/or music from which the work is made up were composed especially for such work.

Writing

Print or any other form of printing of words, including documents, transferred in writing by facsimile, telegram, telex, electronic mail, computer, or through any other means of electronic communication, creating or allowing the creation of a copy and/or printout of the document.

Music Publisher

Any publisher whose main area of business is publication and/or distribution of music and lyrics of a variety of composers.

Composer

Including a person who adapts any musical composition.

Royalties Distribution Table

The table established by the Board of Directors from time to time, for the appraisal of works through a number of points of distribution of royalties between members and between partners in copyright. Wherever the term “table” or “work appraisal table” appears in these Articles – reference is to the “Royalties Distribution Table”.

Office

The Company’s registered office.

Securities

Shares, debentures, capital bills, convertible bonds and certificates, awarding rights to such securities, issued by the Company.

Writer

Including a person who adapts, translates or authors a work of literature.

New Immigrant

Any person holding a lawfully issued Oleh Certificate.

The Companies Ordinance

The Companies Ordinance [New Version], 5733 – 1983.

Special Majority

Special majority of the board of directors

A majority of three quarters at least of votes of Shareholders present at the shareholders meeting having the right to vote.

A majority of at least three quarters of the members of the board serving at such time on the board of the company.

Simple Majority

Simple majority of the board of directors

A majority of Shareholders who are present at the shareholder meeting and who are eligible to vote

A majority of members of the board of directors present at the board of directors meeting.

Acum’s Repertoire

Includes:

All works for which rights have been assigned to Acum, by a deed of assignment under Article 10 herein; and all works in which the Company is authorized to enforce copyright with regard thereto from time to time, by virtue of agreements with affiliated Societies, by virtue of agreements with other bodies or persons, or in any other manner.

Broadcast

Including television broadcasts, transmission by internet and any transmission of sounds or pictures or of both together, using any technology or any other form whatsoever, whether existing today or to be developed or used in future

Articles

The Company Articles as set forth herein, or as modified, whether explicitly or by law.

Company Regulations

Regulations issued by virtue of the Companies Act.

Securities Regulations

Regulations issued by virtue of the Securities Act.

Words of the singular number shall include the plural, and vice versa.

Words of the masculine gender shall include the feminine.

Words of persons shall include legal bodies.

The provisions of Sections 3-10 of the Interpretation Act, 5741 – 1981 shall apply, mutatis mutandis, with regard to interpretation of these Articles in the absence of any other provision in respect thereof, and provided that such application is not inconsistent with any matter provided for herein.

Words or expressions not defined in this Article shall be interpreted as provided in the Companies Act, and if no interpretation is provided in the Companies Act, then such word or expression shall be interpreted as provided in the Securities Act, and if such word or expression has no such interpretation, such term shall be interpreted as provided in any other Act, unless such interpretation be contrary to the written subject matter or to the content thereof.

If these Articles refer to any provision of the Companies Act, and such provision or regulation has been annulled, the original provision mentioned shall be deemed to have effect, as if such were part of these Articles, unless prohibited by law.

2. Private Company
The Company is a private Company, as defined in section 1 of the Companies Act.

3. Company objects
The Company shall deal in all legal dealings.

4. Limit of Liability
The liability of the members is limited, each to the payment of the amount such member undertook to pay for the shares allotted at the time of allotment. The liability of members who were members of the Company limited by guarantee only shall be NIS 1 only.

4A. Compliance with the terms set out by the Restrictive Trade Practices Tribunal

These Articles are subject to “the terms for the activity of ACUM” as approved by the Restrictive Trade Practices Tribunal (in these Articles: “the Terms”) as they may be from time and these Articles shall be interpreted in accordance with the Terms).

Chapter Two – Company Share Capital
5. Share Capital
5.1 The Company’s registered share capital is 39,000 shares of 1 NIS each, divided into:

5.1.1 9,600 ordinary shares of 1 NIS each.

5.1.2 9,600 participation shares of 1 NIS each.

5.1.3 9,600 royalty shares of 1 NIS each.

5.1.4 200 honorary shares of 1 NIS each.

5.1.5 600 membership for Israel only shares of 1 NIS each.

5.1.6 9,500 inheritance shares of 1 NIS each.

6. Rights Attached to Each Class of Shares

6.1 The rights attached to all types of shares are as set forth in Article 7 below.

6.2 No Company shareholder shall hold more than one share.

6.3 Transfer of shares shall be carried out only in accordance with the provisions of these Articles.

6.4 A shareholder shall not be entitled to hold more than one ordinary share in the Company. A person who controls a corporate body which holds a share in the Company and is entitled under these Articles to a further share, this further share shall be a royalty share. This provision shall apply to an officer in such a body corporate.

If at the time of introducing this Article, a shareholder holds more than one ordinary share, the share that was allotted later than the other one shall be converted into a royalty share. When a shareholder ceases to be the holder of an ordinary share, the royalty share shall be converted into an ordinary share, provided that it was such a share in the past.

7. Rights Awarded to Each Class of Shares

7.1 A holder of an ordinary share has the following rights:

(1) To receive invitations, participate and vote at the General Meetings.

(2) To elect and be elected to the Company’s organs.

(3) The right to royalties.

(4) Every ordinary shareholder has one vote for each share held.

7.2 A holder of a participation share has all rights held by a holder of an ordinary share, expect for the right to elect and be elected to the Company’s organs and except for the right to vote at the General Meeting.

7.3 A holder of a royalty share has the right to receive royalties for use of his works only. A royalty share does not award any other rights.

7.4 A holder of an honorary share has only the right to receive invitations to General Meetings, and to receive any material distributed to Company members.

7.5 A holder of a membership for an Israel only share has only the right to receive royalties as the board of director resolves.

7.6 A holder of an inheritance shares has the right to royalties only.

7.7 No share other than an ordinary share awards any rights whatsoever regarding any settlement with the Company or the right to convene a class shareholders meeting.

7.8 The provisions of these Articles regarding shares shall apply, mutatis mutandis, with regard to other securities if and so far as any such securities are issued by the Company.

7.9 The Company has the power to purchase and/or redeem its shares in accordance with the provisions of these Articles and the Companies Act.

8. Criteria for Share Issue

8.1 (A) Dealing with a candidacy for share purchase allotment:

The Company Board of Directors shall deal with an application for issue of a share submitted by a composer and/or a writer, citizen or permanent resident of Israel, or by a limited company in which such aforesaid composer and/or writer is the sole shareholder and sole director; or a publisher who is a citizen or permanent resident of Israel; or a corporation duly registered in Israel, after such has submitted applications to the Board of Directors using the forms customarily used from time to time by the Company, and has filled out all information required by the Board of Directors.

(B) The Company’s Board of Directors may provide for a detailed procedure for submitting an application for the transfer of the share of a member who is a composer and/or writer, citizen or permanent resident of Israel, to a limited company in which he is the sole shareholder and sole director (such a company shall hereinafter be referred to as: “a sole member company”, and the sole shareholder in the company shall be referred to as: “the sole shareholder”).

All such applications shall be submitted according to the aforesaid procedure.

(C) A Sole Member Company shall be entitled to assign to the Company by a deed of assignment the copyright in works created by its sole shareholder only.

(D) When a sole shareholder dies, the following provisions shall apply:

(1) The share held by the sole shareholder shall become a deferred share, awarding its holder only the right to receive 1 NIS upon dissolution of the Company;

(2) The heir or heirs of such deceased sole shareholder may ask the Company to issue to him or to them an Inheritance Share, and the provisions of Articles 8.11 and 12.2 shall apply.

8.2 The Company’s Board of Directors shall deal with an application by a music publisher for an allotment of a share only if the applicant is a physical person, or a duly incorporated corporation, after the publisher has attached ten small works (such as songs or musical pieces) of at least five different composers, Company shareholders, or two large works (with or without words) of two different composers, Company shareholders, which works have been published by the applicant in a printed, finished graphic form or a recording, for commercial distribution, and provided further that contractual engagement has been made by the applicant with those Company shareholders. A work authored by the music publisher himself shall not be taken into account.

8.3 Notwithstanding the aforesaid in Article 8.2 above, the Board of Directors shall also deal with an application for allotment of a share submitted by a music publisher who publishes only its own musical works and/or works authored by him together with others, if in the opinion of the Board of Directors there is justification for such an allotment. A share allotted under this Article shall be a Royalty Share, which may be converted into another share if the conditions prescribed in Article 8.2 above are fulfilled.

8.4 When dealing with a share allotment in the Company, the Board of Directors may also take into account a candidate’s income from royalties, and any other factors from the point of view of the Company objects and management.

8.5 A candidate may submit an application for a Company share as stated in Article
8.8 below. An Application is to be submitted to the Company’s Board of
Directors in writing, in the form decided upon by the Board of Directors from
time to time. If and insofar as the Company’s Board of Directors approves the
application, the applicant hall be allotted a share of the class the Board of
Directors resolves upon, beginning as of the date given in the certificate. The
Board of Directors shall deliberate and resolve from time to time the conversion
of a share of a certain class to another class, according to the circumstances of
each case. A shareholder who believes he is entitled to convert his share to
another class of shares, according to criteria set forth from time to time by the
Board of Directors, may apply to the Arbitrator, whose decision shall be final.
Inheritance Shares , Membership for Israel Only Share and

Honorary Shares are not convertible.

8.6 The Board of Directors is not obligated to announce its grounds for rejecting a candidate’s application for share allotment.

8.7 If a candidate’s application for share allotment is rejected by the Board of Directors, the candidate may appeal to the Arbitrator; a candidate whose appeal is rejected by the Arbitrator shall not have the right to any other appeals.

8.8 Any person who fulfills the conditions for allotment of a share, as set forth in these Articles, may submit an application for share allotment (“Share Application”), subject to the Articles’ limitations regarding the class of share.

8.8a. The board of directors may establish from time to time criteria for the determination of those eligible to be allocated a share of the company or conversion of a share held by a shareholder into another share. Approval and the determination of the criteria shall be adopted by the board of directors by a special majority vote.

8.9 The majority required for a resolution of share allotment or conversion

A resolution regarding allocation of any share in the Company, including a resolution regarding the conversion of any share into another class of share, shall be adopted by the board of directors by a simple majority, unless the allocation is not in accordance with the criteria that were established by the board in accordance with article 8.8a above, whereby the resolution will be adopted by a special majority of the board.

8.10 New Immigrants

A new immigrant who is a composer or writer may apply for membership as stated in Article 8.5 above, if he can in any way prove that he was a composer or writer in his country of origin, and a member of a Society of composers or writers.

A new immigrant who is the heir of a deceased composer or writer shall be allotted one Inheritance Share, if he can in any way prove that the deceased composer or writer was a member of a composers’ or writers’ Society in his country of origin. A member who is a new immigrant shall receive royalties for the use of his work, as if it had been first composed or published in Israel, even if any doubt exists regarding his status under Israeli law.

8.11 Inheritance Shares

The Board of Directors may allot an Inheritance Share also to the heir of a person who had been eligible to receive a share in the Company under the conditions set forth in Articles 8.1 to 8.10. If such an Inheritance Share is allotted, the provisions of Article 12 shall apply.

8.12 Honorary Shares

The Board of Directors may allot an Honorary Share to a person who is not a writer or composer, and has made a special contribution to the advancement of the objects of the Company or of the copyright or of works of art in Israel. A person to whom an Honorary Share is allotted shall give his consent to such allotment.

8.13 Membership for Israel Only Shares

The Board of Directors may, in special cases, and at its exclusive discretion, allot a Share For Israel Only. Such shareholder shall be entitled to royalties only, as the Board of Directors may decide. The provisions of this Article shall also apply to a company shareholder who has been accepted as a member of an affiliated Society and wishes to remain a shareholder in the Company with regard to his rights in Israel and in countries not given over to administration of the affiliated Society which such member joined.

8.14 A shareholder who ceases to be an Israeli resident, as mentioned in Article 8.13 above, and who received an approval as stated in Article 8.13 above, and later returns to Israel as a resident, shall not continue to benefit from rights under the aforementioned Article 8.13, and must decide whether he desires to continue holding a share in Acum. If such a member decides to continue holding a share in Acum, he must resign from any other foreign Society within one year of his return to Israel, and assign all rights throughout the world to Acum.

8.15 Subject to the provisions of Article 8.13 above, a shareholder who is a resident of Israel may not hold shares in both Acum and other Societies abroad, save in such cases where the shareholder has been given notice under Article 9.3 below, or by approval of the Board of Directors.

8.16 Employment in the Company

A Company employee who is a composer and/or writer may hold a Royalties Share only. A holder of a Participation Share or an Ordinary Share who desires permanent employment with the Company shall not be accepted unless he agrees to the conversion of his share to a Royalty Share. If the shareholder has ceased employment with the Company, his Royalty Share shall be converted to a share of the class he held before he was accepted as a Company employee.

8.17 A Body Corporate as a Shareholder

If a person or a number of persons are controlling members of a company limited or of any lawfully incorporated body, have been accepted as Company shareholders as music publishers, and have founded a new company limited or new business in which that same person or persons control also the new Company or the new business, the Company may accept the new company or the new business as a shareholder in Acum as a music publisher, provided it fulfills the conditions of the provisions of Article 8.2, and further provided it receives only a Royalty Share.

