SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
SCHEDULE TO
(Rule 14d-100)
Tender Offer Statement under
Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934
 
MAGAL SECURITY SYSTEMS LTD.
(Name of Subject Company (Issuer))

FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP
FIMI FIVE 2012 LTD.
SHIRA AND ISHAY DAVIDI MANAGEMENT LTD.
ISHAY DAVIDI
(Name of Filing Person (Offeror))
 
ORDINARY SHARES, PAR VALUE NIS 1.0 PER SHARE
(Title of Class of Securities)
 
M6786D104
(CUSIP Number of Class of Securities)
 
Gillon Beck
FIMI FIVE 2012 Ltd.
Alon Towers 2, 94 Yigal Alon Street, Tel-Aviv 6789141, Israel
Telephone: +972-3-565-2244
(Name, address and telephone numbers of person authorized to receive
notices and communications on behalf of filing persons)

With copies to:
Sharon Amir, Adv.
Tuvia Geffen, Adv.
Idan Lidor, Adv.
Naschitz, Brandes, Amir & Co.
5 Tuval Street
Tel-Aviv 6789717, Israel
Telephone: +972-3-623-5000
 
Andris Vizbaras, Esq.
Carter Ledyard & Milburn LLP
2 Wall Street
New York, NY  10005
Telephone: (212) 238-8698
 



CALCULATION OF FILING FEE
Transaction Valuation*
$25,573,636
 
Amount of Filing Fee**
$3,320
*
 
For purposes of calculating the filing fee only, this amount is based on the offer to purchase 8,669,029 ordinary shares of Magal Security Systems Ltd. at a purchase price of $2.95 cash per share.

**
 
The amount of the filing fee was calculated in accordance with Rule 0-11 of the Exchange Act and Fee Rate Advisory # 1 for Fiscal Year 2020 issued by the Securities and Exchange Commission, by multiplying the transaction valuation by 0.0001298.


 
Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

   

Amount Previously Paid: None.
Form or Registration No.: Not Applicable.


 Filing Party: Not Applicable.
 Date Filed: Not Applicable.

 
Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

 
Check the appropriate boxes below to designate any transaction to which the statement relates:

 
 
third-party tender offer subject to Rule 14d-1
 
 
issuer tender offer subject to Rule 13e-4
 
 
going-private transaction subject to Rule 13e-3
 
 
amendment to Schedule 13D under Rule 13d-2
 
 
Check the following box if the filing is a final amendment reporting the results of the tender offer: ☐

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
 
☐Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
 
☐Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
2

 
This Tender Offer Statement on Schedule TO (this “Schedule TO”) is filed by FIMI Opportunity V, L.P, a limited partnership organized under the laws of the State of Delaware and FIMI Israel Opportunity Five, Limited Partnership, a limited partnership organized under the laws of the State of Israel (collectively, the “Bidder”), FIMI Five 2012 Ltd., Shira and Ishay Davidi Management Ltd. and Ishay Davidi, and relates to the offer by the Bidder to purchase 8,669,029 outstanding ordinary shares, nominal (par) value NIS 1.0 per share (the “Shares”), of Magal Security Systems Ltd. (“Magal”), at $2.95 per Share, net to the seller in cash, less any applicable withholding taxes, and without interest, upon the terms of, and subject to the conditions to, the Offer to Purchase, dated May 22, 2020 (the “Offer to Purchase”) and the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)(A) and (a)(1)(B), respectively (which, together with any amendments or supplements thereto, constitute the “Offer”).
 
This Schedule TO is intended to satisfy the reporting requirements of Rule 14d-1 under the Securities Exchange Act of 1934, as amended. Pursuant to General Instruction F to Schedule TO, the information contained in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference in response to all of the items of this Schedule TO as more particularly described below. Capitalized terms used herein but not otherwise defined have the meaning ascribed to such terms in the Offer to Purchase.
 
ITEM 1. SUMMARY TERM SHEET.
 
The information set forth under “Summary Term Sheet” in the Offer to Purchase is incorporated herein by reference.
 
ITEM 2. SUBJECT COMPANY INFORMATION.
 
(a) The information set forth in Section 8 (“Information Concerning Magal”) of the Offer to Purchase is incorporated herein by reference.
 
(b) The information set forth under “Introduction” in the Offer to Purchase is incorporated herein by reference.
 
(c) The information set forth under in Section 6 (“Price Range of the Shares Etc.”) in the Offer to Purchase is incorporated herein by reference.
 
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
 
(a), (b) and (c) The information set forth in the Offer to Purchase under “Introduction,” Section 9 (“Information Concerning the Bidder Group”) and in Schedule I to the Offer to Purchase is incorporated herein by reference.
 
ITEM 4. TERMS OF THE TRANSACTION.
 
(a) The information set forth in the following sections of the Offer to Purchase is incorporated herein by reference:
 
 “Summary Term Sheet;”
3

 “Introduction;”
 
 Section 1 (“Terms of the Offer; Proration; Expiration Date”);
 
 Section 2 (“Acceptance for Payment and Payment”);
 
 Section 3 (“Procedures for Tendering Shares or Notifying Us of Your Objection to the Offer”);
 
 Section 4 (“Withdrawal Rights”);
 
 Section 5 (“Material U.S. Federal Income Tax and Israeli Income Tax Consequences”);
 
 Section 11 (“Conditions of the Offer”); and
 
 Section 14 (“Miscellaneous”).
 
The information set forth in the Letter of Transmittal and the Notice of Objection, copies of which are attached hereto as Exhibits (a)(1)(B) and (a)(1)(F), respectively, is also incorporated herein by reference.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
 
(a) and (b) The information set forth in the Offer to Purchase under “Introduction,” “Background to the Offer—Related Party Transactions,” Section 9 (“Information Concerning the Bidder Group”) and Schedule I to the Offer to Purchase is incorporated herein by reference.
 
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
 
(a) The information set forth in the Offer to Purchase under “Summary Term Sheet,” “Background to the Offer—Background” and “Background to the Offer—Purpose of the Offer; Reasons for the Offer” is incorporated herein by reference.
 
(c)(1) through (c)(7) The information set forth in the Offer to Purchase under “Background to the Offer—Plans for Magal after the Offer; Certain Effects of the Offer,” Section 7 (“Effects of the Offer on the Market for Shares; Registration under the Exchange Act”) and Section 9 (“Information Concerning the Bidder Group”) is incorporated herein by reference.
 
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
 
(a), (b) and (d) The information set forth in the Offer to Purchase under “Summary Term Sheet,” “Background to the Offer—Background” and Section 10 (“Sources and Amount of Funds”) is incorporated herein by reference.
4

 
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
 
(a) and (b) The information set forth in the Offer to Purchase under “Introduction,” “Background to the Offer—Related Party Transactions,” Section 9 (“Information Concerning the Bidder Group”) and in Schedule I to the Offer to Purchase is incorporated herein by reference.
 
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
 
(a) The information set forth in the Offer to Purchase under Section 13 (“Fees and Expenses”) is incorporated herein by reference.
 
ITEM 10. FINANCIAL STATEMENTS.
 
(a) and (b) The Bidder does not believe that its financial statements are material to the decision of holders of Shares whether to tender the Shares and accept the offer because: (i) the Offer consideration consists solely of cash; (ii) the Offer is not subject to any financing condition; and (iii) the Bidder already holds 42.6% of the issued and outstanding shares of Magal as of May 21, 2020, and therefore the Bidder is already a controlling shareholder of Magal; (iv) the Bidder is a private equity fund and it invests based on capital commitments of the partners in the limited partnerships comprising the funds, but these capital commitments are not reflected in the Bidder’s financial statements until actually called for by the Bidder prior to making an investment, so the Bidder’s financial statements do not accurately reflect its financial position or resources; and (v) the Bidder’s financial statements primarily reflect its fund manager’s ability to manage an investment portfolio, rather than the Bidder‘s ability to manage an operating company such as Magal. While the Bidder does not believe that its financial condition is material to the decision of a holder of Shares whether to tender the Shares and accept the Offer, certain selected financial information is set forth in the Offer to Purchase under Section 10 (“Sources and Amount of Funds”) and is incorporated herein by reference.
 
ITEM 11. ADDITIONAL INFORMATION.
 
(a) The information set forth in the Offer to Purchase under “Background to the Offer—Interest of Persons in the Offer,” “Background to the Offer—Related Party Transactions,” Section 7 (“Effect of the Offer on the Market for Shares; Registration Under the Exchange Act”), Section 9 (“Information Concerning the Bidder Group”) and Section 12 (“Legal Matters and Regulatory Approvals”) is incorporated herein by reference. The Bidder is not aware of any pending material legal proceedings relating to the Offer.
 
(c) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference.
 
On May 22, 2020, the Bidder issued a press release announcing the commencement of the Offer, a copy of which is filed as Exhibit (a)(5)(A) to this Schedule TO and is incorporated herein by reference.
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ITEM 12. EXHIBITS.
 
 
 
NO.
 
DESCRIPTION
(a)(1)(A)
 
Offer to Purchase dated May 22, 2020.
(a)(1)(B)
 
Letter of Transmittal.
(a)(1)(C)
 
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(D)
 
Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)
 
Notice of Objection.
(a)(1)(F)
 
Declaration Form (“Declaration of Status for Israeli Income Tax Purposes”).
(a)(5)(A)
 
Text of Press Release issued by the Bidder on May 22, 2020.
(a)(5)(B)
 
Summary Advertisement published on May 22, 2020.
(c)
 
Not applicable.
(d)
 
Not applicable.
(e)
 
Not applicable.
(f)
 
Not applicable.
(g)
 
Not applicable.
(h)
 
Not applicable.
     

ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
 
Not applicable.
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SIGNATURES

After due inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certify that the information set forth in this statement is true, complete and correct.

 
FIMI OPPORTUNITY V, L.P.
By: FIMI FIVE 2012 LTD., its general partner
       By: /s/ Ishay Davidi
              Name: Ishay Davidi
              Title: Chief Executive Officer
 
 
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP
By: FIMI FIVE 2012 LTD., its general partner
       By: /s/ Ishay Davidi
              Name: Ishay Davidi
              Title: Chief Executive Officer
 
 
FIMI FIVE 2012 LTD.
By: /s/ Ishay Davidi
       Name: Ishay Davidi
       Title: Chief Executive Officer
 
 
SHIRA AND ISHAY DAVIDI MANAGEMENT LTD.
By: /s/ Ishay Davidi
       Name: Ishay Davidi
       Title: Chief Executive Officer
 
 
/s/ Ishay Davidi
Ishay Davidi

Dated: May 22, 2020
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EXHIBIT INDEX

NO.
 
DESCRIPTION
 
 
 
 
 
 
 
 
(c)
 
Not applicable.
(d)
 
Not applicable.
(e)
 
Not applicable.
(f)
 
Not applicable.
(g)
 
Not applicable.
(h)
 
Not applicable.
     
 
8


Exhibit (a)(1)(A)

OFFER TO PURCHASE FOR CASH
   8,669,029  ORDINARY SHARES
OF
MAGAL SECURITY SYSTEMS LTD.
AT
$2.95 NET PER SHARE
by
FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP

THE INITIAL OFFER PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK TIME, ON JUNE 22, 2020, UNLESS THE OFFER IS EXTENDED.

We, FIMI Opportunity V, L.P, a limited partnership organized under the laws of the State of Delaware and FIMI Israel Opportunity Five, Limited Partnership, a limited partnership organized under the laws of the State of Israel (collectively, “FIMI”), are offering to purchase 8,669,029 ordinary shares, NIS 1.0 par value per share, of Magal Security Systems Ltd., (“Magal” and “Magal Shares”, respectively), at the price of $2.95 per Magal share, net to you (subject to withholding taxes, as applicable), in cash, without interest. Based on the Annual Report on Form 20-F filed by Magal on April 23, 2020, as of December 31, 2019, there was a total of 23,153,985 Magal Shares issued and outstanding.
 
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE FOLLOWING:
 
(I)
 
AT LEAST 1,200,000 MAGAL SHARES (CURRENTLY REPRESENTING APPROXIMATELY 5.2% OF THE ISSUED AND OUTSTANDING SHARES AND VOTING POWER OF MAGAL), ARE VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE COMPLETION OF THE INITIAL OFFER PERIOD (AS DEFINED BELOW);
(II)
 
IN ACCORDANCE WITH ISRAELI LAW, AT THE COMPLETION OF THE INITIAL OFFER PERIOD, THE AGGREGATE NUMBER OF MAGAL SHARES VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN IS GREATER THAN THE AGGREGATE NUMBER OF MAGAL SHARES REPRESENTED BY NOTICES OF OBJECTION TO THE CONSUMMATION OF THE OFFER; AND
(III)
THE ISRAEL COMPETITION AUTHORITY SHALL HAVE APPROVED THE PURCHASE OF THE MAGAL SHARES PURSUANT TO THIS OFFER TO PURCHASE.

THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE.  SEE SECTION 11, WHICH SETS FORTH IN FULL THE CONDITIONS OF THE OFFER.
 
THE OFFER IS NOT CONDITIONED ON THE AVAILABILITY OF FINANCING OR THE APPROVAL OF THE BOARD OF DIRECTORS OF THE COMPANY.
 
IF MORE THAN 8,669,029 MAGAL SHARES IN THE AGGREGATE ARE VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN, WE WILL PURCHASE A PRO RATA NUMBER OF MAGAL SHARES FROM ALL TENDERING SHAREHOLDERS, SO THAT WE WOULD PURCHASE NO MORE THAN 8,669,029 MAGAL SHARES.
 
THE INITIAL PERIOD OF THE OFFER WILL EXPIRE AT 10:00 A.M., NEW YORK TIME ON JUNE 22, 2020, UNLESS THE INITIAL PERIOD OF THE OFFER IS EXTENDED. WE REFER TO THIS PERIOD, AS MAY BE EXTENDED, AS THE INITIAL OFFER PERIOD. UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER, IF PRIOR TO THE COMPLETION OF THE INITIAL OFFER PERIOD, ALL THE CONDITIONS OF THE OFFER ARE SATISFIED OR, SUBJECT TO APPLICABLE LAW, WAIVED BY US, WE WILL PROVIDE YOU WITH AN ADDITIONAL FOUR CALENDAR-DAY PERIOD, UNTIL 10:00 A.M., NEW YORK TIME ON JUNE 26, 2020, DURING WHICH YOU MAY TENDER YOUR MAGAL SHARES. WE REFER TO THIS ADDITIONAL PERIOD AS THE ADDITIONAL OFFER PERIOD. THE EXPIRATION OF THE ADDITIONAL OFFER PERIOD WILL CHANGE IF WE DECIDE TO EXTEND THE INITIAL OFFER PERIOD. SEE SECTION 1 AND SECTION 11.
 
The Magal Shares are listed on the Nasdaq Global Select Market, or Nasdaq, under the ticker symbol “MAGS”. On May 21, 2020, the last trading day before we announced our intention to commence the offer, the closing sale price of the Magal Shares was $3.00 on Nasdaq.  We encourage you to obtain current market quotations for the Magal Shares before deciding whether to tender your Magal Shares. See Section 6.



The Information Agent for the Offer is:
D.F. KING & CO., INC.
 
May 22, 2020

IMPORTANT
 
The offer is subject both to U.S. federal securities laws and the Israeli Companies Law, 5759-1999 (the “Israeli Companies Law”).
 
The offer has not been approved or disapproved by the Securities and Exchange Commission (“SEC”), any state securities commission, or the Israel Securities Authority (“ISA”), nor has the SEC, any state securities commission or the ISA passed upon the fairness or merits of the offer or upon the accuracy or adequacy of the information contained in this offer to purchase. Any representation to the contrary is a criminal offense.
 
We have not authorized any person to make any recommendation on our behalf as to whether you should or should not tender your Magal Shares in the offer. You should rely only on the information contained in this offer to purchase and the other related documents delivered to you or to which we have referred you. We have not authorized any person to give any information or to make any representation in connection with the offer, other than those contained in this offer to purchase and the other related documents delivered to you or to which we have referred you. If anyone makes any recommendation or representation to you or gives you any information, you must not rely on that recommendation, representation or information as having been authorized by us.
 
Holders of Magal Shares should tender their Magal Shares to American Stock Transfer & Trust Company LLC, the Depositary, pursuant to the applicable instructions in Section 3. For the address and telephone number of our Depositary, see the back cover of this offer to purchase.

Upon the terms and subject to the conditions of the offer (including any terms and conditions of any extension or amendment), subject to proration, we will accept for payment and pay for the Magal Shares that are validly tendered and not properly withdrawn prior to 10:00 a.m., New York time, on June 22, 2020, unless we extend the period of time during which the initial period of the offer is open. This period, as may be extended, is referred to as the Initial Offer Period, and the date of completion of the Initial Offer Period is referred to as the Initial Completion Date. We will publicly announce in accordance with applicable law, and in any event issue a press release by 9:00 a.m., New York time, on the U.S. business day following the Initial Completion Date, stating whether or not the conditions of the offer have been satisfied or, subject to applicable law, waived by us. As required by Israeli law, if the conditions of the offer are satisfied or, subject to applicable law, waived by us, then if, with respect to each Magal Share owned by you,
 
you have not yet responded to the offer,
you have notified us of your objection to the offer, or
you have validly tendered such Magal Share but have properly withdrawn your tender during the Initial Offer Period,

then you will be afforded an additional four calendar-day period, until 10:00 a.m., New York time, on June 26, 2020, during which you may tender each such Magal Share. We refer to this additional period as the Additional Offer Period. The date of completion of the Additional Offer Period will change if we decide to extend the Initial Offer Period.  Magal Shares tendered during the Initial Offer Period may be withdrawn at any time prior to 10:00 a.m., New York time, on the Initial Completion Date, but not during the Additional Offer Period. See Section 1, Section 4 and Section 11.

              Any questions and requests for assistance may be directed to D.F. King & Co., Inc., our Information Agent, at its address and telephone number set forth on the back cover of this offer to purchase.

              Additional copies of this offer to purchase, the Letter of Transmittal and other related materials may be obtained from the Information Agent or the Depositary upon request.

TABLE OF CONTENTS
 
SUMMARY TERM SHEET
INTRODUCTION
FORWARD-LOOKING STATEMENTS
BACKGROUND TO THE OFFER
   Background
   Purpose of the Offer; Reasons for the Offer
   Plans for Magal after the Offer; Certain Effects of the Offer
10 
   Rights of Shareholders Who Do Not Accept the Offer
11 
   Interest of Persons in the Offer
11 
   Related Party Transactions
11 
THE TENDER OFFER
12 
   1.    TERMS OF THE OFFER; PRORATION; EXPIRATION DATE
12 
   2.    ACCEPTANCE FOR PAYMENT AND PAYMENT
14 
   3.    PROCEDURES FOR TENDERING SHARES OR NOTIFYING US OF YOUR OBJECTION TO THE OFFER
15 
   4.    WITHDRAWAL RIGHTS
17 
   5.    MATERIAL U.S. FEDERAL INCOME TAX AND ISRAELI INCOME TAX CONSEQUENCES
18 
   6.    PRICE RANGE OF THE SHARES ETC.
22 
   7.    EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
23 
   8.    INFORMATION CONCERNING MAGAL
24 
   9.    INFORMATION CONCERNING THE BIDDER GROUP
25 
   10.  SOURCES AND AMOUNT OF FUNDS
26 
   11.  CONDITIONS OF THE OFFER
26 
   12.  LEGAL MATTERS AND REGULATORY APPROVALS
28 
   13.  FEES AND EXPENSES
28 
   14.  MISCELLANEOUS
29 
ANNEX A Excerpt of Section 331 of the Israeli Companies Law, 5759-1999
30 
ANNEX B Definition of Israeli Resident for Israeli Tax Purposes
31 
SCHEDULE I
32 
       
i

 
Unless the context otherwise requires, all references in this offer to purchase to “FIMI,” “us,” “we,” and “our” are to FIMI Opportunity V, L.P, a limited partnership organized under the laws of the State of Delaware and FIMI Israel Opportunity Five, Limited Partnership, a limited partnership organized under the laws of the State of Israel, all references to “MAGAL” are to Magal Security Systems Ltd., all references to “Nasdaq” are to the Nasdaq Global Select Market, all references to “dollars” or “$” are to United States dollars, all references to “NIS” are to New Israeli Shekels, and all references to the “Israeli Companies Law” are to the Israeli Companies Law 5759-1999, as amended.
 
Unless the context otherwise requires, the percentages of the issued and outstanding Magal Shares and the percentages of the voting power of Magal stated throughout this offer to purchase are based on 23,153,985 shares issued and outstanding as of December 31, 2019 (based on the Annual Report on Form 20-F filed by Magal on April 23, 2020).
 
Unless otherwise indicated or the context otherwise requires, for purposes of this offer to purchase, a “U.S. business day” means any day other than a Saturday, Sunday, U.S. federal holiday or any other day on which the banks in the U.S. are permitted not to be open for business.

SUMMARY TERM SHEET
 
This summary term sheet is a brief summary of the material provisions of this offer to purchase 8,669,029 ordinary shares of Magal, par value NIS 1.0 per share (which we refer to as Magal Shares) being made by FIMI, and is meant to help you understand the offer. This summary term sheet is not meant to be a substitute for the information contained in the remainder of this offer to purchase, and the information contained in this summary term sheet is qualified in its entirety by the fuller descriptions and explanations contained in the later pages of this offer to purchase. The following are some of the questions you, as a shareholder of Magal, may have about us and the offer and answers to those questions. We recommend that you read carefully this entire offer to purchase, the Letter of Transmittal and other related documents delivered to you prior to making any decision regarding whether to tender your shares.

WHO IS OFFERING TO BUY MY SECURITIES?

We, FIMI Opportunity V, L.P. and FIMI Israel Opportunity Five, Limited Partnership, are limited partnerships that are part of a group of private equity funds known as the FIMI Funds. The FIMI Funds invest in companies that are predominantly located in Israel or that have significant ties or relations to Israel.

We are controlled by our general partner FIMI Five 2012 Ltd., a private company limited by shares, the managing general partner of FIMI, and an entity in a chain of ownership that leads up to Mr. Ishay Davidi, the founder of the FIMI Funds. This chain of entities consists, in addition to FIMI Five 2012 Ltd., of Shira & Ishay Davidi Management Ltd. See Section 9. Because FIMI Five 2012 Ltd., Shira & Ishay Davidi Management Ltd. and Ishay Davidi control us and helped to structure our offer, our offer may be deemed to be made on behalf of these controlling persons, and in this offer to purchase we refer to them and us collectively as our “bidder group.”

HOW MANY SHARES ARE SOUGHT IN THIS OFFER?

Subject to certain conditions, we are offering to purchase 8,669,029 Magal Shares, representing approximately 37.4% of the issued and outstanding Magal Shares and of the voting power of Magal. See Section 1.

If more than 8,669,029 shares are validly tendered and not properly withdrawn, we will purchase 8,669,029 shares on a pro rata basis from all shareholders who have validly tendered their shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their shares before the completion of the Initial Offer Period. The number of shares that we will purchase from each tendering shareholder will be based on the total number of shares validly tendered by all shareholders in the Initial Offer Period and the Additional Offer Period and not properly withdrawn before the completion of the Initial Offer Period. You may only withdraw previously tendered shares prior to the completion of the Initial Offer Period. See Section 1 and Section 4.

If less than 8,669,029 shares are validly tendered, but at least 1,200,000 shares are validly tendered and not properly withdrawn, we will purchase shares from all shareholders who have validly tendered their shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their shares before the completion of the Initial Offer Period. You may only withdraw previously tendered shares prior to the completion of the Initial Offer Period. See Section 1 and Section 4.
 

1


 
WHY ARE YOU CONDUCTING THIS OFFER?

We are conducting the offer to increase our interest in Magal because we believe in the long-term value and prospects of Magal and in order to comply with the requirements of Israeli law. Under Israeli law, a purchase of shares of a public company may not be made other than by way of a “special tender offer” meeting certain requirements if, among other things, as a result of the purchase, the purchaser would own or would be deemed to beneficially own more than 45.0% of the aggregate voting power of the company and no other person owns more than 45.0% of the aggregate voting power of the company. As of May 21, 2020 we beneficially held 9,854,159 Magal Shares, representing approximately 42.6% of the issued and outstanding Magal Shares. Accordingly, in order for us to purchase additional Magal Shares that would increase our voting power in Magal to more than 45.0%, we are required to conduct the offer as a “special tender offer” meeting the requirements of Israeli law. See “Background to the Offer – Background” and “Background to the Offer – Purpose of the Offer; Reasons for the Offer.”

HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?

We are offering to pay $2.95 per Magal Share, net to you (subject to withholding taxes, as applicable), in cash, without interest. All shareholders tendering their Magal Shares in the offer will be paid solely in United States dollars. See “Introduction”, Section 1 and Section 2, and, with respect to withholding taxes, Section 5.

WHAT PERCENTAGE OF THE MAGAL SHARES DO YOU CURRENTLY OWN AND HOW MUCH WILL YOU OWN IF THE OFFER IS COMPLETED?

We currently beneficially own 9,854,159 Magal Shares, representing approximately 42.6% of the issued and outstanding Magal Shares.

Following the consummation of the offer, (i) if we purchase the maximum number of shares we offer to purchase hereunder, we will beneficially own 18,523,188 Magal Shares, representing approximately 80.0% of the issued and outstanding Magal Shares, and (ii) if we purchase the minimum number of shares we offer to purchase hereunder, we will beneficially own 11,054,159 Magal Shares, representing  approximately 47.8% of the issued and outstanding Magal Shares.

See “Introduction” and Section 11.

WHAT IS THE MARKET VALUE OF MY MAGAL SHARES AS OF A RECENT DATE?

On May 21, 2020, the last trading day before we announced our intention to commence the offer, the closing sale price of the Magal Shares on Nasdaq was $3.00. The price we are offering to pay is less than the closing price of Magal Shares on Nasdaq on May 21, 2020. We recommend that you obtain a recent quotation for your Magal Shares prior to deciding whether or not to tender your Magal Shares. See Section 6.

DO YOU HAVE THE FINANCIAL RESOURCES TO PAY THE PURCHASE PRICE IN THE OFFER?

Yes. We possess all of the necessary funds to consummate the offer from cash on hand. The offer is not conditioned on the availability of financing.

IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER TO TENDER IN THE OFFER?

We do not believe that our financial statements are material to your decision whether to tender Magal Shares and accept the offer because: (i) the offer consideration consists solely of cash; (ii) the offer is not subject to any financing condition; and (iii) we are already a controlling shareholder of Magal. While we do not believe that our financial condition is material to the decision of a holder of Magal Shares whether to tender Magal Shares and accept the offer, certain selected financial information of FIMI is provided in Section 10.

CAN I OBJECT TO THE OFFER?

Yes. Pursuant to Israeli law, you may object to the offer. If you want to notify us of your objection to the offer you must complete and sign the accompanying Notice of Objection and deliver it prior to the completion of the Initial Offer Period on June 22, 2020 (as may be extended) by following the applicable procedures and instructions described in Section 3. Under Israeli law, since following the consummation of the offer we will be beneficial owners of more than 45.0% of the voting power of Magal, the aggregate number of Magal Shares validly tendered pursuant to the offer and not properly withdrawn at the completion of the Initial Offer Period must exceed the aggregate number of Magal Shares represented by Notices of Objection to the offer. This is one of the conditions of the offer, and if it is not met, we will be prohibited from purchasing any Magal Shares tendered pursuant to the offer.



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See the answer to the question “What are the most significant conditions of the offer?” below, “Background to the Offer – Rights of Shareholders Who Do Not Accept the Offer,” Section 3 and Section 11.

WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?

At least 1,200,000 Magal Shares (currently representing 5.2% of the issued and outstanding shares and voting power of Magal),  must be validly tendered and not properly withdrawn prior to the completion of the Initial Offer Period;

At the completion of the Initial Offer Period, the aggregate number of Magal Shares validly tendered pursuant to the offer and not properly withdrawn (excluding Magal Shares held by us or our affiliates - see “Rights of Shareholders Who Do Not Accept the Offer”) must be greater than the aggregate number of Magal Shares represented by Notices of Objection to the offer; and

The Competition Authority of the State of Israel shall have approved the purchase of the Magal Shares pursuant to this offer.

The offer is not conditioned on the availability of financing or the approval of the board of directors of Magal.

See “Background to the Offer – Rights of Shareholders Who Do Not Accept the Offer” and Section 11, which sets forth in full the conditions of the offer and describes those conditions of the offer that may be waived by us.

WHAT WILL HAPPEN IF THE CONDITIONS OF THE OFFER ARE NOT SATISFIED?

If any condition is not satisfied, we may elect not to purchase, or may be prohibited from purchasing, any Magal Shares tendered pursuant to the offer, or, subject to applicable law, we may waive such conditions. See “Introduction”, Section 1 and Section 11.

HOW LONG DO I HAVE TO DECIDE WHETHER TO ACCEPT THE OFFER AND TENDER MY SHARES?

You may tender your Magal Shares until 10:00 a.m., New York time, on June 22, 2020 (as may be extended). We refer to this period, as may be extended, as the Initial Offer Period, and the date of completion of the Initial Offer Period is referred to as the Initial Completion Date.

We will publicly announce in accordance with applicable law, and in any event issue a press release by 9:00 a.m., New York time, on the U.S. business day following the Initial Completion Date, stating whether or not the conditions of the offer have been satisfied or, subject to applicable law, waived by us. As required by Israeli law, if the conditions of the offer are satisfied or, subject to applicable law, waived by us, then if, with respect to each Magal Share owned by you,

you have not yet responded to the offer,
you have notified us of your objection to the offer, or
you have validly tendered such Magal Share but have properly withdrawn your tender during the Initial Offer Period,

you will be afforded an additional four calendar-day period following the Initial Completion Date, until 10:00 a.m., New York time, on June 26, 2020, during which you may tender each such Magal Share. We refer to this additional period as the Additional Offer Period and the date of expiration of the Additional Offer Period is referred to as the Final Expiration Date. The Final Expiration Date will change if we decide to extend the Initial Offer Period.

See “Introduction,” Section 1, Section 3 and Section 11.
 

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HOW DO I TENDER MY MAGAL SHARES AND TO WHICH DEPOSITARY SHOULD I TENDER?

All holders of Magal Shares should tender their Magal Shares to the Depositary by following the applicable procedures and instructions described in Section 3.

CAN I TENDER MY MAGAL SHARES USING A GUARANTEED DELIVERY PROCEDURE?

No. You may only tender your Magal Shares by following the applicable procedures and instructions described in Section 3.

WHEN CAN I WITHDRAW THE MAGAL SHARES I TENDERED PURSUANT TO THE OFFER?

You may withdraw any previously tendered Magal Shares at any time prior to the completion of the Initial Offer Period, but not during the Additional Offer Period. In addition, under U.S. law, tendered Magal Shares may be withdrawn at any time after 60 days from the date of the commencement of the offer if the Magal Shares have not yet been accepted for payment by us. See Section 1 and Section 4.

