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SECURITIES AND EXCHANGE COMMISSION

FORM 20-F
Annual and transition report of foreign private issuers pursuant to sections 13 or 15(d)

Filing Date: 2010-03-18 | Period of Report: 2009-12-31


SEC Accession No. 0001178913-10-000783
(HTML Version on secdatabase.com)

FILER
RRSat Global Communications Network Ltd.
CIK:1375829| IRS No.: 000000000 | State of Incorp.:L3 | Fiscal Year End: 1231
Type: 20-F | Act: 34 | File No.: 001-33085 | Film No.: 10690313
SIC: 4899 Communications services, nec

Mailing Address
D. N. SHIKMIM
REEM L3 79813

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Business Address
D. N. SHIKMIM
REEM L3 79813
972-8-861-0000

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549
______________

FORM 20-F
o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report.............................


For the transition period from ____________ to _______________
Commission file number: 001-33085

RRsat Global Communications Network Ltd.


(Exact name of Registrant as specified in its charter)
Israel
(Jurisdiction of incorporation or organization)
Re'em, D.N. Shikmim 79813, Israel
(Address of principal executive offices)
Gil Efron
Chief Financial Officer
RRsat Global Communications Network Ltd.
Re'em, D.N. Shikmim 79813
Israel
Tel: +972-8-861-0000
Fax: +972-8-861-0501
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class

Name of each exchange on which registered

Ordinary shares, par value NIS 0.01 per share

The NASDAQ Stock Market LLC

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


Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of December 31, 2009: 17,326,716
ordinary shares, par value NIS 0.01 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:
Yes

No S

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934:
Yes

No S

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 S

No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes

No

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 S

Non-accelerated filer

Indicate by check mark the basis of accounting the registrant has used to prepare the financial statements included in this filing:
S

U.S. GAAP

International Financial Reporting Standards as issued by the International Accounting Standards Board

Other

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17

Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act):
Yes

No S
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TABLE OF CONTENTS
PART I
Item 1.
Item 2.
Item 3.
Item 4.
Item 4A.
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Item 10.
Item 11.
Item 12.

Identity of Directors, Senior Management and Advisers


Offer Statistics and Expected Timetable
Key Information
Information on the Company
Unresolved Staff Comments
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Additional Information
Quantitative and Qualitative Disclosures about Market Risk
Description of Securities Other than Equity Securities

5
5
6
28
56
57
75
86
93
94
95
113
114

PART II
Item 13.
Item 14.
Item 15.
Item 16.
Item 16A.

Defaults, Dividend Arrearages and Delinquencies


Material Modifications to the Rights of Security Holders and Use of Proceeds
Controls and Procedures
Reserved
Audit Committee Financial Expert

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115
115
115
117
117

Item 16B.
Item 16C.
Item 16D.
Item 16E.
Item 16F.
Item 16G.

Code of Ethics
Principal Accountant Fees and Services
Exemption from the Listing Standards for Audit Committee
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Change in Registrant's Certifying Accountant
Corporate Governance

117
117
118
118
118
118

PART III
Item 17.
Item 18.
Item 19.

Financial Statements
Financial Statements
Exhibits

119
119
120

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PART I
ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.
ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.
5

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ITEM 3.

KEY INFORMATION

A. Selected financial data


The following selected financial data, which is presented in accordance with generally accepted accounting principles in the United
States (U.S. GAAP), should be read together with our consolidated financial statements and related notes and Item 5 "Operating and Financial
Review and Prospects" included elsewhere in this Annual Report. The selected balance sheet data as of December 31, 2008 and 2009 and the
selected statements of operations data for the years ended December 31, 2007, 2008 and 2009 have been derived from our audited
consolidated financial statements included elsewhere in this Annual Report. The selected balance sheet data as of December 31, 2005, 2006
and 2007 and the selected statements of operations data for the years ended December 31, 2005 and 2006 have been derived from our audited
financial statements not included in this Annual Report.
Year ended December 31,
2006
2007
2008
(in thousands, except share per share data and cash
dividend per ordinary share)

2005

Statements of Operations Data:


Revenues
Cost of revenue
Gross profit
Operating expenses:
Sales and marketing
General and administrative
One time fees associated with the IPO
Total operating expenses
Operating income
Interest and marketable securities income
Currency fluctuation and other financial income
(expenses), net
Change in fair value of embedded currency conversion
derivatives
Other income, net
Income before taxes on income
Income taxes
Net income
Basic income per ordinary share
Diluted income per ordinary share
Weighted average number of ordinary shares used to
compute basic income per ordinary share
Weighted average number of ordinary shares used to
compute diluted income per ordinary share
Cash dividend per ordinary share

31,311
19,798
11,513

1,704
2,356
-4,060
7,453
140
(2)

$
$
$

(1,375)
36
6,252
2,007
4,245 $
0.33 $
0.33 $

43,284
27,451
15,833

59,221
38,419
20,802

78,993
53,477
25,516

2009

93,687
64,548
29,139

1,831
3,588
1,000
6,419
9,414
450

3,017
5,767
-8,784
12,018
2,631

3,914
6,582
-10,496
15,020
1,111

5,554
8,391
-13,945
15,194
639

374

329

177

299

243
4
10,485
3,180
7,305
0.53
0.53

$
$
$

(646)
4
14,336
2,932
11,404 $
0.66 $
0.65 $

1,342
10
17,660
4,228
13,432
0.78
0.77

$
$
$

(1,326)
26
14,832
3,254
11,578
0.67
0.67

12,921,300

13,746,467

17,249,710

17,290,099

17,310,005

13,034,700
$
0.19

13,793,694
$
0.15

17,418,180
$
-

17,399,375
$
0.61

17,399,324
$
0.49

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2005
Balance Sheet Data:
Cash and cash equivalents
Working capital
Total assets
Total liabilities
Retained earnings
Shareholders' equity

2006

2,060
4,056
20,409
9,902
6,695
10,507

As of December 31,
2007
(in thousands)

51,393
54,275
79,133
15,788
12,025
63,345

28,409
57,154
95,390
20,231
23,429
75,159

2008

34,749
39,348
104,487
26,137
26,309
78,350

2009

14,941
46,207
115,121
33,178
29,407
81,943

B. Capitalization and indebtedness


Not applicable.
C. Reasons for offer and use of proceeds
Not applicable.
D. Risk factors
Special Note Regarding Forward-Looking Statements. This Annual Report contains forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. The forward-looking statements are contained
principally in Item 3 "Key Information Risk Factors," Item 5 "Operating and Financial Review and Prospects," and in Item 4 "Information
on the Company." These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the
forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

our ability to convince potential customers to use our content management, distribution and mobile satellite services (MSS)
rather than the services of other providers, including teleports that are owned by satellite operators;

the future growth of the global broadcast market, the global content management and distribution services market and the global
MSS market;

the general economic conditions in the markets in which we, our customers and our suppliers operate;

our ability to lease additional satellite capacity in order to provide continuity of service to our existing customers, enter into
contracts with new customers and expand our transmission service offerings;

the revenues that we may generate from our contracted backlog;

our plans to expand our presence in the United States;

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our plans to expand our presence in Asia and in other markets in which most of our operations are hosted facilities, by acquiring
or establishing our own teleports and production facilities;

our ability to successfully integrate businesses and assets we acquired in 2008 and intend to acquire;

our plans to broaden our service offerings and to acquire or establish complementary businesses or technologies;

our plans to invest in appropriate infrastructure and personnel to allow us to continue to accommodate global content
management and distribution and global MSS utilizing the latest technologies;

our ability to enter into strategic arrangements with satellite fleet operators;

the growth of the North American and Asia Pacific broadcast markets;

the growth of new technologies, such as high definition television (HDTV) or Internet protocol television;

our expected increases in expenses as our operations continue to expand;

entering into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rate of
the U.S. dollar against the Euro or NIS;

our intention to pay cash dividends to our shareholders in the future;

the renewal of our licenses by the Israeli Ministry of Communications and the U.S. Federal Communications Commission;

our ability to extend our building and other permits for our principal teleport in Re'em and the Emek Ha'ela teleport and Hawley
Teleport we acquired in 2008;

our belief that our current facilities leases are adequate to meet our needs; and

our estimates regarding future performance, sales, gross margins, expenses (including stock-based compensation expenses) and
cost of sales.

In some cases, you can identify forward-looking statements by terms such as "may," "might," "will," "should," "could," "would,"
"expect," "believe," "intend," "estimate," "predict," "potential" or the negative of these terms, and similar expressions intended to identify
forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject
to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. There are
important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed
or implied by the forward-looking statements. In particular, you should consider the risks in this Annual Report under this Item 3 "Key
Information Risk Factors."
These forward-looking statements represent our estimates and assumptions only as of the date of this Annual Report. Although we
believe the expectations reflected in the forward-looking statements to be reasonable, we cannot guarantee future results, level of activity,
performance or achievement. We undertake no obligation to update any of the forward-looking statements after the date of the filing of this
Annual Report to conform those statements to reflect the occurrence of unanticipated events, except as required by applicable law.
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Risks Relating to Our Business and Industry


We operate in a relatively new market and cannot assure you that it will continue to grow.
We operate in a relatively new segment of our industry involving comprehensive, global content management and distribution
services for the television and radio broadcasting industries. The continued growth of this segment depends upon a number of factors,
including continued growth in the introduction of broadcast channels seeking a global audience, deregulation of broadcasting, and the scope,
timeliness, sophistication and price of our services. We cannot assure you that the market will demand such services from us at prices and on
terms acceptable to us. A lack of market demand or lack of additional revenues beyond our existing customer contracts would adversely
affect our financial condition and ability to grow our business.
Significant damage to our principal teleports in Israel would have a material adverse affect on our ability to continue to operate our
business.
Our principal teleports and playout facilities are located in Israel, in Re'em and in Emek Ha'ela. Significant damage to these facilities,
for any reason, including by acts of terrorism or war, such as the hostilities along Israel's border with the Gaza Strip and the missiles fired
from the Gaza Strip into Southern Israel in December 2008 and January 2009, could require substantial time and expense to repair, and would
require reestablishing transmission links with our suppliers of capacity. Even though our facilities are covered under an insurance policy, the
policy may not be sufficient to cover repair costs or the cost of disruption of our services. If this damage were to occur, it would have a
material adverse effect on our ability to continue to operate our business or operate our business profitably. Furthermore, if our customers or
potential customers were to be concerned that our principal teleports and playout facilities or our operations were at risk due to a perception of
instability in the security situation in Israel, they may be deterred from entering into agreements to use our services.
Continuing unfavorable global economic conditions could have a material adverse effect on our business, operating results and
financial condition.
The recent crisis in the financial and credit markets in the United States, Europe and Asia has led to a global economic slowdown,
with the economies of the United States and Europe showing significant signs of weakness. If the United States or European economy
weakens further, our customers may reduce or postpone their spending significantly. This could result in reductions in the services we sell
and lease, longer sales cycles and increased price competition. In addition, our ability to collect fees with respect to the services we provide
may be adversely affected by the financial condition of our customers. Any of these events would likely harm our business, operating results
and financial condition. If global economic and market conditions, or economic conditions in the United States, Europe or Asia or other key
markets (including in specific industries such as commercial shipping industry) do not improve or continue to deteriorate, it may have a
material adverse effect on our business, operating results and financial condition.
Volatility in the broadcasting and telecommunications industries may adversely affect our revenues and margins, which could have a
material adverse effect on our operating results and financial condition.
The broadcasting and telecommunications industries in which we operate historically have been volatile and are characterized by
fluctuations in product supply and demand. From time to time, these industries have experienced significant downturns, often in connection
with, or in anticipation of, maturing product and technology cycles, and declines in general economic conditions, such as the current
unfavorable economic conditions. This volatility could cause our operating results to decline dramatically from one period to the next. If in
periods of decreased demand we are unable to adjust our levels of lease commitments and human resources or manage our costs and deliveries
from suppliers in response to lower spending by customers, our gross margin might decline and we may experience operating losses. In
addition, demand for mobile satellite services, or MSS, is specifically susceptible to changes in global commerce and use of international
commercial shipping services or cruise shipping. Any decline in the use of such services may have an adverse affect on our business,
operating results and financial condition.
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We have acquired two teleports in 2008, and we may acquire or establish additional teleports or complementary businesses or
technologies. We may be unsuccessful in integrating any acquired businesses or assets, and these acquisitions could divert our
resources, cause dilution to our shareholders and adversely affect our financial results.
We intend to use a significant amount of our cash, cash equivalents and marketable securities to acquire or establish additional
teleports and playout centers or complementary businesses or technologies, such as the acquisitions we completed in 2008 to acquire the
satellite business of Bezeq in Israel and the Hawley Teleport in Pennsylvania. Negotiating potential acquisitions or integrating newly acquired
businesses or technologies into our business could divert our management's attention from other business concerns and could be expensive and
time consuming. Acquisitions could expose our business to unforeseen liabilities or risks associated with entering new markets. For example,
once we acquire or establish additional teleports, we will be subject to governmental regulations, licensing fees and taxation in the countries in
which those teleports are located, such as FCC regulations and United States taxation as a result of the Hawley Teleport we acquired in
2008. In addition, we might lose key employees while integrating new organizations. Consequently, we might not be successful in
integrating any acquired businesses or technologies, and might not achieve anticipated revenue or cost benefits. In addition, future
acquisitions could result in customer dissatisfaction, performance problems with an acquired company, or issuances of equity securities that
cause dilution to our shareholders. Furthermore, we may incur contingent liability or possible impairment charges related to goodwill or other
intangible assets or other unanticipated events or circumstances, any of which could harm our business.
If there is a material decrease in the current level of excess capacity in satellite and terrestrial fiber optic transmission networks, we
may not be able to obtain leased transmission capacity on competitive terms.
We lease satellite and terrestrial fiber optic capacity and use this capacity as part of a package together with our other services. There
is currently excess capacity in satellite and terrestrial fiber optic transmission networks, which allows us to lease and use capacity on
competitive terms. We may be adversely affected were the amount of satellite and terrestrial fiber optic excess capacity available for video
and audio programming to decrease. We need to renew our existing leases and enter into additional leases of such capacity in order to provide
continuity of service to our existing customers, enter into contracts with new customers and expand our transmission service offerings. There
can be no assurance, however, that there will continue to be excess capacity. For example, high definition television (HDTV) broadcasts
require substantially greater bandwidth than conventional television broadcasts, and the success of high definition television (HDTV)
broadcasts may lead to a reduction in the quantity of excess capacity. We lease approximately 16% of our satellite transmission capacity
pursuant to long-term preemptible leases, which means that the satellite fleet operator can use our transponder to provide service for another
customer or to restore service to other customers in the event of satellite or transponder failure. A decline in the available excess capacity
might lead our suppliers to preempt the use of some of our leased capacity, increase our transmission costs and therefore reduce our margins,
increase costs to an extent that our potential customers would be less likely to pursue a global market, and require us to incur more long-term
commitments for capacity without any corresponding assurance of customers for this capacity.
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If we are unable to successfully balance our supplier and customer capacity commitments, our income will decline.
In order to minimize our capital expenditures and to maintain flexibility to reduce unused capacity in our network, we lease RRsat
Global Network's transmission capacity instead of owning our own fleet of satellites or fiber optic network. We are generally required to
commit to lease satellite capacity on a long-term basis. In many cases our commitment is longer than the corresponding commitment that we
obtain from our customers. In many cases we are not able to terminate our commitment before its scheduled expiration. If we commit to
lease capacity in anticipation of customer orders and these orders do not materialize or are terminated, due to global economic conditions or
otherwise, we will likely still be required to pay our suppliers, and may have difficulty in obtaining commitments from other customers for
this capacity. In this case, we would have fixed cost commitments without a corresponding source of revenues.
In addition, we lease approximately 16% of our satellite transmission capacity pursuant to preemptible leases. If we commit to
provide content distribution services to a customer and the satellite fleet operator then preempts our transponder, we would need to obtain
capacity on other satellites with a comparable footprint, or geographic coverage. We may not be able to replace this capacity on economical
terms, with the quality of service necessary to satisfy our customers' requirements, or at all. We would likely need a significant amount of
time and incur substantial expense to replace the capacity.
The failure of third parties to properly maintain transmission networks we lease from them would adversely affect the quality of the
services we offer.
We rely on transmission capacity and other critical facilities that we lease from third parties. All of our satellite and terrestrial fiber
optic transmission capacity is leased, and we receive teleport services and maintain points of presence (POPs) outside of Israel pursuant to
contracts with third parties. We are dependent on the quality of service provided by these third parties.
Damage to a satellite on which we lease transponders could significantly degrade the satellite's performance and result in a partial or
total loss of our transmission capacity on that satellite. Similarly, the loss of a satellite on which we lease transponders would result in the
total loss of our transmission capacity on that satellite. In addition, damage to the fiber optic on which we lease transmission capacity could
damage the service we provide to our customers. We cannot assure you that the satellites on which we lease capacity or the fiber optic leased
will perform properly or remain in operation for the duration of their expected commercial lives.
If we suffered a partial or total loss of leased capacity on a satellite, including as a result of the bankruptcy of the satellite owner or
operator, we would need to obtain capacity on other satellites with a comparable footprint, or geographic coverage. We may not be able to
obtain alternative capacity on economical terms or at all. We would likely need a significant amount of time and incur substantial expense to
replace the capacity. During any period of time in which any of our transponders is not fully operational, we likely would lose most or all of
the revenues that we otherwise would have derived from the leased capacity on that transponder. Similar risks apply to our leased terrestrial
fiber optic transmission capacity, as well as to our hosted teleports and points of presence (POPs) outside of Israel.
If we are unable to renew our agreements with Inmarsat on favorable terms, or at all, our ability to continue to provide MSS will be
significantly impaired.
We use the Inmarsat satellite network to provide MSS. These services on the Inmarsat satellite network are provided by our
company pursuant to an authorization granted to us under a Space Segment Access Service Agreement (SSAA) and a Network Services
Distribution Agreement (NSDA). These agreements set forth the rules and procedures for providing and reselling services on the Inmarsat
satellite network as well as conditions of use of Inmarsat's intellectual property rights. The agreements, which we signed on March 30, 2009,
remain in effect unless terminated by Inmarsat with a prior notice of at least two years, with a minimum term ending April 14, 2014. We
cannot guarantee that we will be able to renew the agreements on favorable terms, or at all, when the agreements expire. If we are unable to
renew the agreements on favorable terms or at all or the agreements are terminated, our ability to continue to provide MSS will be
significantly impaired.
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Significant interruptions in the Inmarsat network and services could adversely affect our business.
Our MSS rely solely on the Inmarsat satellite network. Consequently, our MSS business is subject to many of the same risks to
which the Inmarsat's business is subject. Significant interruptions in the Inmarsat network could adversely affect our ability to provide reliable
service to our customers and could negatively affect our business.
Furthermore, we rely on third party service providers when providing services in regions covered by Inmarsat satellites that cannot be
received at our Emek Ha'ela teleport, namely the Atlantic Ocean West Region and the Pacific Ocean Region. If any of these service
providers experiences interruptions or is unable to provide us with reliable services we may not be able to provide services to our customers
and our business may suffer.
Failure to compete successfully in providing content management and distribution services, as well as MSS, would have a material
adverse effect on our business and could prevent us from implementing our business strategy.
We compete in the market for global content management and distribution services, as well as MSS, with numerous commercial and
other providers. Many of our competitors have greater technical, financial, human and other resources than we do, and some of them own
satellites and teleports on several continents. The principal global broadcasters may prefer to procure services from larger or more established
vendors of content management and distribution services, or from vendors with their own satellites, even if our quality and pricing are more
attractive.
Certain satellite fleet operators, which had typically offered only connectivity, have recently begun to either acquire or partner with
teleports and terrestrial fiber network operators to create global hybrid networks. In addition to our direct competitors, numerous companies
and governments that operate global or regional fleets of satellites in the United States, Latin America, Europe, the Middle East, Africa and
Asia may recommend individual teleport operators and service providers (who are our competitors in providing value-added services and
service packages) with whom they have relationships.
In April 2009, Inmarsat purchased its largest distribution partner, Stratos Global Corporation, which became a wholly owned
operating division of Inmarsat. This acquisition may have an adverse affect on our ability to compete in the Inmarsat services market as many
potential customers may prefer to procure services directly from Inmarsat, rather than from a vendor for Inmarsat services, even if our quality
and pricing are more attractive.
If the overcapacity situation that currently exists with respect to satellite and terrestrial fiber optic transmission networks were to
become exacerbated, satellite fleet operators and terrestrial fiber optic networks might engage in aggressive price competition and offer our
current and potential customers more attractive prices for transmission than we can offer them. In this case, our current and potential
customers may prefer to obtain transmission directly from our suppliers of capacity and turn to other content management service providers or
develop their own content management capabilities, rather than to procure a package of services from us.
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We began providing global content management and distribution services in 2000 and MSS in 2008 and may fail to successfully
address the risks and uncertainties associated with our business.
We began to provide global content management and distribution services to the television and radio broadcasting industries in 2000
and MSS in 2008. Given our relatively limited operating history in these markets and the risks, expenses, difficulties and potential delays
associated with a high-technology, highly-regulated industry such as ours, if we are unable to address these uncertainties, we may not be able
to expand our business, develop a sufficiently large revenue-generating customer base, obtain additional transmission capacity or compete
successfully in the global content management and distribution services and MSS industries.
Our contracted backlog may not ultimately result in future revenues.
Contracted backlog represents services that our customers have committed by long-term contracts to purchase from us. As of
December 31, 2009, we had contracted backlog totaling $167.9 million through 2018, of which $81.9 million are related to services expected
to be delivered in 2010, and $50.1 million are related to services expected to be delivered in 2011. Although we believe contracted backlog is
an indicator of our future revenues, our reported contracted backlog may not be converted to revenues in any particular period and actual
revenues from such contracts may not equal our reported contracted backlog. Our backlog includes contracts denominated in currencies other
than US dollar, such as Euro, and change in currency exchange rates may change the value of the backlog and the amount of revenues
expected in future years. Therefore, our contracted backlog is not necessarily indicative of the level of our future revenues. Of our $167.9
million contracted backlog as of December 31, 2009, which we do not recognize as revenue until we actually perform the services,
approximately $149.2 million, or 88.8%, is related to obligations to be provided under non-cancelable agreements and the remaining contracts
may be canceled under certain circumstances by an advanced notice of between 30 to 120 days or at certain predefined exit dates. As of
December 31, 2009, long-term contracts constituting approximately 19.5% of our contracted backlog at December 31, 2008 had been
cancelled mainly due to our decision to terminate contracts for failure of the customer to meet the payment terms. Cancellations of customer
contracts could substantially and materially reduce contracted backlog and could negatively impact our revenues. Our ability to collect our
monthly fees with respect to all or a portion of the contracted backlog may also be adversely affected by the long-term financial condition of
our customers. If, as a result of the current unfavorable global economic conditions or otherwise, several of our customers become insolvent
or bankrupt or experience other financial difficulties which make them unable or unwilling to continue to use our services, our revenue would
be adversely affected. Accordingly, we cannot assure you that our contracted backlog will ultimately result in revenues.
Contracts for content management and distribution services generally extend over several years, which will make it more difficult for
us to sell our services to broadcasters who have entered into agreements with other providers of these services.
Broadcasters generally seek content management and distribution services over a lengthy period. Contracts for these services
generally extend for terms of 3 to 5 years, and in some cases may extend for the expected life of a satellite. Once a broadcaster has entered
into an agreement with one of our competitors, we may effectively be unable to obtain business from that potential customer for an extended
period.
Changes in technology may reduce the demand for our services.
The technology used in content management and distribution services is evolving rapidly. The technologies we currently use or plan
to use may not be preferred by our customers or changes in these technologies may compromise our business. For example, although satellite
transmission is currently the preferred method of point-to-multipoint global distribution, widespread implementation of Internet television
broadcasts may reduce the demand for our content management and distribution services. Similarly, to the extent that excess capacity
develops in terrestrial fiber optic systems, our satellite-based content management and distribution offerings may be less attractive. In
addition, the gradual extension of terrestrial wireline and wireless communications networks to areas not currently served by them or
development of new technology for distribution to remote areas may reduce demand for our MSS services. If we are unable to keep pace with
on-going technological changes in the content management and distribution services industry, our financial condition may be adversely
affected.
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Because our functional currency is the U.S. dollar but a large portion of our expenses and revenues are incurred in Euros and New
Israeli Shekels, our results of operations may be seriously harmed by currency fluctuations.
Although our functional currency is the U.S. dollar, we pay a large portion of our expenses in other currencies primarily payments
for transmission capacity in Euros, and to a lesser extent payments for salaries and other general and administrative expenses in New Israeli
Shekels, or NIS. As a result, we are exposed to risk to the extent that the value of the U.S. dollar decreases against the Euro or the NIS. In
that event, the U.S. dollar cost of our operations will increase and our U.S. dollar-measured results of operations will be adversely
affected. This effect has occurred in 2007, 2008 and during a portion of 2009, because the Euro and NIS appreciated against the U.S. dollar,
which resulted in a significant increase in the U.S. dollar cost of our operations. In addition, a significant portion of our agreements with
customers are denominated in Euros or NIS, which exposes us to risk to the extent the value of the U.S. dollar increases against the Euro or
the NIS. To date, we have not engaged in hedging transactions. In the future, we may enter into currency hedging transactions to decrease the
risk of financial exposure from fluctuations in the exchange rate of the U.S. dollar against the Euro or NIS. Our financial results of operations
could be adversely affected if we are unable to guard against currency fluctuations in the future.
Our reported net income and income per share will be impacted by embedded derivatives.
Some of our customers and suppliers contracts provide for payment in currencies that are neither our functional currency nor the
functional currency of the customer or supplier. Under FASB ASC Topic 815, Derivatives and Hedging (Statement No. 133, Accounting for
Derivative Instruments and Certain Hedging Activities, as amended), these contracts are deemed to include an "embedded derivative" in the
form of a foreign currency forward contract. Accordingly, our U.S. GAAP statements of operations reflect non-operating, non-cash gains and
losses attributable to changes in the fair value of foreign currency conversion embedded derivatives. Although we do not believe that these
non-operating, non-cash gains and losses are meaningful to an understanding of our results of operations, they can result in unanticipated
fluctuations in our reported results of operations and impact the market price of our ordinary shares.
A crisis in the financial sector may significantly decrease the value of our assets.
The performance of the capital markets affects the values of funds that are held in marketable securities. These assets are subject to
market fluctuations and yield uncertain returns, which may fall below our projected return rates. For example, due to market developments in
2008 and the first half of 2009, including a series of rating agency downgrades, the fair value of these investments declined during such
periods.
Our cash, cash equivalents, short term deposits and marketable securities totaled $47.5 million as of December 31, 2009. Our policy
is to retain substantial cash balances in order to support our growth. Our short-term investments consist primarily of corporate bonds of
financial institutions and industrial companies, as well as U.S. agency bonds. Although we believe that we generally adhere to conservative
investment guidelines, the continuing turmoil in the markets may result in impairments of the carrying value of our investment assets.
Realized or unrealized losses in our investments or in our other financial assets may adversely affect our financial condition.
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Future consolidations in the telecommunications and satellite industries, or in the content management and distribution services
market, may increase competition that could reduce our revenues and the demand for our services.
The markets in which we compete have been characterized by increasing consolidation, which may be accelerated due to the
unfavorable global economic conditions. We may not be able to compete successfully in increasingly consolidated markets. Additional
consolidation may reduce the amount of capacity that may be available to us and increase the cost of such capacity. Increased competition
and consolidation in these markets also may require that we reduce the prices of our services or result in a loss of market share, which could
materially adversely affect our revenues and reduce our operating margins. Additionally, because we now, and may in the future, depend on
certain strategic relationships with third parties in the telecommunications and satellite industries, any additional consolidation involving these
parties could reduce the demand for our services and otherwise hurt our business prospects.
We depend and rely upon the experience and resources of our shareholders, none of which has any obligation to assist us except as
contracted.
We receive certain consulting services from our principal shareholders Del-Ta Engineering Equipment Ltd., or Del-Ta Engineering,
and Kardan Communications Ltd., or Kardan Communications, pursuant to a management services agreement. If either of them decides to
discontinue the services it is providing, we may not be able to obtain alternative consulting services from independent third parties on
economical terms or at all. In addition, these principal shareholders provide us with the benefit of their experience and extensive contacts in
the industry, which they are not obligated to provide under their management services agreement.
We may have difficulty managing the growth of our business, which could limit our ability to increase sales and cash flow.
We have experienced significant growth in our operations in recent years, with our annual revenues increasing from $4.4 million in
2000 to $93.7 million in 2009. In addition, in 2008 we completed the acquisition of the satellite business of Bezeq in Israel and the Hawley
Teleport in Pennsylvania, and during the next few years we expect to continue to acquire businesses in the United States, Europe and Asia and
to expand our sales and marketing activities. Our growth has placed, and will continue to place, significant demands on our management, as
well as our financial and operational resources, that are required to:

manage a larger organization;

integrate the assets and businesses we acquire;

implement appropriate financial and operational systems;

expand our infrastructure to support a greater volume of services;

expand our sales and marketing infrastructure and capabilities on an international basis; and

develop regulatory compliance programs in foreign jurisdictions.

