NOTE 10:- SHAREHOLDERS' EQUITY

The Company's shares are listed for trade on the NASDAQ Global Select Market under the symbol "RDWR".

a. Rights of shares:

Ordinary Shares:

The ordinary shares confer upon the holders the right to receive notice to participate and vote in shareholders meetings of the Company and to receive dividend, if declared.

b. Treasury stock:

In April 2015, the Company’s Board of Directors authorized a new plan for the repurchase of up to an aggregate amount of $ 40,000 of the Company’s ordinary shares in the open market, subject to normal trading restrictions, or in privately negotiated transactions. This plan expired on April 30, 2016. In April 2016, the Company’s Board of Directors authorized a new plan for the repurchase of up to an aggregate amount of $ 40,000 of the Company’s ordinary shares in the open market, subject to normal trading restrictions, or in privately negotiated transactions. This plan will expire on April 30, 2017. During 2015 and 2016 the Company purchased a total of 2,824,772 and 1,884,030 of its ordinary shares for total consideration of $ 52,896 and $ 21,980, respectively. Total consideration for the purchase of these ordinary shares was recorded as Treasury stock, at cost, as part of shareholders' equity.

c. Dividends:

Dividends, if any, will be paid in NIS. Dividends paid to shareholders outside Israel may be converted to U.S. dollars on the basis of the exchange rate prevailing at the date of the conversion. The Company does not intend to pay cash dividends in the foreseeable future.

d. Stock Option Plans:

The Company has two stock option plans, the Company's Key Employee Share Incentive Plan (1997) as amended and restated (the "1997 Plan") and the Directors and Consultants Option Plan (the “DC Plan" and together with the 1997 Plan, Stock Option Plans"). Under the Stock Option Plans, options may be granted to officers, directors, employees and consultants of the Group. The exercise price per share under the Stock Option Plans was generally not less than the market price of an ordinary share at the date of grant. The options expire 5.2 years from the grant date. The options vest primarily over four years. Each option is exercisable for one ordinary share. Any options, which are forfeited or not exercised before expiration, become available for future grants.

Pursuant to the Stock Option Plans, the Company reserved for issuance 28,445,714 ordinary shares. As of December 31, 2016, an aggregate of 1,025,066 ordinary shares of the Company were still available for future grants.

On February 1, 2010, the Company's Board of Directors adopted an additional addendum to the share option plan allowing the allocation of short-term options to grantees who are not residents of Israel or the United States, with a grant price of 90% of the closing market price of the shares on the NASDAQ on the date of grant of a respective option award. As of December 31, 2016, 1,000,000 ordinary shares have been reserved for option grants under this addendum. As of December 31, 2016, an aggregate of 763,306 ordinary shares of the Company, under this addendum, were still available for future grants.

Restricted Shares Units ("RSUs"):

In addition to granting stock options, since 2013, the Company started to routinely grant Restricted Stock Units ("RSUs") under the 1997 Plan. RSUs vest primarily over a four years period of employment. RSUs that are cancelled or forfeited become available for future grants.

Employee Stock Purchase Plan ("ESPP"):

On February 1, 2010 the Company's Board of Directors adopted the 2010 Employee Share Purchase Plan ("ESPP"), which provides for the issuance of a maximum of 2,000,000 ordinary shares. Pursuant to the ESPP, eligible employees (including only Israeli and United States residents) could have up to 10% of their net income withheld, up to certain maximums, to be used to purchase the Company's ordinary shares. The ESPP is implemented with overlapping one year Offering Periods, each one consisting of two purchases, once in every six-month period. The price of each ordinary share purchased under the ESPP is equal to 90% of the closing price for the shares on the respective Offering Date.

As of December 31, 2016, 1,744,440 ordinary shares are available for issuance under future ESPP. During 2016, 2015 and 2014 there was no offering under the ESPP.

Modification of Stock Options:

During 2016, the Board of Directors of the Company approved the repricing of 667,750 stock options for several employees and senior management, previously granted under the Stock Option Plans. As a result, the exercise price of the options was lowered to the price per share of the stock at the free market. There was no change in the number of shares subject to each option, vesting or other terms of the options. The incremental expense for the repricing of the options is approximately $1,187. For the year ended December 31, 2016, the Company recorded expenses totaling $359 associated with the repricing.

A summary of employees and directors option activity under the Company's Stock Option Plans as of December 31, 2016, 2015 and 2014 is as follows:

	Number of options			Weighted-average exercise price		Weighted- average remaining contractual term (in years)		Aggregate intrinsic value

Outstanding at January 1, 2016		5,201,661		$	16.51		3.06	$	2,748
Granted		2,772,300			12.94
Exercised		(139,400	)		12.18
Expired		(416,523	)		17.06
Forfeited		(1,389,150	)		19.09

Outstanding at December 31, 2016		6,028,888		$	14.33		3.27	$	5,070

Exercisable at December 31, 2016		2,014,403		$	15.28		1.85	$	597

Vested and expected to vest at December 31, 2016		5,475,668		$	14.44		3.16	$	4,236