WHEN WILL YOU PAY FOR THE MAGAL SHARES TENDERED IN THE OFFER?

All of the Magal Shares validly tendered pursuant to the offer and not properly withdrawn will be paid for following the Final Expiration Date, subject to proration. We expect to make such payment, including in the event that proration of tendered Magal Shares is required, within four U.S. business days following the Final Expiration Date. See Section 1, Section 2 and Section 11.

CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?

We have the right, in our sole discretion, to extend the Initial Offer Period, subject to applicable law. In addition, in certain circumstances, we may be required by law to extend the Initial Offer Period. See Section 1.

HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?

If we decide to extend the Initial Offer Period, we will inform the Depositary and the Information Agent of that fact. We will also publicly announce the new Initial Completion Date in accordance with applicable law, and in any event issue a press release to this effect no later than 9:00 a.m., New York time, on the first U.S. business day following the day on which we decide to extend the Initial Offer Period. See Section 1.

HAS MAGAL OR ITS BOARD OF DIRECTORS ADOPTED A POSITION ON THE OFFER?

Under applicable U.S. law, no later than ten U.S. business days from the date of this offer to purchase, Magal is required to publish, send or give to you a statement disclosing that it either recommends acceptance or rejection of the offer, expresses no opinion and remains neutral toward the offer, or is unable to take a position with respect to the offer.

Under Israeli law, Magal’s board of directors is required to express its opinion to the shareholders on the advisability of the offer. Magal’s board of directors may refrain from expressing an opinion if it cannot do so, as long as it gives the reasons for not providing an opinion.

As of the date of this offer to purchase, Magal’s board of directors has not made any recommendation regarding acceptance or rejection of the offer or expressed an opinion regarding the advisability of the offer.

ARE THERE ANY CONFLICTS OF INTEREST IN THE OFFER?

Yes.

FIMI’s beneficial ownership of approximately 42.6% of the issued and outstanding Magal Shares as of May 21, 2020 is deemed to exert control over Magal.

FIMI has invested, and in the future may invest, in other companies that operate in the same industry as, and may compete with, Magal.

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Gillon Beck, a senior partner in FIMI, serves as a director and an Executive Chairman of Magal’s board of directors. Gillon Beck is also a member of the board of directors of FIMI Five 2012 Ltd. Ron Ben-Haim, a partner in FIMI, is also a member of Magal’s board of directors. Messrs. Beck and Ben-Haim do not control FIMI.

See “Background to the Offer – Purpose of the Offer; Reasons for the Offer” and “Background to the Offer – Interest of Persons in the Offer”.

WHAT ARE THE TAX CONSEQUENCES OF THE OFFER?

The receipt of cash for Magal Shares accepted for payment by us from tendering shareholders who are “United States persons” for United States federal income tax purposes will be treated as a taxable transaction for United States federal income tax purposes.

The receipt of cash for Magal Shares accepted for payment by us from tendering shareholders generally will be a taxable transaction for Israeli income tax purposes for both Israeli residents and non-Israeli residents, unless a specific exemption is available or a tax treaty between Israel and the shareholder’s country of residence provides otherwise.

We have obtained an approval from the Israeli Tax Authority with respect to the Israeli withholding tax rates applicable to shareholders as a result of the sale of Magal Shares pursuant to the offer. The approval provides, among other things, that (1) tendering shareholders who acquired their Magal Shares after Magal’s initial public offering on Nasdaq in 1993 and who certify that they are not, and at the date of purchase of their Shares were not Israeli residents (and, in the case of a corporation, that no Israeli residents (x) hold 25.0% or more of the means to control such corporation or (y) are the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such corporation, whether directly or indirectly), will not be subject to Israeli withholding tax, and (2) payments to be made to tendering shareholders who acquired their Magal Shares after Magal’s initial public offering on Nasdaq in 1993 and who hold their Magal Shares through an Israeli broker or Israeli financial institution will be made by us without any Israeli withholding at source, and the relevant Israeli broker or Israeli financial institution will withhold Israeli tax, if any, as required by Israeli law. The approval does not address shareholders who are not described in clauses (1) and (2) above, and therefore they will be subject to Israeli withholding tax at the applicable rate of the gross proceeds payable to them pursuant to the offer as prescribed by Israeli tax law.

We recommend that you seek professional advice from your own advisors concerning the tax consequences applicable to your particular situation. See Section 5.

WILL THE OFFER RESULT IN THE DELISTING OF THE MAGAL SHARES?

No. Magal Shares will continue to trade on Nasdaq following completion of the offer. See Section 7.

WITH WHOM MAY I TALK IF I HAVE QUESTIONS ABOUT THE OFFER?

You can call D.F. King & Co., Inc., our Information Agent in the United States, at (212) 269-5550 (banks and brokers) or Toll Free at (800) 814-2879, during its normal business hours. See the back cover of this offer to purchase.


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INTRODUCTION
 
   We, FIMI Opportunity V, L.P, a limited partnership organized under the laws of the State of Delaware and FIMI Israel Opportunity Five, Limited Partnership, a limited partnership organized under the laws of the State of Israel (collectively, “FIMI”), hereby offer to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share, of Magal Security Systems Ltd., or Magal Shares, at a price of $2.95 per share, net to you (subject to withholding taxes, as applicable), in cash, without interest. The offer is subject to the terms and conditions set forth in this offer to purchase, the Letter of Transmittal and the other related documents delivered to you.

                  Magal Shares are listed on the Nasdaq Global Select Market, or Nasdaq, under the ticker symbol “MAGS”. Based on the Annual Report on Form 20-F filed by Magal on April 23, 2020, as of December 31, 2019, there was a total of 23,153,985 Magal Shares issued and outstanding. As of the date of this offer to purchase, we beneficially own 9,854,159 Magal Shares, representing approximately 42.6% of the issued and outstanding Magal Shares. As a result, (i) if we purchase the maximum amount of Magal Shares we offer to purchase hereunder, we would beneficially own 18,523,188 Magal Shares, representing approximately 80.0% of the issued and outstanding Magal Shares, and (ii) if we purchase the minimum amount of Magal Shares we offer to purchase hereunder, we would beneficially own 11,054,159 Magal Shares, representing approximately 47.8% of the issued and outstanding Magal Shares.

                  FIMI is part of a group of private equity funds known as the FIMI Funds. The FIMI Funds invest in companies that are predominantly located in Israel or that have significant ties or relations to Israel.

   We are controlled by our general partner, FIMI Five 2012 Ltd., and an entity in a chain of ownership that leads up to Ishay Davidi, the founder of the FIMI Funds. This entity is Shira & Ishay Davidi Management Ltd. Because FIMI Five 2012 Ltd., Shira & Ishay Davidi Management Ltd. and Ishay Davidi control us and helped structure our offer, our offer may be deemed to be made on behalf of these controlling persons, and in this offer to purchase we refer to them and us collectively as our “bidder group.”

   Gillon Beck, a senior partner in FIMI, serves as a director and an Executive Chairman of Magal’s board of directors. Gillon Beck is also a member of the board of directors of FIMI Five 2012 Ltd. Ron Ben-Haim, a partner in FIMI, is also a member of Magal’s board of directors. Messrs. Beck and Ben-Haim do not control FIMI.

                  The initial period of the offer will be completed at 10:00 a.m., New York time, on June 22, 2020. We refer to this period, as may be extended, as the Initial Offer Period, and the date of completion of the Initial Offer Period is referred to as the Initial Completion Date. We will publicly announce in accordance with applicable law, and in any event issue a press release by 9:00 a.m., New York time, on the U.S. business day following the Initial Completion Date, stating whether or not the conditions of the offer have been satisfied or, subject to applicable law, waived by us. As required by Israeli law, if the conditions of the offer have been satisfied or, subject to applicable law, waived by us, then if, with respect to each Magal Share owned by you, (a) you have not yet responded to the offer, (b) you have notified us of your objection to the offer, or (c) you have validly tendered such Magal Share but have properly withdrawn your tender during the Initial Offer Period, then you will be afforded an additional four calendar-day period, until 10:00 a.m., New York time, on June 26, 2020, during which you may tender each such Magal Share. We refer to this additional period as the Additional Offer Period and the date of expiration of the Additional Offer Period is referred to as the Final Expiration Date. The Final Expiration Date will change if we decide to extend the Initial Offer Period.
 
  We have applied to the SEC for exemptive relief from Rule 14d-7(a) to provide for the four-day additional offering period without withdrawal rights, and no-action relief by the staff of the SEC from Rule 14e-1(c) to permit payment within four U.S. business days following the Final Expiration Date.

   If you are a record owner of Magal Shares and tender directly to American Stock Transfer & Trust Company LLC, the Depositary, you generally will not be obligated to pay brokerage fees or commissions, service fees or commissions or, except as set forth in the Letter of Transmittal, share transfer taxes with respect to the sale of your Magal Shares in the offer. If you hold your Magal Shares through a bank or broker, we recommend that you check whether they charge any service or other fees.

                  We will pay the fees and expenses of the Depositary in connection with the offer. The Depositary will act as agent for tendering shareholders for the purpose of receiving payment from us and transmitting payments to tendering shareholders whose Magal Shares are accepted for payment. We will also pay the fees and expenses of D.F. King & Co., Inc., our Information Agent, who will facilitate and answer questions concerning the offer during their respective normal business hours.
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   The offer is conditioned on at least 1,200,000 Magal Shares (currently representing 5.2% of the issued and outstanding shares and voting power of Magal), being validly tendered and not properly withdrawn, and we may terminate the offer if the total number of Magal Shares validly tendered and not properly withdrawn prior to 10:00 a.m., New York time, on the Initial Completion Date is less than 1,200,000. Certain other conditions to the consummation of the offer are described in Section 11. We reserve the right (subject to applicable law and the rules of the United States Securities and Exchange Commission, or the SEC) to amend or, other than the conditions set forth in clause (a) and clauses (c) and (d) of Section 11, waive any one or more of the terms and conditions of the offer. However, if any of these conditions is not satisfied, we may elect not to purchase, or may be prohibited from purchasing any Magal Shares tendered pursuant to the offer. The offer is not conditioned on the availability of financing or the approval of the board of directors of Magal. See Section 1, Section 10 and Section 11.

                  Under applicable U.S. law, no later than ten U.S. business days from the date of this offer to purchase, Magal is required to publish, send or give to you a statement disclosing that it either recommends acceptance or rejection of the offer, expresses no opinion and remains neutral toward the offer, or is unable to take a position with respect to the offer. Under Israeli law, Magal’s board of directors is required to express its opinion to the shareholders on the advisability of the offer. Magal’s board of directors may refrain from expressing an opinion if it cannot do so, as long as it gives the reasons for not providing an opinion. As of the date of this offer to purchase Magal’s board of directors has not made such a statement. Mr. Beck and Mr. Ben-Haim intend to abstain from voting on the offer in their capacities as directors of Magal, because their interests with regard to the offer as directors of Magal may be deemed to conflict with their interests with regard to the offer as executive officers of FIMI.

                  This offer to purchase, the Letter of Transmittal and the other related documents delivered to you contain important information which should be read carefully before any decision is made with respect to the offer.
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FORWARD-LOOKING STATEMENTS

        This offer to purchase, the Letter of Transmittal and the other related documents delivered to you and/or incorporated by reference herein include “forward-looking statements” that are not purely historical regarding our intentions, hopes, beliefs, expectations and strategies for the future, including, without limitation:

statements regarding the public float of Magal Shares following consummation of the offer;
statements regarding whether the Magal Shares will continue to be “margin securities” following consummation of the offer;
statements regarding whether the Magal Shares will continue to be traded on Nasdaq or registered under the United States Securities Exchange Act of 1934, as amended, following consummation of the offer;
statements regarding the plans, objectives or expectations regarding the future operations or status of us or Magal; and
any statement of assumptions underlying any of the foregoing.

        Forward-looking statements that are based on various assumptions (some of which are beyond our control) may be identified by the use of forward-looking terminology, such as “may,” “can be,” “will,” “expects,” “anticipates,” “intends,” “believes,” “believe in the value,” and similar words and phrases. Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to:

changes in domestic and foreign economic and market conditions;
changes in the ownership of Magal Shares, particularly any substantial accumulations by persons who are not affiliated with us;
uncertainty as to the completion of the offer; and
the risk factors detailed in Magal’s most recent annual report on Form 20-F and its other filings with the SEC.

        See Section 9 of this offer to purchase for a discussion of certain information relating to us. Except as may be required by law, we do not undertake, and specifically disclaim, any obligation to publicly release the results of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such forward-looking statements.

        You should assume that the information appearing in this offer to purchase is accurate as of the date on the front cover of this offer to purchase only.
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BACKGROUND TO THE OFFER

Background

        We originally made an investment in Magal on October 1, 2014 by purchasing a total of 6,461,290 Magal Shares from Ki Corporation.

On September 30, 2016, we purchased 3,392,869 additional Magal Shares, pursuant to a rights offering initiated by Magal on September 7, 2016.

        In the ordinary course of our business, we from time to time review the performance of our investments and consider possible strategies for enhancing value. As part of our ongoing review of our investment in Magal, we explore, from time to time, the possibilities of acquiring additional Magal Shares.

        In March 2020, Mr. Davidi, Mr. Beck and Mr. Ben-Haim, together with other members of our management, began considering the possibility of purchasing additional Magal Shares. In connection therewith, we conducted an analysis of the legal requirements relating to the purchase of Magal Shares and the tender offer requirements. The analysis was made with the assistance of Israeli and U.S. legal counsel.

Under Israeli law, a purchase of the shares of a public company may not be made other than by way of a “special tender offer” meeting certain requirements, if, among other things, as a result of the purchase, the purchaser would own or would be deemed to own more than 45.0% of the aggregate voting power of the company and no other person owns more than  45.0% of the voting power.

Accordingly, due to the fact that under Israeli law we are obligated to initiate a “special tender offer” in order to own more than 45% of Magal’s issued and outstanding share capital, we decided to initiate a public “special tender offer” pursuant to Israeli law, to acquire a minimum of 1,200,000 and up to 8,669,029 Magal Shares at a price of $2.95 per Magal Share.

        In addition, we, with the assistance of Israeli and U.S. legal counsel, applied to the SEC for relief from certain provisions of the U.S. securities laws to enable us to structure a tender offer that would comply with applicable law and regulations in both the U.S. and Israel. We have requested from the Israeli Tax Authority, or the ITA, an approval with respect to the Israeli withholding tax rates applicable to the offer.

On May 21, 2020, we received the exemptive relief and no-action relief that we requested from the SEC.

On May 18, 2020, we received from the ITA an approval with respect to the Israeli withholding tax rates applicable to sales of shares pursuant to the offer.

Purpose of the Offer; Reasons for the Offer

        Our bidder group’s purpose for the offer is for FIMI to increase its beneficial ownership of the issued and outstanding Magal Shares from its current level of approximately 42.6% up to approximately 80.0%. This is because each member of our bidder group believes in the long-term value and prospects of Magal. Although not required under the federal securities laws, we are conducting the offer in order to comply with the requirements of Israeli law. According to Israeli law, we are not permitted to acquire additional Magal Shares if such acquisition would result in our percentage ownership of the voting power of Magal exceeding 45.0%, other than by means of a special tender offer.

Plans for Magal after the Offer; Certain Effects of the Offer

        Except as otherwise described below or elsewhere in this offer to purchase, none of the members of our bidder group, and to the best of our knowledge none of the other persons listed in Schedule I to this offer to purchase, has any current plans, proposals or negotiations that relate to or would result in the following:

an extraordinary corporate transaction, merger, reorganization or liquidation involving Magal or any of its subsidiaries;

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a purchase, sale or transfer of a material amount of the assets of Magal or any of its subsidiaries;

any change in the present board of directors and management of Magal (including any plan or proposal to change the number or term of directors or to fill any existing vacancy on the board or to change any material term of the employment contract of any executive officer);

any other material change in Magal’s corporate structure or business;

a delisting of the Magal Shares from Nasdaq; or

the Magal Shares becoming eligible for termination of registration under the United States Securities Exchange Act of 1934, as amended, or the Exchange Act.

        We expect that from time to time there may be significant developments or transactions involving our portfolio companies (including Magal) or their securities, or offers, proposals or discussions related thereto, which may involve acquisitions or sales by us of our holdings in such entities (including Magal) or acquisitions or sales of securities, assets or business operations by such entities.

        We intend to review our investment in Magal, its performance and market conditions periodically and consider possible strategies for enhancing value and take such actions with respect to our investment as we deem appropriate in light of the circumstances existing from time to time. Such actions could include, among other things, additional purchases of Magal Shares pursuant to one or more open-market purchase programs, through private transactions or through tender offers or otherwise, subject to applicable U.S. and Israeli law. Future purchases may be on the same terms or on terms that are more or less favorable to Magal’s shareholders than the terms of the offer. Any possible future purchases will depend on many factors, including the results of the offer, the market price of Magal Shares, our business and financial position, and general economic and market conditions. In addition, following the consummation of the offer, we may also determine to dispose of our Magal Shares, in whole or in part, at any time and from time to time, subject to applicable laws. Any such decision would be based on our assessment of a number of different factors, including, without limitation, the business, prospects and affairs of Magal, the market for the Magal Shares, the condition of the securities markets, general economic and industry conditions and other opportunities available to us.

        We may exercise our controlling influence in Magal to cause Magal to change its current dividend policy and declare a distribution of dividends to Magal’s shareholders, from time to time, subject to the requirements and limitations set forth in the Israeli Companies Law.

        Under Israeli law, if a shareholder owns or is deemed to beneficially own in excess of 45.0% of the voting power of a company, such shareholder may purchase shares in the open market or through private transactions, and not solely by means of a tender offer, provided such shareholder does not beneficially own more than 90% of the voting power of such company. Accordingly, following the consummation of the offer, we may purchase Magal Shares in the open market or through private transactions, and not solely by means of a tender offer, subject to the applicable laws.

However, under Israeli law, if the offer is accepted, we, our controlling shareholders and any company under our or their control, are prohibited from conducting an additional tender offer for Magal Shares and from merging with Magal within 12 months after the date of this offer to purchase.

Rights of Shareholders Who Do Not Accept the Offer

You will have no appraisal or similar rights with respect to the offer. Under Section 331 of the Israeli Companies Law, you may respond to the offer by accepting the offer or notifying us of your objection to the offer. Alternatively, you may simply not respond to the offer and not tender your Magal Shares. It is a condition to the offer that, at the completion of the Initial Offer Period, the aggregate number of Magal Shares validly tendered pursuant to the offer and not properly withdrawn is greater than the aggregate number of Magal Shares represented by Notices of Objection. As required by Section 331(c) of the Israeli Companies Law, in making this calculation, the votes of a holder of a controlling interest in the offeror, a holder who has a personal interest in the acceptance of the special tender offer, a holder of a control block in the company, or any person acting on their behalf or on behalf of the offeror, including their relatives and companies under their control, shall not be taken into account.

An excerpt of Section 331 of the Israeli Companies Law is attached as Annex A.
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Please see Section 3 for instructions on how to notify us of your objection to the offer.

Interests of Persons in the Offer

Gillon Beck, a senior partner in FIMI, serves as a director and an Executive Chairman of Magal’s board of directors. Gillon Beck is also a member of the board of directors of FIMI Five 2012 Ltd. Ron Ben-Haim, a partner in FIMI is also a member of Magal’s board of directors. Messrs. Beck and Ben-Haim do not control FIMI.

Related Party Transactions

On September 30, 2016, we purchased 3,392,869 Magal Shares, pursuant to a rights offering initiated by Magal on September 7, 2016, including through an exercise of over-subscription rights for a total subscription price of $13,096,478.20.

        Except as set forth in this offer to purchase, none of the members of our bidder group, nor any of the other persons listed in Schedule I to this offer to purchase, have had any transaction during the past two years with Magal or any of its executive officers, directors or affiliates that is required to be described in this offer to purchase under applicable law. Except as set forth in this offer to purchase, there have been no negotiations, transactions or material contacts during the past two years between any of the members of our bidder group, or any of the other persons listed in Schedule I to this offer to purchase, on the one hand, and Magal and its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer, exchange offer or other acquisitions of Magal’s securities, an election of Magal’s directors or a sale or other transfer of a material amount of the assets of Magal.
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THE TENDER OFFER

        YOU SHOULD READ THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND THE OTHER RELATED DOCUMENTS DELIVERED TO YOU CAREFULLY BEFORE YOU MAKE ANY DECISION WITH RESPECT TO THE OFFER.

1.          TERMS OF THE OFFER; PRORATION; EXPIRATION DATE.
 
The offer is being made to all of Magal’s shareholders. Upon the terms and subject to the conditions of the offer (including any terms and conditions of any extension or amendment), subject to proration, we will accept for payment and pay for Magal Shares, that are validly tendered and not properly withdrawn in accordance with Section 4 prior to 10:00 a.m., New York time, on June 22, 2020, unless we extend the period of time during which the initial period of the offer is open. We refer to this period, as may be extended (as described below), as the Initial Offer Period, and the date of completion of the Initial Offer Period is referred to as the Initial Completion Date.

          We will publicly announce in accordance with applicable law, and in any event issue a press release by 9:00 a.m., New York time, on the U.S. business day following the Initial Completion Date, stating whether or not the conditions of the offer have been satisfied or, subject to applicable law, waived by us. Under Israeli law, if the conditions of the offer have been satisfied or, subject to applicable law, waived by us, then the shareholders who have, with respect to each Magal Share owned by them,

  •
not responded to the offer,
  •
notified us of their objection to the offer, or
  •
validly tendered such Magal Share but have properly withdrawn their tender during the Initial Offer Period,

will be entitled to tender each such Magal Share during an additional four calendar-day period commencing at the completion of the Initial Offer Period. We refer to this period as the Additional Offer Period and to the expiration of such period as the Final Expiration Date.  Shares tendered during the Initial Offer Period may be withdrawn at any time prior to 10:00 a.m., New York time, on the Initial Completion Date, but not during the Additional Offer Period. In this respect, we recommend that you read Section 4 and Section 11 of this offer to purchase.

          Subject to proration, we will also accept for payment and pay for all Magal Shares validly tendered and not properly withdrawn in accordance with Section 4 prior to 10:00 a.m., New York time, on the Final Expiration Date. We expect to make such payment, including in the event that proration of tendered Magal Shares is required, within four U.S. business days following the Final Expiration Date.

          No fractional Magal Shares will be purchased by us in the offer.

  Conditions of the offer include, among other things, that:

  •
prior to 10:00 a.m., New York time, on the Initial Completion Date, there shall have been validly tendered and not properly withdrawn at least 8,669,029 Magal Shares (currently representing 5.2% of the issued and outstanding shares and voting power of Magal);

  •
as required by Israeli law, at 10:00 a.m., New York time, on the Initial Completion Date, the aggregate number of Magal Shares validly tendered pursuant to the offer and not properly withdrawn (excluding the Magal Shares held by us or our affiliates – see “Rights of Shareholders Who Do Not Accept the Offer”) is greater than the aggregate number of Magal Shares represented by Notices of Objection to the offer; and

  •
The Israel Competition Authority shall have approved the purchase of the Magal Shares pursuant to this offer.

 The offer is also subject to certain other conditions set forth in Section 11. If any of these conditions is not satisfied, we may elect not to purchase, or may be prohibited from purchasing, any Magal Shares tendered pursuant to the offer. The offer is not conditioned on the availability of financing or the approval of the board of directors of Magal. See Section 11, which sets forth in full the conditions of the offer and specifies those conditions of the offer that are waivable by us.

        If more than 8,669,029 Magal Shares are validly tendered and not properly withdrawn prior to 10:00 a.m., New York time, on the Final Expiration Date, we will purchase 8,669,029 Magal Shares on a pro rata basis from all tendering shareholders who have validly tendered their shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their shares before the completion of the Initial Offer Period. The number of Magal Shares that we will purchase from each tendering shareholder will be based on the total number of Magal Shares validly tendered by all shareholders prior to 10:00 a.m., New York time, on the Final Expiration Date and not properly withdrawn before the completion of the Initial Offer Period. The proration factor, if any, will be calculated by dividing (x) 8,669,029 Magal Shares, the number of Magal Shares that we are offering to purchase, by (y) the aggregate number of Magal Shares validly tendered pursuant to the offer and not properly withdrawn.
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        We will publicly announce in accordance with applicable law and in any event issue a press release by 9:00 a.m., New York time, on the U.S. business day following the Initial Completion Date, stating whether the conditions of the offer have been satisfied or, subject to applicable law, waived by us. Promptly following the Final Expiration Date, we will announce the results of the offer and the proration factor, if any. If we are unable to promptly determine the proration factor, we will announce the preliminary results. We will pay for all Magal Shares accepted for payment pursuant to the offer promptly following the calculation of the proration factor. We expect to make such payment within four U.S. business days following the Final Expiration Date.

        Under Israeli law, once we announce, following the completion of the Initial Offer Period, that the offer has been accepted, or, in other words, that all the conditions of the offer have been satisfied or, subject to applicable law, waived by us, no further conditions of the offer would apply and we will become irrevocably bound to purchase the Magal Shares validly tendered pursuant to the offer and not properly withdrawn prior to 10:00 a.m., New York time, on the Final Expiration Date (subject to proration, if any).

Subject to applicable laws and regulations, if any condition has not been satisfied as of the Initial Completion Date, we may decide to:

 •
extend the Initial Offer Period and, subject to applicable withdrawal rights until the Initial Completion Date, retain all tendered Magal Shares until the Final Expiration Date;

 •
if the only conditions that have not been satisfied are one or more of the conditions set forth in clause (b) of Section 11, waive such condition(s) and, subject to proration, accept for payment and pay for all Magal Shares validly tendered and not properly withdrawn prior to 10:00 a.m., New York time, on the Final Expiration Date by no later than four business days following the Final Expiration Date; or

 •
terminate the offer and not accept for payment or pay for any Magal Shares and promptly return all tendered Magal Shares to tendering shareholders.

 In the event that we extend the Initial Offer Period, we will inform the Depositary and the Information Agent of that fact. We will also issue a press release announcing a new Initial Completion Date no later than 9:00 a.m., New York time, on the first U.S. business day following the day on which we decide to extend the Initial Offer Period.

        Without limiting the manner in which we may choose to make any public announcement, subject to applicable law (including Rule 14e-1(d) and Rule 14d-4(d) under the Exchange Act, which require that material changes be promptly disseminated to holders of Magal shares in a manner reasonably designed to inform such holders of such changes), we currently intend to make announcements regarding the offer by distributing a press release to “PR Newswire” and publishing the aforesaid notices in a daily newspaper with national circulation in the United States.
 
 If we make a material change in the terms of the offer (as may be permitted under applicable law) or in the information concerning the offer, or if we waive a material condition to the offer (if permitted pursuant to the Exchange Act and the rules of the SEC), we will extend the Initial Offer Period to the extent required by the Exchange Act and the rules of the SEC.

        This offer to purchase, the Letter of Transmittal and the other related documents to be furnished will be mailed to the record holders of Magal Shares whose names appear as of the date of this offer to purchase on Magal’s shareholder list. They will also be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear as of the date of this offer to purchase on the shareholder list or, if applicable, who are listed as of the date of this offer to purchase as participants in a clearing agency’s security position listing, for subsequent transmittal to beneficial owners of Magal Shares.
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2.          ACCEPTANCE FOR PAYMENT AND PAYMENT.
 
General. Following the Final Expiration Date and upon the terms and subject to the conditions of the offer (including, if the Initial Offer Period is extended or the offer is otherwise amended, the terms and conditions of any such extension or amendment), subject to proration, we will accept for payment and, subject to any applicable withholding tax duties, pay for all Magal Shares validly tendered prior to 10:00 a.m., New York time, on the Final Expiration Date and not properly withdrawn in accordance with Section 4. We expect to make such payment, including in the event that proration of tendered Magal Shares is required, within four U.S. business days following the Final Expiration Date. Please see Section 1.

          In all cases, we will pay for Magal Shares validly tendered and accepted for payment pursuant to the offer only after timely receipt by the Depositary of the required documents to substantiate a valid tender, as set forth in Section 3.
      
For purposes of the offer, we will be deemed to have purchased Magal Shares that have been validly tendered and not properly withdrawn if and when we give oral or written notice to the Depositary of our acceptance for payment of Magal Shares pursuant to the offer. Upon the terms and subject to the conditions of the offer, payment for the Magal Shares will be made by the Depositary.

          Under no circumstances will interest be paid on the purchase price to be paid, regardless of any extension of the offer or any delay in making payment.

          If, pursuant to the terms and conditions of the offer, we do not accept tendered Magal Shares for payment for any reason or if certificates are submitted representing more Magal Shares than are tendered (including by reason of proration), certificates evidencing unpurchased Magal Shares will be returned to the tendering shareholder (or, in the case of Magal Shares tendered by book-entry transfer pursuant to the procedure set forth in Section 3, the Magal Shares will be credited to the relevant account), no later than three business days following the expiration, termination or withdrawal of the offer.

          Form of Payment. All shareholders tendering their Magal Shares will be paid solely in U.S. dollars.

          Withholding Tax. Please note that under the “Backup Withholding” provisions of U.S. federal income tax law, the Depositary may be required to withhold tax, at applicable rates (currently 24.0%), on amounts received by a tendering shareholder or other payee pursuant to the offer. To prevent such withholding from the purchase price received for Magal Shares tendered pursuant to the offer to the Depositary, each tendering shareholder who does not otherwise establish an exemption from such withholding, must properly complete the Form W-9 included in the Letter of Transmittal. See Section 5.

Also, under the “withholding tax” provisions of Israeli income tax law, the gross proceeds payable to a tendering shareholder in the offer generally will be subject to Israeli withholding tax. However, based on an approval that we received from the ITA:

          (1) tendering shareholders who acquired their Magal Shares after Magal’s initial public offering on Nasdaq in 1993 and who certify that they are not, and at the date of purchase of their Shares were not Israeli residents (and, in the case of a corporation, that no Israeli resident(s) (x) holds 25.0% or more of the means of control of such corporation or (y) is the beneficiary of, or is entitled to, 25.0% or more of the revenues or profits of such corporation, whether directly or indirectly), will not be subject to Israeli withholding tax; and

          (2) payments to tendering shareholders who acquired their Magal Shares after Magal’s initial public offering on Nasdaq in 1993 and who hold their Magal Shares through an Israeli broker or Israeli financial institution will be made by us without any Israeli withholding at source, and the relevant Israeli broker or Israeli financial institution will withhold Israeli tax, if any, as required by Israeli law.

          The approval does not address shareholders who are not described in clauses (1) and (2) above, and therefore they will be subject to Israeli withholding tax at the applicable rate of the gross proceeds payable to them pursuant to the offer, as prescribed by Israeli tax law.