8.18 Limited companies or other businesses which are music publishers, who have been accepted as royalty shareholders, and are under the control of one person or a number of persons, shall remain royalty shareholders at all times, save for one of the aforesaid limited companies or businesses, which may receive another class of share, subject to the provisions of these Articles.

8.19 A person or a body corporate who is an agent or an exclusive representative of a publisher who is a member of a Foreign Affiliated Society may be entitled to a Royalty Share only.

8.20 If a publisher who holds an ordinary share ceases to comply with the conditions required under these Articles for the allotment of shares under Article 8.2, the Board of Directors shall decide to convert his share to a Royalty Share.

9. Handling Copyright of Members or Affiliated Foreign Societies/Companies

9.1 The Company is entitled by authorization of a foreign Society to administer its copyright in works in a manner even more comprehensive than that defined in these Articles.

9.2 The Company is entitled to accept authorizations from owners of copyright in the areas the Company deals with who are not shareholders in the Company, including from owners of performance rights and act in accordance therewith.

9.2A Notwithstanding what is stated in the Deed of Assignment, the Board of
Directors may, at a meeting at which all members of the board are present,
by a special majority of the board, decide that the Company shall or shall
not administer a specific right or rights of those which are included in the
Deed of Assignment (hereinafter: “the Rights”).

9.3 In special cases, the Company may at any time notify any shareholder in writing, even after receiving shareholders’ notice under Article 10.4, that it shall not administer all or any part of the rights assigned to the Company in a particular work or works which the shareholder wrote, composed or published.

9.4 Shareholders may notify the Company in writing that they personally shall administer public performance rights in a particular show, provided that at least 95% of the works played at such a show were written by that shareholder. If a shareholder has so notified the Company, including giving details of the works, the Company shall not handle the performance rights with regards to that shareholder’s works at that show, unless the Board of Directors has otherwise resolved.

“Show” in this sub-article shall mean public performance of protected works.

10. Transfer of Rights to the Company

10.1(A) Simultaneously with and as a condition of allotment of any share, a candidate must sign a deed of assignment in the form prescribed from time to time by the Board of Directors. The deed of assignment, signed by the candidate, shall be interpreted in accordance with these Articles, as they are from time to time.

10.1(B) A shareholder shall assign the following rights to ACUM in the Deed of Assignment: public performance, broadcasting, recording, synchronization, reproduction and making the Work available to the public. This with regard to musical works and literary works.

Any shareholder of the Company is entitled to notify the Company that he wishes to administer certain rights or certain works by himself (hereinafter: “Exclusion”), such Exclusion to be in accordance with the Terms. In the absence of any Terms, the Exclusion shall be subject to a decision of the Board of Directors.

10.2 The Deed of Assignment shall not apply to dramatic works and dramatic-musical works (hereinafter in this Article: “Grand Rights”), except for the purpose of recording, broadcasting on the radio and television, and performance of non-stage performances.

10.3 If a shareholder has chosen to assign Grand Rights to the Company, the Company may accept and administer them, in the same manner as any other right assigned to it.

10.4 A shareholder must notify the Company once per every time period as determined by the Board of Directors, of any new work authored by him, using the form prescribed by the Board of Directors. The Company may refuse to include any work not so notified to the Company as a work eligible for distribution of royalties.

10.5 The provisions of Article 10.4 shall apply mutatis mutandis with regard to publishers in respect of any work in which such publisher received publishing rights.

10.6 The Company has the right to demand that a shareholder sign an additional deed of assignment worded as prescribed from time to time by the Board of Directors, and a shareholder is obligated to sign such additional deed of assignment upon the Board of Directors’ demand.

10.7 If a shareholder has not signed such deed of assignment within 30 days of the date on which the deed of assignment was sent for signing, the Board of Directors may delay making any payment to this shareholder, until the fulfillment of the aforesaid obligation under Article 10.6 above.

11. Restriction of Assignment of Rights in a Work

11.1 No shareholder shall assign or use rights he has assigned to the Company, unless he has received in advance the Company’s written permission to do so.

11.2 Subject to the provisions of Article 10.1, a shareholder may not engage under any contract under which he writes or is obligated to write or author a work for an employer who is not a Company shareholder, unless the contract explicitly states that the shareholder’s rights in the work shall be assigned to the Company. A shareholder engaging under such aforesaid contract must notify the Company of such engagement within 30 days of signing.

12. Inheritance Share

12.1 Upon the decease of a shareholder and subject to the provisions of this Article, the Board of Directors shall allot an Inheritance Share to the heir or heirs of the deceased shareholder (in this Article “the Deceased”). The Deceased’s share shall be cancelled simultaneously with the allotment of the Inheritance Share.

If the heir or heirs of the Deceased pass away, the provisions of this Article and Articles 12.4A and 12.4B hereunder shall apply mutatis mutandis.

12.2 The Deceased’s heir or heirs shall submit to the Company an application for the allotment of the Inheritance Share to them. The application shall be made in writing, and a certified copy of the inheritance order in respect of the Deceased’s estate or probate of the Deceased’s will, as the case may be, shall be attached thereto.

12.3. The Board of Directors, upon receiving such application and being satisfied that the applicant or applicants are indeed the Deceased’s heirs, shall allot the inheritance share to him or them, as the case may be.

12.3.A If upon decease of a shareholder no application for allotment of the Inheritance Share is submitted within three years from the date of decease (hereinafter in this article: “the effective date”), as prescribed in Article 12.2, the deceased’s share shall be cancelled, or will become a deferred share, if for some reason the share could not be cancelled, and the provisions of Article 13.1.4 will apply, mutatis mutandis, unless the Board of Directors decides, upon its sole and absolute discretion to postpone the date of the cancellation of the share to another date, which will be decided by resolution of the Board of Directors, and the Board of Directors will announce its grounds in its minutes.

12.4 During the period from the day of Deceased’s death until the date of allotment of the Inheritance Share to the Deceased’s heir or heirs, as prescribed in Article 12.1, or until the date of the cancellation of the Deceased’s Share, as prescribed in Article 12.3A, whichever is earlier, the Company shall continue to administer and enforce all the rights assigned to the Company by the Deceased, in order to ensure the rights of the heirs. After the allotment of the Inheritance Share, all the monies accrued to the heirs during the period from the day of Deceased’s death until the date of allotment of the Inheritance Share, will be transferred to the heirs.

12.4A The Board of Directors shall deal with any application of any or some of the Deceased’s heirs (hereinafter: the “Heirs”) to allot the Inheritance Share to a limited company (hereinafter: the “Heirs’ Company”), provided that:

(A) Only the Heirs, one or more of them shall be the shareholders and directors of the Heirs’ Company;

(B) Only the works authored by the Deceased shall be registered in the name of the owners of an Inheritance Share – physical people and/or a limited company.

The Board of Directors may provide for a detailed procedure for filing an application for allotment of an Inheritance Share to an Heirs’ Company. All such applications shall be submitted to the Company in accordance with such aforesaid procedure.

12.4B Notwithstanding any provision in these Articles, the Board of Directors may deal with and decide on a written application of the holder of an Inheritance Share, to transfer the share or any part thereof to his relative. The Board of Directors may set up a detailed procedure for the submission of such an application.

For the purpose of this Article: a “relative” as defined in the Companies Act 1999.

12.4C In case the Deceased’s Share is cancelled, as prescribed in Article 12.3A, the Company will act with the monies accrued to the heirs of the Deceased, according to the law.

12.5 The rights of a holder of an Inheritance Share are as stated in Article 7.6 above.

13. Expiry of Membership in the Company

13.1 Subject to the provisions of Article 13.1.4 below, a shareholder whose share has been redeemed shall be entitled to the rights assigned by him to the Company and the nominal sum paid for the purchase of the share returned to him. A shareholder’s share in the Company shall be redeemed in the following cases:

13.1.1 Rights validity period

A shareholder’s membership shall terminate upon the expiration of the term of copyright in the shareholder’s works, in accordance with the provisions of the copyright law applicable at the relevant time.

If the law allows collection of royalties after this period, the Company may collect royalties for the purpose prescribed by law.

13.1.2 Expiry of shares and redemption shares

A shareholder may deliver a written notice to the Company notifying of his intent to resign from the Company. Such notice shall come into effect on 1st January of the year following the date of delivery of such notice, and the share shall expire at that time.

13.1.3 Upon receipt of such aforesaid written notice, the shareholder’s duty to notify the Company of works created shall cease from the date on which notice was given (as stated in Article 10.4 above), and the deed of assignment of rights given to the Company shall be cancelled, subject to the provision of Article 13.1.4.

13.1.4 The Company shall delete the name of the shareholder from the list of shareholders, and that shareholder’s repertoire of the works shall no longer be part of the Company’s repertoire; however, the rights shall remain a part of the Company’s repertoire until the expiration of a global license granted by the Company for the use of its repertoire; or until the termination of any pending legal proceedings involving the Company’s repertoire.

13.1.5 The account of a shareholder who has given such aforesaid notice and whose membership has been terminated shall be settled upon the Company’s first distribution of royalties to members immediately after 1st January in the year in which the shareholder’s membership terminated. The Company shall give the shareholder confirmation of the expiry of his share together with the final account.

13.1.6 Forced Termination

The Board of Directors may give any shareholder a written notice signed by the Chairman of the Board and the General Manager of the expiration of such shareholder’s share at the end of fourteen days from the date of notice (hereinafter in this Article: “Notice Period”). Upon termination of the Notice Period, such member shall be deemed to have given notice of his intention to resign from the Company, as prescribed in Article 13.1.2 above, and the provisions of Articles 13.1.3, 13.1.4 and 13.1.5 shall apply, accordingly.

13.1.7 A member who has filed an appeal to the Arbitrator during the notice period shall remain a shareholder in the Company until confirmation of the resolution by the Arbitrator.

13.1.8 Causes for Termination of Membership

The Board of Directors may, subject to Articles 63.8 and 63.9, redeem the share of any shareholder whose address is unknown and who has not been entitled to royalties for five consecutive years.

13.1.9 The Board of Directors may, in accordance with these Articles, redeem any Participation Share or any Royalty Share if the holder thereof was not entitled to any royalties from the Company for 10 consecutive years.

13.1.10 The Board of Directors may redeem, in accordance with these Articles, the share of any publisher who has ceased publishing activities or has assigned all copyrights in his ownership or copyrights he represented to another, or who has given the Company notice under Article 10.1 above, unless such activity has been renewed within two years of the time it ceased.

13.2 Additional Rights and Obligations

No provision herein shall restrict or preclude a shareholder from his right to administer his rights as he sees fit in any work not assigned to the Company under a deed of assignment, or in any work which the member was not required to assign under the provisions of these Articles.

13.3 A shareholder shall take no legal measures regarding any right assigned to the Company under a deed of assignment, in the event of breach of such right, unless the Company’s Board of Directors has approved such action.

13.4 A shareholder shall take no action which can harm the Company; a shareholder shall cooperate with the Company, its clerks and directors in order to ensure the fulfillment of these Articles and/or rules of procedure under Article 33.3 in order to promote the Company’s business, and shall provide reasonable assistance to the Company, its clerks and directors, towards the achievement of this goal.

13.5 In the event that a shareholder acts in breach of the provisions of a deed of assignment, the Board of Directors may reduce his royalties by a rate of up to forty percent of his latest annual income from the Company.

13.6 Without derogating from the provisions of Article 10.7, the Board of Directors may take measures against any shareholder who has done any act contrary to these Articles, including a disciplinary rebuke, warning, conversion of a higher class of share to a lower class, and may order such shareholder to indemnify the Company for all the damage caused to the Company as a result of such actions.

13.7 The Board of Directors shall not exercise its power under Articles 13.5 and 13.6 above until such shareholder has been summoned to a meeting of the Board of Directors in which his case is dealt with. If the shareholder does not appear at the Board’s meeting, having been summoned, and did not present a reasonable excuse for his absence, the Board may decide in the matter in his absence.

13.8 A special majority of the Board of Directors must vote in favor of any decision exercising the power under this Article. A shareholder may appeal a resolution of the board before the arbitrator within 14 days from the date he becomes informed of the resolution of the board.

13.9 Transitory Provision

Shareholders registered in the Company on December 30, 1958 are eligible for an ordinary share.

Shareholders registered in the Company on December 31, 1980 are eligible for a share according to their status on that date, and subject to the provisions of these Articles.

14. Issue of Other Shares and Securities

Public Issue

14.1 The Company shall not offer securities or bonds to the public.

14.2 The Company’s Board of Directors may issue Company shares up to the number of registered Company shares.

14.3 Subject to the provisions of these Articles, the Board of Directors may allot shares to such persons and of such class and under such conditions as it sees fit.

14.4 The Company’s existing shareholders shall not have any precedence, preference or any other rights to purchase Company securities. The Board of Directors may, at its exclusive discretion, offer Company securities first to all or some of its existing shareholders.

15. Calls for Payment

15.1 Upon the Company’s allotment of shares, shareholders shall pay the Company the sum of one (1) NIS for the share’s par value.