If we are unable to manage and grow our business effectively during this period of rapid growth, we may not be able to implement
our business strategy and our business and financial results would suffer.
A loss of the services of David Rivel, our founder and Chief Executive Officer, or other members of our senior management could
cause our revenues to decline and impair our ability to expand our business.
We depend on the continued services of David Rivel, our founder and Chief Executive Officer. Any loss of the services of Mr. Rivel
or of other members of our senior management could result in a gap in senior management and the loss of technical and managerial expertise
necessary for us to succeed, which could cause our revenues to decline and impair our ability to expand our business.
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If we are unable to hire, train and retain qualified managerial, technical, and sales and marketing personnel, we may be unable to
develop new services or sell or support our existing or new services. This could cause our revenues to decline and impair our ability to
meet our development and revenue objectives.
Our success depends in large part on the continued contributions of our managerial, technical, and sales and marketing personnel. If
our business continues to grow, we will need to hire additional qualified managerial, technical engineering, and sales and marketing personnel
to succeed. The process of hiring, training and successfully integrating qualified personnel into our operations is a lengthy and expensive
one. The market for the qualified personnel we require is very competitive because of the limited number of people available with the
necessary technical and sales skills and understanding of our services. This is particularly true in Israel and some of the markets into which
we hope to expand, where competition for qualified personnel is intense. Our failure to hire and retain qualified employees could cause our
revenues to decline and impair our ability to meet our sales objectives.
If we are unable to provide uninterrupted or quality services, our reputation may suffer, which could cause the demand for our
services to decline.
Our business depends on the efficient, uninterrupted and high-quality operation of our systems. Our service offerings are complex,
depend on our successful integration of sophisticated third-party technology and services, and must meet stringent quality requirements. Our
services are critical to our customers' businesses, and disruptions in our services may cause significant damage to our customers and our
reputation. We do not know whether, in the future, we will be subject to liability claims or litigation for damages related to service
disruptions. If such litigation were to arise, regardless of its outcome, it could result in substantial expenses to us, significantly divert the
efforts of our technical and management personnel and disrupt or otherwise severely impact our relationships with current and potential
customers. In addition, if any of our services has reliability or quality problems, our reputation could be damaged significantly and customers
might be reluctant to buy our services, which could result in a decline in revenues, a loss of existing customers or the failure to attract new
customers.
Our quarterly operating results are likely to fluctuate, which could cause us to miss expectations about these results and cause the
trading price of our ordinary shares to decline.
Our prospective customers generally must commit significant resources to evaluate our services. Accordingly, our sales process is
subject to delays associated with the approval process and delays associated with our customers' preparations to begin broadcasting using our
services. This approval process typically lasts 3 to 12 months, and creates unpredictability regarding the timing of our generation of
revenues. As a result, orders that we expect in one quarter may be deferred to another because of the timing of customers' procurement
decisions. Therefore, our quarterly operating results are likely to fluctuate, which could cause us to miss expectations about these results and
cause the trading price of our ordinary shares to decline.
Factors that could cause our revenues and operating results to fluctuate from period to period include:

market conditions in the broadcast and telecommunications industries;

changes in global economic conditions;

our service and customer mix;

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customer demand for our services;

the timing and success of new service introductions by our competitors and us;

the timing of contracts with new customers;

changes in the price or the profitability of our services;

changes in the availability or the cost of transmission capacity;

changes in the utilization of transmission capacity;

the timing of renewal or commencement of our long-term capacity commitments;

changes in regulatory and compliance requirements; and

Currency fluctuation that may change the level of our costs and revenues

We face potential liability for content broadcast by our customers over our network.
Our potential liability for distributing content broadcast by our customers over our network is uncertain. We could become liable for
such content based on obscenity, defamation, negligence, copyright or trademark infringement, or other bases.
Our standard agreement provides that our customers are fully responsible for the content of their programming, for ensuring that the
content conforms to all applicable governmental regulations and for obtaining any local regulatory approvals relating to their broadcasts. The
agreement further provides that we are not liable if the satellite fleet operator requires us to suspend or terminate service for any reason
relating to content. Our customers are generally required to indemnify us for any financial costs of governmental or third-party proceedings
resulting from their content. Although we attempt to reduce our liability through contractual indemnification from our customers and
disclaimers, there is no guarantee that we would be successful in protecting ourselves against this type of liability. Even if we were ultimately
successful in such litigation, litigation would divert management time and resources, could be costly and is likely to generate negative
publicity for our business. We may also be forced to implement expensive measures to alter the way our services are provided to avoid any
further liability.
We face potential liability for radiation generated by our teleports.
Our operations are subject to various environmental laws and regulations regarding the protection of the environment and personal
health and safety, including the emission of radio frequencies and electromagnetic radiation. Our teleports in Israel and in the United States
generate electromagnetic radiation, which above certain levels can be harmful to people. Although we believe that our facilities comply with
all applicable standards in this regard, personal injury claims may be brought against us for harm to individuals allegedly caused by our
transmission equipment. Similarly, new, more stringent environmental protection regulations may be promulgated, and we may need to incur
significant expense to comply with such regulations.
Our business, including the operation of our network, may be vulnerable to acts of terrorism or war.
Our network may be vulnerable to acts of terrorism or war. If our facilities, including our headquarters or principal teleports become
temporarily or permanently disabled by an act of terrorism or war, such as the hostilities along Israel's border with the Gaza Strip and the
missiles fired from the Gaza Strip into Southern Israel in December 2008 and January 2009, it will be necessary for us to develop alternative
infrastructure to continue providing service to our customers. We may not be able to avoid service interruptions if our facilities or the
facilities we use are disabled due to a terrorist attack or war. Any act of terrorism or war that substantially or totally destroys or disables our
facilities or the facilities of our service providers would result in a substantial reduction in revenues and in the recognition of a loss of any
uninsured assets that are substantially or totally disabled.
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We may not be able to fulfill our dividend policy in the future and holders of our ordinary shares may not receive any cash dividends.
In March 2008, our board of directors adopted a new dividend policy pursuant to which it may distribute each year not more than
50% of our cumulative retained earnings, subject to applicable law, our contractual obligations and provided that such distribution would not
be detrimental to our cash needs or to any plans approved by our board of directors. Our board of directors will consider, among other factors,
our expected results of operations, financial condition, contractual restrictions, planned capital expenditures, financing needs and other factors
our board of directors deems relevant in order to reach its conclusion that a distribution of dividends will not prevent us from satisfying our
existing and foreseeable obligations as they become due. In 2008 and 2009, we distributed dividends to our shareholders in the aggregate
amount of $10.6 million and $8.5 million, respectively.
Dividend payments are not guaranteed and our board of directors may decide, in its absolute discretion, at any time and for any
reason, not to pay dividends. Our ability to pay dividends is also subject to the requirements of Israeli law. Further, our dividend policy, to
the extent implemented, will significantly restrict our cash reserves and may adversely affect our ability to fund unexpected capital
expenditures. As a result, we may be required to borrow money or raise capital by issuing equity securities, which may not be possible on
attractive terms or at all. Due to our approved enterprise program, dividend payment from earnings derived from our approved enterprise may
result in additional taxes to our shareholders which are Israeli corporations. See Item 10.D. "Additional Information Taxation Taxation in
Israel - Law for the Encouragement of Capital Investments, 1959" for more information about our "approved enterprise" status.
If we are unable to fulfill our dividend policy, or pay dividends at levels anticipated by investors, the market price of our shares may
be negatively affected and the value of your investment may be reduced. For additional information, please also see Item 8.A "Financial
information Consolidated Financial Statements and Other Financial Information Dividend Policy."
Market prices of companies involved in the telecommunications industry, as well as our company, have been highly volatile and
shareholders may not be able to resell their ordinary shares at or above the price they paid.
The trading price of our ordinary shares has been in the past, and may be in the future, subject to wide fluctuations. Since our
ordinary shares commenced trading on NASDAQ on November 1, 2006, the market price of the ordinary shares has fluctuated from $7.27 to
$26.50. Factors that may affect the trading price include, but are not limited to:

the gain or loss of significant customers;

fluctuations in the timing or amount of customer orders;

variations in our operating results;

results of integration of acquired assets and businesses;

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announcements of new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;

recruitment or departure of key personnel;

commencement of, or involvement in, litigation;

the level of liquidity available for our shares;

changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our
shares; and

market conditions in our industry, the industries of our customers and the economy as a whole.

The trading price and volume for our ordinary shares may also be influenced by the research and reports that industry or securities
analysts publish about us or our business. If our future quarterly or annual operating results are below the expectations of securities analysts
or investors, the price of our ordinary shares would likely decline. Share price fluctuations may be amplified if the trading volume of our
ordinary shares is low.
Class action litigation due to share price volatility or other factors could cause us to incur substantial costs and divert our
management's attention and resources.
In the past, following periods of volatility in the market price of a public company's securities, securities class action litigation has
often been instituted against that company. Companies such as ours in the telecommunications industry and other technology industries are
particularly vulnerable to this kind of litigation as a result of the volatility of their share prices. Any litigation of this sort could result in
substantial costs and a diversion of management's attention and resources.
We are controlled by a small number of shareholders, who may make decisions with which other shareholders may disagree.
Our directors, executive officers, principal shareholders and their affiliated entities beneficially own approximately 74.3% of our
outstanding ordinary shares as of December 31, 2009. The interests of these shareholders may differ from the interests of other
shareholders. These shareholders, if acting together, could control our operations and business strategy and will have sufficient voting power
to influence all matters requiring approval by our shareholders, including the approval or rejection of mergers or other business combination
transactions. These shareholders have also entered into an agreement providing each of them with a right to tag along to certain sales of our
shares by Del-Ta Engineering or Kardan Communications. In addition, two of our principal shareholders, Del-Ta Engineering and David
Rivel, our Chief Executive Officer, are parties to a shareholders agreement, pursuant to which Mr. Rivel granted Del-Ta Engineering an
irrevocable proxy to vote all his shares with respect to the election of directors. This concentration of ownership may delay, prevent or deter a
change in control, or deprive shareholders of a possible premium for their ordinary shares as part of a sale of our company.
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We may be or become a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to
U.S. investors.
We may be classified as a passive foreign investment company ("PFIC") by the U.S. Internal Revenue Service for U.S. federal
income tax purposes. Such characterization could result in adverse U.S. federal income tax consequences to you if you are a U.S.
investor. For example, U.S. investors who owned our ordinary shares during any taxable year in which we were a PFIC generally are subject
to increased U.S. tax liabilities and reporting requirements for that taxable year and all succeeding years, regardless of whether we actually
continue to be a PFIC, although a shareholder election to terminate such deemed PFIC status may be available in certain circumstances. The
same adverse U.S. federal income tax consequences will apply to U.S. investors who acquire our ordinary shares during the current taxable
year or any subsequent taxable year if we are treated as a PFIC for that taxable year.
The determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and
assets from time to time. Specifically, we will be classified as a PFIC for U.S. tax purposes for a taxable year if either (a) 75% or more of our
gross income for such taxable year is passive income, or (b) 50% or more of the average percentage of our assets during such taxable year
either produce passive income or are held for the production of passive income. For such purposes, if we directly or indirectly own 25% or
more of the shares of another corporation, we generally will be treated as if we (a) held directly a proportionate share of the other
corporations assets, and (b) received directly a proportionate share of the other corporations income.
We do not believe that we were a PFIC for the preceding taxable year or will be a PFIC for the current taxable year. However,
because the PFIC determination is highly fact intensive and made at the end of each taxable year, there can be no assurance that we will not be
a PFIC for the current or any future taxable year or that the IRS will not challenge our determination concerning our PFIC status. For further
discussion of the adverse U.S. federal income tax consequences of our possible classification as a PFIC, please see Item 10.E. "Additional
Information Taxation U.S. Federal Income Tax Consequences."
Provisions of Israeli law, our license and current agreements among our principal shareholders may delay, prevent or make difficult
an acquisition of us, prevent a change of control and negatively impact our share price.
Israeli corporate law regulates acquisitions of shares through tender offers and mergers, requires special approvals for transactions
involving directors, officers or significant shareholders, and regulates other matters that may be relevant to these types of
transactions. Furthermore, Israeli tax considerations may make potential acquisition transactions unappealing to us or to some of our
shareholders. For example, Israeli tax law may subject a shareholder who exchanges his or her ordinary shares for shares in a foreign
corporation to taxation before disposition of the investment in the foreign corporation. In addition, our license from the Israeli Ministry of
Communications to operate our teleports in Israel impose certain restrictions on ownership of our shares, as described below under "Risks
Relating to Government Regulation Our license from the Israeli Ministry of Communications to operate our teleports impose certain
restrictions on ownership of our shares. If these restrictions are breached, we could lose our license." These provisions of Israeli law and of
our license may delay, prevent or make difficult an acquisition of our company, which could prevent a change of control and therefore depress
the price of our shares. In addition, our principal shareholders have entered into an agreement providing each of them with a right to tag along
to certain sales of our shares by Del-Ta Engineering or Kardan Communications. Furthermore, David Rivel and Del-Ta Engineering, two of
our principal shareholders, are parties to a shareholders agreement, pursuant to which Mr. Rivel granted Del-Ta Engineering an irrevocable
proxy to vote all his shares solely with respect to the election of directors. These agreements, which add to the concentration of ownership in
our company, may have the effect of delaying or deterring a change in control of us, thereby limiting the opportunity for shareholders to
receive a premium for their shares and possibly affecting the price that some investors are willing to pay for our securities.
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Our board of directors could choose not to negotiate with an acquiror that it did not feel was in our strategic interest. If the acquiror
were discouraged from offering to acquire us or prevented from successfully completing a hostile acquisition by anti-takeover measures,
shareholders could lose the opportunity to sell their shares at a favorable price.
We may fail to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
The Sarbanes-Oxley Act of 2002 imposes certain duties on us and our executives and directors. Our efforts to comply with the
requirements of Section 404, which started in connection with the 2007 Annual Report on Form 20-F, have resulted in increased general and
administrative expense and a diversion of management time and attention, and we expect these efforts to require the continued commitment of
resources.
Section 404 of the Sarbanes-Oxley Act requires management's annual review and evaluation of our internal control over financial
reporting in connection with the filing of the Annual Report on Form 20-F for each fiscal year.
We have documented and tested our internal control systems and procedures in order for us to comply with the requirements of
Section 404. While our assessment of our internal control over financial reporting resulted in our conclusion that as of December 31, 2009,
our internal control over financial reporting was effective, we cannot predict the outcome of our testing in future periods. If we fail to maintain
the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting. Failure to maintain effective internal controls over financial reporting could require us to expend significant
resources and management time to implement and test remedial measures, or result in investigation or sanctions by regulatory authorities, and
could have a material adverse effect on our operating results, investor confidence in our reported financial information, and the market price of
our ordinary shares.
Risks Relating to Government Regulation
If we do not obtain or continue to maintain all of the regulatory permissions, authorizations and licenses necessary to provide our
services, we may be required to relocate or shut down our principal teleport or other teleports, and may not be able to implement our
business strategy and expand our operations as we currently plan.
Aspects of the content management, content distribution and MSS industry are highly regulated, both in Israel and
internationally. Our business requires regulatory permissions, authorizations and licenses from the Israeli Ministry of Communications, which
we have obtained. Furthermore, the use, operation and sale of encryption devices such as those incorporated in our transmission systems and
services require a license from the Israeli Ministry of Defense, which we have obtained. The employment of employees that are required to
work on Saturday and Jewish Holidays in Israel requires a special permit from the Israeli Ministry of Industry, Trade and Labor, which we are
in the process of obtaining. These permissions, authorizations and licenses are subject to periodic renewal. Our principal license from the
Israeli Ministry of Communications for operation of our teleports is scheduled to expire in July 2013. If our principal license from the Israeli
Ministry of Communications for operation of our teleports is revoked or not renewed, we will not be able to continue our operations as they
are being conducted today.
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In addition, the erection and operation of our Re'em teleport site and our Emek Ha'ela teleport site requires building permits from
local and regional zoning authorities, which are granted for limited periods and are subject to renewal from time to time. The building permit
for our Re'em teleport site has expired on October 20, 2009. We have applied to extend the permit for an additional 3-year term and are
awaiting the decision of the Regional Building and Zoning Committee. If our request is not granted, we intend to appeal the decision. In
addition, on November 5, 2009, the Regional Building and Zoning Committee sent our Chief Executive Officer a warning before filing an
indictment for allegedly building and placing antennas at our Re'em teleport without a permit. Our Chief Executive Officer was invited to a
hearing before the Regional Building and Zoning Committee to assert his defense to such allegations. The hearing has not taken place
yet. The building permits for our Emek Ha'ela teleport site have no expiration date. There can be no assurance that the zoning authorities will
renew expired permits, or that the Building and Zoning Committee will not file an indictment for building without a permit or that we will be
able to renew any of our other licenses or permits when they expire, or that we will be able to obtain any new licenses or permits that may be
required for the operation of our business. If we are unable to renew the building permit for our Re'em teleport site, we could be forced to shut
down or relocate our antennas and other equipment currently located at our principal teleport. Relocation of our principal teleport would
require significant additional capital expenditures. In addition, shutting down or relocation of our principal teleport could disrupt or diminish
the quality of the services we provide to our customers.
Under Israeli law, the Israeli Prime Minister and the Minister of Communications, at their discretion or at the request of the Minister
of Defense and subject to the approval of the Government of Israel, have the right to determine by order that certain telecommunications
services, including certain of the services we provide, such as the downlink of broadcasts in Israel, are vital services. If such an order is
issued, the Prime Minister and the Minister of Communications, subject to approval of the Government of Israel, may impose various
requirements and limitations that may directly or indirectly affect us. These requirements and limitations include, among others, limitations
on the identity of our shareholders, requiring that management and control of our company be located in and be carried out in Israel,
obligations to provide information, limitations regarding the identity of our officers, limitations regarding our corporate reorganization and
limitations on transfer of control of our company. If such an order is issued with respect to us, any transfer of control in the company requires
prior approval by the Prime Minister and the Minister of Communications. In addition, the Israeli Prime Minister and the Minister of
Communications may impose limitations on the transfer of information to certain of our officers and shareholders.
Further, under the Israeli Wireless Telegraph Ordinance, if the Government of Israel determines that the State of Israel is undergoing
a state of emergency, the Minister of Communications can expropriate any device that is involved in the transmission of wireless telegraph
information, visual signs or electromagnetic waves. During such an emergency period, the Minister of Communications can also enact orders
to sell, buy, erect, use or restrict the operation of any such instrument. Any emergency appropriation or regulation of communications
equipment could result in our equipment or frequencies required for us to operate our business being used by the State of Israel, or in our
being forced to share with the State of Israel control of equipment or frequencies required for us to conduct our business. Additional
emergency powers are accorded to the Minister of Communications under the Israeli Communications Act, whereby in a state of emergency
the Minister of Communications may impose various instructions and limitations relating to the provision of our services, including mandating
the provision of services to the Israeli security forces.
We are also required to obtain permits from the Israeli Ministry of Environmental Protection with regard to our transmission
antennae and other radiation generating equipment. If the Ministry of Environmental Protection were to impose stricter requirements than
currently exist in connection with the renewal of these permits, we may be unable to renew them. In this event, we could be forced to relocate
our antennas and other equipment currently located at our principal teleport or other teleports, or could be restricted in our ability to expand
our teleports. Relocation of our teleports would require significant additional capital expenditures. In addition, relocation of our teleports or
significant restrictions on our ability to expand our teleports could disrupt or diminish the quality of the services we provide to our customers.
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Our license from the Israeli Ministry of Communications to operate our teleports impose certain restrictions on ownership of our
shares. If these restrictions are breached, we could lose our license.
Our license from the Israeli Ministry of Communications to operate our teleports provides that, without the consent of the Israeli
Minister of Communications, no means of control of RRsat may be acquired or transferred, directly or indirectly.
In connection with our initial public offering in November 2006, our license was amended to provide that our entering into an
underwriting agreement for the offering and sale of shares to the public, listing the shares for trading, and depositing shares with a depositary
was not considered a transfer of means of control. In addition, pursuant to the amendments, transfers of our shares that do not result in the
transfer of control of RRsat are permitted without the prior approval of the Ministry of Communications, provided that:

in the event of a transfer or acquisition of shares without the consent of the Ministry of Communications, resulting in the
transferee becoming a beneficial holder of 5% or more of our shares or being entitled to a right to appoint a director or the chief
executive officer (or is a director or the chief executive officer), we must notify the Ministry of Communications within 21 days
of learning of such transfer; and

in the event of a transfer or acquisition of shares without the consent of the Ministry of Communications, resulting in the
transferee becoming a beneficial holder of 10% or more of our shares or having significant influence over us (but which does not
result in a transfer of control of RRsat), we must notify the Ministry of Communications within 21 days of learning of such
transfer and request the consent of the Ministry of Communications for such transfer.

Should a shareholder, other than our shareholders prior to our initial public offering in November 2006, become a beneficial holder of
10% or more of our shares or acquire shares in an amount resulting in such shareholder having significant influence over us without receiving
the consent of the Director General of the Ministry of Communications, its holdings will be converted into dormant shares for as long as the
Minister's consent is required but not obtained. The beneficial holder of such dormant shares will have no rights other than the right to receive
dividends and other distributions to shareholders and the right to participate in rights offerings.
Our license also states that means of control of the company, or of an interested shareholder of the company (which generally would
include a holder of 5% of the company's voting power or other means of control), cannot be pledged unless such pledge agreement includes a
condition that prohibits the exercise of the pledge without obtaining the advance written approval of the Minster of Communication.
Our articles of association contain the provisions described above, and any revisions to these provisions in our articles of association
may result in the termination of our license from the Ministry of Communications or other sanctions provided for in our license. For
additional information, see Item 4.B. "Information on the Company Business Overview Regulation."
In connection with our recent acquisition of Bezeq's satellite communications business, we agreed with the Israeli Ministry of
Defense that the Israeli Prime Minister, at the request of the Israeli Minister of Defense may issue an order to our company requiring us to
provide certain services to the Israeli Defense Forces. Pursuant to the order, we would be required to amend our articles of association in a
manner that would require us to maintain a certain number of Israeli citizens and residents on our management team and board of directors,
which comply with certain security clearance criteria, and we will be required to comply with certain requirements relating to security and
protection of confidential information. To date, the Israeli Prime Minister has not issued such an order. However, we cannot assure you that
such order will not be issued in the future.
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Our ability to establish or acquire our own teleports in countries other than Israel may be restricted by government regulation of the
telecommunications industry, including laws subjecting our licenses to renewal and potential revocation, as well as laws prohibiting or
limiting foreign ownership.
Some of the teleports we use are owned and operated by third parties. Our customers and these third parties are responsible for
obtaining any necessary licenses, approvals or operational authority for the transmission of data and/or audiovisual signals to and from the
satellites that we, via our suppliers, use. Failure by our customers or suppliers to obtain and maintain some or all regulatory licenses,
authorizations or approvals could have a material adverse effect on our business.
We intend to expand our presence in markets in which we currently have hosted facilities by acquiring or establishing our own
teleports and production facilities, such as the acquisition we completed in 2008 to acquire the Hawley Teleport in Pennsylvania. Specifically,
on May 1, 2008 after receiving the approval of the Federal Communications Commission ("FCC"), we acquired various wireless and earth
station licenses (the "FCC Licenses") associated with the Hawley Teleport and now operate them on a non-common carrier basis for the
provision of video and radio distribution services. As an FCC licensee, we are subject to regulation primarily by the FCC, which ensures that
licensees comply with the Communications Act of 1934, as amended (the "Communications Act") and related technical, licensing,
operational, siting, and environmental protection regulations. Any state or local zoning, land use, building or similar regulation that materially
limits the transmission or reception by earth stations is preempted by federal law, subject to certain exceptions. We believe that the Hawley
Teleport materially complies with the Communications Act, FCC regulations, and any applicable state or local regulations.
The FCC Licenses also are subject to renewal upon the expiration of their license terms. The FCC has routinely renewed the FCC
Licenses in the past. The Communications Act, however, provides that licenses may be revoked for cause and applications to renew licenses
may be denied if the FCC concludes the renewal would not serve the public interest. We believe that the FCC Licenses will be renewed in the
ordinary course, but we cannot provide assurances that the FCC will renew the FCC Licenses upon their expiration. Most recently, we
successfully renewed one FCC License in mid-2009 prior to its scheduled expiration. If an FCC License is revoked or not renewed, we could
not provide services under that license, which may have a material adverse affect on our business.
In addition, the United States has restrictions on the foreign ownership of companies that directly or indirectly hold common carrier
wireless licenses, including earth station licenses that are used to communicate with satellites, which could prevent us from acquiring or
owning our own teleports in the United States to the extent we seek to operate the teleports on a common carrier basis. In the event that we
seek to operate the Hawley Teleport (or any other teleport in the United States) on a common carrier basis, U.S. law prohibits more than 20
percent of the capital stock of a common carrier wireless licensee to be directly owned or voted by non-U.S. citizens or their representatives,
by a foreign government or its representatives or by a foreign corporation. Additionally, no more than 25 percent of the capital stock of an
entity that directly or indirectly controls a common carrier wireless licensee may be owned or voted by non-U.S. citizens or their
representatives, by a foreign government or its representatives, or by a foreign corporation, if the FCC finds that prohibiting such indirect
foreign ownership of a common carrier wireless licensee would serve the public interest. The FCC, however, may allow indirect foreign
ownership levels in excess of 25 percent, and even up to 100 percent, if it finds that the higher foreign ownership levels are consistent with the
public interest. Although the FCC has adopted a rebuttable presumption in favor of allowing indirect foreign ownership in excess of 25
percent by investors from World Trade Organization member countries, including Israel, there can be no assurance that we will be able to
obtain a favorable ruling from the FCC in the future. In addition, the Department of Justice, the Department of Homeland Security and the
Federal Bureau of Investigation (the "Executive Agencies") review FCC applications to acquire new or existing wireless licenses and can
require the applicant to enter into an agreement addressing any national security concerns before the application is granted. We were not,
however, required to enter into a national security agreement with the Executive Agencies in connection with the acquisition of the Hawley
Teleport, and the FCC Licenses include no other restrictions outside the ordinary course. Restrictions on foreign ownership of teleports may
also exist in other countries in which we would at some future date like to establish or acquire teleport facilities. If we are not able to acquire
additional teleports in the United States or other countries, our ability to expand our presence in those markets may be adversely affected.
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We could in the future be subject to new laws, policies or regulations, or changes in the interpretation or application of existing laws,
policies and regulations that modify the present regulatory environment in Israel, the United States or other countries in which we may wish to
own or operate teleport facilities. For example, a country in which we currently operate without need of a license could modify its laws or
regulations to require a license, which we may or may not be able to obtain. Similarly, a country in which we may wish to acquire a teleport
could modify its laws or regulations to prohibit or limit foreign ownership, which could impair our ability to acquire a teleport in that
country. We are not aware, however, of any specific countries contemplating such changes at present. For additional information, see Item
4.B. "Information on the Company Business Overview Regulation."
Risks Relating to Our Operations in Israel
Potential political, economic and military instability in Israel, where our principal teleport and our senior management are located,
may adversely affect our results of operations.
We are incorporated under the laws of the State of Israel, and our principal teleport, our Emek Ha'ela teleport and our principal
executive offices are located in Israel. Accordingly, political, economic and military conditions in Israel may directly affect our
business. Since the State of Israel was established in 1948, a number of armed conflicts have occurred between Israel and its Arab
neighbors. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a
significant downturn in the economic or financial condition of Israel, could adversely affect our operations. Since October 2000, terrorist
violence in Israel has increased significantly. Recently, there has been an escalation in violence among Israel, Hamas, the Palestinian
Authority and other groups, as well as extensive hostilities in December 2008 and January 2009 along Israel's border with the Gaza Strip,
which resulted in missiles being fired from the Gaza Strip into Southern Israel. There were also extensive hostilities along Israel's northern
border with Lebanon in the summer of 2006. Ongoing and revived hostilities or other Israeli political or economic factors could harm our
operations and cause our revenues to decrease. Furthermore, several countries, principally those in the Middle East, still restrict business with
Israel and Israeli companies. These restrictive laws and policies may seriously limit our ability to offer our services to customers in these
countries.
Our operations may be disrupted by the obligations of our personnel to perform military service.
Most of our employees are obligated to perform several weeks of military reserve duty annually, and are subject to being called to
active duty at any time under emergency circumstances until they reach middle age. In response to the increase in terrorist activity and
hostilities in the region, there have been, at times, significant call-ups of military reservists, including in connection with recent hostilities
along Israel's border with the Gaza Strip, and it is possible that there will be additional call-ups in the future. Our operations could be
disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods of military
service of one or more of our key employees. A disruption could materially adversely affect our business.
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The tax benefits available to us under Israeli law require us to meet several conditions, including meeting export goals and applying
plan administration rules, and may be terminated or reduced in the future, which would increase our taxes.
Since 2006 we have been realizing tax reductions resulting from the "approved enterprise" status of our facilities in Israel. To be
eligible for these tax benefits, we must meet conditions, including meeting export goals and applying plan administration rules. If we fail to
meet these conditions in the future, the tax benefits would be canceled and we could be required to refund any tax benefits we might already
have received. These tax benefits may not be continued in the future at their current levels, or at any level. The termination or reduction of
these benefits may increase our income tax expense in the future. See Item 10.D. "Additional Information Taxation Taxation in
Israel - Law for the Encouragement of Capital Investments, 1959" for more information about our "approved enterprise" status.
You may have difficulties enforcing a U.S. judgment against us and our executive officers and directors or asserting U.S. securities
laws claims in Israel.
We are incorporated under the laws of the State of Israel, and substantially all of our directors and executive officers are not residents
of the United States and most of their assets and our assets are located outside the United States. Service of process upon our non-U.S.
resident directors or executive officers and enforcement of judgments obtained in the United States against us and our directors and executive
officers may be difficult to obtain within the United States. It may be difficult to assert U.S. securities law claims in original actions instituted
in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum
in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is
applicable to the claim. If U.S. law is found to be applicable, the substance of the applicable U.S. law must be proved as a fact, which can be
a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. Furthermore, there is little binding
case law in Israel addressing these matters.
Israeli courts might not enforce judgments rendered outside Israel which may make it difficult to collect on judgments rendered
against us. Subject to certain time limitations, an Israeli court may declare a foreign civil judgment enforceable only if it finds that:

the judgment was rendered by a court which was, according to the laws of the state of the court, competent to render the
judgment;

the judgment may no longer be appealed;

the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel
and the substance of the judgment is not contrary to public policy; and

the judgment is executory in the state in which it was given.

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Even if these conditions are satisfied, an Israeli court will not enforce a foreign judgment if it was given in a state whose laws do not
provide for the enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the
sovereignty or security of the State of Israel. An Israeli court also will not declare a foreign judgment enforceable if:

the judgment was obtained by fraud;

there is a finding of lack of due process;

the judgment was rendered by a court not competent to render it according to the laws of private international law in Israel;

the judgment is at variance with another judgment that was given in the same matter between the same parties and that is still
valid; or

at the time the action was brought in the foreign court, a suit in the same matter and between the same parties was pending before
a court or tribunal in Israel.