  See Section 5 and the Letter of Transmittal for instructions on how to prevent us from withholding Israeli income tax from the gross proceeds payable to you (if any) pursuant to the offer.
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3.          PROCEDURES FOR TENDERING SHARES OR NOTIFYING US OF YOUR OBJECTION TO THE OFFER.
 
Overview

All holders of Magal Shares should tender their Magal Shares to, or object to the offer through, the Depositary pursuant to the instructions described under the caption “Tenders to American Stock Transfer & Trust Company, LLC, our Depositary” below.

 You may only tender your Magal Shares or object to the offer by following the procedures described in this Section 3. You may not tender your Magal Shares using a guaranteed delivery procedure.

Tenders to American Stock Transfer & Trust Company, LLC, our Depositary

        Eligibility; Who May Tender to, or Object to the Offer through, the Depositary. All shareholders should tender their Magal Shares to, or object to the offer through, the Depositary.

        Valid Tender. In order for you to validly tender Magal Shares pursuant to the offer, a properly completed and duly executed Letter of Transmittal, together with any required signature guarantees, or in the case of a book-entry transfer, an agent’s message, and any other documents required by the Letter of Transmittal, must be received by the Depositary at its address set forth on the back cover of this offer to purchase prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date, as applicable. In addition, certificates evidencing tendered Magal Shares must be received by the Depositary at its address or the shares must be delivered to the Depositary (including an agent’s message if you did not deliver a Letter of Transmittal), in each case prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date, as applicable.

        The term “agent’s message” means a message, transmitted by The Depository Trust Company, or DTC, to, and received by, the Depositary and forming part of the Book-Entry Confirmation that states that DTC has received an express acknowledgement from the participant in DTC tendering the Magal Shares that are the subject of the Book-Entry Confirmation, that the participant has received and agrees to be bound by the Letter of Transmittal and that we may enforce that agreement against that participant.

        If certificates evidencing tendered Magal Shares are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each delivery. No alternative, conditional or contingent tenders will be accepted and no fractional Magal Shares will be purchased.

        The method of delivery of share certificates and all other required documents, including through DTC, is at your option and risk, and the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

Book-Entry Transfer. The Depositary will establish an account with respect to the Magal Shares at DTC for purposes of the offer within two U.S. business days after the date of this offer to purchase. Any financial institution that is a participant in the system of DTC may make book-entry delivery of Magal Shares by causing DTC to transfer such Magal Shares into the Depositary’s account at DTC in accordance with DTC’s procedures. However, although delivery of Magal Shares may be effected through book-entry transfer into the Depositary’s account at DTC, the Letter of Transmittal, properly completed and duly executed, with any required signature guarantees, or an agent’s message, and any other required documents must, in any case, be transmitted to, and received by, the Depositary at its address set forth on the back cover of this offer to purchase prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date, as applicable. Delivery of the documents to DTC or any other party does not constitute delivery to the Depositary.

        Signature Guarantees. Signatures on all Letters of Transmittal must be guaranteed by a firm that is a member of the Securities Transfer Agents Medallion Program, or by any other “eligible guarantor institution,” as that term is defined in Rule 17Ad-15 under the Exchange Act, except in cases where Magal Shares are tendered:

 •
by a registered holder of Magal Shares who has not completed either the box entitled “Special Delivery Instructions” or the box entitled “Special Payment Instructions” on the Letter of Transmittal; or

 •
for the account of an eligible guarantor institution.

        If a share certificate is registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or a share certificate not accepted for payment or not tendered is to be returned, to a person other than the registered holder(s), then the tendered certificate must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear on the certificate, with the signature(s) on the certificate or stock powers guaranteed by an eligible guarantor institution. See Instruction 1 and Instruction 5 to the Letter of Transmittal.
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        Condition to Payment. In all cases, payment for Magal Shares tendered and accepted for payment pursuant to the offer will be made only after timely receipt by the Depositary of the certificate(s) evidencing Magal Shares, or a timely Book-Entry Confirmation for the delivery of Magal Shares, the Letter of Transmittal, properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an agent’s message, and any other documents required by the Letter of Transmittal.

        The valid tender of Magal Shares pursuant to the applicable procedure described above will constitute a binding agreement between you and us upon the terms and subject to the conditions of the offer.

        Appointment. By executing the Letter of Transmittal as set forth above (including delivery by way of an agent’s message), you irrevocably appoint our designees as your agents, attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of your rights with respect to the Magal Shares you tendered. These powers of attorney and proxies will be considered coupled with an interest in the tendered Magal Shares. The appointment will be effective if, as and when, and only to the extent that, we accept your Magal Shares for payment. Upon our acceptance for payment, all prior powers of attorney, proxies and consents given by you with respect to such Magal Shares (and any and all Magal Shares or other securities issued or issuable in respect of your Magal Shares) will be revoked, without further action, and no subsequent powers of attorney or proxies may be given or any subsequent written consent executed by you (and, if given or executed, will not be deemed effective). Our designees will, with respect to the Magal Shares for which the appointment is effective, be empowered to exercise all of your voting and other rights as they in their sole discretion may deem proper at any annual or special meeting of Magal’s shareholders or any adjournment or postponement of that meeting, by written consent in lieu of any meeting or otherwise. We reserve the right to require that, in order for Magal Shares to be deemed validly tendered, immediately upon our payment for the Magal Shares, we must be able to exercise full voting rights with respect to the Magal Shares at any meeting of Magal’s shareholders with a record date subsequent to the consummation of the offer (and at any meeting of Magal’s shareholders with a record date prior to the consummation of the offer if such Magal Shares were held by such tendering shareholder as of such record date).

Objecting to the Offer. If you want to notify us of your objection to the offer with respect to all or any portion of your Magal Shares, and you hold such Magal Shares through a broker, dealer, commercial bank, trust company or other nominee, you should request such broker, dealer, commercial bank, trust company or other nominee to provide on your behalf the Notice of Objection to the Depositary prior to 10:00 a.m., New York time, on the Initial Completion Date.

        We will disregard any Notices of Objection received by the Depositary after such deadline. In addition, if you submit a Notice of Objection with respect to Magal Shares and thereafter you deliver a Letter of Transmittal by which you tender those Magal Shares, we will disregard your Notice of Objection. Similarly, if you submit a Letter of Transmittal by which you tender Magal Shares, and thereafter you deliver to us a Notice of Objection with respect to those Magal Shares, we will disregard your Letter of Transmittal. If you submit a Letter of Transmittal and a Notice of Objection concurrently with respect to the same Magal Shares, we will disregard the Notice of Objection.

        Withdrawing your Objection. You may withdraw a previously submitted Notice of Objection at any time prior to 10:00 a.m., New York time, on the Initial Completion Date. For a withdrawal to be effective, a written notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of this offer to purchase. Any notice of withdrawal must specify the name of the person(s) who submitted the Notice of Objection to be withdrawn and the number of Magal Shares to which the Notice of Objection to be withdrawn relates. Following the withdrawal of a Notice of Objection, a new Notice of Objection may be submitted at any time prior to 10:00 a.m., New York time, on the Initial Completion Date by following the procedures described above.

        If, with respect to all or any portion of your Magal Shares, you object to the offer during the Initial Offer Period and the conditions to the offer have been satisfied or, subject to applicable law, waived by us, you may tender such Magal Shares during the Additional Offer Period. See Section 1 and Section 11.

        Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Magal Shares or Notice of Objection will be determined by us, in our sole discretion. We reserve the absolute right to reject any or all tenders or Notices of Objection that we determine not to be in proper form or, in the case of tenders, the acceptance for payment of which may be unlawful. A tender of Magal Shares or Notice of Objection will not have been made until all defects and irregularities have been cured or waived. None of us, our affiliates, our assigns, the Depositary, the Information Agent, our Israeli or U.S. legal counsel or any other person will be under any duty to give notification of any defects or irregularities in tenders of Magal Shares or Notices of Objection or incur any liability for failure to give any notification.
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        If you tender your Magal Shares pursuant to the applicable procedure described above, it will constitute your acceptance of the terms and conditions of the offer, as well as your representation and warranty to us that:

 •
you have the full power and authority to tender, sell, assign and transfer the tendered Magal Shares (and any and all Magal Shares or other securities issued or issuable in respect of your Magal Shares); and

 •
when we accept your Magal Shares for payment, we will acquire good and unencumbered title to your Magal Shares, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims.

4.          WITHDRAWAL RIGHTS
 
You may withdraw previously tendered Magal Shares at any time prior to 10:00 a.m., New York time, on the Initial Completion Date, but not during the Additional Offer Period (see Section 1 and Section 11).  In addition, under U.S. law, tendered Magal Shares may be withdrawn at any time after 60 days from the date of the commencement of the offer if the Magal Shares have not yet been accepted for payment by us. If we extend the Initial Offer Period, delay our acceptance for payment of Magal Shares or are unable to accept Magal Shares for payment pursuant to the offer for any reason, then, without prejudice to our rights under the offer but subject to applicable law, the Depositary may, nevertheless, on our behalf, retain tendered Magal Shares, and those Magal Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described in this Section 4. However, our ability to delay the payment for Magal Shares that we have accepted for payment is limited by applicable law, including Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of security holders promptly after the termination or withdrawal of such bidder’s offer. Any delay will be by an extension of the offer to the extent required by law. Holders of Magal Shares who are concerned about tendering their Magal Shares in a manner that will leave them without withdrawal rights during any part of the Offer can wait until the lapse of the Initial Offer Period before tendering their Magal Shares in the Additional Offer Period.

Withdrawal procedure for tenders to American Stock Transfer & Trust Company, LLC, our Depositary

        If you tendered your Magal Shares to the Depositary, for a withdrawal to be effective, a written notice of withdrawal must be timely received by the Depositary at the address set forth on the back cover of this offer to purchase. Any notice of withdrawal must specify the name of the person who tendered the Magal Shares to be withdrawn, the number of Magal Shares to be withdrawn and the name of the registered holder of the Magal Shares, if different from the name of the person who tendered the Magal Shares. If certificates evidencing Magal Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of the certificates, the serial numbers shown on the certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an eligible guarantor institution, unless the Magal Shares have been tendered for the account of an eligible guarantor institution. If Magal Shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 3, any notice of withdrawal must also specify the name and number of the account at DTC to be credited with the withdrawn Magal Shares and otherwise comply with DTC’s procedures.

        Withdrawals of tendered Magal Shares may not be rescinded. If you have properly withdrawn your Magal Shares, they will be deemed not to have been validly tendered for purposes of the offer. However, withdrawn Magal Shares may be re-tendered at any time prior to 10:00 a.m., New York time, on the Final Expiration Date by following the applicable procedure described in Section 3.

Determination of Validity

        All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by us, in our sole discretion, subject to applicable law. None of us or our affiliates or assigns, the Depositary, the Information Agent, or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.
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5.          MATERIAL U.S. FEDERAL INCOME TAX AND ISRAELI INCOME TAX CONSEQUENCES.
 
Certain Material U.S. Federal Income Tax Consequences.

        U.S. Holders. The following discussion summarizes certain material U.S. federal income tax consequences of the offer applicable to the shareholders of Magal who are U.S. Holders and whose Magal Shares are tendered and accepted for payment pursuant to the offer. A “U.S. Holder” means a holder of Magal Shares who is:

 •
an individual who is a citizen or resident of the United States;

 •
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

 •
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

 •
a trust (A) if a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have authority to control all of its substantial decisions, or (B) if it has made a valid election to be treated as a U.S. person under the Code.

        This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, referred to as the Code, current and proposed Treasury regulations promulgated under the Code, administrative pronouncements and judicial decisions and interpretations as of the date hereof, all of which are subject to differing interpretations or change, which change may apply retroactively and could materially affect the continued validity of this summary and the tax consequences described in this Section 5. Subject to the discussion set forth below under the heading entitled “Characterization of the Purchase if Magal is a Passive Foreign Investment Company,” this discussion assumes that Magal is not and has never been a “passive foreign investment company,” “controlled foreign corporation,” “foreign investment company” or “foreign personal holding company” for U.S. federal income tax purposes.

        This discussion addresses only holders of Magal Shares that are held as capital assets within the meaning of section 1221 of the Code. No ruling has been or will be sought from the U.S. Internal Revenue Service, or IRS, and no opinion of counsel has been or will be rendered as to the U.S. federal income tax consequences of the offer. This discussion does not address all of the tax consequences that may be relevant to shareholders in light of their particular circumstances or certain types of shareholders subject to special treatment, including, without limitation:

 •
regulated investment companies;

 •
broker-dealers (including in securities or foreign currency) or insurance companies;

 •
persons who have elected to apply a mark-to-market method of accounting;

 •
certain former citizens or former long-term residents of the United States;

 •
tax-exempt organizations or retirement plans;

 •
persons subject to the alternative minimum tax;

 •
banks and other financial institutions;

 •
persons who hold their Magal Shares as part of a position in a straddle or as part of a hedging, conversion, constructive sale, synthetic security, or other integrated investment;

 •
holders who received their Magal Shares through the exercise of employee stock options or otherwise as compensation;

 •
partnerships or other pass-through entities or persons who hold their Magal Shares through partnerships or other pass-through entities;

 •
holders who within the five-year period prior to the offer owned directly, indirectly or by attribution at least 10.0% of the voting power of Magal; and

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 •
persons whose functional currency is not the U.S. dollar.

        In addition, this summary does not discuss any foreign, state, or local tax consequences or any U.S. tax consequences (e.g., estate or gift tax) relevant to U.S. Holders other than U.S. federal income tax consequences.

        WE RECOMMEND THAT MAGAL SHAREHOLDERS WHO ARE U.S. HOLDERS CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS. FOR A DISCUSSION OF CERTAIN ISRAELI INCOME TAX CONSEQUENCES, SEE BELOW UNDER “CERTAIN MATERIAL ISRAELI TAX CONSEQUENCES.”

        Characterization of the Purchase if Magal is not a Passive Foreign Investment Company. The receipt of cash for Magal Shares pursuant to the offer will be treated as a taxable transaction for U.S. federal income tax purposes. In general, a U.S. Holder who sells Magal Shares pursuant to the offer will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the Magal Shares sold pursuant to the offer. Gain or loss will be determined separately for each block of Magal Shares (i.e., Magal Shares acquired at the same cost in a single transaction) tendered pursuant to the offer. The gain or loss will be long-term capital gain or loss if the U.S. Holder has held the Magal Shares for more than one year at the time of the consummation of the offer. Long-term capital gain realized by a non-corporate U.S. Holder is generally eligible for a preferential tax rate (currently a maximum of  20.0%). Special limitations apply to the use of capital losses.

        Characterization of the Purchase if Magal is a Passive Foreign Investment Company. In general, a non-U.S. corporation will be classified as a passive foreign investment company within the meaning of section 1297(a) of the Code (“PFIC”) if, for any taxable year, at least 75.0% of its gross income consists of passive income (such as dividends, interest, rents, royalties, or gains on certain securities or commodities transactions), or at least 50.0% of the average value of its assets consists of assets that produce or are held for the production of, passive income. Magal’s Form 20-F for each of the fiscal years ended December 31, 2008 through December 31, 2019 states that Magal did not believe that it was a PFIC in those years, nor does it expect to be a PFIC in 2020. However, because the determination of PFIC status is a factual determination that must be made annually at the close of each taxable year, there is no assurance that Magal is not a PFIC or that it has never been a PFIC.

        In general, if Magal were characterized as a PFIC for any taxable year during a U.S. Holder’s period of ownership, any gain recognized by the U.S. Holder who sells Magal Shares pursuant to the offer would be treated as ordinary income and would be subject to tax as if the gain had been realized ratably over the holding period of the Magal Shares. The amount allocated to the current taxable year and any taxable year with respect to which Magal was not a PFIC would be taxed as ordinary income (rather than capital gain) earned in the current taxable year. The amount allocated to other taxable years would be taxed at the highest marginal rates applicable to ordinary income for such taxable years, and the U.S. Holder also would be liable for an additional tax equal to the interest on such tax liability for such years. We recommend that U.S. Holders consult their tax advisors regarding the potential application of the PFIC rules to the sale of Magal Shares pursuant to the offer.

Additional Tax on Investment Income. In addition to the income taxes described above, U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds will be subject to a 3.8% Medicare contribution tax on net investment income, which includes capital gains from the sale of Magal Shares.

Information Reporting and Backup Withholding. Payments made by the Depositary in connection with the offer may be subject to information reporting to the IRS and possible backup withholding. Under the U.S. federal backup withholding tax rules, 24.0% of the gross proceeds payable to a shareholder or other payee pursuant to the offer must be withheld and remitted to the U.S. Treasury unless the U.S. Holder (or other payee) who tenders its Magal Shares to the Depositary provides such shareholder’s (or other payee’s) taxpayer identification number (employer identification number or social security number) to the Depositary and otherwise complies with the backup withholding rules. Each U.S. Holder tendering its shares to the Depositary should complete and sign the Form W-9 included as part of the Letter of Transmittal in order to provide the information and certification necessary to avoid backup withholding.

        Amounts withheld under the backup withholding rules are not an additional tax and may be refunded or credited against the U.S. holder’s federal income tax liability, provided the required information is furnished to the IRS.
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Certain Material Israeli Tax Consequences.

        The following discussion summarizes the material Israeli tax consequences of the offer applicable to Magal’s shareholders whose Magal Shares are tendered and accepted for payment pursuant to the offer. The following discussion is based on the Israeli Income Tax Ordinance [New Version], 1961, as amended, or the Ordinance, the regulations promulgated thereunder, administrative rulings and pronouncements, all of which are subject to change, possibly with retroactive effect. Any such change could alter the tax consequences discussed below. There can be no assurance that the Israeli Tax Authority, or the ITA, or a court will not take a position contrary to the Israeli income tax consequences discussed herein or that any such contrary position taken by the ITA or a court would not be sustained. This discussion addresses only Magal Shares that are held as capital assets (generally, assets held for investment) within the meaning of the Ordinance. This discussion does not address all of the tax consequences that may be relevant to shareholders in light of their particular circumstances or certain types of shareholders subject to special treatment.

        The tax discussion set forth below is based on present law. Because individual circumstances may differ, we recommend that you consult your tax advisors to determine the applicability of the rules discussed below to you and the particular tax effects of the offer, including the application of Israeli or other tax laws.

        The summary below does not discuss the effects of any non-Israeli tax laws. For a discussion of certain U.S. federal income tax consequences, see above under “Certain Material U.S. Federal Income Tax Consequences.”

        Characterization of the Purchase. The receipt of cash for Magal Shares pursuant to the offer generally will be treated as a taxable transaction for Israeli income tax purposes in which a holder of Magal Shares will be treated as having sold such Magal Shares.

        Israeli Residents. Israeli law generally imposes a capital gains tax on a sale or disposition of any capital assets by Israeli residents, as defined for Israeli tax purposes, and on the sale of assets located in Israel, including shares in Israeli companies (such as Magal), by non-Israeli residents, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise.

        Tax Rates. In general, pursuant to the Ordinance and the regulations promulgated thereunder, the tax rate applicable to capital gains derived from the sale of Magal Shares, whether listed on a stock market or not, is 25% for Israeli individuals. Additionally, if such shareholder is considered a “significant shareholder” at any time during the 12-month period preceding such sale, i.e., such shareholder holds directly or indirectly, including with others, at least 10% of any means of control in the company, the tax rate is 30%. Companies are subject to the corporate tax rate on capital gains derived from the sale of Magal Shares (currently 23%). However, the foregoing tax rates will not apply to: (i) dealers in securities; (ii) shareholders who acquired their Magal Shares prior to Magal’s initial public offering on Nasdaq (that may be subject to a different tax arrangement); and (iii) in some cases, shareholders who received their Magal Shares through the exercise of employee stock options or otherwise as compensation.

Non-Israeli residents. Non-Israeli residents generally will be exempt from capital gains tax on the sale of their Magal Shares, provided that such shareholders did not acquire their Magal Shares prior to Magal’s initial public offering and that the gains are not attributed to a permanent establishment of such shareholders in Israel. However, non-Israeli corporations will not be entitled to such exemption if Israeli residents (i) have a controlling interest of 25.0% or more in such non-Israeli corporation, or (ii) are the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.

        In addition, pursuant to the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on Income, as amended, or the U.S.-Israel Tax Treaty, the sale, exchange or disposition of Magal Shares by a person who (i) holds the Magal Shares as a capital asset, (ii) qualifies as a resident of the United States within the meaning of the U.S.-Israel Tax Treaty, and (iii) is entitled to claim the benefits afforded to such U.S. resident by the U.S.-Israel Tax Treaty (such person is referred to as a U.S. Treaty Resident), generally will not be subject to Israeli capital gains tax unless such U.S. Treaty Resident held, directly or indirectly, Magal Shares representing 10% or more of the voting power of Magal during any part of the 12-month period preceding the sale, exchange or disposition, subject to certain conditions, or the capital gains can be allocated to a permanent establishment of such U.S. Treaty Resident in Israel. If the exemption is not available, such sale, exchange or disposition would be subject to Israeli capital gains tax to the extent applicable. Under the U.S.-Israel tax Treaty, such U.S. Treaty Resident would be permitted to claim a credit for Israeli income tax against the U.S. federal income tax imposed on the disposition, subject to the limitations in the U.S. tax laws applicable to foreign tax credits.
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        Israeli Withholding Tax. An approval from the ITA was obtained with respect to the withholding tax rates applicable to shareholders as a result of the sale of Magal Shares pursuant to the offer. The approval provides, among other things, that:

        (1) tendering shareholders who acquired their Magal Shares after Magal’s initial public offering on Nasdaq in 1993 and who certify that they are not and at the date of purchase of their Shares were not Israeli residents (and, in the case of corporations, that no Israeli residents (x) hold 25.0% or more of the means of control such corporations or (y) are the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such corporations, whether directly or indirectly), will not be subject to Israeli withholding tax; and

        (2) payments to tendering shareholders who acquired their Magal Shares after Magal’s initial public offering on Nasdaq in 1993 and who hold their Magal Shares through an Israeli broker or Israeli financial institution will be made by us without any Israeli withholding at source, and the relevant Israeli broker or Israeli financial institution will withhold Israeli tax, if any, as required by Israeli law.

        The approval does not address shareholders who are not described in clauses (1) and (2) above, and therefore they will be subject to Israeli withholding tax at the applicable rate of the gross proceeds payable to them pursuant to the offer, as prescribed by Israeli tax law.

        More specifically, based on the approval, if a Magal Shareholder tenders its Magal Shares to the Depositary, the Depositary may be required to withhold Israeli tax at the applicable rate of the gross proceeds payable to such shareholder pursuant to the offer, unless such shareholder, upon the terms and conditions set forth in the Letter of Transmittal, either:

certifies, by completing the Declaration Form (Declaration of Status for Israeli Income Tax Purposes), or the Declaration Form, included in the Letter of Transmittal or otherwise delivered to such shareholder, that (1) such shareholder is NOT and at the date of purchase of its Shares was not a “resident of Israel” for purposes of the Ordinance, and if it is a corporation that is NOT and at the date of purchase of its Shares was not a “resident of Israel” – that Israeli residents are NOT “controlling shareholders” (as defined under Section 68A of the Ordinance) of such corporation, nor are Israeli residents the beneficiaries of, and are not entitled to, 25.0% or more of such corporation’s revenues or profits, whether directly or indirectly, or (2) such shareholder is a bank, broker or financial institution resident in Israel. In such case, the Depositary will not withhold any Israeli withholding tax from the gross proceeds payable to such shareholder pursuant to the offer; or

provide the Depositary, with a copy (which shall not constitute notice) to Naschitz, Brandes, Amir & Co., Advocates, our legal counsel in Israel, at its address set forth on the back cover of this offer to purchase, with a valid certificate from the ITA entitling such shareholder to an exemption or a specified withholding tax rate, referred to as the ITA Waiver. In such case, the Depositary will withhold Israeli withholding tax (or not withhold, if such shareholder is entitled to an exemption) from the gross proceeds payable to such shareholder pursuant to the offer in accordance with such ITA Waiver.

        We recommend that you consult your tax advisors regarding the application of Israeli income and withholding taxes (including eligibility for any withholding tax reduction or exemption, and the refund procedure).

        Please note that if you tender your Magal Shares to the Depositary and provide a Declaration Form, you also consent to the provision of such Declaration Form to us and to the ITA in case the ITA so requests for purposes of audit or otherwise.

        All questions as to the validity, form or eligibility of any Declaration Form or ITA Waiver (including time of receipt) and, subject to applicable law, the withholding of Israeli taxes, will be determined by us, in our sole discretion. We reserve the absolute right to reject any or all Declaration Forms or ITA Waivers that we determine not to be in proper form or pursuant to which the failure to withhold any Israeli taxes may be unlawful. We also reserve, subject to applicable law, the absolute right, in our sole discretion, to waive any defect or irregularity in any Declaration Form or ITA Waiver of any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders. None of us, our affiliates, our assigns, the Depositary, the Information Agent, our Israeli or U.S. legal counsel or any other person will be under any duty to give notification of any defects or irregularities or incur any liability for failure to give any notification.

An excerpt of the definition of an Israeli resident in the Ordinance is attached as Annex B.

        The Israeli withholding tax is not an additional tax. Rather, the Israeli income tax liability of shareholders subject to Israeli withholding tax will be reduced by the amount of Israeli tax withheld. If Israeli withholding tax results in an overpayment of Israeli taxes, the holder may apply to the ITA in order to obtain a refund. However, no assurance is given as to whether and when the ITA will grant such refund.
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        The foregoing discussion is intended only as a summary and does not purport to be a complete analysis or description of all potential Israeli tax effects of a sale of shares pursuant to the offer. We recommend that Magal Shareholders consult their tax advisors concerning the Israeli and non-Israeli tax consequences to them of tendering their shares pursuant to the offer.

6.          PRICE RANGE OF THE SHARES ETC.
 
Magal Shares are listed and traded on Nasdaq under the ticker symbol “MAGS”. Magal Shares commenced trading on Nasdaq in March 1993.

        The following table sets forth, for each of the fiscal quarters indicated, the high and low sale price per share on Nasdaq in U.S. dollars, as reported in published financial sources.

Quarter
 
Nasdaq Global Select Market
 
   
High
   
Low
 
 2018
           
First Quarter
 
$
6.48
   
$
5.04
 
Second Quarter
 
$
5.90
   
$
4.83
 
Third Quarter
 
$
5.91
   
$
4.95
 
Fourth Quarter
 
$
5.80
   
$
3.88
 
                 
 2019
               
First Quarter
 
$
5.45
   
$
4.30
 
Second Quarter
 
$
5.38
   
$
4.27
 
Third Quarter
 
$
5.25
   
$
3.97
 
Fourth Quarter
 
$
4.37
   
$
3.63
 
                 
 2020
               
First Quarter
 
$
4.37
   
$
2.48
 
Second Quarter (through May 21, 2020)
 
$
3.24
 
 
$
2.46
 

The price paid in the Offer represents a premium of approximately one percent to the average closing price of Magal Shares on Nasdaq over the 45-day period ended on May 21, 2020, and is less than $3.00, the closing price of Magal Shares on Nasdaq on May 21, 2020, the last full trading day before the announcement of the Offer.

        We recommend that you obtain a current market quotation for Magal Shares.

        Based on Magal’s audited consolidated financial statements for the period ended December 31, 2019, as included in the Annual Report on Form 20-F of Magal as filed on April 23, 2020, Magal’s shareholders equity was $87,806,000 and its shareholders’ equity per share (based on 23,153,985 Magal Shares outstanding on such date) was $3.79.

7.
EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT.
Our purchase of Magal Shares pursuant to the offer may reduce the number of Magal Shares that might otherwise be traded publicly and may reduce the number of Magal shareholders. In particular, if the offer is consummated, Magal’s “public float,” that is the number of Magal Shares owned by Magal’s non-affiliated shareholders and available for trading in the securities markets, may be reduced. This may result in lower share prices or reduced liquidity in the trading market for Magal Shares in the future. As set forth in Section 11, a condition to the consummation of the offer is that there will be a sufficient number of Magal Shares issued and outstanding and publicly-traded following consummation of the offer to ensure a continued trading market for the Magal Shares. Therefore, based upon published guidelines of Nasdaq, each member of our bidder group believes that our purchase of Magal Shares pursuant to the offer will not, in itself, cause the remaining Magal Shares to be delisted from Nasdaq.
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The Magal Shares are currently “margin securities” under the rules and regulations of the Board of Governors of the Federal Reserve System. This has the effect, among other things, of allowing brokers to extend credit to their customers using such Magal Shares as collateral. Each member of our bidder group believes that following the purchase of Magal Shares pursuant to the offer, the Magal Shares will continue to be “margin securities” for purposes of the margin rules and regulations of the Board of Governors of the Federal Reserve System.

          Magal Shares are registered under the Exchange Act, which requires, among other things, that Magal furnish certain information to its shareholders and the SEC.  We believe that the offer will not result in the deregistration of the Magal Shares under the Exchange Act or otherwise cause Magal to no longer be subject to the reporting requirements of the Exchange Act applicable to it (as a foreign private issuer).

8.
INFORMATION CONCERNING MAGAL.
The information concerning Magal contained in this offer to purchase has been taken from, or is based upon, publicly available documents and records on file with the SEC and other public sources. The summary information set forth below is qualified in its entirety by reference to these documents and records. We have not independently verified the accuracy or completeness of the information contained in such documents or records.

          Overview. Magal’s legal and commercial name is Magal Security Systems Ltd. and its legal form is a company limited by shares. It was incorporated under the laws of the State of Israel on March 27, 1984 under the name Magal Security Systems Ltd. Magal’s corporate headquarters and principal executive offices are located near Tel Aviv in the Yehud Industrial Zone. Its telephone number in Israel is +972-3-539-1444. Its agent for service of process in the U.S. is Senstar Inc., 13800 Coppermine Road, Second Floor, Herndon, Virginia 20171. Magal’s website address is http://www.magalsecurity.com. However, information contained on Magal’s website does not constitute a part of this offer to purchase.

Magal is a leading global provider of products and solutions for physical security, safety and site management. Magal commenced its operations in 1969 as a department of Israel Aircraft Industries Ltd, specializing in perimeter security systems and have delivered products, tailor-made solutions and turnkey projects to thousands of customers in over 100 countries in some of the world’s most demanding locations, including national borders, military bases, power plants, airports, seaports, prisons, industrial sites, large retailer organizations, banks, oil and gas facilities, sporting events including athlete villages and stadiums, and municipalities from intrusion, terror, crime, sabotage or vandalism to infrastructure, assets and personnel.

Magal offers a broad portfolio of homegrown Perimeter Intrusion Detection Systems (PIDS), Video Management Software (VMS), Intelligent Video Analytics (IVA)and cyber solutions. Magal’s offering is complemented by its comprehensive integrated solutions for critical sites, managed by Fortis4G- Magal’s 4th generation Physical Security Information Management System (PSIM).

