10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2007
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-22839

GLOBECOMM SYSTEMS INC.
(exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)			11-3225567 (I.R.S. EMPLOYER Identification No.)
45 Oser Avenue, Hauppauge, NY (Address of principal executive offices)			11788 (Zip Code)

Registrant’s telephone number, including area code: (631) 231-9800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Name of each exchange on which registered
Common Stock, $.001 par value			Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer     Accelerated filer     Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes No

Based on the closing sale price on the Nasdaq Global Market on December 31, 2006, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock, $0.001 par value per share (the ‘‘Common Stock’’) held by non-affiliates of the registrant on such date was approximately $132.2 million. For purposes of this calculation, only executives and directors are deemed to be affiliates of the registrant.

As of September 10, 2007, there were 19,477,045 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Proxy Statement of Globecomm Systems Inc. relative to the 2007 Annual Meeting of Stockholders to be held on November 15, 2007, is incorporated by reference into Part III of this Annual Report on Form 10-K.

PART I

Item 1.    Business

Overview

Globecomm Systems Inc., or Globecomm, was incorporated in Delaware in August 1994. Globecomm is a leading provider of satellite-based communications infrastructure solutions and services on a global basis. Our services are provided by our wholly-owned subsidiaries, Globecomm Network Services Corp. (‘‘GNSC’’), and Globecomm Services Maryland LLC (‘‘GSM’’).

Our goal is to provide our customers with a comprehensive suite of design, engineering, installation and integration solutions, managed network services and lifecycle support services, by employing our expertise in emerging satellite-based communication technologies. By offering both infrastructure solutions and services, we provide our customers with a complete end-to-end solution for their satellite-based communications requirements. We believe our integrated approach of combining in-house design and engineering expertise with world-class teleport and network operating centers is a competitive advantage and enables us to meet our customers’ needs in a timely and cost-effective manner.

Infrastructure Solutions

Our infrastructure solutions consist of the design, engineering, integration and installation of ground segment systems and networks, which are deployed in communications networks that include a satellite component. We combine our expert engineering and design capabilities with state-of-the-art technologies and products to provide solutions for building and maintaining satellite earth stations, uplink centers, broadcast centers and Internet Protocol-based (IP) communication networks. In the case of complex IP-based networks, our infrastructure solutions support a wide range of network applications and facilitate ‘‘quadruple play’’ services, comprised of video, data, voice and wireless communications.

A key component of our infrastructure solutions is our product line of pre-engineered fixed and mobile/transportable satellite terminals and network management systems, which are marketed under the Summit™ and Explorer™ brands. These products utilize highly integrated electronics to assure high reliability and rapid response and to provide ease of operation in a low cost, small and lightweight format. Our network management software, which is marketed under the AxxSys^® brand, is designed for management and control of third-party satellite and terrestrial-based network equipment and can be configured to communicate with serial or discrete monitors and control interfaces offered by major third-party vendors.

Services

Our services business consists of managed network services and lifecycle support services for a broad variety of communications applications. Both of these services can be offered as part of our infrastructure solutions or on a stand-alone basis and are typically provided under multi-year contracts.

Our managed network services include content distribution, Internet and data, very small aperture terminal (VSAT) multi-mode, and IP telephony services, and can be offered on either a standardized or customized basis to best meet our customers’ needs. Our managed network services leverage our world class infrastructure, including our teleports, 24/7 Network Operations Centers (NOCs) and data centers located in Hauppauge, New York and Laurel, Maryland. These facilities have Department of Defense (DoD) facility clearance and have multiple connections to the public switched telephone network (PSTN), multiple redundant fiber rings and emergency backup power systems.

Our life cycle support services include installation, network monitoring, help desk maintenance and professional engineering services. We leverage these services by utilizing our facilities infrastructure, engineering personnel and network of skilled technicians. We have maintenance partners in over 40 countries that provide us access to skilled technicians who can cover most areas of the world.

Solutions

Our solutions and services fit within the following categories: pre-engineered systems; systems design and integration services; managed network services; and life cycle support services.

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Our Pre-Engineered Systems

Our pre-engineered systems product line includes a line of a fixed satellite terminal products under the Summit^TM brand, and mobile/transportable satellite terminal products under the Explorer^TM brand. Summit satellite terminals have antenna apertures from sub meter to 21 meter in diameter using pre-engineered building blocks that assure high reliability and rapid response. Explorer satellite terminals have antenna apertures from sub meter to 3 meter in diameter using highly integrated electronics in order to provide ease of operation, low cost, light weight and small size. Our pre-engineered systems also include a line of AxxSys network management systems designed for mana gement and control of satellite-terrestrial networks and include flexible interface devices that can be configured to communicate with satellite communications equipment and networking equipment from various manufacturers. The following details our products in this category.

Summit^TM Modular Building Block Earth Station MBB 2001.^®    This satellite terminal provides point-to-point high-capacity data links and hubs for satellite networks. Generally, all electronics are housed in an indoor equipment enclosure.

Summit^TM Commercial Terminal CTF 2001.^®    This family of satellite terminals encompasses a range of general purpose, medium-capacity satellite terminals, and is principally used by corporate, common carrier and government networks. Generally, all radio frequency electronics are housed in weatherproof enclosures mounted on the antenna. The satellite modem is housed in an indoor equipment enclosure.

Summit^TM Compact Earth Station CES 2001.^®     We designed this family of digital satellite terminals to be used principally to provide limited capacity to areas with limited or no telecommunications infrastructure. These satellite terminals integrate radio frequency and satellite modem components into one antenna mounted package.

Auto-Explorer Fly-Away Satellite Terminals.    We designed this family of fly-away satellite terminals for ease of operation by non-satellite personnel by incorporating automatic satellite acquisition technology. These satellite terminals include an integrated electronics package designed to incorporate the radio frequency, monitor and control and satellite modem components into an outdoor mounted package. This family of satellite terminals is designed for use in military tactical environments and is tested and qualified for the appropriate military environmental standards.

Explorer MIL-COTS HMMWV Transportable Satellite Terminals.    We designed this family of militarized transportable satellite terminals primarily for United States and international government customers. This transportable system group is comprised of transportable earth stations designed to be quickly deployed and operated anywhere in the world in military tactical environments. The latest model is a HMMWV (High-Mobility Multipurpose Wheeled Vehicle) mounted satellite terminal that incorporates the latest commercial off the shelf, or COTS, satellite equipment technology that meet the stringent requirements of military tactical operations. Our pre-engineered systems also include a line of network management systems designed for management and control of satellite terrestrial networks including equipment and systems from various manufacturers by providin g flexible interface devices that can be configured to communicate with any serial or discrete monitor and control interface.

AxxSys^® Network Management Systems. We designed this family of computer-based network management systems to monitor and control satellite communication equipment and satellite terminal networks. AxxSys-based network management systems provide status reporting locally or remotely and provide the ability to manage distributed satellite communications networks on a global basis. We introduced AxxSys Orion in fiscal 2007 which monitors and controls all of the terrestrial elements of a satellite communications network. This includes the ability to manage other network elements such as routers, microwave, fiber and wireless subsystems. Deployed over an industry-standard IP network, it is capa ble of monitoring and controlling from dozens to thousands of devices. We are currently focusing on continuing the developing of AxxSys network management systems. Network management systems are key to simplifying operations and maintenance of satellite-based networks and, therefore, add value to the systems and networks we integrate.

SpyGlass Carrier Monitoring Systems.^®    We designed this family of computer-based carrier monitoring tools for service providers who need to monitor and manage their transmissions to ensure service

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reliability and availability. Our SpyGlass^® family of carrier monitoring tools integrates with the AxxSys network management system to provide ease of operation.

Our Systems Design and Integration Services

We design, integrate, install, test and commission facilities and complex networks to meet the needs of our customers. Our custom systems design and integration services are largely focused on requirements for satellite earth stations, uplink centers, broadcast centers and next generation IP based networks. This segment of our business is based on our core engineering expertise in satellite earth stations and network design, broadcast engineering, Internet protocol network engineering and network management system design.

Our Managed Network Services

We tailor our managed network services to meet our customers’ needs by offering standardized services for various communication applications. Our standardized services may be sold separately or may be used as building blocks as a part of a custom-engineered solution. We use our expertise in satellite communications, Internet protocol, communications networks and information technology in designing our custom-engineered solutions. Our managed network service offerings include Content distribution, Internet and data, IP telephony and VSAT multi-mode solutions.

Globally, telecommunications networks are moving rapidly toward Internet protocol-based networks and services based on the lower cost of implementation and the flexibility these networks offer. Satellite-based communications complement this trend as many of the regions in the world lack the ‘‘next generation’’ terrestrial networks required to accommodate the rapid and reliable transmission of the vast amounts of information underlying the growth in traffic. We are a network service provider that offers ‘‘next generation’’ network services to communication service providers, commercial enterprises, broadcasters and other media and content providers and governments and government related entities around the world. We combine satellite and terrestrial communications networks to provide customers high-speed access services to the United States Internet backbone, their corporate headquarters or government offices, as we ll as the public switched telephone network. We are a licensed international voice carrier and have bilateral agreements with a number of international telecommunication operators for the origination and termination of voice traffic. We currently have customers for which we are providing such network services in the United States, Europe, South America, Africa, the Middle East, and Asia.

Content Distribution.    We offer a complete end-to-end solution for master control and uplinking services. This service offering provides point to multipoint content delivery of multimedia content supporting applications such as United States cable headend distribution via satellite, satellite-based program acquisition and storage and playout to support the launch of new service offerings by IPTV providers. We also operate a direct to home platform which offers niche broadcasters and BTV (Business Television) customers a flexible and cost-effective means to extend their reach. Our teleport facilities, fiber connectivity and twenty-four hour per day by seven-day per week network operations center allow us to provide ad hoc video services on a wide range of satellites.

Internet and Data.    We offer point to point and point to multipoint Internet and data connectivity for service providers, broadcast, government and enterprise customers. Solutions include two way satellite connectivity as well as one-way satellite connectivity with terrestrial return. Shared and Committed Information Rate services are available and all services are offered with encryption options. Our Internet access services, marketed under the Access-Plus^SM brand name, provide high-speed access to the United States Internet backbone. As part of this offering we provide the necessary satellite transmission services, terrestrial transit and routing services, earth stations and installation services.

IP Telephony.    We are a licensed operator that provides voice termination services around the world. Our voice services allow for economical voice termination and origination services. We own and operate on Cisco-based gateway architectures for ubiquitous voice services. Our offering provides backbone connectivity services for service providers in order to connect public switched telephone networks to

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international long distance carriers through a VoIP-based satellite link. This allows service providers overseas to contract with us to act as their gateway to a large number of international carriers. We also offer hosted soft switching services for telephony providers in order to allow them to provide cellular coverage in locations otherwise not economical to connect using traditional terrestrial means. This allows telephony providers overseas to expand GSM or CDMA networks economically, or to initiate service in new service areas with a minimal capital outlay. In the United States, we provide outsourced hosted soft switch services to rural telecommunication companies that allow them to take advantage of a shared platform. We currently have a patent pending for this hosted soft switch service.

VSAT Multi-mode.    We have developed a variety of very small aperture terminals, or VSAT, solutions involving the provisioning of both standard and customized two-way VSAT services for Internet access, voice services, and terrestrial network backup services. We have extended our VSAT offerings with the successful launch of a new hub in Dubai, UAE. In addition, through our acquisition of the GlobalSat business, we now have a hub in Maryland and a strategic partnership with a teleport in Poland. These, coupled with our VSAT hub at our Long Island International Teleport, provides us with global VSAT coverage. The VSAT solution service line typically involves custom network design for specific customer applications. The scope of these services range widely, and the network can be serviced out of any or our teleports, or other teleports or uplinks as appro priate.

Our Life Cycle Support Services

Our life cycle support services include installation, network monitoring, help desk, maintenance and professional engineering services. We are able to offer these life cycle support services by leveraging our facilities infrastructure, including our teleports, our network operations centers and our data centers, as well as our personnel and network of skilled technicians. We have maintenance partners in over 40 countries that provide us access to skilled technicians who can cover most areas of the world. We provide these services on either a stand-alone basis, or bundled with infrastructure solutions. Recently, we began providing multi-year life cycle support services for a U.S.-wide satellite network, which we implemented for a major government agency, under a sub-contract from Harris Corporation.

Network Monitoring and Help Desk.    This offering provides twenty-four hour per day by seven-day per week monitoring of satellite and terrestrial network systems and networks. Status and alarm monitoring coupled with our help desk services provides our customers with the ability to outsource monitoring of their networks. We provide customers with network trouble shooting and problem resolution support with escalation to technical resources on duty for problems requiring detailed technical knowledge of equipment, systems and/or networking. We utilize a remedy-based trouble ticket system to track problems through conclusion. Customized reports are issued by our help desk to meet our customers’ demand.

Installation and Maintenance.    We offer installation and maintenance services of satellite and terrestrial infrastructure at customer locations anywhere in the world. We have an established worldwide network of field technicians to provide on-site services for customer networks. These technicians enable us to provide cost-effective quick-response services for installation and required maintenance.

Professional Engineering.    We provide engineering support to support hands-on activity for co-located equipment and engineering and design support for proposal creation and network architecture design. We also provide professional engineering services for customers who need our engineering specialists and program managers to complement their internal staff.

Solution Offerings

We have created customizable solution offerings based on our core satellite ground segment systems and our network capabilities and managed network services to serve our customers. These customizable solution offerings include:

Managed Satellite-Terrestrial Network Services.    These solutions allow customers to outsource entire satellite-terrestrial based communication networks to us. We are capable of providing a ‘‘one stop shopping’’ solution including licensing, facilities construction and operation and maintenance anywhere in the world.

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Skyborne^SM Next Generation Video Broadcasts.    We provide video broadcast services to large enterprises in the United States as well as to content owners. Our value proposition includes the ability to evolve to ‘‘next generation’’ Internet protocol-based video broadcast services and high quality customer account management. We provide field services for the installation and maintenance of VSAT terminals and related facilities at customer locations anywhere in the world. We have created next generation solutions to allow our customers to evolve their networks to interactive distance learning, merchandizing, co rporate communications and video on demand services.

SatCell^SM Hybrid Satellite/ Cellular Hosted Switch.    We introduced this solution to allow the sharing of the investment in the mobile switch infrastructure and network operations expenses among many service provider customers. This solution is being offered from our Long Island International Teleport to customers in North and South America, Africa, Europe and the Middle East. We also implement base station infrastructure for our service provider customers and operate and maintain the associated cellular switching center on an outsourced basis.

SatCell^SM VoIP Packet Voice (‘‘Clear Packet’’).    This solution provides VoIP via satellite that provides toll quality (i.e., carrier class) voice services for locations where terrestrial fiber is not available or where it does not meet customer cost or quality requirements. We call these ‘‘Clear Packet’’ voice solutions because we connect at the customer’s end to a toll quality local switched voice infrastructure and we connect at our end (i.e., United States termination/origination point) to toll quality public switched infrastructure from United States carriers.

Disaster Recovery/Business Restoral.    We offer call center restoral solutions as a subcontractor to Agility Recovery Solutions in the United States. This provides Agility’s customers protection against communication and facility outages. Once an emergency is declared, we restore their communications services within 48 hours. We provide the satellite-terrestrial network behind Agility’s offerings and in other cases provide disaster recovery solutions directly to end customers.

Satellite-Based Terrestrial Restoral.    This solution restores communications when terrestrial-based services are interrupted. It is well suited for customers with multiple locations that currently have two terrestrial providers, one primary and one backup service. In this scenario, customers are finding that the terrestrial backup service is subject to failure at the same time the primary service fails. We have developed an Internet protocol satellite network solution to backup frame relay and other terrestrial services. This solution automatically routes traffic through the satellite backup network if the terrestrial service fails at any location in the customer’s network.

Hosted Direct to Home Broadcast Center.    We have developed solutions that provide all the functionality required for new service providers to enter the direct to home television and Internet service business with a minimal capital investment. Our facilities at the Long Island International Teleport include television program acquisition (i.e., satellite downlink acquisition, as well as terrestrial program acquisition), program coding, program multiplexing and transmission, subscriber management and conditional access as required to provide such services.

Next Generation Satellite-Based Networks.    We have developed a variety of complex ‘‘next generation’’ satellite-based networks for both countrywide intercity communications via satellite and terrestrial means and for lower density rural communications VSAT networks. For example, in Afghanistan we have built a complex communication network to interconnect all the provincial capitals for voice, data and Internet. In addition, we are in the process of connecting over 300 small towns and villages around the country to provide VSAT service for voice and data. These complex ‘‘next generation’’ networks use Internet protocol-based network systems and equipment to provide flexibility in service creation and the ability to leverage a common communications infrastructure as the platform for all services. These pr ojects include the engineering, integration and deployment of complete turn-key solutions comprised of Internet protocol-based microwave, cellular, broadband wireless, satellite and fiber optic networks along with international gateway access. We also provide ongoing operations and maintenance of these networks, Internet services and international voice origination and terminations services.

Supervisory, Control and Data Acquisition (SCADA) and Surveillance Networks.    We offer SCADA and surveillance infrastructure and service solutions to monitor critical infrastructure or to provide

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security for facilities and personnel. These satellite-based solutions leverage low cost Internet protocol VSAT technology to monitor oil/gas pipelines, electrical power generation and distribution facilities and other critical infrastructure spread over large geographic areas, or to provide surveillance capability using sophisticated video cameras with capability for 360 degree viewing remotely. We provide monitoring services for critical infrastructure for our customers who want to outsource these services or need us to back up their own monitoring center.

Our solutions continue to evolve based on changes in markets and technology. These solution sets position us to leverage the value in our offerings by providing one-stop shopping solutions including communications infrastructure, network services and related back office services, as required.

Sales and Marketing

We market our products and services to communications service providers, government and government related entities (U.S. and foreign), commercial enterprises, broadcasters and other media and content providers. We have structured our sales and marketing approach to respond effectively to the opportunities in these markets, as well as to the traditional ground segment systems and networks market. Our marketing activities are organized regionally, as well as on an industry-specific basis. We use both direct and indirect sales channels to market our services and products. We also focus on industry-specific markets, including government, broadcast and commercial enterprises.

Our corporate sales offices sell and market our products and services in the United States and internationally. We have corporate sales offices in Washington D.C. to service the U.S. Government, in Dubai, United Arab Emirates to service the Middle East and East Asia, in Hong Kong to service the Asia Pacific region, China and India, and in Afghanistan. The corporate sales offices work with the regional business teams, the GNSC service team and the GSM service team to prepare proposals and negotiate contracts.

Our regional business teams, located in Hauppauge, New York, and our GSM team located in Laurel, Maryland sell and market our products and services in concert with the corporate sales offices. These business teams are responsible for orders in the regions and/or markets to which they are assigned, as well as for the delivery of our products and services and for account management of our existing customers. Currently, we have business teams responsible for the Americas, the Asia Pacific region, and the Eastern Atlantic Region (Africa, the Middle East and Europe). We also have a business team dedicated to the government marketplace, as well as GSM which is focused largely on the U.S. government marketplace. In addition, we have expert teams who are focused on leveraging our know-how in Internet protocol networking, broadcast technology, pre-engineered systems, network management systems and network services to provide added value to our products, services and solu tions.

These business and expert teams work together with the corporate sales offices to identify, develop and maintain customer relationships through local sales representatives, sales executives and account managers. Together, they develop close and continuing relationships with our customers. Our local sales representatives in these regions provide a local presence and identify prospective customers for our sales executives. Our account managers may also function as project engineers for network integration and service initiation programs for their accounts. As of June 30, 2007, we employed 41 persons with sales and marketing responsibility, of which 16 were full-time sales executives and 25 had dual engineering and sales and marketing responsibilities. We believe this account management focus provides continuity and loyalty between our customers and us. We also believe that our approach fosters long-term relationships that lead to follow-on work and refer rals to new customers. These accounts also provide us with a market for the new products and services that we develop. In addition, we obtain sales leads through referrals from industry suppliers.

We use direct mailings, print advertising to targeted markets and trade publications to enhance awareness and acquire leads for our direct and indirect sales teams. We create brand awareness by participating in industry trade shows sponsored by organizations like the International Telecommunications Union, the National Association of Broadcasters, Armed Forces Communications and Electronics Association, Communication Media Management Association and other industry associations. We also provide marketing information on our web site and conduct joint marketing programs with sales representatives in various regions to reach new customers.

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Recent Acquisition

On May 2, 2007, we acquired the GlobalSat division of Lyman Bros., Inc. GlobalSat is a global provider of satellite-based telecommunications services headquartered in Laurel, Maryland. The acquisition of GlobalSat significantly increases our recurring revenue base, particularly in the government marketplace. It also increases our U.S. Government-cleared staff from approximately 30 to approximately 100, provides us with a second DoD-cleared facility comprised of a teleport, NOC and data center and strengthens our management team. We believe that the acquisition will accelerate our penetration of the government marketplace, significantly increase our services revenue and expand our margins.

The GlobalSat business operates in the services segment of our business under the name of Globecomm Services Maryland LLC (‘‘GSM’’), which is our wholly-owned subsidiary. We acquired the GlobalSat business for a purchase price of $18.5 million in cash. The purchase price was funded in part through a five-year $16.0 million acquisition term loan.

Customers

We have established a diversified base of customers in a variety of industries. Our customers include communications service providers, government and government related entities (U.S. and foreign), commercial enterprises, broadcasters and other media and content providers. We typically rely upon a small number of customers for a large portion of our revenues. We derived 17% and 11% of our revenues in the year ended June 30, 2007 from the Department of State’s Diplomatic Telecommunications Systems — Program Office and another U.S. Government agency. We expect that in the near term a significant portion of our revenues will continue to be derived from a limited number of customers (the identity of whom may vary from year to year) as we seek to expand our business and customer base. In addition, we anticipate that continuing deregulation worldwide will result in the formation of a significant number of new competitive service providers over t he next few years, who are potential customers.

Backlog

At June 30, 2007, our backlog was approximately $141.2 million compared to approximately $90.9 million at June 30, 2006. The backlog at June 30, 2007 includes a five-year $26.2 million program. We anticipate generating revenue from this program over five years beginning in July 2007. We record an order in backlog when we receive a firm contract or purchase order, which identifies product quantities, sales price, service dates and delivery dates. Backlog represents the amount of unrecorded revenue on undelivered orders and services to be provided and a percentage of revenues from sales of products that have been shipped where installation has not been completed and final acceptance has not been received from the customer. Our backlog at any given time is not necessarily indicative of future period revenues. A substantial portion of our backlog is comprised of large orders, the cancellation of any of which could ha ve a material adverse effect on our operating results. For example, at June 30, 2007, $64.4 million, or approximately 45.6%, of our backlog represented contracts with three customers. We cannot assure you that these contracts or any others in our backlog will not be cancelled or revised. See the section entitled ‘‘Risk Factors.’’

Communications Infrastructure

We built and own the teleport facility located at our headquarters in Hauppauge, New York. In addition, through our acquisition of the GlobalSat business, we now own a teleport facility at our GSM facility in Laurel, Maryland. We are a member of the World Teleport Association (WTA). Our teleports are designed to meet stringent requirements for high-speed data communications. The teleports are used to transmit and receive signals from satellites positioned to serve customers in Latin America, the United States, Canada, Europe, the Middle East and Africa. Our teleports use redundant critical systems and uninterruptible power supplies with back-up power generation.

We also lease teleport services in Los Angeles and Hong Kong to transmit and receive signals from satellites positioned to serve customers in the Pacific Rim region, and our GSM subsidiary leases teleport services in Poland to transmit and receive signals from satellites positioned over Eastern Europe. Connection to the United States Internet backbone in Los Angeles is achieved through leased fiber optic circuits.

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We lease transponder capacity to meet the bandwidth needs of our customers. We have multiple, redundant, high-capacity fiber connections to provide reliable Internet data, voice and data traffic to locations in New York City where it interconnects with telecommunications service providers and the United States Internet backbone.

We have built and staff network operations centers, or NOCs, to manage customer circuits at both our Hauppauge, New York, and Laurel, Maryland facilities. The NOCs operate twenty-four hours per day, seven days per week to monitor customer circuits, respond to customer inquiries and initiate new services. Customers can purchase or lease from us, as a part of their service, the equipment needed at the customers’ locations to transmit and receive the satellite signals. We also offer installation and maintenance services for this equipment.

Product Design, Assembly and Testing

We assign a project team to each contract into which we enter. Each team is led by a project engineer who is responsible for execution of the project. This includes engineering and design, assembly and testing, installation and customer acceptance. A project may include engineers, integration specialists, buyer-planners and an operations team. Our standard satellite ground segment systems are manufactured using a standard modular production process. Typically, long-term projects require significant customer-specific engineering, drafting and design efforts. Once the system is designed, the integration specialist works with the buyer-planner and the operations team to assure a smooth transfer from the engineering phase to the integration phase. The integration phase consists mainly of integrating the purchased equipment, components and subsystems into a complete functioning system. Assembly, integration and test operations are conducted on both an automated and m anual basis.

We provide facilities for complete in-plant testing of all our systems before delivery in order to assure all performance specifications will be met during installation at the customer’s site. We employ formal total quality management programs and other training programs, and have been certified by the International Organization of Standards quality certification process for ISO 9001, a standard that enumerates specific requirements an organization must follow in order to assure consistent quality in the supply of products and services. The certification process qualifies us for access to virtually all domestic and international projects, and we believe that this represents a competitive advantage.

Research and Development

We have developed internal research and development resources in Internet protocol networks, content delivery networks, broadcast systems, network management systems and pre-engineered systems. The costs of developing new technologies are funded partially by the investments made by us and partially by development funded by specific customer program requirements. This approach provides us with a cost-effective means to develop new technology, while minimizing our direct research and development expenditures. Furthermore, we believe that our research and development capabilities allow us to offer added value in developing solutions for our customers, while at the same time we maintain the opportunity to develop products through our strategic supplier relationships. Our internal research and development efforts generally focus on the development of products and services not available from other suppliers to the industry. Current efforts are focused on developing a software based distributed core network to support our wireless hosted switch service offering for our service provider customers, enhancements to pre-engineered AxxSys network management systems for all our earth terminal and network customers and pre-engineered Explorer satellite systems for our government customers. For the years ended June 30, 2007, 2006 and 2005, we have incurred approximately $1.5 million, $1.1 million, and $1.0 million, respectively, in internal research and development expenses.

Competition

In the satellite infrastructure solutions market, we believe that our ability to compete successfully is based primarily on our reputation and the ability to provide a solution that meets the customer’s requirements, including competitive pricing, performance, on-time delivery, reliability and customer support.

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In the communications services market, we believe that our ability to compete successfully is based primarily on our reputation and providing prompt delivery and initiation of service, competitive pricing, consistent and reliable connections and high-quality customer support.

Our primary competitors in the infrastructure solutions market generally fall into two groups: (1) system integrators like Thales, Data Path and SED Systems and (2) equipment manufacturers who also provide integrated systems, like Andrew Corporation, Viasat, General Dynamics SATCOM Technologies, Alcatel and ND Satcom AG.

In the end-to-end satellite-based enterprise solutions and broadcast services markets, we compete with other satellite communication companies who provide similar services, like Ascent Media, Globecast and Convergent Media Systems. In addition, in managed network services we may compete with other communications services providers like Segovia, and satellite owners like SES Americom and Intelsat. We anticipate that our competitors may develop or acquire services that provide functionality that is similar to that provided by our services and that those services may be offered at significantly lower prices or bundled with other services.

Current and potential participants in the markets in which we compete have established or may establish cooperative relationships among themselves or with third parties. These cooperative relationships may increase the ability of their products and services to address the needs of our current and prospective customers. Accordingly, it is possible that new competitors or alliances among competitors may emerge that will enable them to acquire significant market share rapidly. We believe that increased competition is likely to result in price reductions, reduced gross profit margins and loss of market share, any of which would have a material adverse effect on our business, results of operations and financial condition.

Intellectual Property

We rely heavily on the technological and creative skills of our personnel, new product developments, computer programs and designs, frequent product enhancements, reliable product support and proprietary technological expertise in maintaining our competitive position. We have secured patent protection on some of our products, and have secured trademarks and service marks to protect some of our products and services.

We currently have been granted six patents in the United States, one for remote access to the Internet using satellites, another for satellite communication with automatic frequency control, another for a monitor and control system for satellite communications networks and the like, another for implementing facsimile and data communications using Internet protocols, and two for a dish antenna kit including alignment tool. We have one other patent pending in the United States for a distributed satellite-based cellular network. We currently have one Patent Cooperation Treaty patent application pending for implementing facsimile and data communications using Internet protocols. We also intend to seek additional patents on our technology, if appropriate. We have received trademark registration for Globecomm Systems Inc. in the United States, the European Community, Russia and the People’s Republic of China; and for GSI in the United States and Russia. We have also received trademark registrations in the United States for MBB2001, CTF 2001, CES 2001 and AxxSys, which relate to our pre-engineered systems; for SkyBorne, relating to our broadcasting services for the GSI logo; and for various other marks related to our products and services. We have other trademarks and service marks pending and intend to seek registration of other trademarks and service marks in the future.

Government Regulations

Operations and Use of Satellites

We are subject to various federal laws and regulations, which may have negative effects on our business. We operate Federal Communications Commission, or FCC, licensed earth stations in Hauppauge, New York, and Laurel, Maryland, subject to the Communications Act of 1934, as amended, or the FCC Act, and the rules and regulations of the FCC. Pursuant to the FCC Act and FCC rules and regulations, we have obtained or applied for, and are required to maintain radio transmission licenses from the FCC

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for both domestic and foreign operations of our earth stations. We have also obtained and maintain authorization issued under Section 214 of the FCC Act to act as a telecommunications carrier, which authorization also extends to GNSC. These licenses should be renewed by the FCC in the normal course as long as we remain in compliance with FCC rules and regulations. However, we cannot guarantee that additional licenses will be granted by the FCC when our existing licenses expire, nor can we assure you that the FCC will not adopt new or modified technical requirements that will require us to incur expenditures to modify or upgrade our equipment as a condition of retaining our licenses.

We are also required to comply with FCC regulations regarding the exposure of humans to radio frequency radiation from our earth stations. These regulations, as well as local land use regulations, restrict our freedom to choose where to locate our earth stations.

The licenses and authorizations held by Globecomm for the licensed earth stations in Hauppauge, New York, extend to GNSC and GNSC currently provides services in accordance with the requirements of the Globecomm licenses and authorizations. GNSC may in the future seek to obtain licenses and/or authorizations to provide services in its own name, however, we cannot guarantee that such additional licenses and authorizations will be granted by the FCC.

The licenses and authorizations for the licensed earth stations in Laurel, Maryland, are currently held by Lyman Bros., Inc., from whom we acquired the GlobalSat business. We, in cooperation with Lyman Bros., Inc., have applied to the FCC for transfer of the licenses to Globecomm. While we anticipate approval of the transfer in the due course of time, we cannot guarantee that such transfer will be granted by the FCC. GSM is authorized under a System Management Agreement to operate the licensed earth stations under the authority of the Lyman Bros., Inc. licenses until April 30, 2008. While we anticipate renewal of the System Management Agreement as required to continue authorized operation of the licensed earth stations, we cannot guarantee that such renewals will be agreed by Lyman Bros., Inc. or allowed by the FCC.

Common Carrier Regulation

We currently provide services to our customers on a private carrier and on a common carrier basis. Our operations as a common carrier require us to comply with the FCC’s requirements for common carriers. These requirements include, but are not limited to, providing our rates and service terms, being forbidden from unjust and unreasonable discrimination among customers, notifying the FCC before discontinuing service and complying with FCC equal employment opportunity regulations and reporting requirements.

We do not currently provide telecommunications services between points in the same state and so are exempt from state regulation of our services. However, we could become subject to state telecommunications regulations if we do provide intrastate telecommunications services.