15.2 Shareholders shall not be entitled to dividends or shareholders’ rights unless they have paid all amounts set out in the calls for payment issued to such member, plus interest, linkage and expenses, if any, unless the Board of Directors has otherwise directed.

15.3 The Board of Directors may sell, re-allot or otherwise transfer any share forfeited in any manner resolved, with or without charge paid up or deemed paid up for the share.

15.4 The Board of Directors may revoke forfeiture at any time before the sale or any form of transfer of the forfeited share, under such conditions as it resolves. Any shareholder whose shares have been forfeited must pay the Company all calls for payment with regard to these shares not yet paid up before the forfeiture, notwithstanding the forfeiture, in the same manner as if the shares had not been forfeited, and must fulfill all other demands and requirements the Company had the right to enforce with regard to the shares up to the date of forfeiture, without deduction or reduction for the value of the shares on the date of forfeiture. The shareholder’s obligations shall be fulfilled only after the Company receives full payment as prescribed at the time of share issue.

15.5 The Board of Directors may collect calls for payment not paid up for all or some shares forfeited, as it sees fit, but shall not be obligated to do so.

15.6 Forfeiture of a share shall cause revocation of all rights in the Company at the time of forfeiture and any demands or claims towards the Company with regard to the share, save those rights and duties excluded under these Articles or granted or imposed by law to or on a former shareholder.

16. Company Shareholder Register and Issue of Share Certificates

16.1 The Company shall keep a register of shareholders, managed by the Company secretary, subject to the supervision of the Board of Directors.

16.2 A shareholder is entitled to receive one or a number of share certificates regarding all shares of a certain class registered in his name, free of charge, within two months of allotment or registration of a transfer (unless the terms of issue prescribe a different time period). Share certificates shall state the number of shares and the sum paid for such, and any other particulars deemed important by the Board of Directors. In the event of a share held jointly, the Company shall not be obligated to issue more than one share certificate for all the joint holders, and delivery of such certificate to one of the joint holders shall be deemed delivery to all.

16.3 Every certificate shall bear the signature or seal or printed name of the Company, and shall bear the signature of one director and of the Company secretary, or of two directors or of any other person appointed by the Board of Directors for this purpose.

16.4 The Company may issue a new certificate in place of a certificate issued and lost or defaced, with such proof and guarantees as the Company may demand, subject to payment of a sum prescribed by the Board of Directors.

16.5 Where two or more persons are registered as the joint holders of a share, each one may confirm receipt of a dividend or other payments in connection with that share.

17. Trustee as Shareholder

The Company shall not recognize a trustee as a shareholder, and shall not be required or obligated to recognize any right based on the rules of equity or any conditional right, or any future right, or partial right in a share, or any other right whatsoever with regard to any share, other than the registered owner’s absolute right in connection with any share, unless a judicial decision or a provision of the law requires the Company to recognize such right.

18. Transfer of Company Shares

Company shares are not transferable. The Company’s Board of Directors has the power to approve the transfer of a Company share in special cases and according to the provisions of these Articles, provided the person receiving the transfer is entitled under these Articles to a share of the class of the share being transferred.

18.1 The Company may demand a fee for the registration of a transfer, in such amount or at such rate as shall be fixed by the Board of Directors from time to time.

18.2 The Board of Directors may close the share register for a period of up to 30 days each year.

18.3 Upon the death of a Company shareholder, the Company shall recognize the guardian or administrator of the estate, executor of the deceased’s will and in the absence of such, the legal heirs of the shareholder, as the sole persons entitled to the inheritance share for the deceased shareholder’s share, after having proven entitlement to such, as prescribed by the Board of Directors, all subject to the provisions of article 12 above.

18.4 Any person who has acquired the right to shares by virtue of being a guardian, administrator of the estate, heir of a shareholder, receiver, liquidator or trustee in bankruptcy of a shareholder, or by virtue of any other provision of law, may be registered as the shareholder or, subject to the provisions of these Articles regarding transfer, transfer the share to another, after providing proof of rights as required by the Board of Directors.

19. Bearer Share Certificates
The Company shall not issue bearer shares, testifying that the bearer of such share is the holder of the rights set forth therein.

20. Lien on Shares
20.1 A shareholders may not pledge his share. To remove any doubt, and without derogating from the aforesaid, the Company shall be entitled to a first and paramount lien on all shares not paid up in full, which are registered in the name of any member, and also over the proceeds of sale thereof to secure payment of amounts (whether or not such payment has already fallen due) already called or to be called at a fixed time for such shares. The Company shall also have first charge on all shares (except for fully paid up shares) registered in the name of any member for securing payment of money due from such shareholder or from his property, whether such money is due from him only or together with any other person.

The foregoing charge shall apply to all dividends declared from time to time on such shares.

20.2 In order to enforce such charge and lien, the Board of Directors may sell the shares the subject of the lien, or any part thereof, in such manner as it sees fit. No share shall be sold unless the time fixed for payment has elapsed and written notice has been given to the member stating that the Company intends to sell the share, and the money has not been paid within fourteen days following such notice.

20.3 Net proceeds of any such sale, after payment of the sale, shall be used for payment of the shareholder’s debts or liabilities, and the balance (if any) shall be paid to him.

20.4 In the event of a sale following the enforcement of a charge or lien by assumed exercise of the powers conferred above, the board or directors may register the purchaser of these shares in the shareholders’ register as holder of the shares sold, and the purchaser shall not be liable to verify the validity of such actions or be concerned as to the application of the proceeds of sale. After the shares are registered in the name of the purchaser, no person shall have the right to appeal regarding the validity of the sale.

21. Alteration of Share Capital

The General Meeting may resolve to take any of the following actions, provided the General Meeting’s resolution is passed by a special majority.

The provisions set forth below shall apply with regard to other Company securities as well, mutatis mutandis.

21.1 Increase of share capital

To Increase the Company’s share capital, whether or not all the shares registered at such time have been allotted. The increased capital shall be divided into shares with preferred rights or deferred or other special rights (subject to special rights of any existing class of shares), or subject to such conditions and restrictions regarding dividends, return of capital, voting or other conditions as may be prescribed by the General Meeting in its resolution for increase of capital, and in the absence of a special instruction prescribed by the Board of Directors, subject to the provisions of these Articles.

21.2 Classes of shares

To divide the Company’s share capital into various classes of shares and to fix and modify the rights attached to any class of shares, under the following conditions:

So long as not otherwise prescribed by the terms of issue of the shares, the rights of any class of shares may be modified, following a resolution of the General Meeting of the shareholders of each class of shares separately or the consent of all shareholders of each class, obtained in writing.

The rights to which the holders of a certain class of shares are entitled shall not be deemed modified by the creation or issue of other shares having identical rights, unless otherwise provided in the terms of issue of such shares.

21.3 Consolidation of capital

To fix a par value for a share, consolidate and redivide all or part the share capital into shares of greater value than the existing one. If as a result of consolidation, fractions of shares remain after consolidation, the Board of Directors may, by resolution, if approved by the General Meeting regarding aforesaid consolidation of capital:

A. Sell the total of all fractions, and for this purpose, appoint a trustee in whose name share certificates shall be issued on the fractions which will be sold, and the proceeds, after deduction of fees and expenses, shall be divided among those entitled. The Board of Directors may decide that the shareholders entitled to proceeds of less than an amount fixed shall not receive proceeds from the sale of such aforesaid fractions, and their portion of the proceeds shall be divided among the shareholders entitled to proceeds exceeding the sum fixed, pro rata to the proceeds to which they are entitled;

B. Allot to each shareholder remaining with fractions of shares after consolidation a number of shares of the class as they were prior to the consolidation, paid up in full, in such a number allowing consolidation of these shares with the remaining fraction to create one full consolidated share, and such allotment shall be deemed valid immediately prior to consolidation;

C. Resolve that shareholders remaining with half or less of the number of shares required for consolidation creating one consolidated share shall not be entitled to receive a consolidated share for fractions remaining after consolidation, and shareholders remaining with more than half of the number of shares required for consolidation creating one consolidated share shall be entitled to receive a consolidated share for fractions remaining after consolidation.

Should action under Sub-Articles B or C above require issue of additional shares, payment shall be made in the same manner as payment for bonus shares. Such aforesaid consolidation and division shall not be deemed modification of rights in the shares the subject matter of the consolidation and division.

21.4 Cancellation of unalloted share capital

Cancel registered share capital not yet allotted, provided the Company has not undertaken to allot such shares.

21.5 Division of share capital

Divide all or part of the Company’s share capital into shares of a smaller nominal value than that fixed, by division of all or some Company shares at the time being.

Chapter Three – General Meeting

22. Powers of the General Meeting

22.1 Subjects within the power of the General Meeting

Company resolutions on these subjects shall be taken by the General Meeting:

Modifications of the Articles: no General Meeting of the Company shall deal with an amendment or cancellation of any Article under these presents, nor shall it amend or cancel such an Article more than once during a period of twelve months.

The above limitation shall not apply to any amendment or cancellation proposed by the Board of Directors.

Exercising powers given to the Board of Directors, provided the General Meeting has found that the Board of Directors is unable to exercise its powers, and that exercise of the powers is critical for proper management of the Company.

Appointment or renewal of the appointment or termination or non-renewal of the appointment of the Company’s auditor, under Articles 23.1(B)(2) and 54 below.

Appointment of directors, under Articles 34, 35 below.

Approval of actions and transactions with interested parties, and approval of an action or transaction with an interested party constituting breach of fiduciary duty on the part of an officer, subject to the provisions of section 225 of the Companies Act.

Alterations in the Company’s share capital, in accordance with the provisions of Article 21 above.

22.1A In General Meetings of the Company, only shareholders themselves may participate.

22.2 General Meeting’s power to transfer powers between organs of the Company

The General Meeting may, by a vote passed by simple majority, take upon itself powers given to another organ of the Company. The General Meeting may also transfer powers of the General Manager to the Board of Directors.

Taking or transferring powers as stated shall be for specific issues or limited periods of time, all as stated in the General Meeting’s resolution.

23. Annual, Extraordinary and Class General Meetings

23.1 Annual General Meetings

An Annual General Meeting shall take place at least once every year, no later than 15 months after the last Annual General Meeting. The meeting shall take place at the Company’s registered offices, unless otherwise prescribed by the Board of Directors.

If no such aforesaid meeting has been convened, it must be held at the time and place the Board of Directors prescribes. If no Annual General Meeting was convened as stated, an Annual General Meeting shall be held in the month following. If the Board of Directors does not convene the Annual General Meeting as stated, any sixty holders of ordinary shares may convene the Annual General Meeting according to the provisions of this Article, mutatis mutandis.

Such Annual General Meetings shall be termed “annual meetings”, and any other General Meetings shall be termed extraordinary General Meetings.

The Annual General Meeting shall convene for presentation of the following reports:

(1) Submission of the financial statements and the directors’ report, submitted by the Company under the Securities Regulations as of December 31 of the calendar year preceding the year during which the annual meeting is convened.

(2) Submission of a report from the Board of Directors regarding the remuneration of the auditor, and renewal of his office, giving particulars of his professional background.

(3) Submission of the report of the Inspection Committee, as provided for in Article 50.14.

The annual meeting shall be convened for resolving the following matters:

(1) Appointment of directors and termination of their office, in accordance with the Article below.

(2) Appointment or renewal of appointment of an auditor, and authorization of the Board of Directors to fix the auditor’s remuneration, subject to the provisions of Article 54.4 below.

23.2 Extraordinary General Meetings

An Extraordinary General Meeting shall deliberate and decide all matters which may not be deliberated and decided at an Annual General Meeting and for which the Extraordinary General Meeting was called.

24. Convening General Meetings

24.1 Convening annual meetings

The Board of Directors shall convene annual meetings in accordance with the provisions of Article 23.1 above.

24.2Convening extraordinary meetings

The Board of Directors may decide to convene an extraordinary meeting.

24.3 The Board of Directors shall be bound to convene an Extraordinary General Meeting on the demand of either:

One director.
10% of the holders of the ordinary shares of the Company.

If the Board of Directors has not convened an extraordinary meeting as stated in this Article, the party demanding such meeting – and if it be shareholders, half of their number – may also convene a meeting themselves, provided that it not be convened later than three months after the date on which such demand was submitted, and must be convened, so far as possible in the same manner as a meeting convened by the Board of Directors.

If an Extraordinary General Meeting has been convened as stated, the Company shall cover the reasonable costs incurred by the demanding party.

No General Meeting shall be convened for deliberating one subject more than once during a period of 12 months.

The Board of Directors shall be entitled to refuse to convene an Extraordinary General Meeting under the demand of shareholders or a director if the demand for such convening is contrary to the provisions of this passage.

If there is a dispute between the Board of Directors and the demanding shareholders or director whether the subject for the Extraordinary Meeting is the same subject already decided during the period of 12 months or not, the matter shall be brought to the Arbitrator and his decision shall be final.

The limitation provided for in this passage shall not apply to the convening of an Extraordinary General Meeting by the Board of Directors.