As of December 31, 2019, Magal had approximately 421 full-time employees, of whom 59 were employed in general management and administration, 80 were employed in selling and marketing, 18 were employed in projects management, 194 were employed in production, installation and maintenance, and 65 were employed in engineering and research and development. Of such full-time employees, 158 were located in Israel, 29 were in the United States, 119 were in Canada and 105 were in various other countries.

In April 2018, Magal completed the acquisition of a 55% controlling interest in ESC BAZ Ltd., an Israeli-based company, focused on the development and manufacturing of military-grade smart security video observation and surveillance systems. In April 2016, Magal completed the acquisition of Aimetis, a Canadian-based company, which specializes in advanced video analytics software and intelligent IP video management software (VMS). In July 2017, Magal completed the amalgamation of its two Canadian subsidiaries into one company named Senstar Corporation.
        
Magal’s ordinary shares began trading on Nasdaq in March 1993 and trades under the ticker symbol “MAGS”.

        Available Information. Magal is subject to the informational filing requirements of the Exchange Act applicable to “foreign private issuers” and, in accordance therewith, is obligated to file reports, including annual reports on Form 20-F, and other information with the SEC relating to its business, financial condition and other matters.
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The Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the Securities and Exchange Commission using its EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system.

9.
INFORMATION CONCERNING THE BIDDER GROUP.
Overview. FIMI Israel Opportunity Five, Limited Partnership and FIMI Opportunity V, L.P are limited partnerships that are part of a group of private equity funds known as the FIMI Funds. The FIMI Funds invest in companies that are predominantly located in Israel or that have significant ties or relations to Israel. The managing general partner of FIMI is FIMI Five 2012 Ltd., which is a company organized under the laws of the State of Israel. Ishay Davidi is the founder of the FIMI Funds and the chief executive officer of FIMI Five 2012 Ltd. Gillon Beck, a senior partner in FIMI, serves as a director and an Executive Chairman of Magal’s board of directors. Gillon Beck is also a member of the board of directors of FIMI Five 2012 Ltd. Ron Ben-Haim, a partner in FIMI, is also a member of Magal’s board of directors. Our principal executive offices, and the principal executive offices of FIMI Five 2012 Ltd., are located at Alon Towers 2, 94 Yigal Alon Street, Tel Aviv 6789141 Israel. Our telephone number, and the telephone number of FIMI Five 2012 Ltd., in Israel is +972-3-565-2244. Shira & Ishay Davidi Management Ltd. is a holding company organized under the laws of the State of Israel that controls FIMI Five 2012 Ltd., the managing general partner of FIMI. Ishay Davidi controls Shira & Ishay Davidi Management Ltd. The principal executive offices of Shira & Ishay Davidi Management Ltd. and of Ishay Davidi are also located at Alon Towers 2, 94 Yigal Alon Street, Tel-Aviv 6789141, Israel and their telephone number in Israel also is +972-3-565-2244. 

Except as set forth in this offer to purchase, no member of our bidder group nor, to the best of our knowledge, any of the other persons listed on Schedule I, nor any affiliate or majority-owned subsidiary of any of the foregoing, nor any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transaction in Magal Shares during the past 60 days.

Except as set forth in this document, no member of our bidder group, nor to the best of our knowledge, any other person listed on Schedule I, nor any affiliate or majority-owned subsidiary of the foregoing, beneficially owns or has a right to acquire Magal Shares.

Except as set forth in this document, no member of our bidder group, nor to the best of our knowledge, any of the other persons listed on Schedule I has had, during the past two years, any negotiations, contacts or material transactions with Magal or any of its executive officers, directors or affiliates, concerning any merger, consolidation, acquisition, tender offer, election of directors, or the sale of a material amount of the assets of, Magal.

Additional Information. The name, citizenship, business address, present principal occupation and material positions held during the past five years of each of the executive officers, directors and other “senior office holders” (as such term is defined under the Israeli Securities Law, 5728-1968 (the “Israeli Securities Law”)) of each member of our bidder group are set forth in Schedule I to this offer to purchase.

        None of the members of our bidder group:

has been convicted in a criminal proceeding in the past five years (excluding traffic violations or similar misdemeanors);

has been party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, U.S. federal or state securities laws, or a finding of any violation of U.S. federal or state securities laws; or

has been otherwise convicted in a criminal proceeding and the statute of limitation regarding such conviction, pursuant to the Israeli Criminal Registration and Rehabilitation Law, 1981, has not elapsed prior to the date of this offer to purchase.

        Available Information. Pursuant to Rule 14d-3 under the Exchange Act, we have filed with the SEC a Tender Offer Statement on Schedule TO (as amended, the “Schedule TO”), of which this Offer to Purchase forms a part, and exhibits to the Schedule TO. The Schedule TO and its exhibits, as well as other information filed by us with the SEC, are available on the SEC’s website at www.sec.gov. Additional copies of this Offer to Purchase and other materials related to the Offer may also be obtained for free upon request from the Information Agent, whose contact information is set forth on the on the back cover of this Offer to Purchase.
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10.
SOURCES AND AMOUNT OF FUNDS.
We estimate that the total amount of funds that we will require to consummate the offer, including fees and expenses, is approximately $26.5 million. FIMI has, or will have, available to it, through a variety of sources, including cash on hand and, if so decided by FIMI, borrowings from third party lenders, funds necessary to satisfy all of FIMI’s purchase amount under the offer. We have not determined a lender, entered into a loan agreement or other arrangement, or developed plans to repay any such borrowings. In any event, the offer is not conditioned on the availability of financing.
 
We do not believe that our financial statements are material to your decision whether to tender Magal Shares and accept the offer because:

the offer consideration consists solely of cash;
the offer is not subject to any financing condition;
we already hold 42.6% of the issued and outstanding shares of Magal as of April 30, 2020, and therefore are a controlling shareholder of Magal;
we are private equity funds and we invest based on capital commitments of the partners in the limited partnerships comprising the funds, but these capital commitments are not reflected in our financial statements until actually called for by us prior to making an investment, so our financial statements do not accurately reflect our financial position or resources; and
our financial statements primarily reflect our fund manager’s ability to manage an investment portfolio, rather than our ability to manage an operating company such as Magal.

While we do not believe that our financial condition is material to the decision of a holder of Magal Shares whether to tender Magal Shares and accept the offer, certain selected financial information is provided below.

As of March 31 2020, FIMI held investments in portfolio companies with a net asset value of approximately $965 million, comprised of, among other things, 9,854,159 Magal Shares with an aggregate value of $29.6 million (based on the closing price per share on Nasdaq on May 21, 2020, the U.S. business day prior to the commencement of the offer, of $3.00 per share), and no liabilities other than the payment of fees and expenses with respect to the offer, an estimate of which fees and expenses are set forth in Section 13 of this offer to purchase, and immaterial administrative expenses. As of March 31, 2020, the net worth of Mr. Davidi was in excess of $500 million, excluding illiquid assets, and there are no guarantees or contingencies that negatively may affect his net worth in any material respect.

11.
CONDITIONS OF THE OFFER.
Under Israeli law, we will become irrevocably bound to purchase, subject to proration, the Magal Shares validly tendered pursuant to the offer and not properly withdrawn prior to 10:00 a.m., New York time, on the Final Expiration Date, subject to the following conditions. Notwithstanding any other provisions of the offer, and in addition to (and not in limitation of) our rights to extend the Initial Offer Period or otherwise amend the terms of the offer at any time, we shall not be required to accept for payment and, subject to Israeli law, the Exchange Act and any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to our obligation to either pay for or return tendered Magal Shares promptly after the termination or withdrawal of the offer), pay for, and may delay the acceptance for payment of and accordingly the payment for, any tendered Magal Shares, and terminate the offer, if, in our reasonable judgment, any of the following occurs:

(a) at 10:00 a.m., New York time, on the Initial Completion Date, any one or more of the following conditions has not been satisfied:

(1) there shall have been validly tendered and not properly withdrawn at least 1,200,000 Magal Shares (currently representing 5.2% of the issued and outstanding shares and voting power of Magal); and

          (2) as required by Israeli law, at the completion of the Initial Offer Period, the aggregate number of Magal Shares validly tendered pursuant to the offer and not properly withdrawn (excluding the Magal Shares held by us or our affiliates – see “Rights of Shareholders Who Do Not Accept the Offer”) is greater than the aggregate number of Magal Shares represented by Notices of Objection to the offer;
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(b) (1) at any time on or after commencement of the offer and prior to 10:00 a.m., New York time, on the Initial Completion Date,

any “event” (as such term is defined below) shall have occurred,

we did not know and could not have known of, and we did not foresee and could not have foreseen, in each case, on the date of this offer to purchase, the occurrence of such “event”, and

such “event” would cause the terms of the offer as a result of such “event” to become materially different from the terms which a reasonable offeror would have proposed had it known of such “event” on the date of this offer to purchase;

For purposes of this paragraph (b)(1), an “event” shall mean any of the following:

(A)
any action taken, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction enacted, enforced, promulgated, amended, issued or deemed applicable to the offer, by any legislative body, court, government or governmental, administrative or regulatory authority or agency of competent jurisdiction, domestic or foreign;

(B)
any action or proceeding instituted or pending by any governmental entity or third party before a court or other authority of competent jurisdiction, domestic or foreign; or

(C)
any change that has or will have occurred (or any development that has or will have occurred involving prospective changes) in the business, assets, liabilities, conditions (financial or otherwise), prospects or results of operations of Magal or its subsidiaries that has, or could reasonably be expected to have, in our reasonable discretion, a material adverse effect on Magal or, assuming consummation of the offer, on us, including, without limitation, any financial or regulatory change, development or event, whether occurred or will have occurred subsequent to the date of this offer to purchase, as a result of, related to or in connection with the global outbreak of the coronavirus (COVID-19) pandemic and its threat to the public health, including travel and shipping disruptions and shutdowns, closures of factories, guidance of social distancing and any other emergency measures and actions taken by governments.

(2)
at any time on or after commencement of the offer and prior to 10:00 a.m., New York time, on the Initial Completion Date, any of the following shall have occurred, provided that we did not know and could not have known of, nor did we foresee or could have foreseen, such an event, on the date of this offer to purchase:

any general suspension of, or limitation on prices for, trading in securities on Nasdaq;

a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or Israel (whether or not mandatory) or a material limitation (whether or not mandatory) by any governmental entity on the extension of credit by banks or other lending institutions, that could  have a material adverse effect on us, Magal or the trading of Magal Shares;

in the case of any of the foregoing existing at the time of the commencement of the offer, a material escalation or the worsening thereof;

any change in the general political, market, economic or financial conditions in the United States, Israel or abroad that could, in our reasonable judgment, have a material adverse effect on us, Magal or the trading of Magal Shares; or

a tender offer or exchange offer for any or all of Magal Shares, or any merger, acquisition, business combination or other similar transaction with or involving Magal or any of its subsidiaries, shall have been proposed, announced or made by any other person or has been publicly disclosed; or

         (c) at least one U.S. business day prior to the Initial Completion Date, we shall not have obtained any approvals, licenses, permits or consents of any competent authority or any other approval, which is required under applicable law in order to purchase the Magal Shares pursuant to the offer (see Section 12). This includes the failure to obtain the approval of the Israel Competition Authority or that any U.S. or Israeli governmental, administrative or regulatory authority or agency has imposed, or has sought to impose, a requirement as to the terms of, or the disclosure with respect to, the offer, the compliance with which would (1) result in unreasonable cost or expense to us, (2) require unreasonable commercial efforts by us, or (3) otherwise would prohibit consummation of the offer or prevent consummation thereof within the time periods prescribed by applicable law.
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        The foregoing conditions may be asserted by us regardless of the circumstances giving rise to any such conditions  so long as they are not caused exclusively by any action or inaction of any member of the FIMI Group, and, in the case of clause (b) above, subject to applicable law, may be waived by us in whole or in part at any time and from time to time until the Initial Completion Date (as may be extended), in each case, in the exercise of our reasonable judgment. You should be aware that, under Israeli law, we may not waive the condition set forth in clause (a)(2) above and we may waive the condition set forth in clause (a)(1) above but only to the extent that Magal Shares representing at least 5% of the issued and outstanding shares and voting power of Magal shall have been validly tendered and not properly withdrawn on the Initial Completion Date.

        Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time prior to 10:00 a.m., New York time, on the Initial Completion Date. All of the conditions of the offer must be satisfied or waived before the Initial Completion Date. If we proceed with the offer after failing to exercise any of the foregoing rights, this will be deemed a waiver of such rights, and depending on the materiality of the waived right and the number of days remaining in the offer, we may be required to extend the offer and recirculate new disclosure to the tendering shareholders. A public announcement may be made of a material change in, or waiver of, such conditions, and the Initial Offer Period may, in certain circumstances, be extended in connection with any such change or waiver.

        Should the offer be terminated pursuant to the foregoing provisions, all tendered Magal Shares not theretofore accepted for payment shall promptly be returned by the Depositary to the tendering shareholders.

        The offer is not conditioned on the availability of financing or the approval of the board of directors of Magal.

12.
LEGAL MATTERS AND REGULATORY APPROVALS.
The U.S. Securities and Exchange Commission. The SEC may or may not review and comment on this offer to purchase and related documents. However, the offer has not been approved or disapproved by the SEC (or, for that matter, any state securities commission or the ISA), nor has the SEC (or any state securities commission or the ISA) passed upon the fairness or merits of the offer or upon the accuracy or adequacy of the information contained in this offer to purchase. Any representation to the contrary is a criminal offense.

        General. In addition, we must receive the approval of the Israel Competition Authority for the purchase of the Magal Shares pursuant to this offer and any other necessary material approval, permit, authorization or consent of any U.S., Israeli or other governmental, administrative or regulatory agency (federal, state, local, provincial or otherwise) prior to the Initial Completion Date. Except as set forth above, we are not aware of any license or regulatory permit that appears to be material to the business of Magal and its subsidiaries, taken as a whole, that might be adversely affected by our acquisition of Magal Shares pursuant to the offer. If any such material approval or other action is required, we presently contemplate to use our reasonable commercial efforts to obtain such approval or take such action. While, except as otherwise described in this offer to purchase, we do not presently intend to delay the acceptance for payment of, or payment for, Magal Shares tendered pursuant to the offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions, or that failure to obtain any such approval or other action might not result in unknown or unforeseen consequences adverse to Magal’s business. See Section 11 for conditions of the offer, including conditions with respect to regulatory approvals.

13.
FEES AND EXPENSES.
We have retained D.F. King & Co., Inc. to serve as the Information Agent for the offer, and American Stock Transfer & Trust Company LLC, to serve as the Depositary for the offer.

          The Information Agent may contact holders of Magal Shares by personal interview, mail, telephone, facsimile and other methods of electronic communication and may request brokers, dealers, banks, trust companies and other nominees to forward the materials relating to the offer to beneficial holders. As compensation for acting as Information Agent in connection with the offer, D.F. King & Co., Inc . will be paid a reasonable and customary fee for its services and will also be reimbursed for reasonable out-of-pocket expenses and may be indemnified against specified liabilities and expenses in connection with the offer, including specified liabilities under the federal securities laws. We will pay the Depositary reasonable and customary compensation for its services in connection with the offer and reimburse it for reasonable out-of-pocket expenses, and will indemnify it against specified liabilities and expenses in connection with its services, including specified liabilities under the federal securities laws.
27

  It is estimated that the expenses incurred in connection with the offer will be approximately as set forth below:

     
Information Agent Fees and Expenses
 
$
65,000
Depositary' Fees and Expenses
 
$
50,000
Filing Fees
 
$
3,320
Legal Fees
 
$
160,000
Printing and Mailing Costs
 
$
7,220
Miscellaneous
 
$
13,200
     
Total
 
$
298,740

Except as set forth above, we will not pay any fees or commissions to any broker or dealer or other person or entity in connection with the solicitation of tenders of Magal Shares pursuant to the offer. We will, upon request, reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding materials relating to the offer to their customers.

14.
MISCELLANEOUS.
We are making the offer to shareholders of Magal by this offer to purchase and the related documents delivered to you. We are not aware of any jurisdiction where the making of the offer is prohibited by administrative or judicial action pursuant to any valid state statute. If we become aware of any valid state statute prohibiting the making of the offer or the acceptance of the Magal Shares pursuant thereto, we will make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the offer. If, after this good faith effort, we cannot comply with the state statute, subject to applicable law, the offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Magal Shares in that state. In those jurisdictions where the securities, blue sky or other laws require the offer to be made by a licensed broker or dealer, we will endeavor to make arrangements to have the offer made on our behalf by one or more registered brokers or dealers licensed under the laws of such jurisdictions.

        No person has been authorized to give any information or to make any representation on our behalf not contained herein or in the related documents delivered to you and, if given or made, such information or representation must not be relied upon as having been authorized.

        Pursuant to Rule 14d-3 under the Exchange Act, we have filed with the SEC the Schedule TO, together with exhibits, furnishing additional information with respect to the offer. The Schedule TO and any amendments thereto, including exhibits, should be available for inspection at the SEC website http://www.sec.gov that contains reports and other information filed electronically with the SEC.

FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP

Dated: May 22, 2020
28

ANNEX A

Excerpt of Section 331 of the Israeli Companies Law 5759-1999

(Unofficial Translation from Hebrew)

“331.
Consent of shareholders

(a)
A special tender offer shall be addressed to all offerees, and the offerees may announce their consent to the special tender offer or their objection thereto.

(b)
A special tender offer may not be accepted unless a majority of the votes of offerees, who announced their position with respect thereto, agreed to the offer.

(c)
In counting the votes of the offerees, the votes of a holder of a controlling interest in the offeror, a holder who has a personal interest in the acceptance of the special tender offer, a holder of a control block in the company, or any person acting on their behalf or on behalf of the offeror, including their relatives and companies controlled by them, shall not be taken into account; the provisions of Section 276, mutatis mutandis, will apply to anyone who has a personal interest.

(d)
If a special tender offer is accepted, then all offerees who had not announced their position with respect the offer or who objected to the offer, may agree to the offer, not later than four days after the last date for acceptance of the tender offer, or by such other date to be set by the Minister for this purpose, and they shall be treated like persons who initially agreed to the offer.”

29

ANNEX B

Definition of Israeli Resident for Israeli Tax Purposes

(Unofficial Translation from Hebrew)

The following is an excerpt of Section 1 of the Israeli Income Tax Ordinance [New Version], 1961, as amended, which defines a “resident of Israel” as follows:
 
(A)
 
with respect to an individual – a person whose center of vital interests is in Israel; for this purpose the following provisions will apply:
 

(1)
in order to determine the center of vital interests of an individual, there shall be taken into account the whole of the individual’s family, economic and social connections, including, among others:
 

(a)
place of domicile;
 

(b)
place of residence of the individual and the individual’s immediate family;
 

(c)
place of the individual’s regular or permanent occupation or the place of his permanent employment;
 

(d)
place of the individual’s active and material economic interests;
 

(e)
place of the individual’s activities in organizations, associations and other institutions;
 

(2)
the center of vital interests of an individual will be presumed to be in Israel:
 

(a)
if the individual was present in Israel for 183 days or more in the tax year;
 

(b)
if the individual was present in Israel for 30 days or more in the tax year, and the total period of the individual’s presence in Israel during the tax year and the two previous tax years is 425 days or more.
 
For the purposes of this paragraph, “day” includes a portion of a day;
 

(3)
the presumption in subparagraph (2) may be rebutted either by the individual or by the assessing officer.
 
(B)
 
with respect to an entity – an entity that satisfies one of the following conditions:
 

(1)
it was incorporated in Israel;
 

(2)
the “control and management” of its business is exercised in Israel, except for a body of persons, the business of which is controlled and managed in Israel by an individual who became an Israel resident for the first time or is a returning resident, as set forth in section 14(a) and ten years have not yet passed since he became an Israeli resident as aforesaid, or by any person on his behalf, provided that such body of persons would not be an Israel resident if the control and management of its business were not by a said individual or by a person on his behalf, unless the body of persons requested otherwise.

30

SCHEDULE I

 CERTAIN INFORMATION CONCERNING THE
EXECUTIVE OFFICERS AND CONTROL PERSONS OF THE BIDDER GROUP

Set forth below are the name, business address and current principal occupation or employment, and material occupations, positions, offices or employment for the past five years, of the executive officers and control persons of each member (other than natural persons) of our bidder group. The business address of each person listed below is Alon Towers 2, 94 Yigal Alon Street, Tel-Aviv 6789141, Israel.

Our managing general partner is FIMI Five 2012 Ltd., a company limited by shares.

The directors and officers of FIMI Five 2012 Ltd. are Ishay Davidi and Gillon Beck. The director and officer of Shira & Ishay Davidi Management Ltd. is Ishay Davidi.

None of the persons listed below has, during the past five years, (i) been convicted in a criminal proceeding or (ii) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, U.S. federal or state securities laws, or a finding of any violation of U.S. federal or state securities laws.  All persons listed below are citizens of the State of Israel.

Name
 
Current Principal Occupation or Employment and Five-Year Employment History
     
Ishay Davidi
 
Mr. Davidi is the founder of the FIMI Funds and has served as the CEO of each of the managing general partners of the partnerships comprising the FIMI Funds since 1996. Mr. Davidi is the Chairman of the Board of Directors of Hadera Paper (TASE-listed) and Polyram Plastic Industries. He is a Director of Gilat Satellite Networks (NASDAQ/TASE-listed), Ham-Let (TASE-listed), Bet Shemesh Engines (TASE-listed), C.Mer Industries (TASE-listed), Kamada Ltd. (NASDAQ/TASE-listed) and Rekah Pharmaceutical Industries (TASE-listed), Amiad Filtration Systems Ltd. (AIM), PCB Technologies Ltd. (TASE), Tadir-Gan (Precision Products) 1993 Ltd. (TASE), G1 Security Solutions Ltd. (TASE) .Mr. Davidi previously served as the Chairman of the board of directors of Inrom Construction Industries Ltd. (TASE), of Retalix (previously traded on NASDAQ and TASE) from August 2008 until January 2010, of Tefron Ltd. (New York Stock Exchange and TASE) and of Tadir-Gan (TASE), and as a director of Retalix, Overseas Commerce Ltd. (TASE), Tadiran Communications Ltd. (TASE), Lipman Electronic Engineering Ltd. (NASDAQ and TASE), Merhav Ceramic and Building Materials Center Ltd. (TASE), TAT Technologies Ltd. (NASDAQ and TASE), Orian C.M. Ltd. (TASE), Ophir Optronics Ltd. (TASE), Scope Metals Group Ltd. (TASE) and Formula Systems Ltd. (NASDAQ and TASE). Mr. Davidi holds a B.Sc. in Industrial and Management Engineering from Tel Aviv University and an M.B.A. from Bar Ilan University.
 
     
Gillon Beck

Mr. Beck has been a senior partner and director of the FIMI Funds since 2003, as well as a Director of the FIMI Funds’ General Partners and SPV companies. Mr. Beck currently serves as Chairman of the Board of ImageSat NV, Bet Shemesh Engines Ltd. (TASE), Ham-Let (Israel-Canada) Ltd. (TASE), Rivulis Irrigation Ltd., Oxygen and Argon Works Ltd and Bird Aerosystems Ltd, and is a director of Utron Ltd. (TASE), of Orbit Technologies Ltd (TASE), Carmel Forge Ltd., Simplivia Healthcare Ltd, Y. Stern Engineering (1989) Ltd , AITECH Rugged Ltd, and Unitronics (1989) (R”G) Ltd (TASE). During the past five years, Mr. Beck had served as the Chairman of the board of directors of Overseas Commerce Ltd. (TASE), and had served as a member of the Board of Directors of the following companies: Inrom Construction Industries Ltd. (TASE), Overseas Commerce Ltd (TASE), Ormat Technologies Inc. (NYSE), Nirlat Paints Ltd., Alony Marble Ltd., and Ormat Industries Ltd. From 1999 to 2003, Mr. Beck served as Chief Executive Officer and President of Arad Ltd., a publicly-traded water measurement and automatic meter reading company, and from 1995 to 1999, he served as Chief Operating Officer of Arad Ltd. Mr. Beck received a Bachelor of Science degree (Cum Laude) in Industrial Engineering in 1990 from the Technion – Israel Institute of Technology, and a Master of Business Administration in Finance in 1992 from Bar-Ilan University.

31

The Depositary for the Offer is:
 
American Stock Transfer & Trust Company, LLC
 
6201 15th Avenue
Attn: Corporate Actions Dept.
Brooklyn, N.Y. 11219
 Fax number 718-234-5001
For assistance call 877-248-6417
 
The Information Agent for the Offer is:
 
D.F. King & Co., Inc.
48 Wall Street , 22nd Floor
New York, NY  10005
For assistance call D.F. King at (800) 814-2879 or (212) 269-5550 (banks and brokers)
Email: magal@dfking.com
 
Our Israeli legal counsel is:

 
 
5 Tuval St.
Tel Aviv 6789717, Israel
Tel.: 972-3- 6235000; Facsimile: 972-3-6235005
Attn: Sharon Amir, Adv. or Tuvia Geffen, Adv. or Idan Lidor, Adv.

32

Exhibit (a)(1)(B)
 
Letter of Transmittal
To Tender Ordinary Shares
of
MAGAL SECURITY SYSTEMS LTD.
Pursuant to the Offer to Purchase
Dated May 22, 2020
by
FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP

THE INITIAL OFFER PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK TIME, ON
JUNE 22, 2020, UNLESS THE OFFER IS EXTENDED.

Mail or deliver this Letter of Transmittal, or a facsimile, together with the certificate(s) representing your shares, to:

The Depositary:
 
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Attn: Corporate Actions Dept.
Brooklyn, N.Y. 11219
 Fax number 718-234-5001

For assistance call 877-248-6417
 
Pursuant to the Offer to Purchase dated May 22, 2020 by FIMI Opportunity V, L.P and FIMI Israel Opportunity Five, Limited Partnership, the undersigned encloses herewith and surrenders the following certificate(s) representing ordinary shares of Magal Security Systems Ltd.:

Name(s) and Address of Registered Holder(s)
 
DESCRIPTION OF SHARES SURRENDERED
If there is any error in the name or address shown below, please make the necessary corrections
 
 (Please fill in.  Attach separate schedule if needed)
 
 
 
 
       
 
 
Certificate No(s)
Number of Shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       
       
   
TOTAL SHARES 
 


DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
 
PLEASE READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THIS LETTER OF TRANSMITTAL.  IF APPLICABLE TO YOU, MAKE SURE YOU COMPLETE (1) THE DECLARATION FORM (“DECLARATION OF STATUS FOR ISRAELI INCOME TAX PURPOSES”) INCLUDED HEREIN TO PREVENT ISRAELI WITHHOLDING TAX, AND/OR (2) IRS FORM W-9 INCLUDED HEREIN OR THE APPROPRIATE IRS FORM W-8, AS APPLICABLE, TO PREVENT U.S. FEDERAL BACKUP WITHHOLDING TAX, IN EACH CASE, ON ANY PAYMENT PAYABLE TO YOU PURSUANT TO THE OFFER.
 
SUBJECT TO APPLICABLE LAW, THE OFFER IS NOT BEING MADE TO (NOR WILL TENDER OF ORDINARY SHARES BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR THE ACCEPTANCE OF THE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.

Shareholders of Magal must complete this Letter of Transmittal (i) if certificates evidencing shares are to be forwarded with this letter, or (ii) unless an agent’s message (as defined in Section 3 of the Offer to Purchase, as referred to below) is utilized, if delivery of shares is to be made by book-entry transfer to an account maintained by American Stock Transfer & Trust Company, as depositary (the “Depositary”) at The Depository Trust Company (the “Book-Entry Transfer Facility” or “DTC”).  Delivery of documents to DTC or any other party does not constitute delivery to the Depositary.
 
Shareholders whose certificates evidencing shares are not immediately available or who cannot deliver their share certificates and all other documents required hereby to the Depositary prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date (as defined in Section 1 of the Offer to Purchase), as applicable, or who cannot complete the procedure for delivery by book‑entry transfer on a timely basis will not be able to tender their shares pursuant to guaranteed delivery procedure.  See Instruction 2.
 
NOTE:  SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
 
CHECK HERE IF ORDINARY SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY’S ACCOUNT AT THE DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
 
Name of Tendering Institution: _________________________________________________________________________________________________________________
 
Account Number: ____________________________________________________________________________________________________________________________
 
Transaction Code Number: _____________________________________________________________________________________________________________________
 
IMPORTANT: This Letter of Transmittal properly completed and duly executed (together with any required signature guarantees (or, in the case of a book-entry transfer, an agent’s message) and certificates or confirmation of book-entry transfer and all other required documents must be received by the Depositary prior to 10:00 a.m., New York City time, on the Initial Completion Date or Final Expiration Date, as applicable.  Delivery of this Letter of Transmittal to an address other than as set forth above, will not constitute a valid delivery.
 

Ladies and Gentlemen:
 
The undersigned hereby tenders to FIMI Opportunity V, L.P and FIMI Israel Opportunity Five, Limited Partnership, (collectively, the “Purchaser”), the above-described ordinary shares, par value NIS 1.0 per share (the “Shares”) of Magal Security Systems Ltd. (“Magal”), pursuant to the Purchaser’s offer to purchase 8,669,029 Shares at $2.95 per Share, net to the seller in cash, less any required withholding taxes and without interest, upon the terms of, and subject to the conditions to, the Offer to Purchase, dated May 22, 2020 (the “Offer to Purchase”) and this Letter of Transmittal (which, as amended from time to time, together constitute the “Offer”), receipt of which is hereby acknowledged.

Upon the terms of, and subject to the conditions to, the Offer (and if the Offer is extended or amended, the terms of any such extension or amendment), and subject to, and effective upon, acceptance for payment of Shares tendered herewith, in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to or upon the order of the Purchaser all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the undersigned’s status as a holder of, all Shares that are being tendered hereby (and any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect thereof on or after June 22, 2020 (collectively, “Distributions”)) and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to the tendered Shares (and all Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (1) deliver certificates evidencing the tendered Shares (and all Distributions), or transfer ownership of the tendered Shares (and all Distributions) on the account books maintained by The Depository Trust Company, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (2) present the tendered Shares (and all Distributions) for transfer on the books of Magal, and (3) receive all benefits and otherwise exercise all rights of beneficial ownership of the tendered Shares (and all Distributions), all in accordance with the terms of the Offer.