Foreign Ownership

The FCC Act and FCC regulations impose restrictions on foreign ownership of our earth stations. These requirements generally forbid more than 20% ownership or control of an FCC licensee by non-United States citizens and more than 25% ownership of a licensee’s parent by non-United States citizens. The FCC may authorize foreign ownership in the licensee’s parent in excess of these percentages. Under current policies, the FCC has granted these authorizations where the applicant does not control monopoly or bottleneck facilities and the foreign owners are citizens of countries that are members of the World Trade Organization or provide equivalent competitive opportunities to United States citizens.

We may, in the future, be required to seek FCC approval if foreign ownership of our stock exceeds the thresholds mentioned above. Failure to comply with these policies could result in an order to divest the offending foreign ownership, fines, denial of license renewal and/or license revocation proceedings against the licensee by the FCC. We have no knowledge of any present foreign ownership which would result in a violation of the FCC rules and regulations.

Foreign Regulations

Regulatory schemes in countries in which we may seek to provide our satellite-delivered services may impose impediments on our operations. Some countries in which we operate or intend to operate have

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telecommunications laws and regulations that do not currently contemplate technical advances in telecommunications technology like Internet/intranet transmission by satellite. We cannot assure you that the present regulatory environment in any of those countries will not be changed in a manner which may have a material adverse impact on our business. Either we or our local sales representatives typically must obtain authorization for each country in which we provide our satellite-delivered services. Although we believe that we or our local sales representatives will be able to obtain the requisite licenses and approvals from the countries in which we intend to provide products and services, the regulatory schemes in each country are different, and thus there may be instances of noncompliance of which we are not aware. Although we believe these regulatory schemes will not prevent us from pursuing our business plan, we cannot assure you that our licenses and approvals are or will remain sufficient in the view of foreign regulatory authorities. In addition, we cannot assure you that necessary licenses and approvals will be granted on a timely basis, or at all, in all jurisdictions in which we wish to offer our products and services or that the applicable restrictions will not be unduly burdensome.

Regulation of the Internet

Our Internet operations (other than the operation of a teleport) are not currently subject to direct government regulation in the United States or most other countries, and there are currently few laws or regulations directly applicable to access to or commerce on the Internet. However, due to the increasing popularity and use of the Internet it is possible that a number of laws and regulations may be adopted at the local, national or international levels with respect to the Internet, covering issues like user privacy and expression, pricing of products and services, taxation, advertising, intellectual property rights, information security or the convergence of traditional communication services with Internet communications.

We anticipate that a substantial portion of our Internet operations will be carried out in countries which may impose greater regulation of the content of information coming into their country than that which is generally applicable in the United States. Examples of this include privacy regulations in Europe and content restrictions in countries, such as the People’s Republic of China. To the extent that we provide content as a part of our Internet services, it will be subject to laws regulating content. Moreover, the adoption of laws or regulations may decrease the growth of the Internet, which could in turn decrease the demand for our Internet services, or increase our cost of doing business or otherwise negatively affect our business. In addition, the applicability to the Internet of existing laws governing issues including property ownership, copyrights and other intellectual property issues, taxation, libel and personal privacy is uncertain. The vast majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues of the Internet and related technologies. Changes to these laws intended to address these issues, including some recently proposed changes, could create uncertainty in the marketplace. These changes could reduce demand for our products and services or could increase our cost of doing business as a result of costs of litigation or increased product development costs.

Telecommunications Taxation, Support Requirements and Access Charges

Telecommunications carriers providing domestic services in the United States are required to contribute a portion of their gross revenues for the support of universal telecommunications services, telecommunications relay services for the deaf, and/or other regulatory fees. We are subject to some of these fees and we may be subject to other fees or to new or increased taxes and contribution requirements that could affect our profitability, particularly if we are not able to pass them through to customers for either competitive or regulatory reasons.

Broadband Internet access services provided by telephone companies are currently classified as information services under the Communications Act and therefore not considered a telecommunications service subject to payment of access charges to local telephone companies in the United States. Should this situation change or other charges be imposed, the increased cost to our customers who use telephone-company provided facilities to connect with our satellite facilities could discourage the demand for our services. Likewise, the demand for our services in other countries could be affected by the availability and cost of local telephone or other telecommunications services required to connect with our facilities in those countries.

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Export of Telecommunications Equipment

The sale of our infrastructure solutions services outside the United States is subject to compliance with the regulations of the United States Export Administration and, in certain instances, with International Traffic in Arms regulations. The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position. In addition, in order to ship our products into or implement our services in some countries, these products or services must satisfy the technical requirements of the particular country. If we were unable to comply with these requirements with respect to a significant quantity of our products, our sales in those countries could be restricted, which could have a material adverse effect on our business, financial condition and results of operations.

Employees

As of June 30, 2007, we had 282 full-time employees, including 155 in engineering and program management, 71 in the manufacturing, operations support and network operations, 16 in sales and marketing and 40 in management and administration. Our employees are not covered by any collective bargaining agreements. We believe that our relations with our employees are good.

Financial Information About Geographic Areas

Revenues from foreign sales as a percentage of total revenues for each of the three years in the period ended June 30, 2007 are set forth in Note 15 of the Notes to Consolidated Financial Statements.

Financial Information About Business Segments

The sales and operating profits of each business segment and the identifiable assets attributable to each business segment for each of the three years in the period ended June 30, 2007 are set forth in Note 14 of the Notes to Consolidated Financial Statements.

Available information

We maintain an Internet website at www.globecommsystems.com where our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to these reports and all other SEC documents are available without charge, as soon as reasonably practicable following the time that they are filed with or furnished to the SEC. Information contained on our website does not constitute a part of this Annual Report on Form 10-K.

Item 1A.    Risk Factors

Risks Related to Our Business

A limited number of customer contracts account for a significant portion of our revenues, and the inability to replace a key customer contract or the failure of the customer to implement its plans would adversely affect our results of operations, business and financial condition.

We rely on a small number of customer contracts for a large portion of our revenue. Specifically, we have agreements with three customers to provide equipment and services, from which we expect to generate a significant portion of our revenues. We derived 17% and 11% of our revenues in the year ended June 30, 2007 from the Department of State’s Diplomatic Telecommunications Systems — Program Office and another U.S. Government agency, respectively. If any key customer is unable to implement its business plan, the market for these customers’ services declines, political or military conditions make performance impossible or if all or any of the major customers modifies or terminates its agreement with us, and we are unable to replace these contracts, our results of operations, business and financial condition would be materially harmed.

We derive a substantial portion of our revenues from the government marketplace.

We derive a substantial portion of our revenues from government marketplace. In the year ended June 30, 2007, we derived 68% of our consolidated revenues from the government marketplace. This

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business tends to have higher gross margins than other markets of our business. A future reduction in the proportion of our business from government marketplace would negatively impact our results of operations.

We may not realize all of the anticipated benefits of our acquisition of the GlobalSat business.

The success of our recent acquisition of the GlobalSat business depends, in part, on our ability to realize the anticipated synergies, cost savings and growth opportunities from integrating the GlobalSat business with our business, and the failure to realize these anticipated benefits could cause our business to be materially adversely affected.

Our success in realizing these benefits and the timing of this realization depends upon our successful integrations of the operations of the GlobalSat business. The integration of two independent businesses is a complex, costly and time-consuming processes. The difficulties of combining the operations of the businesses include among others:

	•	retaining key employees;

	•	bridging possible differences in cultures and management philosophies;

	•	consolidating corporate and administrative infrastructures and systems;

	•	coordinating sales and marketing functions;

	•	preserving our and the GlobalSat business’ customer, supplier and other important relationships;

	•	aligning and executing on new product roadmaps;

	•	minimizing the diversion of management’s attention from ongoing business concerns; and

	•	coordinating geographically separate organizations.

We acquired the GlobalSat business for $18.5 million and entered into a five-year $16 million acquisition term loan. We plan for the future cash flow of the GlobalSat division business to fund the principal and interest payments of the acquisition term loan, unless it is repaid from other financing proceeds. The GlobalSat business is generally dependant upon agreements with three customers to provide equipment and services, from which we expect to generate a significant portion of revenues relating to the GlobalSat business. If any of these three customers modifies or terminates its agreement with GlobalSat, and we are unable to replace these contracts, our results of operations, business and financial condition would be materially harmed.

We cannot assure you that our integration of the GlobalSat business will result in the realization of the full benefits that we anticipate will result from the acquisition. Any inability to integrate successfully, or a delay in integrating, the GlobalSat business could have a material adverse effect on us.

Risks associated with operating in international markets could restrict our ability to expand globally and harm our business and prospects.

We market and sell a substantial portion of our products and services internationally. We anticipate that international sales will continue to account for a significant portion of our total revenues for the foreseeable future with a significant portion of the international revenue coming from developing countries, including countries in areas of conflict like Afghanistan. There are a number of risks inherent in conducting our business internationally, including:

	•	general political and economic instability in international markets, including the hostilities in Iraq and Afghanistan, could impede our ability to deliver our products and services to customers and harm our results of operations;

	•	difficulties in collecting accounts receivable could adversely affect our results of operations;

	•	changes in regulatory requirements could restrict our ability to deliver services to our international customers; including the addition of a country to the list of sanctioned countries under the International Emergency Economic Powers Act or similar legislation;

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	•	export restrictions, tariffs, licenses and other trade barriers could prevent us from adequately equipping our network facilities;

	•	differing technology standards across countries may impede our ability to integrate our products and services across international borders;

	•	protectionist laws and business practices favoring local competition may give unequal bargaining leverage to key vendors in countries where competition is scarce, significantly increasing our operating costs;

	•	increased expenses associated with marketing services in foreign countries could affect our ability to compete;

	•	relying on local subcontractors for installation of our products and services could adversely impact the quality of our products and services;

	•	difficulties in staffing and managing foreign operations could affect our ability to compete;

	•	complex foreign laws and treaties could affect our ability to compete; and

	•	potentially adverse taxes could affect our results of operations.

These and other risks could impede our ability to manage our international operations effectively, limit the future growth of our business, increase our costs and require significant management attention.

We derive a substantial portion of our revenues from fixed-price projects, under which we assume greater financial risk if we fail to accurately estimate the costs of the projects.

We derive a substantial portion of our revenues from fixed-price projects. We assume greater financial risks on a fixed-price project than on a time-and-expense based project. If we miscalculate the resources or time we need for these fixed-price projects, the costs of completing these projects may exceed our original estimates, which would negatively impact our financial condition and results of operations.

If GNSC does not continue to execute its business strategy or if the market for its services fails to develop or develops more slowly than we expect, our results of operations will be harmed.

GNSC’s future revenues and results of operations are dependent on its execution of its business strategy and development of the market for its current and future services. GNSC has had, and we expect will continue to have, cash requirements, which have decreased and will continue to decrease our cash resources. If GNSC does not efficiently and substantially utilize its transponder space capacity and increase its level of orders, its cash requirements may increase and our results of operations will be harmed. In addition, significant capital expenditures have been required as we have built our content delivery and telephony service offerings. If our content delivery and telephony service offerings are not accepted, or if the market fails to grow, we cannot assure you that we will be able to realize an appropriate return on these capital expenditures.

In the event of a catastrophic loss affecting our operations in Hauppauge, New York or Laurel, Maryland, our results of operations would be harmed.

GNSC’s revenues and results of operations are dependant on the infrastructure of the network operations center and the International Teleport at our headquarters in Hauppauge, New York. Similarly, GSM’s revenues and results of operations are dependant on the infrastructure of the network operations center and teleport at our Laurel, Maryland facility. A catastrophic event to either of these facilities or to the infrastructure of the surrounding areas would result in significant delays in restoring a majority of the services capabilities. These capabilities permit us to offer an integrated suite of products and services and the incapacity of our communications infrastructure would negatively impact our ability to sell our infrastructure solutions. This would result in the loss of revenues and adversely affect our business, results of operations and financial condition.

Our markets are highly competitive and we have many established competitors, and we may lose market share as a result.

The markets in which we operate are highly competitive and this competition could harm our ability to sell our products and services on prices and terms favorable to us. Our primary competitors in the

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infrastructure solutions market generally fall into two groups: (1) system integrators, like Thales, Data Path, and SED Systems, and (2) equipment manufacturers who also provide integrated systems, like General Dynamics SATCOM Technologies, Andrew Corporation, Viasat, Alcatel and ND Satcom AG.

In the end-to-end satellite-based enterprise solutions and broadcast services markets, we compete with other satellite communication companies who provide similar services, like Ascent Media, Globecast, and Convergent Media Systems. In addition, in managed network services we may compete with other communications service providers like Segovia and satellite owners like SES Americom and Intelsat. We anticipate that our competitors may develop or acquire services that provide functionality that is similar to that provided by our services and that those services may be offered at significantly lower prices or bundled with other services. These competitors may have the financial resources to withstand substantial price competition, may be in a better position to endure difficult economic conditions in international markets and may be able to respond more quickly than we can to new or emerging technologies and changes in customer requirements. Moreover, many of our c ompetitors have more extensive customer bases, broader customer relationships and broader industry alliances than we do that they could use to their advantage in competitive situations.

The markets in which we operate have limited barriers to entry, and we expect that we will face additional competition from existing competitors and new market entrants in the future. Moreover, our current and potential competitors have established or may establish strategic relationships among themselves or with third parties to increase the ability of their products and services to address the needs of our current and prospective customers. The potential strategic relationships of existing and new competitors may rapidly acquire significant market share, which would harm our business and financial condition.

If our products and services are not accepted in developing countries with emerging markets, our revenues will be impaired.

We anticipate that a substantial portion of the growth in the demand for our products and services will come from customers in developing countries due to a lack of basic communications infrastructure in these countries. However, we cannot guarantee an increase in the demand for our products and services in developing countries or that customers in these countries will accept our products and services at all. Our ability to penetrate emerging markets in developing countries is dependent upon various factors including:

	•	the speed at which communications infrastructure, including terrestrial microwave, coaxial cable and fiber optic communications systems, which compete with satellite-based services, is built;

	•	the effectiveness of our local resellers and sales representatives in marketing and selling our products and services; and

	•	the acceptance of our products and services by customers.

If our products and services are not accepted, or the market potential we anticipate does not develop, our revenues will be impaired.

We have had a history of operating losses and negative cash flow. Negative cash flows may occur as we pursue our business plan and our losses may reoccur, which may strain our capital resources.

Although we have been profitable, we had incurred significant net losses in the past and may incur negative cash flows from operations. Our ability to maintain profitability will depend upon our ability to generate significant revenues through new profitable customer contracts and the expansion of our existing products and services. We cannot assure you that we will be able to obtain new profitable customer contracts or generate significant additional revenues from those contracts or any new products or services that we introduce. In the past, we have incurred significant negative cash flows, which may reoccur if our business plan is not successful. Also, if we are unable to sustain or increase our profits on a quarterly or annual basis in the future or if our business undergoes a period of rapid growth, our operating cash flows may be negatively impacted.

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Since sales of satellite communications equipment are dependent on the growth of communications networks, if market demand for these networks declines, our revenue and profitability are likely to decline.

We derive, and expect to continue to derive, a significant amount of revenues from the sale of satellite infrastructure solutions. If the long-term growth in demand for communications networks does not continue to return from recent depressed levels, the demand for our infrastructure solutions may decline or grow more slowly than we expect. As a result, we may not be able to grow our business, our revenues may decline from current levels and our results of operations may be harmed. The demand for communications networks and the products used in these networks is affected by various factors, many of which are beyond our control. For example, the uncertain general economic conditions have affected the overall rate of capital spending by many of our customers. Also, many companies have found it difficult to raise capital to finish building their communications networks and, therefore, have placed fewer orders. Past economic slowdowns resulted in a softening of dema nd from our customers. We cannot predict the extent to which demand will increase. Further, increased competition among satellite ground segment systems and network manufacturers has increased pricing pressures.

We depend upon certain key personnel and may not be able to retain these employees. If we lose the services of these individuals or cannot hire additional qualified personnel, our business will be harmed.

Our success also depends to a substantial degree on our ability to attract, motivate and retain highly-qualified personnel. There is considerable competition for the services of highly-qualified technical and engineering personnel. We may not be able either to retain our current personnel or hire additional qualified personnel if and when needed.

Our future performance depends on the continued service of our key technical, managerial and marketing personnel; in particular, David Hershberg and Kenneth Miller are key to our success based upon their individual knowledge of the markets in which we operate. The employment of any of our key personnel could cease at any time.

Satellites upon which we rely may malfunction or be damaged or lost.

In the delivery of our services, we lease space segment from various satellite transponder vendors. The damage or loss of any of the satellites used by us, or the temporary or permanent malfunction of any of the satellites upon which we rely, would likely result in the interruption of our satellite-based communications services. This interruption could have a material adverse effect on our business, results of operations and financial condition.

We depend on our suppliers, some of which are our sole or a limited source of supply, and the loss of these suppliers could materially adversely affect our business, results of operations and financial condition.

We currently obtain most of our critical components and services from limited sources and generally do not maintain significant inventories or have long-term or exclusive supply contracts with our vendors. We have from time to time experienced delays in receiving products from vendors due to lack of availability, quality control or manufacturing problems, shortages of materials or components or product design difficulties. We may experience delays in the future and replacement services or products may not be available when needed, or at all, or at commercially reasonable rates or prices. If we were to change some of our vendors, we would have to perform additional testing procedures on the service or product supplied by the new vendors, which would prevent or delay the availability of our products and services. Furthermore, our costs could increase significantly if we need to change vendors. If we do not receive timely deliveries of quality products and services , or if there are significant increases in the prices of these products or services, it could have a material adverse effect on our business, results of operations and financial condition.

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Our network may experience security breaches, which could disrupt our services.

Our network infrastructure may be vulnerable to computer viruses, break-ins, denial of service attacks and similar disruptive problems caused by our customers or other Internet users. Computer viruses, break-ins, denial of service attacks or other problems caused by third parties could lead to interruptions, delays or cessation in service to our customers. There currently is no existing technology that provides absolute security. We may face liability to customers for such security breaches. Furthermore, these incidents could deter potential customers and adversely affect existing customer relationships.

If the satellite communications industry fails to continue to develop or new technology makes it obsolete, our business and financial condition will be harmed.

Our business is dependent on the continued success and development of satellite communications technology, which competes with terrestrial communications transport technologies like terrestrial microwave, coaxial cable and fiber optic communications systems. Fiber optic communications systems have penetrated areas in which we have traditionally provided services. If the satellite communications industry fails to continue to develop, or if any technological development significantly improves the cost or efficiency of competing terrestrial systems relative to satellite systems, then our business and financial condition would be materially harmed.

We may not be able to keep pace with technological changes, which would make our products and services become non-competitive and obsolete.

The telecommunications industry, including satellite-based communications services, is characterized by rapidly changing technologies, frequent new product and service introductions and evolving industry standards. If we are unable, for technological or other reasons, to develop and introduce new products and services or enhancements to existing products and services in a timely manner or in response to changing market conditions or customer requirements, our products and services would become non-competitive and obsolete, which would harm our business, results of operations and financial condition.

We may be unable to raise additional funds to meet our capital requirements in the future.

We believe that our available cash resources will be sufficient to meet our working capital and capital expenditure requirements through at least June 30, 2008. However, our future liquidity and capital requirements are difficult to predict, as they depend on numerous factors, including the success of our existing product and service offerings, as well as competing technological and market developments. We may need to raise additional funds in order to meet additional working capital requirements and to support additional capital expenditures or acquisition of assets or a business. Should this need arise, additional funds may not be available when needed and, even if additional funds are available, we may not find the terms favorable or commercially reasonable. If adequate funds are unavailable, we may be required to delay, scale back or eliminate some of our operating activities, including, without limitation, the timing and extent of our marketing pr ograms, capital expenditures and research and development activities and we may be required to reduce headcount. If we raise additional funds by issuing equity securities, our existing stockholders will own a smaller percentage of our capital stock and new investors may pay less on average for their securities than, and could have rights superior to, existing stockholders.

Unauthorized use of our intellectual property by third parties may damage our business.

We regard our trademarks, trade secrets and other intellectual property as beneficial to our success. Unauthorized use of our intellectual property by third parties may damage our business. We rely on trademark, trade secret and patent protection and contracts, including confidentiality and license agreements with our employees, customers, strategic collaborators, consultants and others, to protect our intellectual property rights. Despite our precautions, it may be possible for third parties to obtain and use our intellectual property without our authorization.

We currently have been granted six patents in the United States, one for remote access to the Internet using satellites, one for satellite communication with automatic frequency control, one for a monitor and

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control system for satellite communications networks and the like, one for implementing facsimile and data communications using Internet protocols and two for a dish antenna kit including alignment tool. We have one other patent pending in the United States for a distributed satellite-based cellular network. We currently have one Patent Cooperation Treaty patent application pending for implementing facsimile and data communications using Internet protocols. We also intend to seek further patents on our technology, if appropriate. We cannot assure you that patents will be issued for any of our pending or future patent applications or that any claims allowed from such applications will be of sufficient scope, or be issued in all countries where our products and services can be sold, to provide meaningful protection or any commercial advantage to us. Also, our competitors may be able to design around our patents. The laws of some foreign countries in which our products and services are or may be developed, manu factured or sold may not protect our products and services or intellectual property rights to the same extent as do the laws of the United States and thus make the possibility of piracy of our technology and products and services more likely.

We have filed applications for trademark registration of Globecomm Systems Inc., Globecomm and GSI in the United States and various other countries, and have been granted registrations for some of these terms in the United States, Europe and Russia. We have various other trademarks and service marks registered or pending for registration in the United States and in other countries and may seek registration of other trademarks and service marks in the future. We cannot assure you that registrations will be granted from any of our pending or future applications, or that any registrations that are granted will prevent others from using similar trademarks in connection with related goods and services.

Defending against intellectual property infringement claims could be time consuming and expensive, and if we are not successful, could cause substantial expenses and disrupt our business.

We cannot be sure that the products, services, technologies and advertising we employ in our business do not or will not infringe valid patents, trademarks, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. Prosecuting infringers and defending against intellectual property infringement claims could be time consuming and expensive, and regardless of whether we are or are not successful, could cause substantial expenses and disrupt our business. We may incur substantial expenses in defending against these third party claims, regardless of their merit. Successful infringement claims against us may result in substantial monetary liability and/or may materially disrupt the conduct of, or necessitate the cessation of, segments of our business.

Risks Related to the Securities Markets and Ownership of Our Common Stock

Our stock price is volatile.

From July 1, 2006 through June 30, 2007, our stock price ranged from a low of $6.30 per share to a high of $15.05 per share. The market price of our common stock, like that of the securities of many telecommunications and high technology industry companies, could be subject to significant fluctuations and is likely to remain volatile based on many factors, including the following:

	•	quarterly variations in operating results;

	•	announcements of new technology, products or services by us or any of our competitors;

	•	changes in financial estimates or recommendations by securities analysts;

	•	general market conditions; or

	•	domestic and international economic factors unrelated to our performance.

Additionally, numerous factors relating to our business may cause fluctuations or declines in our stock price.

The stock markets in general and the markets for telecommunications stocks in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.

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Because our common stock is thinly traded, it may be difficult to sell shares of our common stock into the markets without experiencing significant price volatility.

Our common stock is currently traded on the Nasdaq Global Market. Because of the relatively small number of shares that are traded, it may be difficult for an investor to find a purchaser for shares of our common stock without experiencing significant price volatility. We cannot guarantee that an active trading market will develop, that our common stock will have a higher trading volume than it has historically had or that it will maintain its current market price. This illiquidity could have a material adverse effect on the market price of our stock.

A third party could be prevented from acquiring shares of our stock at a premium to the market price because of our anti-takeover provisions.

Various provisions with respect to votes in the election of directors, special meetings of stockholders, and advance notice requirements for stockholder proposals and director nominations of our amended and restated certificate of incorporation, by-laws and Section 203 of the General Corporation Law of the State of Delaware could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders. In addition, we have a poison pill in place and employment provisions with our senior executives that have change of control provisions that could make an acquisition of us by a third party more difficult.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on our future earnings, capital requirements, financial condition, future prospects and other factors as the board of directors might deem relevant. If we do not pay dividends our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

Risks Related to Government Approvals

We are subject to many government regulations, and failure to comply with them will harm our business.

Operations and Use of Satellites

We are subject to various federal laws and regulations, which may have negative effects on our business. We operate FCC licensed earth stations in Hauppauge, New York, and Laurel, Maryland subject to the Communications Act of 1934, as amended (the ‘‘FCC Act’’), and the rules and regulations of FCC. Pursuant to the FCC Act and rules, we have obtained and are required to maintain radio transmission licenses from the FCC for both domestic and foreign operations of our earth stations. We have also obtained and maintain authorization issued under Section 214 of the FCC Act to act as a telecommunications carrier, which authorization also extends to GNSC. These licenses should be renewed by the FCC in the normal course as long as we remain in compliance with FCC rules and regulations. Additionally, we have applied to the FCC, in cooperation with Lyman Bros., Inc., for the transfer of the FCC licenses for our Laurel, Maryland teleport facility. T his transfer should be approved by the FCC in the normal course. However, we cannot guarantee that the FCC will grant additional licenses when our existing licenses expire or approve the transfer of the licenses for our Laurel, Maryland facility, nor are we assured that the FCC will not adopt new or modified technical requirements that will require us to incur expenditures to modify or upgrade our equipment as a condition of retaining our licenses. We are also required to comply with FCC regulations regarding the exposure of humans to radio frequency radiation from our earth stations. These regulations, as well as local land use regulations, restrict our freedom to choose where to locate our earth stations. In addition, prior to a third party acquisition of us, we would need to seek approval from the FCC to transfer the radio transmission licenses we have obtained to the third party upon the consummation of the acquisition. However, we cannot assure you that the FCC will permit the transfer of these licenses . These approvals may make it more difficult for a third party to acquire us.

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Foreign Regulations

Regulatory schemes in countries in which we may seek to provide our satellite-delivered services may impose impediments on our operations. Some countries in which we intend to operate have telecommunications laws and regulations that do not currently contemplate technical advances in telecommunications technology like Internet/intranet transmission by satellite. We cannot assure you that the present regulatory environment in any of those countries will not be changed in a manner that may have a material adverse impact on our business. Either we or our local partners typically must obtain authorization from each country in which we provide our satellite-delivered services. The regulatory schemes in each country are different, and thus there may be instances of noncompliance of which we are not aware. We cannot assure you that our licenses and approvals are or will remain sufficient in the view of foreign regulatory authorities, or that necessary licenses and appr ovals will be granted on a timely basis in all jurisdictions in which we wish to offer our products and services or that restrictions applicable thereto will not be unduly burdensome.

Regulation of the Internet

Due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted at the local, national or international levels with respect to the Internet, covering issues including user privacy and expression, pricing of products and services, taxation, advertising, intellectual property rights, information security or the convergence of traditional communication services with Internet communications. It is anticipated that a substantial portion of our Internet operations will be carried out in countries that may impose greater regulation of the content of information coming into the country than that which is generally applicable in the United States, including but not limited to privacy regulations in numerous European countries and content restrictions in countries such as the People’s Republic of China. To the extent that we provide content as a part of our Internet services, it will be subject to laws re gulating content. Moreover, the adoption of laws or regulations may decrease the growth of the Internet, which could in turn decrease the demand for our Internet services or increase our cost of doing business or in some other manner have a material adverse effect on our business, operating results and financial condition. In addition, the applicability of existing laws governing issues including property ownership, copyrights and other intellectual property issues, taxation, libel, court jurisdiction and personal privacy to the Internet is uncertain. The vast majority of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, the laws do not contemplate or address the unique issues of the Internet and related technologies. Changes to these laws intended to address these issues, including some recently proposed changes, could create uncertainty in the marketplace which could reduce demand for our products and services, could increase our cost of doing business a s a result of costs of litigation or increased product development costs, or could in some other manner have a material adverse effect on our business, financial condition and results of operations.

Telecommunications Taxation, Support Requirements, and Access Charges

Telecommunications carriers providing domestic services in the United States are required to contribute a portion of their gross revenues for the support of universal telecommunications services, telecommunications relay services for the deaf, and/or other regulatory fees. We are subject to some of these fees, and we may be subject to other fees or new or increased taxes and contribution requirements that could affect our profitability, particularly if we are not able to pass them through to customers for either competitive or regulatory reasons.

Internet services are currently exempt from charges that long distance telephone companies pay for access to the networks of local telephone companies in the United States. Efforts have been made from time to time, and may be made again in the future, to eliminate this exemption. If these access charges are imposed on telephone lines used to reach Internet service providers and/or if flat rate telephone services for Internet access are eliminated or curtailed, the cost to customers who access our satellite facilities using telephone company-provided facilities could increase to an extent that could discourage the demand for our services. Likewise, the demand for our services in other countries may be affected by the availability and cost of local telephone or other telecommunications facilities to reach our facilities.

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Export of Telecommunications Equipment

The sale of our infrastructure solutions outside the United States is subject to compliance with the regulations of the United States Export Administration and, in certain circumstances, with International Traffic in Arms regulations. The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position. In addition, in order to ship our products into and implement our services in some countries, the products must satisfy the technical requirements of that particular country. If we were unable to comply with such requirements with respect to a significant quantity of our products, our sales in those countries could be restricted, which could have a material adverse effect on our business, results of operations and financial condition.

Foreign Ownership

We may, in the future, be required to seek FCC or other government approval if foreign ownership of our stock exceeds certain specified criteria. Failure to comply with these policies could result in an order to divest the offending foreign ownership, fines, denial of license renewal and/or license revocation proceedings against the licensee by the FCC, or denial of certain contracts from other United States Government Agencies.

Item 1B.    Unresolved Staff comments.

None.

Item 2.    Properties

We own a facility containing approximately 122,000 square feet of space on approximately seven acres located at 45 Oser Avenue, Hauppauge, New York. This facility houses our principal offices, teleport facility and production facilities, as well as the offices and network operations center of GNSC. We also own a facility containing approximately 20,000 square feet of space on approximately 3 acres located in Laurel, Maryland, which houses the teleport facility, teleport and network operations center of GSM. We lease warehouse space in Hauppauge, New York and rent office space in Laurel, Maryland, Washington D.C., the United Kingdom, United Arab Emirates, Hong Kong and Afghanistan.

Item 3.    Legal proceedings

None.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

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PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is quoted on the Nasdaq Global Market under the symbol ‘‘GCOM.’’ The fiscal 2007 and 2006 high and low sales prices are as follows:

			High						Low
2007
Quarter ended September 30, 2006				$	8.91					$	6.30
Quarter ended December 31, 2006					9.70						8.02
Quarter ended March 31, 2007					11.63						8.85
Quarter ended June 30, 2007					15.05						10.17
2006
Quarter ended September 30, 2005					8.44						5.77
Quarter ended December 31, 2005					8.35						5.89
Quarter ended March 31, 2006					7.98						5.88
Quarter ended June 30, 2006					8.15						6.38

At September 10, 2007, there were approximately 5,000 stockholders of record of our common stock, as shown in the records of our transfer agent.

At the close of the Nasdaq Global Market on September 10, 2007, our market price per share was $14.22.

As of June 30, 2007, we had not declared or paid dividends on our common stock since inception and we do not expect to pay dividends in the foreseeable future.

The table below sets forth securities we have authorized for issuance under our equity compensation plans.

Equity Compensation Plan Information as of June 30, 2007

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

(a)

(b)

(c)

Equity compensation plan approved by security holders

1,863,340

$

8.32

738,800

Item 6.	Selected Financial Data

Our selected consolidated financial data as of and for each of the five years in the period ended June 30, 2007 have been derived from our audited consolidated financial statements. EBITDA represents net income (loss) before interest income, interest expense, provision for income taxes, depreciation and amortization expense, gain on sale of investment, gain on sale of available-for-sale securities and gain on liquidation of foreign subsidiary. EBITDA does not represent cash flows defined by accounting principles generally accepted in the United States and does not necessarily indicate that our cash flows are sufficient to fund all of our cash needs. We disclose EBITDA since it is a financial measure commonly used in our industry. EBITDA is not meant to be considered a substitute or replacement for net income (loss) as prepared in accordance with accounting principles generally accepted in the United States. EBITDA may not be comparable to other similar ly titled measures of other companies. We record an order in backlog

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when we receive a firm contract or purchase order, which identifies product quantities, sales price, service dates and delivery dates. Backlog represents the amount of unrecorded revenue on undelivered orders and services to be provided and a percentage of revenues from sales of products that have been shipped where installation has not been completed and final acceptance has not been received from the customer. Our backlog at any given time is not necessarily indicative of future period revenues.