	Number of options			Weighted-average exercise price		Weighted- average remaining contractual term (in years)		Aggregate intrinsic value

Outstanding at January 1, 2015		4,702,920		$	15.54		3.22	$	30,474
Granted		1,562,000			18.96
Exercised		(600,393	)		14.57
Expired		(160,000	)		16.92
Forfeited		(302,866	)		17.76

Outstanding at December 31, 2015		5,201,661		$	16.51		3.06	$	2,748

Exercisable at December 31, 2015		1,791,130		$	15.32		1.91	$	1,578

Vested and expected to vest at December 31, 2015		4,878,629		$	16.44		2.99	$	2,655

	Number of options			Weighted-average exercise price		Weighted- average remaining contractual term (in years)		Aggregate intrinsic value

Outstanding at January 1, 2014		7,073,511		$	11.74		2.62	$	44,716
Granted		1,239,375			17.14
Exercised		(3,058,966	)		7.35
Expired		-			-
Forfeited		(551,000	)		14.83

Outstanding at December 31, 2014		4,702,920		$	15.54		3.22	$	30,474

Exercisable at December 31, 2014		1,265,300		$	15.57		1.58	$	8,161

Vested and expected to vest at December 31, 2014		4,320,142		$	15.99		3.14	$	26,033

The aggregate intrinsic value of options outstanding at December 31, 2016, represents intrinsic value of 3,925,483 outstanding options that are in-the-money as of December 31, 2016.

The aggregate intrinsic value of options exercisable at December 31, 2016 represents intrinsic value of 982,890 outstanding options that are in-the-money as of December 31, 2016.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2016, 2015 and 2014 was $ 3.48, $ 5.29 and $ 5.42, respectively.

As of December 31, 2016, there was approximately $ 10,612 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's stock option plans (including expenses associated with the repricing).. That cost is expected to be recognized over a weighted-average period of 1.62 years. Total grant-date fair value of vested options for the year ended December 31, 2016 was approximately $ 10,281.

As of December 31, 2015, there was approximately $ 9,866 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's stock option plans. That cost was expected to be recognized over a weighted-average period of 1.60 years. Total grant-date fair value of vested options for the year ended December 31, 2015 was approximately $ 9,696.

As of December 31, 2014, there was approximately $ 10,643 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's stock option plans. That cost is expected to be recognized over a weighted-average period of 1.53 years. Total grant-date fair value of vested options for the year ended December 31, 2014 was approximately $ 6,841.

The options outstanding under the Company's Stock Option Plans as of December 31, 2016, 2015 and 2014 have been separated into ranges of exercise price as follows:

December 31, 2016
Outstanding								Exercisable
				Weighted
				average		Weighted				Weighted
Ranges of				remaining		average				average
exercise		Number of		contractual		exercise		Number of		exercise
price		options		life (years)		price		options		price

$	10.08-14.74		4,190,733		3.66		13.38		982,890		13.97
$	15.09-19.30		1,793,905		2.37		16.34		1,031,513		16.52
$	20.62-23.66		44,250		3.47		22.81		-		-

			6,028,888						2,014,403

December 31, 2015
Outstanding								Exercisable
				Weighted
				average		Weighted				Weighted
Ranges of				remaining		average				average
exercise		Number of		contractual		exercise		Number of		exercise
price		options		life (years)		price		options		price

$	12.18-14.74		1,861,208		2.98		13.91		863,792		13.56
$	15.09-19.30		2,557,703		2.67		16.69		927,338		16.96
$	20.62-23.66		782,750		4.53		22.10		-		-

			5,201,661						1,791,130

December 31, 2014
Outstanding								Exercisable
				Weighted
				average		Weighted				Weighted
Ranges of				remaining		average				average
exercise		Number of		contractual		exercise		Number of		exercise
price		options		life (years)		price		options		price

$	7.65		60,350		0.25		7.65		60,350		7.65
$	11.94-14.47		1,861,533		3.32		13.58		334,200		12.19
$	15.09-19.30		2,781,037		3.21		17.03		870,750		17.41

			4,702,920						1,265,300

The following table summarizes information relating to RSUs, as well as changes to such awards during 2016:

	Year ended December 31,
	2016
	Number in thousands

Outstanding at January 1, 2016		818,364
Granted		743,188
Vested		(154,633	)
Forfeited		(123,989	)

Outstanding as of December 31, 2016		1,282,930

As of December 31, 2016, there was approximately $ 12,570 of total unrecognized compensation costs related to non-vested RSUs granted under the Company's stock option plans. That cost is expected to be recognized over a weighted-average period of 1.67 years.

The weighted-average grant date fair value of RSUs granted during the year ended December 31, 2016, 2015 and 2014 were $ 12.79, 18.36 and 16.96, respectively.

Stock-based compensation was recorded in the following items within the consolidated statements of income (loss):

	Year ended December 31,
	2016		2015		2014

Cost of revenues	$	180	$	141	$	79
Research and development, net		3,339		2,456		1,421
Sales and marketing		5,661		4,098		2,950
General and administrative		2,340		2,634		2,932

Total expenses	$	11,520	$	9,329	$	7,382