By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints the designees of the Purchaser as the attorney and proxy of the undersigned, each with full power of substitution, to the full extent of the undersigned’s rights with respect to the Shares tendered. This proxy and power of attorney is coupled with an interest in the tendered Shares, is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of the tendered Shares by the Purchaser in accordance with other terms of the Offer. Acceptance for payment will revoke all other proxies and powers of attorney granted by the undersigned at any time with respect to the tendered Shares (and all shares and other securities issued in Distributions in respect of the tendered Shares), and no subsequent proxies, powers of attorney, consents or revocations may be given by the undersigned with respect thereto (and if given will not be deemed effective). The undersigned understands that, in order for Shares or Distributions to be deemed validly tendered, immediately upon the Purchaser’s acceptance of the tendered Shares for payment, the Purchaser must be able to exercise all rights, including voting rights, with respect to the tendered Shares (and any and all Distributions), including, without limitation, voting at any meeting of Magal’s shareholders then scheduled.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer Shares tendered hereby and all Distributions, that when the tendered Shares are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title to such Shares and Distributions, free and clear of all liens, restriction, charges and encumbrances, and that none of the tendered Shares and Distributions will be subject to any adverse claim. The undersigned, upon request, will execute and deliver all additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the tendered Shares and all Distributions. In addition, the undersigned will remit and transfer promptly to the Depositary for the account of the Purchaser all Distributions in respect of Shares tendered hereby, accompanied by appropriate documentation of transfer, and until receipt of transfer or appropriate assurance of receipt and transfer, the Purchaser will be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the tendered Shares, or deduct from the purchase price, the amount or value of that Distribution as determined by the Purchaser in its sole discretion.

No authority herein conferred or agreed to be conferred will be affected by, and all such authority will survive, the death or incapacity of the undersigned. All obligations of the undersigned in this Letter of Transmittal will be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that the valid tender of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the Instructions to this Letter of Transmittal will constitute the undersigned’s acceptance of the terms of, and conditions to, the Offer. The Purchaser’s acceptance of the tendered Shares for payment will constitute a binding agreement between the undersigned and the Purchaser upon the terms of, and subject to the conditions to, the Offer (and if the Offer is extended or amended, the terms of, or conditions to, any such extension or amendment).


Unless otherwise indicated below in the box entitled “Special Payment Instructions,” please issue the check for the purchase price of all Shares purchased and return all certificates evidencing Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing above under “Description of Shares Tendered.” Similarly, unless otherwise indicated below in the box entitled “Special Delivery Instructions,” please mail the check for the purchase price of all Shares purchased and return all certificates evidencing Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under “Description of Shares Tendered”. In the event that the boxes below entitled “Special Payment Instructions” and “Special Delivery Instructions” are both completed, please issue the check for the purchase price of all Shares purchased and return all certificates evidencing Shares not tendered or not accepted for payment in the name(s) of, and deliver such check and return such certificates (and any accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated below in the box entitled “Special Payment Instructions,” please credit any Shares tendered hereby and delivered by book-entry transfer that are not accepted for payment by crediting the account at The Depository Trust Company. The undersigned recognizes that the Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder(s) if the Purchaser does not accept for payment any Shares tendered hereby.



 
IF ANY SHARE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST,
STOLEN OR DESTROYED, SEE INSTRUCTION 2.

SHAREHOLDERS:  SIGN HERE
(Please complete an IRS Form W-9, the appropriate IRS Form W-8, and/or a Declaration Form (Declaration of Status for Israeli Income Tax Purposes), as applicable.  See “IMPORTANT TAX INFORMATION”.)
 
 
 
 
Signature(s) of Holder(s)

Dated:  . . . . . . . . . . . . . ., 2020.
(Must be signed by registered holder(s) exactly as name(s) appear(s) on share certificates or on a security position listing by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith.  If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.)

 Name(s):
 
Please Print

Capacity (full title):
 

 Address:  
   
   
Include Zip Code

Daytime Area Code and Telephone No:
 

Taxpayer Identification or
Social Security No.:  
(See IRS Form W-9 below)

GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)

FOR USE BY FINANCIAL INSTITUTIONS ONLY.
Financial Institutions: Place Medallion Guarantee in Space Below
 
FOR USE BY DEPOSITARY/ PURCHASER ONLY.
By power-of-attorney from Purchaser, the Depositary
hereby sets its corporate seal to indicate acceptance of the tendered
Shares by the Purchaser: ______________________
 

If you wish that the check for the purchase price of the Shares and the certificate evidencing Shares not tendered or not purchased be issued in the name of someone other than the record holder(s) of the Shares, please complete the “Special Payment Instructions” below.  If the check for the purchase price of the tendered Shares and the certificate evidencing Shares not tendered or not purchased are to be registered in the name of anyone other than the registered holder or mailed to any person(s) other than the person(s) signing this Letter of Transmittal, the certificate(s) must be endorsed and signatures guaranteed.



     
SPECIAL PAYMENT INSTRUCTIONS
 
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
 
(See Instructions 1, 5, 6 and 7)
     
To be completed ONLY if the check for the purchase price of Shares and share certificates evidencing Shares not tendered or not purchased are to be issued in the name of someone other than the registered holder.

 
To be completed ONLY if the check for the purchase price of Shares purchased and share certificates evidencing Shares not tendered or not purchased are to be mailed to someone other than the registered holder, or the registered holder at an address other than that shown under “Description of Ordinary Shares Tendered”.
      Issue Check and Share Certificate(s) to:
 
   
Name: _____________________________________________________________________________  
                              Mail Check and Share Certificate(s) to:
(Please Print)
   
Address: ___________________________________________________________________________   Name: _____________________________________________________________________________
 ___________________________________________________________________________________    (Please Print)
 ___________________________________________________________________________________   Address: ___________________________________________________________________________
                                                                                                                                                    (Zip Code)    ___________________________________________________________________________________
 ___________________________________________________________________________________    ___________________________________________________________________________________
(Tax Identification or Social Security Number)                                                                                                                                                        (Zip Code)
(See IRS Form W-9 below)     ___________________________________________________________________________________
    (Tax Identification or Social Security Number)
 Account
  (See IRS Form W-9 below)
 Number: ____________________________________________________________________________    
     


 

 

 

 

Form W-9 (Rev. October 2016) Department of the Treasury Internal Revenue Service Request for Taxpayer Identification Number and Certification Go to www.irs.gov/FormW9 for instructions and the latest information. Give Form to the requester. Do not send to the IRS. Print or type. See Specific Instructions on page 3. 1 Name (as shown on your income tax return). Name is required on this line; do not leave this line blank. 2 Business name/disregarded entity name, if different from above 3 Check appropriate box for federal tax classification of the person whose name is entered on line 1. Check only one of the following seven boxes. q Individual/sole proprietor or C Corporation S Corporation Partnership Trust/estate single-member LLC Ill Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=Partnership) Note: Check the appropriate box in the line above for the tax classification of the single-member owner. Do not check LLC if the LLC is classified as a single-member LLC that is disregarded from the owner unless the owner of the LLC is another LLC that is not disregarded from the owner for U.S. federal tax purposes. Otherwise, a single-member LLC that is disregarded from the owner should check the appropriate box for the tax classification of its owner. Other (see instructions) 4 Exemptions certain entities, instructions(codes apply only to not individuals; see on page 3) :Exempt payee code (if any) Exemption from FATCA reporting code (if any) (Applies to accounts maintained outside the U.S.) 5 Address (number, street, and apt. or suite no.) See instructions. Requester's name and address (optional) 6 City, state, and ZIP code 7 List account number(s) here (optional) Part I Taxpayer Identification Number (TIN) Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid backup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the instructions for Part I, later. For other entities, it is your employer identification number (EIN). If you do not have a number, see Now to get a TIN, later. Note: If the account is in more than one name, see the instructions for line 1. Also see What Name and Number To Give the Requester for guidelines on whose number to enter. Part II Certification Under penalties of perjury, I certify that: 1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and 2. 1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and 3. I am a U.S. citizen or other U.S. person (defined below); and 4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct. Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions for Part II, later. Sign Here Signature of U.S. person IN. Date 110. General Instructions Section references are to the Internal Revenue Code unless otherwise noted. Future developments. For the latest information about developments related to Form W-9 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/FormW9. Purpose of Form An individual or entity (Form W-9 requester) who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) which may be your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following. • Form 1099-INT (interest earned or paid) • Form 1099-DIV (dividends, including those from stocks or mutual funds) • Form 1099-MISC (various types of income, prizes, awards, or gross proceeds) • Form 1099-B (stock or mutual fund sales and certain other transactions by brokers) • Form 1099-S (proceeds from real estate transactions) • Form 1099-K (merchant card and third party network transactions) • Form 1098 (home mortgage interest), 1098-E (student loan interest), 1098-T (tuition) • Form 1099-C (canceled debt) • Form 1099-A (acquisition or abandonment of secured property) Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN. If you do not return Form W-9 to the requester with a TIN, you might be subject to backup withholding. See What is backup withholding, later. Cat. No. 10231X Form W-9 (Rev. 10-2016) 1

 

 

 

Form W-9 (Rev. 10-2018) Page 2 By signing the filled-out form, you: 1.Certify that the TIN you are giving is correct (or you are waiting for a number to be issued), 2.Certify that you are not subject to backup withholding, or 3.Claim exemption from backup withholding if you are a U.S. exempt payee. If applicable, you are also certifying that as a U.S.person, your allocable share of any partnership income from a U.S. trade or business is not subject to the withholding tax on foreign partners’ share of effectively connected income,and 4.Certify that FATCA code(s) entered on this form (if any) indicating that you are exempt from the FATCA reporting, is correct. See What is FATCA reporting, later, for further information. Note:If you are a U.S. person and a requester gives you a form other than Form W-9 to request your TIN, you must use the requester’s form if it is substantially similar to this Form W-9. Definition of a U.S.person.For federaltax purposes, you are considered a U.S.person if you are: • An individualwho is a U.S. citizen or U.S. resident alien; • A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States; • An estate (other than a foreign estate); or • A domestic trust (as defined in Regulations section 301.7701-7). Specialrules for partnerships.Partnerships that conduct a trade or business in the United States are generally required to pay a withholding tax under section 1446 on any foreign partners’ share of effectively connected taxable income from such business. Further, in certain cases where a Form W-9 has not been received,the rules under section 1446 require a partnership to presume that a partner is a foreign person, and pay the section 1446 withholding tax. Therefore, if you are a U.S. person that is a partner in a partnership conducting a trade or business in the United States, provide Form W-9 to the partnership to establish your U.S. status and avoid section 1446 withholding on your share of partnership income. In the cases below, the following person must give Form W-9 to the partnership for purposes of establishing its U.S. status and avoiding withholding on its allocable share of net income from the partnership conducting a trade or business in the United States. • In the case of a disregarded entity with a U.S. owner, the U.S.owner of the disregarded entity and not the entity; • In the case of a grantor trust with a U.S. grantor or other U.S. owner, generally, the U.S. grantor or other U.S.owner of the grantor trust and not the trust;and • In the case of a U.S. trust (other than a grantor trust), the U.S. trust (other than a grantor trust) and not the beneficiaries of the trust. Foreign person.If you are a foreign person or the U.S. branch of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities). Nonresident alien who becomes a resident alien.Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income.However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the payee has otherwise become a U.S. resident alien for tax purposes. If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items. 1.The treaty country. Generally,this must be the same treaty under which you claimed exemption from tax as a nonresident alien. 2.The treaty article addressing the income. 3.The article number (or locatoi n) in the tax treaty that contains the saving clause and its exceptions. 4.The type and amount of income that qualifei s for the exemption from tax. 5.Sufficient facts to justify the exemption from tax under the terms of the treaty article. Example. Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S.law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years. However, paragraph 2 of the first Protocolto the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to Form W-9 a statement that includes the information described above to support that exemption. If you are a nonresident alien or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233. Backup Withholding What is backup withholding? Persons making certain payments to you must under certain conditions withhold and pay to the IRS 24% of such payments.This is called “backup withholding.” Payments that may be subject to backup withholding include interest, tax-exempt interest, dividends, broker and barter exchange transactions, rents,royalties, nonemployee pay, payments made in settlement of payment card and third party network transactions, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding. You will not be subject to backup withholding on payments you receive if you give the requester your correct TIN,make the proper certifications, and report all your taxable interest and dividends on your tax return. Payments you recevi e will be subject to backup withholding if: 1.You do not furnish your TIN to the requester, 2.You do not certify your TIN when required (see the instructions for Part II for details), 3.The IRS tells the requester that you furnished an incorrect TIN, 4.The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only),or 5.You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only). Certain payees and payments are exempt from backup withholding. See Exempt payee code, later, and the separate Instructions for the Requester of Form W-9 for more information. Also see Special rules for partnerships, earlier. What is FATCA Reporting? The Foreign Account Tax Compliance Act (FATCA) requires a participating foreign financai l institution to report all United States account holders that are specified United States persons. Certain payees are exempt from FATCA reporting. See Exemption from FATCA reporting code, later, and the Instructions for the Requester of Form W-9 for more information. Updating Your Information You must provide updated information to any person to whom you claimed to be an exempt payee if you are no longer an exempt payee and anticipate receiving reportable payments in the future from this person.For example, you may need to provide updated information if you are a C corporation that elects to be an S corporation, or if you no longer are tax exempt. In addition, you must furnish a new Form W-9 if the name or TIN changes for the account; for example, if the grantor of a grantor trust dies. Penalties Failure to furnish TIN.If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willfulneglect. Civilpenalty for false information with respect to withholding.If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. 

 

 

 

Form W-9 (Rev. 10-2018) Page 3 Criminalpenalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. Misuse of TINs.If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties. Specific Instructions Line 1 You must enter one of the following on this line;do not leave this line blank. The name should match the name on your tax return. If this Form W-9 is for a joint account (other than an account maintained by a foreign financial institution (FFI)), list first, and then circle, the name of the person or entity whose number you entered in Part I of Form W-9. If you are providing Form W-9 to an FFI to document a joint account,each holder of the account that is a U.S. person must provide a Form W-9. a. Individual Generally, enter the name shown on your tax return.If you have changed your last name without informing the Social Security Administration (SSA) of the name change, enter your first name, the last name as shown on your social security card, and your new last name. Note:ITIN applicant: Enter your individual name as it was entered on your Form W-7 application,line 1a.This should also be the same as the name you entered on the Form 1040/1040A/1040EZ you filed with your application. b. Sole proprietor or single-member LLC.Enter your individual name as shown on your 1040/1040A/1040EZ on line 1. You may enter your business, trade, or “doing business as” (DBA) name on line 2. c. Partnership,LLC that is not a single-member LLC,C corporation,or S corporation. Enter the entity’s name as shown on the entity’s tax return on line 1 and any business, trade,or DBA name on line 2. d. Other entities.Enter your name as shown on required U.S. federal tax documents on line 1.This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on line 2. e. Disregarded entity. For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a “disregarded entity.” See Regulations section 301.7701-2(c)(2)(ii). Enter the owner’s name on line 1. The name of the entity entered on line 1 should never be a disregarded entity.The name on line 1 should be the name shown on the income tax return on which the income should be reported. For example,if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a U.S. person,the U.S.owner’s name is required to be provided on line 1. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded entity’s name on line 2, “Business name/disregarded entity name.” If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9. This is the case even if the foreign person has a U.S. TIN. Line 2 If you have a business name, trade name,DBA name, or disregarded entity name, you may enter it on line 2. Line 3 Check the appropriate box on line 3 for the U.S. federal tax classification of the person whose name is entered on line 1. Check only one box on line 3. IF the entity/person on line 1 is a(n) ... THEN check the box for ._ . • Corporation Corporation • Individual • Sole proprietorship, or • Single-member limited liability company (LLC) owned by an individual and disregarded for U.S. federal tax purposes. Individual/sole proprietor or single- member LLC • LLC treated as a partnership for U.S. federaltax purposes, • LLC that has filed Form 8832 or 2553 to be taxed as a corporation, or • LLC that is disregarded as an entity separate from its owner but the owner is another LLC that is not disregarded for U.S.federal tax purposes. Limited liability company and enter the appropriate tax classification. (P= Partnership;C= C corporation; or S= S corporation) • Partnership Partnership • Trust/estate Trust/estate Line 4, Exemptions If you are exempt from backup withholding and/or FATCA reporting, enter in the appropriate space on line 4 any code(s) that may apply to you. Exempt payee code. • Generally, individuals (including sole proprietors) are not exempt from backup withholding. • Except as provided below, corporations are exempt from backup withholding for certain payments,including interest and dividends. • Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions. • Corporations are not exempt from backup withholding with respect to attorneys’ fees or gross proceeds paid to attorneys, and corporations that provide medical or health care services are not exempt with respect to payments reportable on Form 1099-MISC. The following codes identify payees that are exempt from backup withholding.Enter the appropriate code in the space in line 4. 1-An organization exempt from tax under section 501(a), any IRA, or a custodialaccount under section 403(b)(7) if the account satislies the requirements of section 401( (2) 2-The United States or any of its agencies or instrumentalities 3 -A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities 4-A foreign government or any of its political subdivisions, agencies, or instrumentalities 5 -A corporation 6-A dealer in securities or commodities required to register in the United States, the District of Columbia,or a U.S. commonwealth or possession 7 -A futures commission merchant registered with the Commodity Futures Trading Commission 8-A real estate investment trust 9-An entity registered at all times during the tax year under the Investment Company Act of 1940 10-A common trust fund operated by a bank under section 584(a) 11-A financial institution 12-A middleman known in the investment community as a nominee or custodian 13-A trust exempt from tax under section 664 or described in section 4947

 

 

 

page 4 The following chart shows types of payments that may be exempt from backup withholding. The chart applies to the exempt payees listed above, 1 through 13. IF the payment is for . THEN the payment is exempt for .. . Interest and dividend payments All exempt payees except for 7 Broker transactions Exempt payees 1 through 4 and 6 through 11 and all C corporations. S corporations must not enter an exempt payee code because they are exempt only for sales of noncovered securities acquired prior to 2012. Barter exchange transactions and patronage dividends Exempt payees 1 through 4 Payments over $600 required to be reported and direct sales over $5,0001 Generally, exempt payees 1 through 5° Payments made in settlement of payment card or third party network transactions Exempt payees 1 through 4 See Form 099-MISC, Miscellaneous Income, and its instructions. *However, the following payments made to a co5 belowrporation and reportable on Form 1099-MISC are not exempt from backup withholding: medical and health care payments, attorneys1fees, gross proceeds paid to an attorney reportable under section 6045(g, and payments for services paid by a federal executive agency. Exemption from FATCA reporting code. The following codes identify payees that are exempt from reporting under FATCA. These codes apply to persons submitting this form for accounts maintained outside of the United States by certain foreign financial institutions. Therefore, if you are only submitting this form for an account you hold in the United States, you may leave this field blank. Consult with the person requesting this form if you are uncertain if the financial institution is subject to these requirements. A requester may indicate that a code is not required by providing you with a Form W-9 with “Not Applicable” (or any similar indication) written or printed on the line for a FATCA exemption code. A— An organization exempt from tax under section 501(a) or any individual retirement plan as defined in section 7701(a)(37) B — The United States or any of its agencies or instrumentalities C —A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities D— A corporation the stock of which is regularly traded on one or more established securities markets, as described in Regulations section 1.1472- 1(c)(1)(i) E— A corporation that is a member of the same expanded affiliated group as a corporation described in Regulations section 1.1472-1(c)(1)(i) F A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any state G A A real estate investment trust H A A regulated investment company as defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940 I A A common trust fund as defined in section 584(a) J— A bank as defined in section 581 KA A broker L— A trust exempt from tax under section 664 or described in section 4947(a)(1) M A A tax exempt trust under a section 403(b) plan or section 457(g) plan Note: You may wish to consult with the financial institution requesting this form to determine whether the FATCA code and/or exempt payee code should be completed. Line 5 Enter your address (number, street, and apartment or suite number). This is where the requester of this Form W-9 will mail your information returns. If this address differs from the one the requester already has on file, write NEW at the top. If a new address is provided, there is still a chance the old address will be used untii the payor changes your address in their records. Line 6 Enter your city, state, and ZIP code. Part I. Taxpayer Identification Number (TIN) Enter your TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see /-for to get a TIN below. If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owners SSN (or EIN, if the owner has one). Do not enter the disregarded entity's EIN. If the LLC is classified as a corporation or partnership, enter the entity's EIN. Note: See What Name and Number To Give the Requester, later, for further clarification of name and TIN combinations. How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form 55-5, Appiication for a Social Security Oard, from your local SSA office or get this form online at www.SiA.gov. You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or Form 55-4, Application for Employer identification Number, to apply for an EAN. You can apply for an EIN online by accessing the IRS website at www.irs.goviBusinesses and clicking on Employer Identification Number (EIN) under Starting a Business. Go to www.irs.gov/Forms to view, download, or print Form W-7 and/or Form 55-4. Or, you can go to www.irs.goviOrderForms to place an order and have Form W-7 and/or 55-4 mailed to you within 10 businessdays. If you are asked to complete Form W-9 but do not have a TIN, apply for a TIN and write “Applied ForE in the space for the TIN, sign and date the form, and give it to the requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester. Note: Entering Applied For” means that you have already applied for a TIN or that you intend to apply for one soon. Caution: A disregarded U.S. entity that has a foreign owner must use the appropriate Form W-8. Part II. Certification To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if item 1, 4, or 5 below indicates otherwise. For a joint account, only the person whose TIN is shown in Part I should sign (when required). In the case of a disregarded entity, the person identified on line 1 must sign. Exempt payees, see Exemp/ payee code, earlier. Signature requirements. Complete the certification as indicated in items through 5 below.

 

 

   

page 51. Interest, dividend, and barter exchange accounts opened before 4984 and broker accounts considered active during 1983. You must pive your correct TIN, but you do not have to sign the certification. 2. Interest, dividend, broker, and batter exchange accounts opened after 1983 and broker accounts considered inactive during 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form. 3. Real estate transactions. You must sign the certification. You may cross out item 2 of the certification. 4. Other payments. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. Other payments include payments made in the course of the requester!! trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments made in settlement of payment card and third party network transactions, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations). 5. Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529j, ABLE accounts (under section 529Aj, IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions. You must give your correct TIN, but you do not have to sign the certification. What Name and Number To Give the Requester For this type of account: Give name and SSN of: 1. Individual The individual Two or more individuals joint The actual owner of the account or, i! account) other than an account combined funds, the first individual on maintained by an FFI the account' 3. Two or more U.S. persons Each holder of the account (joint account mat stained by an FFI) 4. CusodalazcounloCaminor The minor* (Uniform Gift to Minors Act) S. a. The usual revocable savings tfM8t The gran tor-trustee' (grantor is also trustee) b. So-called trust account that is not The actual owner' a legal or valid trust under state law 6. Sole proprietorship or disregarded The owner* entity owned by an individual Grantor trust filing under Optional The grantor' Form 1099 Filing Method (see Regulations section 1.671-4(bj(2)(i) (A)) For this type of account: Give name and EAN of: 8. Disregarded entity not owned by an The owner individual g A valid trust, estate, or pension trust legal entity' 10. Corporation or LLC electing The corporation corporate status on Form 8832 or Form 2' 53 11. Assocanon, cub,religiouv The organization charitable, educational, or other tax- exempt organization Partnership or multi-m ember LLC The partnership 13. A broker or registered nominee The broker or nominee For this type of account: Give name and EIN of: 14. Account with the Department of The public entity Agriculture in the name of a public en tidy (such as a state or local government, school district, or prison) that receives agricultural program payments 15. Grantor trust filing under the Form The trust 1041 Filing Method or the Optional Form 1099 Flllng Method 2 (see Regulations section 1.671-4(b)(2)(i)(B)) ' List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person's number must be furnished. z Circle the minors name and furnish the minors SSN. * You must show your individual name and you may also enter your business or DBA name on the EBusiness name/disregarded entity name line. You may use either your SSN or EIN (ifyou have one), but the IRS encourages you to use your SSN. 4 List first and circle the name of the trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Also see Special rules for partnerships, earlier. Note: The grantor also must provide a Form W-9 to trustee of trust. Note: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. Secure Your Tax Records From Identity Theft Identity theft occurs when someone uses your personal information such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. To reduce your risk: • Protect your SSN, • Ensure your employer is protecting your SSN, and • Be careful when choosing a tax prepared. If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number printed on the IRS notice or letter. If your tax records are not currently affected by identity theft but you think you are at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Theft Hotline at 1-800-908-4490 or submit Form 14039. For more information, see Pub. 5027, Identity Theft Information for Taxpayers. Victims of identity theft who are experiencing economic harm or a systemic problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll- free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Protect yourself from suspicious emails or phishing schemes. Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common act is sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.

 

 

 

 

page 6 The IRS does not initiate contacts with taxpayers via emails. Also, the IRS does not request personal detailed information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts. If you receive an unsolicited email claiming to be from the IRS, forward this message to phishing@irs.gov. You may also report misuse of the IRS name, logo, or other IRS property to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484. You can forward suspicious emails to the Federal Trade Commission at spam@uce.gov or report them at www.ftc.gov/complaint. You can contact the FTC at www.ftc.gov/idtheft or 877-IDTHEFT (877-438-4338). If you have been the victim of identity theft, see www.ldentityTheft.gov and Pub. 5027. Visit www.irs. gov/ldentityTheft to learn more about identity theft and how to reduce your risk. Privacy Act Notice Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons (including federal agencies) who are required to file information returns with the IRS to report interest, dividends, or certain other income paid to you; mortgage interest you paid; the acquisition or abandonment of secured property; the cancellation of

debt; or contributions you made to an IRA, Archer MSA, or HSA. The person collecting this form uses the information on the form to file information returns with the IRS, reporting the above information. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their laws. The information also may be disclosed to other countries under a treaty, to federal and state agencies to enforce civil and criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You must provide your TIN whether or not you are required to file a tax return. Under section 3406, payers must generally withhold a percentage of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to the payer. Certain penalties may also apply for providing false or fraudulent information.




INSTRUCTIONS TO THIS LETTER OF TRANSMITTAL

Forming Part of the Terms and Conditions of the Offer
 
1.  Guarantee of Signatures.  All signatures on this Letter of Transmittal must be guaranteed by a firm which is a member of the Security Transfer Agent Medallion Signature Program, or by any other “eligible guarantor institution”, as such term is defined in Rule 17Ad‑15 promulgated under the Securities Exchange Act of 1934, as amended (each of the foregoing being an “Eligible Institution”) unless (i) this Letter of Transmittal is signed by the registered holder(s) of Ordinary Shares (which term, for purposes of this document, shall include any participant in The Depository Trust Company whose name appears on a security position listing as the owner of Shares) tendered hereby and such holder(s) has (have) not completed the box entitled “Special Payment Instructions” or “Special Delivery Instructions” on the reverse hereof or (ii) such Shares are tendered for the account of an Eligible Institution.  See Instruction 5.
 
2.  Delivery of Letter of Transmittal and Share Certificates.  This Letter of Transmittal is to be used (i) if certificates are to be forwarded with it, or (ii) if tenders are to be made pursuant to the procedures for tenders by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Certificates evidencing all physically tendered Shares, or a confirmation of a book-entry transfer into the Depositary’s account at The Depository Trust Company of all Shares delivered by book-entry transfer, as well as a properly completed and duly executed Letter of Transmittal and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth below prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date (as defined in Section 1 of the Offer to Purchase), as applicable. If certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each delivery.

        Shareholders whose certificates are not immediately available, who cannot deliver their certificates and all other required documents to the Depositary prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date, as applicable, or who cannot complete the procedure for delivery by book-entry transfer on a timely basis will not be able to tender their Shares pursuant to guaranteed delivery procedure.
 
The method of delivery of this Letter of Transmittal, Share certificates and all other required documents, including delivery through the Depository Trust Company, is at the option and risk of the tendering shareholder, and the delivery will be deemed made only when actually received by the Depositary.  If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended.  In all cases, sufficient time should be allowed to ensure timely delivery.
 
All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion.  The Purchaser reserves the absolute right to reject any or all tenders that it determines not to be in proper form or the acceptance for payment of which may be unlawful.  A tender of Shares will not have been made until all defects and irregularities have been cured or waived.  None of the Purchaser, the Depositary, the Information Agent, Purchaser’s legal counsel or any other person will be under any duty to give notification of any defects or irregularities in tenders of Shares or incur any liability for failure to give any notification.

No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased.  By execution of this Letter of Transmittal (or a manually signed facsimile hereof), all tendering shareholders waive any right to receive any notice of the acceptance of their Shares for payment.
 
If any Share certificate has been lost, destroyed or stolen, the shareholder should promptly notify the Depositary.  The shareholder then will be instructed as to the steps that must be taken in order to replace the Share certificate.  This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Share certificates have been followed.

IMPORTANT: IF YOU SUBMIT A LETTER OF TRANSMITTAL, BY WHICH YOU TENDER YOUR SHARES, AND THEREAFTER YOU DELIVER TO US A NOTICE OF OBJECTION WITH RESPECT TO THOSE SHARES, WE WILL DISREGARD YOUR LETTER OF TRANSMITTAL. SIMILARLY, IF YOU SUBMIT TO US A NOTICE OF OBJECTION WITH RESPECT TO YOUR SHARES AND THEREAFTER YOU DELIVER TO US A LETTER OF TRANSMITTAL BY WHICH YOU TENDER THOSE SHARES, WE WILL DISREGARD YOUR NOTICE OF OBJECTION. IF YOU SUBMIT A LETTER OF TRANSMITTAL AND A NOTICE OF OBJECTION CONCURRENTLY WITH RESPECT TO THE SAME SHARES, THE NOTICE OF OBJECTION WILL BE DISREGARDED.


3.  Inadequate Space.  If the space provided on the reverse hereof under “Description of Ordinary Shares Tendered” is inadequate, the Share certificate numbers, the number of Shares evidenced by such Share certificates and the number of Shares tendered should be listed on a separate signed schedule and attached hereto.
 
4.  Partial Tenders (not applicable to shareholders who tender by book-entry transfer). If fewer than all Shares evidenced by any certificate delivered to the Depositary with this Letter of Transmittal are to be tendered, fill in the number of Shares that are to be tendered in the box entitled “Number of Shares Tendered.” In such cases, new certificate(s) evidencing the remainder of Shares that were evidenced by the certificates delivered to the Depositary with this Letter of Transmittal will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled “Special Delivery Instructions” on the reverse of this Letter of Transmittal, as soon as practicable after the Initial Completion Date or Final Expiration Date, as applicable, or the termination of the offer. All Shares evidenced by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated.
 
5.  Signatures on Letter of Transmittal; Stock Powers and Endorsements.  If this Letter of Transmittal is signed by the registered holder(s) of Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates evidencing the tendered Shares without alteration, enlargement or any other change whatsoever.
 
If any tendered Shares are held of record by two or more persons, all of those named persons must sign this Letter of Transmittal. If any tendered Shares are registered in different names, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of those tendered Shares.

                  If this Letter of Transmittal is signed by the registered holder(s) of tendered Shares, no endorsements of certificates or separate stock powers are required, unless payment is to be made to, or certificates evidencing Shares not tendered or not accepted for payment are to be issued in the name of, a person other than the registered holder(s). If the Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) evidencing Shares tendered, the tendered certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s). Signatures on the certificate(s) and stock powers must be guaranteed by an Eligible Institution.

                  If this Letter of Transmittal is signed by a person other than the registered holder(s) of tendered Shares, the certificate(s) evidencing tendered Shares must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such certificate(s). Signatures on such certificate(s) and stock powers must be guaranteed by an Eligible Institution.