Selected Financial Data
(In thousands, except per share data)

			Years Ended June 30,
			2007						2006						2005						2004						2003
Statements of Operations Data:
Revenues from infrastructure solutions				$	114,612					$	97,967					$	90,656					$	73,305					$	40,125
Revenues from services					36,133						28,069						18,928						13,931						13,903
Total revenues					150,745						126,036						109,584						87,236						54,028
Costs and operating expenses:
Costs from infrastructure solutions					92,197						81,410						75,357						63,282						39,447
Costs from services					29,052						23,605						15,527						12,992						17,796
Selling and marketing					8,376						7,029						5,821						4,808						6,042
Research and development					1,451						1,052						1,021						1,328						800
General and administrative					12,297						9,589						7,596						6,529						9,423
Total costs and operating expenses					143,373						122,685						105,322						88,939						73,508
Income (loss) from operations					7,372						3,351						4,262						(1,703	)					(19,480	)
Other income (expense):
Interest income					1,370						965						444						271						422
Interest expense					(205	)					—						—						—						(539	)
Gain on liquidation of foreign subsidiary					—						264						—						—						—
Gain on sale of available-for-sale securities					—						—						132						91						—
Gain on sale of investment					—						—						40						—						—
Income (loss) before income taxes					8,537						4,580						4,878						(1,341	)					(19,597	)
Provision for income taxes					211						88						64						—						—
Net income (loss) from continuing operations				$	8,326					$	4,492					$	4,814					$	(1,341	)				$	(19,597	)
Basic net income (loss) from continuing operations per common share				$	0.53					$	0.30					$	0.33					$	(0.10	)				$	(1.56	)
Diluted net income (loss) from continuing operations per common share				$	0.50					$	0.29					$	0.32					$	(0.10	)				$	(1.56	)
Weighted-average shares used in the calculation of basic net income (loss) from continuing operations per common share					15,795						15,001						14,422						13,346						12,565
Weighted-average shares used in the calculation of diluted net income (loss) from continuing operations per common share					16,672						15,608						14,966						13,346						12,565

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			Years Ended June 30,
			2007						2006						2005						2004						2003
Other Operating Data:
Net income (loss)				$	8,326					$	4,492					$	4,814					$	(1,341	)				$	(19,597	)
Other (income) expense, net					(1,165	)					(1,229	)					(616	)					(362	)					117
Provision for income taxes					211						88						64						—						—
Depreciation and amortization					3,333						3,023						2,695						3,097						3,532
EBITDA				$	10,705					$	6,374					$	6,957					$	1,394					$	(15,948	)
Cash flows provided by (used in) operating activities				$	14,357					$	(1,129	)				$	(3,926	)				$	1,613					$	(14,714	)
Cash flows used in investing activities					(36,877	)					(2,484	)					(1,070	)					(1,871	)					(1,712	)
Cash flows provided by (used in) financing activities					23,566						2,531						2,347						6,421						(310	)
Capital expenditures					17,808	(a)					2,484						3,303						1,267						1,732
Backlog at end of year					141,198						90,930						76,268						75,444						58,006

			June 30,
			2007						2006						2005						2004						2003
Balance Sheet Data:
Cash and cash equivalents				$	25,558					$	24,512					$	25,609					$	28,252					$	22,016
Working capital					37,251						43,695						36,520						30,052						22,040
Total assets					142,883						93,234						86,378						73,475						70,344
Long-term liabilities					13,568	(b)					353						670						987						1,303
Total stockholders’ equity					83,513						67,016						60,137						52,806						47,437

(a) Capital expenditures of $17.8 million primarily related to the purchase of network operations center and teleport assets primarily for a large program with Showtime Network Inc. which service began on July 1, 2007. In addition, we upgraded our facility to meet the requirements of our increase in business levels.

(b) The increase in long term liabilities in fiscal 2007 is primarily due to Acquisition Loan used to partially fund the acquisition of GlobalSat.

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains, in addition to historical information, forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, based on our current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as, among others, our dependence on a limited number of contracts for a high percentage of our revenues and a significant reduction in revenues from the government marketplace. These risks and others are more fully described in the ‘‘Risk Factors’’ section and elsewhere in this Annual Re port on Form 10-K. We undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Overview

Our business is global and subject to technological and business trends in the telecommunications marketplace. We derive much of our revenue from government and government related entities (‘‘government marketplace’’) and developing countries. Our business is therefore affected by geopolitical developments involving areas of the world in which our customers are located, particularly in developing countries and areas of the world involved in armed conflicts.

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The products and services we offer include: pre-engineered systems, systems design and integration services, managed network services and life cycle support services. To provide these products and services, we engineer all the necessary satellite and terrestrial facilities as well as provide the integration services required to implement those facilities. We also operate and maintain managed networks and provide life cycle support services on an ongoing basis. Our customers generally have network service requirements that include point-to-point or point-to-multipoint connections via a hybrid network of satellite and terrestrial facilities. In addition to the government marketplace, these customers are communications service providers, commercial enterprises, and media and content broadcasters.

Since our products and services are often sold into areas of the world which do not have fiber optic land-based networks, a substantial portion of our revenues are derived from, and are expected to continue to be derived from, developing countries. These countries carry with them more enhanced risks of doing business than in developed areas of the world, including the possibility of armed conflicts or the risk that more advanced land-based telecommunications will be implemented over time.

In the year ended June 30, 2007, 28% of our revenues were generated by two customers in the government marketplace. Although the identity of customers and contracts may vary from period to period, we have been, and expect to continue to be, dependent on revenues from a small number of customers or contracts in each period in order to meet our financial goals. From time to time these customers are located in developing countries or otherwise subject to unusual risks.

Revenues related to contracts for infrastructure solutions and services have been fixed-price contracts in a majority of cases. Profitability of such contracts is subject to inherent uncertainties as to the cost of performance. In addition to possible errors or omissions in making initial estimates, cost overruns may be incurred as a result of unforeseen obstacles, including both physical conditions and unexpected problems encountered in engineering design and testing. Since our business is frequently concentrated in a limited number of large contracts, a significant cost overrun on any contract could have a material adverse effect on our business, financial condition and results of operations.

Contract costs generally include purchased material, direct labor, overhead and other direct costs. Anticipated contract losses are recognized, as they become known. Costs from infrastructure solutions consist primarily of the costs of purchased materials (including shipping and handling costs), direct labor and related overhead expenses, project-related travel and living costs and subcontractor salaries. Costs from services consist primarily of satellite space segment charges, voice termination costs, network operations expenses and Internet connectivity fees. Satellite space segment charges consist of the costs associated with obtaining satellite bandwidth (the measure of capacity) used in the transmission of services to and from the satellites leased from operators. Network operations expenses consist primarily of costs associated with the operation of the network operations center on a twenty-four hour a day, seven day a week basis, including personnel and r elated costs and depreciation. Selling and marketing expenses consist primarily of salaries, travel and living costs for sales and marketing personnel. Research and development expenses consist primarily of salaries and related overhead expenses. General and administrative expenses consist of expenses associated with our management, finance, contract and administrative functions.

Critical Accounting Policies

Certain of our accounting policies require judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate. Actual results may differ from these judgments under different assumptions or conditions. Our accounting policies that require management to apply significant judgment include:

Revenue Recognition

We recognize revenue in accordance with Staff Accounting Bulletin No. 104 (‘‘SAB 104’’), Revenue Recognition, for our production-type contracts that are sold separately as standard satellite ground

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segment systems when persuasive evidence of an arrangement exists, the selling price is fixed or determinable, collectibility is reasonably assured, delivery has occurred and the contractual performance specifications have been met. Our standard satellite ground segment systems produced in connection with these contracts are typically short-term (less than twelve months in term) and manufactured using a standard modular production process. Such systems require less engineering, drafting and design efforts than our long-term complex production-type projects. Revenue is recognized on our standard satellite ground segment systems upon shipment and acceptance of factory performance testing which is when title transfers to the customer. The amount of revenues recorded on each standard production-type contract is reduced by the customer’s contractual holdback amount, which typically requires 10% to 30% of the contract value to be retained by the customer until installation and final acceptance is complete. T he customer generally becomes obligated to pay 70% to 90% of the contract value upon shipment and acceptance of factory performance testing. Installation is not deemed to be essential to the functionality of the system since installation does not require significant changes to the features or capabilities of the equipment, does not require complex software integration and interfacing and we have not experienced any difficulties installing such equipment. In addition, the customer or other third party vendors can install the equipment. The estimated relative fair value of the installation services is determined by management, which is typically less than the customer’s contractual holdback percentage. If the holdback is less than the fair value of installation, we will defer recognition of revenues, determined on a contract-by-contract basis equal to the fair value of the installation services. Payments received in advance by customers are deferred until shipment and are presented as deferred revenues.< /font>

We recognize revenue using the percentage-of-completion method of accounting upon the achievement of certain contractual milestones in accordance with Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, for our non-standard, complex production-type contracts for the production of satellite ground segment systems and equipment that are generally integrated into the customer’s satellite ground segment network. The equipment and systems produced in connection with these contracts are typically long-term (in excess of twelve months in term) and require significant customer-specific engineering, drafting and design effort in order to effectively integrate all of the customizable earth station equipment into the customer’s ground segment network. These contracts generally have larger contract values, greater economic risks and substantive specific contractual performance requirements due to the engineering and design complexity of such systems and related equipment. Progress payments received in advance by customers are netted against the inventories balance.

The timing of our revenue recognition is primarily driven by achieving shipment, final acceptance or other contractual milestones. Project risks including project complexity, political and economic instability in certain regions in which we operate, export restrictions, tariffs, licenses and other trade barriers which may result in the delay of the achievement of revenue milestones. A delay in achieving a revenue milestone may negatively impact our results of operations.

Costs from Infrastructure Solutions

Costs related to our production-type contracts and our non-standard, complex production-type contracts rely on estimates based on total expected contract costs. Typically, these contracts are fixed price projects. We use estimates of the costs applicable to various elements which we believe are reasonable. Our estimates are assessed continually during the term of these contracts and costs are subject to revisions as the contract progresses to completion. These estimates are subjective based on management assessment of project risk. These risks may include project complexity and political and economic instability in certain regions in which we operate. Revisions in cost estimates are reflected in the period in which they become known. A significant revision in an estimate may negatively impact our results of operations. In the event an estimate indicates that a loss will be incurred at completion, we record the loss as it becomes known.

Goodwill Impairment

Goodwill represents the excess of the purchase price of businesses over the fair value of the identifiable net assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets,

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goodwill and other indefinite life intangible assets are no longer amortized, but instead tested for impairment at least annually. The impairment test for goodwill uses a two-step approach, which is performed at the reporting unit level. Step one compares the fair value of the reporting unit (calculated using a discounted cash flow method) to its carrying value. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit’s goodwill to its implied fair value (i.e., fair value of the reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets). If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment charge. The impairment test is dependent upon estimated future cash flows of the services segment. There have been no events during the year ended June 30, 2007 that wo uld have resulted in any goodwill impairment.

Deferred tax assets

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of any net operating loss carryforwards. Due to the uncertainty regarding our ability to utilize the net operating losses in the future, we have provided a valuation allowance against the operating losses and temporary differences.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (‘‘FIN 48’’), which clarifies the accounting for uncertainty in income tax positions.  FIN 48 requires that we recognize in our financial statements the benefits of tax return positions if that tax position is more likely than not of being sustained on audit, based on its technical merits. The provisions of FIN 48 are effective as of the beginning of our 2008 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings.  We are currently evaluating the impact of adopting FIN 48 on its financial statements.

Allowances for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We assess the customer’s ability to pay based on a number of factors, including our past transaction history with the customer and the creditworthiness of the customer. An assessment of the inherent risks in conducting our business with foreign customers is also made since a significant portion of our revenues is international. Management specifically analyzes accounts receivable, historical bad debts, customer concentrations, customer creditworthiness and current economic trends. If the financial condition of our customers were to deteriorate in the future, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

Inventories consist primarily of work-in-progress from costs incurred in connection with specific customer contracts, which are stated at the lower of cost or market value. In assessing the realizability of inventories, we are required to make estimates of the total contract costs based on the various elements of the work-in-progress. It is possible that changes to these estimates could cause a reduction in the net realizable value of our inventories.

Results of Operations

Fiscal Years Ended June 30, 2007 and 2006

Our Consolidated results of operations for the fiscal year ended June 30, 2007 include two months of results (May and June 2007) related to the acquisition of the GlobalSat business which are included in the services segment.

Revenues from Infrastructure Solutions.    Revenues from infrastructure solutions increased by $16.6 million, or 17.0%, to $114.6 million for the fiscal year ended June 30, 2007 from $98.0 million for the

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fiscal year ended June 30, 2006. The increase in revenues was primarily driven by the increase in the pre-engineered systems product line revenue in the government marketplace.

Revenues from Services.    Revenues from services increased by $8.1 million, or 28.7%, to $36.1 million for the fiscal year ended June 30, 2007 from $28.1 million for the fiscal year ended June 30, 2006. The increase in revenue was primarily due to $5.1 million of sales due to the acquisition of GlobalSat along with an increase in revenue within the life cycle support services due to an increase in the government marketplace and the sale of equipment and services to a major U.S. enterprise customer offset by a decrease in telephony services due to increased competition.

Costs from Infrastructure Solutions.    Costs from infrastructure solutions increased by $10.8 million, or 13.3%, to $92.2 million for the fiscal year ended June 30, 2007 from $81.4 million for the fiscal year ended June 30, 2006. The increase was attributable to the higher revenue base. The gross margin increase to 19.6% for the fiscal year ended June 30, 2007 compared to 16.9% for the fiscal year ended June 30, 2006 was mainly attributable to the increased revenue in the pre-engineered systems product line in the government marketplace, due to contracts with two customers with higher than our usual gross margins.

Costs from Services.    Costs from services increased by $5.4 million, or 23.1%, to $29.1 million for the fiscal year ended June 30, 2007 from $23.6 million for the fiscal year ended June 30, 2006. Gross margin increased to 19.6% for the fiscal year ended June 30, 2007 compared to 15.9% for the fiscal year ended June 30, 2006. The increase in the margin was primarily driven by the acquisition of GlobalSat along with in an increase in revenue within the life cycle support services which has higher margin than the other service offerings, partially offset by a decrease in the margin in telephony services due to increased competition. The increase in gross margin in the services segment has been a key driver in the increase in our consolidated income from operations. The future relationship between the revenue and margin growth of our operating segments will depend on a variety of factors, including the timing of major contracts, which are difficult to predict.

Selling and Marketing.    Selling and marketing expenses increased by $1.3 million, or 19.2%, to $8.4 million for the fiscal year ended June 30, 2007 from $7.0 million for the fiscal year ended June 30, 2006. The increase is a result of an increase in salary and salary related expenses for additional marketing personnel pursuing business in the government marketplace, travel and living expenses related to marketing efforts exploring new markets and expenses related to the sales office in Afghanistan along with selling and marketing expenses incurred at GSM.

Research and Development.    Research and development expenses increased by $0.4 million, or 37.9%, to $1.5 million for the fiscal year ended June 30, 2007 from $1.1 million for the fiscal year ended June 30, 2006. The increase was principally due to costs associated with developing the next version of AxxSys^® Network Management System on the ‘‘.Net’’ operating system called AxxSys^® Orion and additional efforts enhanc ing the cellular hosted switch offering.

General and Administrative.    General and administrative expenses increased by $2.7 million, or 28.2%, to $12.3 million for the fiscal year ended June 30, 2007 from $9.6 million for the fiscal year ended June 30, 2006. The increase in general and administrative expenses for the fiscal year ended June 30, 2007 was due to an increase in fringes primarily due to the increase in the Company’s pay for performance plan, the acquisition of GlobalSat and salary increases due to an increase in headcount.

Interest Income.    Interest income increased by $0.4 million, or 42.0%, to $1.4 million for the fiscal year ended June 30, 2007 from $1.0 million for the fiscal year ended June 30, 2006, as a result of increased interest rates.

Interest Expense.    Interest expense of $0.2 million for the fiscal year ended June 30, 2007 is a result of the term loan used to partially fund the acquisition of GlobalSat.

Gain on liquidation of foreign subsidiary.    Gain on liquidation of foreign subsidiary for the fiscal year ended June 30, 2006 was due to the realization of the previously unrealized foreign exchange gain reported in other comprehensive income upon the liquidation of our UK subsidiary.

Fiscal Years Ended June 30, 2006 and 2005

Revenues from Infrastructure Solutions.    Revenues from infrastructure solutions increased by $7.3 million, or 8.1%, to $98.0 million for the fiscal year ended June 30, 2006 from $90.7 million for the

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fiscal year ended June 30, 2005. The increase in revenues was primarily the result of increased infrastructure sales in the U.S. Government and government related entities marketplace coupled with increased sales due to an overall improvement in the telecommunications industry segments we serve offset by a decrease in sales at Globecomm Systems Europe Limited. Due to this decrease in revenues and our assessment of our UK subsidiary, we liquidated Globecomm Systems Europe Limited on June 30, 2006 and have continued our UK presence through our UK representative office.

Revenues from Services.    Revenues from services increased by $9.1 million, or 48.3%, to $28.1 million for the fiscal year ended June 30, 2006 from $18.9 million for the fiscal year ended June 30, 2005. In our managed network service offerings we had increases of 73% in telephony, 28% in Internet and Data and 39% in VSAT multi-mode, coupled with an 84% increase in life cycle support in fiscal 2006 as compared to fiscal 2005. The increase in revenue and corresponding increase in gross margin in the data communication services segment has been a key driver in the increase in our consolidated income from operations. The future relationship between the revenue growth of our operating segments will depend on a variety of factors, including the timing of major contracts, which are difficult to predict.

Costs from Infrastructure Solutions.    Costs from infrastructure solutions increased by $6.1 million, or 8.0%, to $81.4 million for the fiscal year ended June 30, 2006 from $75.4 million for the fiscal year ended June 30, 2005. The increase was attributable to the higher revenue base. The gross margin remained consistent at 16.9% for the fiscal years ended June 30, 2006 and 2005. Although the gross margin remained consistent, the gross margin in fiscal 2005 included a non-recurring cost recovery related to a settlement with a large customer of $0.9 million. Excluding this cost recovery, the gross margin actually increased in 2006 due to revenue related to the U.S. Government and government related entities projects.

Costs from Services.    Costs from services increased by $8.1 million, or 52.0%, to $23.6 million for the fiscal year ended June 30, 2006 from $15.5 million for the fiscal year ended June 30, 2005. Gross margin decreased to 15.9% for the fiscal year ended June 30, 2006 compared to 18.0% for the fiscal year ended June 30, 2005. The decrease in the margin was primarily a result of increased termination costs in the telephony service offering.

Selling and Marketing.    Selling and marketing expenses increased by $1.2 million, or 20.8%, to $7.0 million for the fiscal year ended June 30, 2006 from $5.8 million for the fiscal year ended June 30, 2005. The increase in selling and marketing costs was a result of an increase in consulting fees and increased salary and salary related expenses for additional marketing personnel pursuing business in Europe, Asia, and U.S Government and government related entities and marketing of our next generation network services.

Research and Development.    Research and development expenses remained consistent for the fiscal years ended June 30, 2006 and 2005.

General and Administrative.    General and administrative expenses increased by $2.0 million, or 26.2%, to $9.6 million for the fiscal year ended June 30, 2006 from $7.6 million for the fiscal year ended June 30, 2005. The increase in general and administrative expenses for the fiscal year ended June 30, 2006 was primarily due to a bad debt recovery of $1.5 million related to a settlement agreement reached with a customer in the fiscal year ended June 30, 2005, which did not recur in fiscal 2006, an increase in the provision for doubtful accounts due to increased business levels in services, compensation expense related to the annual automatic director option grant based on the adoption of SFAS 123R, and an increase in salary and related fringes due to an increase in headcount and the reinst atement of the 401k match by the Company in January 2005.

Interest Income.    Interest income increased by $0.5 million, or 117.3%, to $1.0 million for the fiscal year ended June 30, 2006 from $0.4 million for the fiscal year ended June 30, 2005, as a result of increased interest rates.

Gain on liquidation of foreign subsidiary.    Gain on liquidation of foreign subsidiary for the fiscal year ended June 30, 2006 was due to the realization of the previously unrealized foreign exchange gain reported in other comprehensive income upon the liquidation of our UK subsidiary.

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Quarterly Results

The following tables set forth unaudited consolidated financial information for each of the eight fiscal quarters in the period ended June 30, 2007. This information has been presented on the same basis as the audited consolidated financial statements appearing elsewhere in the Annual Report on Form 10-K, and we believe all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the unaudited quarterly results of operations when read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The operating results for any quarter are not necessarily indicative of the operating results for any future period.

			Three Months Ended,
			June 30, 2007						Mar. 31, 2007						Dec. 31, 2006						Sept. 30, 2006						June 30, 2006						Mar. 31, 2006						Dec. 31, 2005						Sept. 30, 2005
			(In thousands, except per share data)
Statement of Operations Data:
Revenues from infrastructure solutions				$	36,982					$	31,818					$	28,351					$	17,461					$	28,609					$	23,735					$	22,604					$	23,019
Revenues from services					12,206						7,299						8,370						8,258						6,898						7,306						7,308						6,557
Total revenues					49,188						39,117						36,721						25,719						35,507						31,041						29,912						29,576
Costs and operating expenses:
Costs from infrastructure solutions					29,695						25,225						23,202						14,075						23,568						19,616						18,701						19,525
Costs from services					9,358						6,131						6,976						6,587						6,021						5,873						6,143						5,568
Selling and marketing					2,545						2,290						1,766						1,775						2,029						1,871						1,615						1,514
Research and development					488						440						323						200						514						268						161						109
General and administrative					3,899						3,033						2,951						2,414						2,402						2,379						2,552						2,256
Total costs and operating expenses					45,985						37,119						35,218						25,051						34,534						30,007						29,172						28,972
Income from operations					3,203						1,998						1,503						668						973						1,034						740						604
Other income (expense):
Interest income					363						391						348						268						262						247						227						229
Interest expense					(205	)					—						—						—						—						—						—						—
Gain on liquidation of foreign subsidiary					—						—						—						—						264						—						—						—
Income before income taxes					3,361						2,389						1,851						936						1,499						1,281						967						833
Provision (benefit) for income taxes					89						57						45						20						(4	)					42						30						20
Net income				$	3,272					$	2,332					$	1,806					$	916					$	1,503					$	1,239					$	937					$	813
Basic net income per common share				$	0.20					$	0.15					$	0.12					$	0.06					$	0.10					$	0.08					$	0.06					$	0.06
Diluted net income per common share				$	0.19					$	0.14					$	0.11					$	0.06					$	0.10					$	0.08					$	0.06					$	0.05
Weighted-average shares used in the calculation of basic net income per common share					16,324						16,045						15,601						15,219						15,184						15,098						15,005						14,719
Weighted-average shares used in the calculation of diluted net income per common share					17,332						16,954						16,489						15,834						15,791						15,682						15,606						15,336

We may experience significant quarter-to-quarter fluctuations in our consolidated results of operations, which may result in volatility in the price of our common stock. See section entitled ‘‘Risk Factors.’’

Liquidity and Capital Resources

At June 30, 2007, we had working capital of $37.3 million, including cash and cash equivalents of $25.6 million, net accounts receivable of $38.4 million, inventories of $16.3 million and prepaid expenses

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and other current assets of $2.8 million, offset by $24.2 million in accounts payable, $9.8 million in deferred revenue, $3.3 million in current portion of long term debt and $8.5 million in accrued expenses and other current liabilities.

Net cash provided by operating activities during the fiscal year ended June 30, 2007 was $14.4 million, which primarily related to: net income of $8.3 million; an increase in accounts payable of $4.3 million relating to the increase in revenue and timing of vendor payments; a non-cash item representing depreciation and amortization expense of $3.3 million primarily related to the network operations center and satellite earth station equipment; an increase in accrued payroll and related fringe benefits of $3.0 million primarily due to an increase in the Company’s pay for performance plan; an increase in deferred revenues of $1.2 million due to timing differences between project billings and revenue recognition milestones resulting from specific customer contracts; offset by an increase in accounts receivable of $4.6 million due to the increase in revenues and an increase in inventories of $2.8 million due to the increased business levels and the timing of shipments on certain contracts.

Net cash used in investing activities during fiscal year ended June 30, 2007 was $36.9 million, which consisted of $19.1 million related to the acquisition of GlobalSat and capital expenditures of $17.8 million which primarily related to the purchase of network operations center and teleport assets primarily for a large program with Showtime Network Inc. for which service began on July 1, 2007. In addition, we upgraded our Hauppauge facility to meet the requirements of our increase in business levels.

Net cash provided by financing activities during fiscal year ended June 30, 2007 was $23.6 million which primarily related to $16.0 million of borrowings from the term note used to partially fund the acquisition of GlobalSat, $6.4 million of proceeds from the exercise of stock options and $1.4 million of proceeds from the exercise of warrants.

On May 2, 2007, we acquired the GlobalSat business for a purchase price of $18.5 million in cash. The purchase price was funded, in part, through a five-year $16.0 million acquisition term loan (‘‘Acquisition Loan’’) provided by Citibank, N.A. The Acquisition Loan bears interest at the prime rate or LIBOR plus 225 basis points, at our discretion, and is collateralized by a first priority security interest on all of our assets, including the GSM assets. In addition, the credit facility contains certain financial and other covenants, monthly reporting provisions and other requirements, with which we were in compliance with at June 30, 2007. The remaining principal balance as of June 30, 2007 was $15.7 million.

We have a credit facility in place with Citibank, N.A, which expires on November 30, 2007. The credit facility is comprised of: (1) a $25 million borrowing base line of credit (the ‘‘Line’’), which is available for standby letters of credit, commercial letters of credit and loans; (2) a bridge line of credit in the amount of $7 million, which is to support equipment purchases; and (3) a foreign exchange line in the amount of $10 million. If there are direct borrowings under the Line, the commercial letters of credit and direct borrowings may not be drawn in amounts in excess of $20 million. The Line bears interest at the prime rate or LIBOR plus 225 basis points, at our discretion, and is collateralized by a first priority security interest on all of our assets. We can be advanced up to 80% of eligible accounts receivable and 100% of unrestricted cash. The credit facility provides that we may b orrow and apply letters of credit against the availability under the Line. In addition, the credit facility contains certain financial and other covenants, deposit requirements, monthly reporting provisions and other requirements. The credit facility is uncommitted and advances are subject to Citibank, N.A.’s approval. As of June 30, 2007, no borrowings were outstanding under the credit facility; however, there were standby letters of credit of approximately $13.4 million, which were applied against and reduced the amounts available under the facility.

We lease satellite space segment services and other equipment under various operating lease agreements, which expire in various years through fiscal 2013. Future minimum lease payments due on these leases through June 30, 2008 are approximately $13.6 million.

We expect that our cash and working capital requirements for operating activities will increase as we continue to implement our business strategy. Management anticipates additional working capital requirements for work in progress for orders as obtained and that we may periodically experience negative cash flows due to variances in quarter to quarter operating performance and if cash is used to fund any future acquisitions of complementary businesses, technologies and intellectual property. No

32

acquisitions are currently at a stage which are probable of completion. We will use existing working capital and, if required, use our credit facility to meet these additional working capital requirements.

On August 17, 2007, we completed an offering of equity securities totaling $33,750,000 in gross proceeds. We sold 3,000,000 shares of common stock at a price of $11.25 per share and granted to the underwriters an overallotment option of 450,000 additional shares at the same terms. On August 21, 2007, we received $31,893,750 after deducting underwriting discounts and commissions. As of the date of this report, the underwriters overallotment option of 450,000 additional shares has not been exercised.

Our future capital requirements will depend upon many factors, including the success of our marketing efforts in the infrastructure solutions and services business, the nature and timing of customer orders and the level of capital requirements related to the expansion of our service offerings. Based on current plans, we believe that our existing capital resources will be sufficient to meet working capital requirements at least through June 30, 2008. However, we cannot assure you that there will be no unforeseen events or circumstances that would consume available resources significantly before that time.

Additional funds may not be available when needed and, even if available, additional funds may be raised through financing arrangements and/or the issuance of preferred or common stock or convertible securities on terms and prices significantly more favorable than those of the currently outstanding common stock, which could have the effect of diluting or adversely affecting the holdings or rights of our existing stockholders. If adequate funds are unavailable, we may be required to delay, scale back or eliminate some of our operating activities, including, without limitation, capital expenditures, research and development activities, the timing and extent of our marketing programs, and we may be required to reduce headcount. We cannot assure you that additional financing will be available to us on acceptable terms, or at all.

Contractual Obligations and Commercial Commitments

At June 30, 2007, we had contractual obligations and commercial commitments as follows (in thousands):

			Payments Due by Period
Contractual Obligations			Total						Less than 1 year						1-3 years						4-5 years						More than 5 years
Operating leases				$	20,872					$	13,553					$	6,263					$	1,042					$	14
Long term debt				$	15,845					$	3,312					$	6,400					$	6,133					$	—
Total contractual cash obligations				$	36,717					$	16,865					$	12,663					$	7,175					$	14

									Amount of Commitment Expiration Per Period
Other Commercial Commitments			Total Amounts Committed						Less than 1 year						1-3 years						4-5 years						More than 5 years
Standby letters of credit				$	13,420					$	12,621					$	799					$	—					$	—
Total commercial commitments				$	13,420					$	12,621					$	799					$	—					$	—

Related Party Transactions

During January 2003, pursuant to a letter agreement, we combined the then outstanding loan and advances receivable from an individual who is a former executive officer and a current employee into a $0.3 million promissory note. Under the terms of the letter agreement we will forgive the outstanding principal and interest amounts due on the promissory note in five annual installments beginning in January 2004 so long as the former executive officer remains an employee, subject to the terms of the letter agreement. In March 2007, we forgave the fourth installment under the promissory note.

On August 17, 2007, the Company completed an offering of equity securities totaling $33,750,000 in gross proceeds. On August 21, 2007, the Company received $31,893,750 after deducting underwriting discounts and commissions. Stephens Inc. acted as a joint lead bookrunners in our August 17, 2007 offering. Because A. Robert Towbin serves on our Board of Directors and as an Executive Vice President and Managing Director of Stephens Inc., Stephens Inc. may be deemed to be an ‘‘affiliate’’ of Globecomm

33

under Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc. (‘‘NASD’’). Accordingly, the offering was made in compliance with the applicable provisions of Rule 2720, which require that the offering price of the common stock be no higher than that recommended by a ‘‘qualified independent underwriter,’’ as defined in Rule 2720.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are subject to a variety of risks, including foreign currency exchange rate fluctuations relating to certain purchases from foreign vendors. In the normal course of business, we assess these risks and have established policies and procedures to manage our exposure to fluctuations in foreign currency values.

Our objective in managing our exposure to foreign currency exchange rate fluctuations is to reduce the impact of adverse fluctuations in earnings and cash flows associated with foreign currency exchange rates. Accordingly, we may utilize from time to time foreign currency forward contracts to hedge our exposure on firm commitments denominated in foreign currency. At June 30, 2007, we had no outstanding foreign exchange contracts.

Our results of operations and cash flows are subject to fluctuations due to changes in interest rates primarily from our variable interest rate long term debt and from our investment of available cash balances in money market funds with portfolios of investment grade corporate and government securities. Under our current positions, we do not use interest rate derivative instruments to manage exposure to interest rate changes.

