NOTE 9:- COMMITMENTS AND CONTINGENT LIABILITIES a. Guarantees: As of September 30, 2020, contingent liabilities exist regarding guarantees in the amounts of $18,643, $2,176 and $240 in respect of bank loans, office rent lease agreements and other transactions, respectively. b. Contractual purchase obligations: The Company has contractual obligations to purchase goods and raw materials. These contractual purchase obligations relate to inventories held by contract manufacturers and purchase orders initiated by the contract manufacturers and suppliers, which cannot be cancelled without penalty. The Company utilizes third parties to manufacture its products. In addition, it acquires raw materials or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on its projected demand and manufacturing needs. As of September 30, 2020, the Company had non-cancellable purchase obligations totaling approximately $326,661 out of which the Company already recorded a provision for loss in the amount of $3,118. As of September 30, 2020, the Company had off-balance sheet contractual obligations for capital expenditures totaling approximately $114,526. These commitments reflect purchases of automated assembly lines and other machinery related to the Companys manufacturing. c. Legal claims: From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. These accruals are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. In September 2018, the Companys German subsidiary, SolarEdge Technologies GmbH received a complaint filed by competitor SMA Solar Technology AG (SMA). The complaint, filed in the District Court Dusseldorf, Germany, alleges that SolarEdge's 12.5kW - 27.6kW inverters infringe two of the plaintiffs patents. In its complaint, SMA requests inter alia an injunction and a determination for a claim for damages for sales in Germany. Plaintiff also asserted a value in dispute of EUR 5.5 million (approximately $6,450) for both patents. The Company challenged the validity of both patents. With respect to one of the claims, in October 2020, the German Patent Court rendered the SMA patent invalid. With respect to the other claim, in November 2019, the first instance court stayed the infringement proceedings since it considered it to be highly likely that the second SMA patent would also be rendered invalid. The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against the remaining lawsuit. F-23 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 9:- COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) In May 2019, the Company was served with three lawsuits by Huawei Technologies Co., Ltd., a Chinese entity (Huawei), against the Company's two Chinese subsidiaries and its equipment manufacturer in China. The lawsuits, filed in the Guangzhou intellectual property court, allege infringement of three patents and ask for an injunction of manufacture, use, sale and offer for sale, and damage awards of Chinese yuan (CNY) 30 million (approximately $4,250). A first-instance judgment was issued on August 7, 2020 ordering the Company to pay damages in the amount of approximately CNY 10.5 million (approximately $1,550), including court fees, with respect of one of the patents, which was recorded in general and administrative expenses. The Company has filed an appeal with the Supreme Peoples Court of China. Following the receipt of the lawsuits, the Company filed three lawsuits in China against Huawei for unauthorized use of patented technology of the Company. These lawsuits are still in process and judgements have not been rendered. The Company believes that it has meritorious defenses to the claims asserted by Huawei and the judgement of the first instance court and intends to vigorously defend against these lawsuits. In August 2019, the Company was served with a lawsuit by certain former shareholders of S.M.R.E S.p.A (SMRE), against its Italian subsidiary that purchased the shares of SMRE in the tender offer which followed the SMRE Acquisition. The shareholders who tendered their shares are asking for the difference between EUR 6 per share, which is the amount they tendered their shares, and EUR 6.77 per share, for a total award of EUR 2.7 million (approximately $3,150). The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit. In December 2019, the Company received a lawsuit filed by a former consultant of the Company and its Israeli subsidiary in the amount of NIS 25.5 million (approximately $7,400) claiming damages caused relating to a terminated consulting agreement and stock options therein. The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit. As of September 30, 2020, accrued amounts for legal claims of $1,709, were recorded in accrued expenses and other current liabilities.