                  If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person should so indicate when signing, and proper evidence satisfactory to the Purchaser of that person’s authority so to act must be submitted.

6.  Stock Transfer Taxes.  The amount of any stock transfer taxes (whether imposed on the registered holder(s), or such other person, or otherwise) payable on account of the transfer of any Shares will be deducted from the purchase price of the tendered Shares purchased, unless evidence satisfactory to the Purchaser of the payment of the taxes, or that the transfer is not subject to tax, is submitted. The Purchaser will only be liable for stock transfer taxes with respect to the sale and transfer of any Shares if such taxes are expressly imposed by applicable law on the Purchaser.
 
Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share certificates evidencing Shares tendered hereby.

 
7.  Special Payment and Delivery Instructions.  If a check for the purchase price of any tendered Shares is to be issued in the name of, and/or certificate(s) evidencing Shares not tendered or not accepted for payment are to be issued in the name of and/or returned to, a person other than the person(s) signing this Letter of Transmittal or if a check or any such certificate is to be sent to a person other than the signor of this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box entitled “Description of Shares Tendered” on the reverse of this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed.
 
8.  Questions and Requests for Assistance or Additional Copies.  Questions and requests for assistance may be directed to the Information Agent at the address or telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Declaration Form (“Declaration of Status for Israeli Income Tax Purposes”), and other documents related to the Offer may be obtained from the Information Agent.
 
9.  IRS Form W-9, IRS Form W-8.  Each holder who is a U.S. Holder (as defined in Section 5 of the Offer to Purchase) surrendering certificates for payment is required to provide the Depositary with a correct Taxpayer Identification Number (“TIN”) on IRS Form W-9 (provided herein) and certify under penalties of perjury that such number is correct and indicate whether such holder is subject to backup withholding as provided in the certification instructions in the form. Each holder must date and sign the IRS Form W-9 in the spaces indicated.  Failure to provide the information on the form may subject the holder to federal income tax withholding on the purchase price and to a penalty imposed by the Internal Revenue Service. If the holder has not been issued a TIN and has applied for a number, the holder should write “Applied For” in the space for the TIN and sign and date the IRS Form W-9 in the spaces indicated. If the IRS Form W-9 is so completed, the Depositary will withhold 24% of all reportable payments that the holder is otherwise entitled to receive until a TIN is provided to the Depositary. If the holder provides a properly certified TIN within 60 days, the Depositary will refund the withheld taxes upon the holder’s request. Each holder who is not a U.S. Holder (as defined in Section 5 of the Offer to Purchase) must complete and submit the applicable IRS Form W-8 in order to be exempt from the federal income tax backup withholding due on payments with respect to the Shares. The appropriate IRS Form W-8 may be obtained from the Information Agent and the Depositary. Shareholders that are not U.S. Holders are urged to consult their tax advisor regarding the appropriate IRS Form W-8 in light of their particular circumstances.
 
10. Declaration Form (“Declaration of Status for Israeli Income Tax Purposes”) or Valid Certificate.  Each holder surrendering certificates for payment who is eligible for an exemption from Israeli withholding tax, or a reduced withholding tax rate, as described in Section 2 and Section 5 of the Offer to Purchase, is required to complete the Declaration Form included in this letter or attach to this letter a valid certificate issued by the Israeli Tax Authority exempting such holder from Israeli withholding tax or entitling such holder to a reduced rate of Israeli withholding tax in form and substance reasonably satisfactory to the Purchaser (a “Valid Certificate”), with a copy (which shall not constitute notice) to Naschitz, Brandes, Amir & Co., Advocates, our legal counsel in Israel, at its address set forth on the back of the Offer to Purchase. See also “Important Tax Information” below and the instructions to the Declaration Form. Each holder must date and sign the Declaration Form in the spaces indicated.  Failure to provide the information on the form or the Valid Certificate may subject the holder to Israeli income tax withholding on the purchase price.
 
11. Additional Offer Period. Promptly following the Initial Completion Date (as defined in the Offer to Purchase), the Purchaser will publicly announce whether or not the conditions to the offer have been satisfied or, subject to applicable law, waived by the Purchaser. As required by Israeli law, if the conditions to the offer have been satisfied or, subject to applicable law, waived by the Purchaser and if, with respect to each Share owned by a shareholder: (a) he or she has not yet responded to the offer, (b) he or she has notified the Purchaser of his or her objection to the Offer, or (c) he or she has tendered such Share but have withdrawn his or her tender prior to 10:00 a.m., New York time, on the Initial Completion Date, such shareholder will be afforded an additional four calendar-day period, until 10:00 a.m., New York time, on the Final Expiration Date, during which period he or she may tender each such Share. See Section 1 of the Offer to Purchase.

 
IMPORTANT TAX INFORMATION
 
United States
 
Under U.S. federal income tax law, a shareholder who is a U.S. Holder (as defined in Section 5 of the Offer to Purchase) whose tendered Shares are accepted for payment is generally required to provide the Depositary (as payer) with the shareholder’s correct TIN on IRS Form W-9. If a shareholder is an individual, the TIN generally is the shareholder’s social security number. If the Depositary is not provided with the correct TIN, the shareholder may be subject to a penalty imposed by the Internal Revenue Service and payments that are made to the shareholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding of 24%. In addition, if a shareholder makes a false statement that results in no imposition of backup withholding, and there was no reasonable basis for making such statement, a penalty may also be imposed by the Internal Revenue Service.

                  Many shareholders (including, among others, corporations and certain non-U.S. individuals) are not subject to these backup withholding and reporting requirements. In order for a non-U.S. shareholder (e.g., a non-U.S. corporation or nonresident alien individual) to qualify as an exempt recipient, that holder must submit a statement on the appropriate IRS Form W-8, signed under penalties of perjury, attesting to that holder’s exempt status. Forms of those statements can be obtained from the Information Agent and the Depositary. See the instructions for the applicable IRS Form W-8, which can be obtained on the IRS website, for additional information. A tax advisor should be consulted as to that shareholder’s qualification for exemption from backup withholding and the procedure for obtaining such exemption, including which IRS Form W-8 should be provided by the shareholder.

                  If backup withholding applies, the Depositary is required to withhold 24% of any payments made to the shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained if the required information is furnished to the Internal Revenue Service, generally by filing a U.S. tax return.

Purpose of IRS Form W-9. To prevent backup withholding on payments that are made to a shareholder with respect to shares purchased in the offer, each shareholder who is a U.S. Holder (as defined in Section 5 of the Offer to Purchase) is required to notify the Depositary of such shareholder’s correct TIN by completing the IRS Form W-9 certifying that (a) the TIN provided on IRS Form W-9 is correct, (b)(i) that shareholder has not been notified by the Internal Revenue Service that he, she or it is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the shareholder that the shareholder is no longer subject to backup withholding and (c) the shareholder is a U.S. resident or other U.S. person. See the instructions for IRS Form W-9 (provided herein), for additional information.

                  What Number to Give the Depositary. Each shareholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record holder of tendered Shares who is a U.S. Holder (as defined in Section 5 of the Offer to Purchase). If Shares are in more than one name or are not in the name of the actual owner, consult the enclosed instructions for IRS Form W-9 for additional guidance on which number to report. If the holder has not been issued a TIN and has applied for a number, the holder should write “Applied For” in the space for the TIN and sign and date the IRS Form W-9 in the spaces indicated. If the IRS Form W-9 is so completed, the Depositary will withhold 24% of all reportable payments that the holder is otherwise entitled to receive until a TIN is provided to the Depositary. If the holder provides a properly certified TIN within 60 days, the Depositary will refund the withheld taxes upon the holder’s request.

Israel
 
The Purchaser has obtained an approval from the Israeli Tax Authority, or the ITA, with respect to the withholding tax rates applicable to shareholders as a result of the purchase of Shares in the Offer. The approval provides, among other things, that: (1) tendering shareholders who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993 and who certify that they are not and at the date of purchase of their Shares were not Israeli residents (and, in the case of corporations, that no Israeli residents (x) hold 25.0% or more of the means of control such corporations or (y) are the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such corporations, whether directly or indirectly), will not be subject to Israeli withholding tax, and (2) payments to tendering shareholders who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993 and who hold their Shares through an Israeli broker or Israeli financial institution will be made by us without any Israeli withholding at source, and the relevant Israeli broker or Israeli financial institution will withhold Israeli tax, if any, as required by Israeli law. The approval does not address shareholders who are not described in clauses (1) and (2) above, and therefore they will be subject to Israeli withholding tax at the applicable rate of the gross proceeds payable to them pursuant to the Offer, as prescribed by Israeli tax law. The Israeli withholding tax is not an additional tax. Rather, the Israeli income tax liability of shareholders subject to Israeli withholding will be reduced by the amount of Israeli tax withheld. If Israeli withholding tax results in an overpayment of Israeli taxes, the holder may apply to the ITA in order to obtain a refund. However, the Purchaser cannot assure you whether and when the ITA will grant such refund.


                  Purpose of Declaration Form. To prevent withholding of Israeli income tax on payments that are made to a shareholder with respect to Shares purchased in the Offer, each shareholder is required to notify the Depositary of such shareholder’s exemption by completing and signing the Declaration Form included in this letter below or by providing a Valid Certificate (see Instruction 10 above). The Declaration Form should be completed by holders of Shares, who are either: (i) NOT and at the date of purchase of their Shares were not “residents of Israel” for purposes of the Israeli Income Tax Ordinance [New Version], 5721-1961 (the “Ordinance”), who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993 or (ii) a bank, broker or financial institution that are “residents of Israel” within the meaning of that term in Section 1 of the Ordinance, holding Shares solely on behalf of beneficial shareholder(s), and are subject to the provisions of the Ordinance and regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made to them with respect to Shares tendered by such beneficial shareholder(s) and accepted for payment by the Purchaser pursuant to the Offer.

        The foregoing description of certain tax withholding is only a summary and is qualified by all the terms of, and conditions to, the Offer set forth in the Offer to Purchase. In this respect, you are urged to read Section 2 and Section 5 of the Offer to Purchase.

(Declaration Form Immediately Follows)


DECLARATION OF STATUS FOR ISRAELI INCOME TAX PURPOSES
 Do not send this form to the IRS. See separate instructions on the back cover of this form.
 Read this form together with the Offer to Purchase and Letter of Transmittal accompanying this form.

PAYER'S NAME: American Stock Transfer & Trust Company, as Depositary

Who may use this form and why?

Holders of Shares who wish to tender their Shares pursuant to the Offer to Purchase and the related Letter of Transmittal (which, as amended from time to time, together constitute the “Offer”) may use this form if they tender their Shares in the Offer to the Depositary and they are either:


Non-Israeli Residents: If (i) you are NOT and at the date of purchase of your Shares were not a “resident of Israel” (as defined under Section 1 of the Israeli Income Tax Ordinance [New Version], 5721-1961 (the “ Ordinance ”) (See Instruction II)) for purposes of the Ordinance, or (ii) you are a corporation that is NOT and at the date of purchase of your Shares was not a “resident of Israel”, and Israeli residents are NOT “controlling shareholders” (as defined under Section 68A of the Ordinance (See Instruction III)) of you, nor are Israeli residents the beneficiaries of, or are entitled to, 25.0% or more of your revenues or profits, whether directly or indirectly, and you acquired your Shares after Magal’s initial public offering on Nasdaq in 1993;  then  you may be eligible for a full exemption from Israeli withholding tax with respect to the gross proceeds payable to you (if any) pursuant to the Offer. By completing this form in a manner that would substantiate your eligibility for such exemption, you will allow the Purchaser, the Depositary, your broker or any other withholding agent, or their authorized representatives to exempt you from such Israeli withholding tax; or


A Bank, Broker or Financial Institution Resident in Israel: If you are a bank, broker or financial institution resident in Israel that (1) is holding the Shares solely on behalf of beneficial shareholder(s) (so-called “street name” holders), and (2) is subject to the provisions of the Ordinance and regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by you to your beneficial shareholder(s) with respect to Shares tendered by them and accepted for payment by the Purchaser pursuant to the Offer (an  “Eligible Israeli Broker ”), you may be eligible for a full exemption from Israeli withholding tax with respect to the cash payment transmitted to you. By completing this form in a manner that would substantiate your eligibility for such exemption, you will allow the Purchaser, the Depositary, your broker or withholding agent, or their authorized representatives, to exempt you from such Israeli withholding tax. Consequently, even though the Depositary will not deduct any Israeli withholding tax from you, pursuant to the provisions of the Ordinance and regulations promulgated thereunder, to which you are subject, you may be required to withhold Israeli tax, as applicable, from the cash payment (if any) made by you to your beneficial shareholder(s).  NOTE: AN ELIGIBLE ISRAELI BROKER MAY COMPLETE THIS FORM IF IT IS HOLDING THE SHARES SOLELY ON BEHALF OF HIS CLIENTS, THE BENEFICIAL SHAREHOLDERS.

THIS FORM IS NOT INTENDED FOR YOUR USE IF YOU ARE A “RESIDENT OF ISRAEL” (OTHER THAN A BANK, BROKER OR FINANCIAL INSTITUTION RESIDENT IN ISRAEL).

PLEASE NOTE THAT IF YOU PROVIDE A DECLARATION FORM, YOU ALSO CONSENT TO THE PROVISION OF YOUR DECLARATION FORM TO THE PURCHASER AND/OR THE DEPOSITARY AND TO THE ISRAELI TAX AUTHORITY (THE “ITA”), IN CASE THE ITA SO REQUESTS, FOR PURPOSES OF AUDIT OR OTHERWISE.

To whom should you deliver this form?

If you wish to submit this form and (1) you hold your Shares directly, i.e., you are a registered holder, complete and sign this form and mail or deliver it to the Depositary (together with the Letter of Transmittal by which you tender your Shares) at its address set forth below, or (2) you hold your Shares through a broker, dealer, commercial bank, financial institution, trust company or other nominee (a “Broker”), complete and sign this form and mail or deliver it (together with the instruction letter by which you tender your Shares) to such Broker.


Until when should I deliver this form?

As described above, this form should be delivered together with the Letter of Transmittal or instruction letter by which you tender your Shares prior to 10:00 a.m., New York time on the on the Initial Completion Date or Final Expiration Date (as defined in Section 1 of the Offer to Purchase), as applicable.

You are urged to consult your own tax advisors to determine the particular tax consequences to you should you tender your Shares in the Offer, including, without limitation, the effect of any state, local or foreign income and any other tax laws and whether or not you should use this form.

PART I
  Identification and details of Shareholder (including Eligible Israeli Brokers) (see instructions)
1. Name:
2. Type of Shareholder (more than one box may be applicable):
(please print full name)
◻          Corporation (or Limited Liability Company)
◻          Individual
◻          Trust
◻          Partnership
◻          Other:
_________________

◻          Bank
◻          Broker
◻          Financial Institution
3. For individuals only:
4. For all other Shareholders:
Date of birth:  ______/_____/______
   month /  day  /  year
Country of incorporation or organization:
Country of residence:
Registration number of corporation (if applicable):
Countries of citizenship (name all citizenships):
Taxpayer Identification or
Social Security No. (if applicable):
Country of residence:
5. Permanent Address (state, city, zip or postal code, street, house number, apartment number):
 
6. Mailing Address (if different from above):
7.  Contact Details:
Name:______________
Capacity:_______________
Telephone Number (country code, area code and number):
     _______________________________________________


8. I hold the Shares of  ____________ (mark X in the appropriate place):
◻          directly, as a Registered Holder
◻          through a Broker.  If you marked this box, please state the name of your Broker:  _________________



PART II
 Declaration by Non-Israeli Residents (see instructions) „ Eligible Israeli Brokers should not complete this Part II
A. To be completed only by Individuals.  I hereby declare that: (if the statement is correct, mark X in the following box)

A.1 ◻      I am NOT and at the date of purchase of my Shares was not a “resident of Israel”, which means, among other things, that:
•          The State of Israel is not my permanent place of residence,
•          The State of Israel is neither my place of residence nor that of my family,
•          My ordinary or permanent place of activity is NOT in the State of Israel and I do NOT have a permanent establishment in the State of Israel,
•          I do NOT engage in an occupation in the State of Israel,
•          I do NOT own a business or part of a business in the State of Israel,
•          I am NOT insured by the Israeli National Insurance Institution,
•          I was NOT present (nor am I planning to be present) in Israel for 183 days or more during this tax year,
•          I was NOT present (nor am I planning to be present) in Israel for 30 days or more during this tax year, and the total period of my presence in Israel during this tax year and the two previous tax years is less than 425 days in total;
A.2 ◻     I acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.

B. To be completed by Corporations (except Partnerships and Trusts).  I hereby declare that: (if correct, mark X in the following box)

B.1 ◻      The corporation is NOT and at the date of purchase of its Shares was not a “resident of Israel”, which means, among other things, that:
•          The corporation is NOT registered with the Registrar of Companies in Israel,
•          The corporation is NOT registered with the Registrar of "Amutot" (non-profit organizations) in Israel,
•          The control of the corporation is NOT located in Israel,
•          The management of the corporation is NOT located in Israel,
•          The corporation does NOT have a permanent establishment in Israel, and
•          No Israeli resident holds, directly or indirectly via shares or through a trust or in any other manner or with another who is an Israeli resident, 25.0% or more of any “means of control” in the corporation as specified below:
o          The right to participate in profits;
o          The right to appoint a director;
o          The right to vote;
o          The right to share in the assets of the corporation at the time of its liquidation; and
o          The right to direct the manner of exercising one of the rights specified above;
B.2 ◻      The corporation acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.

C. To be completed by Partnerships.  I hereby declare that: (if correct, mark X in the following box)

C.1 ◻      The partnership is NOT and at the date of purchase of its Shares was not an Israeli resident which means, among other things, that:
•          The partnership is NOT registered with the Registrar of Partnerships in Israel,
•          The control of the partnership is NOT located in Israel,
•          The management of the partnership is NOT located in Israel,
•          The partnership does NOT have a permanent establishment in Israel,
•          NO Israeli resident holds, directly or indirectly via shares or through a trust or in any other manner or with another who is an Israeli resident, 25.0% or more of any right in the partnership or, of the right to direct the manner
           of exercising any of the rights in the partnership, and
•          NO partner in the partnership is an Israeli resident;
C.2 ◻       The partnership acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.



D. To be completed by Trusts.  I hereby declare that: (if correct, mark X in the following box)

D.1 ◻    The trust is NOT and at the date of purchase of its Shares was not an Israeli resident, and:
•          All settlors of the trust are NOT Israeli residents,
•          All beneficiaries of the trust are NOT Israeli residents, and
D.2 ◻    The trust acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.

PART III
Declaration by Israeli Bank, Broker or Financial Institution (see instructions) Non-Israeli Residents should not complete this Part III

I hereby declare that: (if correct, mark X in the following box)
◻       I am a bank, broker or financial institution that is a “resident of Israel” within the meaning of that term in Section 1 of the Ordinance (See Instruction II), I am holding the Shares solely on behalf of beneficial shareholder(s) and I am subject to the provisions of the Ordinance and the regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by me to such beneficial shareholder(s) with respect to Shares tendered by them and accepted for payment by the Purchaser pursuant to the Offer.

PART IV
Certification.  By signing this form, I also declare that:

•          I understood this form and completed it correctly and pursuant to the instructions.
•          I provided accurate, full and complete details in this form.
•          I am aware that providing false details constitutes criminal offense.
•          I am aware that this form may be provided to the Israeli Tax Authority, in case the Israeli Tax Authority so requests, for purposes of audit or otherwise.


 
SIGN HERE  
       
 
 
Signature of Shareholder

Date             Capacity in which acting
     (or individual authorized to sign on your behalf)          

Number of Shares: __________________________

INSTRUCTIONS
 Forming Part of the Declaration of Status for Israeli Income Tax Purposes

I.     General Instructions. This Declaration Form (Declaration of Status for Israeli Income Tax Purposes), or this Form, should be completed by holders of Shares who wish to tender their Shares pursuant to the Offer, and who are either: (i) NOT and at the date of purchase of my Shares were not “residents of Israel” for purposes of the Ordinance (See Instruction II below), and if the holder of Shares is a corporation, the corporation is NOT and at the date of purchase of its Shares was not a “resident of Israel”, and Israeli residents are NOT “controlling shareholders” of such corporation within the meaning of Section 68A of the Ordinance (See Instruction III below), and Israeli residents are NOT the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such corporation, whether directly or indirectly, who acquired their Shares after Magal's initial public offering on Nasdaq in 1993 or (ii) a bank, broker or financial institution that are “residents of Israel” within the meaning of that term in Section 1 of the Ordinance, holding Shares solely on behalf of beneficial shareholder(s), and are subject to the provisions of the Ordinance and the regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by them to such beneficial shareholder(s) with respect to Shares tendered by them and accepted for payment by the Purchaser pursuant to the Offer.  Israeli residents who are NOT Eligible Israeli Brokers should not use this Form.

        Part I (Identification and details of Shareholder). You should complete Item 1, 2 and 5 through 8 and either (i) Item 3, if you are an individual, or (ii) Item 4, if you are a corporation (or limited liability company), trust, partnership or other entity.

        Part II (Declaration by Non-Israeli Shareholder). If you are NOT an Israeli resident, you should complete either Section A (for Individuals), Section B (for Corporations), Section C (for Partnerships) or Section D (for Trusts). If you do not mark a box you will be deemed to answer that the corresponding item is not correct with respect to you.


        Part III (Declaration by Israeli Bank, Broker or Financial Institution). If you are an Eligible Israeli Broker, you should complete this Item.

        Part IV (Certification). By signing this Form, you also make the statements in Part IV.

        Inadequate Space. If the space provided on this Form is inadequate, you should insert such details on a separate signed schedule and attached to this Form.

        Determination of Validity. All questions as to the validity, form or eligibility (including time of receipt) of this Form will be, subject to applicable law, determined by the Purchaser, in its sole discretion. None of the Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any Form or incur any liability for failure to give any such notification. For more details, see Section 5 of the Offer to Purchase.

        Questions and Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Information Agent at the address or telephone numbers set forth on the back cover. Additional copies of this Form may be obtained from the Information Agent.

        The method of delivery of this Form is at your option and risk, and the delivery will be deemed made only when actually received by your Broker or the Depositary. If delivery is by mail, registered mail with return receipt requested, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent Forms will be accepted.

II.     Definition of Resident of Israel for Israeli Tax Purposes

Section 1 of the Ordinance defines a “resident of Israel” or a “resident” as follows:

 “(A) with respect to an individual - a person whose center of vital interests is in Israel; for this purpose the following provisions will apply:

(1)  in order to determine the center of vital interests of an individual, account will be taken of the individual’s family, economic and social connections, including, among others:
 
(a) place of permanent home;
 
              (b) place of residential dwelling of the individual and the individual's immediate family;
 
(c) place of the individual's regular or permanent occupation or the place of his permanent employment;

(d) place of the individual's active and substantial economic interests;

(e) place of the individual's activities in organizations, associations and other institutions;

(2) the center of vital interests of an individual will be presumed to be in Israel:

(a) if the individual was present in Israel for 183 days or more in the tax year;

(b)  if the individual was present in Israel for 30 days or more in the tax year, and the total period of the individual’s presence in Israel that tax year and the two previous tax years is 425 days or more.

For the purposes of this provision, “day” includes a part of a day.

(3) the presumption in subparagraph (2) may be rebutted either by the individual or by the assessing officer;

(4) …;
 

(B)
with respect to a body of persons - a body of persons which meets one of the following:

(1) it was incorporated in Israel;

(2) the "control and management" of its business is exercised in Israel, except for a body of persons, the business of which is controlled and managed in Israel by an individual who became an Israel resident for the first time or is a returning resident, as set forth in section 14(a) and ten years have not yet passed since he became an Israeli resident as aforesaid, or by any person on his behalf, provided that such body of persons would not be an Israel resident if the control and management of its business were not by a said individual or by a person on his behalf, unless the body of persons requested otherwise."

III.     Definition of Controlling Shareholder for Purposes of Section 68A of the Ordinance

         Section 68A of the Ordinance defines “controlling shareholders” as follows:

        “Controlling shareholders” – shareholders that hold, directly or indirectly, alone, or together with another, or together with another Israeli resident, one or more of the means of control at a rate exceeding 25.0%.”

        Section 88 of the Ordinance defines the terms “means of control” and “together with another” as follows:

        “Means of control” – in a corporation – each of the following:

(1) the right to profits;

(2) the right to appoint a director or a chief executive officer in the company, or equivalent position holders in another corporation;

(3) a voting right in the general meeting of a company, or in an equivalent body in another corporation;
        
(4) the right to a portion of the remainder of the assets after settlement of liabilities, upon wind-up;
        
(5) the right to instruct anyone holding the rights listed in clauses (1) to (4) on the manner in which his right shall be executed;
        
and all, whether by virtue of shares, rights to shares or other rights, or in any other manner, including by way of voting agreements or through a trust.”

“Together with another” – together with a relative, and together with he who is not a relative and they have between them cooperation on a permanent basis under an agreement regarding material issues of a corporation, directly or indirectly;"

        This Letter of Transmittal and certificates and any other required documents should be sent or delivered by each shareholder or that shareholder’s broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below.

The Depositary for the Offer is:
 
Mail or deliver this Letter of Transmittal, or a facsimile, together with the certificate(s) representing your Shares, to:

 American Stock Transfer & Trust Company, LLC
 
6201 15th Avenue
Attn: Corporate Actions Dept.
Brooklyn, N.Y. 11219
 Fax number 718-234-5001
For assistance call 877-248-6417
___________________
 
Questions or requests for assistance may be directed to the Information Agent at its telephone numbers listed below.  Additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent.  A shareholder may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer.
 
The Information Agent for the Offer is:
 
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
For assistance call D.F. King at (800) 814-2879 (toll free) or (212) 269 - 5550 (banks and brokers)
Email: magal@dfking.com



Exhibit (a)(1)(C)
 

Offer to Purchase for Cash
8,669,029 Ordinary Shares
of
MAGAL SECURITY SYSTEMS LTD.
at
$2.95 NET PER SHARE
by
FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP

THE INITIAL OFFER PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK TIME, ON JUNE 22, 2020 UNLESS THE OFFER IS EXTENDED.

May 22, 2020
 
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
 
We have been appointed by FIMI Israel Opportunity Five and Limited Partnership and FIMI Opportunity V, L.P. (collectively, the “Purchaser”), to act as Information Agent in connection with the Purchaser’s offer to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share (the “Shares”) of Magal Security Systems Ltd. (“Magal”), at a price of $2.95 per Share, net to the seller in cash, less any required withholding taxes and without interest, upon the terms of, and subject to the conditions to, the Offer to Purchase, dated as of the date hereof (the “Offer to Purchase”) and the related Letter of Transmittal (which, as amended from time to time, together constitute the “Offer”) enclosed herewith. The description of the Offer in this letter is only a summary and is qualified by all the terms of, and conditions to, the Offer set forth in the Offer to Purchase and Letter of Transmittal. Terms used herein but not otherwise defined herein have the definitions ascribed thereto in the Offer to Purchase.
 
Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee.
 
We urge you to contact your clients as promptly as possible. Please note that the initial period of the Offer and withdrawal rights expires at 10:00 a.m., New York time, on June 22, 2020 (the “Initial Completion Date”), unless the Offer is extended.
 


Your attention is directed to the following:

1. The offer price is $2.95 per Share, net to the seller in cash, less any applicable withholding taxes and without interest.

2. The Purchaser has obtained an approval from the Israeli Tax Authority (the “ITA”) with respect to the Israeli withholding tax rates applicable to shareholders as a result of the purchase of the Shares pursuant to the Offer. The approval provides, among other things, that: (1) tendering shareholders who acquired their Shares after Magal’s initial public offering on Nasdaq Global Select Market (“Nasdaq”) in 1993 and who certify that they are not and at the date of purchase of their Shares were not, Israeli residents (and, in the case of corporations, that no Israeli residents (x) hold 25.0% or more of the means of control such corporations or (y) are the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such corporations, whether directly or indirectly), will not be subject to Israeli withholding tax; and (2) payments to tendering shareholders who acquired their Shares after Magal’s initial public offering on the Nasdaq in 1993 and who hold their Shares through an Israeli broker or Israeli financial institution will be made by the Purchaser without any Israeli withholding at source, and the relevant Israeli broker or Israeli financial institution will withhold Israeli tax, if any, as required by Israeli law. The approval does not address shareholders who are not described in clauses (1) and (2) above, and therefore they will be subject to Israeli withholding tax as required by Israeli law at the applicable rate of the gross proceeds payable to them pursuant to the Offer. Accordingly, if your client determines to tender his or her Shares in the Offer, you should also request instructions as to whether he or she is eligible for (i) an exemption from Israeli withholding tax by completing the enclosed Declaration Form (“Declaration of Status for Israeli Income Tax Purposes”) or (ii) otherwise eligible for an exemption or a more favorable Israeli withholding tax rate and intend to provide a valid tax certificate issued by the Israel Tax Authority.

In general, if your client(s) certifies, by completing the Declaration Form, that it is (1) NOT and at the date of purchase of its Shares was not a “resident of Israel” for purposes of the Israeli Income Tax Ordinance [New Version], 5721-1961 (the “Ordinance”), who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993 or (2) a bank, broker or financial institution resident in Israel that (A) is holding the Shares solely on behalf of its beneficial shareholder(s) (so-called “street name” holders), and (B) is subject to the provisions of the Ordinance and regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by it to its beneficial shareholder(s) with respect to Shares tendered by them and accepted for payment by the Purchaser pursuant to the Offer (an “Eligible Israeli Broker”), your client is eligible for an exemption from Israeli withholding tax. See Section 2 and Section 5 of the Offer to Purchase.

With respect to U.S. backup withholding taxes, see Section 5 of the Offer to Purchase.

The Purchaser, with the assistance of the Depositary and the Depository Trust Company (“DTC”), has established a procedure whereby, if (and only as long as you may tender the Shares on behalf of your clients pursuant to the Offer) you tender Shares in the Offer through DTC, you will be able to classify, electronically, the Shares into the following categories: (1) Shares that are tendered on behalf of your clients who certified to you, by completing the Declaration Form, that they are eligible for an exemption from Israeli withholding tax (“Category One Shares”), and (2) Shares that are tendered on behalf of your clients who are not eligible for such exemption (“Category Two Shares”).