Item 8.    Financial Statements and Supplementary Data

The information required by this item is incorporated by reference to the Consolidated Financial Statements listed in Item 15(a) of Part IV of this Annual Report on Form 10-K.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures.    Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’)) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our Chief Executive Officer and the Chief Financial Officer have reviewed the effectiveness of our disclosure controls and procedures as of June 30, 2007 and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date. We have excluded from this assessment the operations of Globec omm Services Maryland which was acquired as of April 30, 2007.

Management’s Report on Internal Control Over Financial Reporting.    Under Section 404 of the Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness of the Company’s internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company’s internal control over financial reporting is effective.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company’s financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.

Internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

34

The Company’s management has assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2007. In making this assessment, the Company used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in ‘‘Internal Control — Integrated Framework.’’ These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring. The Company’s assessment included extensive documenting, evaluating and testing the design and operating effectiveness of its internal control over financial reporting.

Based on the Company’s processes and assessment, as described above, management has concluded that, as of June 30, 2007, the Company’s internal control over financial reporting was effective.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2007 has been audited by our independent auditors, as stated in their report, which appears in the ‘‘Report of Independent Registered Public Accounting Firm’’ on page F-2 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting.    There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B.    Other Information

None

35

PART III

Item 10.    Directors and Executive Officers of the Registrant

Certain information in response to this item is incorporated herein by reference to ‘‘Election of Directors’’ and ‘‘Executive Officers’’ in Globecomm Systems Inc.’s Proxy Statement to be filed with the Securities and Exchange Commission (the ‘‘SEC’’). Information on compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to ‘‘Section 16(a) Beneficial Ownership Reporting Compliance’’ in the Registrant’s Proxy Statement to be filed with the SEC.

Item 11.    Executive Compensation

Information in response to this item is incorporated herein by reference to ‘‘Executive Compensation and Other Information’’ in the Registrant’s Proxy Statement to be filed with the SEC.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

Information in response to this item is incorporated herein by reference to ‘‘Security Ownership of Certain Beneficial Owners and Management’’ in the Registrant’s Proxy Statement to be filed with the SEC.

Item 13.    Certain Relationships and Related Transactions

Information in response to this item is incorporated herein by reference to ‘‘Certain Transactions’’ in the Registrant’s Proxy Statement to be filed with the SEC.

Item 14.    Principal Accounting Fees and Services

Information in response to this item is incorporated herein by reference to ‘‘Report of the Audit Committee of the Board of Directors’’ in the Registrant’s Proxy Statement to be filed with the SEC.

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PART IV

Item 15.    Exhibits, Financial Statement Schedules

(A) (1)   Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm			F-1
Consolidated Balance Sheets as of June 30, 2007 and 2006			F-4
Consolidated Statements of Operations for the years ended June 30, 2007, 2006 and 2005			F-5
Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2007, 2006 and 2005			F-6
Consolidated Statements of Cash Flows for the years ended June 30, 2007, 2006 and 2005			F-7
Notes to Consolidated Financial Statements			F-8

        (2)   Index to Consolidated Financial Statement Schedule

Schedule II – Valuation and Qualifying Accounts					S-1

All other schedules for which provision is made in the applicable accounting regulation from the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

37

        (3)   Index of Exhibits

Exhibit No.
	3	.1				Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
	3	.2				Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
	4	.2				See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws of the Registrant defining rights of holders of Common Stock of the Registrant (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1, File No. 333-22425 (the ‘‘Registration Statement’’)).
	10	.1				Employment Agreement dated as of October 9, 2001 by and between the Registrant and David E. Hershberg (incorporated by reference to Exhibit 10.9 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.2				Employment Agreement dated as of October 9, 2001 by and between the Registrant and Kenneth A. Miller (incorporated by reference to Exhibit 10.10 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.3				The Amended and Restated 1997 Stock Incentive Plan (incorporated by reference to Exhibit 99 of the Registrant’s Registration Statement on Form S-8 Registration, File No. 333-112351).
	10	.4				1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.8 of the Registrant’s Registration Statement on Form S-8, File No. 333-70527).
	10	.5				Rights Agreement, dated as of December 3, 1998, between the Registrant and American Stock Transfer and Trust Company, which includes the form of Certificate of Designation for the Series A Junior Participating Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Series A Preferred Shares as Exhibit C (incorporated by reference to Exhibit 4 of Registrant’s Current Report on Form 8-K, dated December 3, 1998).
	10	.6				Negotiable Promissory Note, dated April 1, 2001, between the Registrant and Donald Woodring (incorporated by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2001).
	10	.7				Employment Agreement, dated as of October 9, 2001, by and between Stephen C. Yablonski and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.8				Employment Agreement, dated as of October 9, 2001, by and between Andrew C. Melfi and the Registrant (incorporated by reference to Exhibit 10.21 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.9				Employment Agreement, dated as of October 9, 2001, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.22 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.10				Employment Agreement, dated as of October 9, 2001, by and between Paul J. Johnson and the Registrant (incorporated by reference to Exhibit 10.23 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.11				Employment Agreement, dated as of October 9, 2001, by and between Paul Eterno and the Registrant (incorporated by reference to Exhibit 10.24 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).

38

Exhibit No.
	10	.12				Promissory Note Secured By Stock Pledge Agreement, dated September 4, 2001, by and between Kenneth A. Miller and the Registrant (incorporated by reference to Exhibit 10.26 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.13*				Settlement Agreement, dated as of October 1, 2002, by and between Loral Skynet®, a division of Loral SpaceCom Corporation and the Registrant (incorporated by reference to Exhibit 10.28 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2002).
	10	.14				Letter Agreement, dated as of January 31, 2003, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.30 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended December 31, 2002).
	10	.15				Loan and Security Agreement, dated as of September 15, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.31 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2003).
	10	.16				Loan Modification Agreement, dated as of October 8, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.17 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.17				Second Loan Modification Agreement, dated as of March 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.18 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.18				Third Loan Modification Agreement, dated as of June 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.19				Fourth Loan Modification Agreement, dated as of September 24, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.20				Fifth Loan Modification Agreement, dated as of October 29, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form 8-K, File No. 000-22839).
	10	.21				Sixth Loan Modification Agreement, dated as of November 2, 2005, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form 8-K, File No. 000-22839).
	10	.22				Credit Facility dated October 31, 2006, by and between the Registrant and Citibank, N.A. (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form 8-K, file No. 000-22839).
	10	.23				Term Loan Agreement dated May 2, 2007, by and between the Registrant and Citibank, N.A. (filed herewith).
	10	.24				2006 Incentive Stock Plan. (incorporated by reference to Appendix A of the Registrant’s Definitive proxy on schedule 14A, filed with the Commission on October 13, 2006).
	10	.25				Asset Purchase Agreement, dated May 2, 2007, by and between the Registrant and Lyman Bros., Inc. (incorporated by reference to Exhibit 2.1 of the Registrant’s Registration Statement on Form 8-K, file No. 000-22839).

39

Exhibit No.
	10	.26				Form of Securities Purchase Agreement, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-3, File No. 333-112024).
	10	.27				Form of Warrant, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-3, File No. 333-112024).
	14					Registrant’s Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	21					Subsidiaries of the Registrant (filed herewith).
	23					Consent of Independent Registered Public Accounting Firm (filed herewith).
	31	.1				Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended (filed herewith).
	31	.2				Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended (filed herewith).
	32					Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002 (filed herewith).

* Confidential treatment granted for portions of this agreement.

(B)    Exhibits

The response to this portion of Item 15 is submitted as a separate section of this report.

(C)    Financial Statement Schedules

The response to this portion of Item 15 is submitted as a separate section of this report.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			GLOBECOMM SYSTEMS INC.
Date: September 13, 2007			By:			/s/ DAVID E. HERSHBERG
						David E. Hershberg, Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ DAVID E. HERSHBERG		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		9/13/07
David E. Hershberg
/s/ ANDREW C. MELFI		Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)		9/13/07
Andrew C. Melfi
/s/ KENNETH A. MILLER		President and Director		9/13/07
Kenneth A. Miller
/s/ RICHARD E. CARUSO		Director		9/13/07
Richard E. Caruso
/s/ HARRY L. HUTCHERSON Jr.		Director		9/13/07
Harry L. Hutcherson Jr.
/s/ BRIAN T. MALONEY		Director		9/13/07
Brian T. Maloney
/s/ JACK A. SHAW		Director		9/13/07
Jack A. Shaw
/s/ A. ROBERT TOWBIN		Director		9/13/07
A. Robert Towbin
/s/ C.J. WAYLAN		Director		9/13/07
C.J. Waylan

41

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Globecomm Systems Inc.

We have audited the accompanying consolidated balance sheets of Globecomm Systems Inc. (the ‘‘Company’’) as of June 30, 2007 and 2006 and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2007. Our audits also included the financial statement schedule listed in the index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Globecomm Systems Inc. at June 30, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, in 2006 the Company changed its method of accounting for stock-based compensation.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of June 30, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 10, 2007 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Melville, New York
August 10, 2007

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of
Globecomm Systems Inc.

We have audited management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting that Globecomm Systems Inc. maintained effective internal control over financial reporting as of June 30, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Globecomm Systems Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unaut horized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Globecomm Services Maryland LLC, which is included in the 2007 consolidated financial statements of Globecomm Systems Inc. and constituted approximately $10.2 million and $1.3 million of total and net assets, respectively, as of June 30, 2007 and approximately $5.1 million and $0.7 million of revenue and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Globecomm Systems Inc. also did not include an evaluation of the internal control over financial reporting of Globecomm Services Maryland LLC.

In our opinion, management’s assessment that Globecomm Systems Inc. maintained effective internal control over financial reporting as of June 30, 2007, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Globecomm Systems Inc. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2007, based on the COSO criteria.

F-2

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Globecomm Systems Inc. as of June 30, 2007 and 2006 and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2007 and our report dated August 10, 2007 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Melville, New York
August 10, 2007

F-3

GLOBECOMM SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

			June 30, 2007						June 30, 2006
Assets
Current assets:
Cash and cash equivalents				$	25,558					$	24,512
Accounts receivable, net					38,378						30,837
Inventories					16,294						13,058
Prepaid expenses and other current assets					2,823						1,131
Deferred income taxes					—						22
Total current assets					83,053						69,560
Fixed assets, net					33,238						15,510
Goodwill					22,197						7,204
Intangibles, net					3,474						—
Other assets					921						960
Total assets				$	142,883					$	93,234
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable				$	24,170					$	19,020
Deferred revenues					9,792						1,691
Accrued payroll and related fringe benefits					6,037						2,872
Other accrued expenses					2,235						1,966
Deferred liabilities					256						316
Long term debt – current					3,312						—
Total current liabilities					45,802						25,865
Other liabilities					1,035						353
Long term debt					12,533						—
Commitments and contingencies
Stockholders’ equity:
Series A Junior Participating, shares authorized, shares issued and outstanding: none in 2007 and 2006					—						—
Common stock, $.001 par value, shares authorized: 50,000,000 at June 30, 2007 and 2006; shares issued: 16,942,449 in 2007 and 15,660,524 in 2006					17						16
Additional paid-in capital					143,843						135,673
Accumulated deficit					(57,566	)					(65,892	)
Treasury stock, at cost, 465,351 shares in 2007 and 2006					(2,781	)					(2,781	)
Total stockholders’ equity					83,513						67,016
Total liabilities and stockholders’ equity				$	142,883					$	93,234

See accompanying notes.

F-4

GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

			Years Ended June 30,
			2007						2006						2005
Revenues from infrastructure solutions				$	114,612					$	97,967					$	90,656
Revenues from services					36,133						28,069						18,928
Total revenues					150,745						126,036						109,584
Costs and operating expenses:
Costs from infrastructure solutions					92,197						81,410						75,357
Costs from services					29,052						23,605						15,527
Selling and marketing					8,376						7,029						5,821
Research and development					1,451						1,052						1,021
General and administrative					12,297						9,589						7,596
Total costs and operating expenses					143,373						122,685						105,322
Income from operations					7,372						3,351						4,262
Other income (expense):
Interest income					1,370						965						444
Interest expense					(205	)					—						—
Gain on liquidation of foreign subsidiary					—						264						—
Gain on sale of available-for-sale securities					—						—						132
Gain on sale of investment					—						—						40
Income before income taxes					8,537						4,580						4,878
Provision for income taxes					211						88						64
Net income				$	8,326					$	4,492					$	4,814
Basic net income per common share				$	0.53					$	0.30					$	0.33
Diluted net income per common share				$	0.50					$	0.29					$	0.32
Weighted-average shares used in the calculation of basic net income per common share					15,795						15,001						14,422
Weighted-average shares used in the calculation of diluted net income per common share					16,672						15,608						14,966

See accompanying notes.

F-5

GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
YEARS ENDED JUNE 30, 2007, 2006 AND 2005
(In thousands)

			Common Stock												Additional Paid-in Capital						Accumulated Deficit						Accumulated Other Comprehensive Income (Loss)						Treasury Stock												Total Stockholders’ Equity
			Shares						Amount																								Shares						Amount
Balance at June 30, 2004					14,629						15						130,503						(75,198	)					267						465						(2,781	)					52,806
Proceeds from exercise of stock options					200						—						863						—						—						—						—						863
Issuance of common stock in connection with employee stock purchase plan					38						—						178						—						—						—						—						178
Issuance of stock options for services					—						—						6						—						—						—						—						6
Stock options acceleration					—						—						147						—						—						—						—						147
Proceeds from exercise of warrants					237						—						1,306						—						—						—						—						1,306
Comprehensive income:
Net income					—						—						—						4,814						—						—						—						4,814
Gain from foreign currency translation					—						—						—						—						17						—						—						17
Total comprehensive income											—						—						—						—						—						—						4,831
Balance at June 30, 2005					15,104						15						133,003						(70,384	)					284						465						(2,781	)					60,137
Proceeds from exercise of stock options					477						1						2,090						—						—						—						—						2,091
Stock compensation expense					—						—						115						—						—						—						—						115
Proceeds from exercise of warrants					80						—						440						—						—						—						—						440
Tax benefit from stock compensation plan					—						—						25						—						—						—						—						25
Comprehensive income:
Net income					—						—						—						4,492						—						—						—						4,492
Loss from foreign currency translation					—						—						—						—						(20	)					—						—						(20	)
Realized gain on liquidation of foreign subsidiary					—						—						—						—						(264	)					—						—						(264	)
Total comprehensive income																																															4,208
Balance at June 30, 2006					15,661						16						135,673						(65,892	)					—						465						(2,781	)					67,016
Proceeds from exercise of stock options					1,002						1						6,436						—						—						—						—						6,437
Stock compensation expense					—						—						214						—						—						—						—						214
Grant of restricted shares					37						—						—						—						—						—						—						—
Proceeds from exercise of warrants					242						—						1,444						—						—						—						—						1,444
Tax benefit from stock compensation plan					—						—						76						—						—						—						—						76
Net Income					—						—						—						8,326						—						—						—						8,326
Balance at June 30, 2007					16,942						17						143,843						(57,566	)					—						465						(2,781	)					83,513

See accompanying notes.

F-6

GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

			Years Ended June 30,
			2007						2006						2005
Operating Activities:
Net income				$	8,326					$	4,492					$	4,814
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization					3,333						3,023						2,695
Provision for doubtful accounts					546						426						104
Deferred income taxes					22						16						45
Stock compensation expense					214						115						153
Gain on sale of available-for-sale securities					—						—						(132	)
Gain on sale of investment					—						—						(40	)
Tax benefit from stock compensation plan					76						25						—
Gain on liquidation of foreign subsidiary					—						(264	)					—
Changes in operating assets and liabilities:
Accounts receivable					(4,632	)					(8,569	)					(8,464	)
Inventories					(2,795	)					(174	)					(9,119	)
Prepaid expenses and other current assets					103						(273	)					416
Other assets					58						73						63
Accounts payable					4,258						3,471						63
Deferred revenues					1,235						(3,870	)					4,482
Accrued payroll and related fringe benefits					2,961						699						1,019
Other accrued expenses					30						(2	)					292
Other liabilities					622						(317	)					(317	)
Net cash provided by (used in) operating activities					14,357						(1,129	)					(3,926	)
Investing Activities:
Purchases of fixed assets					(17,808	)					(2,484	)					(3,303	)
Acquisition of business net of cash received					(19,069	)					—						—
Restricted cash					—						—						1,903
Proceeds from the sale of available-for-sale securities					—						—						330
Net cash used in investing activities					(36,877	)					(2,484	)					(1,070	)
Financing Activities:
Proceeds from exercise of stock options					6,437						2,091						863
Proceeds from exercise of warrants					1,444						440						1,306
Proceeds from sale of common stock in connection with employee stock purchase plan					—						—						178
Borrowings under acquisition loan					16,000						—						—
Repayments of debt					(315	)					—						—
Net cash provided by financing activities					23,566						2,531						2,347
Effect of foreign currency translation on cash					—						(15	)					6
Net increase (decrease) increase in cash and cash equivalents					1,046						(1,097	)					(2,643	)
Cash and cash equivalents at beginning of year					24,512						25,609						28,252
Cash and cash equivalents at end of year				$	25,558					$	24,512					$	25,609
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest				$	86					$	—					$	—
Cash paid for income taxes					109						198						5

See accompanying notes.

F-7

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007

1.    Organization and Description of Business

Globecomm Systems Inc. (‘‘Globecomm’’) was incorporated in the State of Delaware on August 17, 1994. The Company’s core business provides end-to-end, value-added satellite-based communications solutions. This business supplies infrastructure solutions for satellite-based communications including hardware and software to support a wide range of satellite systems. The Company’s wholly-owned subsidiaries, Globecomm Network Services Corporation (‘‘GNSC’’) and Globecomm Services Maryland LLC (‘‘GSM’’) provide satellite communication services capabilities.

2.    Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, GNSC, GSM and Globecomm Systems Europe Limited (collectively, the ‘‘Company’’). On June 30, 2006, the Company liquidated the Globecomm Systems Europe Limited entity. All significant intercompany balances and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104 (‘‘SAB 104’’), Revenue Recognition, for its production-type contracts that are sold separately as standard satellite ground segment systems when persuasive evidence of an arrangement exists, the selling price is fixed or determinable, collectibility is reasonably assured, delivery has occurred and the contractual performance specifications have been met. The Company’s standard satellite ground segment systems produced in connection with these contracts are typically short-term (less than twelve months in term) and manufactured using a standard modular production process. Such systems require less engineering, drafting and design efforts than the Company’s long-term complex production-type projects. Revenue is recognized on the Company’s standard satellite ground segment systems upon shipment and acceptance of factory performance test ing which is when title transfers to the customer. The amount of revenues recorded on each standard production-type contract is reduced by the customers’ contractual holdback amount, which typically requires 10% to 30% of the contract value to be retained by the customer until installation and final acceptance is complete. The customer generally becomes obligated to pay 70% to 90% of the contract value upon shipment and acceptance of factory performance testing. Installation is not deemed to be essential to the functionality of the system since installation does not require significant changes to the features or capabilities of the equipment, does not require complex software integration and interfacing and the Company has not experienced any difficulties installing such equipment. In addition, the customer or other third party vendors can install the equipment. The estimated relative fair value of the installation services is determined by management, which is typically less than the customer’s contractual holdback percentage. If the holdback is less than the fair value of installation, the Company will defer recognition of revenues, determined on a contract-by-contract basis equal to the fair value of the installation services. Payments received in advance by customers are deferred until shipment and are presented as deferred revenues in the accompanying consolidated balance sheets.

F-8

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

2.    Significant Accounting Policies (continued)

The Company recognizes revenue using the percentage-of-completion method of accounting upon the achievement of certain contractual milestones in accordance with Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, for its non-standard, complex production-type contracts for the production of satellite ground segment systems and equipment that are generally integrated into the customers’ satellite ground segment network. The equipment and systems produced in connection with these contracts are typically long-term (in excess of twelve months in term) and require significant customer-specific engineering, drafting and design effort in order to effectively integrate all of the customizable earth station equipment into the customers’ ground segment network. These contracts generally have larger contract values, greater economic risks and substantive specific contractual performance requirements due to the engineering and design complexity of such systems and related equipment. Progress payments received in advance by customers are netted against the inventory balances in the accompanying consolidated balance sheets.

Contract costs generally include purchased material, direct labor, overhead and other direct costs. Anticipated contracted losses are recognized as they become known.

Revenues from services consist of managed network services and lifecycle support services for a broad variety of communications applications. Service revenues are recognized ratably over the period in which services are provided. Payments received in advance of services are deferred until the period such services are provided and are presented as deferred revenues in the accompanying consolidated balance sheets.

Costs from Infrastructure Solutions

Costs from infrastructure solutions consist primarily of the costs of purchased materials (including shipping and handling costs), direct labor and related overhead expenses, project-related travel and living costs and subcontractor salaries.

Costs from Services

Costs from services relating to Internet-based services consist primarily of satellite space segment charges, Internet connectivity fees, voice termination costs and network operations expenses. Satellite space segment charges consist of the costs associated with obtaining satellite bandwidth (the measure of capacity) used in the transmission of services to and from the satellite leased from operators. Network operations expenses consist primarily of costs associated with the operation of the Network Operation Centers, on a twenty-four hour a day, seven-day a week basis, including personnel and related costs and depreciation.

Research and Development

Research and development expenditures are expensed as incurred.

Inventories

Inventories, which consist primarily of work-in-progress from costs incurred in connection with specific customer contracts, are stated at the lower of cost (using the first-in, first-out method of accounting) or market value. Progress payments received under long-term contracts are netted against inventories.

Cash Equivalents

The Company classifies highly liquid financial instruments with a maturity, at the purchase date, of three months or less as cash equivalents.

F-9

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

2.    Significant Accounting Policies (continued)

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized and repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from three to twenty-five years. Amortization of leasehold improvements and leased equipment is calculated using the straight-line method over the shorter of the lease term or estimated useful life of the asset.

Fair Value of Financial Instruments

The recorded amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values because of the short maturity of these instruments. The recorded amount of the Company’s debt approximates its fair value due to its variable interest rate.

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R (revised 2004), Share-Based Payment, which is a revision of SFAS 123 (‘‘SFAS 123R’’). SFAS 123R eliminates the ability to account for share-based compensation under the intrinsic value method permitted by Accounting Principles Board Opinion No. 25 (‘‘APB 25’’), Accounting for Stock Issued to Employees. This requires the Company to adopt the fair value model for recognizing compensation expense for employee stock options, and has the effect of reducing the Company’s reported net income and net income per share.

On July 1, 2005, the Company adopted SFAS 123R using a modified prospective application, as permitted under SFAS 123R. Accordingly, prior period amounts have not been restated. Under this application, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Before the adoption of SFAS 123R, the Company applied APB 25 to account for its stock-based awards. Under APB 25, the Company was not required to recognize compensation expense for the cost of stock options. 

The fair value of options granted under the Company’s 1997 and 2006 Plans was estimated at date of grant using a Black-Scholes option pricing model with the following assumptions for the years ended June 30, 2007, 2006 and 2005: weighted average risk-free interest rate of 4.6% (2007), 4.6% (2006) and 3.6% (2005), weighted average volatility factor of the expected market price of the Company’s common stock of .57 (2007), .65 (2006) and .41 (2005), no dividend yields and a weighted-average expected life of the options of four years for the years ended June 30, 2007 and 2006 and five years for the year ended June 30, 2005.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options under the Black-Scholes option valuation model.

F-10

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

2.    Significant Accounting Policies (continued)

The following table details the effect on net income and net income per share had stock-based compensation expense for the stock options been recorded in the year ended June 30, 2005 based on the fair-value method under SFAS 123R. (in thousands, except per share data)

Reported net income				$	4,814
Stock compensation expense included in net income as reported					153
Stock compensation expense determined under fair value method					(2,909	)
Pro-forma net income				$	2,058
Reported basic net income per common share				$	0.33
Reported diluted net income per common share				$	0.32
Pro-forma basic and diluted net income per common share				$	0.14

As of June 30, 2007 there was approximately $396,000 of unrecognized compensation cost related to non-vested stock-based compensation related to outstanding stock options. The cost is expected to be recognized over a weighted-average period of 3.5 years.

In May 2005, in response to FAS 123R, the Board of Directors of the Company, upon recommendation of its Compensation Committee, approved an acceleration of all unvested options granted to employees and directors under the Company’s Amended and Restated 1997 Stock Incentive Plan. As a result of the acceleration, options to acquire 863,165 shares of the Company’s common stock became immediately exercisable. In order to prevent unintended personal benefit to directors and executive officers, the Board of Directors, upon recommendation of its Compensation Committee, imposed restrictions on any shares received through the exercise of accelerated options held by those individuals. These restrictions prevent their sale of stock obtained through exercise of an accelerated option prior to the earlier of the original vesting date or the individual’s termination of employment. The restrictions applied to 306,220 options. A one-time non-cash compensat ion charge of approximately $147,000 was recorded in the fourth quarter of 2005 as a result of the acceleration.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price of businesses over the fair value of the identifiable net assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other indefinite life intangible assets are no longer amortized, but instead tested for impairment at least annually. The impairment test for goodwill uses a two-step approach, which is performed at the reporting unit level. Step one compares the fair value of the reporting unit (calculated using a discounted cash flow method) to its carrying value. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit’s goodwill to its implied fair value (i.e., fair value of the reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets). If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment.

The net carrying value of goodwill is approximately $22,197,000 and $7,204,000 at June 30, 2007 and 2006, which relates to the services reporting unit. The Company performs the goodwill impairment test annually in the fourth quarter. No impairment was noted on the goodwill and intangible assets at June 30, 2007.

F-11

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

2.    Significant Accounting Policies (continued)

Intangibles subject to amortization consist of the following:

			June 30, 2007
			(in thousands)
Customer relationships				$	3,000
Contracts backlog					640
Covenant not to compete					60
					3,700
Less accumulated amortization					226
Intangibles, net				$	3,474

Amortization is calculated using the straight-line method over the estimated useful lives of the assets. The useful lives were estimated as 8 years, 8 months and 3 years for customer relationships, contracts backlog and the covenants not to compete, respectively. Amortization expense of $226,000 was included in general and administrative expenses in the year ended June 30, 2007.

Amortization expense for the next five years related to these intangible assets is expected to be as follows (in thousands):

2008				$	875
2009					395
2010					392
2011					375
2012					375

Long-Lived Assets

For other than goodwill and indefinite life intangibles, when impairment indicators are present, the Company reviews the carrying value of its assets in determining the ultimate recoverability of their unamortized values using future undiscounted cash flows expected to be generated by the assets in accordance with the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. If such assets are considered impaired, the impairment recognized is measured by the amount by which the carrying amount of the asset exceeds the future discounted cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell.

The Company evaluates the periods of amortization in determining whether later events and circumstances warrant revised estimates of useful lives. If estimates are changed, the unamortized cost will be allocated to the increased or decreased number of remaining periods in the revised lives.

Comprehensive Income

Accumulated other comprehensive income for the year ended June 30, 2005 of approximately $284,000 represented an unrealized gain from foreign currency translation related to a foreign subsidiary.

Product Warranties

The Company offers warranties on its contracts, the specific terms and conditions of which vary depending upon the contract and work performed. Generally, a basic limited warranty, including parts and labor, is provided to customers for one year. The Company can recoup certain of these costs through product warranties it holds with its original equipment manufacturers, which typically are one year in term. Historically, warranty expense has been minimal, however, management periodically assesses the need for any additional warranty reserve.

F-12

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

2.    Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (‘‘FIN 48’’), which clarifies the accounting for uncertainty in income tax positions. FIN 48 requires that the Company recognize in its financial statements the benefits of tax return positions if that tax position is more likely than not of being sustained on audit, based on its technical merits. The provisions of FIN 48 are effective as of the beginning of the Company’s 2008 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings.  The Company is currently evaluating the impact of adopting FIN 48 on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (‘‘SFAS 157’’). SFAS 157 establishes a common definition for fair value under accounting principles generally accepted in the United States, establishes a framework for measuring fair value and expands disclosure requirements about such fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS 157 on its financial statements.

3.    Acquisition

On April 23, 2007, the Company entered into an Asset Purchase Agreement (the ‘‘Purchase Agreement’’) with Lyman Bros., Inc., a Utah corporation (‘‘Lyman’’), and GlobalSat, LLC, a Maryland limited liability company and a wholly-owned subsidiary of Lyman Bros., Inc. (‘‘GlobalSat’’). The Purchase Agreement provides for the acquisition of substantially all of the assets and the assumption of certain liabilities of GlobalSat (the ‘‘Assets’’), and the acquisition of 100% of the equity interests of Lyman Maryland Properties, LLC, a Utah limited liability company, and Turbo Logic Associates, LLC a Delaware limited liability company, each a wholly-owned subsidiary of Lyman, comprising the GlobalSat Division of Lyman Bros. The transaction closed on May 2, 2007.

Pursuant to the terms of the Purchase Agreement, the Company acquired the GlobalSat Division from Lyman for a purchase price of $18.5 million in cash. The purchase price was partially funded through a $16 million acquisition term loan provided by Citibank, N.A.

GlobalSat was a privately held global provider of satellite-based telecommunications services. Headquartered in metropolitan Washington D.C., it employed approximately 70 employees worldwide of which a majority are U.S. Government cleared and had a high concentration of recurring service revenues in the government marketplace.

The Company has accounted for the acquisition as a purchase under the purchase method of accounting, the assets and liabilities of GlobalSat are recorded as of the acquisition date at their respective fair values and consolidated with those of the Company. The excess of the purchase price over the net assets acquired recorded as goodwill and other intangible assets of approximately $18,693,000 is deductible for income tax purposes over 15 years.

F-13

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

3.    Acquisition (continued)

The purchase price allocation, which includes approximately $677,000 in transaction related costs, is as follows (in thousands):

Total current assets				$	5,848
Fixed assets					3,027
Other assets					19
Goodwill					14,993
Customer relationships					3,000
Contracts backlog					640
Covenant not to compete					60
Liabilities					(8,362	)
Total Purchase Price				$	19,225

The following unaudited pro forma information assumes that the acquisitions occurred on July 1 of each year presented, after giving effect to certain adjustments, including amortization of intangibles, increased interest expense on the acquisition note, decrease in interest income due to use of cash to partially fund acquisition, and income tax adjustments. The pro forma results are not necessarily indicative of the results of operations that would actually have occurred had the transaction taken place on the dates indicated or of the results that may occur in the future:

			Years Ended June 30,
			2007						2006
			(in thousands) (unaudited)
Revenues				$	169,069					$	146,070
Net income				$	8,736					$	4,882
Basic net income per common share				$	0.55					$	0.33
Diluted net income per common share				$	0.52					$	0.31

4.    Accounts Receivable

Accounts receivable include amounts billed but not paid by customers pursuant to retainage provisions in connection with infrastructure solutions contracts. At June 30, 2006, there was approximately $1,438,000 billed but not paid by customers under retainage provisions in connection with long-term contracts. Such balances are included in accounts receivable in the accompanying consolidated balance sheets. Based on the Company’s experience with similar contracts in recent years, billed receivables relating to long-term contracts are expected to be collected within one year.

F-14

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

5.    Inventories

Inventories consist of the following:

			June 30, 2007						June 30, 2006
			(In thousands)
Raw materials and component parts				$	230					$	110
Work-in-progress					17,507						14,564
					17,737						14,674
Less progress payments					1,443						1,616
				$	16,294					$	13,058

6.    Fixed Assets

Fixed assets consist of the following:

			June 30, 2007						June 30, 2006
			(In thousands)
Land				$	2,116					$	1,750
Building and improvements					8,037						6,606
Computer equipment					3,743						3,373
Machinery and equipment					3,926						3,487
Network Operations Center					13,137						10,747
Satellite earth station equipment					9,838						8,808
Furniture and fixtures					1,576						1,336
Leasehold improvements					63						—
Construction-in-progress					14,489						—
					56,925						36,107
Less accumulated depreciation and amortization					23,687						20,597
				$	33,238					$	15,510

7.    Long Term Debt

Debt consists of the following:

			June 30, 2007
			(in thousands)
Acquisition Loan (a)				$	15,733
Other note at 7% interest due November 2007					112
					15,845
Less current portion					3,312
Long Term Debt				$	12,533

F-15

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

7.    Long Term Debt (continued)

The purchase of GSM was funded, in part, through a five-year $16.0 million acquisition term loan (‘‘Acquisition Loan’’) provided by Citibank, N.A on May 2, 2007. The Acquisition Loan bears interest at the prime rate or LIBOR plus 225 basis points, at the Company’s discretion, and is collateralized by a first priority security interest on all of the Company’s assets, including the GSM assets. In addition, the credit facility contains certain financial and other covenants, monthly reporting provisions and other requirements, with which the Company was in compliance with at June 30, 2007. The balance is paid in equal monthly installments of approximately $267,000.