24.4 A notice for convening an Annual General Meeting or an Extraordinary General Meeting shall be given no more than 45 days and no less than 7 days prior to the date of the meeting. The day of sending the notices shall not be counted. The notice shall set out the place of the meeting, the date and the hour on which it will take place and the agenda for the meeting. Notice shall be served on all shareholders who are entitled to receive such notice from the Company. Accidental non-service of the notice to, or non-receipt of the aforesaid notice by, any shareholder shall not invalidate the meeting.

24.5 The Board of Directors shall appoint the time of an Extraordinary General Meeting under demand within 21 days from the date on which the demand was submitted and the notice of convening this meeting shall be given in accordance with Article 24.4.

24.6 Deleted

24.7 Content of notice

Notice of a General Meeting shall include the place and time of the meeting, and details of the subjects on the agenda. If any proposal for modification of the Articles is on the agenda, the draft proposed modification shall be included in the notice.

No Company financial statements shall be attached to the notice, however, such statements may be examined at the Company’s registered office during the 7 days preceding the annual meeting, during normal working hours, or at such place and at such time as noted in the notice.

25. Agenda at the General Meeting

25.1 The agenda of General Meeting, Annual or Extraordinary, shall be set by the Board of Directors, and shall include also the issues in the demand for an extraordinary meeting.

25.2 One or more shareholders may demand that the Board of Directors include an issue on the agenda of a General Meeting to be convened in the future. The Board of Directors shall include such an issue on the agenda, at their discretion, provided that such issue is, at the discretion of the Board, appropriate for dealing with at the Company’s General Meeting.

If at least 30 days before the date of convening of the meeting, 30 or more shareholders have demanded that the Board of Directors include an issue on the agenda of a General Meeting, the Board of Directors must include the issue on the meeting’s agenda.

25.3 Only issues appearing on the agenda shall be resolved at the General Meeting.

25.4 So long as not otherwise prescribed by law, the General Meeting may pass or reject a proposed resolution on the agenda of a General Meeting, drafted or described in brief and notified by the Company, with slight modifications, however, the meeting may not pass a resolution substantially different from the resolution proposed.

26. Deliberations at General Meetings

26.1Holding a meeting through means of communication

The Company may hold a General Meeting using any means of communication, allowing all participating shareholders to hear each other simultaneously.

26.2 No business at a General Meeting may be commenced unless a quorum is present at the time of deliberations. 40 holders of ordinary shares present in person shall constitute a quorum.

26.3 If half an hour after the time fixed for a meeting, at least 15 holders of ordinary shares are present, the meeting shall take place. If the above number of holders of ordinary shares are not present, the meeting shall be adjourned to a time appointed by the Board of Directors not later than 6 weeks from the original time. At the adjourned meeting, 15 holders of ordinary shares present shall constitute a quorum.

These provisions shall not apply to a meeting convened by demand, which meeting shall be cancelled if no quorum is present.

26.4 Chairman of the General Meeting

The Chairman of the Board of Directors, and in his absence, his deputy, shall open the General Meeting. If there is no chairman or he is not present 15 minutes after the time fixed for the meeting, the members present at the meeting shall elect one of the directors present, or if no director is present at the meeting, shall elect one of the shareholders to serve as chairman of the meeting. Members shall choose the chairman of the meeting immediately upon opening the meeting.

26.5Adjourned meetings

The chairman of a General Meeting may, with the consent of the meeting at which a quorum is present, and if the meeting so resolves, shall adjourn it from time to time and from place to place, as the meeting shall resolve (such meeting is referred to for purposes of this Article as the “adjourned meeting”). If a meeting is adjourned for fourteen days or more, notice of the adjourned meeting shall be given in the same manner as given for the first meeting. Save for the above, no shareholder shall be entitled to receive notice of adjournment or of the issues to be discussed at the adjourned meeting. No business shall be transacted at the adjourned meeting other than the business which was on the agenda of the meeting at which the decision to adjourn was made.

27. Member’s Votes

27.1Passing a resolution

Any resolution at any General Meeting shall be passed by a show of hands, unless a secret ballot has been demanded before the vote by a majority of the owners of ordinary shares present at the meeting. If a decision for a secret ballot is accepted, the meeting shall be adjourned to another time set by the Board of Directors for the purpose of holding a poll.

If no secret ballot has been demanded, a declaration by the chairman that a resolution was passed or rejected shall serve as irrefutable evidence of such fact, and a note thereof shall be entered in the Company’s minutes.

Resolutions on the table shall be passed at all General Meetings by simple majority, or by any other majority specially prescribed by law or under these Articles.

27.2 If a secret ballot was demanded, the ballot shall be conducted in such manner and form as the chairman of the meeting directs, and the result of the secret ballot shall be regarded as a resolution of the meeting at which the secret ballot was demanded.

27.3 A secret ballot to elect the chairman or to adjourn the meeting shall be held immediately. If a secret ballot is demanded for any other issue, the ballot shall take place at such time as the chairman of the meeting directs.

27.4 If the votes are tied, whether in a secret ballot or vote by show of hands, the chairman of the meeting at which the vote or secret ballot was held shall have an additional or casting vote.

27.5 Each shareholder entitled to vote shall have one vote, whether in a secret ballot or by show of hands. A shareholder not present in person at the meeting shall not be entitled to vote.

27.6In the event of a secret ballot, the ballot slip must be delivered personally.

Tallying the majority

A tally of the majority shall be performed by a count of votes, and each holder of an ordinary share shall be entitled to one vote in respect of each share held by him at the time of voting, paid up in full or calls of payment in respect thereof have been fully paid.

27.7 A declaration by the chairman that a resolution has been passed or rejected unanimously or by a certain majority shall constitute prima facie evidence of such fact.

27.8Written resolution

Subject to the provisions of any law, any written resolution, signed by the holders at the time of passing the resolution of all issued shares, entitling the holders thereof to participate and vote in the Company’s General Meeting, or of a certain class of shares the subject of the resolution, as the case may be, shall be deemed for all intents and purposes a valid resolution passed at a General Meeting of the Company or of that class of shares, as the case may be, duly convened for the purpose of passing such a resolution. Such a resolution may be included in a number of documents all worded identically, each signed by one or more shareholders.

27.9The determining date for participation and voting

Only holders of ordinary shares registered in the shareholders’ register of the Company at the time of the meeting shall be eligible to participate and vote in a General Meeting.

27.10 The right to participate and vote

A shareholder owing the Company payment already called for the shares held by him shall not be entitled to participate and vote in any General Meeting or be counted for a quorum, unless the terms of issue of the shares otherwise prescribe.

27.11 Personal interest in resolutions

A shareholder desiring to vote in respect of a resolution requiring a majority of one third of the votes of members who have no personal interest in the issue, shall notify the Company’s registered office, until the date of the General Meeting, whether or not he has a personal interest in the passing of the resolution, as a condition for voting and having his vote counted.

27.12 Votes of legally disqualified members

A legally disqualified member may vote only through his trustee or natural or legal guardian, who shall personally vote.

28. Minutes of the General Meeting

The chairman of the General Meeting shall cause the minutes of each General Meeting to be duly kept and including:

(A) The names of members and number of shares held by such.

(B) The main points of the deliberations and resolutions passed or rejected at the General Meeting, and if passed – by what majority.

Chapter Four – The Board of Directors
Qualification of directors

29. All the provisions in these Articles concerning the qualification of a shareholder to be elected and to serve as a director shall apply to a substitute director.

29.1 A person who does not hold shares of the Company cannot be elected, nor can he act as a director.

29.2 A body corporate which holds a share in the Company shall not be elected, nor shall it serve as a director, however a person who controls such body corporate or acts as an officer therein may be elected and serve as a director, as long as he controls the body corporate or acts as an officer therein.

If the person serving as a director on behalf the body corporate ceases to be a director for any reason (hereinafter: “the former director”), he shall be replaced by the person who received the largest number of votes after the former director in the sector in which the former director was elected.

If the person who was elected as a director on behalf of a body corporate ceases to control the body corporate or to be an officer therein, but controls another body corporate which is a shareholder in the Company or acts as an officer therein, the person shall remain a director.

29.3 A member of the Board of Directors cannot serve in any other capacity in the Company, and cannot serve as an officer or in any other capacity in any company that provides services to the Company.

29.4 An officer or member of the Board of Directors of a society for collective administration of copyright or performance rights (“Another Society”) may not be elected as a director of the Company and may not serve as a director in the Company. If any person serving as a director in the Company is elected to such aforesaid office in Another Society – he shall cease to serve as a director immediately upon his being so elected.

29.5 No person who was convicted of a criminal offence in a final judgment shall be elected or serve as a director, unless the limitation period as defined in the Criminal Registration Act 1981 has elapsed.

29.6 A person who has excluded rights or works from the Company’s repertoire shall not be elected, nor serve as a director in the Company.

29A. Non-executive directors

29A.1 At least a third of the members of the board of directors of the Company shall be non-executive directors under such meaning in Part 5 of the First Chapter in the Sixth Section of the Companies Law, 5759 – 1999 and the provisions of this part shall apply, mutatis mutandis, on the Company.

29A.2 Revoked.

29A.3 Revoked.

29A.4 Revoked.

29A.5 Revoked.

29A.6 Revoked.

29A.7 The Board of Directors shall recommend to the General Meeting on the appointment of non-executive directors so that the number of the non-executive directors shall not be less than a third of the members of the board, and will present their resumes and professional qualifications to the meeting.

29A.8 Notwithstanding any provision in these Articles, the non-executive directors shall be appointed by the General Meeting by a simple majority of the holders of the ordinary shares present at the meeting by a show of hands. In case of deadlock, a further vote shall take place during the same meeting. If the General Meeting did not appoint two candidates or one of them, the Board of Directors shall bring to the next General Meeting another candidate or other candidates.

30. Composition of Board of Directors

30.1The Company’s Council shall consist of members of the Board of Directors as stated in Article 30.2 herein below, and seven substitutes of the directors who are not non-executive directors as provided for in that Article.

30.2The Board of Directors shall be composed as follows:

(1) two lyricists (2) one writer of serious literature (3) two composers of light music (4) one composer of serious music (5) one publisher (6) non-executive directors in a required number so that their number on the board will not be less than a third of the number of members of the board.

The composition of the Board of Directors may be changed only by a majority of 75% of the holders of ordinary shares present at a General Meeting. However changes concerning the non-executive directors may be passed by a simple majority.

The elected members of the Board of Directors shall have substitutes, i.e. two lyricists, one writer of serious literature, two composers of light music, one composer of serious music and one publisher.

If the office of a director is vacated for any reason, it shall be filled by a substitute from the list of substitutes who has the maximum number of votes in the same sector whose office was vacated, and shall become a director for all purposes. If for any reason the substitute cannot fill the position, the board of directors, in accordance with the provisions of these Articles, shall act to convene a general meeting of the Company to choose a director from the sector in which an office of director became vacant, who will serve in the position until the expiration of the period of service of the board during which he was elected.

30.3The number of directors in the Company shall be no less than four directors who are not non-executive directors and two non-executive directors (hereinafter: “the Minimum Number”) and shall not exceed eleven, unless decided otherwise by the general meeting.

If a position of a director becomes vacant, the remaining directors may continue to act, except in the case where the number of remaining directors is less than the minimum number.

If the number of the remaining directors is less than the minimum number, they will be entitled to act only for the election of other directors so as to reach the minimum number by summoning a General Meeting of the Company, but not for any other purpose.

30.4 The substitute directors shall not participate in meetings of the Board of Directors unless they are invited by the Board of Directors.

30.5The Board of Directors shall invite substitute directors to its meetings at least once every four months. In such meetings of the Board of Directors, the agenda shall include at least one of the following:

General operations report.

Report of the implementation of the resolutions of the General Meeting and of the Board of Directors.

Budget proposal for the following financial year.

30.6Substitutes shall not have voting rights in the Board of Directors. However, they shall be entitled to express their opinions. Resolutions of the Board of Directors shall be passed by a majority vote.

30.7Revoked

30.8A director may be absent from meetings for a period to be approved by the board. In the event that this period exceeds one month, the board shall invite the first on the list of substitutes in place of the missing director, in accordance with the provisions of Article 30.8, to serve as a temporary member for all intents and purposes until the return of the missing member; however, the board may invite a substitute within the said period of a month as well.

31. Honorary members of the Board of Directors

31.1 In addition to the members of the Board of Directors and their substitutes, the General Meeting may also elect an honorary member of the Board of Directors, with such member’s consent.

31.2 Only a person who served as a director or a substitute director for a period of 10 years, and is 65 years of age or more, and whose activities for the good of the Company are worthy, in the opinion of the General Meeting, of special appreciation may be elected as honorary members of the Board of Directors.

31.3 An honorary member may participate in meetings of the Council only. He shall not be entitled to receive any remuneration for his participation in meetings.

31.4 The number of honorary members of the board shall not exceed three, provided each belongs to a different sector (composer, writer, publisher).

32. Officers in the Board of Directors

32.1 The Board of Directors shall elect one of its members to be the chairman, another to be his deputy, another to be the treasurer and another to be the secretary thereof. Elections shall take place during the first meeting of the Board of Directors after the annual meeting at which the Board was elected, or at any other meeting as it may decide.