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        By so classifying, through such DTC system, you will be deemed to certify to the Depositary and to the Purchaser that based on a careful review of the Declaration Forms received by you, the Shares that you classified as Category One Shares, are held by non-Israeli residents and/or Eligible Israeli Broker(s). In addition, in order to confirm your eligibility to make such certification for Category One Shares, you must provide copies of such Declaration Forms as well as any additional information to the Information Agent (via e-mail and utilizing the specialized e-mail address at the end of this notice) that you will be requested to provide in connection therewith. You are reminded that the ITA may have the right to audit the Declaration Forms, and if you refuse, Israeli withholding tax may be imposed. If you fail to meet the deadlines for tendering Shares in the Offer, make untimely classifications or make incorrect classifications, you will be required to claim any withholding tax directly from the ITA. Alternatively, with respect to Category Two Shares, you may receive together with the Letter of Transmittal or Declaration Form certificates of exemption form Israeli withholding or reduced withholding. In such event, you must provide copies of such certificates to the Information Agent with a copy (which shall not constitute notice) to Naschitz, Brandes, Amir & Co., Advocates, our legal counsel in Israel, at its address set forth on the back of the Offer to Purchase. NOTE: A CLIENT OF YOURS THAT IS AN ELIGIBLE ISRAELI BROKER MAY COMPLETE THE DECLARATION FORM IF IT IS HOLDING THE SHARES SOLELY ON BEHALF OF ITS CLIENTS, THE BENEFICIAL SHAREHOLDERS.

3. The Offer is being made for 8,669,029 Shares, representing approximately 37.4% of the issued and outstanding Shares and voting power of Magal, as of the date of the Offer to Purchase.

4. Shareholders may tender their Shares or deliver Notices of Objection until 10:00 a.m., New York time, on the Initial Completion Date (unless the Offer is extended by the Purchaser). The period from the commencement of the Offer until the Initial Completion Date (as may be extended by the Purchaser) is referred to as the Initial Offer Period.

5. Promptly following the Initial Completion Date, the Purchaser will publicly announce whether or not the conditions to the Offer have been satisfied or, subject to applicable law, waived by the Purchaser. As required by Israeli law, if the conditions to the Offer are satisfied or, subject to applicable law, waived by the Purchaser and if, with respect to each Share held by a shareholder:

(i) such shareholder has not yet responded to the Offer,

(ii) such shareholder has notified the Purchaser (through you) of his or her objection to the Offer, or

(iii) such shareholder has tendered such Share (through you) but has withdrawn (through you) such tender prior to the Initial Completion Date,          

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such shareholder will be afforded an additional four calendar-day period following the Initial Completion Date, during which he or she may tender such Share. This additional period is referred to as the Additional Offer Period. These dates will change if the Purchaser decides to extend the Initial Offer Period. Shareholders may withdraw any previously tendered Shares at any time prior to the completion of the Initial Offer Period, but not during the Additional Offer Period. See “Introduction,” Section 1, Section 3 and Section 4 of the Offer to Purchase.

                  If, with respect to all or any portion of his or her Shares, a shareholder objects to the Offer during the Initial Offer Period and the conditions to the Offer have been satisfied or, subject to applicable law, waived by the Purchaser, such shareholder may tender such Shares during the Additional Offer Period.

6. Conditions to the Offer include, among other things, that:

(i) prior to 10:00 a.m., New York time, Israel time, on the Initial Completion Date, there shall have been validly tendered and not properly withdrawn at least 1,200,000 Magal Shares (currently representing approximately 5.2% of the issued and outstanding shares and voting power of Magal);

(ii) as required by Israeli law, at 10:00 a.m., New York time, on the Initial Completion Date, the aggregate number of Shares validly tendered and not properly withdrawn (excluding Shares held by the Purchaser or its affiliates – see “Rights of Shareholders Who Do Not Accept the Offer” in the Offer to Purchase) must be greater than the number of Shares represented by Notices of Objection to the Offer; and

(iii) the Israeli Competition Authority shall have approved the purchase of the Shares pursuant to the offer.

The Offer is not conditioned on the availability of financing or the approval of the board of directors of Magal. Please see Section 11 of the Offer to Purchase, which sets forth in full the conditions to the Offer and specifies those conditions to the Offer that are waiveable by the Purchaser.

7. If more than 8,669,029 Shares are validly tendered and not properly withdrawn prior to the expiration of the Additional Offer Period (the “Final Expiration Date”), the Purchaser will purchase 8,669,029 Shares on a pro rata basis from all tendering shareholders. In these circumstances, the number of Shares that the Purchaser will purchase from each tendering shareholder will be based on the total number of Shares validly tendered and not properly withdrawn by all shareholders prior to the Final Expiration Date.

8. If less than 8,669,029 shares are validly tendered, but at least 1,200,000 Shares are validly tendered and not properly withdrawn, Purchaser will purchase Shares from all shareholders who have validly tendered their Shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their Shares before the completion of the Initial Offer Period. Tendering shareholder may only withdraw previously tendered shares prior to the completion of the Initial Offer Period. See Section 1 and Section 4 of the Offer to Purchase.

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9. Promptly following the Final Expiration Date, the Purchaser will announce the results of the Offer and the proration factor, if any. If the Purchaser is unable to promptly determine the final proration results, the Purchaser will announce the preliminary results. Shares accepted for payment pursuant to the Offer will be paid promptly following the calculation of the final proration factor.

Explanation of Notice of Objection. Under Israeli law, the shareholders of Magal may respond to the Offer by accepting the Offer and tendering all or any portion of their Shares in accordance with the Offer to Purchase or by notifying the Purchaser of their objection to the Offer by executing and delivering Notices of Objection. Alternatively, they may simply not respond to the Offer and not tender their Shares. It is a condition to the Offer that, at 10:00 a.m., New York time, on the Initial Completion Date, the aggregate number of Shares tendered in the Offer is greater than the number of shares represented by Notices of Objection. In making this calculation, the votes of a holder of a controlling interest in the Purchaser, a holder who has a personal interest in the acceptance of the Offer, a holder of a control block in Magal, or any person acting on its behalf or on behalf of the Purchaser, including their relatives and companies under their control, shall not be taken into account. If this and the other conditions to the Offer have been satisfied or, subject to applicable law, waived by the Purchaser, shareholders will be afforded an additional four calendar days to tender their Shares in the Offer, but Notices of Objection will no longer be accepted. See Section 3 of the Offer to Purchase.

IMPORTANT: IF A SHAREHOLDER SUBMITS A NOTICE OF OBJECTION WITH RESPECT TO HIS OR HER SHARES AND THEREAFTER, DELIVERS TO YOU A LETTER OF TRANSMITTAL BY WHICH HE OR SHE TENDERS THOSE SHARES, PLEASE DISREGARD THE NOTICE OF OBJECTION. SIMILARLY, IF A SHAREHOLDER SUBMITS TO YOU A LETTER OF TRANSMITTAL BY WHICH HE OR SHE TENDERS HIS OR HER SHARES AND THEREAFTER, HE OR SHE DELIVERS TO YOU A NOTICE OF OBJECTION WITH RESPECT TO THOSE SHARES, PLEASE DISREGARD THE LETTER OF TRANSMITTAL. IF A SHAREHOLDER SUBMITS A LETTER OF TRANSMITTAL AND A NOTICE OF OBJECTION CONCURRENTLY WITH RESPECT TO THE SAME SHARES, PLEASE DISREGARD THE NOTICE OF OBJECTION.

For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents:

 
1.
Offer to Purchase;
 
 
2.
Letter of Transmittal for your use in accepting the Offer and tendering Shares and for the information of your clients;
 
 
3.
A letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining the clients’ instructions with regard to the Offer;

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4.
Notice of Objection for your use in objecting to the Offer on behalf of your clients;
 
 
5.
Declaration Form (“Declaration of Status of Israeli Income Tax Purposes”); and
 
 
6.
Return envelope addressed to American Stock Transfer & Trust Company, as Depositary.
 
In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (1) certificates evidencing the Shares (or a confirmation of a book-entry transfer of the Shares into the U.S. Depositary’s account at the DTC), (2) the Letter of Transmittal properly completed and duly executed with any required signature guarantees or, in the case of a book-entry transfer, an agent’s message (as described in the Offer to Purchase) and (3) any other required documents.  Tender of Shares through guaranteed delivery procedures is not allowed.

The Purchaser will not pay any fees or commissions to any broker, dealer or other person in connection with the solicitation of tenders of Shares pursuant to the Offer (other than to the Depositary, Information Agent and its Israeli counsel). However, the Purchaser will, upon request, reimburse you for customary and reasonable mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will NOT pay or cause to be paid any stock transfer taxes payable with respect to the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal.

        Any inquiries you may have with respect to the Offer should be addressed to the undersigned at our address and telephone numbers set forth on the back cover page of the Offer to Purchase.

        Additional copies of the enclosed material may be obtained from us, at the address and telephone number set forth on the back cover page of the Offer to Purchase.

 
Very truly yours,

D.F.King & Co., Inc.

ENCLOSURES.
 
NOTHING CONTAINED IN THIS LETTER OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS THE AGENT OF THE PURCHASER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.

The Information Agent for the offer is:


D.F King & Co., Inc.
48 Wall Street
New York, NY 10005
Shareholders may call toll-free: (800) 814-2879
Banks and Broker may call: (212) 269 - 5550
Email: magal@dfking.com

Copies of the Declaration forms as well as any additional information that may be required should be sent to the following e-mail address:
Magaltaxdeclaration@dfking.com
 
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 Exhibit (a)(1)(D)
 
Offer to Purchase for Cash
8,669,029 Ordinary Shares
of
MAGAL SECURITY SYSTEMS LTD.
at
$2.95 NET PER SHARE
by

FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP

THE INITIAL OFFER PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK TIME, ON JUNE 22, 2020, UNLESS THE OFFER IS EXTENDED.

May 22, 2020
 
To Our Clients:
 
Enclosed for your consideration are the Offer to Purchase, dated as of the date hereof, and the related Letter of Transmittal, which as amended from time to time, together constitute the Offer, in connection with the special tender offer of FIMI Israel Opportunity Five, Limited Partnership and FIMI Opportunity V, L.P. (collectively, the “Purchaser”), to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share (the “Shares”) of Magal Security Systems Ltd. (“Magal”), at a price of $2.95 per Share, net to the seller in cash, less any applicable withholding taxes, and without interest, upon the terms of, and subject to the conditions to, the Offer, dated as of the date hereof (the “Offer to Purchase”) and the related Letter of Transmittal (which, as amended from time to time, together constitute the “Offer”) enclosed herewith. The description of the Offer in this letter is only a summary and is qualified by all the terms of, and conditions to, the Offer set forth in the Offer to Purchase and Letter of Transmittal. Terms used herein but not otherwise defined herein have the definitions ascribed thereto in the Offer to Purchase.
 
We are (or our nominee is) the holder of record of Shares held by us for your account. A tender of your Shares or an objection to the completion of the Offer can be made only by us as the holder of record of the Shares and only pursuant to your instructions. The enclosed Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account.
 
               Please instruct us as to whether you wish us to either (1) tender on your behalf any or all of the Shares held by us for your account, upon the terms of, and subject to the conditions to, the Offer or (2) notify the Purchaser of your objection to the Offer with respect to any or all of the Shares held by us for your account.


 
If you determine to tender your Shares in the Offer, we also request instructions as to whether you are eligible for an exemption from Israeli withholding tax by completing the enclosed Declaration Form (“Declaration of Status for Israeli Income Tax Purposes”). In this respect, as more fully described in the Offer to Purchase, pursuant to Israeli tax law, the Purchaser will withhold applicable amounts from the cash payment (if any) made to you with respect to Shares tendered by you and accepted for payment by the Purchaser pursuant to the Offer, unless you are either (1) eligible for a full exemption from such tax and complete and submit to us the Declaration Form together with your tender instructions, or (2) otherwise eligible for an exemption or a more favorable Israeli withholding tax rate and provide a valid certificate issued by the Israel Tax Authority (the “Valid Certificate”). We are (or our nominee is) the holder of record of Shares held by us for your account and therefore, you should submit the Declaration Form or the Valid Certificate only to us, and by doing so, you also acknowledge that we may forward such form (as well as related information) to the Purchaser, to the Depositary, to the Information Agent and any person authorized by the Purchaser. You are urged to consult your tax advisors regarding the application of Israeli income and withholding taxes (including eligibility for any withholding tax reduction or exemption, and the refund procedure). See Section 5 of the Offer to Purchase, which also sets forth important information with respect to U.S. backup withholding taxes.
 
Your attention is directed to the following:
 
1.          The offer price is $2.95 per Share, net to you in cash, less any applicable withholding taxes and without interest.
 
2.          The Offer is being made for 8,669,029 Shares.
 
3.          Shareholders may tender their Shares or deliver Notices of Objection until 10:00 a.m., New York time, on June 22, 2020 (the “Initial Completion Date”), unless the Offer is extended. The period from the commencement of the Offer until the Initial Completion Date (as may be extended by the Purchaser) is referred to as the Initial Offer Period.
 
4.          Promptly following the Initial Completion Date, the Purchaser will publicly announce whether or not the conditions to the Offer have been satisfied or, subject to applicable law, waived by the Purchaser. As required by Israeli law, if the conditions to the Offer are satisfied or, subject to applicable law, waived by the Purchaser, then if with respect to each Share held by us for your account:
 

we have not yet responded to the Offer;
 

we have notified the Purchaser of your objection to the Offer, or
 

we have tendered such Share on your behalf but have withdrawn such tender prior to the Initial Completion Date,
 
you will be afforded an additional four calendar-day period following the Initial Completion Date, during which you may instruct us to tender such Share on your behalf. This additional period is referred to as the Additional Offer Period. These dates will change if the Purchaser decides to extend the Initial Offer Period. You may withdraw any previously tendered Shares at any time prior to the completion of the Initial Offer Period, but not during the Additional Offer Period. See “Introduction,” Section 1, Section 3 and Section 4 of the Offer to Purchase.

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If, with respect to all or any portion of your Shares, we object on your behalf to the Offer during the Initial Offer Period and the conditions to the Offer have been satisfied or, subject to applicable law, waived by the Purchaser, you may instruct us to tender such Shares on your behalf during the Additional Offer Period.

5.          Conditions to the Offer include, among other things, that:
 

prior to 10:00 a.m., New York time, on the Initial Completion Date, there shall have been validly tendered and not properly withdrawn at least 1,200,000 Magal Shares (currently representing approximately 5.2% of the issued and outstanding shares and voting power of Magal);
 

as required by Israeli law, at 10:00 a.m., New York time, on the Initial Completion Date, the aggregate number of Shares validly tendered and not properly withdrawn (excluding Shares held by the Purchaser or its affiliates – see “Rights of Shareholders Who Do Not Accept the Offer” in the Offer to Purchase) must be greater than the number of Shares represented by Notices of Objection to the Offer; and
 

the Israeli Competition Authority shall have approved the purchase of the Shares pursuant to the offer.
 
The Offer is not conditioned on the availability of financing or the approval of the board of directors of Magal. Please see Section 11 of the Offer to Purchase, which sets forth in full the conditions to the Offer and specifies those conditions to the Offer that are waiveable by the Purchaser.
 
6.          If more than 8,669,029 Shares are validly tendered and not properly withdrawn prior to the expiration of the Additional Offer Period (the “Final Expiration Date”), the Purchaser will purchase 8,669,029 Shares on a pro rata basis from all tendering shareholders. In these circumstances, the number of Shares that the Purchaser will purchase from each tendering shareholder will be based on the total number of Shares validly tendered and not properly withdrawn by all shareholders prior to the Final Expiration Date. You should consult with your broker or other financial or tax advisors on the possibility of designating the priority in which your Shares will be purchased in the event of proration.
 
7.          If less than 8,669,029 shares are validly tendered, but at least 1,200,000 Shares are validly tendered and not properly withdrawn, Purchaser will purchase Shares from all shareholders who have validly tendered their Shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their Shares before the completion of the Initial Offer Period. You may only withdraw previously tendered shares prior to the completion of the Initial Offer Period. See Section 1 and Section 4 of the Offer to Purchase.

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8.          Promptly following the Final Expiration Date, the Purchaser will announce the results of the Offer and the proration factor, if any. If the Purchaser is unable to promptly determine the final proration results, the Purchaser will announce the preliminary results. Shares accepted for payment pursuant to the Offer will be paid within four U.S. business days following the Final Expiration Date.
 
9.          Tendering shareholders will generally not be obligated to pay brokerage fees, service fees or commissions with respect to the purchase of Shares by the Purchaser in the Offer. Except as otherwise provided in Instruction 6 to the Letter of Transmittal, share transfer taxes will not be paid by the Purchaser.
 
If you wish to have us tender any or all of your Shares held by us for your account, please (1) so instruct us by completing, executing and returning to us the instruction form contained in this letter and (2) if applicable to you, complete, execute and return to us the Declaration Form enclosed with this letter.

Alternatively, if you wish to notify the Purchaser of your objection to the Offer, please so instruct us by completing, executing and returning to us the objection instruction form contained in this letter by no later than 10:00 a.m., New York time, on the Initial Completion Date. IF YOU DO NOT WISH TO TENDER ANY SHARES OR OBJECT TO THE OFFER, YOU MAY SIMPLY DO NOTHING.

An envelope in which to return your instructions to us is enclosed. If you authorize the tender of your Shares in the Offer, all of your Shares will be tendered unless otherwise specified in your instructions. Your tender instructions (and Declaration Form, if applicable) should be forwarded to us in ample time to permit us to submit a tender on your behalf and, if you completed the Declaration Form, request an exemption from Israeli withholding tax on your behalf, prior to the Initial Completion Date or the Final Expiration Date, as applicable.

If you authorize the objection of your Shares to the Offer, we will object to the Offer with respect to all of your Shares unless otherwise specified in your instructions. Your objection instructions should be forwarded to us in ample time to permit us to submit an objection on your behalf prior to the Initial Completion Date.

The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all of Magal’s shareholders. The Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant to the Offer, the Purchaser will make a good faith effort to comply with that state statute. If, after its good faith effort, the Purchaser cannot comply with that state statute, subject to applicable law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in that state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Purchaser will endeavor to make arrangements to have the Offer made on its behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction.

IMPORTANT: IF YOU SUBMIT A TENDER INSTRUCTION LETTER BY WHICH YOU TENDER SHARES AND THEREAFTER, YOU DELIVER TO US AN OBJECTION INSTRUCTION LETTER WITH RESPECT TO THOSE SHARES, WE WILL DISREGARD YOUR TENDER INSTRUCTION LETTER. SIMILARLY, IF YOU SUBMIT TO US AN OBJECTION INSTRUCTION LETTER WITH RESPECT TO SHARES AND THEREAFTER, YOU DELIVER TO US A TENDER INSTRUCTION LETTER BY WHICH YOU TENDER THOSE SHARES, WE WILL DISREGARD YOUR OBJECTION INSTRUCTION LETTER. IF YOU SUBMIT A TENDER INSTRUCTION LETTER AND AN OBJECTION INSTRUCTION LETTER CONCURRENTLY WITH RESPECT TO THE SAME SHARES, THE OBJECTION INSTRUCTION LETTER WILL BE DISREGARDED.


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TENDER INSTRUCTION LETTER
with Respect to the Offer
 to Purchase for Cash
8,669,029 Ordinary Shares
 of
 Magal Security Systems Ltd.

 
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 22, 2020 (the “Offer to Purchase”), and the related Letter of Transmittal, which as amended from time to time, together constitute the Offer, in connection with the special tender offer of FIMI Israel Opportunity Five, Limited Partnership and FIMI Opportunity V, L.P. (collectively, the “Purchaser”), to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share (the “Shares”) of Magal Security Systems Ltd. (“Magal”), at a price of $2.95 per Share, net to the seller in cash, less any applicable withholding taxes, and without interest, upon the terms of, and subject to the conditions to, the Offer.

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This will instruct you to tender in the Offer the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.
 
Dated: ______________________, 2020
 
     SIGN HERE
Number of Ordinary Shares
To Be Tendered:
                                                 Ordinary Shares1
 

                                                                                           
 
                                                                                            
Signature(s)
                                                                                             
           
                                                                                             
Please type or print names(s)
                                                                                             
   
           
                                                                                            
     
                                                                                            
Please type or print address

                                                                                             
Area Code and Telephone Number
 
                                                                                              
Taxpayer Identification or Social Security Number

PLEASE NOTE THAT THIS TENDER INSTRUCTION LETTER IS TO TENDER YOUR SHARES IN ACCORDANCE WITH THE TERMS AND CONDITIONS DESCRIBED IN THE OFFER TO PURCHASE. IF YOU WISH TO OBJECT TO THE OFFER, PLEASE COMPLETE THE “OBJECTION INSTRUCTION LETTER” AND RETURN IT TO US.
 

1          Unless otherwise indicated, it will be assumed that all Ordinary Shares held by us for your account are to be tendered.

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OBJECTION INSTRUCTION LETTER
 with Respect to the Offer
 to Purchase for Cash
 8,669,029 Ordinary Shares
 of
 Magal Security Systems Ltd.

        The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 22, 2020 (the “Offer to Purchase”), and the related Letter of Transmittal, which as amended from time to time, together constitute the Offer, in connection with the special tender offer of FIMI Israel Opportunity Five, Limited Partnership and FIMI Opportunity V, L.P. (collectively, the “Purchaser”), to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share (the “Shares”) of Magal Security Systems Ltd. (“Magal”), at a price of $2.95 per Share, net to the seller in cash, less any applicable withholding taxes, and without interest, upon the terms of, and subject to the conditions to, the Offer.

This will instruct you to object to the Offer with respect to the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.
 
Dated: ______________________, 2020

     SIGN HERE
Number of Ordinary Shares
To Be Tendered:
                                                 Ordinary Shares2
 

                                                                                           
 
                                                                                            
Signature(s)
                                                                                             
           
                                                                                             
Please type or print names(s)
                                                                                             
 
 
           
                                                                                            
     
                                                                                            
Please type or print address

                                                                                             
Area Code and Telephone Number
 
                                                                                              
Taxpayer Identification or Social Security Number


2          Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to object to the Offer.

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Explanation of Objection Instruction Letter. Under Israeli law, the shareholders of Magal may respond to the Offer by accepting the Offer and tendering all or any portion of their Shares in accordance with the Offer to Purchase or by notifying the Purchaser of their objection to the Offer by executing and delivering Notices of Objection (which, in your case, is corresponding to this Objection Instruction Letter). Alternatively, they may simply not respond to the Offer and not tender their Shares. It is a condition to the Offer that at 10:00 a.m., New York time, on the Initial Completion Date, the aggregate number of Shares tendered in the Offer is greater than the number of shares represented by Notices of Objection. In making this calculation, the votes of a holder of a controlling interest in the Purchaser, a holder who has a personal interest in the acceptance of the Offer, a holder of a control block in Magal, or any person acting on its behalf or on behalf of the Purchaser, including their relatives and companies under their control, shall not be taken into account. If this and the other conditions to the Offer have been satisfied or waived, shareholders will be afforded an additional four calendar days to tender their Shares in the Offer, but Notices of Objection will no longer be accepted. See Section 3 of the Offer to Purchase.

THIS OBJECTION INSTRUCTION LETTER SHOULD ONLY BE EXECUTED BY YOU IN THE EVENT THAT YOU OBJECT TO THE OFFER WITH RESPECT TO ALL OR ANY PORTION OF YOUR SHARES. ACCORDINGLY, DO NOT EXECUTE THIS OBJECTION INSTRUCTION LETTER IF (1) YOU WOULD LIKE TO ACCEPT THE OFFER WITH RESPECT TO THOSE SHARES (IN WHICH CASE YOU SHOULD COMPLETE AND EXECUTE THE TENDER INSTRUCTION LETTER) OR (2) YOU DO NOT WISH TO PREVENT THE COMPLETION OF THE OFFER.

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Exhibit (a)(1)(E)
 
Notice of Objection
to
Offer to Purchase for Cash
8,669,029 Ordinary Shares
of
MAGAL SECURITY SYSTEMS LTD.
by
FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP

The Initial Offer Period and Withdrawal Rights will Expire at 10 a.m., New York Time, on June 22, 2020, unless the Offer is Extended.

The Depositary for the offer is:
 
American Stock Transfer & Trust Company, LLC
Attn: Corporate Actions Dept.
Brooklyn, N.Y. 11219
 Fax number 718-234-5001
For assistance call 877-248-6417
 
THIS NOTICE OF OBJECTION SHOULD BE SENT TO (1) THE DEPOSITARY, IF YOU ARE A REGISTERED SHAREHOLDER, OR (2) THE INFORMATION AGENT IF YOU ARE A BROKER, DEALER, BANK OR OTHER NOMINEE THAT SUBMITS THIS NOTICE ON BEHALF OF YOUR CLIENTS.
 
DELIVERY OF THIS NOTICE OF OBJECTION TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
 
PLEASE READ THE INSTRUCTIONS ON THE REVERSE SIDE OF THIS NOTICE OF OBJECTION CAREFULLY BEFORE COMPLETING THIS NOTICE OF OBJECTION.
 
To:
FIMI Israel Opportunity Five, Limited Partnership and FIMI Opportunity V, L.P.
c/o American Stock Transfer & Trust Company
 
        The undersigned hereby notifies you of the undersigned’s objection to the offer by FIMI Israel Opportunity Five, Limited Partnership and FIMI Opportunity V, L.P. (collectively, the “Purchaser”) to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share (the “Shares”) of Magal Security Systems Ltd. (“Magal”), as set forth in the Offer to Purchase, dated May 22, 2020 (as may be amended from time to time, the “Offer to Purchase” and, together with the Letter of Transmittal, the “Offer”) with respect to _________________ (insert number) Shares held by the undersigned. By executing this Notice of Objection, the undersigned acknowledges that the undersigned has read, and agrees to, the terms and conditions of the instructions accompanying this Notice of Objection.
 
________________________________________________________________________________________________
Name(s) of Registered Holder(s)

________________________________________________________________________________________________
Address(es) of Registered Holder(s)



________________________________________________________________________________________________
Signature(s) of Registered Holder(s)
 
Date _______________
 
Name of Bank or Broker (if applicable): _______________
 
DTC Account Number (if applicable): ____________
 
THIS NOTICE OF OBJECTION SHOULD ONLY BE EXECUTED BY YOU IN THE EVENT THAT YOU OBJECT TO THE OFFER WITH RESPECT TO ALL OR ANY PORTION OF YOUR SHARES. ACCORDINGLY, DO NOT EXECUTE THIS NOTICE OF OBJECTION IF (1) YOU WOULD LIKE TO ACCEPT THE OFFER WITH RESPECT TO THOSE SHARES (IN WHICH CASE YOU SHOULD COMPLETE AND EXECUTE THE LETTER OF TRANSMITTAL) OR (2) YOU DO NOT WISH TO PREVENT THE COMPLETION OF THE OFFER.
 

Shareholders of Magal who wish to object to the Offer must complete this Notice of Objection unless an agent’s message is utilized. Any terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Offer to Purchase. Delivery of documents to The Depository Trust Company or any other party does not constitute delivery to the Depositary.
 
NOTE: SIGNATURES MUST BE PROVIDED BELOW
 
Check here if Notice of Objection is being delivered by book-entry transfer to the Depositary’s account at The Depository Trust Company and complete the following:

 
Name of Tendering Institution: _____________________________________________________
Account Number: _______________________________________________________________
Transaction Code Number: ________________________________________________________

INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
 
1.     Explanation of Notice of Objection. Under Israeli law, you may respond to the Offer by accepting the Offer and tendering all or any portion of your Shares in accordance with the Offer to Purchase and the instructions contained in the Letter of Transmittal or by notifying us of your objection to the Offer with respect to all or any portion of your Shares by executing and delivering this Notice of Objection. Alternatively, you may simply do nothing and not tender your Shares or object to the Offer. It is a condition to the Offer that at the completion of the Initial Offer Period (as defined in the Offer to Purchase), the aggregate number of Shares validly tendered in the Offer is greater than the number of Shares represented by Notices of Objection. In making this calculation, the votes of a holder of a controlling interest in the Purchaser, a holder who has a personal interest in the acceptance of the Offer, a holder of a control block in Magal, or any person acting on its behalf or on behalf of the Purchaser, including their relatives and companies under their control, shall not be taken into account. We will make this calculation and announce the results promptly after the Initial Completion Date (as defined in the Offer to Purchase). If this and the other conditions to the Offer have been satisfied or, subject to applicable law, waived by us, shareholders will be afforded an additional four calendar days to tender their Shares in the Offer, but Notices of Objection will no longer be accepted.
 
2

 
        If, with respect to all or any portion of your Shares, you object to the Offer during the Initial Offer Period and the conditions to the Offer have been satisfied or, subject to applicable law, waived by us, you may tender such Shares during the Additional Offer Period (as defined in the Offer to Purchase).
 
        Do not send any stock certificates with this Notice of Objection.
 
2.     Delivery of Notice of Objection. If you wish to object to the Offer and you hold your Shares directly, complete and sign this Notice of Objection and mail or deliver it to the Depositary (or Information Agent, as applicable) at one of its addresses set forth on the front of this document prior to 10:00 a.m., New York time, on the Initial Completion Date.
 
        If you wish to object to the Offer and you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee, request such broker, dealer, commercial bank, trust company or other nominee to submit for you the Notice of Objection to the Depositary prior to 10:00 a.m., New York time, on the Initial Completion Date.
 
        The method of delivery of this Notice of Objection is at the option and risk of the objecting shareholder, and the delivery will be deemed made only when actually received by the Depositary (or the Information Agent, as applicable). If delivery is by mail, registered mail with return receipt requested, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
 
        No alternative, conditional or contingent Notices of Objection will be accepted.
 
3.     Signatures on Notice of Objection. If this Notice of Objection is signed by the registered holder(s) of Shares, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) evidencing the Shares without alteration, enlargement or any other change whatsoever.
 
        If any Shares are registered in the name of two or more persons, all of those named persons must sign this Notice of Objection.
 
        If any Shares are registered in different names, it will be necessary to complete, sign and submit as many separate Notices of Objection as there are different registrations of those objecting Shares.
 
        If this Notice of Objection is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person should so indicate when signing, and proper evidence satisfactory to us of that person’s authority so to act must be submitted.
 
4.     Withdrawal of Notice of Objection. You may withdraw a previously submitted Notice of Objection at any time prior to 10:00 a.m., New York time, on the Initial Completion Date. For a withdrawal to be effective, a written notice of withdrawal must be timely received by the Depositary (or the Information Agent, as applicable) at its address set forth on the front of this document. Any notice of withdrawal must specify the name of the person(s) who submitted the Notice of Objection to be withdrawn and the number of Shares to which the Notice of Objection to be withdrawn relates. Following the withdrawal of a Notice of Objection, a new Notice of Objection may be submitted at any time prior to 10:00 a.m., New York time, on the Initial Completion Date by following the procedures described above. If Notices of Objection have been delivered pursuant to the procedures for book-entry transfer as set forth above, any notice of withdrawal must also specify the name and number of the account at DTC to be adjusted to reflect the withdrawal of such Shares and otherwise comply with DTC’s procedures.
 
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5.     Determination of Validity. All questions as to the form and validity (including time of receipt) of Notices of Objection will be determined by us, in our sole discretion, subject to applicable law. None of us or our affiliates or assigns, the Depositary, the Information Agent, our Israeli counsel or any other person will be under any duty to give notification of any defects or irregularities in any notice or incur any liability for failure to give any such notification.
 
