The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grant were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan.

F - 24

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 10:-STOCKHOLDERS’ EQUITY (Cont.)

The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, RSUs and other share-based awards to directors, employees, officers, and nonemployees of the Company and its Subsidiaries. As of September 30, 2020, a total of 12,828,270 shares of common stock were reserved for issuance under the 2015 Plan (the “Share Reserve”).

The Share Reserve will automatically increase on January 1st of each year during the term of the 2015 Plan, commencing on January 1st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year; provided, however, that the Company’s board of directors may determine that there will not be a January 1st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31st.

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of September 30, 2020, an aggregate of 8,627,031 shares of common stock are still available for future grant under the 2015 Plan.

A summary of the activity in the stock options granted to employees and members of the board of directors for the nine months ended September 30, 2020 and related information are as follows:

	Number of Options			Weighted average exercise price		Weighted average remaining contractual term in years		Aggregate intrinsic Value

Outstanding as of December 31, 2019		2,112,009			15.44		3.58		168,229
Granted		59,558			101.81
Exercised		(1,434,129	)		10.93
Outstanding as of September 30, 2020		737,438			31.18		5.79		152,776

Vested and expected to vest as of September 30, 2020		728,547			31.01		6.85		151,055

Exercisable as of September 30, 2020		497,011			23.48		6.32		106,792

The aggregate intrinsic value represents the total intrinsic value (the difference between the fair value of the Company’s common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of each period.

The total intrinsic value of options exercised during the nine months ended September 30, 2020 was $239,397.

The weighted average grant date fair values of options granted to employees and executive directors during the nine months ended September 30, 2020 was $53.65.

F - 25

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 10:-STOCKHOLDERS’ EQUITY (Cont.)

A summary of the activity in the RSUs granted to employees and directors for the nine months ended September 30, 2020 is as follows:

	Number of RSUs			Weighted average grant date fair value

Unvested as of December 31, 2019		2,742,589			52.77
Granted		606,666			180.66
Vested		(807,986	)		43.34
Forfeited		(166,461	)		65.30
Unvested as of September 30, 2020		2,374,808			87.78

c.Employee Stock Purchase Plan (“ESPP”):

The Company adopted an ESPP. As of September 30, 2020, a total of 2,687,451 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares.

However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.

The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 10% of their salaries to purchase common stock shares up to an aggregate limit of $10 per participant for every six months’ plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of September 30, 2020, 578,778 common stock shares had been purchased under the ESPP.

As of September 30, 2020, 2,108,673 common stock shares were available for future issuance under the ESPP.

In accordance with ASC No. 718, the ESPP is compensatory and as such results in recognition of compensation cost.

F - 26

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 10:-STOCKHOLDERS’ EQUITY (Cont.)

d.Stock-based compensation expense for employees and non-employees:

The Company recognized stock-based compensation expenses related to stock options, RSUs and PSUs granted to employees and non-employee consultants and ESPP in the condensed consolidated statement of income for the three and nine months ended September 30, 2020 and 2019, as follows:

	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019

Cost of revenues	$	2,730	$	1,691	$	7,362	$	4,696
Research and development		6,904		4,269		18,129		11,935
Selling and marketing		4,066		2,779		10,703		7,905
General and administrative		2,559		2,628		6,799		7,907
Other operating expenses		-		6,242		-		6,242

Total stock-based compensation expense	$	16,259	$	17,609	$	42,993	$	38,685

As of September 30, 2020, there were total unrecognized compensation expenses in the amount of $207,529 related to non‑vested equity‑based compensation arrangements granted under the Company’s Plans. These expenses are expected to be recognized during the period from October 1, 2020 through October 31, 2024.