32.2 If the Chairman of the Board elected is a writer, his deputy shall be elected from among the composers, and vice versa.

32.3 If the office of the Chairman of the Board or of the Deputy Chairman of the Board has been vacated, directors elected by the Board to serve in such office shall serve until the next elections.

32.4 If the Chairman of the Board is absent from a meeting, the board shall elect another from among its members to chair the meeting and sign the minutes thereof, however, such person shall not have an additional vote.

32.5Powers of the Chairman of the Board of Directors

The Chairman of the Board shall chair each meeting of the Board, and sign the minutes of the meeting.

If the votes for any resolution of the board are tied, the Chairman of the Board shall have an additional vote.

The Chairman of the Board may at any time, of his own initiation or by resolution of the Board of Directors, demand reports from the General Manager on matters relating to Company business.

32.6Restrictions concerning the Chairman’s activities

The Chairman of the Board may not serve as General Manager of the Company, unless he has been appointed in accordance with the provision of Article 52.2 below.

The Chairman of the Board shall not be a member of the Inspection Committee.

33. Powers of the Board of Directors

33.1 The powers of the board are as set forth by law and in the provisions of these Articles.

33.2 The business and operations of the Company shall be performed by the board, which shall be authorized to make all payments deriving from the establishment and registration of the Company, and may exercise all powers of the Company which under the Company Articles are not exercised by the General Meeting. All of the above is subject to the provisions of the Articles and subject to any provisions resolved upon by the Company in the General Meeting which may not contradict these Articles. However, no Article passed by the Company in a General Meeting may cancel any action taken by the board which would have been valid had such Article not been resolved.

33.3 The board has the power to provide for procedures and to modify such from time to time, subject to the provisions of these Articles. These procedures shall be notified to the shareholders of the Company by ordinary mail, and shall be binding.

33.4 (Cancelled)

33.5 The General Manager shall prepare the Company budget and present it to the Board of Directors for its approval.

33.6 Before the Company engages in any contract for provision of goods or services in an amount exceeding NIS 80,000, the General Manager shall study the bids of at least three different suppliers, and shall choose the most worthwhile.

33A – The Council

33A1. The Council shall consist of the directors and the substitute directors.

33A2. The Council shall be convened by the Chairman of the Board, at such times as he may fix.

33A3. The Chairman of the Board shall also serve as the chairman of the Council.

33A4. The Chairman of the Board shall determine the order of the Council’s deliberations.

34. Election of Directors who are not non-executive directors and Their Period of
Office

34.1 Directors shall be elected by the General Meeting once every four years in accordance with the provisions of Article 35 herein, and shall serve in office until the end of the General Meeting four years after the meeting in which they were elected, when a new board is elected, unless an office is vacated earlier under the provisions of these Articles. This Article will become effective as from the General Meeting held on 1.7.2011.

34.2 The Directors will assume office 60 days after the date of their election (hereinafter: “Date of Assuming Office”). From the date of the elections to the Board of Directors until the Date of Assuming Office, the retiring Directors will continue to serve on the Board of Directors. During the 60 days after the date of their election, the Directors will serve as observers at the meetings of the Board of Directors. This regulation will take effect immediately and will apply both to the retiring Board of Directors and the Board of Directors which will be elected at the General Meeting on 1.7.2011.

34.3 At each annual meeting in which a Board of Directors has to be elected, the directors elected at a previous annual meeting shall be deemed to have resigned from office. A resigning director may be re-elected.

34.4 A special General Meeting of the Company may elect, in accordance with the provisions of article 35 herein, directors for the Company in place of directors whose office has been terminated and in the event that the number of the members of the board has fallen below the minimum fixed in these Articles or by the General Meeting.

34.5 It is understood that the provisions of article 34 shall not apply to non-executive directors, operations of which will be governed by the provisions of article 29a.

35. Election proceedings for directors

35.1 Directors shall be elected for a period of four years.

35.2 Elections shall be by ballot, at the time of the General Meeting, as set forth below.

35.3 The Board of Directors shall be elected by direct, secret, sectorial and proportional elections. This Article may not be amended except at a General Meeting by a majority of 75% of the members having voting rights.

35.4 Every holder of an ordinary share may elect and be elected.

35.5 Every holder of an Ordinary Share may vote in elections according to his main area of activity (sector). The sectors are as follows: lyricists, writers of serious literature, composers of light music, composers of serious music, publishers.

35.6 The Company shall classify each member having voting rights to a sector according to the following provisions:

Upon accepting a person as a holder of an ordinary share in the Company, such person shall declare the sector to which he belongs;

A holder of an Ordinary Share may from time to time by written notice change the sector to which he belongs. The notice shall be in an appropriate form available at the Company’s offices and on its internet site, and shall be delivered to the Company so that it is received no later than 30 days before the date on which elections are held.

A holder of an Ordinary Share may not belong to more than one sector.

If a holder of an Ordinary Share has not declared to which sector he belongs, the sector shall be determined according to the majority of works registered in his name in the Company data base. If there is any doubt or dispute, the issue shall be determined by the Election Committee, and its decision shall be final and binding.

The register of members with voting rights shall contain the name, surname and sector to which each eligible member belongs, and shall be open to the candidates for study and duplication, provided it is used for election purposes only.

35.7 The Election Committee shall send each eligible voter a notice by mail regarding the date of elections, not later than 60 days before election day. The notice shall state that elections shall be held by ballot, and shall name the date and place elections shall be held. A submission of candidacy form shall be attached to each notice, and any member eligible to be elected may submit candidacy using this.

Any member wishing to submit candidacy must present the signatures of seven members having voting rights, belonging to the candidate’s sector, supporting his candidacy, as a prerequisite to such member’s candidacy. Three support signatures suffice for the publishers’ sector.

The candidate or the member having voting rights recommending such candidate shall send to the Election Committee the Candidacy Submission Form signed by the candidate and with the supporting signatures. A declaration given by the candidate, confirming that he does not hold any position or office with the Company or in any business providing services to the Company must be attached to the form. The sender may also attach to the form a short statement presenting the candidate’s platform (no more than 100 words). The sender shall ensure that the Candidacy Submission Form has been received by the Election Committee not later than 45 days before the date of elections. Any candidacy form not received by the aforesaid date shall not be considered.

35.8 The Election Committee shall send the names of all candidates to all members having voting rights, together with the candidates’ platforms, not later than 30 days before the date of elections. These particulars shall appear on the Company’s internet site on the same day.

35.9 All members having voting rights shall be entitled to vote at the ballot box at the time of voting. Voting at the ballot box shall be performed separately for each sector.

35.10 Members having voting rights shall elect their candidates, marking the voting form in the following manner:

A lyricist shall mark up to four names out of his sector’s candidates; a writer of serious literature shall mark up to two names out of his sector’s candidates; a composer of light music shall mark up to four names out of his sector’s candidates; a composer of serious music shall mark up to two names out of his sector’s candidates; a publisher shall mark up to two names out of his sector’s candidates.

35.11 Candidates shall be present at the polls at the time of voting. A candidate who in not present without reasonable justification shall be disqualified.

35.12 Upon conclusion of the voting at the polls, the Election Committee shall count all of the participating qualified votes, and shall ensure that no member having voting rights voted more than once.

The Election Committee shall decide who was elected to serve as a member of the Board of Directors, or as a substitute director, according to the following provisions:

Two directors shall be those who received the largest number of votes in the lyricist sector, and their substitutes shall be the two having the next largest number of votes in that sector.

One director shall be the person who received the largest number of votes in the sector for writers of serious literature, and his substitute shall be the person having the next largest number of votes in that sector.

Two directors shall be those who received the largest number of votes in the sector of composers of light music, and their substitutes shall be the two persons having the next largest number of votes in that sector.

One director shall be the person who received the largest number of votes in the sector of composers of serious music, and his substitute shall be the person having the next largest number of votes in that sector.

One director shall be the person who received the largest number of votes in the publishers’ sector, and his substitute shall be the person having the next largest number of votes in that sector.

In the event that two candidates from a certain sector receive the same number of votes and cannot agree which one was elected, the Election Committee shall decide who was elected by casting lots.

35.13 In the event that the office of any director or substitute director is vacated, the candidate with the next largest number of votes in that sector shall come in place thereof.

35.14 It is understood that the provisions of article 35 shall not apply to non-executive directors, operations of which will be governed by the provisions of article 29a.

36. The Election Committee

36.1 The Board of Directors shall appoint an Election Committee not later than 90 days before the date on which elections for directors are held. The Committee shall serve until after the elections of the Company’s Board of Directors. The Committee shall consist of four members who are:

The Company’s external legal advisor, who shall serve as chairman of the committee, and three holders of Ordinary Shares in the Company, who are not members of the Board of Directors or members of any committee in the Company, and who are not Company employees. One of these must be a writer, the second a composer, provided at least one member is from the serious sector and one from the light sector, and the third, a publisher. Members of the Election Committee shall not be entitled to submit their candidacy in these elections.

36.2 The Election Committee shall act independently, and shall supervise the fulfillment of the provisions of these Articles regarding elections. The Election Committee shall have the power to provide for the identification of the voters, to issue instructions to ensure proper voting and for the implementation of these Articles in all matters related to elections. The Election Committee’s decisions in all matters relating to the outcome of the elections shall be recorded in the minutes of the General Meeting, and shall be final.

Decisions of the Election Committee shall be passed by majority vote, and in the event of a tie vote, the chairman of the Committee shall have a casting vote.

37. Termination of a Director’s Office

The office of a member of the Board of Directors shall be terminated in each of the following cases:

37.1 If he resigns by a written notice signed by his hand and submitted to the Company office.

37.2 If he be declared bankrupt or has settled with his creditors as part of bankruptcy proceedings.

37.3 If he be found legally disqualified.

37.4 If he is dismissed by a resolution passed by the Company’s General Meeting before the end of his term of service.

37.5 If he is convicted of an offence, as stated in section 232 of the Companies Act.

37.6 If he is dismissed by the Board of Directors, under the provisions of section 231 of the Companies Act.

37.7 If the director ceases to be a holder of an Ordinary Share in the Company, or in the event that a director elected as the legal representative of a limited company or of a business, and the company or the business cease to be a holder of Ordinary Shares in the Company;

37.8 If the director is elected as the legal representative of a limited company or if a business ceases to have the qualifications necessary for such legal representative, as stated in Article 29.2;

37.9 If a director, whether personally or as the representative of a limited company or of a business, members of Acum, has any business relations with one of the Company’s customers or potential customers or an interest in any contract between the Company and one of its customers, according to which the Company granted a license to that customer, or if such director is a member of a body or organization dealing in matters contrary to the Company’s interests. This Article shall not apply if the director has declared the nature of his aforesaid relations or interests. Notwithstanding such aforesaid declaration given by the director, canceling his disqualification, such director shall not be entitled to vote at meetings or in votes relating to any such aforesaid matters, and if he has voted, his vote shall be disqualified, all in accordance with the provisions of sections 254-257 of the Companies Act. Such director shall also not be entitled to examine the Company’s documents relating to the aforesaid matters.

37.10 In addition to the provisions of Article 37.9 above, no director shall be entitled to participate or be present at a meeting of the Board of Directors on any issue in which, according to a resolution of the majority of directors present at that meeting of the Board of Directors, such director has an interest contrary to the Company’s interest, provided this majority includes representatives of two sectors at least.

37.11 The General Meeting shall have the power to dismiss members of the Board of Directors or any of them at any time, and to appoint another or others in their stead, as stated in Article 34 above.

37.12 A director who wishes temporarily to cease his activity as a member of the Board of Directors may be replaced by his substitute; however, this shall be for a period of no more than six months. The director who was replaced may return to serve as a director, if he so desires.
In the event a director ceases his activities as a member of the Board of Directors for more than six months he will be considered to have resigned his directorship.

37.13 Any director who is absent for three consecutive meetings without, in the opinion of the Board of Directors, a reasonable cause, and without advance permission from the Board of Directors, may, at the Board’s discretion, be deemed to have resigned from the Board of Directors, if a resolution to that effect is approved with at least five elected members of the Board of Directors voting in favour.

37.14 (Cancelled)

37.15 Remuneration for members of the Board of Directors

Members of the Board of Directors shall not receive any remuneration from Company funds, unless the General Meeting has so resolved, and in such amount as may be determined by the General Meeting, subject to the provisions of law.

Remuneration of members of the Board of Directors may be fixed as an overall sum or as payment for participation in meetings or any combination of such.

The Company may, by resolution of the Board of Directors, refund reasonable expenses to a director for performance of his duties, provided the Board of Directors approves such expenses in advance.

37.16 It is understood that the provisions of article 37 shall not apply to non-
executive directors, operations of which shall be governed by the
provisions of article 29a.

38. Proceedings of the Directors

38.1 The Board of Directors may regulate the convening and adjournment of its meetings as it deems fit. Subject to the provisions of these Articles prescribing a different majority for certain decisions, decisions of the Board of Directors shall be passed by a majority of votes, and if votes are tied, the chairman shall have an additional vote.