As a foreign private issuer whose shares are listed on the NASDAQ Global Select Market, we may follow certain home country
corporate governance practices instead of certain NASDAQ requirements. We do not comply with NASDAQ requirements regarding
the director nominations process and regularly scheduled meetings of independent directors at which only independent directors are
present, and instead, we follow Israeli law and practice.
As a foreign private issuer whose shares are listed on the NASDAQ Global Select Market, we are permitted to follow certain home
country corporate governance practices instead of certain requirements of the NASDAQ Marketplace Rules.
We do not, nor are we required to, comply with NASDAQ requirements regarding the director nominations process, which require
that director nominees be selected/determined, or recommended for the board of directors selection/determination, either by a majority of the
independent directors or a committee comprised solely of independent directors. Instead, we follow Israeli law and practice in accordance
with which our directors are recommended by our board of directors for election by our shareholders and our board of directors. In addition,
our independent directors do not have regularly scheduled meetings at which only independent directors are present, as such meetings are not
required by Israeli law.
As a foreign private issuer listed on the NASDAQ Global Select Market, we may also follow home country practice with regard to,
among other things, composition of the board of directors and quorum at shareholders' meetings. In addition, we may follow our home
country law, instead of the NASDAQ Marketplace Rules, which require that we obtain shareholder approval for certain dilutive events, such
as for the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the
company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain
acquisitions of the stock or assets of another company. A foreign private issuer that elects to follow a home country practice instead of
NASDAQ requirements, must submit to NASDAQ in advance a written statement from an independent counsel in such issuer's home country
certifying that the issuer's practices are not prohibited by the home country's laws. In addition, a foreign private issuer must disclose in its
annual reports filed with the Securities and Exchange Commission or on its website each such requirement that it does not follow and describe
the home country practice followed by the issuer instead of any such requirement. Accordingly, our shareholders may not be afforded the
same protection as provided under NASDAQ Marketplace Rules.
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ITEM 4.

INFORMATION ON THE COMPANY

A. History and development of the company


We were incorporated in Israel in August 1981. We are registered with the Israeli registrar of companies and our registration number
is 51-089629-3. Our corporate name is RRsat Global Communications Network Ltd.
Our principal executive offices are located at Re'em, D.N. Shikmim 79813, Israel, and our telephone number is
+972-8-861-0000. Our website address is www.rrsat.com. Our website address is included in this annual report as an inactive textual
reference only, and the information on, or accessible through, our website is not part of this Annual Report.
Our agent for service of process in the United States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware
19711, tel: 302-738-6680.
See Items 5 and 18 of this Annual Report for a description of our current principal capital expenditures and our principal capital
expenditures during the last three fiscal years. We have not made any significant divestitures during the same time period.
B. Business overview
Overview
We provide global, comprehensive, content management and distribution services to the rapidly expanding television and radio
broadcasting industries. Through our proprietary "RRsat Global Network," composed of satellite and terrestrial fiber optic transmission
capacity and the public Internet, we are able to offer high-quality and flexible global distribution services for content providers. Our content
distribution services involve the worldwide transmission of video and audio broadcasts over our state-of-the-art RRsat Global Network
infrastructure. Our content management services involve the digital archiving and sophisticated compilation of a customer's programming and
advertising content into one or more broadcast channels, with the ability to customize broadcast channels by target audience. We then provide
automated transmission services for these channels in accordance with our customer's broadcast schedules, known as playlists. We
concurrently provide content management and distribution services to more than 545 television and radio channels, covering more than 150
countries. We offer continuous distribution services to channels such as Baby TV, Baby First TV, Fashion TV, MGM, GOD TV, NTD TV,
SARAFAN TV, AON TV, BVN TV, Telemedia Interactv, Kurdsat, Thai Global Network, and Turkish Radio and Television, and occasional
and news distribution services to channels such as Fox News, Israeli Channels (2, 5 and 10), Al Jazeera and Russia Today. In 2009, we
derived approximately 42.2% of our revenues from European customers (primarily Western Europeans) and approximately 22.4% of our
revenues from North American customers.
As part of the acquisition of the Bezeq satellite business in 2008, we also acquired a business that provides mobile satellite services,
or MSS, over the Inmarsat satellite network. Through this network, we provide global telephony, fax, data, Internet and other value added
services to end users and ISPs (Inmarsat Service Providers) who use designated Inmarsat terminals. This service is aimed at shipping,
aviation, construction and oil companies, humanitarian aid organizations, governmental agencies and other end customers that require
telephony and Internet services in remote areas of the world that lack sufficient telecommunications infrastructure. We currently provide MSS
to more than 160 end customers, either directly or through two ISPs.
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The global content management and distribution services market is rapidly growing. Technological developments have prompted a
rapid acceleration in the pace of introduction of new broadcasters and have increasingly led broadcasters to target a global
audience. According to Euroconsult, a leading industry consulting and analyst firm, the number of satellite television channels worldwide
grew from approximately 1,000 in 1995 to more than 13,000 in 2005. We believe that the trend towards global distribution and the need to
accommodate the rapid and reliable transmission of the vast amounts of information underlying the growth in traffic and content call for a
network infrastructure that integrates both satellite-based and terrestrial fiber optic capacity. Teleports, which allow for such integration, have
therefore emerged as the primary solution for the broadcasting community. According to a 2007 report by the World Teleport Association, in
2007 the commercial teleport sector generated revenues of approximately $15 billion per year, of which we believe a significant portion was
attributable to video content distribution, and was a critical component of the global satellite communications industry, producing
approximately 24% of world satellite services revenue. According to the World Teleport Association, in addition to the commercial teleports,
broadcasters with in-house teleports may distribute their content independently using approximately 57% of the teleport dishes around the
globe.
Satellite transmission is currently the preferred method of point-to-multipoint global distribution, and teleports are the ground-based
side of a satellite transmission network. The unique geographical locations of our principal teleports, Re'em teleport, and the Emek Ha'ela
teleport, provides us direct access (via a single connection) to satellites that can transmit directly to North America, South America, Europe,
Asia, Africa and Australia, which affords us the capability to receive transmissions from and transmit to all the major population centers in
both the Western and Eastern hemispheres from a single location. In addition to our principal teleports, we operate three auxiliary teleports
elsewhere in Israel. We also operate the Hawley Teleport in Pennsylvania.
We also utilize hosted teleports (teleports at which the connectivity and transmission capabilities, and in some cases the equipment
and transmission capacity, are provided by a third party pursuant to a service agreement) in the United States, Spain, Hong Kong, Serbia,
Australia, Argentina, Hungary, Italy, Russia, Germany, the Philippines, Slovenia, Taiwan, Belgium and the United Kingdom. These teleports
provide continuous and occasional uplink, downlink and turnaround transmission services. Uplink services consist of the transmission of a
broadcast from a teleport to a satellite, downlink services consist of the reception of a broadcast that is transmitted from a satellite to a
teleport, and turnaround consists of downlinking a satellite signal and instantaneously uplinking it again, either to transmit a signal beyond the
range of a single satellite or to change the signal from one transmission bandwidth to another. We transmit to 47 satellites and receive
transmissions from 68 satellites that cover every significant population center. Our RRsat Global Network delivers our customers' content to
five different end markets: to cable operators and satellite operators, to Internet Protocol Television (IPTV) operators, to the Direct to Home
market and to the public Internet. In order to offer a comprehensive solution, our global content distribution network integrates our teleports,
our leased satellite transmission capacity, our points of presence (POPs), our leased terrestrial fiber optic transmission capacity and the public
Internet capacity. We maintain hosted terrestrial points of presence (POPs) in four continents, with our leased terrestrial fiber optic
transmission network linking our teleports to our points of presence (POPs) in the United States (New Jersey, New York, Washington DC,
Pennsylvania and California), the United Kingdom, Russia, Israel, Italy, Australia and Hungary. We also procure public Internet capacity,
which we use primarily for monitoring the quality of our transmissions worldwide, but also as a distribution tool for some of our customers
who transmit Internet TV broadcasts and for customers who are IPTV operators.
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In addition to a comprehensive range of content distribution services, we provide comprehensive content management services for
broadcast video and audio. These services include production and playout services and satellite newsgathering services (SNG). As part of our
playout services we receive our customers' content in a variety of media and load the content onto high-capacity servers and our digital
archive, which store tens of thousands of hours of broadcast video. Our automated playout facility offers a variety of value-added services,
such as the ability to compile a customer's discrete programming and advertising content into a complete broadcast channel. We also compile
a customer's content into multiple broadcast channels, allowing the content to be aired at different times or with different commercials in
different geographic markets. We then provide automated transmission services for these channels in accordance with our customer's specific
playlists.
We also offer our broadcasting customers various production services on a contractual basis. We provide satellite newsgathering
services (SNG) through our fleet of ten fully-equipped vans for outside broadcasting (live broadcasts made from outside the television studio
by means of portable cameras linked to our vans, which contain the necessary equipment for broadcasting them back to the production
company), in addition to complete electronic news gathering crews and full-service packages. A related service we provide uses flyaway
units, which are freestanding satellite uplinks that can be disassembled and transported in packing cases to the scene of an urgent news story to
transmit full quality video and audio signals from that remote location. We also offer our customers live broadcast studios and editing
facilities in Israel.
Our company offers MSS over the Inmarsat satellite network. The Inmarsat network is comprised of eleven satellites (generations
two, three and four) that cover the entire globe, except for the Polar Regions. These regions are divided to four regions named after the oceans
they cover: Pacific Ocean Region, Indian Ocean Region, Atlantic Ocean Region East and Atlantic Ocean Region West.
Our Emek Ha'ela teleport, known to end users of the Inmarsat system as "Station 711", is capable of providing services to terminals
located within the Indian Ocean Region and the Atlantic Ocean Region East. Services to terminals located in other regions are provided
seamlessly by our company to end customers through the use of third party contract service providers.
Services on the Inmarsat Network are provided by our company pursuant to an authorization granted to us under a Space Segment
Access Service Agreement (SSAA) and a Network Services Distribution Agreement (NSDA), which we signed with Inmarsat Global Ltd. in
March 2009. These agreements set forth the rules and procedures for providing services on the Inmarsat network as well as conditions of use
of Inmarsat's intellectual property rights.
In 1996, we were granted the first private license for transmission of television and radio channels via satellite in Israel and started to
provide satellite services for Israeli governmental and commercial channels. In 2000, we began offering global content management and
distribution services, and have grown from distributing 8 channels in 2000 to distributing more than 545 television and radio channels
currently. In 2003, we opened our playout center and today we provide playout services to approximately 110 television channels. In 2008,
our license was expanded to include the right to transmit data signals and provide services over the Inmarsat network.
Our business model has historically resulted in growing revenue streams, strong operating cash flow and strong visibility from
contracted backlog as described below. Based on the rapid growth in the broadcast industry and our increasing penetration of this industry,
our revenues grew from $4.4 million in 2000 to $93.7 million in 2009. In order to minimize our capital expenditures and to maintain
flexibility to reduce unused capacity in our network, we lease RRsat Global Network's transmission capacity instead of owning our own fleet
of satellites or fiber optic network. Our agreements with our customers for content distribution services typically extend over terms of three to
five years, and as of December 31, 2009, we had contracted backlog totaling $167.9 million through 2018, of which $81.9 million are related
to services expected to be delivered in 2010, and $50.1 million are related to services expected to be delivered in 2011. Our contracted
backlog increased from $114 million as of December 31, 2006, to $155.5 million as of December 31, 2007, and to $185.7 million as of
December 31, 2008, and decreased to $167.9 million as of December 31, 2009. The decrease in 2009 resulted from our decision to terminate
customer contracts due to their failure to meet the payment terms of the agreements, primarily due to the unfavorable global economic
conditions in 2008 and 2009.
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This Item 4.B. includes statistical data, market data and other industry data and forecasts, which we obtained from market research,
publicly available information and independent industry publications and reports that we believe to be reliable sources. These industry
publications generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the
accuracy and completeness of the information. We have not independently verified these data nor sought the consent of any organization to
refer to their reports in this Annual Report, and we do not make any representation as to the accuracy of these data.
Our Strengths
We believe that our RRsat Global Network addresses many of the content management and distribution needs of broadcasting, video
distribution and entertainment companies. We also believe that our Station 711 is capable of providing reliable and advanced telephony, data
and value added services for all customers in need of MSS in remote locations. Our business is focused on rapidly growing a loyal customer
base, while maintaining capital and operating efficiency. We believe we benefit from the following strengths:

Optimized Independent Global Network. We believe that the topography and infrastructure neutrality of our proprietary global
network offer unique benefits to our customers. The unique geographical location of our principal teleports in Israel allow us to
structure our network in a star configuration, transmitting via a single satellite connection (or one hop) from these teleports to
virtually anywhere in the world an advantage that is currently impossible to attain from a single location in the United States or
Western Europe. This allows our customers to broadcast to specific regions or globally without the added expense of multiple
satellite transmissions, and allows them to add new regions rapidly and cost effectively. We procure our global network's
transmission capacity from a variety of suppliers, which enables us to select the transponders (the electronic components on satellites
that receive uplink transmissions from earth and retransmit the downlink signal to earth) that are best suited for a specific customer's
needs. Similarly, we offer our customers a combination of distribution media to meet their individual requirements, such as satellite
capacity to certain target audiences and terrestrial fiber optic capacity to other target audiences. Our company has made substantial
investments in state-of-the art technology in anticipation of the fourth generation of the Inmarsat services which will allow for higher
bandwidth data transmissions and allow seamless transition from the current third generation services to the new fourth generation
services. Our company has also entered into agreements with third party service providers in order to allow broader coverage and an
array of value added services.

Breadth of Value-Added Services. We provide our customers with a complete package of content management services in addition
to content distribution services. These content management services, which are suitable for both regional and global broadcasters,
differentiate our service offerings, build customer loyalty and expand the potential for revenue from each customer. Our content
management services include playout services; remote server control to allow customers to control their playlists over the Internet;
encryption services; satellite newsgathering services (SNG); and studio services. We utilize state-of-the-art equipment in all of our
service offerings, allowing us to provide highly sophisticated, cost-effective and flexible value-added services that are tailored to our
customers' specific needs. For example, we can transmit customized versions of the same channel to different regions of the world,
based upon the preferred viewing hours in the various target markets. Customized broadcasts can be augmented with the insertion of
advertising material by market, with commercials targeted to each local audience. This provides our customers with the ability to
increase their profits by generating advertising revenues in multiple target markets during the same time slot. Moreover, our
experienced engineering team and our relationships with technology and service providers permit us to adapt rapidly to our
customers' requirements and to support new technologies, such as Internet protocol television transmissions and video on demand
(VOD).
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Significant Barriers to Entry. We believe that it would be very difficult for a new competitor to replicate our global network and
breadth of value-added services and to attain significant market share without expending significant time and resources. To offer
global content distribution services, it would be necessary to procure a critical mass of transponder capacity on multiple satellite
platforms, which would entail negotiations with multiple suppliers. In addition to incurring the cost of the acquisition of this
capacity, a potential new entrant would need to incur a substantial long-term financial commitment for the capacity, without any
assurance of corresponding revenues (particularly since our business entails a lengthy sales cycle, typically 3 months to a year, before
receipt of a customer commitment). We also benefit from a variety of economies of scale that derive from the number of customers
we have obtained and the volume of their requirements. For example, by leasing an entire transponder, we can efficiently offer our
services while enjoying the benefits of electrical power efficiency and lower costs per customer. In addition, we have established a
global network infrastructure that includes fiber optic connections among four continents, a choice and combination of transmission
media, and a star configuration made possible by the unique geographical location of our principal teleport and our teleport in Emek
Ha'ela, which we acquired in 2008. We also benefit from an established network of sales and marketing agents around the world, and
from an experienced engineering team that rapidly incorporates new technologies into our network.

Stable and Predictable Business Model. Multi-year contracts represent the majority of our revenues. Most of our customers,
whether they use our global network for content distribution services or content management services, have entered into long-term
contracts with us as of December 31, 2009 we had a contracted backlog totaling $167.9 million through 2018, of which $81.9
million are related to services expected to be delivered in 2010, and $50.1 million are related to services expected to be delivered in
2011. We also benefit from our existing customers' dedication to our transmission frequencies and in some cases to our transmission
encryption, both of which are unique to our network and would involve high costs in switching to other service providers. Finally,
we believe that our strong customer orientation and our commitment to providing personalized, responsive and quality service are
important factors in our high level of customer satisfaction.

Low Cost Structure. We utilize leased satellite and terrestrial fiber optic transmission capacity. Our approach of leasing capacity
rather than owning this infrastructure minimizes capital expenditures and potential underutilization of assets, and facilitates our
matching of operating expenses with revenues. Consequently, our network can be expanded substantially without our having to incur
significant capital expenditures. Because of our network design, we have incurred relatively minimal indebtedness in growing our
business. This approach also minimizes the risks associated with satellite ownership, such as the risks related to satellite launch and
maintenance, and allows us to switch from older satellites to newer satellites without additional significant investment. We enjoy
significant cost benefits by virtue of the fact that we design our own network and equipment configuration, acquire the individual
equipment components from manufacturers, perform the integration of our digital platforms and manage our entire network.
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New services offerings. We provide our customers with a broad array of MSS, including telephony, fax and data transmission
services, as well as value added services, such as email, fleet tracking and electronic billing. Our company has invested in state-ofthe-art technology which is capable of providing a wide array of MSS utilizing the same infrastructure and using automated
management systems. Our MSS technology enables us to reduce the costs of infrastructure and to service a larger number of
customers using a reduced work force. We have built a new concept in the field of MSS, in which our customers receive an end-toend telecommunications solution, which eliminates the need for them to purchase special software to handle their communications
needs at remote locations. Our solution allows our customer to use their existing office software (such as email) at sea or in the field,
as if they were in their offices.

Experienced, Entrepreneurial Management Team. We believe that our senior officers, in the years since our creation, have
demonstrated entrepreneurial orientation, ability to build a global business and deliver strong operational and financial
performance. We further believe that our management team has capitalized on its experience in the global content distribution and
telecommunications industries and on our strengths to create an innovative provider of global content management and distribution
services with a strong business model, and to deliver consistently strong growth in revenues and profitability.

Our Strategy
Our objective is to utilize our core competencies to expand, enhance and provide innovative content management, and distribution
services. We aim to make our RRsat Global Network the independent content management and distribution network of choice for the global
television and radio broadcasting industries, and our Station 711 to be a leading provider of MSS. Our strategy to attain these goals includes
the following principal components:

Focus on broadcasters that seek global content management and distribution services. We target broadcasters that require global
content management and distribution service capabilities, or regional broadcasters that may desire the capability to roll out their
broadcasts globally. These include large global broadcasters as well as significant regional broadcasters that are looking to expand to
global broadcasts. Most of these broadcasters place a high priority on cost-effective, high quality solutions, and do not have
dedicated in-house capabilities for content management and distribution. We have grown from distributing 8 channels in 2000 to
distributing more than 545 television and radio channels currently.

Expand our footprint within the largest broadcasters. As the RRsat Global Network brand continues to gain recognition and the
market increasingly acknowledges the scope and quality of our services, we also seek to provide a broader range of services to the
largest global broadcasters to whom we already provide certain services. We intend to continue to expand the services we provide to
the largest broadcasters as they look for complex global distribution and content management solutions to support the large number
of television channels they produce and broadcast. We believe the large broadcasters are broadcasting a significant portion of the
television channels around the globe, are expanding their distribution of television content to the global market, and are creating
additional local versions of their content for the different local television viewers.

Establish a local presence in key markets. We intend to expand our presence in the United States, Asia and other markets where we
already operate through subcontractors, by establishing or selectively pursuing the acquisition of local teleports and playout centers,
and connecting them to our global network, such as our 2008 acquisition of the Hawley Teleport in Pennsylvania. We believe that
the acquisition of the Hawley Teleport is a significant first step in our strategic plan to build a strong local presence in the North
American region, and further expand the footprint of our RRsat Global Network. We expect to continue to expand in the United
States and subsequently in Asia, although the availability of specific opportunities may alter this sequence. According to
Euroconsult, the North American market is expected to continue to be by far the most significant broadcast market in the near term,
and also to produce a large quantity of content that is suitable for global distribution, while a significant growth is forecast for the
Asia Pacific region, which we believe does not have a well-developed broadcast infrastructure. We also intend to expand our direct
sales and marketing efforts in conjunction with the establishment or acquisition of local teleports and playout centers, first in the
United States and later in Asia, while continuing our strategy elsewhere of working with local marketing and sales agents who are
familiar with their local markets, needs and cultures. We believe that having our own content management and distribution facilities
in these markets will afford us greater control over our operations and allow us to protect proprietary information relating to our
methods of operation, provide direct control over our relationships with our customers, facilitate our sales and marketing efforts,
increase our profit margins and afford us access to customers for whom the proximity of our facilities may be an important factor
(particularly customers who use our content management services, since playout services involve a significant degree of interaction
with our customers).
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Provide an expanded range of innovative, value-added services. Our unique and comprehensive service offerings allow our
customers to utilize us as a one-stop shop for their global content management distribution and MSS needs. We offer sophisticated
value-added services that allow our customers to focus on developing or acquiring content while we cost-effectively handle
distribution and content management for them. We intend to broaden our service offerings and introduce new and innovative valueadded services. We believe that this approach is appealing to customers who need to focus on producing and acquiring content, and
therefore, attracts new customers, generates additional sources of revenue from existing customers and encourages customer loyalty.

Expand and adapt our service offerings to new technologies and services. The television and radio broadcasting industries are
undergoing significant changes that are leading to the introduction of multiple technology standards, with the adoption of high
definition television (HDTV) broadcasts, digital video broadcasting over fiber optic cables, digital video broadcasting via terrestrial
transmitters (DVB-T) and Internet protocol television. We are currently focusing on supporting video on demand (VOD), high
definition television (HDTV) broadcasts, MPEG 4 and Windows Media 9 broadcasting. We intend to invest in appropriate
infrastructure and personnel to allow us to continue to accommodate global content management and distribution utilizing the latest
technologies. This will allow us to continue to provide comprehensive services to our customers, and in some cases we could reduce
our capacity cost per channel. We intend to develop our MSS business by expanding our relationships with other providers in the
supply chain of those services, and invest in appropriate infrastructure to expand the services we can offer our MSS customers.

Expand strategic relationships with satellite fleet operators. We work closely with large satellite fleet operators and intend to
explore further avenues of cooperation. We have entered into strategic agreements with Intelsat, Thaicom (formerly Shin Satellite)
and APT (formerly Loral Skynet and Telesat Canada) for the joint marketing of their capacity and our value-added services. We
believe there are additional opportunities for strategic cooperation with satellite fleet operators in which we provide value-added
services while they provide transmission capacity. For example, in 2007 we entered into a cooperation agreement with Loral Skynet
(which was subsequently assigned to Telesat Canada and to APT), for the joint marketing of a platform designed to offer TV and
Radio channels efficient and reliable means for reaching cable and satellite head-ends throughout Asia and Africa.
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Industry Background
Changes in the technology, regulation and economics of the communications industry over the past three decades have presented
increasingly complex challenges and opportunities. The transmission of voice, data and video content has been dramatically altered by
changes in wireline, wireless and IP technologies. Carriers, satellite operators and other infrastructure providers have each tried to balance the
quality and cost of their respective technologies. Similarly, broadcasters and other content providers have strategically tried to leverage
different technologies and infrastructure to enable the most effective content delivery.
Broadcasting Industry Dynamics
There are a number of current market trends in the broadcasting industry leading to significantly increased need for global satellite
and terrestrial fiber network distribution, including:

Globalization of content. Technological developments, particularly the massive deployment of satellite dishes and the
transition to digital from analog cable, have prompted a rapid acceleration in the introduction of new broadcasters and have
increasingly led broadcasters to target a global audience. Content providers are increasingly offering their programming on
a global scale. Broadcasters who appeal to a niche market, such as speakers of a specific language, are now able to reach
their target audience worldwide. These content providers rely upon networks with the ability to distribute across all
continents in order to achieve global scale.

Expanding channel lineups. In the last decade, numerous new content providers have begun broadcasting. Competition
between networks for audience and revenues and competition between service providers for customers, as well as satellite
providers' offering local channels and localized content, are all catalysts for a larger number of channels becoming
available. According to Euroconsult, the number of satellite television channels grew from approximately 1,000 in 1995 to
more than 13,000 in 2005. In 2003, there were 677 channels in the United States that targeted specific ethnic groups. There
are also special interest broadcasters, such as the Baby Channel, a satellite channel that we distribute, which offers 24-hour a
day commercial-free programming created especially for infants and toddlers under 3 years old. These new channels will
lead to a greater volume of content to be distributed over satellite and terrestrial fiber networks globally.

New broadcasting technology. Increased high definition television (HDTV) adoption and digital simulcast are expected to
lead to even greater increases in the number of channels available. At the same time, the wider adoption of these
technologies will require increased bandwidth, which we believe will amplify the value of infrastructure providers such as
us. The distribution of the new programming for these channels will require the use of combined satellite-terrestrial fiber
optic networks.

Emergence of Internet television. New service providers offering video over the public Internet open the door for new
content providers to enter the industry and new internet protocol television operators (IPTV operators) accommodate the
rapid and reliable transmission of the vast amounts of information underlying the growth in traffic and content created by
Internet television, will require a network such as the RRsat Global Network, which integrates satellite-based and terrestrial
fiber optic capacity.

These developments have been accompanied in the past by strong economic growth and deregulation in many regions, which
stimulated demand from newly-authorized broadcasters, communication operators and direct-to-home service providers. However, in light of
the unfavorable current economic conditions in the United States, Europe and Asia, it is unclear if such demand will continue. If the United
States, European or Asian economies do not improve or weaken further, demand may be reduced significantly.
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Broadcasting/Video Distribution over Satellite and Terrestrial Fiber Networks


Broadcasters, video distribution and other entertainment companies have actively leveraged both satellite and terrestrial fiber optic
networks for a variety of communications and entertainment applications.
Historically, broadcasters, video distribution and other entertainment companies have relied heavily on satellite systems for the bulk
of their distribution needs. A satellite has the advantage of being able to connect multiple points with a single transmission because satellites,
in essence, "blanket" an entire coverage area with their signal, known as "point-to-multipoint" or "footprint" coverage. Satellite remains the
best method for broadcasters to transmit ad hoc events occurring at remote locations. These ad hoc events leverage the ability to use shortterm satellite capacity and transportable uplink ground stations. Recent technological innovations, such as high definition television (HDTV)
programming, require far more satellite capacity to transmit content than standard definition programming, and are expected to grow rapidly
as programmers seek to increase their revenues from audiences where the high-definition format can enhance the content.
The availability of transmission capacity accompanied by the growth in the number of broadcasters has increasingly led content
providers and broadcasters to seek greater flexibility and a broader array of service offerings. For instance, when uplink services were
provided only by monopoly national carriers, broadcasters had little choice but to commit to long-term, fixed transmission plans with few
value-added services. A content provider who wanted to expand the geographic scope of its broadcasts needed to negotiate new terms with
the carrier. Since the deployment of terrestrial fiber optic networks in the late 1990s, broadcasters have selectively turned to fiber-based
delivery as an alternative method of transport for key events and other common broadcasting needs. In certain regional and trans-regional
markets, terrestrial fiber optic networks provide a more cost-effective alternative for certain types of applications, such as "point-to-point"
transmissions, than satellite capacity. Terrestrial fiber optic networks can provide certain benefits for intercontinental delivery of footage from
pre-planned events and for other media activities, such as international video distribution for pre- and post-production.
Teleports and Hybrid Satellite-Terrestrial Fiber Networks
Satellites and terrestrial fiber networks both offer flexible and versatile transmission and networking, and they lend themselves well
to a variety of communications and entertainment applications. Although often viewed as competing technologies, they are frequently used to
complement each other for specific customer solutions.
In order to maximize the benefits from these competing and complementary technologies, hybrid satellite-terrestrial fiber networks
have emerged networks running traffic over both satellite and terrestrial fiber systems which are interconnected via a gateway at a teleport
facility. While teleports are the ground-based side of the global satellite network, they also provide terrestrial fiber networks with access to
satellite transponders. Teleports offer comprehensive solutions by interconnecting via owned or leased terrestrial fiber networks and owned or
leased satellite transponders. Teleports uniquely bridge incompatible systems and protocols and act as the hubs of broadband business-tobusiness networks.
Once providers of basic uplinking and downlinking services, teleports have evolved into infrastructure providers of value-added
complex solutions to the broadcasting community, ranging from television program production and post-production to content hosting and
distribution, from systems integration to network management. According to a 2007 report by the World Teleport Association, in 2007 the
teleport sector generated revenues of approximately $15 billion per year, of which we believe a significant portion was attributable to video
content distribution, and was a critical component of the global satellite communications industry, producing approximately 24% of world
satellite services revenue. According to the World Teleport Association, in addition to the commercial teleports, broadcasters with in-house
teleports may distribute their content independently using approximately 57% of the teleport dishes around the globe.
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The current teleport sector consists of four primary types of service providers, all with different strategies:

In-house broadcasters broadcasters that have internal content distribution and management capabilities, which they continue to
use. Because these in-house operations serve only one customer, mainly for the local markets of the broadcasters, and the customer's
primary focus is producing rather than distributing or managing the content, these operations have limited capabilities. We believe
that dedicated in-house operations represent an expensive solution that is not cost effective and not easily scalable and is limited in
the ability to deliver complex distribution and content management solutions.

Telcos telecommunications companies, some with business units focused on satellite services. Many of these companies are
relatively minor players on a global basis because they concentrate on a specific region, and are tied to their own terrestrial
network. Due to a lack of focus on the satellite and broadcasting sectors, these companies have had difficulty reacting to the dynamic
needs of the industry, although some have carved out specialized business units to focus on satellite services.