Future minimum payments under these debt agreements, excluding interest, consisted of the following at June 30, 2007 (in thousands):

2008				$	3,312
2009					3,200
2010					3,200
2011					3,200
2012					2,933
				$	15,845

Line of Credit

On October 31, 2006, the Company entered into a secured credit facility with Citibank, N.A, which expires on November 30, 2007. The credit facility is comprised of: (1) a $25 million borrowing base line of credit (the ‘‘Line’’), which is available for standby letters of credit, commercial letters of credit and loans; (2) a bridge line of credit in the amount of $7 million, which is to support equipment purchases; and (3) a foreign exchange line in the amount of $10 million. If there are direct borrowings under the Line, the commercial letters of credit and loans may not be drawn in amounts in excess of $20 million. The Line bears interest at the prime rate or LIBOR plus 225 basis points, at the discretion of the Company, and is collateralized by a first priority security interest on all of the assets of the Company. The Company can be advanced up to 80% of eligible accounts receivable and 100% of unrestricted cash. The credit facility provides that the Company may borrow and apply letters of credit against the availability under the line of credit. In addition, the credit facility contains certain financial and other covenants, deposit requirements, monthly reporting provisions and other requirements, with which the Company was in compliance with at June 30, 2007. The credit facility is uncommitted and advances are subject to Citibank, N.A.’s approval. As of June 30, 2007, no borrowings were outstanding under this credit facility, however, there were standby letters of credit of approximately $13.4 million, which were applied against and reduced the amounts available under this credit facility.

8.    Common Stock

Private Placement

On December 31, 2003, the Company completed a private placement transaction of equity securities and issued 1,500,000 shares of common stock at a price of $4.50 per share for an aggregate price of $6,750,000 and issued warrants to purchase up to 750,000 shares of common stock at an exercise price of $5.50 per share. The warrants became exercisable on July 1, 2004 and will expire on December 31, 2008. The Company incurred total expenses of approximately $583,000, of which approximately $456,000 represented placement agent commissions and approximately $127,000 represented other expenses. After deducting total expenses, the net proceeds received by the Company in January 2004 were approximately $6,167,000. At June 30, 2007, warrants to purchase 232,500 shares of the Company’s common stock noted above are outstanding and exercisable.

F-16

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

9.    Stock Option and Stock Purchase Plans

On November 22, 2006, the Company’s Board of Directors authorized, and the stockholders subsequently approved, the 2006 Stock Incentive Plan (‘‘2006 Plan’’), which provides for grants of stock options or restricted stock awards to employees, directors and consultants of the Company for an aggregate of 850,000 shares of the Company’s common stock. At June 30, 2007, the number of remaining options available for grant under the 2006 Plan was 738,800.

On February 26, 1997, the Company’s Board of Directors authorized, and the stockholders subsequently approved, the 1997 Stock Incentive Plan (‘‘1997 Plan’’), which authorized the granting to employees, directors and consultants of the Company options to purchase an aggregate of 2,280,000 shares of the Company’s common stock. In November 2000 and 2001, the Company’s stockholders approved amendments to the 1997 Plan whereby the number of shares authorized for issuance under the 1997 Plan increased by 800,000 shares in fiscal 2001 and 2002. In November 2004, the Company’s stockholders approved amendments to the 1997 Plan whereby the number of shares authorized for issuance under the 1997 Plan increased by 1,000,000 shares. On November 22, 2006, the Company terminated the 1997 Plan and cancelled all remaining unissued shares totaling approximately 1,311,000. No new options can be granted f rom the 1997 Plan.

Options granted under the 1997 Plan and 2006 Plan may be either incentive or non-qualified stock options. The exercise price of an option shall be determined by the Company’s Board of Directors or compensation committee of the board at the time of grant, however, in the case of an incentive stock option the exercise price may not be less than 100% of the fair market value of such stock at the time of the grant, or less than 110% of such fair market value in the case of options granted to a 10% owner of the Company’s stock.

Employee options generally vest annually in equal installments over a four-year period and expire on the tenth anniversary of the date of grant. Director options granted upon initial election to the Board of Directors generally vest one third on the grant date and an additional one third on each of the next two succeeding anniversaries of the date of grant. Each additional annual grant vests immediately. All Director options expire the earlier of ten years from the date of grant or one year from concluding service as a director of the Company. In May 2005 (as discussed in Note 2), in response to FAS 123R, the Board of Directors of the Company approved an acceleration of all unvested options granted to employees and directors under the 1997 Plan. Restricted stock awards vest annually in equal installments over a three-year period.

The following table summarizes the Company’s stock option activity (in thousands, except per share amounts):

			Years Ended June 30,
			2007												2006												2005
			Shares Under Option						Weighted- Average Exercise Price						Shares Under Option						Weighted- Average Exercise Price						Shares Under Option						Weighted- Average Exercise Price
Balance, beginning of year					2,809					$	7.55						3,258					$	7.16						3,359					$	7.05
Grants					94						10.86						79						6.90						206						6.34
Exercised					(1,002	)					6.42						(477	)					4.38						(200	)					4.31
Canceled					(38	)					7.52						(51	)					11.58						(107	)					7.20
Balance, end of year					1,863						8.32						2,809						7.55						3,258						7.16
Exercisable, end of year					1,782					$	8.22						2,760					$	7.55						3,258					$	7.16
Weighted-average fair value options granted during the year										$	5.26											$	3.77											$	4.16

F-17

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

9.    Stock Option and Stock Purchase Plans (continued)

The following table summarizes information about stock options outstanding at June 30, 2007 (in thousands, except per share amounts):

			Options Outstanding																		Options Exercisable
Range of Exercise Price			Number Outstanding						Weighted- Average Remaining Contractual Life (Years)						Weighted- Average Exercise Price						Number Exercisable						Weighted- Average Exercise Price
$1.47 – $1.47					2						6.5					$	1.47						2					$	1.47
$3.14 – $4.68					503						5.5					$	3.78						503					$	3.78
$5.06 – $7.49					764						4.9					$	6.57						741					$	6.55
$7.63 – $10.99					215						4.2					$	9.57						196					$	9.67
$11.22 – $17.13					212						3.3					$	13.43						173					$	13.45
$18.38 – $25.25					149						2.4					$	21.24						149					$	21.24
$28.00 – $28.00					18						2.6					$	28.00						18					$	28.00
					1,863						4.6					$	8.32						1,782					$	8.22

Restricted stock granted under the 2006 Plan totaled 37,000 shares in the year ended June 30, 2007. The weighted average grant date fair value of restricted stock granted in during the year ended June 30, 2007 was $13.61. As of June 30, 2007 there was approximately $485,000 of unrecognized compensation cost related to non-vested stock-based compensation related to the restricted shares. The cost is expected to be recognized over a weighted-average period of 2.9 years.

The Company has reserved approximately 2,872,000 shares of its common stock for issuance upon exercise of all available and outstanding options, warrants, and unvested restricted shares at June 30, 2007.

On September 23, 1998, the Board of Directors adopted, and the stockholders subsequently approved, the 1999 Employee Stock Purchase Plan (‘‘1999 Plan’’). Pursuant to the 1999 Plan, 400,000 shares of the Company’s common stock will be reserved for issuance. The 1999 Plan is intended to provide eligible employees of the Company, and its participating affiliates, the opportunity to acquire an interest in the Company at the lesser of 85% of fair market value at date of grant or date of purchase through participation in the payroll-deduction based employee stock purchase plan. During the year ended June 30, 2005 the Company issued 37,961 shares of its common stock to participating employees in connection with the 1999 Plan. The Board of Directors suspended the 1999 Plan effective July 1, 2005 due to the impact on the Company’s operating results due to the adoption of SFAS 123R. At June 30,&nb sp;2007, the number of remaining shares available for issuance under the 1999 Plan was 121,321.

10.    Basic and Diluted Net Income Per Common Share

The Company computes net income per share in accordance with the provisions of SFAS No. 128, Earnings Per Share. Basic net income per common share is computed by dividing the net income for the period by the weighted-average number of common shares outstanding for the period. For diluted net income per common share, the weighted average shares include the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method) and unvested restricted shares. The incremental common shares for stock options and warrants are excluded from the calculation of diluted net income per share, if their effect is anti-dilutive. Diluted net income per share for the years ended June 30, 2007, 2006 and 2005, excludes the effect of approximately 430,000, 1,407,000, and 2,577,000 stock options and warrants in the calculation of the incremental common shares, respectively, as their effect would have been anti-dilutive.

F-18

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

11.    Retirement Plan

The Company maintains a 401(k) plan, which covers substantially all employees of the Company. Participants may elect to contribute from 1% to 75% of their pre-tax compensation, subject to elective deferral limitations under Section 403 of the Internal Revenue Code. The plan allows for a matching contribution equal to the discretionary percentage of a participating employee not to exceed 4% of their compensation by the Company. The Company contributed approximately $640,000, $547,000, and $236,000 to the 401(k) plan during the years ended June 30, 2007, 2006 and 2005, respectively. As of June 30, 2007, the Company has accrued $357,000 included in accrued payroll and related fringe benefits in the accompanying balance sheet. In addition, the plan also provides for discretionary profit sharing contributions by the Company. There were no discretionary profit sharing contributions made by the Company during the years ended June 30, 2007, 2006 and 2005.

12.    Related Party Transactions

During fiscal 2001, the Company advanced $200,000 to a former executive officer of the Company. The Company received a promissory note payable on December 31, 2002 for this advance, which bore interest at an annual rate of 5.0% payable quarterly. During fiscal 2002, the Company increased the $200,000 loan to $300,000 and amended the promissory note accordingly. During fiscal 2003, this former executive officer resigned from the board of directors and pursuant to a letter agreement (the ‘‘agreement’’) the Company consolidated the then outstanding loan and advances receivable from this former executive officer and current employee of the Company into a $321,000 promissory note. Under the terms of the letter agreement the Company will forgive the outstanding principal and interest amounts due on the promissory note in five annual installments beginning in January 2005 so long as the former executive officer remains an employee of the Company, subject to the terms of the agreement. At June 30, 2007 and 2006, the annual installment to be forgiven within one year along with accrued interest outstanding under this promissory note was included in other current assets in the accompanying consolidated balance sheet. The remaining principal balance outstanding at June 30, 2007 and 2006 was approximately $65,000 and $130,000, respectively.

13.    Income Taxes

The Company computes income taxes using the liability method. Accordingly, deferred tax assets and liabilities are recognized for estimated future tax consequences attributable to the differences between the carrying amount of the assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities are determined by using enacted tax laws and rates in effect when the differences are expected to reverse. Net deferred tax assets are recorded when it is more likely than not that such tax benefits will be realized.

During fiscal 2007 and 2006, the Company recorded a tax provision of approximately $211,000 and $88,000, respectively.

F-19

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

13.    Income Taxes (continued)

Significant components of the Company’s deferred tax assets (liabilities) are as follows:

			June 30, 2007						June 30, 2006
			(In thousands)
Deferred tax assets:
Net operating loss carryforwards				$	24,631					$	26,972
Accruals and reserves					1,336						1,003
Write-down of investments					426						426
State investment tax credit carryforwards					—						22
AMT tax credit					333						150
Capital loss carryforwards					540						1,062
Projects in progress					150						340
					27,416						29,975
Valuation allowance for deferred tax assets					(26,466	)					(28,958	)
					950						1,017
Deferred tax liabilities:
Depreciation and amortization					(950	)					(995	)
Net deferred tax assets				$	—					$	22

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of any net operating loss carryforwards. Due to the uncertainty regarding the Company’s ability to utilize its net operating losses in the future, the Company has provided a valuation allowance against its operating losses and temporary differences.

For the years ended June 30, 2007, 2006 and 2005, the valuation allowance decreased by approximately $2,492,000, $1,968,000, and $1,887,000, respectively. Approximately $6,456,000 of the deferred tax asset, if recognized, will be allocated directly to stockholders’ equity relating to non-qualified dispositions of stock option exercises.

At June 30, 2007, the Company had federal net operating loss carryforwards of approximately $58,700,000 of which approximately $21,100,000 may be subject to certain utilization limitations provided by the Internal Revenue Code. The net operating loss carryforwards will expire at various dates beginning in 2010 through 2024, if not utilized.

At June 30, 2007, the Company also had federal alternative minimum tax credit carryforwards of approximately $333,000, which may be carried forward indefinitely.

F-20

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

13.    Income Taxes (continued)

The reconciliations of tax provision (benefit) computed at the U.S. federal statutory tax rates to the effective income tax rates on pre-tax income are as follows:

			Years Ended June 30,
			2007						2006						2005
Tax at U.S. Federal statutory rate					34	%					34	%					34	%
Foreign Income at varying rates					—						—						7
Other					4						3						—
Change in valuation allowance					(36	)					(35	)					(40	)
					2	%					2	%					1	%

14.    Segment Information

The Company operates through two business segments. Its infrastructure solutions segment, through Globecomm Systems Inc. is engaged in the design, assembly and installation of ground segment systems and networks. Its services segment, through GNSC and GSM, provides satellite communication services capabilities.

The Company’s reportable segments are business units that offer different products and services. The reportable segments are each managed separately because they provide distinct products and services.

The following is the Company’s business segment information as of and for the years ended June 30, 2007, 2006 and 2005:

			Years Ended June 30,
			2007						2006						2005
			(In thousands)
Revenues:
Infrastructure solutions				$	114,642					$	99,136					$	91,613
Services					36,628						29,273						21,875
Intercompany eliminations					(525	)					(2,373	)					(3,904	)
Total revenues				$	150,745					$	126,036					$	109,584
Income from operations:
Infrastructure solutions				$	4,790					$	2,370					$	4,229
Services					2,506						837						(296	)
Interest income					1,370						965						444
Gain on sale of investment					—						—						40
Gain on sale of available-for-sale securities					—						—						132
Gain on liquidation of foreign subsidiary					—						264						—
Interest expense					(205	)					—						—
Intercompany eliminations					76						144						329
Income before income taxes				$	8,537					$	4,580					$	4,878
Depreciation and amortization:
Infrastructure solutions				$	1,327					$	1,201					$	1,153
Services					2,065						1,893						1,871
Intercompany Eliminations					(59	)					(71	)					(329	)
Total depreciation and amortization				$	3,333					$	3,023					$	2,695

F-21

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

14.    Segment Information (continued)

			Years Ended June 30,
			2007						2006						2005
			(In thousands)
Expenditures for long-lived assets:
Infrastructure solutions				$	8,875					$	1,410					$	887
Services					8,933						1,074						2,458
Intercompany eliminations					—						—						(42	)
Total expenditures for long-lived assets				$	17,808					$	2,484					$	3,303

			June 30, 2007						June 30, 2006						June 30, 2005
			(In thousands)
Assets:
Infrastructure solutions				$	183,988					$	145,125					$	139,117
Services					29,735						13,256						13,712
Intercompany eliminations					(70,840	)					(65,147	)					(66,451	)
Total assets				$	142,883					$	93,234					$	86,378

At June 30, 2007, 2006 and 2005, the Company had total assets of approximately $56,000, $53,000 and $1,137,000, and long-lived assets of approximately $38,000, $46,000 and $80,000, respectively, located in the United Kingdom.

15.    Significant Customers and Concentrations of Credit Risk

The Company designs, assembles and installs infrastructure solutions for customers in diversified geographic locations. Credit risk with respect to accounts receivable is concentrated due to the limited number of customers. The timing of cash realization is determined based upon the contract or service agreements with the customers. The Company performs ongoing credit evaluations of its customers’ financial condition and in some cases requires a letter of credit or cash in advance for foreign customers. The Company evaluates the collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their credit worthiness. The Company’s estimate of its allowance for doubtful accounts is periodically adjusted when the Company becomes aware of a specific customer’s inability to meet its financial obligations, or as a result of changes in the overall aging of accounts receivable. Allowances related t o accounts receivable at June 30, 2007, 2006 and 2005, were approximately $1,113,000, $825,000 and $815,000, respectively.

The Company’s consolidated revenues for the years ended June 30, 2007, 2006 and 2005 included two customers, which accounted for 17% and 11% of the Company’s consolidated revenue, one customer accounted for 11% of the Company’s consolidated revenue and three customers accounted for 20%, 13% and 13% of the Company’s consolidated revenue, respectively.

F-22

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

15.    Significant Customers and Concentrations of Credit Risk (continued)

Revenues earned from infrastructure solutions are attributed to the geographic location to which the equipment is shipped. Revenues earned from services are attributed to the geographic location in which the services are being provided. Revenues from foreign sales as a percentage of total consolidated revenues are as follows:

			Years Ended June 30,
			2007						2006						2005
Africa					7	%					13	%					8	%
North and South America					10	%					5	%					4	%
Asia					4	%					8	%					4	%
Europe					7	%					17	%					25	%
Middle East					24	%					22	%					32	%
					52	%					65	%					73	%

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade receivables. The Company places its cash and cash equivalents with high quality financial institutions. Substantially all cash and cash equivalents are held in one financial institution at June 30, 2007 and 2006. Cash equivalents are comprised of short-term debt instruments and certificates of deposit of direct or guaranteed obligations of the United States, which are held to maturity and approximate fair market value. At times, cash may be in excess of Federal Deposit Insurance Company insurance limits.

16.    Commitments and Contingencies

Lease Commitments

The Company currently leases satellite space segment services, office space, teleport services and other equipment under various operating leases, which expire in various years through 2013. As leases expire, it can be expected that in the normal course of business they will be renewed or replaced.

Future minimum lease payments under non-cancelable operating leases with terms of one year or more consist of the following at June 30, 2007 (in thousands):

2008				$	13,553
2009					5,034
2010					1,229
2011					643
2012					399
Thereafter					14
				$	20,872

Rent expense for satellite space segment services, office space, teleport services, and other equipment was approximately $11,704,000, $10,306,000 and $7,918,000 for years ended June 30, 2007, 2006 and 2005, respectively.

F-23

GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Continued)

16.    Commitments and Contingencies (continued)

Employment Agreements

During October 2001, the Company entered into three-year employment agreements with six officers and one former officer for an aggregate amount of approximately $1,214,000 per year. The Company will have certain obligations to these individuals if they are terminated. Each employment agreement renews automatically for additional terms of one year, unless either party provides written notice to the other party of its intention to terminate the agreement. During fiscal 2007, the Board of Directors approved increases bringing the aggregate amount to approximately $1,909,000 per year.

17.    Subsequent Event

On August 17, 2007, the Company completed an offering of equity securities totaling $33,750,000 in gross proceeds. The Company issued 3,000,000 shares of common stock at a price of $11.25 per share and granted to the underwriters an overallotment option of 450,000 additional shares at the same terms. On August 21, 2007, the Company received $31,893,750 after deducting underwriting discounts and commissions. As of the date of this report, the underwriters overallotment option has not been exercised.

Stephens Inc. acted as a joint lead bookrunner in the offering. Because A. Robert Towbin serves on our Board of Directors and as an Executive Vice President and Managing Director of Stephens Inc., Stephens Inc. may be deemed to be an ‘‘affiliate’’ of Globecomm under Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc. (‘‘NASD’’). Accordingly, the offering was made in compliance with the applicable provisions of Rule 2720, which require that the offering price of the common stock be no higher than that recommended by a ‘‘qualified independent underwriter,’’ as defined in Rule 2720.

F-24

GLOBECOMM SYSTEMS INC.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Description			Balance at Beginning of Period						Additions						Deductions						Balance at End of Period
Year ended June 30, 2007:
Reserves and allowances deducted from asset accounts:
Reserve for estimated doubtful accounts receivable				$	825,000					$	546,000					$	(258,000	)(c)				$	1,113,000
Valuation allowance on deferred tax assets					28,958,000						—					$	(2,492,000	)(b)					26,466,000
				$	29,783,000					$	546,000					$	(2,750,000	)				$	27,579,000
Year ended June 30, 2006:
Reserves and allowances deducted from asset accounts:
Reserve for estimated doubtful accounts receivable				$	815,000					$	426,000					$	(416,000	)(c)				$	825,000
Valuation allowance on deferred tax assets					30,926,000						—					$	(1,968,000	)(b)					28,958,000
				$	31,741,000					$	426,000					$	(2,384,000	)				$	29,783,000
Year ended June 30, 2005:
Reserves and allowances deducted from asset accounts:
Reserve for estimated doubtful accounts receivable				$	2,618,000					$	(1,350,000	)(a)				$	(453,000	)(c)				$	815,000
Valuation allowance on deferred tax assets					32,813,000						—					$	(1,887,000	)(b)					30,926,000
				$	35,431,000					$	(1,350,000	)				$	(2,340,000	)				$	31,741,000

(a) Includes recovery of accounts receivable balances (net of charges).

(b) Reduction in valuation allowance for net deferred tax assets.

(c) Reduction in allowance due to write-off of accounts receivable balances (net of recovery).

S-1

Index of Exhibits

Exhibit No.
	3	.1				Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
	3	.2				Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998).
	4	.2				See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws of the Registrant defining rights of holders of Common Stock of the Registrant (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1, File No. 333-22425 (the ‘‘Registration Statement’’)).
	10	.1				Employment Agreement dated as of October 9, 2001 by and between the Registrant and David E. Hershberg (incorporated by reference to Exhibit 10.9 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.2				Employment Agreement dated as of October 9, 2001 by and between the Registrant and Kenneth A. Miller (incorporated by reference to Exhibit 10.10 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.3				The Amended and Restated 1997 Stock Incentive Plan (incorporated by reference to Exhibit 99 of the Registrant’s Registration Statement on Form S-8 Registration, File No. 333-112351).
	10	.4				1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.8 of the Registrant’s Registration Statement on Form S-8, File No. 333-70527).
	10	.5				Rights Agreement, dated as of December 3, 1998, between the Registrant and American Stock Transfer and Trust Company, which includes the form of Certificate of Designation for the Series A Junior Participating Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Series A Preferred Shares as Exhibit C (incorporated by reference to Exhibit 4 of Registrant’s Current Report on Form 8-K, dated December 3, 1998).
	10	.6				Negotiable Promissory Note, dated April 1, 2001, between the Registrant and Donald Woodring (incorporated by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2001).
	10	.7				Employment Agreement, dated as of October 9, 2001, by and between Stephen C. Yablonski and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.8				Employment Agreement, dated as of October 9, 2001, by and between Andrew C. Melfi and the Registrant (incorporated by reference to Exhibit 10.21 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.9				Employment Agreement, dated as of October 9, 2001, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.22 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.10				Employment Agreement, dated as of October 9, 2001, by and between Paul J. Johnson and the Registrant (incorporated by reference to Exhibit 10.23 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.11				Employment Agreement, dated as of October 9, 2001, by and between Paul Eterno and the Registrant (incorporated by reference to Exhibit 10.24 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).

Exhibit No.
	10	.12				Promissory Note Secured By Stock Pledge Agreement, dated September 4, 2001, by and between Kenneth A. Miller and the Registrant (incorporated by reference to Exhibit 10.26 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2001).
	10	.13*				Settlement Agreement, dated as of October 1, 2002, by and between Loral Skynet®, a division of Loral SpaceCom Corporation and the Registrant (incorporated by reference to Exhibit 10.28 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended September 30, 2002).
	10	.14				Letter Agreement, dated as of January 31, 2003, by and between Donald G. Woodring and the Registrant (incorporated by reference to Exhibit 10.30 of the Registrant’s Quarterly Report on Form 10-Q, for the quarter ended December 31, 2002).
	10	.15				Loan and Security Agreement, dated as of September 15, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.31 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2003).
	10	.16				Loan Modification Agreement, dated as of October 8, 2003, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.17 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.17				Second Loan Modification Agreement, dated as of March 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.18 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.18				Third Loan Modification Agreement, dated as of June 2, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.19 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.19				Fourth Loan Modification Agreement, dated as of September 24, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.20 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	10	.20				Fifth Loan Modification Agreement, dated as of October 29, 2004, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form 8-K, File No. 000-22839).
	10	.21				Sixth Loan Modification Agreement, dated as of November 2, 2005, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form 8-K, File No. 000-22839).
	10	.22				Credit Facility dated October 31, 2006, by and between the Registrant and Citibank, N.A. (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form 8-K, file No. 000-22839).
	10	.23				Term Loan Agreement dated May 2, 2007, by and between the Registrant and Citibank, N.A. (filed herewith).
	10	.24				2006 Incentive Stock Plan. (incorporated by reference to Appendix A of the Registrant’s Definitive proxy on schedule 14A, filed with the Commission on October 13, 2006).
	10	.25				Asset Purchase Agreement, dated May 2, 2007, by and between the Registrant and Lyman Bros., Inc. (incorporated by reference to Exhibit 2.1 of the Registrant’s Registration Statement on Form 8-K, file No. 000-22839).

Exhibit No.
	10	.26				Form of Securities Purchase Agreement, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-3, File No. 333-112024.
	10	.27				Form of Warrant, dated as of December 31, 2003, by and between the Registrant and each of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-3, File No. 333-112024).
	14					Registrant’s Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14 of the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2004).
	21					Subsidiaries of the Registrant (filed herewith).
	23					Consent of Independent Registered Public Accounting Firm (filed herewith).
	31	.1				Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended (filed herewith).
	31	.2				Chief Financial Officer Certification required by Rules 13a− 14 and 15d− 14 under the Securities Exchange Act of 1934, as amended (filed herewith).
	32					Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002 (filed herewith).

* Confidential treatment granted for portions of this agreement.

EX-10.23

EXECUTION VERSION

TERM LOAN AGREEMENT

Dated as of May 2, 2007

by and between

GLOBECOMM SYSTEMS INC.

and

CITIBANK, N.A.

TABLE OF CONTENTS

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS					1
SECTION 1.01.    Definitions					1
SECTION 1.02.    Accounting Terms					8
ARTICLE II
TERM LOAN					9
SECTION 2.01.    Term Loan					9
SECTION 2.02.    Note					9
ARTICLE III
INTEREST RATE; FEES AND PAYMENTS; USE OF PROCEEDS					9
SECTION 3.01.    Interest Rate					9
SECTION 3.02.    Use of Proceeds					11
SECTION 3.03.    Prepayments					11
SECTION 3.04.    Fee					11
SECTION 3.05.    Inability to Determine Interest Rate					11
SECTION 3.06.    Illegality					11
SECTION 3.07.    Increased Costs					12
SECTION 3.08.    Indemnity					12
SECTION 3.09.    Taxes					13
SECTION 3.10.    Payments					13
SECTION 3.11.    Disbursement of Term Loan					13
SECTION 3.12.    Manner of Payment					13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES					14
SECTION 4.01.    Organization, Corporate Powers, etc.					14
SECTION 4.02.    Authorization of Borrowing, Enforceable Obligations					14
SECTION 4.03.    Financial Condition					14
SECTION 4.04.    Taxes					15
SECTION 4.05.    Title to Properties					15
SECTION 4.06.    Litigation					15
SECTION 4.07.    Agreements					15
SECTION 4.08.    Compliance with ERISA					15
SECTION 4.09.    Federal Reserve Regulations; Use of Proceeds					15
SECTION 4.10.    Approvals					16
SECTION 4.11.    Subsidiaries and Affiliates					16
SECTION 4.12.    Hazardous Materials					16
SECTION 4.13.    Investment Company Act					16
SECTION 4.14.    No Default					16
SECTION 4.15.    Material Contracts					16
SECTION 4.16.    Permits and Licenses					16
SECTION 4.17.    Compliance with Law					16
SECTION 4.18.    Disclosure					16
SECTION 4.19.    Acquisition Documents					17
SECTION 4.20.    Security Documents					17
ARTICLE V
CONDITIONS OF LENDING					17
SECTION 5.01.    Conditions To Term Loan					17

ii

ARTICLE VI
AFFIRMATIVE COVENANTS					19
SECTION 6.01.    Corporate Existence, Properties, etc.					19
SECTION 6.02.    Payment of Indebtedness, Taxes, etc.					19
SECTION 6.03.    Financial Statements, Reports, etc. Furnish to the Bank					20
SECTION 6.04.    Access to Premises and Records					21
SECTION 6.05.    Notice of Adverse Change					21
SECTION 6.06.    Notice of Default					21
SECTION 6.07.    Notice of Litigation					21
SECTION 6.08.    ERISA					21
SECTION 6.09.    Compliance with Applicable Laws					21
SECTION 6.10.    Subsidiaries					21
SECTION 6.11.    Default in Other Agreements					22
SECTION 6.12.    Operating Accounts					22
SECTION 6.13.    Environmental Laws					22
ARTICLE VII
NEGATIVE COVENANTS					23
SECTION 7.01.    Liens					23
SECTION 7.02.    Indebtedness					23
SECTION 7.03.    Guaranties					23
SECTION 7.04.    Sale of Assets					24
SECTION 7.05.    Sales of Notes					24
SECTION 7.06.    Loans and Investments					24
SECTION 7.07.    Nature of Business					24
SECTION 7.08.    Sale and Leaseback					24
SECTION 7.09.    Federal Reserve Regulations					24
SECTION 7.10.    Accounting Policies and Procedures; Tax Status					24
SECTION 7.11.    Hazardous Materials					24
SECTION 7.12.    Limitations on Fundamental Changes					24
SECTION 7.13.    Financial Covenants					25
SECTION 7.14.    Subordinated Debt					25
SECTION 7.15.    Dividends					25
SECTION 7.16.    Transactions with Affiliates					25
SECTION 7.17.    Impairment of Security Interest					25
SECTION 7.18.    Acquisition Documents					25
SECTION 7.19.    Negative Pledge					25
SECTION 7.20.    Globecomm Systems Europe Ltd.					25
ARTICLE VIII
EVENTS OF DEFAULT					26
SECTION 8.01.    Events of Default					26
ARTICLE IX
MISCELLANEOUS					27
SECTION 9.01.    Notices					27
SECTION 9.02.    Survival of Agreement					28
SECTION 9.03.    Expenses of the Bank					28
SECTION 9.04.    No Waiver of Rights by the Bank					29
SECTION 9.05.    Applicable Law					29
SECTION 9.06.    Submission to Jurisdiction; Jury Waiver					29
SECTION 9.07.    Extension of Maturity					29

iii

SECTION 9.08.    Modification of Agreement					29
SECTION 9.09.    Severability					29
SECTION 9.10.    Sale of Participations, Assignments					29
SECTION 9.11.    Reinstatement; Certain Payments					30
SECTION 9.12.    Right of Setoff					30
SECTION 9.13.    Counterparts					30
SECTION 9.14.    Headings					30
SECTION 9.15.    Construction					30
SECTION 9.16.    USA PATRIOT Act					30
SECTION 9.17.    Termination					30

SCHEDULES

Schedule I           –        Subsidiaries and Affiliates

Schedule II         –        Liens

Schedule III        –        Existing Indebtedness

Schedule IV        –        Existing Guaranties

EXHIBITS

Exhibit A            –        Form of Note

Exhibit B             –        Form of Guaranty

Exhibit C             –        Form of Pledge Agreement

Exhibit D             –        Form of Security Agreement

Exhibit E             –        Form of Opinion of Counsel

iv

TERM LOAN AGREEMENT dated as of May 2, 2007, by and between GLOBECOMM SYSTEMS INC., a Delaware corporation (the ‘‘Company’’) and CITIBANK N.A., a national banking association (the ‘‘Bank’’).