38.2 Absence of directors shall not disqualify the remaining directors’ power to act, subject to the provisions of Article 30.3

38.3 The chairman, and in his absence, the deputy chairman, shall serve as chairman at all meetings of the Board of Directors. If the chairman and the deputy chairman are not present 15 minutes after the time fixed for the meeting, the members of the Board of Directors present at the meeting shall elect one of their number to act as chairman of the meeting. Such an elected chairman shall not have a casting vote.

39 Convening a meeting of the Board of Directors

39.1 The Chairman of the Board of Directors may convene the Board of Directors at any time.

39.2 The Chairman of the Board of Directors shall convene the Board of Directors at least 4 times a year, in a manner allowing the Company to comply with the provisions of the law concerning publication of financial statements and reporting to the public.

39.3 The Chairman of the Board of Directors shall convene the Board of Directors and shall hold a meeting of the Board of Directors on issues set forth, at the demand of at least two directors or at the demand of one director, if the Company has less than 5 directors serving.

39.4 The Chairman of the Board of Directors shall act without delay to convene a meeting of the Board of Directors within 14 days of the date on which a director of the Company informed the chairman of an issue discovered to seemingly be contrary to law or against proper business practices, or from the day on which the Company auditor has given notice of substantial defects in the Company’s accounting audit.

39.5 If any action or report on the part of the General Manager requires action on the part of the Board of Directors, the Chairman of the Board of Directors shall immediately convene a meeting of the Board of Directors within 14 days of the date of such notice or report.

40 Summoning a meeting of the Board of Directors

40.1 Any notice of a meeting of the Board of Directors may be given verbally or in writing, provided notice is given at least two business days before the date set for the meeting, unless all members of the Board of Directors or their substitutes (depending on who was invited) have agreed to a shorter time period.

40.2 Notice as aforesaid shall be given in writing or via facsimile or by electronic mail or through other communication, all to the address or facsimile number of e-mail address the director has provided the secretary of the Company upon appointment, or by written notice given to the secretary at a later time.

40.3 Notice as said shall be given verbally to a director in person or by telephone notice to the telephone number the director has provided the secretary of the Company upon appointment, or by written notice given to the secretary at a later time.

40.4 Notice provided or sent as stated above shall be deemed to have been delivered to the director personally on the date of delivery or transmission, as stated.

40.5 If a substitute has been appointed, notice shall be given to the substitute unless the director has notified that he wishes to receive the notice as well.

40.6 Notice of convening a meeting shall state the place and time of the meeting of the Board of Directors, arrangements for meeting procedure (if media is to be used) and details of the issues on the agenda, as well as any additional material as the chairman has asked to attach to the notice.

40.7 The provisions of this Article shall apply, mutatis mutandis, to cases where substitutes are invited to meetings of the Board of Directors.

41 Agenda for meetings of the Board of Directors

The agenda for meetings of the Board of Directors shall be fixed by the Chairman of the Board of Directors, and shall include the following subjects:

Issues set by the Chairman of the Board of Directors.

Issues for which the meeting was called, as stated in Article 39 above.

Any issue a director or the General Manager has asked the Chairman of the Board of Directors to include on the agenda a reasonable time before the convening of the meeting.

42 Quorum for meetings of the Board of Directors

The quorum for meetings of the board of directors shall be six (6) directors.

42.1 A Meeting via means of communication

The Board of Directors may hold a meeting using any means of
communication, provided that all the participating directors can
hear each other simultaneously.

42.2 Voting at a meeting of the Board of Directors

Questions arising at meetings of the Board of Directors shall be

resolved by a majority of votes of the directors (or participants, in
the case of a vote via means of communication) present and
voting, unless otherwise stipulated in these Articles.

42.3 Written resolution

A resolution in writing, signed by all directors, shall be deemed a resolution duly passed at a meeting of the Board of Directors. Such resolution may contain a number of documents identically worded, each signed by one or a number of directors.

Such a resolution may be passed by the signature of some of the directors, if the directors who have not signed the resolution were not entitled to participate in the deliberations and in the vote on the issue of this resolution under the law, provided they confirmed in writing that they were aware of the intention of passing such resolution.

42.4 Resolution confirmed via means of communication

A resolution confirmed by the directors via means of communication shall be deemed a resolution duly passed at a meeting of the Board of Directors, and the provisions of Article 42.2 above shall apply.

Such a resolution may be passed by confirmation that was given by means of communication by some of the directors, if the directors who have not confirmed the resolution were not entitled to participate in the deliberations and in the vote on the issue of this resolution under the law, provided they confirmed in writing that they were aware of the intention of passing such resolution.

42.5 Effect of Actions of Board of Directors

All actions taken in good faith at meetings of the Board of Directors, or by a committee of the Board of Directors, or by any person acting as a director, shall be valid, even it is later discovered that there was a defect in the appointment of a director or any such person so acting, or that they or one of them were disqualified, just as if such person were duly appointed and was qualified to serve as a director.

43 Company Rights of Signature and Power of Attorney On Its Behalf

43.1 The Board of Directors shall prescribe the rights of signature on behalf of the Company for various issues. The signature of any person appointed by the Board of Directors from time to time, in general or for a special purpose, whether alone or with others, together with the seal or stamp of the Company, or its printed name, shall bind the Company, under the conditions prescribed by the Board of Directors.

43.2 The Board of Directors may prescribe different rights of signature regarding different Company issues and regarding the different amounts of money in respect of which such persons are authorized to sign.

43.3 The Board of Directors may from time to time empower any person to serve as the Company’s representative for such purposes and with such authorities and conditions and for such period as it sees fit. The Board of Directors may also grant any such representative the power to transfer all or any part of the powers, authorities and discretion given him.

44 Directors’ Powers with regard to expenses

44.1 No expenses shall be incurred unless they are included in a detailed expense budget, approved by the Council as prescribed in these Articles.

44.2 The Board of Directors may approve an unexpected expense not included in the said budget.

45 Support Fund

45.1 The Board of Directors may, before distributing royalties among the shareholders, deduct amounts it deems fit, or regarding which it has been agreed shall be donated to a charitable or similar fund, established for the benefit of the shareholders, past Company employees, their wives, widows, families or other such dependants.

45.2 The Board of Directors may set aside amounts it deems fit from proceeds, for the purpose of establishing a reserve fund for any event, or for future distribution, or for repair and improvements in maintenance of Company property or premises and for any other purpose, which at the Board of Directors’ complete discretion seems necessary or beneficial for the good of the Company. The Board of Directors is also authorized to invest funds so set aside in investments which it deems appropriate, and to exchange or modify such investments from time to time and to use all or any part of such for the good of the Company; the Board of Directors shall also be authorized to divide the reserve fund into special funds as it deems fit, and to use the reserve fund, or part thereof, for the Company’s general use, without being required to maintain the aforesaid fund separately from other assets.

45.3 Subject to the provisions of these Articles, the Board of Directors must pay the Company’s expenses and obligations deriving from the exercise and enforcement of shareholders’ rights, assigned to the Company under these Articles; such payment shall be made out of the money received by the Company from administering and enforcing these rights.

45.4 The Board of Directors may from time to time receive a sum or sums of money as it deems required for any necessary purpose for the benefit of the Company. Receipt of such sums shall be performed by the creation and issue of bonds or shares, creating attachments on the property and assets of the Company or any part thereof, or by the creation of other securities on such aforesaid property and assets. The Board of Directors does not, however, have the power to pledge the rights or interests of any shareholder assigned to the Company in any shareholder’s works.

46 Minutes of the Board of Directors

The Chairman of the Board of Directors shall ensure that minutes are duly kept and shall include:

The names of directors present at any meeting.

The decisions and a summary of the deliberations of the aforesaid meetings.

All such minutes of a meeting of the Board of Directors signed by the chairman of such meeting or by the chairman of the subsequent meeting, shall be admitted as prima facie evidence of the matters contained therein.

47 Company’s Registered Office

The Board of Directors shall decide on the location of the Company’s registered office.

48 Board of Directors’ Committees

The provisions concerning the meetings of the Board of Directors shall apply mutatis mutandis to the meetings of any committee of the Board of Directors, unless no other provisions in this respect were made by the Board of Directors, and provided always that the quorum for any such Committee shall be two members thereof.

49 Additional Committees

49.1 The Board of Directors may establish Board Committees. When establishing such a Committee, the Board of Directors shall decide whether powers of the Board of Directors shall be delegated to such a Committee or if it be a consultative committee.

49.2 Only members of the Board of Directors may serve on a Committee to which powers of the Board of Directors have been delegated. However the Committee may decide to invite other members who are not directors to join the Committee, provided that such members shall have no voting right.

49.3 A consultative committee may consist of persons who are not members of the Board of Directors.

49.4 A decision passed or an action done in a Board Committee, under a power delegated thereto by the Board of Directors, shall be as valid as a decision or action passed or done by the Board of Directors.

49.5 A Board Committee shall report regularly to the Board of Directors on its decisions or recommendations.

49.6 Minutes of a meeting of a Board Committee shall be prepared and sent to all the members of the Board of Directors. The Minutes shall be kept in accordance with the provisions of Section 108 of the Companies Act.

49.7 Any director may appeal a decision of a Board Committee within 30 days from the date on which he received the Minutes including the decision. If an appeal is filed, the Board of Directors shall decide and its decision shall be final.

50 Inspection Committee

50.1 The Board of Directors shall appoint, within 60 days from its election, an Inspection Committee. The Inspection Committee shall consist of an internal auditor, who shall be recommended by the Institute of Internal Auditors in Israel, one non-executive director, one elected director and one holder of an ordinary share, who are not clients of the Company, suppliers thereof and who have no conflict of interest with the Company.

50.2 The members of the Inspection Committee shall serve in their positions until the end of the term of office of the Board of Directors which appointed them, unless a position is vacated before this time under the provisions of these Articles.

50.3 No person shall serve as a member of the Inspection Committee for more than two consecutive terms.

50.4 In the absence of any member of the Inspection Committee, his substitute will attend in his place.

50.5 The Inspection Committee shall prepare a quarterly report to be submitted to the Board of Directors. The Board of Directors shall respond, and in the annual report to the General Meeting, the Board of Directors shall present both the committee’s report as well as its responses.

50.6 This Article will be effective as from the date of its confirmation by a General Meeting. The then currently serving Inspection Committee will immediately cease to serve.

50.7 A member of the Inspection Committee absent from three consecutive meetings shall be deemed to have resigned.

50.8 A quorum for a meeting of the Inspection Committee shall be four members present. If a member is absent from the Inspection Committee, his absence and the reason therefor shall be recorded in the Minutes.

50.9 The Committee shall hold its meeting and it shall be deemed to be duly held if the absent member adds his signature to the minutes within one month. Notwithstanding the missing member’s signature, his absence shall be deemed an absence under Article 50.7 above.

50.10 The provisions of Articles 37.9 and 37.10 of these Articles shall apply to members appointed to the Committee.

50.11 The Inspection Committee shall have full power to audit all the Company’s operations. The Inspection Committee and/or any of its members may examine all minutes, files, cards, letters, contracts, accounts, and any other documents it deems necessary and effective for the performance of its task (hereinafter: “Right to Examine”), provided such examination is performed with advance coordination with the authorized party at Acum.

50.12 The Inspection Committee may, by consultation with the Board of Directors, be assisted by a professional consultant or consultants for the performance of its tasks, and it may delegate the Right to Examine to such a consultant or consultants. The Inspection Committee and/or any of its members may receive information from the Chairman of the Board of Directors, from the General Manager and from the persons in charge of the various departments. All of the above are obligated to cooperate with the Committee and with any member of the Committee in the fulfillment of their tasks.

50.13 The Inspection Committee may meet with the Board of Directors for clarifications, provided the Board of Directors receive advance notice (no less than two weeks) regarding the issues on the agenda for clarification. The Board of Directors may also invite the Inspection Committee for clarifications after similar notice is given.

50.14 The Inspection Committee shall submit its comments in writing to the Board of Directors, whenever it feels the need to do so. The Committee shall submit the final report to the annual General Meeting, or to an extraordinary meeting called under the provisions of these Articles, after clarifications with the Board of Directors at one of its meetings, at least two weeks prior to the date of the aforesaid meeting.

50.15 The Chairman of the Board of Directors shall convene the first meeting of the Inspection Committee no later than 14 days after the Committee is appointed. The Inspection Committee shall elect a chairman for the Committee at its first meeting, and shall set the next meeting of the Inspection Committee. The Inspection Committee shall hold its meetings as need be and at its discretion. The Inspection Committee shall regulate its working procedures.

51 Arbitration between shareholders and Directors

51.1 An Arbitrator and his appointment

51.1.1 The Company shall request the President of the Tel Aviv District Court to appoint a retired Judge who will serve as an arbitrator and shall have the power to try and decide controversies enumerated in Article 51.2 hereunder (hereinafter: “the Arbitrator”). In case the President of the Tel Aviv District Court does not appoint an Arbitrator under the Company’s Application, the Company shall request either Tabernacle Arbitration and Dispute Resolutionor the Head of the Israel Bar to appoint the Arbitrator.

51.1.2 The Arbitrator shall serve for a period of four years from the date of his appointment and his term shall automatically be renewed for further periods of four years each, unless the Company notifies the Arbitrator or the Arbitrator notifies the Company in writing 120 days prior to the end of the original or prolonged term of the termination of the service of the Arbitrator for any reason whatsoever.