Satellite fleet operators (hybrids) satellite carriers that had typically offered only transmission, but which have recently begun to
either acquire or partner with teleports and terrestrial fiber network operators to create a global hybrid network. These carriers are
typically limited to their own satellite fleet, which means that they are limited geographically, are not network neutral, focus on
providing transmission capacity and generally cannot offer content management services, and are reticent to compete with their
customers who provide value-added services.

Independents traditional teleport operators founded by entrepreneurs to exploit the liberalization of satellite services in major
markets. Traditional teleport operators have continued to innovate and prosper by reacting to the changing needs of customers, but
generally do not offer a comprehensive solution via hybrid satellite-terrestrial fiber networks. Many of them are relatively small,
resulting in less than global reach, inability to scale to meet customer needs, only limited savings for their customers, and a lack of
resources to invest in supporting emerging technologies.

The RRsat Solution


We integrate state-of-the-art content management services with global content distribution services to offer our customers
comprehensive and flexible solutions, which allow our customers to broadcast to specific regions or expand to global broadcasts in a costeffective manner. This is accomplished through services utilizing a combination of satellite transmission capacity, terrestrial fiber optic
transmission capacity and the public Internet in a manner that is customized for each customer and its changing needs. We also provide
comprehensive production and playout services for broadcast video and audio, as well as satellite newsgathering services (SNG).
We operate our principal teleports in Israel and the Hawley Teleport in Pennsylvania, and use hosted teleports in the United States,
Spain, Hong Kong, Serbia, Australia, Argentina, Hungary, Italy, Russia, Germany, the Philippines, Slovenia, Taiwan, Belgium and the United
Kingdom, to provide global distribution capabilities. Because of Israel's unique geographic location, our teleports are able to transmit to
satellites whose footprint, or geographic signal coverage, extends over the Americas, Europe, Asia, Australasia and Africa. By contrast,
satellite service operators in the United States cannot broadcast directly from the same location to both the Pacific Rim countries and to
Europe, while satellite service operators in Western Europe cannot broadcast directly to Australasia. Therefore, other service operators need
to transmit using multiple hops, or satellite connections, which entails additional cost due to the need to procure more than one satellite space
segment.
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In addition, we do not own or operate a fleet of satellites or fiber optic network, which greatly reduces our capital expenditures. We
lease capacity from owners of satellite fleets and fiber optic network providers, either on terms that obligate us to pay only for capacity that we
actually use or by making a commitment and reserving blocks of capacity. This results in an efficient expense model that limits our fixed
costs. We attempt to match lease obligations with customer commitments. At the same time, we have the ability to increase our capacity as
required to meet customer needs. Because of our global reach and flexibility, we believe we offer an attractive rollout strategy that provides
comprehensive services to broadcasters who initially wish to broadcast to one region but anticipate possible expansion into other regions.
We make use of our state-of-the-art satellite transmission infrastructure and expertise in this field to offer mobile satellite services, or
MSS. These services serve as an addition to our content management and distribution services and enable us to provide additional services
based on our satellite transmission capabilities.
Content Distribution: Uplink, Downlink and Turnaround Services
We are an innovative provider of comprehensive transmission services to the global broadcasting industry. We operate teleports that
we own and obtain additional teleport services under subcontract, to provide uplink, downlink and turnaround services including encryption,
encoding, time delay and localization on both a continuous and occasional basis. We transmit to 47 satellites and receive transmissions from
68 satellites, which allow our customers' content to be distributed to six continents. Broadcasters use our uplink services to transmit
programming to a satellite, from which the programming is distributed either to a cable television headend (a cable television, or CATV,
system control center that receives and processes signals for distribution to subscribers), to a satellite television facility or to Direct to Home
consumers.
Our downlink services involve the reception of a broadcast that is transmitted from a satellite to a teleport. We operate an array of
more than 150 satellite dish antennas to receive broadcasts from Europe, North America, Africa, the Middle East and Asia. These services are
available on a continuous basis, monitoring for special events. We have also entered into service contracts on a long-term basis that involve
dedicated downlinks from a total of 68 satellites, including those operated by Eutelsat, Intelsat, ArabSat, AsiaSat, Spacecom, SES Sirius, SES
Astra, SES World Skies, Thaicom, ABS, Telesat Canada, APT, TrkSat, ISRO, RSCC, HellasSat, HispaSat, PakSat, Nilesat, Protostar and
Gazprom.
Turnaround services involve the receipt and immediate re-transmission of broadcasts (for instance, receipt via a downlink or
terrestrial fiber optic cables, and re-transmission via an uplink). This includes channel distribution and backhaul services (services through
which our RRsat Global Network transmits a live feed from a remote location to a broadcaster's central editing and broadcasting facilities),
sports feeds, and other continuous and occasional feeds.
We provide continuous year-round global distribution services via satellites or terrestrial fiber optic networks on a full-time basis to
more than 545 television and radio channels. Moreover, we provide high-quality, flexible, cost-effective and reliable video broadcast on an
occasional basis, with turnaround between any two continents. The satellite capacity portion of these services can be provided by the
customer, or we can book the segment for the customer.
Our teleports in Israel and the United States have more than 175 satellite dish antennas, ranging from 1.2 meters in diameter to 32.0
meters. We have our technical staff on duty 24 hours a day, 7 days a week, 365 days a year, and provide multiple power supplies, including
primary and back-up generators, uninterruptible power supply, independent air conditioning back-up systems, and automatic fire detection and
extinguishing systems.
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Our satellite services provide transmission over C-band (these frequencies, which have traditionally been used for video
broadcasting, are less susceptible to terrestrial and atmospheric interference but require large antennas), Ku-band (these frequencies have
shorter wavelengths and require more powerful transponders but use smaller dishes for reception) and Ka-band satellite transmissions (these
frequencies have very short wavelengths and use much smaller dishes for reception, but offer large bandwidth). Our uplink services cover
every significant population center. This allows us to offer comprehensive digital direct to home content management and distribution
services to North America, Europe, the Middle East, Asia and Australia.
In addition to offering services that are based on satellite transmission, we offer our customers services involving terrestrial fiber
connectivity to and from a variety of international and domestic news services studios in Israel. Our fiber network extends to four continents,
which allows our customers to choose a transmission medium or combination of media that best serves their individual needs in the most costeffective manner. We provide Internet protocol television (IPTV, where a digital television service is delivered to subscribing consumers
using the Internet Protocol over a broadband connection), DVB-S and DVB-S2 (the first and second generation European standards for digital
video broadcastingsatellite) transmission capabilities. We also have the capability to support digital video broadcasting via terrestrial
transmitters (DVB-T) when our customers introduce the use of this standard.
Content Distribution: Internet
We also offer our customers the ability to distribute their services over the public internet network, either via a dedicated IP address
or over RRsat's Global Internet TV platform, an innovative service that enables customers to distribute their services on a platform that
utilized peer-to-peer technology and that brings to end customers the look and feel of the traditional cable or satellite platforms, all through the
public Internet and on a world-wide basis.
Master Control Room/Control Satellite Center.
We continuously monitor and control all signals going out and all signals received from satellites through our control rooms, which
are manned 24 hours a day, 7 days a week.
Content Management: Production and Playout Services
We operate an automated, high-capacity facility for content management services. Our services enable our customers to easily
expand the number of channels they broadcast. We offer our customers flexible packages, which we deliver with a high degree of redundancy
and availability. Our automated production and playout facilities offer a variety of value-added services:
Production Services:
Satellite News Gathering. We supplement the fixed uplink services we provide to customers with mobile and transportable uplink
systems that operate throughout Israel, the territories administered by the Palestinian Authority and elsewhere in the Middle East. Our mobile
satellite broadcasting vans are equipped with analog, digital and high definition capabilities, with their own generators and uninterruptible
power supply systems for high reliability.
Flyaway Systems. We also maintain a full array of transportable flyaway systems, which are freestanding satellite uplink systems
that can be disassembled and transported in packing cases to the scene of an urgent news story (these have been used primarily in Africa and
in remote regions of Europe). Unlike satellite phone links, the flyaway systems provide full quality video and audio signals.
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Electronic News Gathering Crews and Full-Service Packages. For the customers who use our satellite newsgathering systems and
the portable cameras linked to our satellite newsgathering vans, we provide all of the equipment and other crew members needed for external
news gathering cameras, camera operators, audio kits, audio engineers, lighting kits and an audio mixer. Customers who use our external
newsgathering services only need to provide their own reporters. These production services supplement our customers' on-the-ground
broadcasting capabilities.
Studio Facilities. We offer a comprehensive range of studio services for broadcast video. We maintain terrestrial fiber optic
connections on a full-time basis to various studios in Israel and the region, and we can obtain these studios for our customers' use when
needed. We operate a studio facility in Jerusalem, which is enables our customers to broadcast news reports against various familiar
Jerusalem backgrounds.
Edit Suites. We also offer our customers extensive editing facilities in Israel to support their broadcasts, which provide them with all
the equipment necessary for editing their programs, advertisements and promos.
Playout Services:
Digital Storage and Archive. We generally receive content directly from broadcasters on digital media (tapes or CDs), by satellite
transmission, over leased terrestrial fiber optic telecommunications lines, over a broadband Internet connection, or through SmartJog, a global
distribution and file transfer platform for content delivery. In some cases the content is received from our fleet of mobile satellite
newsgathering units. Content that arrives on tapes or CDs is loaded onto our high-capacity servers and our digital archive, which store tens of
thousands of hours of broadcast video.
Play-out and Play-lists. We compile a customer's discrete programming and advertising content into a complete broadcast
channel. We also compile a customer's content into multiple broadcast channels, allowing the content to be aired at different times or with
different commercials in different geographic markets. These broadcast variations can be augmented with the insertion of advertisements by
market, with advertisements geared to each local audience. We then provide automated transmission services for these channels in accordance
with our customer's specific playlists.
Audio Dubbing. We offer our customers the possibility to transmit the same program in different languages, by providing them with
multi audio channels together with their video channel. This allows our customers to use the same transmission in multiple target markets.
Subtitling. We offer our customers the possibility to provide their audiences with subtitles in a variety of languages. This also allows
our customers to enhance their services while using the same transmission in multiple target markets.
Time Delay. We offer our customers a time delay service for their transmitted channels, which enables the content to be aired at
different times in different geographic markets.
Standard Conversion. We provide our customers with fully-managed, multi-channel devices for tape playout, compatible with all
broadcast formats (NTSC, PAL and SECAM). Our services include conversion from one format to another, depending on the target markets
to which our customers wish to broadcast.
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Encryption/Encoding. For customers for whom investing in their own encryption system would not be economical, we provide inhouse encryption and encoding capabilities, based upon technology that we license from third parties.
Character Generator and SMS Insertions. This service permits our customers to insert various market-specific captions during a
program, including advertisements and announcements received from viewers by SMS phone messages, thereby allowing our customers to
generate additional revenues from advertisements and SMS charges.
Network Supervision. We offer remote monitoring and control services, mostly through the public Internet, which allow our
customers to supervise and alter the broadcasts that are transmitted from our facilities, remotely from their own facilities.
Mobile Satellite Services Business:
We provide our customers with a broad array of MSS, including telephony, fax and data transmission services, including value added
services, such as email, fleet tracking and electronic billing. 711 is our brand name for the MSS segment.
Our company has invested in state-of-the-art technology which is capable of providing a wide array of MSS utilizing the same
infrastructure and using automated management systems, which reduces costs of infrastructure and enables us to service a larger number of
customers using a reduced work force.
We have built a new concept in the field of MSS, in which our customers receive an end-to-end telecommunications solution that
eliminates the need to use specifically designated software to handle their communications needs. We believe this reduces costs for the
customers. Our solution, allows our customers to use their existing office software (such as email) at sea or in the field, as if they were in their
office.
This service is aimed at shipping, aviation, construction and oil companies, humanitarian aid organizations, governmental agencies
and other end customers that require telephony and Internet services in remote areas of the world that lack sufficient telecommunications
infrastructure.
Following is a list of the main services our MSS business currently provides:
Inmarsat-B. The first digital services offered by Inmarsat. The high speed data (HSD) connection is full-duplex and ideal for a wide
range of applications, including compressed real-time video, store-and-forward high resolution video, broadcast quality audio, multiplex voice
channels, and wide area network (WAN) bridging. Inmarsat-B Duplex High Speed Data (DHSD) (56/64 kbps) is ideal for high volume data
communication users such as journalists, humanitarian organizations, and others who need to transmit large amounts of data. Inmarsat-B
service were approved by the International Maritime Organization (IMO) for its Global Safety and Distress System (GMDSS).
Inmarsat C/mini-C. Inmarsat C offers messaging, fleet management, Supervisory Control & Data Acquisition (SCADA) and
Homeland Security & Maritime Safety Solutions that make it possible to perform a broad range of data applications. Using a small,
inexpensive satellite terminal, users can send and receive data files and reports at up to 32 kbps. Inmarsat C is a two-way packet data service
which operates via lightweight, low-cost terminals, small enough to be fitted to any vessel. Approved for use under the Global Maritime
Distress and Safety System (GMDSS), it provides seven of the key GMDSS functions. Inmarsat C is ideal for distributing and collecting
information from fleets of commercial vessels. It also meets the requirements for Ship Security Alert Systems (SSAS).
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Inmarsat Mini-M. 711's Inmarsat Mini-M service provides voice, fax, and data transmissions using a portable note-book sized
terminal weighing less than 6 lbs (2.6 kg). Mini-M allows users to go beyond cellular, GSM and other wireless boundaries with seamless
digital service and global coverage. The service enables voice (4.8 kbps), fax (2.4 kbps Group 3) and Hayes compatible data (2.4
kbps). Applications include e-mail and optional secure voice communications. The Mini-M service is ideal for both mobile land-based
applications and for use at sea.
Fleet 33/55/77. Inmarsat's Fleet services allow voice, fax and data communications for both ocean going and coastal vessels,
delivered via a range of antenna sizes to fit different types of vessels. The Fleet services allow vessels to stay online at any time while paying
only for data sent or received. Fleet 33 allows up to 9.6 kbps of bandwidth, Fleet 55 allows up to 64 kbps of bandwidth and Fleet 77 allows up
to 128 kbps of bandwidth. Fleet 33 utilizes the smallest antennas and is suited for small size vessels while the Fleet 77 utilizes the largest
antennas and is suited for large vessels.
BGAN. Inmarsat's Broadband Global Area Connection provides both voice and broadband data simultaneously through a single,
highly compact device, on a global basis. Through this land solution, customers can access emails, the Internet or Intranet, via a secure VPN
connection, at speeds of up to 492 kbps over a shared channel or stream IP on demand at rates in excess of 384 kbps. Customers can also
make phone calls at the same time while accessing their data applications, as well as send text messages using their laptops to any mobile
phone.
FleetBroadband. Inmarsat's FleetBroadband is the first maritime communications service to provide cost-effective broadband data
and voice, simultaneously, through a compact antenna on a global basis. Through this maritime solution, customers can access emails, the
Internet or Intranet, via a secure VPN connection, at speeds of up to 432kbps over a shared channel or stream IP on demand at rates of up to
256 kbps. Customers can also make phone calls at the same time while accessing their data applications, as well as send text messages using
the terminals. Currently, there are three terminal models that support this type of service FBB150, FBB250 and FBB500 which differ in
antenna size and amount of bandwidth.
MSS Value Added Services:
VoIP Shore to Ship. Our company provides a unique Voice-over-IP solution that allows our customers to make low cost telephone
calls from their home, office or mobile phone to their vessels. Our solution is based on state-of-the-art VoIP technology, and offers the
flexibility of customization to suit each customer's individual needs.
Email. Our company provides advanced Email services over the Inmarsat network that include personal/corporate sophisticated
email software, enabling high rate compression, filters by message size or sender address, downloading from braking point and Email to SMS
and Email to Fax and vice-versa.
Network
Our RRsat Global Network is composed of various leased satellite platforms, terrestrial fiber optic capacity and the use of the public
Internet. Our principal teleport in Re'em and the teleports in Emek Ha'ela and Pennsylvania we acquired in 2008, and the teleport services that
we receive under subcontract allow us to provide uplink and turnaround services to 47 satellites and downlink services from 68 satellites.
Some of these satellites provide coverage for more than one region, and in some cases we lease multiple transponders on a satellite to achieve
coverage of multiple regions.
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The following table lists the satellites on which we lease capacity by their primary regional coverage:
RRsat Global Network -- Satellite Component

Europe

North America

Asia

Middle East

Africa

Amos-2
Amos-3
AtlanticBird-1
Eurobird-9A
Eutelsat Sesat 1
Eutelsat-W2A
Eutelsat-W6
Eutelsat-W7
Hispasat-1D
Hotbird-6
Hotbird-8
Hotbird-9
Intelsat 10-02
Telstar-12
Turksat-1C

AMC-4
Galaxy-19
Intelsat-805
Galaxy-23
Hispasat-1C

ABS-1
Agila 2
Asiasat-5
Insat-2E (APR-1)
Intelsat-10
Telstar-10
Thaicom-5

Amos-2
Amos-3
Asiasat-5
AtlanticBird-1
AtlanticBird-4A
Eurobird-2
Eurobird-9A
Eutelsat Sesat 1
Eutelsat-W6
Eutelsat-W7
Express AM44
Hispasat-1D
Hotbird-6
Hotbird-8
Hotbird-9
Insat-2E (APR-1)
Intelsat-10
Intelsat 10-02
Thaicom-5
Telstar-12
Turksat-1C
Yamal-201

AtlanticBird-1
Intelsat-10
Intelsat 10-02
Intelsat-802
Telstar-11N
Turksat-1C
Thaicom-5

South
America
Galaxy-23
Hispasat-1C
Intelsat-805

Australia
Asiasat-5
Insat-2E(APR-1)
Intelsat-10
NSS-6
Optus-D2
Thaicom-5

A significant portion of the satellite capacity we use (approximately 38.5% as of December 31, 2009) is leased through long term
lease agreements with three satellite operators, which provide coverage primarily for Europe and North America.
Our teleports in Israel and the United States have more than 175 satellite dish antennas, ranging from 1.2 meters in diameter to 32.0
meters in diameter. In addition to these teleports, we operate three auxiliary teleports elsewhere in Israel (Herzliya, Jerusalem and Tel-Aviv)
and utilize hosted teleports in the United States, Spain, Hong Kong, Serbia, Australia, Argentina, Hungary, Italy, Russia, Germany, the
Philippines, Slovenia, Taiwan, Belgium and the United Kingdom.
We maintain hosted terrestrial points of presence (POPs) in four continents, with our leased terrestrial fiber optic transmission
network linking our teleports to our points of presence (POPs) in the United States (New Jersey, New York, Washington DC, Pennsylvania
and California), the United Kingdom, Russia, Israel, Italy, Australia and Hungary.
Our network is an all Internet Protocol network, regardless of whether we are transmitting via satellite or over terrestrial fiber optics
or the Internet. Our uplink, downlink and turnaround services have been ISO 9001:2000 certified since 2002, which indicates that an
independent firm certified that we have complied with the quality of service standards developed by the International Organization for
Standardization.
Our network services costs amounted to $30.5 million in 2007, $42.3 million in 2008 and $50.5 million in 2009. As of December 31,
2009, our contractual commitments for the next five years under our operating network leases amounted to $109.7 million.
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Customers
Content providers who use our RRsat Global Network include commercial broadcasters, government-sponsored broadcasters and
religious broadcasters. In 2009, we had more than 460 continuous and occasional customers for distribution and content management services
and more than 160 customers for MSS. Our top ten customers represented 39.5%, 31.6% and 27.7% of our revenues in 2007, 2008 and 2009,
respectively, and no single customer accounted for more than 6.6%, 5.0% and 4.3% of our revenues during each of these periods,
respectively. For some broadcasters, we provide transmission services for their content 24 hours a day, 7 days a week on a continuous basis,
while for others we provide transmission services for a portion of their content or we transmit their content on an occasional basis.
The following table alphabetically lists the top channels to which we provide services in each category (based on the amount of
revenues we generate from servicing each channel; in cases where these channels acquire our services through intermediaries, the ranking is
based on the amounts that we receive per channel, rather than the amounts that may be paid by the channels to the intermediaries):
Representative Channels
Channels for which we provide Continuous Services
Commercial Channels
Asianet UK TV
Baby First TV
Baby TV
Conto TV
Fashion TV
MGM
IPN TV
NTD TV
Sarafan TV
Telemedia InteracTV
ITN TV

Governmental Channels
Arirang TV (South Korea)
BVN TV (The Netherlands)
Channel One Russia
ICTIMAI (Azerbaijan)
Kurdsat
MRTV (Myanmar)
Thai Global Network
Turkish Radio and Television
Sverige TV (Sweden)
VTV-4 (Vietnam)

Religious Channels
3 Angels Broadcasting
Apostolic Oneness Network
CGN
Channel New Life
God's Learning Channel
GOD TV
Hope TV
MTA Channel
Supreme Master
The Word Network

Channels for which we


provide Occasional Services
and News Channels
Al Jazeera Channel
Fox News
Israel Channels (2, 5 and 10)
Russia Today

Contracted Backlog and Agreements


Our agreements with our customers generally extend over terms of three to five years, with an automatic renewal option for an
additional two to five years. As of December 31, 2009, we had contracted backlog totaling $167.9 million through 2018, of which $81.9
million are related to services expected to be delivered in 2010, and $50.1 million are related to services expected to be delivered in
2011. Contracted backlog represents the actual dollar amount (without discounting to present value) of the expected future revenues to be
received from customers under all long-term contractual agreements. As of December 31, 2009 the average remaining duration of our
contracted backlog, based on a weighted average basis, was approximately 2.62 years. For additional information regarding our contracted
backlog, see Item 5.A. "Operating and Financial Review and Prospects Operating Results Overview."
As of December 31, 2009 we had 310 major long-term service contracts with 185 customers, of which 142 are due for renewal in the
next 12 months. The pricing is typically project based. Most of our contracts with customers are denominated in U.S. dollars, Euros or NIS,
with the currency of the customer contract generally the same as the currency in which we are required to pay for the related satellite
transmission capacity. Approximately 87% of our agreements for content management and distribution services follow a "take or pay"
format, under which the customer is responsible for the payments over the entire term of the agreement even if the customer terminates the
agreement prior to expiration or does not use the services provided for in the contract. Agreements for MSS are based on payment per use and
do not have a minimum commitment.
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Sales and Marketing


Our sales and marketing strategy is to tailor cost-effective solutions to customers' needs based on geographic reach and technical
suitability. We market and sell our content management and distribution services directly to broadcasters. Prospective customers for these
services include those who are already broadcasting through satellite transmission providers, those who are broadcasting through terrestrial
means and wish to initiate satellite transmissions, and potential broadcasters who have not yet begun transmitting through either terrestrial or
satellite means. We strive to present comprehensive solutions that reflect the optimal medium or media (satellite and terrestrial fiber optic
transmission) for the customer's specific requirements.
We market and sell our MSS services either directly to end customers, such as shipping companies and government agencies, or to
resellers who in turn resell our services to their end customers (Inmarsat Service Providers, or ISPs). We strive to offer competitive pricing
and innovative value-added services to attract new customers.
We use a combination of a direct sales force and a network of third party agents and representatives. Our sales force and marketing
team are based in Israel and in the United States, and each sales manager is assigned a geographic region. In addition, certain members of the
marketing and sales team focus on specific needs within the broadcasting industry, such as mobile satellite broadcasting, occasional use and
production services. We also have a dedicated division within our marketing and sales team that focuses on the sale and marketing of our
MSS. We assign a sales representative to maintain the relationship with each customer. The sales representative works together with our
technical department to ensure that we understand the customer's business and needs. They are supplemented by local agents and
representatives, who provide familiarity with the local market and in some cases specialized technical knowledge.
Strategic agreements with satellite fleet operators are an additional avenue by which we market our services. We have entered into
strategic agreements with several satellite fleet operators, pursuant to which we jointly market our services. These agreements generally
provide for the satellite fleet operators to market our value-added playout and production services to their customers, and in return we receive
preferential rates on the related satellite transmission capacity.
For example, we have entered into strategic arrangements with Intelsat, Thaicom (formerly Shin Satellite) and APT:

Intelsat (Joint Marketing) We have launched a Pan-Asian distribution platform using the Insat-2E (Intelsat APR-1)
satellite. This platform enables broadcasters and programmers to target cable headends across most of Asia, including India and
Australia, using just one satellite. We agreed with Intelsat to jointly market content management and distribution services based
on satellite capacity we lease from Intelsat. The agreement provides that we will make certain payments to Intelsat for the leased
capacity and Intelsat will pay us to the extent it sells any of the services. This agreement extends through April 2011.

Thaicom (Cooperation) We have launched a distribution platform using the Thaicom 5 satellite which provides coverage of
Asia. Pursuant to the agreement, which extends for 5 years until August 2013, we agreed to make certain payments to Thaicom
for the leased capacity and Thaicom agreed to pay us to the extent it sells any of our services. The agreement contains minimum
commitments regarding capacity lease that we agreed to maintain during the term of the agreement.
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APT (Cooperation) We have launched a distribution platform using the Telstar-10 satellite. This platform enables broadcasters
and programmers to target cable headends across most of Africa and Asia, including India and Australia, using one satellite. We
agreed with APT to jointly market content management and distribution services in conjunction with the satellite capacity we
lease from APT. The agreement provides that we make certain payments to APT for the leased capacity and APT pays us to the
extent it sells any of our services. This agreement extends through June 2010 and provides for automatic renewal periods of one
year each, unless terminated by either party.