RECITALS

The Company has requested the Bank to extend credit to the Company for the purpose of financing up to ninety (90%) of the costs incurred by the Company in connection with a potential acquisition. The Bank is willing to extend credit to the Company, subject to the terms and conditions hereinafter set forth.

Accordingly, the Company and the Bank agree as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.Definitions.    As used herein, the following words and terms shall have the following meanings:

‘‘Acquisition’’ shall mean the acquisition of substantially all of the assets of Target Company pursuant to the terms of the Asset Purchase Agreement.

‘‘Acquisition Documents’’ shall mean the Asset Purchase Agreement, and all documents and agreements executed in connection therewith.

‘‘Affiliate’’ shall mean with respect to any Person, any corporation, partnership, limited liability company, limited liability partnership, joint venture, trust or unincorporated organization which, directly or indirectly, controls or is controlled by or is under common control with such Person. For the purpose of this definition, ‘‘control’’ of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management or policies of such Person whether through the ownership of voting securities by contract or otherwise; provided that, in any event, any person who owns directly or indirectly 15% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 10% or more of the membership or other ownership interest of any Person (other than as a limited partner of such other Person) will be deemed to control such corporatio n or other Person.

‘‘Agreement’’ shall mean this Term Loan Agreement dated as of May 2, 2007, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time.

‘‘Asset Purchase Agreement’’ shall mean that certain Asset Purchase Agreement, dated                         , by and among the Company, Globecomm Maryland, the Target Company and the Parent, pursuant to which Globecomm Maryland shall acquire substantially all of the assets of Target Company and 100% of the limited liability company interests of each of Lyman and Turbo

‘‘Business Day’’ shall mean any day that is not a Saturday, Sunday or legal holiday, on which banks in New York City, New York are not required or authorized by law or other governmental action to close; provided that, when used in connection with a Libor Loan, the term ‘‘Business Day’’ shall also exclude any day on which banks are not open for dealings in dollar deposits in the London inter bank market.

‘‘Capital Expenditures’’ shall mean additions to property and equipment of the Company and its Subsidiaries, which, in conformity with Generally Accepted Accounting Principles, are included as ‘‘additions to property, plant or equipment’’ or similar items (including, without limitation, Capital Leases) which would be reflected in the Consolidated statement of cash flow of the Company and its Subsidiaries.

‘‘Capital Lease’’ shall mean (i) any lease of property, real or personal, if the then present value of the minimum rental commitment thereunder should, in accordance with Generally Accepted Accounting Principles, be capitalized on the balance sheet of the lessee, and (ii) any other such lease the obligations of which are required to be capitalized on the balance sheet of the lessee.

‘‘Change of Control’’ shall mean any event which results in (i) any Person, or two or more Persons acting in concert, acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and

Exchange Commission under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company (or other securities convertible into such securities) representing 50% or more of the combined voting power of all securities of the Company entitled to vote in the election of directors; or (ii) the individuals who, as of the date hereof, constitute the Board of Directors of the Company, together with those who first become directors subsequent to such date, provided the recommendation, election or nomination for election to the Board of Directors of such subsequent directors was approved by a vote of at least a majority of the directors then still in office who were either directors as of the date hereof or who recommendation, election or nomination for election was previously so approved, ceasing for any reason to constitute a majority of the members of the Board of Directors of the Company.

‘‘Chief Financial Officer’’ shall mean the Chief Financial Officer of the Company.

‘‘Closing Date’’ shall mean May 2, 2007.

‘‘Code’’ shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time.

‘‘Consolidated’’ shall mean, as applied to any financial or accounting term, such term determined on a consolidated basis in accordance with Generally Accepted Accounting Principles for the Company and its Subsidiaries.

‘‘Consolidated Capital Base’’ shall mean, on a Consolidated basis for the Company and its Subsidiaries, the sum of (i) shareholders equity, as reflected on the Consolidated balance sheet of the Company and its Subsidiaries plus (ii) Subordinated Debt minus the sum of (x) intangible assets, (y) items recorded as ‘‘due from’’ shareholders, employees, or affiliates of the Company, and (x) investments in affiliates other than the Guarantors, all as determined in accordance with Generally Accepted Accounting Principles, applied on a consistent basis.

‘‘Consolidated Current Portion of Long Term Debt’’ shall mean for the Company and its Subsidiaries on a Consolidated basis, current portion of long term debt as reflected on the Consolidated balance sheet of the Company and its Subsidiaries as determined in accordance with Generally Accepted Accounting Principles, applied on a consistent basis.

‘‘Consolidated Debt Service Coverage Ratio’’ shall mean, on any date of determination, the ratio of (a) Consolidated EBITDA to (b) the sum of (i) the Consolidated Current Portion of Long Term Debt plus (ii) Consolidated Interest Expense. All of the foregoing categories shall be determined on a Consolidated basis for the Company and its Subsidiaries in accordance with Generally Accepted Accounting Principles applied on a consistent basis and shall be calculated (without duplication) with respect to the four fiscal quarters ending on or most recently ended prior to the date of determination thereof.

‘‘Consolidated EBITDA’’ shall mean, on any date of determination, Consolidated Net Income (whether income or loss) for such period, plus the sum, without duplication, of (a) Consolidated Interest Expense, (b) depreciation and amortization expenses or charges, and (c) all income taxes to any government or governmental instrumentality expensed on the Company’s and any Subsidiaries books (whether paid or accrued), minus all extraordinary or unusual gains, in each case, determined on a Consolidated basis for the Company and its Subsidiaries in accordance with Generally Accepted Accounting Principles applied on a consistent basis. All of the foregoing categories shall be calculated (without duplication) over the four fiscal quarters ending on or most recently ended prior to the date of determination thereof.

‘‘Consolidated Interest Expense’’ shall mean the Consolidated interest expense of the Company and its Subsidiaries, determined in accordance with Generally Accepted Accounting Principles, applied on a consistent basis.

‘‘Consolidated Leverage Ratio’’ shall mean the ratio of Consolidated Unsubordinated Liabilities to Consolidated Capital Base.

‘‘Consolidated Liquidity Ratio’’ shall mean the ratio of (a) the sum of (i) Consolidated Unrestricted Cash plus (ii) Consolidated Net Accounts Receivables to (b) the sum of (i) Consolidated Current Portion of Long Term Debt plus (ii) the face amount of all undrawn letters of credit, other than cash secured

2

letters of credit, issued on behalf of the Company and its Subsidiaries plus (iii) Consolidated current liabilities, all as determined for the Company and its Subsidiaries on a Consolidated basis in accordance with Generally Accepted Accounting Principles, applied on a consistent basis.

‘‘Consolidated Net Accounts Receivable’’ shall mean, any and all rights to payment for goods sold or leased or for services rendered, including accounts, contract rights, general intangibles and any such right evidenced by chattel paper, instruments or documents, minus any reserves held by the Company or any its Subsidiaries in connection with such accounts receivable (including reserves for bad debts), all determined with respect to the Company and its Subsidiaries, on a Consolidated basis in accordance with Generally Accepted Accounting Principles, applied on a consistent basis.

‘‘Consolidated Net Income’’ shall mean, for any period, the net income (or net loss) of the Company and its Subsidiaries on a Consolidated basis for such period determined in accordance with Generally Accepted Accounting Principles applied on a consistent basis.

‘‘Consolidated Total Liabilities’’ shall mean all of the liabilities of the Company and its Subsidiaries, on a Consolidated basis, including all items which, in accordance with Generally Accepted Accounting Principles would be included on the liability side of the balance sheet determined in accordance with Generally Accepted Accounting Principles applied on a consistent basis.

‘‘Consolidated Unrestricted Cash’’ shall mean all cash and cash equivalents of the Company and its Subsidiaries held at the Bank or any Affiliate of the Bank which is not subject to any restriction on usage or subject to any Lien other than a Lien in favor of the Bank or such Affiliate.

‘‘Consolidated Unsubordinated Liabilities’’ shall mean for the Company and its Subsidiaries on a Consolidated Total Liabilities less Subordinated Indebtedness of the Company and its Subsidiaries on a Consolidated basis, all as determined in accordance with Generally Accepted Accounting Principles.

‘‘Debt Issuance’’ means the incurrence, issuance or sale by the Company or any of its Subsidiaries of any Indebtedness (including, without limitation, any debt securities, whether in a public offering of such securities or otherwise), including, without limitation, any Subordinated Debt, but excluding issuance of any Indebtedness permitted under Section 7.02(a) through (e).

‘‘Default’’ shall mean any event or condition which upon notice, lapse of time, or both, would constitute an Event of Default.

‘‘Dollar’’ and the symbol ‘‘$’’ shall mean lawful money of the United States of America.

‘‘ERISA’’ shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefore.

‘‘ERISA Affiliate’’ shall mean each person (as defined in Section 3(9) of ERISA) which together with the Company or any Guarantor would be deemed to be a member of the same ‘‘controlled group’’ within the meaning of Section 414(b), (c), (m) and (o) of the Code.

‘‘Equity Issuance’’ means the issuance, sale or other disposition by the Company or any of its Subsidiaries of any its shares of capital stock of (or other ownership or profit interests in) such Person, and any rights, warrants or options to purchase or acquire any shares of such equity interest or any other security or instrument representing, convertible into or exchangeable for any equity interests in the Company or any of its Subsidiaries.

‘‘Eurocurrency Reserve Requirement’’ shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate (without duplication) of the rates (expressed as a decimal) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves, under any regulations of the Board of Governors of the Federal Reserve System or any other governmental authority having jurisdiction with respect thereto) as from time to time in effect, dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as ‘‘eurocurrency liabilities’’ in Regulation D) maintained by the Bank. For purposes hereof each Libor Rate Loan shall be deemed to constitute a ‘‘eurocurrency liability’’ as defined in Regulation D, and subject to the reserve requiremen ts of

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‘‘Regulation D,’’ without benefit of credit or proration, exemptions or offsets which might otherwise be available to the Bank from time to time under Regulation D.

‘‘Event of Default’’ shall mean any Event of Default set forth in Article VIII.

‘‘Executive Officer’’ shall mean any of the Chief Executive Office, the President, or the Chief Financial Officer of the Company or any Guarantor, as applicable, and their respective successors, if any, designated by the board of directors.

‘‘Fiscal Quarter’’ shall mean the fiscal quarter of the Company, which will be the fiscal quarters ending as of March 31, September 30 and December 31 in each year.

‘‘Fiscal Year’’ shall mean the fiscal year of the Company, which will be the period commencing July 1 of any calendar year and ending on June 30 of the following calendar year.

‘‘Funding Date’’ shall mean that date when all of the conditions set forth in Article V have been satisfied and the proceeds of the Term Loan are advanced to Company, provided that if the Funding Date shall not occur on or before June 15, 2007 this Agreement shall be null and void and the Term Loan Commitment and all of the Bank obligations hereunder shall be terminated and without effect.

‘‘Globecomm Maryland’’ shall mean Globecomm Services Maryland LLC, a Delaware limited liability company.

‘‘Governmental Authority’’ shall mean any nation or government, any state, province, city or municipal entity or other political subdivision thereof, and any governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board or similar body, whether federal, state, provincial, territorial, local or foreign.

‘‘Guarantors’’ shall mean, collectively, Globecomm Network Services Corporation, a Delaware corporation, GSI Properties, Inc., a New York corporation, Globecomm Maryland, Lyman, Turbo, and each Person who, from time to time, is required to execute a Guaranty in accordance with Section 6.10, provided that Globecomm Globecomm Systems Europe Ltd., a United Kingdom corporation, shall not be required to be a Guarantor hereunder.

‘‘Guaranties’’ shall mean, collectively, the Guaranty of All Liability, substantially in the form attached hereto as Exhibit B, to be executed and delivered on the Closing Date by each Guarantor and by each Person who may be required to execute the same pursuant to Section 6.10 hereof, as same may be amended, restated, supplemented or modified, from time to time.

‘‘Hazardous Materials’’ includes, without limit, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49) U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.), and in the regulations adopted a nd publications promulgated pursuant thereto, or any other federal, state or local environmental law, ordinance, rule or regulation.

‘‘Hedging Agreement’’ means any interest rate swap, collar, cap, floor or forward rate agreement or other agreement regarding the hedging of interest rate risk exposure executed in connection with hedging the interest rate exposure of the Company or any Guarantor, and any confirming letter executed pursuant to such agreement, all as amended, supplemented, restated or otherwise modified from time to time.

‘‘Indebtedness’’ shall mean, without duplication, as to any Person (a) indebtedness for borrowed money; (b) indebtedness for the deferred purchase price of property or services; (c) indebtedness evidenced by bonds, debentures, notes or other similar instruments; (d) obligations and liabilities secured by a Lien upon property owned by such Person, whether or not owing by such Person and even though such Person has not assumed or become liable for the payment thereof; (e) obligations and liabilities directly or indirectly guaranteed by such Person; (f) obligations or liabilities created or arising under any conditional sales contract or other title retention agreement with respect to property used and/or acquired by such Person; (g) obligations of such Person as lessee under Capital Leases; (h) net liabilities of such Person under Hedging Agreements and foreign currency exchange agreements, as calcula ted on a basis

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satisfactory to the Bank and in accordance with accepted practice; (i) all obligations of such Person in respect of bankers’ acceptances; (j) all obligations, contingent or otherwise of such Person as an account party in respect of letters of credit; and (k) all liabilities which would be reflected on a balance sheet of such Person, prepared in accordance with Generally Accepted Accounting Principles.

‘‘Interest Payment Date’’ shall mean (a) as to any Prime Rate Loan, the first day of each calendar month, commencing June 1, 2007, (b) as to any Libor Rate Loan, at the option of the Bank, (i) the first day of each calendar month, commencing June 1, 2007, and on the last day of the Interest Period applicable thereto or (ii) the last day of the Interest Period applicable thereto, and (c) the date the Term Loan is otherwise paid in full or in part.

‘‘Interest Period’’ shall mean with (I) with respect to any Libor Rate Loan:

(a)    initially, the period commencing on the date such Libor Rate Loan is made and ending one, two or three months thereafter, as selected by the Company in its Notice of Borrowing as provided in Section 2.01(b), or in its notice of conversion as provided in Section 3.01(f); and

(b)    thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Libor Rate Loan and ending one, two or three months thereafter, as selected by the Company by irrevocable written notice to the Bank not later than 11:00 a.m. three Business Days prior to the last day of the then current Interest Period with respect to such Libor Rate Loan; provided, however, that all of the foregoing provisions relating to Interest Periods are subject to the following:

(i)    if any Interest Period pertaining to a Libor Rate Loan would otherwise end on a day which is not a Business Day, the Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii)    if the Company shall fail to give notice as provided in clause (b) above, the Company shall be deemed to have requested conversion of the affected Libor Rate Loan to a Prime Rate Loan on the last day of the then current Interest Period with respect thereto;

(iii)    any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;

(iv)    no more than four (4) Interest Periods may exist at any one time; and

(v)    the Company shall select Interest Periods so as not to require a payment or prepayment of any Libor Rate Loan during an Interest Period for such Libor Rate Loan.

‘‘Libor Rate Loan’’ shall mean the Term Loan at such time as it is made and/or being maintained at a rate of interest based upon Reserve Adjusted Libor.

‘‘Lien’’ shall mean any lien (statutory or otherwise), security interest, mortgage, deed of trust, pledge, charge, conditional sale, title retention agreement, Capital Lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing.

‘‘Loan Documents’’ shall mean, collectively, this Agreement, the Note, the Guaranty, Security Documents, and each other agreement executed in connection with the transactions contemplated hereby or thereby.

‘‘Lyman’’ shall mean Lyman Maryland Properties, LLC, a Utah limited liability company.

‘‘Material Adverse Effect’’ shall mean a material adverse effect on (a) the business, operations, properties or condition (financial or otherwise) of the Company or any Guarantor, or (b) the ability of the Company or any Guarantor to perform any of their respective material obligations under any Loan Document to which they are a party.

‘‘Material Contract’’ shall mean, with respect to any Person, each contract, instrument or agreement to which such Person is a party which is not entered into in the ordinary course of such Person’s business and which is material to the business, operations, properties or condition (financial or otherwise) of such Person.

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‘‘Note’’ shall have the meaning set forth in Section 2.02.

‘‘Obligations’’ shall mean all obligations, liabilities and indebtedness of the Company to the Bank, whether now existing or hereafter created, absolute or contingent, direct or indirect, due or not, whether created directly or acquired by assignment or otherwise, arising under or in connection with this Agreement and the other Loan Documents, including, without limitation, all obligations, liabilities and indebtedness of the Company with respect to the principal of and interest on the Term Loan and the payment and performance of all other obligations, liabilities, and indebtedness of the Company to the Bank hereunder (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, and interest that but for the filing of a petition in bankruptcy with respect to the Company, would accrue on such obligations, whether or not a claim is allowed again st the Company for such interest in the related bankruptcy proceeding), under the Note or with respect to the Term Loan, including without limitation all fees, costs, expenses and indemnity obligations hereunder.

‘‘Officer’s Certificate’’ shall mean a certificate signed by an Executive Officer of the Company.

‘‘Parent’’ shall mean Lyman Bros., Inc., a Utah corporation and parent of the Target Company and Lyman and Turbo.

‘‘Payment Office’’ shall mean the Bank’s office located at 730 Veterans Memorial Highway, Hauppauge, New York 11788, Attention: Loan Officer — Globecomm Systems Inc.

‘‘PBGC’’ shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

‘‘Permitted Liens’’ shall mean those Liens described in Section 7.01 hereof.

‘‘Permitted Investments’’ shall mean (i) direct obligations of the United States of America or any governmental agency thereof, provided that such obligations mature within one year from the date of acquisition thereof; (ii) dollar denominated certificates of time deposit maturing within one year issued by any commercial bank organized and existing under the laws of the United Sates or any state thereof and having aggregate capital and surplus in excess of $1,000,000,000; (iii) money market mutual funds having assets in excess of $2,500,000,000; or (iv) commercial paper rated not less than P-1 or A-1 or their equivalent by Moody’s Investor Services, Inc. or Standard & Poor’s Rating Group, respectively.

‘‘Person’’ shall mean any natural person, corporation, limited liability company, limited liability partnership, business trust, joint venture, association, company, partnership or Governmental Authority.

‘‘Plan’’ shall mean any multi-employer or single-employer plan defined in Section 4001 of ERISA, which is maintained, or at any time during the five calendar years preceding the date of this Agreement was maintained for employees of the Company, any Guarantor or an ERISA Affiliate.

‘‘Pledge Agreement’’ shall mean the Pledge Agreement, substantially in the form attached hereto as Exhibit C, to be executed and delivered on the Closing Date by the Company, as same may hereafter be amended, restated, supplemented or otherwise modified from time to time.

‘‘Prime Rate’’ shall mean the rate per annum publicly announced by the Bank from time to time as its prime rate in effect at its principal office, each change in the Prime Rate shall be effective on the date such change is announced to become effective.

‘‘Prime Rate Loans’’ shall mean the Term Loan at such time as it is being made and/or maintained at a rate of interest based on the Prime Rate.

‘‘Regulation D’’ shall mean Regulation D of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented from time to time.

‘‘Reportable Event’’ shall mean an event described in Section 4043(b) of ERISA with respect to a Plan as to which the 30 day notice requirement has not been waived by the PBGC.

‘‘Reserve Adjusted Libor’’ shall mean with respect to the Interest Period pertaining to a Libor Rate Loan, a rate per annum equal to the product (rounded upwards to the next higher 1/16 of one percent)

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of (a) the annual rate of interest at which Dollar deposits of an amount equal to the amount of the portion of the proposed Libor Rate Loan and for a period equal to the Interest Period applicable thereto which appears on Telerate Page 3750 at approximately 11:00 A.M. (London time) on the second Business Day prior to the commencement of such Interest Period, multiplied by (b) the Eurocurrency Reserve Requirement.

If the rate described in clause (a) above does not appear on the Telerate system on any applicable interest determination date, then the rate described in clause (a) shall be determined by reference to the rate for deposits in Dollars of an amount equal to the amount of the proposed Libor Rate Loan for a period substantially equal to the Interest Period on the Reuters Page ‘‘LIBO’’ (or such other page as may replace the LIBO Page on that service for the purpose of displaying such rates), as of 11:00 a.m. (London Time) on the date that is three Business Days prior to the beginning of such Interest Period.

If both the Telerate and Reuters system are unavailable, then the rate described in clause (a) for that date will be determined on the basis of the offered rates for deposits in U.S. dollars for a period of time comparable to such applicable Interest Period which are offered by four major banks selected by the Bank in the London interbank market at approximately 11:00 a.m. (London time) on the day that is three Business Days preceding the first day of such Interest Period. The principal London office of each of the four major banks will be requested to provide a quotation of its U.S. dollar deposit offered rate. If at least two such quotations are provided, the rate described in clause (a) for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate described in clause (a) for that date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for a per iod of time comparable to such Interest Period offered by major banks in New York, New York at approximately 11:00 a.m. (New York, New York time) on the day that is three Business Days preceding the first day of such Interest Period. In the event that the Bank is unable to obtain any such quotation as provided above, it will be deemed that Reserve Adjusted Libor pursuant to a Libor Rate Loan cannot be determined.

‘‘Security Agreements’’ shall mean, collectively, the General Security Agreement, substantially in the form attached hereto as Exhibit D, to be executed and delivered on the Closing Date by the Company and each Guarantor and, thereafter, by each Person who may be required to execute the same pursuant to Section 6.10 hereof, as same may be amended, restated, supplemented or otherwise modified, from time to time.

‘‘Security Documents’’ shall mean the Security Agreements, the Pledge Agreement, and each other collateral security document delivered to the Bank hereunder.

‘‘Solvent’’ shall mean with respect to the Company or a Guarantor, as applicable, as of the date of determination thereof that (i) the amount of the ‘‘present fair saleable value’’ of the assets of such Person (including goodwill) will, as of such date, exceed the amount of all ‘‘liabilities of such Person, contingent or otherwise,’’ as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (ii) the present fair saleable value of the assets of such Person (including goodwill) will, as of such date, be greater than the amount that will be required on its debts as such debts become absolute and matured, (iii) such Person will not have as of such date, an unreasonably small amount of capital with which to conduct its business, and (iv) such Person will be able to pay its debts as they mature.< /font>

‘‘Subordinated Debt’’ or ‘‘Subordinated Indebtedness’’ shall mean all debt which is subordinated in right of payment to the prior indefeasible payment in full of the obligations of the Company and/or any Guarantor to the Bank on terms reasonably satisfactory to and approved in writing by the Bank.

‘‘Subsidiaries’’ shall mean with respect to any Person any corporation, association or other business entity more than 50% of the voting stock or other ownership interest of which is at the time owned or controlled, directly or indirectly, by such Person or one or more of its Subsidiaries or a combination thereof.

‘‘Target Company’’ shall mean GlobalSat, LLC, a Delaware limited liability company.

‘‘Telerate Page 3750’’ shall mean the display designated as ‘‘Page 3750’’ on the Associated Press-Dow Jones Telerate Service (or such other page as may replace Page 3750 on the Associated Press-Dow Jones

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Telerate Service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association interest settlement rates for Dollar deposits). Each Reserve Adjusted Libor rate based on the rate displayed on Telerate Page 3750 shall be subject to corrections, if any, made in such rate and displayed by the Associated Press-Dow Jones Telerate Service within one hour of the time when such rate is first displayed by such service.

‘‘Term Loan’’ shall have the meaning set forth in Section 2.01.

‘‘Term Loan Commitment’’ shall mean the Bank’s obligation to make the Term Loan on the Closing Date to the Borrower in an amount not to exceed $16,000,000.

‘‘Term Loan Maturity Date’’ shall mean five years from the Funding Date.

‘‘Turbo’’ shall mean Turbo Logic Associates, LLC, a Delaware limited liability company.

‘‘Unfunded Current Liability’’ of any Plan shall mean the amount, if any, by which the present value of the accrued benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, determined in accordance with Section 412 of the Code.

SECTION 1.02.    Accounting Terms.    Except as otherwise herein specifically provided, each accounting term used herein shall have the meaning given to it under Generally Accepted Accounting Principles. ‘‘Generally Accepted Accounting Principles’’ or ‘‘GAAP’’ shall mean those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants acting through the Financial Accounting Standards Board (‘‘FASB’’) or through other appropriate boards or committees thereof and which are consisten tly applied for all periods so as to properly reflect the Consolidated financial condition, and the Consolidated results of operations and cash flows of the Company and its Subsidiaries except that any accounting principle or practice required to be changed by the FASB (or other appropriate board or committee of the FASB) in order to continue as a generally accepted accounting principle or practice may be so changed. Any dispute or disagreement between the Company and the Bank relating to the determination of Generally Accepted Accounting Principles shall, in the absence of manifest error, be conclusively resolved for all purposes hereof by the written opinion with respect thereto, delivered to the Bank, of nationally recognized independent certified public accountants selected by the Company and reasonably acceptable to the Bank for the purpose of auditing the periodic Consolidated financial statements of the Company and its Subsidiaries.

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ARTICLE II
TERM LOAN

SECTION 2.01.    Term Loan.

(a)    Subject to the terms and conditions hereof, the Bank agrees to make a term loan on the Funding Date in an amount not to exceed the Term Loan Commitment (the ‘‘Term Loan’’) to the Company upon satisfaction of the conditions set forth in Section 5.01 hereof. The Company shall give the Bank irrevocable written notice (or telephonic notice promptly confirmed in writing) not later than 11:00 a.m. New York, New York time three Business Days prior to the Funding Date specifying the Type of Loan and amount to be borrowed. The Term Loan may consist of (i) Prime Rate Loans, (ii) Libor Rate Loans, or (iii) a combination thereof. The Term Loan Commitment shall terminate upon funding of the Term Loan on the Funding Date.

(b)    The Company shall give the Bank a duly completed Notice of Borrowing executed by an Executive Officer not later than 12:00 noon, three Business Days prior to the Funding Date with respect to a Libor Rate Loan under this Section 2.01 or not later than 12:00 noon on the Funding Date with respect to an Prime Rate Loan under this Section 2.01. Such notice shall be irrevocable and shall specify the amount and Type of the proposed borrowing, and the initial Interest Period if a Libor Rate Loan. Each borrowing of a Prime Rate Loan shall be in an amount not less than $1,000,000, or, if greater, whole multiples of $1,000,000 in excess thereof. Each borrowing of a Libor Rate Loan shall be an amount not less than $2,500,000 or whole multiples of $1,000,000 in excess thereof.

SECTION 2.02.    Note.    The Term Loan shall be evidenced by a promissory note of the Company, substantially in the form of Exhibit A, with appropriate insertions (the ‘‘Note’’) payable to the order of the Bank and representing the obligation of the Company to pay the unpaid principal amount of the Term Loan with interest thereon as prescribed in Section 3.01. The Bank is authorized to record the date and amount of each payment or prepayment of principal thereof in the Bank’s records or on the grid schedule annexed to the Note; provided, however, that the failure of the Bank to set forth each payment and other information shall not in any manner affect the obligation of the Company to repay the Term Loan in accordance with the terms of the Note and this Agreement. The Note, the grid schedule and the books and records of the Bank shall constitute presumptive evidence of the information so recorded absent manifest error. The Note shall (a) be dated the Funding Date, (b) be stated to mature on the Term Loan Maturity Date and (c) be payable as to principal in sixty consecutive monthly installments of $266,666.67 each, commencing June 1, 2007 and continuing on the f irst day of each calendar month thereafter, provided that, in any event, the last installment on the Term Loan Maturity Date shall be in an amount equal to the remaining principal amount outstanding, together with interest thereon as of such date. The Note shall bear interest from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum determined as provided in, and payable as specified in, Section 3.01.

ARTICLE III
INTEREST RATE; FEES AND PAYMENTS; USE OF PROCEEDS

SECTION 3.01.    Interest Rate.

(a)    The Term Loan, to the extent that it is a Prime Rate Loan, shall bear interest for the Interest Period from the date thereof on the unpaid principal amount thereof at a fluctuating rate per annum equal to the Prime Rate.

(b)    The Term Loan, to the extent that it is a Libor Rate Loan, shall bear interest for the Interest Period applicable thereto on the unpaid principal amount thereof at a rate per annum equal to the Reserve Adjusted Libor determined for each Interest Period thereof in accordance with the terms hereof plus two hundred twenty five (225) basis points.

(c)    Upon the occurrence and during the continuance of an Event of Default the outstanding principal amount of the Term Loan (excluding any defaulted payment of principal accruing interest in accordance with clause (d) below), shall, at the option of the Bank, bear interest payable on demand at a rate of interest 2% per annum in excess of the interest rate otherwise then in effect or, if no rate is in effect, 2% per annum in excess of the Prime Rate.

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(d)    If the Company shall default in the payment of the principal of or interest on any portion of the Term Loan or any other amount becoming due hereunder, interest, fees, expenses or otherwise, the Company shall pay interest on such defaulted amount accruing from the date of such default (without reference to any period of grace) up to and including the date of actual payment (after as well as before judgment) at a rate of 2% per annum in excess of the rate otherwise in effect or, if no rate is in effect, 2% per annum in excess of the Prime Rate.

(e)    The Company may elect from time to time to convert all or a portion of the outstanding Term Loan from a Libor Rate Loan to a Prime Rate Loan, by giving the Bank at least three Business Day’s prior irrevocable written notice of such election, provided that any such conversion of Libor Rate Loans shall only be made on the last day of an Interest Period with respect thereto. The Company may elect from time to time to convert the outstanding Term Loan from a Prime Rate Loan to a Libor Rate Loan by giving the Bank irrevocable written notice of such election not later than 11:00 a.m. (New York, New York time), three Business Days prior to the date of the proposed conversion, with respect to a Libor Rate Loan. All or any part of outstanding Prime Rate Loans may be converted as provided herein, provided that each conversion shall be in the principal amount of $2,500,000 or whole multiples of $1,000,000 in excess thereof, and further prov ided that no Default or Event of Default shall have occurred and be continuing. Any conversion to or from any Libor Rate Loans hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all Libor Rate Loans having the same Interest Period shall not be less than $2,500,000.

(f)    Any Libor Rate Loan in a minimum principal amount of $2,500,000 may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Company with the notice provisions contained in the definition of Interest Period; provided, that no Libor Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Prime Rate Loan on the last day of the Interest Period in effect when the Bank is notified, or otherwise has actual knowledge, of such Default or Event of Default.

(g)    If the Company shall fail to select the duration of any Interest Period for any Libor Rate Loan in accordance with the definition of ‘‘Interest Period’’ set forth in Section 1.01, the Company shall be deemed to have selected an Interest Period of one month.

(h)    No Loan may be funded as a Libor Rate Loan, or converted to or continued as a Libor Rate Loan, with an Interest Period that extends beyond the Term Loan Maturity Date.

(i)    Anything in this Agreement or in any Note to the contrary notwithstanding, the obligation of the Company to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be paid to the Bank to the extent that the charging or receipt thereof would not be permissible under the law or laws applicable to the Bank limiting the rates of interest that may be charged or collected by the Bank. In each such event payments of interest required to be paid to the Bank shall be calculated at the highest rate permitted by applicable law until such time as the rates of interest required hereunder may lawfully be charged and collected by the Bank. If the provisions of this Agreement or the Note would at any time otherwise require payment by the Company to the Bank of any amount of interest in excess of the maximum amount then permitted by applicable law, the interest payments to the Bank shall be reduce d to the extent necessary so that the Bank shall not receive interest in excess of such maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank shall receive interest payments hereunder or under the Note in an amount less than the amount otherwise provided herein or in the Note, such deficit (hereinafter called the ‘‘Interest Deficit’’) will accumulate and will be carried forward (without interest) until the termination of this Agreement. Interest otherwise payable to the Bank hereunder and under the Note for any subsequent period shall be increased by such maximum amount of the Interest Deficit that may be so added without causing the Bank to receive interest in excess of the maximum amount then permitted by applicable law.