The Arbitrator who is serving the Company on the date of acceptance of this Article shall be deemed to have commenced his term on the date of the acceptance of this Article by the Extraordinary General Meeting.

51.1.3 In case the Arbitrator ceases to serve under the provisions of Article 51.1.2 above, or if he is unable to continue his service for any reason whatsoever, the Company shall again request the appointment of an Arbitrator in accordance with Article 51.1.1.

51.1.4 A decision concerning the renewal or non-renewal of the service of the Arbitrator under Article 51.1.2 shall be approved by the Board of Directors in a session in which at least the 7 elected Members of the Board are present and at least 5 of them voted for the approval of the decision.

51.2 The Arbitrator’s Authority

The Arbitrator shall have the exclusive jurisdiction to try and decide in each of the following matters:

(a) Any dispute between a shareholder and the Company;

(b) Any dispute between the shareholders themselves which derive from the mutual relationship thereof in any matter connected with their rights and obligations towards the Company;

(c) Disputes between the Directors and the Company and between the Directors themselves which derive from their duty as Directors, including any matter connected with the termination of the service of a Director in the Company;

(d) Appeal on any decision of the Election Committee;

(e) Disputes between the shareholders themselves in the field of copyright or moral rights connected with works administered by the Company, including an allegation of plagiarism.

51.3 Procedures before the Arbitrator

51.3.1 The Arbitrator will be subject to substantive law, but will not be subject to the rules of evidence nor to any procedures.

51.3.2 The Arbitrator will be authorized to grant a declaratory judgment, a mandatory injunction or a prohibiting injunction, and any other remedy which the Court is authorized to grant.

51.3.3 Whoever wishes to approach the Arbitrator or the Arbitration Committee will submit his claim to the Company Secretary. With the submission of the claim, the claimant will pay a claim fee as follows:

A. In a claim for a fixed sum – a fee in NIS equal to 1.25% of the amount of the claim, but not less than NIS 100. If a procedure of submission of evidence (proof) is conducted in this case, the claimant will pay no later than 5 days before the date of commencement of the hearing of the evidence, and as a condition of its taking place, a further sum in NIS equal to 1.25% of the amount of the claim, but no less than NIS 100.

B. In the matters specified below, a fixed claim fee of NIS 350 shall be paid;

B.1 Declaratory order, prohibiting injunction, mandatory injunction or enforcement order, apart from a claim for monetary remedy as a result of such an order;

B.2 The duty to account, apart from a claim for monetary remedy as a result of producing accounts.

C. The amount of the claim fee will be linked to the Consumer Price Index and adjusted annually.

D. If the claimant so requests, the Arbitrator and/or the Arbitration Committee, is entitled, at his/its discretion, if it is proven to the Arbitrator, and/or the Arbitration Committee, that the claimant is in a state of considerable economic hardship, which prevents him from paying the said claim fee, to exempt the claimant from payment of the claim fee.

E. With the submission of the claim, the Company Secretary shall open a file, number it and transfer it to the Arbitrator or the Arbitration Committee and to the Defendant. The claim will be sent to the Defendant together with a registered letter, with “proof of delivery”, signed by the Company Secretary, informing the Defendant that a claim has been brought against him and that he must submit a statement of defense within 30 days of receipt of the claim. The letter will include a notice to the Defendant that if he does not submit a statement of defense within the said period, the Arbitrator or the Arbitration Committee will be authorized and entitled to hear the claim in his absence.

F. When awarding costs in the case, the Arbitrator or the Arbitration Committee (as the case may be) may use his/its discretion as to whether or not to take into account the amount of the claim fee paid by the Plaintiff in the case.

G. Furthermore, in claims which are conducted between ACUM members, the Arbitrator or the Arbitration Committee as the case may be will have the authority to award costs in favor of ACUM, taking into account the costs incurred by ACUM in connection with the arbitration proceedings.

H. If the hearing of the claim ends after the first arbitration meeting (even if it was only a preliminary meeting), the claim fee paid by the Plaintiff will be returned in full.

51.3.4 According to the Defendant’s request, the Arbitrator is authorized to extend the term in which to submit the Statement of Defense, provided that the extension will not exceed 30 days and the decision regarding the extension will be recorded in the protocol of the claim file.

51.3.5 The decision of the Arbitrator will be given within 3 months of the date he commenced hearing the case, but the Arbitrator is allowed to extend the term from time to time, as he deems necessary for special reasons which will be recorded.

51.3.6 The Arbitrator will be entitled to a professional fee which will be paid by the Company, as agreed between the Arbitrator and the Company.

51.3.7 If a claim has been filed with the Arbitration Committee and sent to the Defendant, and the Defendant informed the Company Secretary of his wish that the claim be heard by the Arbitrator, the Company Secretary will act in accordance with Article 51.1.3 above, as if the claim was filed with the Arbitrator from the beginning.

51.3A Notification of the decisions of the Arbitrator/Arbitration Committee

The Board of Directors of ACUM is entitled to notify ACUM Members of the Arbitrator’s decision and the decisions of the Arbitration Committee (as defined in Regulation 51A below)

Notwithstanding the aforesaid, at the request of any of the parties to the arbitration, the Arbitrator, or the Arbitration Committee (as the case may be) is entitled to prohibit notification of a decision (or any part of it), for reasons to be recorded, in the event that the decision involves a matter regarding the personal life of the Plaintiff, including his past sexual life or his state of health, or his behavior in private, or in the event the Arbitrator or the Arbitration Committee (as the case ,may be) believed that modification of the decision would be an inappropriate disclosure of the private affairs of the Plaintiff. In this regard, any of the matters enumerated in Regulations 51.2 and 51.11A (including their sub-provisions), as such, shall not be considered as a “private matter” of the Plaintiff.

51.4 Arbitration Agreement

This Article constitutes a binding Arbitration Agreement between all the parties mentioned in Article 51.2, amongst themselves, with regard to the matters mentioned in the said Article.

51a. Arbitration and Appeals Committee

51A.1

An Arbitration and Appeals Committee (hereinafter: “the Committee”) shall be elected once every four years in a General Meeting in which a new Board of Directors is elected. The procedure for election of the Committee shall be identical mutatis mutandis with the procedure for the election of the Board of Directors.

51A.2 The Committee shall consist of shareholders of 3 secotrs, a writer, a composer and a publisher. Each of the Committee members shall have a substitute from the same sector as the member.

51A.3 The Members of the Committee shall be elected by the General Meeting out of a list of candidates who submitted their candidacy. A candidate to the Committee shall have to submit, as a condition for the candidacy, consent signatures of 7 shareholders having the right to vote, not necessarily of the same sector as the candidate, for the candidacy of the candidate.

51A.4 A Committee member shall serve four years and he may be elected for one further period of four years only. A Committee member who served two consecutive periods and was not a member for a period of four years at the end of the above two periods, may be elected again as a member for no more than two consecutive periods of four years each.

51A.5 In case for any reason any of the Committee Members shall be unable to serve on the Committee or resigns from the Committee, the Chairman of the Board of Directors shall be entitled to summon the substitute for the above Member to serve on the Committee. If for any reason the above Member does not have a substitute, the Chairman of the Board of Directors may at his discretion summon a substitute from another sector.

51A.6 The Committee shall elect its chairman. For this purpose, the Chairman of the Board of Directors shall summon the members of the Committee not later than 14 days after its election.

51A.7 A quorum in the Committee shall consist of three members present at the meeting or a delayed meeting. The chairman of the Committee shall conduct its meetings.

51A.8 The decisions of the Committee shall be passed by a simple majority. In case of a deadlock, the chairman shall have a casting vote.

51A.9 A Member of the Committee shall not participate in a meeting of the Committee in which a matter is discussed inwhich the Member has a personal interest (an Estopped Member). In such a case, the substitute of the Estopped Member shall participate in the meeting instead of the Estopped Member. This provision does not prevent the Estopped Member from participating in the Committee meetings in any other matter.

51A.10 The provisions of Articles 37.9 and 37.10 shall apply mutatis mutandis to the members of the Committee.

51A.11 The Committee shall have parallel jurisdiction in the following matters which are within the jurisdiction of the Arbitrator, if both parties to the dispute agree that the Committee will have the jurisdiction:

Disputes between shareholders in a matter of copyright or moral rights relating to works administered by the Company, including an allegation of plagiarism.

Chapter 5 – Company Officers who are not Directors, the Company’s Auditor

52 General Manager

52.1 Appointment and Dismissal of General Manager

The Board of Directors shall appoint a General Manager, for a determined or indeterminate period.
The Board of Directors may appoint more than one General Manager.

The General Manager need not be a shareholder in the Company.

The remuneration and terms of employment of the General Manager shall be determined by the Board of Directors, in any manner the Board of Directors deems fit.

The Board of Directors may discharge the General Manager from his position from time to time, or dismiss him and appoint another or others to serve in his place.

A resolution for the appointment or dismissal of a General Manager of the Company shall be adopted by a special majority of the board of directors.

A member of the Board of Directors or a substitute director appointed to serve as a General Manager shall have to resign from the Board of Directors or from substitution with the Board of Directors, and to act subject to the provisions of Article 8.16.

The General Manager’s role, powers and terms of employment shall be determined by the Board of Directors, also by a special majority of the board of directors.

Any other senior employee for permanent employment with the Company may be accepted by decision of the Board of Directors passed by a simple majority.

52.2 Chairman of the Board of Directors as General Manager

Notwithstanding the provisions of Articles 8.16 and 52.1(F) above, the Company’s General Meeting may authorize the Chairman of the Board of Directors to serve as General Manager or to exercise his powers, for a period not exceeding one calendar year from the date of appointment.

52.3 The Powers of the General Manager and his Subordination to the Board of Directors

The General Manager is responsible for the day to day management of the Company’s business in accordance with the policies determined by and subject to the instructions of the Board of Directors.

The General Manager shall have all management and implementation powers not vested in another organ of the Company by law or by these Articles, and any other power delegated to him, and he shall be controlled by the Board of Directors and subject to its instructions.

The General Manager shall appoint, employ and dismiss Company officers, excluding directors, and shall determine their terms of employment unless otherwise prescribed by the Board of Directors.

The Board of Directors may instruct the General Manager how to act in any particular matter; if the General Manager does not act in accordance with such instruction, the Board of Directors may exercise the powers required in order to perform such instruction in the General Manager’s place. The Board of Directors may take upon itself powers granted to the General Manager for a particular matter or for a determined period of time.

If the General Manager is unable to exercise his powers, the Board of Directors may exercise such powers in his place, or empower another to do so.

The Board of Directors may empower the General Manager to fulfill all or some of its powers.

52.4 General Manager’s duty to report

The General Manager has to notify the Chairman of the Board of Directors of any unusual matter of substantial importance to the Company or of any substantial deviation on the part of the Company from policy determined by the Board of Directors. If for any reason the Company has no Chairman of the Board of Directors, the General Manager shall make such report to the all members of the Board of Directors.

The General Manager shall submit reports to the Board of Directors on issues, at such time and in such scope as determined by the Board of Directors.

The General Manager shall report to the Chairman of the Board of Directors upon demand on issues relating to the Company’s business and its proper management

52.5 Delegation of the powers of the General Manager

The General Manager may delegate powers to a person subordinate to him, with the approval of the Board of Directors. However, such delegation of powers does not release the General Manager from his responsibility.

53 Secretary and Other Officers in the Company
Secretary

53.1 The Board of Directors may appoint a secretary of the Company, under such terms as it deems fit, and appoint a deputy secretary, and define their areas of office and powers, subject to the provisions of Article 32.1.

If no secretary is appointed, the General Manager, or a person authorized by him, and in the absence of a General Manager, any person so authorized by the Board of Directors, shall fulfill the duties of the secretary under the law, these Articles and under the decisions of the Board of Directors.

53.2 The Company secretary shall be responsible for all documents kept at the Company’s registered office, as stated in Section 124 of the Companies Act, and shall manage the records kept by the Company under the law.

53.3 Other Company officers

The Board of Directors may resolve that apart from the General Manager and the secretary, it shall appoint other officers of the Company, whether in general or in a specific case. In such a case, the Board of Directors shall appoint the officer, define his duties and powers, and determine his remuneration and terms of employment.

54 Company’s Auditor

54.1 The annual General Meeting shall appoint an auditor for a period up to the end of the next annual General Meeting.

54.2 The General Meeting may appoint an auditor for a period not extending beyond the third annual meeting following the annual meeting at which he was appointed. In the event the auditor has been appointed for such period, the annual meeting shall not deal with the appointment of an auditor during the said period, unless a decision has been made to terminate his office.

54.3 The General Meeting may at any time dismiss the auditor, or not renew his appointment.

54.4 The Board of Directors shall determine the remuneration of the auditor, and shall report this to the Company’s annual meeting.

54.5 The Board of Directors shall determine the remuneration of the auditor for additional services which are not auditing services, and shall report this to the Company’s annual meeting.

Chapter 6 – Distribution of Royalties

55 Financial Regulations

Licenses, tax invoices and receipts shall be issued by the Company only, and on the Company’s official forms. They shall contain such terms and provisions deemed appropriate from time to time.