We also market our services by means of our corporate website, advertisements in trade journals and on third party websites related
to the satellite industry, and participation in industry tradeshows.
We are active in industry organizations, and we are a member of the World Teleport Association and the Institute of Electrical and
Electronics Engineers (IEEE).
Competition
Content Distribution and Management Services
We primarily compete in the market for content distribution services over satellite and terrestrial fiber networks. This content
distribution services market consists of four types of service providers: in-house distribution departments of broadcasters, telecommunications
companies, satellite fleet operators (hybrids) and independent teleport operators. Each of these service providers allows for the distribution of
content and some also provide certain content management services. We do not offer pure transmission capacity or connectivity to the general
public and do not compete with telecommunications companies and satellite fleet operators for this business. As a provider of global,
comprehensive, content management and distribution services, we believe that our most significant and direct competitor are GlobeCast,
which is a subsidiary of France Telecom, and Arqiva Limited, a subsidiary of Macquarie UK Broadcast Holdings Ltd.
Most of our customers are broadcasters. A number of broadcasters, such as CNN, Fox and Sky, have internal content management
and distribution capabilities, but may seek our services for complex distribution services or for occasional services. However, we believe that
most broadcasters who do not currently possess these capabilities will not establish their own content management and distribution systems
since dedicated in-house operations represent an expensive solution that is not cost effective and not easily scalable.
We also compete indirectly with telecommunications companies such as Telespazio (an Italian telecommunications provider), Vyvx
(owned by Level 3) and Telefnica S.A. (the incumbent Spanish telecommunications provider) in Europe, and REACH and Singapore
Telecommunications in Asia, to the extent that they offer content management and distribution services. We believe that our competition with
these companies is limited since they are tied to their own terrestrial network and mainly provide regional broadcasting while we focus on the
provision of global content management and distribution service.
Satellite carriers that had typically offered only transmission have recently begun to either acquire or partner with teleports and
terrestrial fiber network operators to create a global hybrid network. Since we offer our customers a global network, then to the extent they
expect their activities to include value added services, these ventures pose direct competition to our business. Nevertheless, these carriers
usually do not provide the comprehensive range of value-added services that we offer, mainly since they focus on providing transmission
capacity and are reticent to compete with their customers who provide value added services. In addition, these carriers are typically limited to
their own satellite fleet, which means that they are limited geographically and are not network neutral. The satellite carriers that offer some
value added services with which we compete include Intelsat and SES Americom. In addition to our direct competitors, numerous companies
and governments that operate global or regional fleets of satellites in the United States, Latin America, Europe, the Middle East, Africa and
Asia may recommend individual teleport operators and service providers (who are our competitors in providing value-added services and
service packages) with whom they have relationships. The largest of these fleet operators are Eutelsat, Intelsat and SES.
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In addition, we compete with independent teleport operators that were founded by entrepreneurs to exploit the liberalization of
satellite services in major markets. These operators include companies such as Crawford Communications, Ascent Media, Arqiva and
Teleport Internacional Buenos Aires. The specialized business units that were carved out of large telecommunication companies, such as
GlobeCast, which is a subsidiary of France Telecom, may also be considered as an independent, mainly due to their global network and ability
to innovate and react to the changing needs of customers. In addition, we face competition in providing content management and distribution
services from Satlink Communications Ltd., an Israeli corporation, whose shareholders are GlobeCast, Eurocom (an Israeli
telecommunications group) and Barak Netvision 013 (an Israeli Internet and international telephony service provider). We believe that the
independent teleport operators generally do not offer a comprehensive solution via hybrid satellite-terrestrial fiber networks such as the one
offered by our RRsat Global Network. In addition, with the exception of GlobeCast and Arqiva, many of the independent operators are
relatively small, resulting in less than global reach, inability to scale to meet customer needs, only limited savings for their customers, and a
lack of resources to invest in supporting emerging technologies.
We benefit from the current excess capacity that exists with respect to satellite and terrestrial fiber optic transmission networks. We
lease satellite and terrestrial fiber optic capacity and use this capacity as part of a package together with our other services. The current excess
capacity in satellite and terrestrial fiber optic transmission capacity allows us to lease and use capacity on competitive terms. We would be
adversely affected were the amount of satellite and terrestrial fiber optic excess capacity available for video and audio broadcast to decrease,
since satellite fleet operators and terrestrial fiber optic networks might engage in aggressive price competition and offer our current and
potential customers more attractive prices for capacity than we can offer them. In this case, our current and potential customers may prefer to
obtain capacity directly from our suppliers of capacity rather than procuring a package of services from us.
In certain situations, the global content distribution services provided by one vendor may be indistinguishable in quality from those
provided by another. In these situations, in addition to the quality factor, the largest global broadcasters may be influenced by the size and
reputation of the service provider, while pricing can be the most important competitive factor for other broadcasters. In certain markets, the
purchase of satellite transmission capacity may be influenced by factors in addition to price. Such competitive factors include: a satellite's
technical capabilities, power, capacity, permitted frequencies of operation, broadcast coverage, health, estimated end of life and availability of
additional capacity, the provision of ancillary services by the operator, and the other users of the satellite. In addition, purchase decisions may
be based upon the satellite operator's country of origin and ownership. The low marginal cost of providing transmission capacity once a
satellite is operating could result in adverse pricing pressure and reductions in anticipated profits. Because customer contracts are generally
for terms of three to five years, there is limited movement of existing customers from one service provider to another.
Global MSS
The global MSS industry is highly competitive. We face competition from other Land Earth Station Operators (LESOs) and Inmarsat
Distribution Partners (DPs) as well as from distributors of a number of competing communications networks and technologies. We expect to
continue to face significant competition in the future.
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The major LESOs and DPs in the Inmarsat services market, which together hold the majority of the market share for these services,
are Vizada Satellite Communications, which was formed by the merger of Telenor Satellite Services and France Telecom Mobile Satellite
Communications, and Stratos Global Corporation, formerly an independent Inmarsat services provider which was recently purchased by
Inmarsat and became a wholly owned operating division of Inmarsat. Other second tier LESOs and DPs include Singtel, MVS, OTE,
Telecom Italia, KDDI and KT.
We also face competition from competing networks and technologies, especially Iridium and Maritime VSAT.
Iridium provides data and voice services at rates of up to 9.6 kbps using compression software. The terminals used to access Iridium
services are generally handheld devices that are smaller and less expensive than the terminals used to access Inmarsat's traditional services. In
addition, Iridium's end-user call charges are competitive with, and in some cases cheaper than, the rates offered by us.
We face growing competition in some of our target market segments from communications providers who operate private networks
using VSATs or hybrid systems to target business users. VSATs are fixed, transportable or mobile terminals that access higher bandwidth
services provided over satellite systems operating in the C-band, Ku-band and Ka-band radio frequencies. Communication services provided
by VSATs are primarily targeted at users who have a need for high-volume or high-bandwidth data services, although new entrants into the
sector are offering lower volume and bandwidth products in competition with our MSS. The coverage area of VSAT services is not as
extensive as the coverage area of MSS, but they are growing rapidly to meet demand and are expected to be substantially global within a few
years. Technological innovation in VSAT terminals, together with increased C-band and Ku-band coverage and commoditization, have
increased the competitiveness of VSAT and hybrid systems in some traditional mobile satellite communication services sectors by permitting
smaller, more flexible and cheaper systems.
Regulation
Satellite and fiber optic transmission services are highly regulated industries, both in Israel and internationally. Obtaining and
maintaining the required approvals can involve significant time and expense. If we fail to obtain particular regulatory approvals, this failure
may delay or prevent our ability to provide services to our customers. In addition, the laws and regulations to which we are subject could
change at any time. The countries, territories and institutions that regulate us could adopt new laws, policies or regulations or change their
interpretation of existing laws, policies or regulations at any time. Any of these changes could make it more difficult for us to obtain or
maintain our regulatory approvals or could cause our existing authorizations to be revoked or terminated. If we fail to obtain regulatory
authorizations important to our current business or our business strategy, this failure could result in decreased revenue, increased costs and a
decline in our profitability.
We are also subject to fees associated with the regulatory and licensing requirements discussed above. The countries, territories and
institutions that regulate us could change these fees at any time. Significant increases in the fees to which we are subject in a particular
jurisdiction could negatively impact our plans to provide services in that jurisdiction or our profitability.
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Israeli Regulation
Ministry of Communications
The Israeli Ministry of Communications is responsible for granting licenses for the use of satellite transponders and for the lease of
satellite transmission capacity to our customers, as well as granting us the right to use radio frequencies for the reception, transmission and
turnaround of video, audio and combined signals and data signals, and for the operation of an earth station for the provision of voice and data
telecommunications services over the Inmarsat network. The Israeli Ministry of Communications is also responsible for granting licenses for
the operation, installation, construction and existence of any device for the transmission or reception of signals, signs and other information by
optical or electro-magnetic means in Israel, to the extent not exempted from such requirement. Our current license for the provision of uplink,
downlink and turnaround services is scheduled to expire in July 2013. This license sets the type of customers and the conditions under which
we are authorized to provide uplink, downlink and turnaround services. We have another license for the provision of telemetry, tracking and
control services (TT&C) for specific satellites detailed in the license, which is scheduled to expire in March 31, 2010. We have applied for the
renewal of this license and are awaiting the Ministry of Communications decision. The Ministry of Communications has also granted us a
trade license pursuant to the Wireless Telegraphy Ordinance. This license, mandated by our main operating license, regulates issues of
importing communication equipment to Israel and servicing and trading in equipment, infrastructure and auxiliary equipment in Israel. Our
trade license has expired on February 28, 2010. We have requested its renewal and are waiting to receive the renewed license.
Our licenses from the Israeli Ministry of Communications to operate our teleports provides that, without the consent of the Israeli
Minister of Communications, no means of control of RRsat may be acquired or transferred, directly or indirectly.
In connection with our initial public offering in November 2006, our licenses were amended to provide that our entering into an
underwriting agreement for that offering and sale of shares to the public, listing the shares for trading, and depositing shares with a depositary
was not considered a transfer of means of control. In addition, pursuant to the amendments, transfers of our shares (or other "traded means of
control," that is, means of control which have been listed for trade or offered through a prospectus and are held by the public) that do not result
in the transfer of control of RRsat are permitted without the prior approval of the Ministry of Communications, provided that:

in the event of a transfer or acquisition of shares without the consent of the Ministry of Communications, resulting in the
transferee becoming a beneficial holder of 5% or more of our shares or being entitled to a right to appoint a director or the chief
executive officer (or is a director or the chief executive officer), we must notify the Ministry of Communications within 21 days
of learning of such transfer; and

in the event of a transfer or acquisition of shares without the consent of the Ministry of Communications, resulting in the
transferee becoming a beneficial holder of 10% or more of our shares or having significant influence over us (but which does not
result in a transfer of control of RRsat), we must notify the Ministry of Communications within 21 days of learning of such
transfer and request the consent of the Director General of the Ministry of Communications for such transfer.

Should a shareholder, other than our shareholders prior to our initial public offering, become a beneficial holder of 10% or more of
our shares or acquire shares in an amount resulting in such shareholder having significant influence over us without receiving the consent of
the Director General, its holdings will be converted into dormant shares for as long as the Director General's consent is required but not
obtained. The beneficial holder of such dormant shares will have no rights other than the right to receive dividends and other distributions to
shareholders and the right to participate in rights offerings.
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In addition, our licenses also states that means of control of the company, or of an interested shareholder of the company (which
generally would include a holder of 5% of the company's voting power or other means of control), cannot be pledged unless such pledge
agreement includes a condition that prohibits the exercise of the pledge without obtaining the advance written approval of the Minster of
Communication.
In accordance with the provisions of our amended licenses, any shareholder seeking to vote at a general meeting of our shareholders
must notify us prior to the meeting whether or not its beneficial holdings are subject to the consent of the Ministry of Communications in view
of the restrictions on transfer or acquisition of means of control imposed by the license. If the shareholder does not provide such notice, its
instructions shall be invalid and its vote shall not be counted.
As long as our articles of association include the provisions described above and we act in accordance with such provisions, the
breach of these provisions by our shareholders in a manner that could cause their beneficial holdings to be converted into dormant shares will
not serve in and of itself as the basis for the revocation of our licenses. Our articles of association contain the provisions described above.
The amendments to our licenses that provide for the dormant shares mechanism described above do not apply to our shareholders
prior to our initial public offering.
Under Israeli law, the Israeli Prime Minister and the Minister of Communications, at their discretion or at the request of the Minister
of Defense and subject to the approval of the Government of Israel, have the right to determine by order that the use of radio frequencies
required to perform tracking, telemetry, command and monitoring services of satellites, as well as for the downlink of imagery data in Israel,
is a vital service. If such an order is issued, the Prime Minister and the Minister of Communications, subject to approval of the government of
Israel, may impose various requirements and limitations that may directly or indirectly affect us. These requirements and limitations include,
among others, limitations on the identity of our shareholders, requiring that management and control of our company be carried out in Israel,
obligations to provide information, limitations regarding the identity of our officers, limitations regarding our corporate reorganization and
limitations on transfer of control of our company. If such an order is issued with respect to us, any transfer of control in the company requires
prior approval by the Prime Minister and Minister of Communications. In addition, the Israeli Prime Minister and Ministry of
Communications may impose limitations on the transfer of information to certain of our officers and shareholders.
Further, under the Israeli Wireless Telegraph Ordinance, if the Government of Israel determines that the State of Israel is undergoing
a state of emergency, the Minister of Communications can expropriate any device that is involved in the transmission of wireless telegraph
information, visual signs or electromagnetic waves. During such an emergency period, the Minister of Communications can also enact orders
to sell, buy, erect, use or restrict the operation of any such instrument. Any emergency appropriation or regulation of communications
equipment could result in our equipment or frequencies required for us to operate our business being used by the State of Israel, or in our
being forced to share with the State of Israel control of equipment or frequencies required for us to conduct our business. Additional
emergency powers are accorded to the Minister of Communications under the Israeli Communications Act, whereby in a state of emergency
the Minister of Communications may impose various instructions and limitations relating to the provision of our services, including mandating
the provision of services to the Israeli security forces.
To date we have been able to obtain all necessary telecommunications licenses for the conduct of our business, but there can be no
assurance that we will be able to renew or maintain the necessary licenses in the future.
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In connection with our recent acquisition of Bezeq's satellite communications business, we agreed with the Israeli Ministry of
Defense that the Israeli Prime Minister, at the request of the Minister of Defense may issue an order to our company requiring us to provide
certain services to the Israeli Defense Forces. Pursuant to the order, we would be required to amend our articles of association in a manner that
would require us to maintain a certain number of Israeli citizens and residents on our management team and board of directors, which comply
with certain security clearance criteria, and we will be required to comply with certain requirements relating to security and protection of
confidential information. To date, the Israeli Prime Minister has not issued such an order. However, we cannot assure you that such order will
not be issued in the future.
Ministry of Environmental Protection
Pursuant to the Pharmacists (Radioactive Elements and Products) Regulations, 1980, or the Pharmacists Regulations, issued under
the Pharmaceutics Ordinance, the Ministry of Environmental Protection is empowered to grant erection permits and operation permits for our
antennas and other radiation generating equipment. The Ministry of Environmental Protection has adopted the International Radiation
Protection Agency's standard as a basis for the consents it gives for the erection and operation of antennas.
We have received a permit from the Ministry of Environmental Protection with regard to our transmission antennae and other
radiation generating equipment in our principal teleport in Re'em, effective through September 2012. The permit for our Emek Ha'ela teleport
was assigned to us by Bezeq following our acquisition of the teleport and is effective through April 2013. We are in the process of registering
the permit in our name. We have retained the Radiation Safety Division of the Committee for Atomic Energy to perform regular inspections
of our facilities, and to certify that we comply with the guidelines recommended by the International Commission on Non-Ionizing Radiation
Protection.
The Non-Ionizing Radiation Law (5766-2006), enacted on January 1, 2006, defines the various powers of the Ministry of the
Environmental Protection as they relate, among other things, to the grant of permits for antenna sites, and sets standards for permitted levels of
non-ionizing radiation emissions and reporting procedures. Pursuant to this law, which went into effect on January 1, 2007, a request for an
operating permit from the Ministry of Environmental Protection with respect to either new sites or existing sites requires a building permit for
such site(s). In addition, pursuant to the Non-Ionizing Radiation Regulations (5769-2009), which went into effect on January 24, 2009, a
permit holder is required to perform radiation measurements at the end of each permit year, as well as at such times as shall be prescribed by
the Ministry of the Environmental Protection, and report the results to the Ministry of the Environmental Protection. Operation of an antenna
site without a permit from the Ministry of Environmental Protection may result in criminal and civil liability to us or to our officers and
directors.
Local Building and Zoning Permits
The Planning and Building Law requires that we receive a building permit for the construction of most of our antennas. The local
committee or local licensing authority in each local authority is authorized to grant building permits. The local committee examines the
manner in which an application for a building permit conforms to the plans applying to the parcel of land that is the subject of the application,
and the extent to which the applicant meets the requirements set forth in the Planning and Building Law.
The erection and operation of our Re'em and Emek Ha'ela teleport sites requires building permits from local and regional zoning
authorities. The building permit for our Re'em teleport site expired on October 20, 2009. We have applied to extend the permit for an
additional 3 years term and are awaiting the decision of the Regional Building and Zoning Committee. If our request is not granted, we intend
to appeal the decision. In addition, on November 5, 2009, the Regional Building and Zoning Committee sent our Chief Executive Officer a
warning before filing an indictment for allegedly building and placing antennas at our Re'em teleport without a permit. Our Chief Executive
Officer was invited to a hearing before the Regional Building and Zoning Committee to assert his defense to such allegations. The hearing
has not taken place yet. The building permits for our Emek Ha'ela teleport site have no expiration date. There can be no assurance that the
zoning authorities will renew the expired permits, or that the Building and Zoning Committee will not file an indictment for building without a
permit or that we will be able to renew any of our other licenses or permits when they expire, or that we will be able to obtain any new
licenses or permits that may be required for the operation of our business.
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We lease an additional approximately 56,000 square feet pursuant to a lease that was entered into in June 2004 and which expires in
June 2013, following our exercise of an extension option. We currently do not have satellite dishes on this site. If we decide to use this site in
the future for our satellite dish antennas or other services, we will be required to obtain certain permits and licenses from local and regional
zoning authorities.
Other Licenses and Permits
The use, operation and sale of encryption devices such as those incorporated in our transmission systems and services require a
license from the Israeli Ministry of Defense, which we have obtained.
The employment of employees that are required to work on Saturday and Jewish Holidays in Israel requires a special permit from the
Israeli Ministry of Industry, Trade and Labor, which we are in the process of obtaining. We believe that we will be able to obtain the permit.
International Regulation
We are subject to the regulatory regime of each country in which we propose to provide our services. The laws and regulatory
requirements regulating access to satellite systems vary from country to country. Some countries have substantially deregulated satellite
communications, while other countries maintain strict monopoly regimes. The application procedure can be time-consuming and costly, and
the terms of licenses vary for different countries.
Other than the Hawley Teleport in Pennsylvania, the teleports we use in countries other than Israel are owned and operated by third
parties. We believe our customers and these third parties are responsible for obtaining any necessary licenses, approvals or operational
authority for the transmission of data to and from the satellites that we, via our suppliers, use. Failure by our customers or suppliers to obtain
and maintain some or all regulatory licenses, authorizations or approvals could have a material adverse effect on our business.
Although we believe that we, our customers or our suppliers, as the case may be, will be able to obtain all required licenses and
authorizations and comply with applicable laws, treaties and regulations necessary to operate effectively, there can be no assurance that we or
they will be successful in doing so.
In the event that we seek to own and operate teleports in countries other than Israel, we may be required by those countries to obtain
appropriate licenses, approvals, or operational authority to own and operate earth stations and other teleport facilities.
In the United States, the FCC regulates satellite and other radiocommunication services. Entities seeking to operate an earth station
or other radiocommunication facility in the United States must obtain a license from the FCC under Title III of the Communications Act. We
could seek to obtain such a license on either a common carrier or private carrier basis. On May 1, 2008 after receiving the approval of the
FCC, we acquired various wireless and earth station licenses (the "FCC Licenses") associated with the Hawley Teleport and now operate them
on a non-common carrier basis for the provision of video and radio distribution services. As an FCC licensee, we are subject to regulation
primarily by the FCC, which ensures that licensees comply with the Communications Act and related technical, licensing, operational, siting,
and environmental protection regulations. Any state or local zoning, land use, building or similar regulation that materially limits the
transmission or reception by earth stations is preempted by federal law, subject to certain exceptions. We believe that the Hawley Teleport
materially complies with the Communications Act, FCC regulations, and any applicable state or local regulations.
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The FCC Licenses also are subject to renewal upon the expiration of their license terms. The FCC has routinely renewed the FCC
Licenses in the past. The Communications Act, however, provides that licenses may be revoked for cause and applications to renew licenses
may be denied if the FCC concludes the renewal would not serve the public interest. We believe that the FCC Licenses will be renewed in the
ordinary course, but we cannot provide assurances that the FCC will renew the FCC Licenses upon their expiration. Most recently, we
successfully renewed one FCC License in mid-2009 prior to its scheduled expiration. If an FCC License is revoked or not renewed, we could
not provide services under that license, which may have a material adverse affect on our business.
Under the rules of the FCC, telecommunications providers are required to pay various fees and surcharges, including annual
regulatory fees and assessments for certain regulatory support mechanisms that help sustain number portability administration, telephone
numbering administration and telecommunications relay service for the hearing impaired. In addition, subject to certain limited exceptions,
telecommunications providers must contribute to the federal Universal Service Fund ("USF"), which helps ensure that affordable
telecommunications services are accessible throughout the United States. Many of these fees, including USF contributions, are based upon
interstate and international end user revenues. We believe that we previously were exempt from many of these fees due in part because our
services, provided on a non-common carrier basis in the United States, were primarily international in nature, thus we had very little domestic
interstate revenues. As our domestic business and associated revenues grow, however, we believe that we may be required to start paying
such fees and surcharges. Since our US operations are conducted by our Delaware subsidiary, these fees will be assessed only on our
subsidiary's telecommunications revenues. The fee imposed by the FCC are subject to change periodically by the FCC, and the manner in
which telecommunications providers can recoup these fees from customers is subject to various restrictions. In addition, the FCC contribution
methodology is subject to an on-going rulemaking proceeding in which the FCC is considering basing contributions on line capacity or the
aggregate number of telephone numbers used by a carriers customers. It is not possible to predict when the FCC will act on those proposals,
and if so, how or whether the FCCs decision will affect our USF contribution amounts.
In addition, the United States has restrictions on the foreign ownership of companies directly or indirectly holding common carrier
wireless licenses that could prevent us from acquiring or owning our own teleports in the United States to the extent that we seek to operate
any teleport radiocommunication facilities on a common carrier basis. In the event that we seek to operate the Hawley Teleport (or any other
teleport in the United States) on a common carrier basis, U.S. law prohibits more than 20 percent of the capital stock of a common carrier
wireless licensee to be directly owned or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives or
by a foreign corporation. In addition, no more than 25 percent of the capital stock of an entity that directly or indirectly controls a common
carrier wireless licensee may be owned or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives,
or by a foreign corporation, if the FCC finds that prohibiting such indirect foreign ownership of a common carrier wireless licensee would
serve the public interest. The FCC, however, may allow indirect foreign ownership levels in excess of 25 percent, and even up to 100 percent,
if it finds that the higher levels of foreign ownership are consistent with the public interest. Although the FCC has adopted a rebuttable
presumption in favor of allowing indirect foreign ownership in excess of 25 percent by investors from World Trade Organization member
countries, including Israel, there can be no assurance that an applicant will obtain a favorable ruling from the FCC in the future.
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Additionally, entities offering communications services in the United States on a common carrier basis (whether by satellite or
terrestrial facilities) must obtain operating authority from the FCC under Section 214 of the Communications Act before constructing,
acquiring, operating, or engaging in transmission over any lines of communication. The FCC simplified the Section 214 authorization process
by automatically granting "blanket authority" that permits common carriers providing interstate services to construct or operate domestic
transmission lines without applying for domestic Section 214 authorization. This blanket authority, however, does not extend to common
carriers providing international services (on a facilities or resold basis) and any such carriers must apply for and obtain Section 214 authority
prior to providing international services. In addition, FCC approval under Section 214 of the Communications Act must be obtained before a
domestic or international common carrier or its licenses or assets can be acquired by a third party. We believe that we are currently operating
as a private carrier in the U.S., and therefore do not require Section 214 authorization from the FCC. If in the future we choose to operate the
Hawley Teleport as a common carrier or to acquire another teleport in the United States and operate it as a common carrier rather than a
private carrier, however, we will need to obtain an international Section 214 authorization in addition to the Title III wireless license(s)
described above.
In addition, the Department of Justice, the Department of Homeland Security and the Federal Bureau of Investigation (the "Executive
Agencies") review applications to acquire both Title III and Section 214 licenses or authorizations and can require the applicant to enter into
an agreement addressing any national security concerns before the application is granted. We were not, however, required to enter into a
national security agreement with the Executive Agencies in connection with the acquisition of the Hawley Teleport, and the FCC Licenses
include no other restrictions outside the ordinary course.
Trademarks
We have obtained trademark registrations for the name "RRSAT" in Israel, the European Union and Russia. We are in the process of
obtaining trademark registration of such name in the United States. The initial terms of the registration of our trademarks are for 10 years
from the date of application and are renewable thereafter.
C. Organizational structure
We are organized under the laws of the State of Israel. We have two wholly owned subsidiaries, a corporation incorporated under the
laws of the State of Delaware and a limited liability company organized under the laws of the Republic of Cyprus. None of our subsidiaries
are significant subsidiaries.
D. Property, plants and equipment
We lease approximately 122,500 square feet at our main teleport in Re'em, Israel. We occupy approximately 47,400 square feet of
this facility pursuant to a lease that was entered into in November 2001 and which expires in December 2011. We have an option to extend
this lease for two additional terms of five years each. These premises serve as the site for establishing, maintaining and operating our satellite
dish antennas and our playout facility, as well as the base for our fleet of mobile satellite broadcasting vans. We lease an additional
approximately 64,600 square feet adjacent to our principal teleport pursuant to a lease that was entered into in June 2004 and which expires in
June 2013, following our exercise of an extension option. We also lease approximately 10,500 square feet adjacent to our principal teleport
pursuant to a lease that we entered into in November 2007 and which expires in December 2011, and we have an option to extend the term for
up to an additional 10 years.
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In May 2006, we entered into a lease for approximately 4,000 square feet in Re'em, Israel, adjacent to our principal teleport. This
lease expires in December 2011 following our exercise of an extension option and we have an option to extend the term for an additional 4
years. In December 2008 we entered into another lease for approximately 650 square feet in Re'em, Israel, adjacent to our principal
teleport. This lease also expires in December 2011, with an option to extend the term for an additional 4 years.
In November 2008, we acquired the Emek Ha'ela teleport in Emek Ha'ela, Israel, from Bezeq, The Israel Telecommunications Corp.
Limited. We acquired approximately 26.5 acres pursuant to a forty-nine year lease with the Israel Land Administration, which is set to expire
in May 2042. We also have an option to extend the lease for an additional forty-nine years. We are not required to make any additional
payments under the lease unless we elect to exercise the option to extend the lease beyond 2042. The teleport also includes a facility with
approximately 42,000 square feet.
Since August 2005 we have been leasing a broadcasting studio facility of approximately 10,800 square feet located in Jerusalem,
Israel. The studio facility lease expires in July 2010 with an option to extend the term for an additional period, of either five or ten years at
our election. Since July 2007 we have also been leasing an approximately 3,600 square foot facility in Jerusalem, Israel. This lease expires in
July 2010 with an option to extend the term for an additional period of up to 15 years.
In March 2007, the Israel Land Administration, or ILA, authorized to allocate to our company a parcel of land of approximately
538,200 square feet near Galon, Israel, to be used for erecting a ground station. In May 2007, our company and the ILA entered into a
development agreement pursuant to which the company undertook to commence construction of the site within eighteen months as of the date
of the approval of the allocation of the land, and to finish the construction by no later than April 1, 2010. Contingent upon our company
complying with the terms of the development agreement, the ILA shall, upon completion of the building, enter into a lease agreement with our
company for a term of forty nine years as of the date of the approval of the allocation of the land. The Local Zoning and Building Committee
has rejected our request for a building permit in Galon. We have appealed such decision and in a hearing held before the District Building and
Zoning Appeals Committee we have agreed to prepare a new detailed plan for the site, without waiving our claims that a building permit may
be issued according to the existing plans for the site. We have prepared a detailed plan for the site which was approved by the ILA and are in
the process of approving the plans for the site with the relevant zoning and building committees. Therefore, we have not yet commenced
building the site and informed the ILA of such delay.
In May 2008, we completed the acquisition of the Hawley Teleport located in Pike County, Pennsylvania from Skynet Satellite
Corporation for approximately $4.9 million. The teleport includes approximately 212 acres and a 3 floor communications building with
approximately 40,000 square feet.
We believe that our current facilities and leases are adequate to meet our needs.
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ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not applicable.
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ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis is based on our consolidated financial statements, including the related notes, and should be
read in conjunction with them. You can find our consolidated financial statements in "Item 18 Financial Statements."
A. Operating results
Overview
We provide global, comprehensive, content management and distribution services to the rapidly expanding television and radio
broadcasting industries. Through our proprietary "RRsat Global Network," composed of satellite and terrestrial fiber optic transmission
capacity and the public Internet, we are able to offer high-quality and flexible global distribution services for content providers. Our content
distribution services involve the worldwide transmission of video and audio broadcasts over our state-of-the-art RRsat Global Network
infrastructure. Our content management services involve the digital archiving and sophisticated compilation of a customer's programming and
advertising content into one or more broadcast channels, with the ability to customize broadcast channels by target audience. We then provide
automated transmission services for these channels in accordance with our customer's broadcast schedules, known as playlists. We
concurrently provide services to more than 545 television and radio channels, covering more than 150 countries.
We also provide MSS over the Inmarsat satellite network. Through this network, we provide global telephony, fax, data, Internet and
other value added services to end users and ISPs (Inmarsat Service Providers) who use designated Inmarsat terminals. This service is aimed at
shipping, aviation, construction and oil companies, humanitarian aid organizations, governmental agencies and other end customers that
require telephony and Internet services in remote areas of the world that lack sufficient telecommunications infrastructure. We currently
provide MSS to more than 160 end customers, either directly or through two ISPs.
We lease our transmission capacity from satellite and terrestrial fiber optic network providers to fulfill the distribution requirements
of our customers. By leasing capacity as required, we minimize our capital expenditure and reduce excess capacity in our
network. Consequently, our network can be expanded substantially without having to incur significant capital expenditures. Most of our
capital expenditures relate to transmission and playout equipment. Because of our network design, we have incurred relatively minimal
indebtedness in growing our business. We enjoy significant cost benefits since we design our own network and equipment configuration,
acquire the individual equipment components from manufacturers, perform the integration of our digital platforms and manage our entire
network. Most of our customers have entered into long-term contracts with us, and these contracts represent the majority of our
revenues. This allows us to minimize capital expenditures and potential underutilization of assets, and facilitates our matching of operating
expenses with revenues.
We sell our services primarily through a direct sales force in each market, supplemented by sales agents. These agents often have
other business relationships with the customer.
We formed the company in 1981. In 1996, we were granted the first private license for transmission of television and radio channels
via satellite in Israel and started to provide satellite services for Israeli governmental and commercial channels. In 2000, we formed the
"RRsat Global Network" concept and entered into the global content management and distribution services market. In the last nine years,
RRsat has become one of the few companies worldwide to possess a global network allowing distribution via satellites, fiber optic lines and
the public Internet. In 2003, we opened our playout center. Today we provide playout services to more than 110 television channels for
distribution through our RRsat Global Network.
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In 2008, we acquired a teleport in Hawley, Pennsylvania, to strengthen our presence in the United States, and we acquired the
satellite business of Bezeq, including its teleport in Emek Ha'ela, Israel, and its MSS business aimed at end customers that require telephony
and Internet services in remote areas of the world that lack sufficient telecommunications infrastructure.
We see a significant financial advantage in strategically leasing the satellite and fiber optic capacity of our global network. Our
ability to match our supplier and customer contracts and to effectively utilize capacity on an ongoing basis affects our results.
Revenues. We provide content distribution services, such as uplink, downlink, turnaround, encryption, encoding, storage,
localization and time delay services, and integrated content management, such as production and playout services and satellite newsgathering
services (SNG), on a long term and occasional use basis, to over 545 television and radio channels. We provide MSS over the Inmarsat
satellite network. Through this network, we provide global telephony, fax, data, Internet and other value added services to end users and ISPs
who use designated Inmarsat terminals (see Item 4 "Information on the Company" for a detailed description of the services that we provide).
Most of our revenues are from monthly services provided to our customers under long-term contracts. In 2007, 2008 and 2009,
94%, 94% and 90%, respectively, of our revenues were generated from long-term contracts for content management and distribution services,
and 6%, 6% and 4%, respectively, of our revenues were generated from occasional content management and distribution
services. Approximately 6% of our revenues in 2009 were generated from MSS.
Reporting Segments. The company's operating segments are strategic business units that offer different communications services
and are managed accordingly. As a result of the acquisition in November 2008 of Bezeq's MSS, the 711 business unit, beginning in 2008 we
present operating segments. We analyze our operating segments based on each segment's gross profit. Our two reportable segments are
(i) MSS and (ii) the content management and distribution services to television and radio broadcasting industries.
Contracted Backlog. Our backlog of long-term customer contracts provides us with revenue visibility for the next 12-month period
as well as a relatively reliable stream of future revenues in the next two to five years. As of December 31, 2009, we had contracted backlog
totaling $167.9 million through 2018, of which $81.9 million are related to services expected to be delivered in 2010, and $50.1 million are
related to services expected to be delivered in 2011. Of our $167.9 million contracted backlog, which we do not recognize as revenue until we
actually perform the services, approximately $149.2 million, or 88.8%, is related to obligations to be provided under non-cancelable
agreements and $18.7 million, or 11.2%, is related to obligations to be provided under cancelable agreements. Of our $18.7 million contracted
backlog that relates to cancelable agreements, $6.9 million relate to services to be delivered in 2010, $4.5 million relates to services to be
delivered in 2011 and $7.3 relates to services to be delivered from 2012 through 2018. Approximately 98% of our cancelable agreements may
be canceled by an advanced notice of between 30 to 120 days, while 2% of our cancelable agreements may be canceled at certain predefined
exit dates. We cannot rule out the possibility that we could face contract terminations arising in the normal course of business or as a result of
other market forces. As of December 31, 2009, the weighted average remaining duration of our contracted backlog was approximately 2.62
years.
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Long-term contracts are generally billed monthly in advance and are usually secured via a cash deposit for the last one to three
months of service. Contracted backlog represents the actual dollar amount (without discounting to present value) of the expected future
revenues from customers under all long-term contractual agreements. Our contracted backlog for future services as of December 31, 2007,
2008 and 2009 was $155.5 million, $185.7 million and $167.9 million, respectively. The increase in 2008 in contracted backlog resulted from
additional new customer contracts and expansion and renewal of existing customer contracts. The decrease in 2009 in contracted backlog
resulted from our decision to terminate certain customer contracts due to their failure to meet the payment obligation due primarily from the
unfavorable global economic conditions in 2008 and 2009. If such conditions continue, several of our customers may become insolvent or
bankrupt or experience other financial difficulties which make them unable or unwilling to continue to use our services. In such case, a
portion of this contracted backlog may not ultimately result in revenues.
Pricing. Various market forces affect the pricing of our services. We sell our services at prevailing market prices, which vary based
upon the regions to which the distribution is required by our customer, the type of service, the network capacity for the distribution needs, the
duration of the service under contract and the supply of additional value-added services. In general, each service is tailored to the customer's
needs and is priced accordingly. The pricing of our MSS is determined by the type and volume of services.
Geographic Revenue Breakdown. We have historically derived revenues from customers based in different geographical areas. The
following table sets forth the breakdown of our revenues on a percentage basis, for the years 2007 through 2009, by the geographical locations
of our customers. Most of our contracts are denominated in U.S. dollars. The services we render are not necessarily rendered in the same
geographic areas as those in which the customers are located.