(j)    Interest on each Loan shall be payable in arrears on each Interest Payment Date and shall be calculated on the basis year of 360 days and shall be payable for the actual days elapsed. Any rate of interest on the Term Loan or other Obligations which is computed on the basis of the Prime Rate shall

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change when and as the Prime Rate changes in accordance with the definition thereof. Each determination by the Bank of an interest rate or fee hereunder shall, absent manifest error, be conclusive and binding for all purposes.

SECTION 3.02.    Use of Proceeds.    The proceeds of the Term Loan shall be used by the Company to finance up to ninety percent (90%) of the purchase price paid by the Company to acquire substantially all of the assets of the Target Company pursuant to the Asset Purchase Agreement.

SECTION 3.03.    Prepayments.

(a)    Voluntary.    The Company may at any time and from time to time prepay the then outstanding Term Loan, in whole or in part, without premium or penalty, except as provided in Section 3.08 hereof, upon written notice to the Bank (or telephonic notice promptly confirmed in writing) not later than 11:00 a.m. New York, New York time, three Business Days before the date of prepayment with respect to prepayments of Libor Rate Loans, or 11:00 a.m. New York, New York time on the proposed date of prepayment with respect to Prime Rate Loans. Each notice shall be irrevocable and shall specify the date and amount of prepayment and whether such prepayment is of Libor Rate Loans or Prime Rate Loans or a combination thereof, and if a combination thereof, the amount of prepayment allocable to eac h. If such notice is given, the Company shall make such prepayment, and the amount specified in such notice shall be due and payable, on the date specified therein. Each partial prepayment pursuant to this Section 3.03 hereof shall be in a principal amount of (i) $2,500,000 or whole multiples of $1,000,000 in excess thereof with respect to Libor Rate Loans and (ii) $2,500,000 or whole multiples of $1,000,000 in excess thereof with respect to Prime Rate Loans. All prepayments shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment.

(b)    Mandatory.    The Company shall apply the net cash proceeds (after costs and expenses) realized by the Company upon any Debt Issuance or Equity Issuance to prepay the outstanding Term Loan hereunder. Such net proceeds shall be applied promptly upon the closing of any such Debt Issuance or Equity Issuance.

All prepayments shall be applied, first to Prime Rate Loans outstanding and second, to Libor Rate Loans outstanding, in such order as the Bank shall determine in its sole and absolute discretion. All prepayments shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment. All partial prepayments of the Term Loan shall be applied to the remaining installments of principal in inverse order of maturity.

SECTION 3.04.    Fee.    The Company agrees to pay to the Bank a nonrefundable origination fee in an amount equal to twenty five (25) basis points of the actual principal amount of the Term Loan funded on the Closing Date, payable in full on the Closing Date.

SECTION 3.05.    Inability to Determine Interest Rate.    In the event that the Bank shall have determined (which determination shall be conclusive and binding upon the Company) that, by reason of circumstances affecting the London interbank market, adequate and reasonable means do not exist for ascertaining the Reserve Adjusted Libor applicable pursuant to Section 3.01(b) for any requested Interest Period with respect to (a) the making of a Libor Rate Loan, (b) a Libor Rate Loan that will result from the requested conversion of a Prime Rate Loan to a Libor Rate Loan or a Libor Rate Loan of one type into a Libor Rate Loan of another type, or (c) the continuation of a Libor Rate Loan beyond the expiration of the then current Interest Period with respect thereto, the Bank shall forthwith give notice by telephone of such determination, promptly confirmed in writing, to the Company of such determination. Until the Bank notifies the Company that the circumstances giving rise to the suspension described herein no longer exist (which notification shall be given promptly by the Bank), the Company shall not have the right to request or continue a Libor Rate Loan or to convert a Prime Rate Loan to a Libor Rate Loan.

SECTION 3.06.    Illegality.    Notwithstanding any other provisions herein, if any introduction of or change in any law, regulation, treaty or directive or in the interpretation or application thereof shall make it unlawful for the Bank to make or maintain Libor Rate Loans as contemplated by this Agreement, the Bank shall forthwith give notice by telephone of such circumstances, promptly confirmed in writing, and (a) the commitment of the Bank to make and to allow conversion to or continuations of Libor Rate Loans shall forthwith be cancelled for the duration of such illegality and (b) the Term Loan then outstanding as

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Libor Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the next succeeding last day of each Interest Period applicable to such Libor Rate Loans or within such earlier period as may be required by law. The Company shall pay to the Bank, upon demand, any additional amounts required to be paid pursuant to Section 3.08 hereof.

SECTION 3.07.    Increased Costs.

(a)    In the event that any introduction of or change in, on or after the date hereof, any applicable law, regulation, treaty, order, directive or in the interpretation or application thereof (including, without limitation, any request, guideline or policy, whether or not having the force of law, of or from any central bank or other governmental authority, agency or instrumentality and including, without limitation, Regulation D), by any authority charged with the administration or interpretation thereof shall occur, which:

(i)    shall subject the Bank to any tax of any kind whatsoever with respect to this Agreement, any Note, any Loan, or change the basis of taxation of payments to the Bank of principal, interest, fees or any other amount payable hereunder (other than any tax that is measured with respect to the overall net income of the Bank or lending office of the Bank and that is imposed by the United States of America, or any political subdivision or taxing authority thereof or therein, or by any jurisdiction in which the Bank’s lending office is located, or by any jurisdiction in which the Bank is organized, has its principal office or is managed and controlled); or

(ii)    shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement (whether or not having the force of law) against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of the Bank; or

(iii)    shall impose on the Bank any other condition, or change therein directly relating to this Agreement, the Note or the Loan; and the result of any of the foregoing is to increase the cost to the Bank of making, renewing or maintaining or participating in advances or extensions of credit hereunder or to reduce any amount receivable hereunder, in each case by an amount which the Bank deems material, then, in any such case, the Company shall pay the Bank, upon demand, such additional amount or amounts as the Bank shall have determined will reimburse the Bank for such increased costs or reduction.

(b)    If the Bank shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank (or any lending office of the Bank) or the Bank’s holding company, with any request or directive regarding capital adequacy (whether or not having the force of the law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Bank’s capital or on the capital of the Bank’s holding company as a consequence of its obligations hereunder to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration the Bank’s policies and the policies of the Bank’s holding company with respect to capital adequacy) by an amount deemed by the Bank to be material, then from time to time, the Company shall pay to the Bank, the additional amount or amounts as the Bank shall have determined will reimburse the Bank or the Bank’s holding company for such reduction directly relating to this Agreement, the Note or the Loan. The Bank’s determination of such amounts, upon presentation thereof to the Company, shall be conclusive and binding on the Company absent manifest error.

(c)    A certificate of the Bank setting forth the basis and calculation of any such determination, and the amount or amounts payable pursuant to Sections 3.07(a) and 3.07(b) above, shall be conclusive absent manifest error. The Company shall pay the Bank the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 3.08.    Indemnity.    The Company agrees to indemnify the Bank and to hold the Bank harmless from any loss, cost or expense which the Bank may sustain or incur, including, without limitation, interest or fees payable by the Bank to lenders of funds obtained by it in order to maintain Libor Rate

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Loans hereunder, as a consequence of (a) default by the Company in payment of the principal amount of or interest on any Libor Rate Loan, (b) default by the Company to accept or make a borrowing of a Libor Rate Loan or a conversion into or continuation of a Libor Rate Loan after the Company has requested such borrowing, conversion or continuation, (c) default by the Company in making any prepayment of any Libor Rate Loan after the Company gives a notice in accordance with Section 3.03 of this Agreement and/or (d) the making of any payment or prepayment (whether mandatory or optional) of a Libor Rate Loan or the making of any conversion of a Libor Rate Loan to an Prime Rate Loan on a day which is not the last day of the applicable Interest Period with respect thereto. A certificate of the Bank setting forth the basis, the calculation of any such determination and such amounts shall be conclusive absent manifest error. The Company shall pay the Bank the amount shown as due on any certificate within ten days af ter receipt thereof.

SECTION 3.09.    Taxes.    Except as set forth in clause (c) below or as required by law, all payments made by the Company under this Agreement shall be made free and clear of, and without reduction for or on account of, any present or future taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding income and franchise taxes imposed on the Bank by (i) the United States of America or any political subdivision or taxing authority thereof or therein, (ii) the jurisdiction under the laws of which the Bank is organ ized or in which it has its principal office or is managed and controlled or any political subdivision or taxing authority thereof or therein, or (iii) any jurisdiction in which the Bank’s lending office is located or any political subdivision or taxing authority thereof or therein (such non-excluded taxes being called ‘‘Taxes’’). If any Taxes are required to be withheld from any amounts payable to the Bank hereunder, or under the Note, the amount so payable to the Bank shall be increased to the extent necessary to yield to the Bank (after payment of all Taxes and free and clear of all liability in respect of such Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Note. Whenever any Taxes are payable by the Company, as promptly as possible thereafter, the Company shall send to the Bank, as t he case may be, a certified copy of an original official receipt showing payment thereof. If the Company fails to pay Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Company shall indemnify the Bank for any incremental taxes, interest or penalties that may become payable by the Bank as a result of any such failure together with any expenses payable by the Bank in connection therewith.

SECTION 3.10.    Payments.    All payments (including prepayments) to be made by the Company on account of principal, interest, fees and reimbursement obligations shall be made without set-off or counterclaim and shall be made to the Bank, at the Payment Office of the Bank in Dollars in immediately available funds. The Bank may, in its sole discretion, directly charge principal and interest payments due in respect of the Term Loan to the Company’s accounts at the Payment Office or other office of the Bank. Except as otherwise provided in the definition of ‘‘Interest Period’’, if any payment hereunder be comes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

SECTION 3.11.    Disbursement of Term Loan.    The Bank shall make the Term Loan available to the Company at the Payment Office by crediting the account of the Company with such amount and in like funds.

SECTION 3.12.    Manner of Payment.

(a)    Unless otherwise specified herein each payment and prepayment of principal of and interest on the Note shall be made by the Company in immediately available funds not later than 12:00 noon, New York, New York time, on the date on which it is payable. The Bank may (but shall not be obligated to) debit any ordinary deposit account of the Company with the Bank for the amount of any such payment.

(b)    The Bank may in its sole discretion directly charge one or more of the Company’s accounts at the Payment Office or other office of the Bank for all interest and principal payments due in respect of the Term Loan and all fees payable hereunder. Except as otherwise provided in the definition of ‘‘Interest Period’’, if any payment hereunder becomes due and payable on a day other than a Business Day, such

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payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

(c)    The Bank shall make the Term Loan to be made by it hereunder available to the Company at the Payment Office by crediting the account of the Company with such amount and in like funds.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

In order to induce the Bank to enter into this Agreement and to make the Term Loan herein provided for, the Company represents and warrants to the Bank that:

SECTION 4.01.    Organization, Corporate Powers, etc.    The Company and each Guarantor (i) is a corporation duly incorporated, or a limited liability company duly formed, validly existing and in good standing under the laws of the state of its incorporation or formation, (ii) has the power and authority to own properties and to carry on its business as now being conducted, (iii) is duly qualified to do business in every jurisdiction wherein the conduct of its business or the ownership of its properties are such as to require such qualification, (iv) has the power to execute and perform each of the Loan Documents to which it is a pa rty, (v) with respect to the Company, has the power to borrow hereunder and to execute and deliver the Note, and (vi) is in compliance with all applicable federal, state and local laws, rules and regulations except where the failure to be in compliance could not reasonably be expected to have a Material Adverse Effect.

SECTION 4.02.    Authorization of Borrowing, Enforceable Obligations.    The execution, delivery and performance by the Company of this Agreement, and the other Loan Documents to which it is a party, the borrowings by the Company hereunder, and the execution, delivery and performance of each Guarantor of the Loan Documents to which such Guarantor is a party, (a) have been duly authorized by all requisite corporate or limited liability company action, (b) will not violate or require any consent under (i) any provision of law applicable to the Company or any Guarantor, any governmental rule or regulation, or the Certificate of Incorpo ration, By-laws, or other organizational documents, as applicable, of the Company or any Guarantor or (ii) any order of any court or other agency of government binding on the Company or any Guarantor or any indenture, agreement or other instrument to which the Company or any Guarantor a party, or by which the Company or any Guarantor or any of its property is bound, and (c) will not be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Company or any Guarantor other than as contemplated by this Agreement or the other Loan Documents. This Agreement and each other Loan Document to which the Company and each Guarantor is a party, constitutes a legal, valid and binding obligation of the Company and each Guarantor as the case may be, enforceable against the Company and each Guarantor, as the case may be, in accordance with its terms.

SECTION 4.03.    Financial Condition.    The Company has heretofore furnished to the Bank (a) the audited Consolidated balance sheet of Company and its Subsidiaries and the related audited statements of income, retained earnings and cash flow of Company and its Subsidiaries prepared by Ernst & Young, LLP, certified accountants, for the fiscal year ended June 30, 2006 and (b) the unaudited Consolidated balance sheet of the Company and its Subsidiaries and the related unaudited statements of income, retain earning and cash flow of the Company and its Subsidiaries for the six-month period ended December 31, 2006 (collectively, the ‘‘financial statements’’). The financial statements were prepared in conformity with Generally Accepted Accounting Principles and, to the Company’s knowledge, fairly present the financial position and results of operations of the Company and its Subsidiaries as of the date of such financial statements and for the periods to which they relate and, since the date of such financial statements and tax returns, no material adverse change in the business, operations or assets or condition (financial or otherwise) of Company and its Subsidiaries has occurred. The Company shall deliver to the Bank a certificate by the Chief Financial Officer of the Company to that effect on the Closing Date. There are no obligations or liabilities, contingent or otherwise, of the Company and its Subsidiaries which are

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not reflected on such statements other than obligations incurred in the ordinary course of the Company’s business since the date of such financial statements or specifically disclosed elsewhere in this Agreement or any schedule hereto.

SECTION 4.04.    Taxes.    The Company and each Guarantor has filed or caused to be filed all federal, state and local tax returns which are required to be filed, and has paid or has caused to be paid all taxes as shown on said returns or on any assessment received by them, to the extent that such taxes have become due, except taxes which are being contested in good faith and which are reserved against in accordance with Generally Accepted Accounting Principles.

SECTION 4.05.    Title to Properties.    The Company and each Guarantor has good and marketable title to their respective properties and assets, except for such properties and assets as have been disposed of since the date of such financial statements as no longer used or useful in the conduct of their respective business or as have been disposed of in the ordinary course of business, and all such properties and assets are free and clear of all Liens, except as permitted by Section 7.01.

SECTION 4.06.    Litigation.

(a)    There are no actions, suits or proceedings (whether or not purportedly on behalf of the Company or any Guarantor) pending or, to the knowledge of the Company, threatened against or affecting the Company or any Guarantor at law or in equity or before or by any Governmental Authority, which involve any of the transactions contemplated herein or which, if adversely determined against the Company or such Guarantor, could reasonably be expected to result in a Material Adverse Effect.

(b)    Neither the Company nor any Guarantor is in default with respect to any judgment, writ, injunction, decree, rule or regulation of any Governmental Authority.

SECTION 4.07.    Agreements.    Neither the Company nor any Guarantor is a party to any agreement or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or regulation which could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Guarantor is in default in any manner which could have a Material Adverse Effect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party.

SECTION 4.08.    Compliance with ERISA.    Each Plan is in compliance with ERISA; no Plan is insolvent or in reorganization, no Plan has an Unfunded Current Liability, and no Plan has an accumulated or waived funding deficiency or permitted decreases in its funding standard account within the meaning of Section 412 of the Code; neither the Company nor any ERISA Affiliate nor any Guarantor has incurred any material liability to or on account of a Plan pursuant to Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA or expects to incur any liability under any of the foregoing sections on account of the termination of participation in or contributions to any such Plan, no proceedings have been instituted to terminate any Plan, no condition exists which presents a risk to the Company or any Guarantor of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no lien imposed under the Code or ERISA on the assets of the Company or any Guarantor exists or is likely to arise on account of any Plan; and the Company, and each Guarantor may terminate contributions to any other employee benefit plans maintained by them without incurring any material liability to any person interested therein.

SECTION 4.09.    Federal Reserve Regulations; Use of Proceeds.

(a)    Neither the Company nor any Guarantor is engaged principally in, nor has as one of its important activities, the business of extending credit for the purpose of purchasing or carrying any ‘‘margin stock’’ (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States, as amended to the date hereof). If requested by the Bank, the Company will, and will cause each Guarantor to, furnish to the Bank such a statement on Federal Reserve Form U-1.

(b)    No part of the proceeds of the Term Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or to carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock, or to refund indebtedness originally incurred for such purposes, or (ii) for any purpose which violates or is inconsistent with the provisions of the Regulations T, U, or X of the Board of Governors of The Federal Reserve System.

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(c)    The proceeds of the Term Loan shall be used solely for the purposes permitted under Section 3.02.

SECTION 4.10.    Approvals.    No registration with or consent or approval of, or other action by, any Governmental Authority or any other Person is required in connection with the execution, delivery and performance of this Agreement by the Company or any Guarantor, or with the execution and delivery of other Loan Documents to which it is a party or, with respect to the Company, the borrowings hereunder.

SECTION 4.11.    Subsidiaries and Affiliates.    Attached hereto as Schedule I is a correct and complete list of the Company’s Subsidiaries and Affiliates showing as to each Subsidiary and Affiliate, its name, the jurisdiction of its incorporation or formation, its shareholders or other owners of an interest in each Subsidiary and the number of outstanding shares or other ownership interest owned by each shareholder or other owner of an interest.

SECTION 4.12.    Hazardous Materials.    Except as set forth in environmental reports provided to the Bank, the Company and each Guarantor are each in compliance with all federal, state or local laws, ordinances, rules or regulations governing Hazardous Materials and (a) neither the Company nor any Guarantor has used Hazardous Materials on, from, or affecting any property now owned or occupied by the Company or any Guarantor in any manner which violates federal, state or local laws, ordinances, rules or regulations governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Haz ardous Materials; and (b) to the best knowledge of the Company and each Guarantor, no prior owner of any such property or any tenant, subtenant, prior tenant or prior subtenant has used Hazardous Materials on, from, or affecting such property in any manner which violates federal, state or local laws, ordinances, rules or regulations governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials, except where failure to so comply could not reasonably be expected to have a Material Adverse Effect.

SECTION 4.13.    Investment Company Act.    Neither the Company nor any Guarantor is an ‘‘investment company’’, or a company ‘‘controlled’’ by an ‘‘investment company’’, within the meaning of the Investment Company Act of 1940, as amended.

SECTION 4.14.    No Default.    No event has occurred and is continuing and no condition exists which constitutes a Default or an Event of Default.

SECTION 4.15.    Material Contracts.    Each Material Contract of the Company and each Guarantor (i) is in full force and effect and is binding upon and enforceable against the Company or each Guarantor, as the case may be, and, to the knowledge of the Company, all other parties thereto in accordance with its terms, and (ii) there exists no default under any Material Contract by the Company or any Guarantor or, to the knowledge of the Company, by any other party thereto which has not been fully cured or waived.

SECTION 4.16.    Permits and Licenses.    Each of the Company and each Guarantor has all obtained all material licenses, permits, franchises, or other governmental authorizations necessary to the ownership of its property or to the conduct of its activities, and shall obtain all such licenses, permits, franchises, or other governmental authorizations as may be required in the future to the extent that the failure to obtain them would materially and adversely affect the ability of the Company or any Guarantor to conduct its activities as currently conducted, or in the future may be conducted, or the condition (financial or otherwise) of the Company or any Guarantor.

SECTION 4.17.    Compliance with Law.    The Company and each Guarantor are each in compliance with all laws, rules, regulations, orders and decrees which are applicable to the Company or any Guarantor, or to any of their respective properties, which the failure to comply with could reasonably be expected to have a Material Adverse Effect.

SECTION 4.18.    Disclosure.    No representation or warranty of the Company or any Guarantor contained in this Agreement, any other Loan Document, or any other document, certificate or written statement furnished to the Bank by or on behalf of the Company or any Guarantor for use in connection with the transactions contemplated by this Agreement contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which they were made.

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SECTION 4.19.    Acquisition Documents.    The Company has heretofore delivered to the Bank true, correct and complete copies of the Acquisition Documents. The Acquisition Documents set forth the entire agreement of the parties thereto with respect to the subject matter thereof. No consent or approval, authorization or declaration of any Governmental Authority is or will be required in connection with the Acquisition. Upon funding of the Term Loan the Company shall acquire valid, legal and marketable title to substantially all of the assets of the Target Company pursuant to the Acquisition Documents, free and clear of any Lien. The representations and warranties of the Company in Article V of the Asset Purchase Agreement are true and correct in all respects and are hereby deemed remade and restated in favor of the Bank.

SECTION 4.20.    Security Documents.    Each Security Document executed by the Company and the Guarantor shall constitute a valid and continuing lien on and security interest in the collateral referred to in such Security Document in favor of the Bank prior to all other Liens, claims and right of all other Persons, other than Permitted Liens, and shall be enforceable as such against all other Persons.

ARTICLE V
CONDITIONS OF LENDING

SECTION 5.01.    Conditions To Term Loan.    The obligation of the Bank to make the Term Loan hereunder is subject to the following conditions precedent:

(a)    Note.    On or prior to the Closing Date, the Bank shall have received the Note duly executed by the Company.

(b)    Other Loan Documents.    On or prior to the Closing Date, the Bank shall have received (i) the Guaranties duly executed by each of the Guarantors, and (ii) the Security Documents, each duly executed by the Company and each Guarantor, as applicable, along with financing statements on form UCC-1 describing the collateral covered by the Security Agreement.

(c)    Supporting Documents.    The Bank shall have received on or prior to the Closing Date (a) a certificate of the Secretary or an Assistant Secretary of the Company and of each Guarantor dated the Closing Date and certifying (i) that neither the Certificates of Incorporation nor the By-laws of the Company or such Guarantor has been amended since the Closing Date; (ii) that attached thereto is a true and complete copy of resolutions adopted by the Board of Directors of the Company and each Guarantor, authorizing the execution, delivery and performance of this Agreement and of each Loan Document to be delivered on the Closing Date to which it is a party and, with re spect to the Company, the borrowings hereunder; and (iii) the incumbency and specimen signature of each officer of the Company and each Guarantor executing each Loan Document to which the Company or a Guarantor is a party and any certificates or instruments furnished pursuant hereto or thereto, and a certification by another officer of the Company and each Guarantor as to the incumbency and signature of the Secretary or Assistant Secretary of the Company and each Guarantor; and (b) such other documents as the Bank may reasonably request.

(d)    Opinion of Counsel.    On the Closing Date, the Bank shall have received a written opinion of counsel for the Company and the Guarantors dated the Closing Date and addressed to the Bank substantially in the form of Exhibit E attached hereto.

(e)    No Material Adverse Changes.    There shall not have occurred in the sole opinion of the Bank reasonably applied, any material adverse change in the business, operations, performance, properties or condition, financial or otherwise, of the Company or any Guarantor or in the Target Company since June 30, 2006.

(f)    Fees.    The Company shall have paid all costs and expenses incurred by the Bank in connection with the negotiation, preparation and execution of the Loan Documents (including, without limitation, the expenses and reasonable fees of counsel).

(g)    Assets Free from Liens.    Prior to the Closing Date, the Bank shall have received UCC-1 financing statement, tax and judgment lien searches evidencing that the Company’s and each Guarantor’s accounts receivable, inventory, equipment and all other assets of the Company and each Guarantor are free and clear of all Liens except Permitted Liens.

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(h)    Acquisition.    The Bank shall have received certified true, correct and complete copies of each Acquisition Document, including, without limitation the Asset Purchase Agreement and the schedules and exhibits thereto, which documents shall be in form and substance reasonably satisfactory to the Bank and its counsel shall be reasonably satisfied with all legal and business aspects of the Acquisition, including the structure, the costs of such transaction and the valuation of the assets to be purchased thereunder.

(i)    Consummation of Acquisition.    Simultaneously with the funding of the Term Loan, the Bank shall have received, (a) a certificate of an Executive Officer of the Company certifying that (i) the Acquisition has been consummated (other than the payment of the purchase price) in accordance with the terms of the Acquisition Documents and in compliance with all laws, (ii) that all conditions precedent with respect to the consummation of the Acquisition have been satisfied, (iii) no party to the Acquisition has waived the fulfillment of any material condition precedent set forth therein to the consummation of the Acquisition, (iv) no party has failed to perform any of its obligations thereunder and (v) nothing has come to the attention of the Company which would cause it to believe that any of the representations or warranties of the Target Company and contained in the Asset Purchase Agreement were false or misleading when made or when reaffirmed on the date of funding of the Term Loan, (b) evidence that the purchase price paid by the Company pursuant to the Acquisition shall not exceed $18,500,000, and (c) evidence that the Company and Target Company has approved the Acquisition.

(j)    Value.    The Bank shall be reasonably satisfied that, immediately following the consummation of the Acquisition and the transactions contemplated by this Agreement (including, without limitation, the funding of the Term Loan), (a) the fair value of the assets of the Company will exceed its Indebtedness (including Subordinated Indebtedness), (b) the present fair saleable value of the property and assets of the Company will be greater than the amount required to pay the probable liabilities of its Indebtedness (including Subordinated Indebtedness), (c) the Company will be able to pay its Indebtedness (including Subordinated Indebtedness), as such Indebtedness sh all mature, and (d) the Company shall not have unreasonably small capital in order to conduct the business in which it is engaged. All of the foregoing conditions shall be deemed to be satisfied if the financial information provided by the Company, including, but not limited to the financial information of the Target Company, shall be true and correct.

(k)    Due Diligence Report and/or Field Examination.    The Bank shall have received, prior to the Closing Date, a due diligence report conducted by the Company with respect to the assets, liabilities and books and records of the Target Company, all in form and substance reasonably satisfactory to the Bank, provided that if such due diligence report is not delivered to the Bank within ten (10) days prior to the Closing Date or if such due diligence report is unsatisfactory to the Bank, in its reasonable discretion, the Bank may conduct its own field examination of the assets, liabilities and books and records of the Target Company, the reasonable and actual cost of w hich shall be reimbursed by the Company on the Closing Date.

(l)    Financial Statements of Target Company; Pro Forma Covenant Compliance.    The Bank shall have received, at least fifteen (15) days prior to the Closing Date, Consolidated financial statements for the Target Company and its Subsidiaries as at December 31, 2006 and for the fiscal year then ended, together with a pro forma Consolidated balance sheet of the Company and its Subsidiaries which shall be based upon the financial statements of the Target Company as at December 31, 2006 which shall fairly reflect the co nsummation of the Acquisition and which shall demonstrate to the satisfaction of the Bank pro forma compliance with the financial covenants of Section 7.13 hereof, all of which shall be in form and substance satisfactory to the Bank.

(m)    Insurance.    The Bank shall receive, on or prior to the Closing Date, certificates of insurance covering the personal property and the business of the Company and the Guarantors (including with respect to general liability and products liability insurance), which certificates shall designate the Bank as the loss payee and additional insured, in form and substance reasonably satisfactory to the Bank together with copies of the related insurance policies with proper endorsements to reflect the Bank’s interests.

(n)    Due Diligence.    The Bank shall have results satisfactory to it of its due diligence checkings with respect the Company, the Guarantors and the Target Company, including, without limitation, litigation checkings, customer checkings, bank checkings, judgment, tax and bankruptcy searches, in all jurisdictions deemed necessary by the Bank and its counsel.

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(o)    Completion of Proceedings.    All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by the Loan Documents shall be reasonably satisfactory in form and substance to the Bank and its counsel.

(p)    Other Information, Documentation.    The Bank shall receive such other consents, approvals and further information and documentation as it may reasonably require, including, but not limited, to any information or documentation relating to compliance by the Company and each Guarantor with the requirements of all federal, state and local laws, ordinances, rules, regulations or policies governing the use, storage, treatment, transportation, refinement, handling, production or disposal of Hazardous Materials and in connection with the Acquisition.

(q)Representations and Warranties.    The representations and warranties by the Company and each Guarantor pursuant to this Agreement and the Loan Documents to which each is a party shall be true and correct in all material respects and an Executive Officer shall deliver a certificate to the Bank with respect thereto.

(r)    No Default.    The Company and each Guarantor shall be in compliance with all the terms and provisions set forth herein or in any other Loan Document on their part to be observed or performed, and no Default or Event of Default, shall have occurred and be continuing on the Closing Date or will result after giving effect to the Term Loan requested.

ARTICLE VI
AFFIRMATIVE COVENANTS

The Company covenants and agrees with the Bank that so long as the Term Loan remains in effect or any of the principal of or interest on the Note or any other Obligations hereunder shall be unpaid they will, and will cause each Guarantor to:

SECTION 6.01.    Corporate Existence, Properties, etc.    Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises and comply with all laws applicable to it; at all times maintain, preserve and protect all franchises and trade names and preserve all of its property used or useful in the conduct of its business and keep the same in good repair, working order and condition (ordinary wear and tear excepted), and from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto so that t he business carried on in connection therewith may be properly and advantageously conducted at all times; at all times keep its insurable properties adequately insured and maintain (i) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses, (ii) workmen’s compensation insurance in the amount required by applicable law, and (iii) public liability insurance, which shall include product liability insurance, in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, (iv) such other assistance as may be required by Law or may be reasonably required by the Bank. Each such policy of insurance of the Company and its Subsidiaries shall name the Bank as loss payee, additional insured and mortgagee, as the case may be, and shall provide for at least thirty (30) days’ prior written notice to the Bank of any modification or c ancellation of such policies. The Company shall provide to the Bank promptly upon receipt thereof evidence of the annual renewal of each such policy.

SECTION 6.02.    Payment of Indebtedness, Taxes, etc.

(a)    Pay all indebtedness and obligations, now existing or hereafter arising, as and when due and payable, except where (i) the validity, amount, or timing thereof is being contested in good faith and by appropriate proceedings, which proceedings shall include good faith negotiations, (ii) the Company or such Guarantor has set aside on its books adequate reserves with respect thereto in accordance with Generally Accepted Accounting Principles, and (iii) the failure to make such payment pending such contest could not reasonably be expected to have a Material Adverse Effect; provided that Company and each Guarantor will pay or cause to be paid all such indebtedness and obligations upon the commencement of proceedings to foreclose any lien which has attached as security therefore.

(b)    Pay and discharge or cause to be paid and discharged promptly all taxes, assessments and government charges or levies imposed upon it or upon its income and profits, or upon any of its property,

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real, personal or mixed, or upon any part thereof, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided, however, that neither the Company nor any Guarantor shall be required to pay and discharge or cause to be paid and discharged any such tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, and the Company or such Guarantor, as the case may be, shall have set aside on its books adequate reserves determined in accordance with Generally Accepted Accounting Principles with respect to any such tax, assessment, charge, levy or claim so contested; and further, provided that, subject to the foregoing provisos, the Company and each Guarantor will pay or cause to be paid all such taxes, assessments, charges, levies or claims upon the commencement of proceedings to foreclose any lien which has attached as security therefore.