IMPORTANT: IF YOU SUBMIT A NOTICE OF OBJECTION WITH RESPECT TO SHARES AND THEREAFTER YOU DELIVER TO US A LETTER OF TRANSMITTAL BY WHICH YOU TENDER THOSE SHARES, WE WILL DISREGARD YOUR NOTICE OF OBJECTION. SIMILARLY, IF YOU SUBMIT TO US A LETTER OF TRANSMITTAL BY WHICH YOU TENDER SHARES, AND THEREAFTER YOU DELIVER TO US A NOTICE OF OBJECTION WITH RESPECT TO THOSE SHARES, WE WILL DISREGARD YOUR LETTER OF TRANSMITTAL. IF YOU SUBMIT A LETTER OF TRANSMITTAL AND A NOTICE OF OBJECTION CONCURRENTLY WITH RESPECT TO THE SAME SHARES, THE NOTICE OF OBJECTION WILL BE DISREGARDED.
 
6.     Questions and Requests for Assistance or Additional Copies. Questions or requests for assistance in connection with this Notice of Objection may be directed to the Information Agent at its telephone numbers listed below. Additional copies of the Offer to Purchase, Letter of Transmittal, this Notice of Objection and other offer documents may be obtained from the Information Agent. A shareholder may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer.
 
The Information Agent for the offer is:
 
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
For assistance call D.F. King at (800) 814-2879 (toll free) or (212) 269 - 5550 (banks and brokers)
Email: magal@dfking.com

4


Exhibit (a)(1)(F)
 
DECLARATION OF STATUS FOR ISRAELI INCOME TAX PURPOSES
 Do not send this form to the IRS. See separate instructions on the back cover of this form.

Read this form together with the Offer to Purchase and Letter of Transmittal accompanying this form.
Terms used herein but not otherwise defined herein have the definitions ascribed thereto in the Offer to Purchase.
 
PAYER'S NAME: American Stock Transfer & Trust Company, as Depositary

Who may use this form and why?

Holders of Shares who wish to tender their Shares pursuant to the Offer to Purchase and the related Letter of Transmittal (which, as amended from time to time, together constitute the “Offer”) may use this form if they tender their Shares in the Offer to the Depositary and they are either:


Non-Israeli Residents: If (i) you are NOT and at the date of purchase of your Shares were not a “resident of Israel” (as defined under Section 1 of the Israeli Income Tax Ordinance [New Version], 5721-1961 (the “ Ordinance ”) (See Instruction II)) for purposes of the Ordinance, or (ii) you are a corporation that is NOT and at the date of purchase of your Shares was not a “resident of Israel”, and Israeli residents are NOT “controlling shareholders” (as defined under Section 68A of the Ordinance (See Instruction III)) of you, nor are Israeli residents the beneficiaries of, or are entitled to, 25.0% or more of your revenues or profits, whether directly or indirectly, and you acquired your Shares after Magal’s initial public offering on Nasdaq Global Select Market (“Nasdaq”) in 1993; then you may be eligible for a full exemption from Israeli withholding tax with respect to the gross proceeds payable to you (if any) pursuant to the Offer. By completing this form in a manner that would substantiate your eligibility for such exemption, you will allow the Purchaser, the Depositary, your broker or any other withholding agent, or their authorized representatives to exempt you from such Israeli withholding tax; or


A Bank, Broker or Financial Institution Resident in Israel: If you are a bank, broker or financial institution resident in Israel that (1) is holding the Shares solely on behalf of beneficial shareholder(s) (so-called “street name” holders), who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993 and (2) is subject to the provisions of the Ordinance and regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by you to your beneficial shareholder(s) with respect to Shares tendered by them and accepted for payment by the Purchaser pursuant to the Offer (an  “Eligible Israeli Broker ”), you may be eligible for a full exemption from Israeli withholding tax with respect to the cash payment transmitted to you. By completing this form in a manner that would substantiate your eligibility for such exemption, you will allow the Purchaser, the Depositary, your broker or withholding agent, or their authorized representatives, to exempt you from such Israeli withholding tax. Consequently, even though the Depositary will not deduct any Israeli withholding tax from you, pursuant to the provisions of the Ordinance and regulations promulgated thereunder, to which you are subject, you may be required to withhold Israeli tax, as applicable, from the cash payment (if any) made by you to your beneficial shareholder(s).  NOTE: AN ELIGIBLE ISRAELI BROKER MAY COMPLETE THIS FORM IF IT IS HOLDING THE SHARES SOLELY ON BEHALF OF HIS CLIENTS, THE BENEFICIAL SHAREHOLDERS.

THIS FORM IS NOT INTENDED FOR YOUR USE IF YOU ARE A “RESIDENT OF ISRAEL” (OTHER THAN A BANK, BROKER OR FINANCIAL INSTITUTION RESIDENT IN ISRAEL).

PLEASE NOTE THAT IF YOU PROVIDE A DECLARATION FORM, YOU ALSO CONSENT TO THE PROVISION OF YOUR DECLARATION FORM TO THE PURCHASER AND/OR THE DEPOSITARY AND TO THE ISRAELI TAX AUTHORITY (THE “ITA”), IN CASE THE ITA SO REQUESTS, FOR PURPOSES OF AUDIT OR OTHERWISE.

To whom should you deliver this form?

If you wish to submit this form and (1) you hold your Shares directly, i.e., you are a registered holder, complete and sign this form and mail or deliver it to the Depositary (together with the Letter of Transmittal by which you tender your Shares) at one of its addresses set forth below, or (2) you hold your Shares through a broker, dealer, commercial bank, financial institution, trust company or other nominee (a “Broker”), complete and sign this form and mail or deliver it (together with the instruction letter by which you tender your Shares) to such Broker.



Until when should I deliver this form?

As described above, this form should be delivered together with the Letter of Transmittal or instruction letter by which you tender your Shares prior to 10:00 a.m., New York time, on the on the Initial Completion Date or Final Expiration Date (as defined in Section 1 of the Offer to Purchase), as applicable.

You are urged to consult your own tax advisors to determine the particular tax consequences to you should you tender your Shares in the Offer, including, without limitation, the effect of any state, local or foreign income and any other tax laws and whether or not you should use this form.

PART I
  Identification and details of Shareholder (including Eligible Israeli Brokers) (see instructions)
1. Name:
2. Type of Shareholder (more than one box may be applicable):
(please print full name)
    Corporation (or Limited Liability Company)
    Individual
    Trust
    Partnership
    Other:
_________________
    Bank
    Broker
     Financial Institution
3. For individuals only:
4. For all other Shareholders:
Date of birth:  ______/_____/______
   month /  day  /  year
Country of incorporation or organization:
Country of residence:
Registration number of corporation (if applicable):
Countries of citizenship (name all citizenships):
Taxpayer Identification or
Social Security No. (if applicable):
Country of residence:
5. Permanent Address (state, city, zip or postal code, street, house number, apartment number):
 
6. Mailing Address (if different from above):
7.  Contact Details:
Name:______________
Capacity:_______________
Telephone Number (country code, area code and number):
     _______________________________________________
8. I hold the Shares of  ____________ (mark X in the appropriate place):
          directly, as a Registered Holder
          through a Broker.  If you marked this box, please state the name of your Broker:  _________________
9.    I am the beneficial owner (directly or indirectly) of less than 5% of the outstanding Shares.

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PART II
 Declaration by Non-Israeli Residents (see instructions)  Eligible Israeli Brokers should not complete this Part II
A. To be completed only by Individuals.  I hereby declare that: (if the statement is correct, mark X in the following box)
A.1     I am NOT and at the date of purchase of my Shares was not a “resident of Israel”, which means, among other things, that:
       The State of Israel is not my permanent place of residence,
       The State of Israel is neither my place of residence nor that of my family,
       My ordinary or permanent place of activity is NOT in the State of Israel and I do NOT have a permanent establishment in the State of Israel,
       I do NOT engage in an occupation in the State of Israel,
       I do NOT own a business or part of a business in the State of Israel,
       I am NOT insured by the Israeli National Insurance Institution,
       I was NOT present (nor am I planning to be present) in Israel for 183 days or more during this tax year,
       I was NOT present (nor am I planning to be present) in Israel for 30 days or more during this tax year, and the total period of my presence in Israel during this tax year and the two previous tax years is less than 425 days in total;
A.2    I acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.
A.3    I am the beneficial owner (directly or indirectly) of less than 5% of the outstanding Shares.
B. To be completed by Corporations (except Partnerships and Trusts).  I hereby declare that: (if correct, mark X in the following box)
B.1    The corporation is NOT and at the date of purchase of its Shares was not a “resident of Israel”, which means, among other things, that:
      The corporation is NOT registered with the Registrar of Companies in Israel,
      The corporation is NOT registered with the Registrar of "Amutot" (non-profit organizations) in Israel,
      The control of the corporation is NOT located in Israel,
      The management of the corporation is NOT located in Israel,
      The corporation does NOT have a permanent establishment in Israel, and
      No Israeli resident holds, directly or indirectly via shares or through a trust or in any other manner or with another who is an Israeli resident, 25.0% or more of any “means of control” in the corporation as specified below:
o          The right to participate in profits;
o          The right to appoint a director;
o          The right to vote;
o          The right to share in the assets of the corporation at the time of its liquidation; and
o          The right to direct the manner of exercising one of the rights specified above;
B.2     The corporation acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.
B.3     The corporation is the beneficial owner (directly or indirectly) of less than 5% of the outstanding Shares.
C. To be completed by Partnerships.  I hereby declare that: (if correct, mark X in the following box)
C.1    The partnership is NOT and at the date of purchase of its Shares was not an Israeli resident which means, among other things, that:
      The partnership is NOT registered with the Registrar of Partnerships in Israel,
      The control of the partnership is NOT located in Israel,
      The management of the partnership is NOT located in Israel,
      The partnership does NOT have a permanent establishment in Israel,
      NO Israeli resident holds, directly or indirectly via shares or through a trust or in any other manner or with another who is an Israeli resident, 25.0% or more of any right in the partnership or, of the right to direct the manner of exercising any of the rights in the partnership, and
      NO partner in the partnership is an Israeli resident;
C.2    The partnership acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.
C.3     The partnership is the beneficial owner (directly or indirectly) of less than 5% of the outstanding Shares.

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D. To be completed by Trusts.  I hereby declare that: (if correct, mark X in the following box)
D.1   The trust is NOT and at the date of purchase of its Shares was not an Israeli resident, and:
       All settlors of the trust are NOT Israeli residents,
       All beneficiaries of the trust are NOT Israeli residents, and
D.2   The trust acquired the Shares on or after the initial public offering of Magal Security Systems Ltd. on NASDAQ Stock Market in 1993.
PART III
Declaration by Israeli Bank, Broker or Financial Institution (see instructions) Non-Israeli Residents should not complete this Part III
I hereby declare that: (if correct, mark X in the following box)
       I am a bank, broker or financial institution that is a “resident of Israel” within the meaning of that term in Section 1 of the Ordinance (See Instruction II), I am holding the Shares solely on behalf of beneficial shareholder(s) and I am subject to the provisions of the Ordinance and the regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by me to such beneficial shareholder(s) with respect to Shares in connection with the company liquidation.
PART IV
Certification.  By signing this form, I also declare that:
          I understood this form and completed it correctly and pursuant to the instructions.
          I provided accurate, full and complete details in this form.
          I am aware that providing false details constitutes criminal offense.
          I am aware that this form may be provided to the Israeli Tax Authority, in case the Israeli Tax Authority so requests, for purposes of audit or otherwise.

 SIGN HERE:
 
 
 
 
 
 
Signature of Shareholder          
(or individual authorized to sign on your behalf)
 
  Date   
 
Capacity in which acting
                            
Number of Shares: ___________________
4


INSTRUCTIONS
 Forming Part of the Declaration of Status for Israeli Income Tax Purposes

I.     General Instructions. This Declaration Form (Declaration of Status for Israeli Income Tax Purposes), or this Form, should be completed by holders of Shares who wish to tender their Shares pursuant to the Offer, and who are either: (i) NOT and at the date of purchase of their Shares were not “residents of Israel” for purposes of the Ordinance (See Instruction II below), and if the holder of Shares is a corporation, the corporation is NOT and at the date of purchase of its Shares was not a “resident of Israel”, Israeli residents are NOT “controlling shareholders” of such corporation within the meaning of Section 68A of the Ordinance (See Instruction III below), and Israeli residents are NOT the beneficiaries of, or are entitled to, 25.0% or more of the revenues or profits of such corporation, whether directly or indirectly, who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993 or (ii) a bank, broker or financial institution that are “residents of Israel” within the meaning of that term in Section 1 of the Ordinance, holding Shares solely on behalf of beneficial shareholder(s) who acquired their Shares after Magal’s initial public offering on Nasdaq in 1993, and are subject to the provisions of the Ordinance and the regulations promulgated thereunder relating to the withholding of Israeli tax, including with respect to the cash payment (if any) made by them to such beneficial shareholder(s) with respect to Shares tendered by them and accepted for payment by the Purchaser pursuant to the Offer.  Israeli residents who are NOT Eligible Israeli Brokers should not use this Form.

        Part I (Identification and details of Shareholder). You should complete Item 1, 2 and 5 through 8 and either (i) Item 3, if you are an individual, or (ii) Item 4, if you are a corporation (or limited liability company), trust, partnership or other entity.

        Part II (Declaration by Non-Israeli Shareholder). If you are NOT an Israeli resident, you should complete either Section A (for Individuals), Section B (for Corporations), Section C (for Partnerships) or Section D (for Trusts). If you do not mark a box you will be deemed to answer that the corresponding item is not correct with respect to you.

        Part III (Declaration by Israeli Bank, Broker or Financial Institution). If you are an Eligible Israeli Broker, you should complete this Item.

        Part IV (Certification). By signing this Form, you also make the statements in Part IV.

        Inadequate Space. If the space provided on this Form is inadequate, you should insert such details on a separate signed schedule and attached to this Form.

        Determination of Validity. All questions as to the validity, form or eligibility (including time of receipt) of this Form will be, subject to applicable law, determined by the Purchaser, in its sole discretion. None of the Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any Form or incur any liability for failure to give any such notification. For more details, see Section 5 of the Offer to Purchase.

        Questions and Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Information Agent at the address or telephone numbers set forth on the back cover. Additional copies of this Form may be obtained from the Information Agent.

        The method of delivery of this Form is at your option and risk, and the delivery will be deemed made only when actually received by your Broker or the Depositary. If delivery is by mail, registered mail with return receipt requested, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent Forms will be accepted.

II.     Definition of Resident of Israel for Israeli Tax Purposes

Section 1 of the Ordinance defines a “resident of Israel” or a “resident” as follows:

 “(A) with respect to an individual - a person whose center of vital interests is in Israel; for this purpose, the following provisions will apply:

(1)  in order to determine the center of vital interests of an individual, account will be taken of the individual’s family, economic and social connections, including, among others:
 
(a) place of permanent home;
 
                (b) place of residential dwelling of the individual and the individual's immediate family;

5

 
(c) place of the individual's regular or permanent occupation or the place of his permanent employment;

(d) place of the individual's active and substantial economic interests;

(e) place of the individual's activities in organizations, associations and other institutions;

(2) the center of vital interests of an individual will be presumed to be in Israel:

(a) if the individual was present in Israel for 183 days or more in the tax year;

(b)  if the individual was present in Israel for 30 days or more in the tax year, and the total period of the individual’s presence in Israel that tax year and the two previous tax years is 425 days or more.

For the purposes of this provision, “day” includes a part of a day.

(3) the presumption in subparagraph (2) may be rebutted either by the individual or by the assessing officer;
 
        (4) …;
 

(B)
with respect to a body of persons - a body of persons which meets one of the following:

(1) it was incorporated in Israel;

(2) the "control and management" of its business is exercised in Israel, except for a body of persons, the business of which is controlled and managed in Israel by an individual who became an Israel resident for the first time or is a returning resident, as set forth in section 14(a) and ten years have not yet passed since he became an Israeli resident as aforesaid, or by any person on his behalf, provided that such body of persons would not be an Israel resident if the control and management of its business were not by a said individual or by a person on his behalf, unless the body of persons requested otherwise."

III.  Definition of Controlling Shareholder for Purposes of Section 68A of the Ordinance

         Section 68A of the Ordinance defines “controlling shareholders” as follows:

        “Controlling shareholders” – shareholders that hold, directly or indirectly, alone, or together with another, or together with another Israeli resident, one or more of the means of control at a rate exceeding 25.0%.”

        Section 88 of the Ordinance defines the terms “means of control” and “together with another” as follows:

        “Means of control” – in a corporation – each of the following:

(1) the right to profits;

(2) the right to appoint a director or a chief executive officer in the company, or equivalent position holders in another corporation;

(3) a voting right in the general meeting of a company, or in an equivalent body in another corporation;
        
(4) the right to a portion of the remainder of the assets after settlement of liabilities, upon wind-up;
        
(5) the right to instruct anyone holding the rights listed in clauses (1) to (4) on the manner in which his right shall be executed;
        
and all, whether by virtue of shares, rights to shares or other rights, or in any other manner, including by way of voting agreements or through a trust.”

“Together with another” – together with a relative, and together with he who is not a relative and they have between them cooperation on a permanent basis under an agreement regarding material issues of a corporation, directly or indirectly;"

        This Letter of Transmittal and certificates and any other required documents should be sent or delivered by each shareholder or that shareholder’s broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below.

6

 
The Depositary for the Offer is:

Mail or deliver this Letter of Transmittal, or a facsimile, together with the certificate(s) representing your shares, to:
 
American Stock Transfer & Trust Company, LLC
 
6201 15th Avenue
Attn: Corporate Actions Dept.
Brooklyn, N.Y. 11219
 Fax number 718-234-5001
For assistance call 877-248-6417

___________________
 
Questions or requests for assistance may be directed to the Information Agent at its telephone numbers listed below.  Additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent.  A shareholder may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer.
 
The Information Agent for the Offer is:
 
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
For assistance call D.F. King at (800) 814-2879 or (212) 269-5550 (banks and brokers)
Email: magal@dfking.com

7



Exhibit (a)(5)(A)
 
FIMI Commences
Cash Special Tender Offer for Magal Security Systems Ltd. (Nasdaq: MAGS)
 
Tel Aviv, Israel, May 22, 2020 – FIMI Opportunity V, L.P and FIMI Israel Opportunity Five, Limited Partnership (collectively “FIMI”), announced today that they have commenced a cash special tender offer to purchase 8,669,029 ordinary shares of Magal Security Systems Ltd. (“Magal”) (Nasdaq: MAGS) for $2.95 per share. If more than the maximum number of shares offered to be purchased in the tender offer are tendered, FIMI will purchase Magal shares on a pro rata basis.
 
FIMI, a controlling shareholder of Magal, currently owns 9,854,159 ordinary shares of Magal, representing approximately 42.6% of Magal’s issued and outstanding shares. If FIMI purchases 8,669,029 Magal shares in the tender offer, FIMI will own approximately 80.0% of Magal’s issued and outstanding shares.
 
On May 21, 2020, the last trading day before the announcement of the offer, the closing sale price per Magal share on Nasdaq as reported by Nasdaq was $3.00.
 
The initial period of the tender offer and withdrawal rights is scheduled to expire at 10:00 a.m., New York time, on June 22, 2020, unless the initial period is extended by FIMI. As required by Israeli law, if the conditions to the offer are satisfied as of the completion of the initial offer period, FIMI will provide an additional period of four calendar days during which shareholders may tender their shares, which additional offer period will expire at 10:00 a.m., New York time, on June 26, 2020. However, shareholders will have no withdrawal rights during such additional four-calendar day period.
 
The tender offer is conditioned upon: (1) at least 1,200,000 Magal Shares (currently representing 5.2% of the issued and outstanding shares and voting power of Magal) having been validly tendered and not withdrawn prior to the completion of the initial offer period, (2) as required by Israeli law, at the completion of the initial offer period, the aggregate number of shares tendered in the offer being greater than the number of shares represented by notices of objection to the offer, (3) the Israeli Competition Authority shall have approved the purchase of the Shares pursuant to the offer, and (4) certain other conditions specified in the Offer to Purchase relating to the tender offer. The tender offer is not conditioned on the receipt of financing or the approval of the board of directors of Magal.
 
The complete terms and conditions of the tender offer, including important U.S. and Israeli income and withholding tax considerations relating to the tender offer, are contained in the Offer to Purchase included as an exhibit to the Tender Offer Statement on Schedule TO filed today with the U.S. Securities and Exchange Commission (SEC). American Stock Transfer & Trust Company is the Depositary for the offer.
 
Important Information: This is not an offer to buy or the solicitation of an offer to sell any ordinary shares of Magal. The tender offer that is described in this press release will only be made through the Offer to Purchase, Letter of Transmittal and related tender offer documents. All shareholders of Magal should read the tender offer materials which are being filed today by FIMI. Shareholders of Magal should read the tender offer materials because they contain important information about the tender offer. The tender offer materials and other filed documents will be available at no charge on the SEC’s website at http://www.sec.gov, and will also be made available without charge to all shareholders by contacting D.F. King & Co., Inc., the information agent for the tender offer, at (800) 814-2879 or (212) 269-5550 (banks and brokers). Shareholders are urged to read these materials carefully before making any decision with respect to the tender offer.
 
Forward-Looking Statements: This press release may contain forward-looking statements. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, political events and fluctuations in the share price of Magal. These statements are based on information available at the time of the press release and FIMI undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise (except as required by law).
 
About FIMI: FIMI a part of Israel’s leading private equity funds. Over the past 24 years the FIMI funds have completed 89 investments. FIMI is currently investing through its sixth fund (a US$ 1.1 billion fund) which focuses on investing in selected mature Israeli or Israeli-related companies with strong growth potential and global footprint, among others in buy-out transactions and turnaround situations.

FIMI Contact:
Address: Alon Towers 2, 94 Yigal Alon St., Tel-Aviv 6789141, Israel
Tel: +972-3-565-2244
E-mail: Ron@fimi.co.il



Exhibit (a)(5)(B)
 
This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below), and the provisions herein are subject in their entirety to the provisions of the offer (as defined below). The offer is made solely by the Offer to Purchase, dated May 22, 2020, and the related letter of transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the offer or the acceptance thereof would not be in compliance with the securities, “blue sky” or other laws of such jurisdiction or any administrative or judicial action pursuant thereto. In those jurisdictions where applicable laws require the offer to be made by a licensed broker or dealer, the offer will be deemed to be made on behalf of Purchaser (as defined below) by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Purchaser.

NOTICE OF OFFER TO PURCHASE FOR CASH

8,669,029 ORDINARY SHARES

of

MAGAL SECURITY SYSTEMS LTD.
AT
$2.95 NET PER SHARE
BY
FIMI OPPORTUNITY V, L.P.
FIMI ISRAEL OPPORTUNITY FIVE, LIMITED PARTNERSHIP
 
FIMI Opportunity V, L.P, a limited partnership organized under the laws of the State of Delaware and FIMI Israel Opportunity Five, Limited Partnership, a limited partnership organized under the laws of the State of Israel (collectively, the “Purchaser”), announced today that they have commenced a cash special tender offer to purchase 8,669,029 ordinary shares, par value NIS 1.0 per share, of Magal Security Systems Ltd. (“Magal”) (the “Shares”) at the price of $2.95 per Share, net to you (subject to withholding taxes, as applicable), in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related letter of transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”).
Shareholders of record who tender directly to American Stock Transfer & Trust Company, LLC (the “Depositary”) generally will not be obligated to pay brokerage fees or commissions, service fees or commissions with respect to the sale of Shares in the Offer. Shareholders that hold Shares through a bank or broker should check whether they charge any service or other fees.
 
THE INITIAL OFFER PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK TIME, ON
JUNE 22, 2020, UNLESS THE OFFER IS EXTENDED.
 
The Offer is not conditioned on the availability of financing or the approval of the board of directors of Magal. The Offer is conditioned upon, among other things, (i) at least 1,200,000 Magal Shares (currently representing 5.2% of the issued and outstanding shares and voting power of Magal) having been validly tendered and not withdrawn prior to the completion of the Initial Offer Period; (ii) in accordance with Israeli law, at the completion of the Initial Offer Period, the aggregate number of Shares validly tendered and not properly withdrawn (excluding Shares held by the Purchaser or its affiliates – see “Rights of Shareholders Who Do Not Accept the Offer” in the Offer to Purchase) is greater than the aggregate number of Shares represented by Notices of Objection to the consummation of the Offer; and (iii) the Israeli Competition Authority shall have approved the purchase of the Shares pursuant to the Offer. The Offer also is subject to other conditions as described in the Offer to Purchase.


The initial period of the offer will be completed at 10:00 a.m., New York time, on June 22, 2020. This period, as may be extended, is referred to as the “Initial Offer Period,” and the date of completion of the Initial Offer Period is referred to as the “Initial Completion Date.” As required by Israeli law, if the conditions to the offer have been satisfied or, subject to applicable law, waived by Purchaser, then the shareholders who have, with respect to each Share owned by such shareholder, (a) not responded to the offer, (b) notified Purchaser of its objection to the offer, or (c) validly tendered such Share but have properly withdrawn the tender during the Initial Offer Period, will be afforded an additional four calendar-day period, until 10:00 a.m., New York time, on June 26, 2020, during which such shareholder may tender each such Share. This additional period is referred to as the “Additional Offer Period” and the date of expiration of the Additional Offer Period is referred to as the “Final Expiration Date.” The Final Expiration Date will change if Purchaser extends the Initial Offer Period.
 
Subject to applicable laws and regulations, if any condition has not been satisfied as of the Initial Completion Date, Purchaser may decide to (i) extend the Initial Offer Period and, subject to applicable withdrawal rights until the Initial Completion Date, retain all tendered Shares until the Final Expiration Date; (ii) if the only conditions that have not been satisfied are one or more of the conditions set forth in clause (b) of Section 11 of the Offer to Purchase, waive such condition(s) and, subject to proration, accept for payment and promptly pay for all Shares validly tendered prior to 10:00 a.m., New York time, on the Final Expiration Date and not properly withdrawn prior to the completion of the Initial Offer Period; or (iii) terminate the offer and not accept for payment or pay for any Shares and promptly return all tendered Shares to tendering shareholders. Purchaser will not, however, provide for a subsequent offering period as permitted pursuant to Rule 14d-11 under the Securities Exchange Act of 1934, as amended.
 
Purchaser will publicly announce in accordance with applicable law and in any event issue a press release by 9:00 a.m., New York time, on the U.S. business day following the Initial Completion Date, stating whether the conditions to the offer have been satisfied or, subject to applicable law, waived by Purchaser. Promptly following the Final Expiration Date, Purchaser will announce the results of the Offer and the proration factor, if any. If Purchaser is unable to promptly determine the proration factor, Purchaser will announce the preliminary results. Purchaser will pay for all Shares accepted for payment pursuant to the Offer promptly following the calculation of the proration factor. Purchaser expects to make such payment within four U.S. business days following the Final Expiration Date.
 
For purposes of the Offer, Purchaser will be deemed to have purchased Shares that have been validly tendered and not properly withdrawn if and when Purchaser gives notice to the Depositary of its acceptance for payment of Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for the Shares will be made by the Depositary. Under no circumstances will interest be paid on the purchase price to be paid, regardless of any extension of the offer or any delay in making payment.
 
Tenders to the Depositary. To validly tender Shares pursuant to the Offer, a properly completed and duly executed letter of transmittal, together with any required signature guarantees, or in the case of a book-entry transfer, an agent’s message, and any other documents required by the letter of transmittal, must be received by the Depositary at its address set forth on the back cover of the Offer to Purchase prior to 10:00 a.m., New York time, on the Initial Completion Date or Final Expiration Date, as applicable. See Section 3 of the Offer to Purchase for instructions to tender Shares or object to the Offer.
 
Shareholders may withdraw previously tendered Shares at any time prior to the Initial Completion Date, but not during the Additional Offer Period or thereafter. If Purchaser extends the Initial Offer Period, delays its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the offer for any reason, then, without prejudice to Purchaser’s rights under the offer but subject to applicable law, the Depositary may, on Purchaser’s behalf, retain tendered Shares, and those Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described in Section 4 of the Offer to Purchase. See Section 4 of the Offer to Purchase.

If more than 8,669,029 Shares are validly tendered and not properly withdrawn, Purchaser will purchase 8,669,029 Shares on a pro rata number of Shares from all shareholders who have validly tendered their shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their Shares before the completion of the Initial Offer Period. If less than 8,669,029 shares are validly tendered, but at least 1,200,000 shares are validly tendered and not properly withdrawn, Purchaser will purchase Shares from all shareholders who have validly tendered their shares in the Initial Offer Period and the Additional Offer Period and have not properly withdrawn their Shares before the completion of the Initial Offer Period.


All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its sole discretion, subject to applicable law. None of Purchaser or its affiliates or assigns, the Depositary, the Information Agent, Purchaser’s Israeli legal counsel or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.
 
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. One of the purposes of the Offer is to increase Purchaser’s beneficial ownership of the issued and outstanding shares of Magal.
 
The Offer to Purchase and the related letter of transmittal will be mailed, at Purchaser’s expense, to record holders of Shares and to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Magal shareholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing, for subsequent transmittal to beneficial owners of Shares.
 
The receipt of cash by tendering shareholders in exchange for Shares pursuant to the Offer is a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign tax laws. In general, tendering shareholders will recognize, for U.S. federal income tax purposes, gain or loss equal to the difference between the tendering shareholder’s adjusted tax basis in the Shares surrendered and the amount of cash received for those Shares. See Section 5 of the Offer to Purchase. Each holder of Shares should consult its own tax advisor regarding the tax consequences of the offer.
 
The Offer to Purchase and the related letter of transmittal contain important information and both documents should be read carefully and in their entirety before any decision is made with respect to the offer.
 
Questions and requests for assistance may be directed to the Information Agent in the United States, during its normal business hours at its telephone numbers set forth below. Requests for copies of the Offer to Purchase and the related letter of transmittal may be directed to the Information Agent or the Depositary upon request. Such copies will be furnished promptly at Purchaser’s expense. Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the offer.
 
The Information Agent for the Offer is
Israeli legal counsel for the Offer is
   
D.F. King & Co., Inc.:
Naschitz, Brandes, Amir & Co.:
   
48 Wall Street, 22nd Floor
5 Tuval Street.
New York, NY 10005
Tel Aviv 6789717 Israel
 
Tel.: 972-3- 6235000
For assistance call D.F. King at (800) 814 -2879
(toll free) or (212) 269 - 5550 (banks and brokers)
 Attn:  Sharon Amir, Adv.
            Tuvia Geffen, Adv.
 
         Idan Lidor, Adv.
Email: magal@dfking.com
 

 

May 22, 2020