North America
Europe
Asia
Israel
Middle East (other than Israel)
Rest of world
Total

Year ended December 31,


2007
2008
2009
(as a percentage of total revenues)
22.3%
24.5%
22.4%
43.7
40.8
42.2
10.1
11.1
11.3
9.6
6.9
6.9
11.8
11.7
13.0
2.5
4.9
4.3
100%
100%
100%

We expect that, as a result of our expansion of our operations in the U.S. and contemplated potential expansion of operations in Asia,
the revenues that we derive from customers located in North America and Asia will increase.
Customers and Customer Concentration. We supply our services to customers all over the world and our sales are derived from a
large number of individual customers. During 2009, our content management and distribution services revenues were derived from more than
460 customers and our MSS were derived from more than 160 customers. In 2009, our ten largest customers accounted for 27.7% of total
revenues, and no single customer accounted for more than 4.3% of our total revenues. It is our policy to require a deposit for the last one to
three months of service from most of our customers in the content management and distribution segment. Due to these factors and the
geographical dispersion of our customers, we believe that we adequately control our exposure to credit risks associated with accounts
receivable.
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Cost of Revenues.
Content Management and Distribution. Our cost of revenues represents costs directly related to the operation of our network,
including payments for network services (primarily satellite services), salaries and depreciation of transmission and playout equipment. The
principal component of cost of revenues is the monthly fees paid to network service providers such as satellite space segment and teleport
services and fiber network leases. We lease our space segment capacity pursuant to long-term contracts. We can terminate approximately
32% of our supplier network services contracts within one to three months of notice in the event of termination of the customer contract or in
some cases without cause. We lease approximately 84% of our space segment capacity on a non-preemptible basis, providing our network a
higher level of reliability to our customers and assurance in the case of service outage. We believe the remaining preemptible contracts allow
us to provide customers with a cost effective solution. Changes in market conditions, such as in the supply and demand of satellite capacity,
may result in increasing costs, both for our existing preemptible contracts and for new capacity contracts. If we are unable to increase our
services prices, our gross profit may decline.
MSS. Cost of revenues for our MSS business consists primarily of network services (such as satellite space) and payments to
subcontractors.
A majority of the company's cost of revenues are variable costs, mainly costs associated with broadcasting services. In 2009, 2008
and 2007, our cost of revenues included $50.5 million, $42.3 million and $30.5 million of variable costs. For this purpose, we define the
company's variable costs as direct costs that vary directly, or substantially directly, with the volume of our revenues, mainly broadcasting
services costs, as opposed to depreciation and labor costs, which we define for this purpose as non-variable costs.
Gross Profit.
Content Management and Distribution. By leasing the RRsat Global Network's transmission capacity instead of owning our own
fleet of satellites or fiber optic network we are able to minimize our capital expenditures and to maintain flexibility to reduce unused capacity
in our network. Our efficiency in matching supplier contracts with customer contracts affects our gross margins and is reflected in the
utilization of our committed capacity on an ongoing basis. When we are required to commit to long-term capacity leases of network services,
our gross margin may decrease until we are able to utilize the entire capacity. We may also be subject to price increases for new or renewed
network services, and until we are able to adjust the prices we charge our customers, we may suffer a decrease of gross margin.
MSS. Gross profit of our MSS business is affected by the volume of the services we provide and the portion of the services we
provide using third parties.
Sales and Marketing Expenses. Our sales and marketing expenses consist of salary and related expenses for our direct sales force
and success-based agent fees for our agents. Our agreements with agents are nonexclusive unless the agent has identified a potential
customer, in which case he will be granted exclusivity for the sales process with such customer. If the agent is successful, her or his fees are
payable during the term of the customer contract and are conditioned on the performance of the contracts, and therefore, we recognize those
fees over the contract's term. Those fees may be a percentage of the marginal profit from the individual customer contract or a percentage of
the contract value. We expect that our selling expenses will continue to increase as we expand our direct sales and marketing efforts in
conjunction with the establishment or acquisition of local teleports and playout centers in the United States and Asia, while continuing to
employ our strategy in other parts of the world of additionally working with local marketing and sales agents, who are familiar with their local
markets, needs and cultures. The expansion of our sales and marketing efforts as described above entail an increase of our direct sales force,
resulting in increased wages, travel and overhead costs and additional success based agent fees, and an investment in marketing activities to
create local brand recognition. We could also face additional expenses depending on the location of our new local teleports and playout
centers that we may acquire.
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Our operating expenses include certain variable costs that vary directly, or substantially directly, with the volume of our revenues,
mainly commissions paid to our agents. In 2009, 2008 and 2007, our operating expenses included $2.4 million, $1.9 million and $1.6 million
of variable costs.
General and Administrative Expenses. Our general and administrative expenses consist of salaries and related costs for employees
and other expenses related to administration, facilities and legal and accounting services. It includes management fees to our principal
shareholders that amounted to $398 thousand in each of 2007, 2008 and 2009 (see Item 7.B. "Major Shareholders and Related Party
Transactions Related party transactions"). Our general and administrative expenses include changes in the provision for doubtful accounts,
which, in management's opinion, adequately reflect the loss included in those debts the company is unlikely to collect. The provision for
doubtful accounts is calculated as a percentage of outstanding receivable balance based on the age of the debt, past experience and whether the
debt has been transferred to a professional collector. A specific provision for doubtful debts is done based on an evaluation of the risk, by
considering the available information on the financial position of the debtors, the volume of their business, an evaluation of the security
received from them and past experience. We expect general and administrative expenses to increase for the foreseeable future as our
operations continue to expand, resulting in our need for additional staff and professional consulting. We intend to fund these expenses from
our working capital.
Depreciation and Amortization Expense. Depreciation and amortization is calculated using the straight-line method over the
estimated useful lives of the assets once the assets are placed into service. We generally depreciate teleport related equipment (satellite dish
antennas, receivers transmitters, playout room equipment, etc.), which represents the majority of our fixed assets other than land, over a 7-year
period, while leasehold improvements are amortized over the shorter of the respective lease term or the estimated useful life of the assets,
which is typically 10 years. Intangible assets we acquired from Bezeq mainly associated with the MSS business are amortized on the basis of
the estimated useful lives of the assets using annual rates between 10-33%. Prepaid leased land is amortized based on the term of the lease
agreement assuming the renewal of such lease upon its expiration.
Share-based Compensation. Our expenses also include share-based compensation expenses, which are allocated among cost of
revenues, sales and marketing and general and administrative expenses. Share-based compensation expenses results from the granting of
options to employees under the fair-value based method of accounting (calculated using the Black-Scholes model) and restricted share units.
The share-based compensation expenses are recorded to expenses over the vesting periods of the individual options or restricted share units.
The intrinsic value of the options outstanding as of December 31, 2009, was $1.0 million, of which $0.2 million related to unvested options.
The intrinsic value of the restricted share units outstanding as of December 31, 2009 was $0.2 million.
Interest and Marketable Securities Income. Interest and marketable securities income represents interest income earned (mainly on
bank deposits and corporate and government debentures) and gains from marketable securities invested through brokers in Israel and the
United States.
Marketable securities at December 31, 2008 and 2009 consisted of U.S. Agency debentures, corporate debentures, corporate shares,
government debentures, mutual funds, and treasury notes. We classify our debt securities in one of three categories: "trading", "available- forsale", or "held- to- maturity" and our equity securities as "trading". Trading securities are bought and held principally for the purpose of
selling them in the near term. Held-to-maturity debt securities are those securities in which we have the ability and intent to hold the security
until maturity. All securities not included in trading or held- to- maturity were classified as available-for-sale.
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During 2008 and the first half of 2009, the economic environment has increased the degree of uncertainty inherent in those securities
invested by the company, as the market prospects of the issuers of those securities deteriorated. This resulted in unrealized losses of $0.2 and
$0.1 million at the end of 2008 and 2009, respectively, related to available-for-sale securities. The contractual terms of these investments do
not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because we have the ability and intent to
hold these investments until a market price recovery or maturity, we concluded that these marketable securities are not other-than-temporarily
impaired.
Currency Fluctuation and Other Financial Income (Expenses), Net. Currency fluctuation and other financial income (expenses),
net primarily result from currency exchange rate fluctuations affecting transactions denominated in currencies other than the US dollar, our
functional currency. Other financial income (expenses) relate to bank charges. We expect our currency fluctuation and other financial income
(expenses), net to be volatile as a result of fluctuations of the exchange rates between the US dollar and other currencies denominating our
transactions, mainly the Euro and the NIS.
Gains (losses) from Non-cash Change in Fair Value of Embedded Currency Conversion Derivative. Some of our customers and
suppliers contracts are denominated in currencies that are neither our functional currency nor the functional currency of the customers or
suppliers, as the case may be. For example, we entered into customer agreements denominated in Euro with customers in the United States,
while the Euro is neither our functional currency nor the functional currency of the U.S. customers. In these cases, FASB ASC Topic 815,
Derivatives and Hedging (Statement No. 133, Accounting for Derivative Instruments and Certain Hedging Activities, as amended), requires
that we separate the currency component from the applicable customer or supply contract and account for it as a currency derivative and mark
this instrument to market through the statement of operations every period. This adjustment is included in a separate line on the statement of
operations entitled "changes in fair value of embedded currency conversion derivatives." We believe we have been able to reduce the net
foreign currency exposure by matching the relevant expense contracts to various similarly denominated revenue contracts with our
customers. However, because the revenue contracts with offsetting exposures are denominated in the functional currencies of the customers,
the currency components of these contracts are not separately accounted for as derivatives. Accordingly, even though we may have reduced
our exposure to currency fluctuations from an economic perspective, the separation of currency derivatives for accounting purposes has
caused and may continue to cause significant statement of operations volatility for the remainder of these contracts' terms based on the
fluctuation of the exchange rate between the U.S. dollar and these contracts' currencies (usually the Euro) and or changes to interest rates for
USD and EURO contracts. The embedded derivative expenses/income does not represent the actual cash generated or expended in operating
activities. For additional information regarding ASC Topic 815, see "Application of Critical Accounting Policies Foreign Currency
Embedded Derivatives" below.
Income Taxes. Income tax is computed on the basis of our results in nominal New Israeli Shekels (NIS) determined for statutory
purposes. On February 26, 2008, the Israeli Income Tax Law (Inflationary Adjustments) (Amendment No. 20) (Restriction of Period of
Application) 2008 (the "Amendment") was passed by the Knesset. According to the Amendment, the Inflationary Adjustments Law is no
longer be applicable subsequent to the 2007 tax year, except for certain transitional provisions. In July 2005 and in July 2009, the Israeli
Parliament (the Knesset) passed tax reform acts that provide for a gradual reduction in the corporate income tax rate as follows: in 2009 the
tax rate was reduced to 26.0%, in 2010 it will be reduced to 25.0%, in 2011 it will be reduced to 24.0%, in 2012 it will be reduced to 23.0%, in
2013 it will be reduced to 22.0%, in 2014 it will be reduced to 21.0%, in 2015 it will be reduced to 20.0%, and from 2016 onward the tax rate
will be reduced to 18.0%. Current and deferred tax balances as of December 31, 2008 and 2009 are calculated in accordance with the new tax
rates provided in the tax reform.
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We were granted in 2006 an "approved enterprise" status under the Law for the Encouragement of Capital Investments, 1959, for our
contemplated expansion of export revenues in the taxable years 2006 to 2012 as compared to our revenues in 2005. Under the terms of our
approved enterprise program, our income from that approved enterprise will be subject to a reduced tax rate of 25% for a period of up to a
total of seven years, to be calculated on the portion of our taxable income associated to the expansion (calculated on a pro rated basis to the
additional revenues for the taxable year compared to the base year, which is 2005). Under the terms of the program, which relates to our
export of communications services to television channels and television operators via satellites, we are required, among other things, to
increase the export of our services by at least $100 thousand annually and maintain arms' length terms for all related party transactions. See
Item 10.D. "Additional Information Taxation Taxation in Israel Law for the Encouragement of Capital Investments, 1959" for more
information about our "approved enterprise" status. In 2007, 2008 and 2009, we realized tax reductions resulting from the "approved
enterprise" status in an aggregate amount of $220 thousand, $160 thousand and $114 thousand, respectively.
Expansion Plans. We intend to expand our presence in the United States, Asia and other markets where we already operate through
subcontractors, by establishing or selectively pursuing the acquisition of local teleports and playout centers, and connecting them to our global
network, such as the acquisition we completed in 2008 to acquire the Hawley Teleport in Pennsylvania. We believe that having our own
content management and distribution facilities in these markets will afford us greater control over our operations, allow us to protect
proprietary information relating to our methods of operation, provide direct control over our relationships with our customers, facilitate our
sales and marketing efforts, increase our profit margins and afford us access to customers for whom the proximity of our facilities may be an
important factor (particularly customers who use our content management services, since playout services involve a significant degree of
interaction with our customers).
Application of Critical Accounting Policies
Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements in Item 18. However,
certain of our accounting policies are particularly important to the portrayal of our financial position and results of operations.
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we review our accounting policies, assumptions, estimates and judgments to ensure that our
consolidated financial statements are presented fairly and in accordance with U.S. GAAP. We base our estimates on historical experience and
on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. However, because future events
and their effects cannot be determined with certainty, actual results may differ from these estimates under different conditions. Our significant
accounting policies are more fully described in the notes to the accompanying consolidated financial statements.
In June 2009 the Financial Accounting Standards Board, or FASB, established the Accounting Standards Codification ("ASC"), or
Codification, as the primary source of authoritative GAAP recognized by the FASB to be applied to nongovernmental entities. Although the
establishment of the ASC did not change current GAAP, it did change the way we refer to GAAP throughout this Annual Report to reflect the
updated referencing convention.
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Functional and Reporting Currency. Our accounting records are maintained in NIS and U.S. dollars. The U.S. dollar is the currency
of the primary economic environment in which our operations are conducted and expected to be conducted in the future. Therefore the U.S.
dollar has been determined to be our functional currency. Transactions denominated in foreign currencies other than the U.S. dollar are
translated into the functional currency using the current exchange rate. Gains and losses from the transaction of foreign currency balances are
recorded in the statement of operations.
Provision for Doubtful Accounts. The consolidated financial statements include specific provisions for doubtful debts, which, in
management's opinion, adequately reflect the loss included in those debts whose collection is doubtful. Doubtful debts, which according to
management's opinion, are unlikely to be collected, are written-off from the company's books, based on a management
resolution. Management's determination of the adequacy of the provision is based on an evaluation of the risk, by considering the available
information on the financial position of the debtors, the volume of their business, an evaluation of the security received from them and past
experience.
Business Acquisitions; Goodwill and Other Intangible Assets. In our business acquisition described above, we accounted for our
purchase in accordance with ASC 805-10 (SFAS No. 141), "Business Combinations," which resulted in the recognition of goodwill and other
intangible assets, and may in certain cases in the future result in non-recurring charges associated with the periodic reevaluation of goodwill,
which may affect the amount of current and future period charges and amortization expense. Goodwill represents the excess of the purchase
price over the fair value of net assets acquired, including identified intangible assets, in connection with our business combinations accounted
for by the business combination method of accounting. In management's opinion, the goodwill represents the future synergy that the company
will derive from the use of the Emek Ha'ela Teleport for expanding its business. We amortize our acquisition-related intangible assets using
the straight-line method and based on forecasted cash flows associated with the assets over the estimated useful lives. We adopted FASB
ASC Topic 350, Intangibles - Goodwill and Other (Statement No. 142, Goodwill and Other Intangible Assets) requirements regarding
goodwill and other intangible assets with indefinite useful lives. Such goodwill is not amortized, but rather is periodically assessed for
impairment.
The determination of the value of these components of a business combination, as well as associated asset useful lives, requires
management to make various estimates and assumptions. Critical estimates in valuing certain of the intangible assets include but are not
limited to: future expected cash flows from sales, customer contracts, suppliers contracts, brand name, assumptions about the period of time
that the acquired assets useful lives, and discount rates. Management's estimates of fair value and useful lives are based upon assumptions
believed to be reasonable, but which are inherently uncertain and unpredictable. Unanticipated events and circumstances may occur and
assumptions may change. Estimates using different assumptions could also produce significantly different results.
We continually review the events and circumstances related to our financial performance and economic environment for factors that
would provide evidence of the impairment of our intangible assets. When impairment indicators are identified with respect to our previously
recorded intangible assets, then we will test for impairment using undiscounted cash flows. If such tests indicate impairment, then we will
measure the impairment as the difference between the carrying value of the asset and the fair value of the asset, which is measured using
discounted cash flows. Significant management judgment is required in forecasting future operating results, which are used in the preparation
of the projected discounted cash flows and should different conditions prevail, material write downs of net intangible assets and other longlived assets could occur. We periodically review the estimated remaining useful lives of our acquired intangible assets. A reduction in our
estimate of remaining useful lives, if any, could result in increased amortization expense in future periods. We perform an impairment test at
least annually and on an interim basis if circumstances indicate that an impairment loss may exist. The outcome of such testing may lead to
the recognition of an impairment loss.
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Income Taxes. We account for income taxes under ASC 740-10 "Income Taxes Overall". Income taxes are accounted for under
the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. Deferred tax assets and liabilities are classified as current or non-current items in accordance with the
nature of the assets or liabilities to which they relate. When there are no underlying assets or liabilities the deferred tax assets and liabilities
are classified in accordance with the period of expected reversal. Income tax expenses represent the tax payable for the period and the changes
during the period in deferred tax assets and liabilities.
Beginning with the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) included in ASC
740-10 "Income Taxes Overall" as of January 1, 2007, we recognize the effect of income tax positions only if those positions are more likely
than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being
realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
Fair Value of Embedded Currency Conversion Derivatives. We account for derivatives and hedging activities in accordance with
ASC Topic 815, which requires that derivatives instruments within its scope be recorded on the balance sheet at their respective fair value.
We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks, but occasionally enter into
commercial (foreign currency) contracts in which a derivative instrument is "embedded". For these embedded derivatives, for which the
economic characteristics and risks are not clearly and closely related to the economic characteristics and risks of the host contract, the changes
in fair value are recorded in the statement of operation.
Accounting for Stock-Based Compensation. We follow the fair-value based method of accounting for all of our option plans in
accordance with the provisions of ASC Topic 718, Compensation - Stock Compensation (SFAS 123R "Share- Based Payments"). The grant
date fair value of the options awarded is calculated using the Black-Scholes model and the associated compensation cost is amortized over
their vesting period. As described in Note 11 to our consolidated financial statements included in Item 18, we estimate the fair value of stock
options issued to employees using the Black-Scholes option valuation model with certain assumptions that are significant inputs. The critical
assumptions relate to determining the expected life of the option, considering the outcome of service-related conditions (i.e., vesting
requirements and forfeitures), expected volatility of the underlying shares as an estimate of the future price fluctuation for a term
commensurate with the expected life of the option, expected dividend yield on the underlying shares, commensurate with the expected life of
the option, and risk-free interest rate commensurate with the expected term of the option. These estimates introduce significant judgment into
determining the fair value of stock-based compensation awards. The grant date fair value of the restricted shares units is calculated using the
share price at the date of grant.
Recent Accounting Pronouncements.
Effective April 1, 2009, we adopted ASC 320-10 (formerly known as FSP FAS 115-2) and ASC 958-320 (formerly known as FAS
124-2), "Recognition and Presentation of Other-Than-Temporary Impairments" (ASC 320-10 and ASC 958-320), which significantly changes
the existing other-than-temporary impairment model for debt securities. It also modifies the presentation of other-than-temporary impairment
losses and increases the frequency and expands required disclosures about other-than-temporary impairment for debt and equity securities.
ASC 320-10 and ASC 958-320 did not have material effect on our financial statements. See also Note 1E to our consolidated financial
statements.
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Effective April 1, 2009, we adopted ASC 820-10 (formerly known as FSP FASB statement No. 157-4) "Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly". This ASC provides additional guidance for estimating fair value in accordance with ASC 820-10, "Fair Value measurements",
when the volume and level of activity for the asset or liability have significantly decreased and when circumstances indicate a transaction is
not orderly. ASC 820-10 did not have material effect on our financial statements.
Effective April 1, 2009, we adopted ASC 855-10 (formerly known as FASB SFAS No. 165), "Subsequent Events". ASC 855-10
establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements
are available to be issued (subsequent events). These standards are largely the same guidance on subsequent events which previously existed
only in auditing literature.
Results of Operations
The following table sets forth selected statements of operations data for each of the periods:
Year ended December 31,
2007
2008
2009
(in thousands, except share and per
share data)
Statement of Operations Data:
Revenues
Cost of revenues
Gross profit
Operating expenses:
Sales and marketing
General and administrative
Total operating expenses
Operating income
Interest and marketable securities income
Currency fluctuation and other financial expenses, net
Changes in fair value of embedded currency conversion derivatives
Other income, net
Income before taxes on income
Income taxes
Net income
Basic income per ordinary share
Diluted income per ordinary share
Weighted average number of ordinary shares used to compute basic
income per ordinary share
Weighted average number of ordinary shares used to compute diluted
income per ordinary share

$
$
$

59,221 $
38,419
20,802

78,993 $
53,477
25,516

93,687
64,548
29,139

3,017
5,767
8,784
12,018
2,631
329
(646)
4
14,336
2,932
11,404 $
0.66 $
0.65 $

3,914
6,582
10,496
15,020
1,111
177
1,342
10
17,660
4,228
13,432 $
0.78 $
0.77 $

5,554
8,391
13,945
15,194
639
299
(1,326)
26
14,832
3,254
11,578
0.67
0.67

17,249,710

17,290,099

17,310,005

17,418,180

17,399,375

17,399,324

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Year Ended December 31, 2008 Compared to Year Ended December 31, 2009

Revenues
Cost of revenues
Gross profit
Operating expenses:
Sales and marketing
General and administrative
Total operating expenses
Operating income
Interest and marketable securities income
Currency fluctuation and other financial income (expenses), net
Changes in fair value of embedded currency conversion derivatives
Other income, net
Income before taxes on income
Income taxes
Net income

Year ended
December 31, 2008
December 31, 2009
(in thousands and as a percentage of
total revenues)
78,993
100% $
93,687
100%
53,477
67.7
64,548
68.9
25,516
32.3
29,139
31.1
3,914
6,582
10,496
15,020
1,111
177
1,342
10
17,660
4,228
13,432

5.0
8.3
13.3
19.0
1.4
0.2
1.7
0.0
22.3
5.4
16.9

5,554
8,391
13,945
15,194
639
299
(1,326)
26
14,832
3,254
11,578

5.9
9.0
14.9
16.2
0.7
0.3
(1.4)
0.0
15.8
3.5
12.3

Revenues. Revenues were $93.7 million for the year ended December 31, 2009, an increase of 18.6%, from $79.0 million in
2008. The increase in revenues was primarily due to additional services provided for content management and distribution and additional
revenues from MSS services.
For the year ended December 31, 2009, our total revenues included $89.1 million of revenues derived from our content management
and distribution services, an increase of $10.9 million, or 14.2%, compared to the year ended December 31, 2008, and $4.5 million of
revenues derived from our MSS business, an increase of $3.8 million compared to the year ended December 31, 2008. The MSS business was
acquired by the Company in November 2008.
Cost of Revenues. Cost of revenues was $64.5 million for the year ended December 31, 2009, an increase of 20.7%, from
$53.5 million in 2008. This increase is due primarily to additional payments for transmission capacity resulting from the expansion of our
network as a direct result of the addition of customers on to our network and additional payments related to MSS network services. Network
services costs were $50.5 million in 2009, an increase of $19.4%, from $42.3 million in 2008.
For the year ended December 31, 2009, $3.8 million of expenses were related to the cost of MSS network and transmission services
from third parties, an increase of $3.1 million compared to the year ended December 31, 2008, and $46.7 million were associated with our
content management and distribution services, an increase of $5.1 million, or 12.2%, compared to the year ended December 31, 2008. The
MSS business was acquired by the Company in November 2008
As a percentage of total revenue, cost of revenues increased from 67.7% in 2008 to 68.9% in 2009. The increase in cost of services
as a percentage of revenue is primarily due to payments for transmission capacity acquired as part of the expansion of our network, prior to
being fully utilized in providing services to customers, and to a lesser extent due to a full year of costs related to MSS during 2009 compared
to only two months in 2008.
The other principal components of cost of revenues included depreciation and amortization, which was $5.2 million in 2009, an
increase of 30%, from $4.0 million in 2008. This increase is directly attributable to the increase in fixed assets as a result of the addition of
customers to our network, and the additional assets acquired in 2008 with the acquisition of the satellite business of Bezeq and the acquisition
of the Hawley Teleport.
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As a percentage of content management and distribution revenues, cost of revenues was 67.5% in 2009 as well as in 2008, and as a
percentage of MSS revenues, cost of revenues in 2009 was 98.3% compared to 89.5% in 2008.
Sales and Marketing Expenses. Sales and marketing expenses were $5.6 million in the year ended December 31, 2009, an increase of
43.6% from $3.9 million in 2008. The increase in sales and marketing expenses is due to increases in salaries, wages and benefits, and
increases in agents and commission fees paid to third parties, increase in depreciation and due to the increase in expenses for MSS sales and
marketing activities during 2009. Sales and marketing expenses as a percentage of revenues were 5.0% and 5.9% in 2008 and 2009,
respectively.
Sales and marketing salaries, wages and benefits, which include commissions paid to our direct sales representatives, comprised
37.0% and 35.8% of our total sales and marketing expenses in 2008 and 2009, respectively. Salaries, wages and benefits increased by
$0.6 million from $1.4 million in 2008 to $2.0 million in 2009 due to an increase in the number of our employees and salary.
Depreciation of assets related to marketing activities, comprised 5.3% and 0.5% of our total sales and marketing expenses in 2008
and 2009, respectively. Depreciation increased by $0.3 million from $80 thousand in 2008 to $300 thousand in 2009 due to the MSS business
assets acquired in November 2008.
Agents and commission fees paid to third parties comprised 48.3% and 43.3% of our total sales and marketing expenses in 2008 and
2009, respectively. Agent fees increased by $0.5 million from $1.9 million in 2008 to $2.4 million in 2009 due to additional fees paid with
respect to new contracts.
General and Administrative Expenses. General and administrative expenses were $8.4 million in the year ended December 31, 2009,
an increase of 27.5% from $6.6 million in 2008. The increase is mainly due to our decision to terminate the contract of a customer which did
not meet its contractual financial obligations, which resulted in an increase of $1.5 million in the allowance of doubtful debts. As a percentage
of revenues, general and administrative expenses were 8.3% and 9.0% in 2008 and 2009, respectively.
Salaries, wages and service fees expenses paid to our general and administrative officers and employees comprised 48.1% and 37.9%
of our total general and administrative expenses in 2008 and 2009, respectively. Salaries, wages and service fees expenses were $3.2 million
in 2008 and 2009.
Management fees paid to our principal shareholders were $398 thousand in 2008 and 2009.
Professional services fees, which are legal and audit fees and consulting fees associated with Sarbanes-Oxley compliance, increased
from $802 thousand in 2008 to $888 thousand in 2009.
Allowances for doubtful account. Allowances for doubtful account were $1.0 million in 2008 and $2.4 million in 2009. The increase
is mainly due to our decision to terminate certain customer contracts for their failure to meet the payment obligations.
Interest and Marketable Securities Income. Interest and marketable securities income, primarily representing interest income earned
on bank deposits and gains from marketable securities, was $0.6 million in the year ended December 31, 2009, a decrease of $0.5 million from
interest and marketable securities income of $1.1 million in 2008. This decrease is primarily the result of the decrease in interest earned on
our cash and cash equivalent due to the decrease in interest rates and decrease in yield of marketable securities.
Currency Fluctuation and Other Financial Income (Expenses), Net. Currency fluctuation and other financial expenses, net, primarily
resulting from currency exchange rate fluctuations affecting transactions denominated in currencies other than the U.S. dollar, our functional
currency, were $299 thousand in the year ended December 31, 2009, an increase of $122 thousand from currency fluctuation and other
financial income, net, of $177 thousand in 2008.
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Changes in Fair Value of Embedded Currency Conversion Derivatives. The change in fair value of embedded currency conversion
derivatives resulted in an expense of $1.3 million in the year ended December 31, 2009, compared to income of $1.3 million in 2008. The
change in the year ended December 31, 2009 is due to the increase of the exchange rate between the U.S. dollar and the EURO from 1.3933
U.S. dollar/EURO at the end of 2008 to 1.4415 U.S. dollar/EURO as of December 31, 2009, and the respective change in the value of the U.S.
dollar-EURO forward contracts, the different changes in U.S. dollar and EURO interest rates during the year, and net of additional contracts
with embedded derivatives which we entered into during 2009 contributing approximately $288 thousand of income in 2009. In 2008, the
change in fair value of embedded currency conversion derivatives is due to the decrease of the exchange rate between the U.S. dollar and the
EURO from 1.4718 U.S. dollar/EURO at the end of 2007 to 1.3933 U.S. dollar/EURO as of December 31, 2008, and the respective change in
the value of the U.S. dollar-EURO forward contracts, the different changes in U.S. dollar and EURO interest rates during the year, and due to
additional contracts with embedded derivatives which we entered into during 2008 contributing approximately $500 thousand of income in
2008.
Income Taxes. Income taxes were $3.3 million in the year ended December 31, 2009, a decrease of $0.9 thousand from $4.2 million
in 2008. The decrease is due to the decrease in income before taxes on income from $17.7 million in 2008 to $14.8 million in 2009.
Net Income. Net income was $11.6 million in the year ended December 31, 2009, a decrease of 13.4% from $13.4 million in
2008. The decrease is due to an increase in expenses from embedded currency conversion derivatives of $2.6 million and decrease in income
taxes of $0.9 million.
Segment Results. For the year ended December 31, 2009, the gross profit of our content management and distribution services to
television and radio was $29 million, an increase of $3.6 million, or 14.2%, compared to $25.4 million in 2008.
For the year ended December 31, 2009, the gross profit of our MSS business was $74 thousand, a decrease of $3 thousand, or 3.9%,
compared to $77 thousand in 2008.
Year Ended December 31, 2007 Compared to Year Ended December 31, 2008