SECTION 6.03.    Financial Statements, Reports, etc. Furnish to the Bank:

(a)    as soon as available and in any event within ninety (90) days of the end of the fiscal year of the Company, the audited consolidated financial statements of the Company and its Subsidiaries which shall include the consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year, together with the consolidated statement of income and statement of cash flows for the Company and its Subsidiaries for such fiscal year and as of the end of and for the prior fiscal year, all prepared in accordance with Generally Accepted Accounting Principles and accompanied by an opinion thereon of Ernst & Young, LLP or other nationally recognized independent certified public accountants reasonably acceptable to the Bank (the ‘‘Auditor’’) which opinion shall not include a going concern explanatory paragraph, or a qualification or exception as to the scope of the audit,

(b)    as soon as available and in any event within sixty (60) days after the end of each of the first, second and third fiscal quarters of the Company, the unaudited consolidated financial statements of the Company and its Subsidiaries, which shall include the unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of each such quarter, together with the consolidated statement of income and statement of cash flows of the Company and its Subsidiaries for each such quarter and for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, all in reasonable detail stating in comparative form the respective figures for the corresponding date and period in the previous fiscal year, all prepared by or under the supervision of the Chief Financial Officer of the Company in accordance with Generally Accepted Accounting Principles (subject to year-end adjustments and except for the absence of notes thereto);

(c)    a certificate prepared and signed by the Auditor with each delivery required by clause (a) and a certificate prepared and signed by the Chief Financial Officer with each delivery required by clause (a) and (b), stating whether the Auditor or Chief Financial Officer, as the case may be, shall have obtained knowledge of any Default or Event of Default, together with a certificate of the Chief Financial Officer of the Company demonstrating that as of the last day of the relevant fiscal year or quarter, as applicable, the Company was in compliance with the financial condition covenants set forth in Section 7.13 hereof;

(d)    promptly after filing thereof, copies of all financial statements and reports that the Company sends to its shareholders, and copies of all regular, periodic and special financial information, proxy materials, reports and other information which the Company or any Guarantor shall file with the Securities and Exchange Commission;

(e)    promptly after submission to any government or regulatory agency, all documents and information furnished to such government or regulatory agency other than such documents and information prepared in the normal course of business and which could not reasonably be expected to result in a Material Adverse Effect;

(f)    promptly, from time to time, such other information regarding the operations, business affairs and condition, financial or otherwise, of the Company or any Guarantor as the Bank may reasonably request; and

(g)    The Bank acknowledges and agrees that the Company may satisfy the requirements of clauses (a) and (b) above by delivering to the Bank copies of the Company’s of the Company’s annual and quarterly reports on Forms 10K and 10Q, respectively.

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SECTION 6.04.    Access to Premises and Records.    Maintain financial records in accordance with Generally Accepted Accounting Principles and permit representatives of the Bank to have access during normal business hours to the premises of the Company (and upon reasonable advance notice so long as no Default or Event of Default has occurred and is then continuing) and each Guarantor upon request, and to examine and make excerpts from the minute books, books of accounts, reports and other records and to discuss the affairs, finances and accounts of the Company and the Guarantors with their respective principal officers or with their respective independent accountants and to conduct such audits (including, without limitation, field audits of the Company’s and each Guarantor’s accounts receivable and their respective books and records at the Company’s expense, as such representatives reasonably deem necessary.

SECTION 6.05.    Notice of Adverse Change.    Promptly notify the Bank in writing of (a) any change in the business or the operations which, in the good faith judgment of such officer, may have a Material Adverse Effect disclosing the nature thereof, and (b) any information which indicates that any financial statements which are the subject of any representation contained in this Agreement, or which are furnished to the Bank pursuant to this Agreement, fail, in any material respect, to present fairly the financial condition and results of operations purported to be presented therein, disclosing the nature thereof.

SECTION 6.06.    Notice of Default.    Promptly notify the Bank of any Default or Event of Default which shall have occurred, which notice shall include a written statement as to such occurrence, specifying the nature thereof and the action which is proposed to be taken with respect thereto.

SECTION 6.07.    Notice of Litigation.    Give the Bank prompt written notice of any action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency which, if adversely determined against the Company or any Guarantor on the basis of the allegations and information set forth in the complaint or other notice of such action, suit or proceeding, or in the amendments thereof, if any, could reasonably be expected to have a Material Adverse Effect.

SECTION 6.08.    ERISA.    Promptly deliver to the Bank a certificate by the Chief Financial Officer setting forth details as to such occurrence and such action, if any, which the Company, such Guarantor or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Company, such Guarantor, ERISA Affiliate, the PBGC, a Plan participant or the Plan Administrator, with respect thereto: that a Reportable Event has occurred, that an accumulated funding deficiency has been incurred or an application may be or has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan, that a Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA, that a Plan has an Unfunded Current Liability giving rise to a lien under ERISA, that proceedings may be or have been instituted to terminate a Plan, that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan, or that the Company, any Guarantor or any ERISA Affiliate will or may incur any liability (including any contingent or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA. The Company will deliver to the Bank a complete copy of the annual report (Form 5500) of each Plan required to be filed with the Internal Revenue Service. In addition to any cert ificates or notices delivered to the Bank pursuant to the first sentence hereof, copies of annual reports and any other notices received by the Company or any Guarantor required to be delivered to the Bank hereunder shall be delivered to the Bank no later than 10 days after the later of the date such report or notice has been filed with the Internal Revenue Service or the PBGC, given to Plan participants or received by the Company or a Guarantor.

SECTION 6.09.    Compliance with Applicable Laws.    Comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority.

SECTION 6.10.    Subsidiaries.    Promptly notify the Bank prior to the occurrence thereof, of the creation, establishment or acquisition, in any manner, of any Subsidiary of the Company or any Guarantor, not existing on the date hereof. The Company shall cause each such Subsidiary to execute a joinder agreement with respect to the Guaranty and the Security Agreement concurrently with the

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creation, establishment or acquisition of such Subsidiary and in connection therewith shall provide to the Bank a certificate of good standing with respect to such Subsidiary from the Secretary of the State of its organizational jurisdiction dated as of a recent date, a certified copy of the charter documents of such Subsidiary and the supporting documents identified in clauses (a) and (b) of Section 5.01(c) in each case with respect to such Subsidiary, together with a written opinion of counsel substantially in the form of Exhibit E attached hereby prepared with respect to such Subsidiary, as to the due execution, delivery and enforceability of such documents and such other matters as the Bank may request.

SECTION 6.11.    Default in Other Agreements.    Promptly notify the Bank of any default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which the Company or any Guarantor is a party which could reasonably be expected to have a Material Adverse Effect.

SECTION 6.12.    Operating Accounts.    Maintain its primary operating account at the Bank.

SECTION 6.13.    Environmental Laws.

(a)    Comply with and ensure compliance by all tenants and subtenants of their respective properties with the requirements of all federal, state and local laws, ordinances, rules, regulations or policies governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect, provide to the Bank all documentation in connection with such compliance that the Bank may reasonably request, and defend, indemnify, and hold harmless the Bank, its employees, agents, officers, and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to, (i) the presence, disposal, release, or threatened release of any Hazardous Materials on any property owned or occupied by the Company or any Guarantor; (ii) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (iii) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Materials, and/or (iv) any violation of laws, orders, regulations, requirements, or demands of government authorities, or any policies or requirements of the Bank of which the Company has been notified, which are based upon or in any way related to such Hazardous Materials including, without limitation, reasonable attorney fees and consultant fees, investigation and laboratory fees, court costs, and litigation expenses, except to the extent that any of the foregoing results from the gross negligence or willful misconduct of the party seeking indemnification.

(b)    Execute and cause each Guarantor to execute any and all documentation with respect to environmental matters as the Bank may request and such reasonable documentation shall be in form and substance reasonably satisfactory to the Bank.

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ARTICLE VII
NEGATIVE COVENANTS

The Company covenants and agrees with the Bank that so long as the Term Loan remains in effect or any of the principal of or interest on the Note or any other Obligations hereunder shall be unpaid, they will not, and will not cause or permit any Guarantor, directly or indirectly, to:

SECTION 7.01.Liens.    Incur, create, assume or suffer to exist any Lien on any of their respective assets now or hereafter owned, other than:

(a)    Liens existing on the date hereof as set forth on Schedule II attached hereto but not any renewals or extensions thereof;

(b)    deposits under workmen’s compensation, unemployment insurance and social security laws;

(c)    Liens for taxes, assessments, fees or other governmental charges or the claims of material men, mechanics, carriers, warehousemen, landlords and other similar persons, the payment of which is not overdue or is being contested in good faith by appropriate proceedings (provided that the Company or such Guarantor has set aside on its books adequate reserves with respect thereto in accordance with GAAP (if any are so required), consistently applied, and the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect;

(d)    purchase money Liens for fixed or capital assets; provided, in each case, (x) no Default or Event of Default shall have occurred and be continuing or shall occur as a result of the grant of the proposed Lien, and (y) such purchase money Lien does not exceed 100% of the purchase price and encumbers only the property being acquired;

(e)    Liens granted to the Bank and any of its Affiliates, including renewals and extensions thereof; and

(f)    any attachment, judgment or similar Lien arising in connection with any court or governmental proceeding, provided that the execution or other enforcement of such Lien is effectively stayed within thirty (30) days and the claims secured thereby are being contested in good faith by appropriate proceedings.

SECTION 7.02.Indebtedness.    Incur, create, assume or suffer to exist or otherwise become liable with respect to any Indebtedness, other than:

(a)    Indebtedness incurred prior to the date hereof as described in Schedule III attached hereto but not including any renewals or extensions thereof;

(b)    Indebtedness to the Bank and any of its Affiliates, including renewals and extensions thereof;

(c)    Indebtedness for trade payables incurred in the ordinary course of business provided such payables shall be paid or discharged when due;

(d)    taxes, assessments or other governmental charges or levies not yet delinquent or which are being contested in good faith by appropriate proceedings; provided, however, that adequate reserves with respect thereto are maintained on the books of the Company or any Guarantor in accordance with Generally Accepted Accounting Principles;

(e)    Indebtedness secured by purchase money liens as permitted under Section 7.01(d); and

(f)    Subordinated Debt.

SECTION 7.03.Guaranties.    Guarantee, endorse, become surety for, or otherwise in any way become or be responsible for the Indebtedness or obligations of any Person, whether by agreement to maintain working capital or equity capital or otherwise maintain the net worth or solvency of any Person or by agreement to purchase the Indebtedness of any other Person, or agreement for the furnishing of funds, directly or indirectly, through the purchase of goods, supplies or services for the purpose of discharging the Indebtedness of any other Person or otherwise, or enter into or be a party to any contract for the purchase of merchandise, materials, supplies or other property if such contract provides that

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payment for such merchandise, materials, supplies or other property shall be made regardless of whether delivery of such merchandise, supplies or other property is ever made or tendered except:

(a)    guaranties executed prior to the date hereof as described on Schedule IV attached hereto but not including any renewals or extension thereof;

(b)    endorsements of negotiable instruments for collection or deposit in the ordinary course of business; and

(c)    guaranties of any Indebtedness under this Agreement or any other Indebtedness owing to the Bank and any of its Affiliates, including renewals and extensions thereof.

SECTION 7.04.Sale of Assets.    Sell, assign, lease, transfer or otherwise dispose of any of their now owned or hereafter acquired respective properties and assets, whether or not pursuant to an order of a federal agency or commission, except for (i) the sale, assignment, lease, transfer or other disposition of inventory, each in the ordinary course of business, and (ii) the sale or other disposition of properties or assets no longer used or useful in the conduct of their respective businesses.

SECTION 7.05.Sales of Notes.    Sell, transfer, discount or otherwise dispose of notes, accounts receivable or other obligations owing to the Company or any Guarantor, with or without recourse, except for collection in the ordinary course of business.

SECTION 7.06.Loans and Investments.    Make or commit to make any advance, loan, extension of credit, or capital contribution to or purchase or hold beneficially any stock or other securities, or evidence of Indebtedness of, purchase or acquire all or a substantial part of the assets of, make or permit to exist any interest whatsoever in, any other Person, provided the Company and each Guarantor may (i) consummate the Acquisition, (ii) invest in Permitted Investments and (iii) make investments, loans and advances to Guarantors.

SECTION 7.07.Nature of Business.    Change or alter the nature of its business, in any material respect, from the nature of the business engaged in by it on the date hereof.

SECTION 7.08.Sale and Leaseback.    Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, whether real or personal, used or useful in its business, whether now owned or hereafter acquired, if at the time of such sale or disposition it intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose.

SECTION 7.09.Federal Reserve Regulations.    Permit the Term Loan or the proceeds of the Term Loan to be used for any purpose which violates or is inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.

SECTION 7.10.Accounting Policies and Procedures; Tax Status.    Permit any change in the accounting policies and procedures the Company or any Guarantor, including a change in fiscal year, without the prior written consent of the Bank; provided, however, that any policy or procedure required to be changed by the FASB (or other board or committee of the FASB in order to comply with Generally Accepted Accounting Principles) may be so changed.

SECTION 7.11.Hazardous Materials.    Cause or permit any of its properties or assets to be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, except in material compliance with all applicable federal, state and local laws or regulations, or cause or permit, as a result of any intentional or negligent act or omission on the part of the Company, any Guarantor or any tenant or subtenant, a release of Hazardous Materials in violation of applicable law or regulation onto such property or asset or onto any other property, in a manner that could reasonably be expected to lead to the imposition on the Company, such Guarantor or such property or asset of any liability or lien of any nature whatsoever under any Environmental Law.

SECTION 7.12.Limitations on Fundamental Changes.    Merge or consolidate with, or sell, assign, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now or hereafter acquired) to any Person, or acquire all or substantially all of the assets or the business of any Person or liquidate, wind up or dissolve or suffer any liquidation or

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dissolution, provided that, (a) the Company may consummate the Acquisition and (b) so long as no Event of Default has occurred and is then continuing and the Company has provided prior written notice to the Bank, any Subsidiary of the Company may merge with (i) the Company, provided that the Company shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries of the Company.

SECTION 7.13.Financial Covenants.

(a)    Minimum Debt Service Coverage Ratio.    Permit the Consolidated Debt Service Coverage Ratio to be less than 1.50:1.00, determined quarterly with respect to the most recently concluded four fiscal quarters for which financial statements have been delivered pursuant to Article VI hereof.

(b)    Minimum Consolidated Liquidity Ratio.    Permit the Consolidated Liquidity Ratio to be less than 0.75:1.00, at any time.

(c)    Minimum Consolidated Capital Base.    Permit the Consolidated Capital Base of the Company and its Subsidiaries to be less than $47,000,000 plus 75% of the Consolidated Net Income of the Company and its Subsidiaries plus 75% of the net proceeds received from any Subordinated Debt or any Equity Issuance, all for the period commencing January 1, 2007 and ending on the date of calculation.

(d)    Maximum Consolidated Leverage Ratio:    Permit the Consolidated Leverage Ratio to be more than 1.50:1.00, at any time.

(e)    Minimum Cash Balances.    Maintain in deposit accounts with the Bank an amount less than the sum of $6,000,000 plus any proceeds received from any credit or loan facility with CitiCapital.

SECTION 7.14.Subordinated Debt.    Directly or indirectly prepay, defease, purchase, redeem, or otherwise acquire any Subordinated Debt.

SECTION 7.15.Dividends.    Declare any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of stock of the Company or any Guarantor, whether now or hereafter outstanding, other than non-cash dividends, or make any other distribution in respect thereof, either directly or indirectly, whether in cash, securities or property or in obligations of the Company or any Guarantor or in any combination thereof, or permit any Affilia te to make any payment on account of, or purchase or otherwise acquire, any shares of any class of the stock of the Company or any Guarantor from any Person.

SECTION 7.16.Transactions with Affiliates.    Enter into any transaction, including, without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of the Company’s or any of the Guarantor’s business and upon fair and reasonable terms no less favorable to the Company or such Guarantor then they would obtain in a comparable arms-length transaction with a Person not an Affiliate. For purposes hereof, Globecomm Systems Europe Ltd. shall b e deemed an Affiliate.

SECTION 7.17.Impairment of Security Interest.    Take or omit to take any action which might or would have the result of effecting or impairing the security interest in any property subject to a security interest in favor of the Bank and neither the Company nor any Guarantor shall grant to any person any interest whatsoever in any property subject to a security interest in favor of the Bank.

SECTION 7.18.Acquisition Documents.    Amend, restate, supplement or otherwise modify any Acquisition Documents, in any manner adverse to the interests of the Bank.

SECTION 7.19.Negative Pledge.    Permit any lien, mortgage, security interest or encumbrance to exist upon any of the Company’s real property located in Hauppauge, New York, or upon the real property to be acquired by the Company (in connection with the Acquisition) in Laurel, Maryland.

SECTION 7.20.Globecomm Systems Europe Ltd.    Notwithstanding anything to the contrary herein, neither the Company nor any Guarantor shall make any loans, advances or capital contributions to Globecomm Systems Europe Ltd. In the event that Globecomm Systems Europe Ltd. shall, at any time after the Closing Date, increase, in any material respect, its aggregate assets, Globecomm Systems Europe Ltd. shall comply with the provisions of Section 6.10 hereof as if it were a new Subsidiary of the Company.

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ARTICLE VIII
EVENTS OF DEFAULT

SECTION 8.01.    Events of Default.    In the case of the happening of any of the following events (each an ‘‘Event of Default’’):

(a)    failure by the Company to pay

(i)    the principal of the Term Loan as and when due and payable; or

(ii)    to pay interest on the Term Loan and any fees or other amounts payable under this Agreement and any other Loan Document, as and when due and payable, and such failure to pay shall continue for two (2) Business Days;

(b)    default shall be made in the due observance or performance of any covenant, condition or agreement of the Company or any Guarantor to be performed

(i)    pursuant to Article 6 of this Agreement (other than Section 6.03, Section 6.04, Section 6.06 and Section 6.13 hereof) and, in the case of this sub clause (i) only, such default shall continue unremedied for a period of ten (10) consecutive days or

(ii)    pursuant to any other provision of this Agreement or any other Loan Document that is not specifically addressed in Sections 8.01(a), (b)(i), (c) or (d) hereof;

(c)    any representation or warranty made or deemed made in this Agreement or any other Loan Document shall prove to be false or misleading in any material respect when made or given or when deemed made or given pursuant to the terms hereof;

(d)    any report, certificate, financial statement or other instrument furnished in connection with this Agreement or any other Loan Document or the borrowings hereunder, shall prove to be false or misleading in any material respect when made or given or when deemed made or given pursuant to the terms hereof;

(e)    default in the performance or compliance in respect of any agreement or condition relating to any Indebtedness of the Company or any Guarantor owing to the Bank or any other Indebtedness of the Company or any Guarantor in excess of $150,000, individually or in the aggregate, (other than the Note), if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder or obligee thereof (or a trustee on behalf of such holder or obligee) to cause such Indebtedness to become due prior to the stated maturity thereof, or any Indebtedness in excess of $150,000, individually or in the aggregate, shall not be paid when due (beyond any applicable grace period and subject to Section 6.02 hereof);

(f)    the Company or any Guarantor shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the employment of a receiver, trustee, custodian, sequestrator or similar official for the Company or any Guarantor or for a substantial part of its property; (iv) file an answer admitting the material allegations of a petition filed against it in such proceeding, (v) make a general assignment for the benefit of creditors, (vi) take corporate action for the purpose of effecting any of the foregoing, (vii) become unable or admit in writing its inability or fail generally to pay its debts as they become due or (viii) take corporate action for t he purpose of effecting any of the foregoing;

(g)    an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Company or any Guarantor or of a substantial part of their respective property, under Title 11 of the United States Code or any other federal or state bankruptcy insolvency or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official for the Company or any Guarantor or for a substantial part of their property, or (iii) the winding-up or liquidation of the Company or any Guarantor and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for 60 days;

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(h)    One or more orders, judgments or decrees for the payment of money in excess of $150,000 in the aggregate shall be rendered against the Company or any Guarantor and the same shall not have been paid in accordance with such judgment, order or decree and either (i) an enforcement proceeding shall have been commenced by any creditor upon such judgment, order or decree, or (ii) there shall have been a period of thirty (30) days during which a stay of enforcement of such judgment order or decree, by reason of pending appeal or otherwise, was not in effect;

(i)    any Plan shall fail to maintain the minimum funding standard required for any Plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code, any Plan is, shall have been terminated or the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a Reportable Event shall have occurred with respect to a Plan or the Company, any Guarantor, or any ERISA Affiliate shall have incurred a liability to or on account of a Plan under Section 515, 4062, 4063, 4063, 4201 or 4204 of ERISA, and there shall result from any such event or events the imposition of a lien upon the assets of the Company or any Guarantor, the granting of a security interest, or a liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty under Section 4971 of the Code;

(j)    any provision of any Loan Document shall for any reason cease to be in full force and effect in accordance with its terms or the Company, or any Guarantor shall so assert in writing or any of the Liens purported to be granted pursuant to any Security Document shall fail or cease for any reason to be legal, valid and enforceable liens on the collateral purported to be covered thereby or shall fail or cease to have the priority purported to be created thereby;

(k)    a default shall have occurred and be continuing, beyond any applicable grace period, under any Acquisition Document,

(l)    a Change of Control shall occur; or

(m)    the Company or any Guarantor shall default in the punctual payment of any sum payable with respect to, or in the observance or performance of any of the terms and conditions of, any agreement between such Person and the Bank or any of its Affiliates, other than with respect to this Agreement and any other Loan Document;

then, at any time thereafter during the continuance of any such event, the Bank may, without notice to the Company or any Guarantor, (i) terminate the Term Loan and declare the Note, both as to principal and interest, to be forthwith due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Note to the contrary notwithstanding; provided, however, that if an event specified in Section 8.01(f) and (g) shall have occurred, the Term Loan shall automatically terminate and the Note shall be immediately due and payable; and (ii) exercise any or all of the rights and remedies afforded to the Bank by the Un iform Commercial Code or otherwise possessed by the Bank.

ARTICLE IX
MISCELLANEOUS

SECTION 9.01.Notices.    Any notice shall be in writing and shall be conclusively deemed to have been received by a party hereto and to be effective on the day on which delivered to such party at the address set forth below, or, in the case of telecopy notice, when acknowledged as received, or if sent by registered or certified mail, on the third Business Day after the day on which mailed in the United States, addressed to such party at said address:

	(a)	if to the Bank, at Citibank, N.A. 730 Veterans Memorial Highway Hauppauge, New York 11788 Attention: Relationship Officer – Globecomm Systems Inc. Telecopy:    (631) 265-4888

27

		With copies to: Farrell Fritz, P.C. 1320 Reckson Plaza Uniondale, New York 11556-1320 Attention:    Robert C. Creighton Telecopy:      (516) 227-0777

	(b)	if to the Company, at Globecomm Systems Inc. 45 Oser Avenue Hauppauge, New York 11788 Attention:    Chief Financial Officer Telecopy:      (631) 951-3241 With copies to: Goldman & Associates, LLP 666 Old Country Road Garden City, New York 11530 Attention:    Ronald G. Goldman, Esq.  Telecopy:      (516) 228-8349

- and -

	(c)	as to each such party at such other address as such party shall have designated to the other in a written notice complying as to delivery with the provisions of this Section 9.01.

SECTION 9.02.Survival of Agreement.    All covenants, agreements, representations and warranties made herein and in the other Loan Documents and in the certificates delivered pursuant hereto or thereto shall survive the making by the Bank of the Term Loan herein contemplated and the execution and delivery to the Bank of the Note evidencing the Term Loan and shall continue in full force and effect so long as the Note is outstanding and unpaid. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assig ns of such party; and all covenants, promises and agreements by or on behalf of the Company and the Guarantors which are contained in this Agreement shall bind and inure to the benefit of the respective successors and assigns of the Bank. The Company may assign or transfer any of its interest under this Agreement, the Note or any other Loan Document without the prior written consent of the Bank.

SECTION 9.03.Expenses of the Bank.    The Company agrees (i) to indemnify, defend and hold harmless the Bank and its officers, directors, employees, agents, advisors and affiliates (each, an ‘‘indemnified person’’) from and against any and all losses, claims, damages, liabilities or judgments to which any such indemnified person may be subject and arising out of or in connection with the Loan Documents, the financings contemplated hereby, the use of any proceeds of such financings or any related transaction or any claim, litigation, investigation or pr oceeding relating to any of the foregoing, whether or not any of such indemnified persons is a party thereto, and to reimburse each of such indemnified persons upon demand for any reasonable, legal or other expenses incurred in connection with the investigation or defending any of the foregoing; provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities, judgments or related expenses to the extent arising from the willful misconduct or gross negligence of such indemnified person; and (ii) to reimburse the Bank from time to time, upon demand, all out-of-pocket expenses (including reasonable expenses of its due diligence investigation, and fees and disbursements of counsel and the allocated costs of internal counsel) incurred in connection with the financings contemplated under this Agreement, the preparation, execution and delivery of this Agreement and the other Loan Documents, any amendments and waivers hereof or thereof, the security arrangem ents contemplated thereby and the enforcement thereof. The provisions of this Section 9.03 shall survive termination of this Agreement.

28

SECTION 9.04.No Waiver of Rights by the Bank.    Neither any failure nor any delay on the part of the Bank in exercising any right, power or privilege hereunder or under the Note or any other Loan Document shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.

SECTION 9.05.Applicable Law.    THIS AGREEMENT AND THE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

SECTION 9.06.    Submission to Jurisdiction; Jury Waiver.    THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, COUNTY OF NASSAU AND COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT T HE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR THEREIN WHERE THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AGREES NOT TO (i) SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (ii) ASSERT ANY COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH COUNTERCLAIM CONSTITUTES A COMPULSORY OR MANDATORY COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL PROCEDURE. THE COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BE CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. THE PARTIES HERETO WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT.

SECTION 9.07.Extension of Maturity.    Except as otherwise expressly provided herein, whenever a payment to be made hereunder shall fall due and payable on any day other than a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall be included in computing interest.

SECTION 9.08.Modification of Agreement.    No modification, amendment or waiver of any provision of this Agreement, the Note or any other Loan Document, nor consent to any departure by the Company therefrom shall in any event be effective unless the same shall be in writing and signed by the Bank and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in the same, similar or other circumstance.

SECTION 9.09.Severability.    In case any one or more of the provisions contained in this Agreement, the Note or in any other Loan Document should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby.

SECTION 9.10.Sale of Participations, Assignments.    The Bank reserves the right to sell participations in or to sell and assign its rights, duties or obligations with respect to the Term Loan to such banks, lending institutions or other parties as it may choose and without the consent of the Company,

29

provided that the Bank shall notify the Company promptly following such participation or assignment. The Bank may furnish any information concerning the Company or any Guarantor in its possession from time to time to any assignee or participant (or proposed assignee or participant), provided that the Lender shall notify any such assignee or participant (or proposed assignee or participant) in connection with any contemplated participation in, or assignment of, the Term Loan, that such information may be confidential and that such transferee or participant shall treat such information as such.

SECTION 9.11.Reinstatement; Certain Payments.    If claim is ever made upon the Bank for repayment or recovery of any amount or amounts received by the Bank in payment or on account of any of the Obligations under this Agreement, the Bank shall give prompt notice of such claim to the Company, and if the Bank repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Bank or any of its property, or (ii) any settlement or compromise of any such claim effected by the Bank with any such claiman t, then and in such event the Company agrees that any such judgment, decree, order, settlement or compromise shall be binding upon the Company notwithstanding the cancellation of the Note or other instrument evidencing the Obligations under this Agreement or the termination of this Agreement, and the Company shall be and remain liable to the Bank hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Bank.

SECTION 9.12.Right of Setoff.    If an Event of Default shall have occurred and be continuing, the Bank and each other Affiliate of the Bank are each hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Company against any and all the Obligations. The rights of the Bank under this Section 9.12 are in addition to other rights a nd remedies (including, without limitation, other rights of setoff) which the Bank may have.

SECTION 9.13.Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, taken together, shall constitute one and the same instrument.

SECTION 9.14.Headings.    Section headings used herein are for convenience of reference only and are not to affect the construction of or be taken into consideration in interpreting this Agreement.

SECTION 9.15.Construction.    This Agreement is the result of negotiations between, and has been reviewed by, the Company and the Bank and their respective counsel. Accordingly, this Agreement shall be deemed to be the product of each party hereto, and no ambiguity shall be construed in favor of or against either the Company or the Bank.

SECTION 9.16.    USA PATRIOT Act.    The Bank hereby notifies the Company that pursuant to the requirements of USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the ‘‘Act’’), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow the Bank to identify the Company in accordance with the Act.

SECTION 9.17.    Termination.    The obligations of the Company hereunder shall terminate and be released upon the indefeasible payment in full of the Obligations, provided that the provisions of Sections 3.07, 3.08, 3.09 and 9.03 shall survive and remain in full force and effect regardless of the repayment of the Term Loan or the termination of this Agreement or any provision hereof.

30

IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to be duly executed by their duly authorized officers, as of the day and year first above written.

GLOBECOMM SYSTEMS INC.

By:  /s/ Andrew C. Melfi
Name:    Andrew C. Melfi
Title:     Chief Financial Officer

CITIBANK, N.A.

By:  /s/ Stuart N. Berman
Name:    Stuart N. Berman
Title:     Vice President

31

Schedule I

Globecomm Network Services Crop., Delaware, 100% owned by Globecomm Systems Inc.
GSI Properties Corp., New York, 100% owned by Globecomm Systems Inc.
Globecomm Services Maryland LLC, Delaware, 100% owned by Globecomm Systems Inc.
Turbo Logic Associates LLC, Delaware, 100% owned by Globecomm Services Maryland LLC
Lyman Maryland Properties, LLC, Utah, 100% owned by Globecomm Services Maryland LLC
Globecomm Systems Europe LTD., a United Kingdom corporation, 100% owned by Globecomm Systems Inc.

Schedule II

Other than for liens to Citibank, none

Schedule III

Other than for indebtedness to Citibank, none

Schedule IV

Other than for guaranties to Citibank, none

32

EX-21

EXHIBIT 21

Subsidiaries of the Registrant
Globecomm Network Services Corporation			Delaware
GSI Properties Corp			New York
Globecomm Services Maryland LLC			Delaware

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

	(1)	Registration Statement (Form S-3 No. 333-141464) of Globecomm Systems Inc.

	(2)	Registration Statement (Form S-8 No. 333-70527) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan and the 1999 Employee Stock Purchase Plan

	(3)	Registration Statement (Form S-8 No. 333-95783) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan

	(4)	Registration Statement (Form S-8 No. 333-54622) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan

	(5)	Registration Statement (Form S-8 No. 333-81822) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan

	(6)	Registration Statement (Form S-8 No. 333-102928) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan

	(7)	Registration Statement (Form S-8 No. 333-112351) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan

	(8)	Registration Statement (Form S-8 No. 333-120635) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan

	(9)	Registration Statement (Form S-8 No. 333-122421) pertaining to the Globecomm Systems Inc. 1997 Stock Incentive Plan, and

	(10)	Registration Statement (Form S-8 No. 333-138915) pertaining to the Globecomm Systems Inc. 2006 Stock Incentive Plan

of our reports dated August 10, 2007, with respect to the consolidated financial statements and schedule of Globecomm Systems Inc., Globecomm Systems Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Globecomm Systems Inc., included in this Annual Report (Form 10-K) for the year ended June 30, 2007.

/s/ Ernst & Young LLP

Melville, New York
September 11, 2007

EX-31.1

EXHIBIT 31.1

Chief Executive Officer Certification

Required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended

I, David E. Hershberg, certify that:

1.	I have reviewed this annual report on Form 10-K of Globecomm Systems Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 13, 2007			By: /s/ DAVID E. HERSHBERG
			David E. Hershberg
			Chairman of the Board and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Chief Financial Officer Certification

Required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended

I, Andrew C. Melfi, certify that:

1.	I have reviewed this annual report on Form 10-K of Globecomm Systems Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 13, 2007			By:   /s/ ANDREW C. MELFI
			Andrew C. Melfi         Vice President, Chief Financial Officer         and Treasurer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

David E. Hershberg, Chief Executive Officer of Globecomm Systems Inc., and Andrew C. Melfi, Chief Financial Officer of Globecomm Systems Inc., each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the annual report of Globecomm Systems Inc. on Form 10-K for the fiscal year ended June 30, 2007 (the ‘‘Annual Report’’) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Globecomm Systems Inc.

Date: September 13, 2007			By: /s/ DAVID E. HERSHBERG
			David E. Hershberg Chairman of the Board and Chief Executive Officer
			By: /s/ ANDREW C. MELFI
			Andrew C. Melfi Vice President, Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906 has been provided to Globecomm Systems Inc. and will be retained by Globecomm Systems Inc. and furnished to the Securities Exchange Commission or its staff upon request.