55.1 Distribution of royalty money and rights

(A) By virtue of the rights assigned to or to be assigned, or which have to be assigned to the Company under these Articles, the Company shall act for the benefit of its shareholders and members of the affiliated foreign Societies. All monies received or to be received by the Company shall be divided, budgeted and allocated or administered subject to and in accordance with these Articles.

(B) All amounts collected by the Company as royalties for the use of works protected by the Company shall be recorded to the credit of various accounts, according to the sources of such sums.

(C) After deduction of the Company’s expenses related to the collection and distribution of these sums, and to the management of the Company’s business and operations, and after deduction of the amounts determined by the Board of Directors as contributions and allowances for any charities, pension or any other fund, the amounts recorded to the credit of the aforesaid various accounts shall be distributed among the shareholders, in accordance with the various accounts and various types of royalties, determined according to the decisions of the Board of Directors, and according to the various types of works, their appraisal and distribution of royalties applicable thereto according to the existing Table or a Table applicable from time to time.

The Board of Directors has the power to decide that in any case where the cost of deciphering user’s reports and entering them into the Acum data base is not reasonable in proportion to the royalties to be distributed for uses set forth in such reports, royalties shall be distributed according to a sample. The Company shall prepare the sample, and the Board of Directors must approve it.

The Board of Directors shall establish an appeals committee on the matter of the sample (hereinafter: the “appeals committee”).

A shareholder who contends that he has been discriminated against in the distribution of royalties as a result of the use of the sample may submit an appeal to the appeals committee. The appeals committee, after hearing the appellant’s and the Company’s contentions, shall have the power to hear and decide the appeal. The appeals committee shall be deemed to be an adjudicator (and not an arbitrator), and its decision shall be final for all intents and purposes.

(D) Any change in the existing Table, determining the appraisal of a work by a number of points and the distribution of royalties among persons who jointly own the rights therein, shall be done only in a meeting of the Board of Directors, in which all members of the Board of Directors are present and by a special majority of the board. Any change to the table related to the rights of the publisher may be made only if the publisher, a member of the board, is among the members of the board of directors voting for said change. ,

(E) All amounts received by the Company (save those referred to in Article 55.1(A)), shall be handled and distributed in accordance with Articles 55.1(B) and (C), and subject to such changes as may be required or as the Board of Directors may instruct from time to time.

(F) Distribution according to the work appraisal Table may be changed by an agreement between the shareholders, by written notice to the Board of Directors regarding such agreement, to be signed by the shareholders affected by the change; provided, however, that the portion of the author shall be no smaller than 50% (fifty percent) of all royalties paid for such works.

(G) No shareholder may submit notice to the Company requesting that the Company pay another person all or part of the amount to which that shareholder is entitled; however, the Board of Directors may allow delivery of such notice in writing, at its discretion.

(H) Any amount allocated for distribution, not collected during the three years following dispatch of notice on the matter to the shareholder’s last known address, or to any person to whom the member requested to send such notice, may be reallocated for distribution. However, the Board of Directors may transfer such sums to any of the Company’s funds. Royalties not paid to members due to mistakes on the part of the Company, which the member, in good faith, failed to demand, shall be returned to the shareholder upon demand, even if more than three years have passed from the time of distribution, provided that no more than seven years have passed since that time.

This Article shall apply only with regard to royalties distributed for the period beginning on January 1, 1994 onwards. The Board of Directors may prescribe a minimal sum and any lower amount shall not be credited to shareholders’ accounts.

(I) Notwithstanding the provisions of Sub-Article (H) above, any amount allocated for a shareholder who is a publisher, which was not collected for a period of three years from the time notice was sent in respect thereof, to the shareholder’s last known address, or to a person to whom the member requested to send such notice, the Board of Directors may transfer said sum to the author or authors of the works for which the amount was allocated.

If the work had more than one author, the aforesaid sum shall be divided among them according to the Table.

(J) A shareholder who received royalties together with an account of royalties, and did not give notice that he disagrees with the contents of the account within 12 months of the date of the account shall be deemed to have agreed that the account is true and complete, and shall not have any right to object thereto. All royalty accounts sent to members shall quote this provision.

(K) The Company shall publish on its internet site information regarding works in respect of which royalties cannot be paid due to missing information; such information shall be open for all shareholders to see.

55.2 Distribution of royalties shall take place at the time or times each year as the Board of Directors shall decide. All distributions of royalties are final and binding, unless any shareholder has submitted an appeal within three years of the date of the appealed distribution.

55.3 Revoked.

55.4 Any income received by the Company from money accumulated and not yet distributed for various reasons, under Article 55.1 (B), shall be the property of the shareholders entitled thereto. However, such money shall be paid subject to a decision by the Board of Directors, in accordance with the provisions of Article 55.1(C) above.

The Company may invest any such aforesaid money accumulated and not yet distributed in solid investments in order to maintain the capital and to guarantee the fruit. The Board of Directors shall determine from time to time the manner and the period of investment of the money, taking into account the expected time such money shall be distributed among the members.

56 Acum Member Welfare Fund

56.1 Upon the distribution of royalties as stated in Article 55.1 (C) above, the Board of Directors may pay, through the Acum Member Welfare Fund, to needy Acum members (in the case of a deceased member – to the widow or orphans) a one-time or another payment.

56.2 The money so paid shall be part of the money distributed among the shareholders, and the Board of Directors may each year determine the percentage or the maximum amount out of the Company’s total income to be divided among needy members.

Chapter 7– Officers’ Insurance, Indemnification and Waiver of Liability

57 Officers’ insurance

57.1 The Company may insure the liability of its officers solely in accordance with the provisions of this chapter.

57.2 The Company may engage in a contract to insure the liability of an officer of the Company for any liability imposed on him due to any action taken by him by virtue of his service as an officer, in respect of each of the following cases:

Breach of the duty of care towards the Company or towards any other person;

Breach of fiduciary duty of care towards the Company, provided that the officer acted in good faith and had a reasonable ground to believe that the action would not harm the welfare of the Company;

Financial liability imposed on the officer in favor of another person.

57.3 The Company may not engage in a contact to insure the liability of its officers in respect of each of the following cases:

Breach of fiduciary duty towards the Company, except where the officer acted in good faith and had a reasonable ground to believe that the action would not harm the welfare of the Company;

Breach of duty of care done with intent or recklessly;

Any action done with the intention of making unlawful personal gain;

A fine or ransom imposed

58 Indemnification of Officers

58.1 The Company shall indemnify its officers solely in accordance with the provisions of this chapter.

58.2 Advance Indemnification

The Company may undertake in advance to indemnify an officer, provided that the undertaking is limited to a type of events which, in the opinion of the Board of Directors, can be foreseen at the time the undertaking to indemnify is made, except in the case of the events named in Article 57.3 above, and in the amount the Board of Directors shall prescribe as reasonable, under the circumstances.

58.3 Retroactive remuneration

The Company may indemnify an officer retroactively for all types of events, except the events named in Article 57.3 above.

58.4 The Company may indemnify an officer for a liability or expense imposed upon him following an action done by virtue of his office in the Company, as follows:

Financial liability imposed upon him in favor of another person pursuant to a judgment, including a judgment awarded by compromise or arbitrator’s award approved by the court.

Reasonable costs of litigation, including advocate’s fees, incurred by the officer or awarded against him by the court in proceedings brought against him by or on behalf of the Company, or by another person or on a criminal indictment from which he is acquitted, or on a criminal indictment in which he is convicted of an offense which does not require criminal intent.

59 Waiver of liability

59.1 The Company may waive the liability of any officer for breach of a duty of care towards it solely in accordance with the provisions of this chapter.

59.2 The Company may waive all or any part of an officer’s liability in advance and retrospectively, for damage resulting from breach of duty of care towards the Company.

59.3 Notwithstanding the aforesaid, the Company shall not waive any officer’s liability for any of the following cases:

Breach of fiduciary duty towards the Company;

Breach of duty of care done with intent or recklessly;

An action done with the intention of making unlawful personal gain;

A fine or ransom imposed
Chapter 8– Dissolution and Reorganization of the Company
60 Dissolution

60.1 Upon dissolution of the Company, whether voluntary or otherwise, the Company’s surplus assets, except the copyright assigned to the Company by the shareholders, shall be divided among the shareholders pro rata to each shareholder’s portion of royalties paid by the Company during the period of at least 10 years preceding the dissolution, according to information existing in the Company records.

60.2 Upon dissolution of the Company, the rights (if any) assigned to the Company by any shareholder, or which are under the control of the Company due to him being a shareholder, shall be returned to the shareholder or to the shareholder’s personal legal representative or lawful heirs.

61 Reorganization of the Company

61.1 Upon the sale of the Company’s assets, the Board of Directors, or the liquidators (in the case of dissolution), if so empowered by a resolution passed by the Company’s General Meeting by simple majority, may receive fully or partially paid up shares, debentures or other Company securities of another company, Israeli or foreign, whether incorporated or about to incorporate for the purpose of purchasing the Company’s assets or any part thereof, and the Board of Directors (if the Company profits allow) or the liquidators (in the case of dissolution) may divide such shares or securities or any other Company assets among the shareholders, without realizing them, or deposit them in the hands of trustees in the name of the shareholders.

61.2 The General Meeting may resolve, by resolution passed thereby by a simple majority, on assessment of securities or of the assets mentioned above, at such price and in such manner as the General Meeting shall decide, and all shareholders shall be obligated to accept the assessment or the division so authorized, and to waive their rights in this matter, save, in the event the Company is dissolved or is in the process of dissolution, such legal rights (if any) which according to the provisions of law cannot be modified or deviated from.

61.3 The provisions of Article 60.2 shall apply, mutatis mutandis, with regard to reorganization of the Company.

Chapter 9– Miscellaneous

62 Accounts

The Board of Directors shall ensure that books of account are kept for:

1.Money received and expended by the Company for the purposes such money was received or expended.

2.The Company’s expenses and undertakings.

62.1 The books of account shall be kept at the Company’s registered office or at such other place as the Board of Directors sees fit, and shall at all times be open for inspection by the members of the Board of Directors subject to the provisions of Article 37.9.

62.2 The Board of Directors shall decide from time to time to what extent, when where and under what conditions and regulations Company shareholders who are not directors may examine the Company books. Shareholders who are not directors shall not be entitled to examine the Company books, accounts or any other Company documents, except where the law so authorizes or when permission is granted by the Company’s Board of Directors.

63 Notices

63.1 A notice or any document may be delivered by the Company to any shareholder appearing in the Company’s register of shareholders in one of the following manners:

Personally , by post, by facsimile or by electronic mail. Any notice shall be addressed to the address recorded in the Company’s shareholders register.

63.2 With regard to shares having joint owners, notice shall be delivered to the person whose name appears first in the shareholders’ register, and any notice so delivered shall be deemed a sufficient notice to all joint shareholders.

63.3 Any shareholder registered in the shareholders’ register having an address in Israel or abroad shall be entitled to have any notice which he is entitled to receive under these Articles or by law sent to him at such address. Apart from the aforesaid, any person not registered in the shareholders’ register , shall not be entitled to receive notice from the Company.

63.4 Any notice or other document served or delivered to a shareholder in accordance with these Articles shall be deemed to have been duly served and delivered for all shares held by such a shareholder (whether held alone or jointly with others), even if such shareholder was deceased at the time, or became bankrupt, or under dissolution order, or a trustee or liquidator or receiver was appointed for such shares (whether or not the Company knew of it), until such time as another person is registered in the shareholders’ register in place of such member, and service or delivery of such aforesaid notice or document shall be deemed sufficient service or delivery for any person having rights in such shares.

63.5 Any notice or other document sent by the Company shall be deemed to have been received:

If sent by post within 48 hours from the time of the delivery of the letter to the Post Office, if sent by facsimile at the time it was sent, if sent by electronic mail at the time of the sending of the electronic mail.

63.6 The unintentional failure to dispatch notice to a member of a General Meeting or a member’s failure to receive such notice regarding a meeting or any other notice shall not affect the validity of any resolution passed at the meeting or cause cancellation of processes based on such notice.

63.7 Any shareholder who is a member of the Board of Directors may waive his right to receive notice or to receive notice at a certain time, and may agree that the General Meeting or meeting of the Board of Directors, accordingly, shall convene and take place notwithstanding the fact that he has received no notice thereof, or notwithstanding the fact that notice was not served at the time required, subject to the provisions of any law prohibiting such waiver or consent.

63.8 If a shareholder has no registered address in Israel and has not given the Company an address to which notice may be sent, and contact with the member has been lost, the Company shall advertise for such member in one of the newspapers in Israel, asking that he provide the Company his address. If the member has not responded within 21 days of the date of publication of such notice, the Company shall advertise another such notice.

63.9 If the shareholder has not responded to the second notice within 21 days of publication, the provisions of Article 13.1.8 shall apply.

63.10 Notice of a General Meeting shall be served on all Company shareholders in accordance with the provisions of these Articles, save such shareholders who have no registered address in Israel or have not provided an address for service of notice in Israel. No other person shall be entitled to receive notice of the convening of any General Meeting.