Revenues
Cost of revenues
Gross profit
Operating expenses:
Sales and marketing
General and administrative
Total operating expenses
Operating income
Interest and marketable securities income
Currency fluctuation and other financial income (expenses), net
Changes in fair value of embedded currency conversion derivatives
Other income, net
Income before taxes on income
Income taxes
Net income

Year ended
December 31, 2007
December 31, 2008
(in thousands and as a percentage of
total revenues)
59,221
100% $
78,993
100%
38,419
64.9
53,477
67.7
20,802
35.1
25,516
32.3
3,017
5,767
8,784
12,018
2,631
329
(646)
4
14,336
2,932
11,404

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5.1
9.7
14.8
20.3
4.4
0.6
(1.1)
0.0
24.2
5.0
19.3

3,914
6,582
10,496
15,020
1,111
177
1,342
10
17,660
4,228
13,432

5.0
8.3
13.3
19.0
1.4
0.2
1.7
0.0
22.3
5.4
16.9

Revenues. Revenues were $79.0 million for the year ended December 31, 2008, an increase of 33.4%, from $59.2 million in
2007. The increase in revenues was primarily due to an increase of $18.2 million in revenues from long-term service contracts and an increase
of $0.4 million in revenues from the provision of occasional services. For the year ended December 31, 2008, our total revenues included
$78.3 million of revenues derived from our content management and distribution services, and $0.7 million of revenues derived from our MSS
business. For the year ended December 31, 2007, all of our revenues were derived from our content management and distribution services, as
the MSS business was acquired by the company in November 2008.
Cost of Revenues. Cost of revenues was $53.5 million for the year ended December 31, 2008, an increase of 39.2%, from
$38.4 million in 2007. This increase is due primarily to additional payments for transmission capacity resulting from the expansion of our
network as a direct result of the addition of customers on to our network. Network services costs were $42.3 million in the period ended
December 31, 2008, an increase of 38.7%, from $30.5 million in 2007.
For the year ended December 31, 2008, $650 thousand were associated with our MSS business, and the remainder with our content
management and distribution services. For the year ended December 31, 2007, the aggregate cost of revenues were associated with our
content management and distribution services, since, as noted above, the MSS business was acquired by the company in November 2008.
As a percentage of total revenue, cost of revenues increased from 64.9% in 2007 to 67.7% in 2008. The increase in cost of services
as a percentage of revenue is primarily due to payments for transmission capacity acquired as part of the expansion of our network, prior to
being fully utilized in providing services to customers, expenses associated with the commencement of activity of Hawley Teleport during
2008 and the effect of currency fluctuation due to the devaluation of the U.S. dollar versus the NIS on salaries and wages expenses that are
primarily denominated in NIS.
The other principal components of cost of revenues include depreciation and amortization, which was $4.0 million in 2008, an
increase of 33.3%, from $3.0 million in 2007. This increase is directly attributable to the increase in fixed assets as a result of the addition of
customers to our network, and the additional assets acquired in Hawley Teleport and in the satellite business of Bezeq.
As a percentage of content management and distribution revenues, cost of revenues in 2008 was 67.5%, and as a percentage of MSS
revenues, cost of revenues in 2008 was 89.5%.
Sales and Marketing Expenses. Sales and marketing expenses were $3.9 million in the year ended December 31, 2008, an increase of
29.7% from $3.0 million in 2007. As described below, the increase in sales and marketing expenses is due to increases in salaries, wages and
benefits, and increases in agents and commission fees paid to third parties. Sales and marketing expenses as a percentage of revenues were
5.1% and 5.0% in 2007 and 2008, respectively.
Sales and marketing salaries, wages and benefits, which include commissions paid to our direct sales representatives, comprised
33.4% and 37.0% of our total sales and marketing expenses in 2007 and 2008, respectively. Salaries, wages and benefits increased by $0.4
million from $1.0 million in 2007 to $1.4 million in 2008 due to an increase in the number of our employees and salary increases and due to
the effect of currency fluctuation between the U.S. dollar and the NIS on salaries and wages that are primarily denominated in NIS.
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Agents and commission fees paid to third parties comprised 52.2% and 48.3% of our total sales and marketing expenses in 2007 and
2008, respectively. Agent fees increased by $0.3 million from $1.6 million in 2007 to $1.9 million in 2008 due to additional fees paid with
respect to new contracts.
General and Administrative Expenses. General and administrative expenses were $6.6 million in the year ended December 31, 2008,
an increase of 14.2% from $5.8 million in 2007. The increase in the dollar amount of general and administrative expenses is mainly the result
of an increase in salaries, wages and service fees paid to our general and administrative officers and employees and an increase in professional
services fees. As a percentage of revenues, general and administrative expenses were 9.7% and 8.3% in 2007 and 2008, respectively.
Salaries, wages and service fees expenses paid to our general and administrative officers and employees comprised 49.1% and 48.1%
of our total general and administrative expenses in 2007 and 2008, respectively. Salaries, wages and service fees expenses increased by
$0.4 million from 2007 to 2008 mainly due to an increase in the number of employees and bonus paid due to our company's performance and
due to the effect of currency fluctuation between the U.S. dollar and the NIS on salaries and wages that are denominated in NIS.
Management fees paid to our principal shareholders were $398 thousand in 2007 and 2008.
Professional services fees, which are legal and audit fees and consulting fees associated with Sarbanes-Oxley compliance, increased
from $630 thousand in 2007 to $802 thousand in 2008. The increase in the costs incurred in 2008 was mainly due to increase in our business
activities.
Allowances for doubtful account. Allowances for doubtful account were $1.1 million in 2007 and $1.0 million in 2008.
Interest and Marketable Securities Income. Interest and marketable securities income, primarily representing interest income earned
on bank deposits and gains from marketable securities, was $1.1 million in the year ended December 31, 2008, a decrease of $1.5 million from
interest and marketable securities income of $2.6 million in 2007. This decrease is primarily the result of the decrease in interest earned on
our cash and cash equivalent due to the decrease in interest rates and losses in our marketable securities classified as trading securities due to
the financial market condition in Israel.
Currency Fluctuation and Other Financial Income (Expenses), Net. Currency fluctuation and other financial income, net, primarily
resulting from currency exchange rate fluctuations affecting transactions denominated in currencies other than the U.S. dollar, our functional
currency, were $177 thousand in the year ended December 31, 2008, a decrease of $152 thousand from currency fluctuation and other
financial income, net, of $329 thousand in 2007.
Changes in Fair Value of Embedded Currency Conversion Derivatives. The change in fair value of embedded currency conversion
derivatives resulted in income of $1.3 million in the year ended December 31, 2008, compared to an expense of $646 thousand in 2007. The
change in the year ended December 31, 2008 is due to the decrease of the exchange rate between the U.S. dollar and the EURO from 1.4718
U.S. dollar/EURO at the end of 2007 to 1.3933 U.S. dollar/EURO as of December 31, 2008, and the respective change in the value of the U.S.
dollar-EURO forward contracts, the different changes in U.S. dollar and EURO interest rates during the year, and due to additional contracts
with embedded derivatives which we entered into during 2008 contributing approximately $500 thousand of income in 2008. The change in
the year ended December 31, 2007 is due to the increase of the exchange rate between the U.S. dollar and the EURO from 1.3170 U.S. dollar/
EURO at the end of 2006 to 1.4718 U.S. dollar/EURO as of December 31, 2007, and the respective change in the value of the U.S. dollarEURO forward contracts.
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Income Taxes. Income taxes were $4.2 million in the year ended December 31, 2008, an increase of 44.2% from $2.9 million in
2007. The increase is primarily due to the difference between the definition of capital and assets for Israeli tax purposes (mainly associated
with our cash held in U.S. dollars) that resulted in finance income for tax purposes, which is added to our income before taxes in our
consolidated financial statements and increased the income before tax for tax purposes. This was partially offset by the additional decrease in
tax rates from 29% in 2007 to 26% in 2008, and partially by the increased portion of our taxable income associated with the approved
enterprise reduced tax rate.
Net Income. Net income was $13.4 million in the year ended December 31, 2008, an increase of 17.8% from $11.4 million in
2007. The increase is due to an increase in operating income of $3.0 million, a decrease in interest and marketable securities income of $1.5
million, an increase in income from embedded currency conversion derivatives of $2.0 million and increase in income taxes of $1.3 million.
Segment Results. In 2008, the gross profit of our MSS business was $77 thousand and the gross profit of our content management
and distribution services to television and radio was $25.4 million. In 2007, all of our revenues were derived from our content management
and distribution services, as the MSS business was acquired by the company in November 2008.
B. Liquidity and capital resources
Principal Sources and Uses of Liquidity. Our principal sources of liquidity are cash from operations and our cash and cash
equivalents and marketable securities. We raised net proceeds of approximately $47.4 million in our initial public offering in November
2006. Our current principal liquidity requirements consist of capital expenditures and amounts owed to suppliers. We usually use our working
capital to pay our suppliers, although, if needed, we may utilize the lines of credit provided to us by Bank Igud (approximately $2.1 million)
and Bank Leumi (approximately $2.0 million) when an obligation to pay a supplier precedes the receipt of payments from customers. At
present we only utilize a portion of these lines of credit ($2.0 million from the Bank Leumi credit line and $1.3 million from the Bank Igud
credit line) mainly to provide guarantees required under several of our long term contracts with our suppliers. Our capital expenditures consist
primarily of transmission and playout equipment as required to provide services to new customers and to expand our MSS offering.
In 2009, our capital expenditures included mainly investments in fixed assets of approximately $8 million. In 2008, our capital
expenditures included the acquisition of the Hawley Teleport in Pennsylvania and the acquisition of the satellite business of Bezeq. We
believe that our present working capital is sufficient for our present requirements.
We intend to continue to expand our presence in the United States, Asia and other markets where we already operate through subcontractors,
by establishing or selectively pursuing the acquisition of local teleports and playout centers, and connecting them to our global network. For
example, in 2008 we completed the acquisition of the Hawley Teleport in Pennsylvania for an aggregate cost of approximately $4.9
million. The cost of acquiring or establishing such operations will include the cost of fixed assets related to transmission equipment and
playout equipment, customer contracts and customer relationship and potential value of synergies.

In addition, in 2008 we acquired the satellite business of Bezeq for an aggregate cost of approximately
$15.6 million.

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Taking into account our expansion plans, we believe that our cash generated from operations and cash balances, including our net
proceeds from our initial public offering in November 2006, will be sufficient to meet our anticipated cash requirements for at least the next
12 months. However, if the acquisition of new businesses will require additional funds, we may raise such amounts by offering debt or equity.
Cash and Cash Equivalents; Marketable Securities. Cash and cash equivalents were $28.4 million at December 31, 2007, $34.7
million at December 31, 2008, and $14.9 million at December 31, 2009. The decrease from 2008 to 2009 was primarily attributable to
investment in securities available- for- sale of $16.8 million and short term deposits of $9.9 million. The increase from 2007 to 2008 was
primarily attributable to the increase of cash provided by operating activities and maturity of marketable securities investments during 2008
that were not reinvested.
Year ended December 31,
2007
2008
2009
(in thousands)
Statement of Cash Flows Data:
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents beginning of year
Cash and cash equivalents end of year

$
$

15,130 $
(38,114)
-(22,984) $
51,393
28,409 $

20,314 $
(3,422)
(10,552)
6,340 $
28,409
34,749 $

16,954
(28,282)
(8,480)
(19,808)
34,749
14,941

Operating Activities
For the year ended December 31, 2009, net cash provided by operating activities was $17 million, a decrease of $3.3 million from
$20.3 million of net cash provided by operating activities for the year ended December 31, 2008. The decrease resulted primarily from an
increase of $8.0 million in trade receivables offset by an increase in account payables of $2.5 million and increase in deferred income of $2.9
million. For the year ended December 31, 2008, net cash provided by operating activities was $20.3 million, an increase of $5.2 million from
$15.1 million of net cash provided by operating activities for the year ended December 31, 2007. The increase resulted primarily from the
increase in our operating income and increase of $3.9 million in trade payables.
Investing Activities
For the year ended December 31, 2009, we used $8.1 million for capital expenditures, comprised mainly of investments in fixed
assets and $20.2 million related to investments net of proceeds of marketable securities and short term deposits. For the year ended December
31, 2008, we used $26.8 million for capital expenditures, comprised of $15.6 million related to the acquisition of the satellite business of
Bezeq, $4.9 million related to the acquisition of the Hawley Teleport and $6.3 million of capital expenses for teleport and playout equipment.
This was offset by net proceeds from marketable securities of $23.4 million. For the year ended December 31, 2007, we used $38.1 million
for capital expenditures from which $31.7 million related to investments net of proceeds of marketable securities invested during 2007 from
the proceeds from our initial public offering in November 2006, and $5.3 million for capital expenditures for teleport and playout equipment.
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Financing Activities
During the years ended December 31, 2008 and 2009, we paid dividends to our shareholders in the amount of $10.6 million and
$8.5 million, respectively. During the year ended December 31, 2007, we did not pay any dividends to our shareholders.
C. Research and development, patents and licenses, etc.
Not applicable.
D. Trend information
See discussion in Parts A and B of Item 5 "Operating Results and Financial Review and Prospects."
E. Off-balance sheet arrangements
We had no material off-balance sheet arrangements for the fiscal year ended December 31, 2009.
F. Tabular disclosure of contractual information
We have lease agreements for our facilities. See Part D of Item 4 "Information on the Company Property, plants and equipment"
for a description of these leases.
We lease cars for employees under operating leases. Those leases are for terms of three years each with a right to terminate with
payment of certain cancellation fee.
We enter into long term contracts with suppliers for leases of network (satellite and fiber optic) and teleport services. Approximately
67.8% of these contractual commitments as of December 31, 2009 do not provide for early termination, or impose a significant penalty for
early termination. The remaining commitments are either terminable each month or allow termination if our corresponding contract with a
customer is terminated.
The following are the contractual commitments at December 31, 2009, associated with lease obligations and contractual
commitments:
Less than
1 year

Total
Operating Leases
Operating Car Leases
Operating Network Leases
Total

2,425
1,114
113,686
117,225

323
445
42,889
43,657

2-3
years
(in thousands)
$
642 $
663
43,314
$
44,619 $

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4-5
years
585
6
23,478
24,069

More than
5 years
$

875
4,005
4,880

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and senior management


Our directors and executive officers as of the date of this Annual report are as follows:
Name
Gilad Ramot (1)(5)
David Rivel
Gil Efron
Lior Rival
Ziv Mor
Maya Rival
David Assia (2)(3)(4)(5)(6)
Amit Ben-Yehuda
Dan Levinson (6)
Vered Levy-Ron (2)(3)(4)
Alexander Milner (1)(5)
Ron Oren
Guy Vaadia (2)(4)(6)
(1)
(2)
(3)
(4)
(5)
(6)

Age
59
63
44
37
34
33
58
46
39
43
70
38
46

Position(s)
Chairman of the Board
Chief Executive Officer and Director
Chief Financial Officer
Vice President Sales and Marketing
Chief Technology Officer
Vice President Operations
Director
Director
Director
Director
Director
Director
Director

"Independent Director" under the applicable NASDAQ Marketplace Rules (see explanation below)
"Independent Director" under the applicable NASDAQ Marketplace Rules and the applicable rules of the Securities and
Exchange Commission (see explanation below)
"Outside Director" as required by Israel's Companies Law (see explanation below)
Member of Audit Committee
Member of Compensation Committee
Member of Investment Committee

Gilad Ramot, the Chairman of our board of directors since April 2001, is a director and the Chief Executive Officer of Del-Ta
Engineering Equipment Ltd., a holding company and a defense and aerospace consulting and marketing firm that is one of our principal
shareholders. Mr. Ramot has been the Chief Executive Officer of Del-Ta Engineering Equipment Ltd. since January 2001. He serves as
Chairman of El-Mor Electricity (1986) Ltd and El-Mor Industries Ltd., and as a director of General Engineers Ltd. and General Engineers
Lighting and Power Protection Ltd., companies engaged in the distribution, marketing and servicing of various electrical equipment, as a
director of Liron Technologies Equipment Ltd., a company engaged in projects and sales of electric power switching gear, and as the
President of Delta Systems, the representative of Raytheon Company in Israel. Mr. Ramot, who is a Brigadier General (res.) in the Israel
Defense Forces, served as the Israeli Defense Forces' Air Defense Forces Commander from 1994 to 1998. He holds a B.A. in Social Science
from Bar-Ilan University, Israel and an M.A. in Management from the Air War High College, France.
David Rivel, our founder and Chief Executive Officer since 1991, is also one of our directors. Mr. Rivel is an electronic, computers
and communications engineer with over 30 years of experience in radio frequency communications, antennas, video, television and satellite
communication. He is responsible for the development and implementation of our strategy, our business development and the overall
management of our company. He holds an M.Sc. degree in Electrical Engineering from the Technion Israel Institute of Technology, Be'er
Sheva Campus, and is a member of the IEEE, World Teleport Association and Society of Satellite Professionals Association. He is the father
of Lior Rival, our Vice President of Sales and Marketing, and Maya Rival, our Vice President Operations.
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Gil Efron has been our Chief Financial Officer since January 2006. From September 2005 until February 2006, Mr. Efron served as
Chief Financial Officer of Earnix Ltd., a software company, and from August 2002 to March 2005, Mr. Efron served as Chief Financial
Officer of Proficiency Ltd., a software company specializing in product data engineering collaboration. Prior to that he served in various
finance positions, including as Chief Financial Officer of IP Planet Network Ltd., a satellite communications services and interactive
television software development company, and as a senior auditor with the Israeli member firm of PricewaterhouseCoopers. Mr. Efron also
serves as a director of Poalim Venture I. Mr. Efron is a certified public accountant in Israel and holds a B.A. in Economics and Accounting
and an M.A. in Business Administration from the Hebrew University of Jerusalem.
Lior Rival has been our Vice President Sales and Marketing since January 2003, after having served as our Marketing Manager
from April 1998 to January 2003. Mr. Rival holds a B.A. in Management and Communication from the Tel-Aviv Open University. He is the
son of David Rivel, our Chief Executive Officer, and the brother of Maya Rival, our Vice President Operations.
Ziv Mor has been our Chief Technology Officer since December 2006. From January 2003 until December 2006, Mr. Mor served as
our Director of Engineering, after having served us in different technical management roles since November 1997. Mr. Mor holds a B.Sc. in
Technology Business and Management from Holon Academic Institute of Technology and a practical engineering degree in Electronics and
Communications from ORT College for Advanced Technologies and Sciences.
Maya Rival has been our Vice President Operations since November 2006, after having served in different technical roles in our
company from 1998 until 2000, and after serving as our Administration Manager since 2000. In her current position as Vice President
Operations, Ms. Rival is responsible for our Administration, Human Resources and Logistics departments. She is the daughter of David
Rivel, our Chief Executive Officer, and the sister of Lior Rival, our Vice President Sales and Marketing.
David Assia, a member of our board of directors since October 2006, is a co-founder of Magic Software Enterprises Ltd. (NASDAQ:
MGIC), and served there in various positions, including as Chairman of the Board of Directors and Chief Executive Officer, from 1983 until
2007. Mr. Assia is currently the CEO of Nadyr Investments, a privately held investment company. Mr. Assia was managing director of
Mashov Computers Ltd. between 1980 and 1986 and has served as the Chairman of its Board of Directors since 1989. Mr. Assia also serves
as a director of Kardan Technologies Ltd., Tradonomi Ltd., Dynasec Ltd., The Weizmann Institute of Science and The Israel Association of
Electronics and Software. Mr. Assia holds a B.A. degree in economics and statistics and an M.B.A. degree, both from Tel Aviv University.
Amit Ben-Yehuda, a member of our board of directors since March 2004, is Chief Executive Officer and a director of Kardan
Communications Ltd., a holding company that focuses in communication companies, which is one of our principal shareholders. Prior to
becoming Chief Executive Officer of Kardan Communications Ltd. in January 2006, Mr. Ben-Yehuda was Deputy CEO of Kardan
Communications Ltd. from January 2005 to January 2006 and Vice President Business Development of Kardan Communications Ltd. from
October 1999 to January 2005. From late 1996 to late 1999, Mr. Ben-Yehuda served as the Director of Business Development of Cellcom
Israel Ltd., a leading wireless telecommunications services operator in Israel. Mr. Ben-Yehuda served as Senior Advisor to the Israeli
Ministry of Tourism and the Israeli Ministry of Interior Affairs from 1992 to 1996. He serves as a director of Kardan Technologies Ltd., a
public company traded on the Tel-Aviv Stock Exchange, and of several privately held companies, including Sintecmedia Ltd., Unicell Ltd.,
The Israeli Channel and Baby First TV LLC. Mr. Ben-Yehuda holds a B.A. in Economics and Political Science and an M.B.A. from Tel-Aviv
University.
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Dan Levinson, a member of our board of directors since July 2008, is the Business Development Manager of Kardan
Communications Ltd. Prior to becoming Business Development Manager of Kardan Communications Ltd. in June 2008, Mr. Levinson
worked in Strategic Planning for The First International Bank of Israel from 2003 until 2008. From 2000 until 2003 Mr. Levinson served as an
associate in the venture capital funds of Poalim Capital Markets. From 1998 until 2000 Mr. Levinson served as a credit officer in the
Corporate Banking Division of Bank Hapoalim. Mr. Levinson currently serves as a director of several private companies, including Unicell
Advanced Cellular Solutions Ltd. and IDIT IDI Technologies Ltd. Mr. Levinson holds a Bachelor of Science in Management from the
Arizona State University and an MBA from Tel-Aviv University.
Vered Levy-Ron, a member of our board of directors since January 2007, is the CEO of HumanEyes Technologies from February
2010. Prior to that, she was president of DaLi Advisory from September 1995 until January 2010. Ms. Levy-Ron also served as head of the
Prepaid Products and Services Group and as a VP of New Businesses at IDT Telecom, a subsidiary of IDT Corporation, from February 2002
to July 2005. Ms. Levy-Ron was also a strategy management consultant at A.T. Kearney in Paris from 1999 to 2001, at Booz Allen &
Hamilton in New York from 1993 to 1999 and at Shaldor in Tel Aviv from 1990 to 1992. Ms. Levy-Ron holds a B.A. degree in French and
economics from Tel Aviv University and an M.B.A. degree in finance and international management from Columbia Business School.
Alexander Milner, a member of our board of directors since December 2006, is the Vice Chairman of Rapac Communication &
Infrastructure Ltd. Mr. Milner was the Managing Director of Rapac Communication & Infrastructure Ltd. from 1989 until the end of 2006.
Prior to that, Mr. Milner was Corporate Vice President and General Manager of the communications group of Tadiran Electronics Ltd. Mr.
Milner is also the Managing Director of O.R.T. Technologies Ltd. and the Chairman of Orpak Systems Ltd. and Transway Ltd. Mr. Milner
received an M.Sc. degree in Electrical Engineering from the Technion in Israel and is a graduate of the Advanced Management Program from
Insead/Stanford University.
Ron Oren, a member of our board of directors since March 2006, is the Chief Executive Officer and President of Rapac
Communication & Infrastructure Ltd. Mr. Oren served as Vice President Business Development of Rapac Communication &
Infrastructure Ltd. from July 2005 until the end of 2006. Prior to his engagement at Rapac Communication & Infrastructure Ltd., Mr. Oren
served as the Technology Manager of Delta Film Ltd., the largest importer of photographic materials and products in Israel, from July 2001 to
July 2005, and as the Logistic Control Manager of Orbotech Ltd., a company that develops equipment for inspecting and imaging circuit
boards and display panels, from February 1999 to June 2001. He is also a director of various subsidiaries of Inter-Gamma
Investment Company Ltd., including Del-Ta Engineering Equipment Ltd., Orpak Systems Ltd. and O.R.T. Technologies Ltd. Mr. Oren holds
a B.Sc. in Industrial and Management Engineering from the Technion Israel Institute of Technology and an M.B.A. from the Herzliya
Interdisciplinary Center.
Guy Vaadia, a member of our board of directors since October 2007, is the Managing Partner of Origo Investments, a credit
investment fund. Prior to joining Origo Investments in 2009, Mr. Vaadia was the Chief Executive Officer of FIBI Holdings Ltd., FIBI
Investment House Ltd. and FIBI Investment House A (1998) Ltd. Prior to becoming the Chief Executive Officer in February 2005, Mr.
Vaadia served as Chief Business Credit Officer at Bank Ha'Mizrahi from 1995. Until March 2009, Mr. Vaadia served as a director of FIBI
Investment House Ltd., FIBI Investment House A (1998) Ltd., CRH (Israel) Ltd., Inter-Gamma Investment Company Ltd., O.R.T.
Technologies Ltd., Rapac Communication & Infrastructure Ltd. and Shamir Optical Industry Ltd. Mr. Vaadia received B.Sc and M.S.C.
degrees in Economics, Agriculture and Management from the Hebrew University in Jerusalem, and an M.B.A. degree from INSEAD at
Fontainebleau.
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The term of each of our directors, other than our outside directors, will expire at the time of our 2010 annual general meeting of
shareholders. The term of our outside directors will expire in January 2013. Please also see Item 7.B. "Major Shareholders and Related Party
Transactions Related party transactions" for a description of the shareholders agreement between David Rivel and Del-Ta Engineering,
pursuant to which David Rivel granted Del-Ta Engineering an irrevocable proxy to vote his ordinary shares solely with respect to the election
of directors.
B. Compensation
The aggregate direct compensation we paid to our executive officers as a group (5 persons) for the year ended December 31, 2009
was $3.2 million. This amount includes $89 thousand that was set aside or accrued to provide for severance and retirement insurance policies,
and $1.7 million that was paid as bonuses pursuant to individual bonus arrangements provided for in the executive officers' employment
agreements. This amount does not include expenses we incurred for other payments, including dues for professional and business
associations, business travel and other expenses and benefits commonly reimbursed or paid by companies in Israel. In addition, this amount
does not include fees paid to our Chief Executive Officer in consideration for his services as a director (see below).
We pay each director an annual fee of $17 thousand, $500 per each meeting of the board attended and $500 per each meeting of a
committee attended, unless such meeting is held immediately before or after a board meeting, in which case, the fee for such meeting is
$200. In the event that a director attends a meeting by phone or a resolution is adopted by written consent, then the fee for such action is
$150.
The cash compensation of our outside directors is the same as the cash compensation of all our other directors. In addition, in
January 2010, upon their reelection as our outside directors for an additional three year term until January 2013, we granted each of our
outside directors options to purchase 7,440 ordinary shares at an exercise price of $12.50 per ordinary share that vest in equal annual
installments over a three years period.
In addition, commencing January 1, 2009, in consideration for the services provided to the company, we pay the Chairman of our
board of directors a monthly fee of $5,000 and an annual bonus not to exceed $60,000 (see Item 7.B. "Major Shareholders and Related Party
Transactions Related party transactions").
As of December 31, 2009, there were outstanding (i) options to purchase 233,100 ordinary shares granted to our directors and
executive officers (one person), at exercise prices ranging from $5.60 to $8.35 per ordinary share, with an expiration date of June 2012 (see
Item 7.B. "Major Shareholders and Related Party Transactions Related party transactions"), and (ii) 19,845 restricted share units granted to
our directors and executive officers (6 persons). Other than as specified in the share ownership table under Item 7 "Major Shareholders and
Related Party Transactions," none of our directors and officers holds more than 1% of our outstanding shares.
C. Board practices
Our current board of directors consists of nine directors, including two outside director as required by Israeli law.
Other than the outside directors, who are subject to special election requirements under Israeli law, our directors are elected by
cumulative voting of the shareholders present, in person or by proxy, at a shareholders meeting convened for that purpose. At the election of
directors, each shareholder so present shall be entitled to as many votes as shall equal the number of ordinary shares held by such shareholder
multiplied by the number of directors to be elected at the meeting, and such shareholder may cast all of such votes for a single director
nominee or may distribute them among any number of directors nominees as it may see fit. Although cumulative voting does not assure
minority representation, it may facilitate the ability of a significant minority shareholder or a group of minority shareholders to elect one or
more directors.
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Any increase in the number of our directors above nine members requires an amendment of our articles of association and approval
by a supermajority vote of seventy-five percent (75%) or more of the votes cast by those shareholders present and voting, not taking into
consideration abstentions. A general meeting may remove a director during the term by a simple majority vote (except for outside directors,
who can be removed only in accordance with the Israeli Companies Law of 1999, or the Companies Law).
David Rivel and Del-Ta Engineering are parties to a shareholders agreement, pursuant to which Mr. Rivel granted Del-Ta
Engineering an irrevocable proxy to vote all shares beneficially owned by him solely with respect to the election of directors. Del-Ta
Engineering agreed to use its voting rights in support of Mr. Rivel's election to our board of directors. For a detailed description of this
agreement, see Item 7.B. "Major Shareholders and Related Party Transactions Related party transactions".
Each of our executive officers serves at the discretion of our board of directors and holds office until his or her successor is elected or
his or her resignation or removal.
Since October 2007, Yigal Berman has served as an observer to our board of directors. In such capacity, he receives compensation
equal to the compensation we pay our directors. Mr. Berman's background is set forth below:
Yigal Berman is the Vice President, Chief Financial Officer and Secretary of Inter-Gamma Investment Company Ltd., one of our
principal shareholders (through its indirect subsidiary Del-Ta Engineering Equipment Ltd.). Mr. Berman served as our director from June
1993 through October 2007. Mr. Berman serves as a director of various subsidiaries of Inter-Gamma Investment Company Ltd., including
Rapac Communication & Infrastructure Ltd., a holding company that primarily operates in the fields of communication and military systems
and is publicly traded on the Tel-Aviv Stock Exchange, Orpak Systems Ltd., a company engaged in computerized fuel management and
payment systems, which is publicly traded on the London Stock Exchange, and Orpak's holding company, O.R.T. Technologies Ltd.
Mr. Berman holds a B.A. in Economics and an M.B.A. from Tel-Aviv University.
Corporate Governance Requirements
The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the SEC and NASDAQ, require issuers to
comply with various corporate governance practices.
In general, NASDAQ Marketplace Rules require that the board of directors of a NASDAQ-listed company have a majority of
independent directors, each of whom satisfies the "independence" requirements of NASDAQ, and its audit committee must have at least three
members and be comprised only of independent directors, each of whom satisfies the respective "independence" requirements of NASDAQ
and the Securities and Exchange Commission. Our board of directors has determined that each of Messrs. Assia, Milner, Ramot and Vaadia
and Ms. Levy-Ron qualifies as an independent director under the requirements of NASDAQ, and that each of Messrs. Assia and Vaadia and
Ms. Levy-Ron (who serve on our audit committee) qualifies as an independent director under the respective requirements of the Securities and
Exchange Commission and NASDAQ.
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Under the Israeli Companies Law, an Israeli company, whose shares are publicly traded, may elect to adopt a provision in its articles
of association pursuant to which a majority of its board of directors will constitute individuals complying with certain independence criteria
prescribed by the Israeli Companies Law. We have not included such a provision in our articles of association since our board of directors
complies with the independence requirements of the NASDAQ and Securities and Exchange Commission regulations described above.
Home Country Practices
As a foreign private issuer whose shares are listed on the NASDAQ Global Select Market, we are permitted to follow certain home
country corporate governance practices instead of certain requirements of the NASDAQ Marketplace Rules.
We do not comply with NASDAQ requirements regarding the director nominations process, which require that director nominees be
selected/determined, or recommended for the board of directors selection/determination, either by a majority of the independent directors or a
committee comprised solely of independent directors. Instead, we follow Israeli law and practice in accordance with which our directors are
recommended by our board of directors for election by our shareholders and our board of directors. In addition, our independent directors do
not have regularly scheduled meetings at which only independent directors are present, as such meetings are not required by Israeli law.
As a foreign private issuer listed on the NASDAQ Global Select Market, we may also follow home country practice with regard to,
among other things, composition of the board of directors and quorum at shareholders' meetings. In addition, we may follow our home
country law, instead of the NASDAQ Marketplace Rules, which require that we obtain shareholder approval for certain dilutive events, such
as for the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the
company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain
acquisitions of the stock or assets of another company. A foreign private issuer that elects to follow a home country practice instead of
NASDAQ requirements, must submit to NASDAQ in advance a written statement from an independent counsel in such issuer's home country
certifying that the issuer's practices are not prohibited by the home country's laws. In addition, a foreign private issuer must disclose in its
annual reports filed with the Securities and Exchange Commission or on its website each such requirement that it does not follow and describe
the home country practice followed by the issuer instead of any such requirement.
For a discussion of the requirements of Israeli law in this regard, see Item 10.B. "Additional Information Memorandum and articles
of association Fiduciary Duties and Approval of Related Party Transactions," " Shareholders" and " Anti-Takeover Provisions."
Outside Directors
We are subject to the Companies Law. Under the Companies Law, an Israeli company whose shares have been offered to the public
or whose shares are listed for trading on a stock exchange in or outside of Israel, is required to elect at least two outside directors to serve on
its board of directors, which we have reelected in January 2010. At least one of the outside directors is required to have "financial and
accounting expertise," unless another member of the audit committee, who is an independent director under the NASDAQ Marketplace Rules,
has "financial and accounting expertise," and the other outside director or directors are required to have "professional expertise," all as defined
under the Companies Law. Our board of directors has determined that our outside director, Mr. David Assia, is independent under the
applicable Securities and Exchange Commission and NASDAQ Marketplace Rules and has "financial and accounting expertise," and our
other outside director, Ms. Vered Levy-Ron, is independent under the applicable Securities and Exchange Commission and NASDAQ
Marketplace Rules and has "professional expertise". Our board of directors has also determined that each of Mr. Assia and Ms. Levy-Ron is
an expert outside director, as defined in the Companies Law regulations.
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A person may not serve as an outside director if at the date of the person's election or within the prior two years the person, or his or
her relatives, partners, employers or entities under the person's control, have or had any affiliation with us or any entity controlling, controlled
by or under common control with us. Under the Companies Law, "affiliation" includes:

an employment relationship,

a business or professional relationship maintained on a regular basis,

control, and

service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the
public if such director was appointed or elected as a director of the private company in order to serve as an outside director
following the initial public offering.

An "office holder" is defined as any director, managing director, general manager, chief executive officer, executive vice president,
vice president, other manager directly subordinate to the general manager or any other person assuming the responsibilities of any of these
positions regardless of that person's title. Each person listed in the table under "Director and senior management" is an office holder.
A person may not serve as an outside director if that person's position or other business activities create, or may create, a conflict of
interest with the person's service as a director or may otherwise interfere with the person's ability to serve as a director. If at the time any
outside director is to be elected all members of the board are of the same gender, then the outside director to be elected must be of the other
gender. There is also a restriction on interlocking boards: A director of a company may not be elected as an outside director of another
company if, at that time, a director of the other company is acting as an outside director of the first company. Until the lapse of two years
from the termination of office, a company may not engage an outside director to serve as an office holder and cannot employ or receive
services from that person, either director or indirectly, including through a corporation controlled by that person.
Outside directors are elected by a majority vote at a shareholders' meeting. In addition to the majority vote, the shareholder approval
of the election of an outside director must satisfy either of two additional tests:

the majority includes at least one-third of the shares voted by shareholders other than our controlling shareholders; or

the total number of shares, other than shares held by controlling shareholders, voted against the election of the outside director
does not exceed 1% of the aggregate voting rights of our company.

The Companies Law provides for an initial three-year term for an outside director, which may be extended for additional three-year
terms, subject to certain requirements. An outside director may be removed only by the same special majority required for his or her election
or by a court, and then only if the outside director ceases to meet the statutory qualifications for election or if he or she breaches a duty of
loyalty to our company. In the event of a vacancy in the position of an outside director, if there are then fewer than two outside directors, our
board of directors is required under the Companies Law to call a special shareholders meeting as promptly as practical to elect a new outside
director. David Assia and Vered Levy-Ron are our outside directors under the Companies Law. Their term of office will expire in January
2013.
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Outside directors may be compensated only in accordance with regulations adopted under the Companies Law. The compensation of
an outside director must be determined prior to the person's consent to serve as an outside director. Compensation of all directors requires the
approval of our audit committee, board of directors and shareholders, in that order.
Committees of the Board of Directors
Our board of directors has established an audit committee, a compensation committee and an investment committee.
Audit Committee. Under the Companies Law, the board of directors of any public company must establish an audit committee. The
audit committee must consist of at least three directors and must include all of the outside directors. The audit committee may not include the
chairman of the board, any director employed by us or providing services to us on a regular basis, a controlling shareholder or any of a
controlling shareholder's respective relatives. In addition, under the listing requirements of the NASDAQ Global Market, we also are required
to maintain an audit committee. Our audit committee consists of Guy Vaadia and our two outside directors, David Assia and Vered LevyRon, each of which is an independent director under the respective requirements of the Securities and Exchange Commission and
NASDAQ. Our audit committee meets as often as it determines to be necessary and appropriate, but not less than every three months.
The audit committee's duties include providing assistance to the board of directors in fulfilling its legal and fiduciary obligations in
matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services
performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal accounting
controls. The audit committee also oversees the audit efforts of our independent accountants and takes those actions as it deems necessary to
satisfy itself that the accountants are independent of management. Under the Companies Law, the audit committee also is required to monitor
deficiencies in the administration of our company, including by consulting with the internal auditor, and to review and approve related party
transactions.
Compensation Committee. Our compensation committee consists of three directors, Alexander Milner, Gilad Ramot and David
Assia, our outside director. The compensation committee's duties include making recommendations to the board of directors regarding the
issuance of equity incentive awards under our equity incentive plan and determines salaries and bonuses for our executive officers and
incentive compensation for our other employees. The compensation committee meets at least twice a year, with further meetings to occur, or
actions to be taken by unanimous written consent, when deemed necessary or desirable by the committee or its chairperson.
Investment Committee. Our investment committee consists of three directors, Dan Levinson, Guy Vaadia and David Assia, our
outside director. The investment committee's duties include reviewing and making recommendations to the board of directors regarding the
company's investment policies. The investment committee meets at least twice a year, with further meetings to occur, or actions to be taken
by unanimous written consent, when deemed necessary or desirable by the committee.
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Internal Auditor
Under the Companies Law, the board of directors also must appoint an internal auditor nominated following the recommendation of
the audit committee. The primary role of the internal auditor is to examine whether a company's actions comply with the law and proper
business procedure. The internal auditor may be an employee of ours but may not be an interested party or office holder, or a relative of any
interested party or office holder, and may not be a member of our independent accounting firm or its representative. The Companies Law
defines an "interested party" as a holder of 5% or more of our shares or voting rights, any person or entity that has the right to nominate or
appoint at least one of our directors or our general manager, or any person who serves as one of our directors or as our general manager. Our
internal auditor is Brightman Almagor & Co., a member firm of Deloitte Touche Tohmatsu.
D. Employees
As of December 31, 2009, we had 215 employees, of whom 169 were in operations, 20 were in sales and marketing, and 26 were in
general and administration; as of December 31, 2008, we had 188 employees, of whom 147 were in operations, 18 were in sales and
marketing, and 23 were in general and administration; and as of December 31, 2007, we had 142 employees, of whom 111 were in operations,
12 were in sales and marketing, and 19 were in general and administration. Competition for personnel in the telecommunications industry is
intense. We have never experienced any work stoppage and we believe that our employee relations are good. The number of employees above
includes 7 employees in the MSS business as of December 31,2009, of whom 3 were in operations and 4 in sales and marketing; and 3
employees as of December 31, 2008, of whom 1 was in operations and 2 were in sales and marketing.
As of December 31, 2009, 201 of our employees were located in Israel and 14 employees were located in the United States, and as of
December 31, 2008, 178 of our employees were located in Israel and 10 employees were located in the United States. Certain provisions of
Israeli law and of the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination
Bureau of Economic Organizations (the Israeli federation of employers' organizations) apply to our Israeli employees by order of the Israeli
Ministry of Industry, Trade and Labor. These provisions principally concern the maximum length of the work day and the work week for
employees. Furthermore, under these provisions, the wages of most of our employees are automatically adjusted in accordance with cost of
living adjustments, as determined on a nationwide basis and under agreements with the Histadrut based on changes in the Israeli consumer
price index. The amounts and frequency of such adjustments are modified from time to time. In addition, Israeli law determines minimum
wages, procedures for dismissing employees, minimum severance pay that we must pay and other conditions of employment.
Israeli law generally requires the payment by Israeli employers of severance pay upon the retirement or death of an employee, or
upon termination of employment by the employer or, in certain circumstances, by the employee. We currently fund our ongoing severance
obligations by making monthly payments for severance insurance policies. According to Section 14 to the Israeli Severance Pay Law
("Section 14"), the payment of monthly deposits by a company into recognized severance and pension funds or insurance policies releases it
from any additional severance obligation to the employees that have entered into agreements with the company pursuant to such Section
14. Commencing 2009, we entered into agreements with a majority of our employees in order to implement Section 14. Therefore, beginning
that date, the payment of monthly deposits by the company into recognized severance and pension funds or insurance policies releases it from
any additional severance obligation to those employees that have entered into such agreements and therefore we incur no additional liability
since that date with respect to such employees. In addition, according to the National Insurance Law, Israeli employees and employers are
required to pay specified amounts to the National Insurance Institute, which is similar to the United States Social Security
Administration. These contributions entitle the employees to benefits during periods of unemployment, work injury, maternity leave,
disability, and military reserve duty, and in the event of the bankruptcy or winding-up of their employer. These amounts also include
payments for national health insurance payable by employees. The payments to the National Insurance Institute are determined progressively
in accordance with wages. They currently range from approximately 7% to 15% of wages up to certain wage levels, of which the employee
contributes approximately 66% and the employer contributes approximately 34%. All of our full-time employees in Israel, are covered by
general and/or individual life and pension insurance policies providing customary benefits to employees, including retirement and severance
benefits. Pursuant to an order issued in December 2007 by the Israeli Minister of Industry, Trade and Labor, new provisions relating to
pension arrangements in the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the
Coordination Bureau of Economic Organizations (the Israeli federation of employers' organizations) apply to all employees in Israel,
including our employees. According to these provisions, all employees employed for at least six months are entitled to pension benefits to be
funded by preset monthly contributions of the employee and the employer.
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E. Share ownership
Share Ownership by Directors and Executive Officers
For information regarding ownership of our ordinary shares by our directors and executive officers, see Item 7.A. "Major
Shareholders and Related Party Transactions Major shareholders."
2006 Israel Equity Incentive Plan
We have adopted an equity incentive plan under Section 102 of the Israeli Income Tax Ordinance, or Section 102, which provides
certain tax benefits in connection with share-based compensation to employees, officers and directors. This plan, our 2006 Israel Equity
Incentive Plan, was approved by the Israeli Tax Authority.
Under our equity incentive plan, we may grant our directors, officers and employees restricted shares, restricted share units and
options to purchase our ordinary shares under Section 102. We may also grant other persons awards under our equity incentive
plan. However, such other persons (controlling shareholders, services providers, etc.) will not enjoy the tax benefits provided by
Section 102. The total number of ordinary shares that are available for grant under our plan is 441,000, which is reduced by two shares for
each restricted share unit or restricted share that we grant under the plan and by one share for each option that we grant under the plan.
As of December 31, 2009, we had granted 104,261 restricted share units under the plan (net of expired restricted share units), 19,845
of which were outstanding on that date and will vest on October 31, 2010. No other awards were granted under the plan as of December 31,
2009. In January 2010, upon their reelection to our board of directors, we granted each of our two outside directors options to purchase 7,440
ordinary shares at an exercise price of $12.50 per ordinary share.
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The Israeli Tax Authority approved our equity incentive plan under the capital gains tax track of Section 102. Based on Israeli law
currently in effect and the election of the capital gains tax track, and provided that options, restricted shares and restricted shares units granted
or, upon their exercise or vesting, the underlying shares, issued under the plan are held by a trustee for the two years following the date in
which such awards are granted, our employees, officers and directors will be (i) entitled to defer any taxable event with respect to the awards
until the underlying shares are sold, and (ii) subject to capital gains tax of 25% on the sale of the shares. However, if we grant awards at a
value below the underlying shares' market value at the date of grant, the 25% capital gains tax rate will apply only with respect to capital gains
in excess of the underlying shares' market value at the date of grant and the remaining capital gains will be taxed at the grantee's regular tax
rate. We may not recognize expenses pertaining to the employees' restricted shares, restricted share units and options for tax purposes except
in the events described above under which the gain is taxed at the grantee's regular tax rate.
If we terminate the employment of an employee for cause, all of his or her vested and unvested options expire immediately and all
unvested restricted shares and unvested restricted share units expire immediately. If we terminate the employment of an employee for any
other reason, the employee may generally exercise his or her vested options within three months of the date of termination and shall be
entitled to any rights upon vested restricted shares and vested restricted share units to be delivered to the employee to the extent that they were
vested prior to the date his or her employment terminates. An employee whose employment is terminated due to disability or death may
generally exercise his or her options (or his or her heirs, in the event of death) within one year of the date the employment is terminated. Any
expired or unvested options, restricted shares, restricted share units restricted return to the plan for reissuance.
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ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major shareholders
The following table shows information as of March 15, 2010 for (i) each person who, to the best of our knowledge, beneficially owns
more than 5% of our outstanding ordinary shares, (ii) each of our executive officers and directors and (iii) our executive officers and directors
as a group. The information in the table below is based on 17,326,716 ordinary shares outstanding as of March 15, 2010. In computing the
number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed as outstanding
shares of common stock subject to options or restricted share units held by that person that are currently exercisable or exercisable within 60
days of March 15, 2010. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any
other person. Except as otherwise set forth below, the street address of the beneficial owners is c/o RRsat Global Communications
Network Ltd., Re'em, D.N. Shikmim 79813, Israel. Each of our outstanding ordinary shares has identical rights in all respects.

Name
Executive Officers and Directors
Gilad Ramot
David Rivel (2)
Gil Efron
Lior Rival
Maya Rival
Ziv Mor
David Assia
Amit Ben-Yehuda
Dan Levinson
Vered Levy-Ron
Alexander Milner
Ron Oren
Guy Vaadia
All directors and officers as a group (13 persons)(2)
Other 5% Shareholders
Del-Ta Engineering Equipment Ltd. (3)
Kardan Communications Ltd. (4)
_______________________

Number of
Ordinary
Shares
Beneficially
Owned(1)

Percentage of
Ordinary
Shares

10,710
2,205,740
22,936
10,008
10,008
3,336
2,262,738

*
12.61%
*
*
*
*
12.89%

6,556,867
4,233,600

37.84%
24.43%

* Less than 1%.


(1)

Excludes outstanding restricted share units that do not vest within 60 days of March 15, 2010.

(2)

Based on Schedule 13G/A filed with the Securities and Exchange Commission on January 19, 2010 and on other
information provided to us. Includes currently exercisable options to purchase (i) 37,800 ordinary shares at an exercise
price of $5.60 per share; (ii) 37,800 ordinary shares at an exercise price of $6.16 per share; (iii) 44,100 ordinary shares at an
exercise price of $6.77 per share; and (iv) 50,400 ordinary shares at an exercise price of $7.45 per share. These ordinary
shares are deemed outstanding for the purpose of computing the percentage owned by David Rivel (that is, they are
included in both the numerator and the denominator) but they are disregarded for the purpose of computing the percentage
owned by any other shareholder.
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(3)

Based on Schedule 13G/A filed with the Securities and Exchange Commission on January 19, 2010 and on other
information provided to us. The address of Del-Ta Engineering Equipment Ltd. is 8 Shaul Hamelech Blvd. Tel-Aviv
64733, Israel. Del-Ta Engineering Equipment Ltd. is a wholly-owned subsidiary of Rapac Communication &
Infrastructure Ltd. Based on information provided to us by Del-Ta Engineering Equipment Ltd., as of March 11, 2010,
Inter-Gamma Investment Company Ltd., a company publicly traded on the Tel-Aviv Stock Exchange, beneficially owned
shares of Rapac Communication & Infrastructure Ltd. representing approximately 66.0% of the voting power and share
capital of Rapac Communication & Infrastructure Ltd. Based on information provided to us by Del-Ta Engineering
Equipment Ltd., as of March 11, 2010, Mr. Tanhum Oren beneficially owned shares of Inter-Gamma Investment Company
Ltd. representing approximately 74.0% of the voting power and 61.1% of the share capital of Inter-Gamma
Investment Company Ltd. Del-Ta Engineering Equipment Ltd. directly holds 6,085,800 ordinary shares. InterGamma
International Trade Founded by InterGamma Investments Co., a wholly owned subsidiary of Del-Ta Engineering
Equipment Ltd., directly holds 471,067 ordinary shares. In addition, Del-Ta Engineering Equipment Ltd. may be deemed
the beneficial owner of additional 2,035,640 ordinary shares that are beneficially owned by Mr. Rivel, by virtue of the
irrevocable proxy for the election of directors that Mr. Rivel has granted to Del-Ta Engineering Equipment Ltd. Mr. Oren
disclaims beneficial ownership of the ordinary shares beneficially owned by Del-Ta Engineering Equipment Ltd. except to
the extent of his interest in Inter-Gamma Investment Company Ltd.

(4)

Based on Schedule 13G/A filed with the Securities and Exchange Commission on January 12, 2010 and on other
information provided to us. The address of Kardan Communications Ltd. is 154 Menachem Begin Road Tel-Aviv 64921,
Israel. Kardan Israel Ltd., a company publicly traded on the Tel-Aviv Stock Exchange, beneficially owns all the shares of
Kardan Communications Ltd. As of December 31, 2009, Kardan N.V., a company publicly traded on the Euronext
Amsterdam Market and the Tel-Aviv Stock Exchange, beneficially owned shares of Kardan Israel Ltd. representing
approximately 73.9% of the voting power of Kardan Israel Ltd.

Based on Schedules 13G/A filed with the Securities and Exchange Commission by Del-Ta Engineering Equipment Ltd. and David
Rivel, on January 28, 2008, January 14, 2009 and January 19, 2010 and on other information provided to us, (A) during 2007, (i) InterGamma
International Trade Founded by InterGamma Investments Co., a wholly owned subsidiary of Del-Ta Engineering Equipment Ltd., acquired
64,700 ordinary shares in ordinary brokerage transactions, and (ii) David Rivel sold an aggregate of 445,934 ordinary shares in ordinary
brokerage transactions, (B) during 2008, (i) InterGamma International Trade Founded by InterGamma Investments Co., a wholly owned
subsidiary of Del-Ta Engineering Equipment Ltd., acquired 320,947 ordinary shares in ordinary brokerage transactions, and (ii) David Rivel
sold an aggregate of 71,326 ordinary shares in ordinary brokerage transactions, and (C) during 2009, InterGamma International Trade
Founded by InterGamma Investments Co., a wholly owned subsidiary of Del-Ta Engineering Equipment Ltd., acquired 85,420 ordinary
shares in ordinary brokerage transactions. We have been notified by Kardan Communications Ltd. that it has pledged its ordinary shares of
the company in favor of a bank to secure a bank loan.
According to our transfer agent, as of March 15, 2010, we had two holders of record of our ordinary shares in the United States,
including Cede & Co., the nominee of The Depository Trust Company, holding 4,971,671 ordinary shares representing approximately 28.7%
of outstanding shares. The number of record holders in the United States is not representative of the number of beneficial holders nor is it
representative of where such beneficial holders are resident since many of these ordinary shares were held by brokers or other nominees.
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B. Related party transactions


Shareholders Agreements
Two of our principal shareholders, Del-Ta Engineering and David Rivel, have entered into a shareholders agreement, pursuant to
which Mr. Rivel granted Del-Ta Engineering an irrevocable proxy to vote all shares beneficially owned by him at shareholders meetings on
any matter relating to the election of directors, including their removal, substitution or replacement. Del-Ta is entitled to exercise the
irrevocable proxy in its sole discretion, but will be required to inform Mr. Rivel in advance how it intends to exercise its rights. Del-Ta
Engineering agreed to use its voting rights in support of Mr. Rivel's election to our board of directors. In addition, Mr. Rivel granted Del-Ta a
right of first refusal with respect to any proposed sale of his ordinary shares, whether in a transaction on a stock exchange or in a private
transaction, including sales through a blind trust, except for sales to specified permitted transferees. Del-Ta Engineering will be required to
compensate Mr. Rivel in certain cases in the event Del-Ta Engineering does not exercise its right of first refusal. The shareholders agreement
had an initial term of three years that commenced at the time of our initial public offering in November 2006. At the end of each year, the
agreement automatically extends for an additional one year period beyond the then current three year term unless either party notifies the other
during the month of April in any year that it does not wish to extend the agreement, in which case the agreement will expire at the end of the
then applicable initial or extended three years term. We have been advised by these principal shareholders that in November 2009, the term of
the agreement was extended until November 2012. Furthermore, the agreement will terminate on the earlier of (i) 30 days after the date on
which the aggregate holdings of Del-Ta Engineering and David Rivel represent less than 47% of our outstanding share capital and (ii) two
years after the date Mr. Rivel is no longer our chief executive officer, unless Del-Ta Engineering and all the directors representing Del-Ta
Engineering on our board of directors voted against the removal of Mr. Rivel from his position as our chief executive officer.
In October 2006, our principal shareholders, Del-Ta Engineering, Kardan Communications and David Rivel, entered into an
agreement providing each principal shareholder with a right to tag along to any proposed sale of ordinary shares or other securities of the
company by Del-Ta Engineering or Kardan Communications. The tag along right does not apply to sales on a stock exchange and sales to
specified permitted transferees. Each principal shareholder shall have the right to tag along based on its pro rata share of our ordinary shares
at the time of the proposed sale. The agreement has an initial term of three years that commenced at the time of our initial public offering in
November 2006. At the end of each year, the agreement automatically extends for an additional one year period beyond the then current three
year term unless one of the parties notifies the other parties at least 90 days prior to the end of the year that it does not wish to extend the
agreement, in which case the agreement will expire at the end of the then applicable initial or extended three years term. Furthermore, the
agreement will terminate with respect to any shareholder on the date such shareholder's holdings represent less than 10% of our outstanding
share capital.
Registration Rights Agreement
Our principal shareholders, Del-Ta Engineering, Kardan Communications and David Rivel, to whom we refer to as the entitled
shareholders, have the right, subject to various conditions and limitations, to include their shares in registration statements relating to our
securities.
Demand Registration Rights. At any time beginning no earlier than six months after the closing of our initial public offering in
November 2006, each of the three entitled shareholders has the right, on no more than one occasion, to demand that we register ordinary
shares under the Securities Act, subject to certain limitations, including that the aggregate offering price to the public equals at least
$5 million. We may defer the filing of any registration statement for up to 120 days once in any 12-month period if our board of directors
determines that the filing would be detrimental to our shareholders and us. The underwriters have the right, subject to certain limitations, to
limit the number of shares included in the registration.
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Form F-3 Registration Rights. At any time after we become eligible to file a registration statement on Form F-3, the entitled
shareholders may, subject to certain terms and conditions, require us to file a registration statement on Form F-3, provided the aggregate
offering price to the public, not including the underwriters' discounts and commissions, equals at least $2 million. However, we shall not be
required to effect more than two registrations on Form F-3 in any twelve-month period, and we may, in certain circumstances, defer the
registration for up to 120 days once in any 12-month period if our board of directors determines that the filing would be detrimental to our
shareholders and us. The underwriters have the right, subject to certain limitations, to limit the number of shares included in the registration.
"Piggyback" Registration Rights. In addition, the entitled shareholders received piggyback registration rights with respect to the
registration under the Securities Act of ordinary shares. In the event we propose to register any ordinary shares under the Securities Act either
for our account or for the account of other shareholders, the entitled shareholders will be entitled to receive notice of the registration and to
include shares in any such registration, subject to limitations. Piggyback registration rights are also subject to the right of the underwriters of
an offering to limit the number of shares included in the registration. We may terminate or withdraw any piggyback registration prior to the
effectiveness of the registration whether or not any entitled shareholder has elected to include securities in the registration.
Expenses of Registration. All expenses in effecting these registrations, including the reasonable fees and expenses of one counsel for
the selling shareholders in the event that our counsel does not make itself available for the selling shareholders for this purpose, with the
exception of underwriting discounts and selling commissions, will be borne by us. However, we will not pay for the expenses of any demand
registration or F-3 registration if the request is subsequently withdrawn by the entitled shareholders, subject to specified exceptions.
Expiration of Registration Rights. The registration rights described above will expire, with respect to each holder, on the earlier of:
(i) the date that the holder is eligible to sell all of its shares subject to these registration rights under Rule 144 of the Securities Act within any
90-day period; and (ii) the lapse of five years following the completion of our initial public offering. If, after five years, any shares cannot be
sold without any volume limitations in any 90-day period without registration in compliance with Rule 144(k) of the Securities Act, we agreed
to use our best efforts to assist such entitled shareholder in disposing of such shares so long as we will not be required to bear any expense or
subject ourselves to any liability in connection with, or as a result of, such assistance.
Management Services Agreements
In October 2006, we entered into a management service agreement with Del-Ta Engineering and Kardan Communications effective
as of January 2007. This agreement sets forth the management and consulting services that Del-Ta Engineering and Kardan Communications
are obligated to provide us and the annual management fees payable thereunder as follows: (i) $235 thousand to Del-Ta Engineering and
(ii) $163 thousand to Kardan Communications. This agreement provided initially for a one year term and renews automatically for one year
periods unless terminated by us or, jointly, by Del-Ta Engineering and Kardan Communications. Each of Del-Ta Engineering and Kardan
Communications agreed not to terminate or amend the agreement without the consent of the other service provider. Del-Ta Engineering and
Kardan Communications also agreed that for so long as each has a representative serving on our board of directors, neither party will vote at
any shareholder vote in favor of terminating or not renewing the agreement. The payments pursuant to this agreement aggregated
$398 thousand in 2007, 2008 and 2009.
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Employment Agreements
In March 2006, we entered into a service agreement (which replaced an agreement of March 2001) with Datacom, a company
controlled by Mr. Rivel, which was amended in September 2006, pursuant to which Datacom agreed to provide us with the services of David
Rivel as our Chief Executive Officer. We believe this agreement is equivalent to an employment agreement. The term of the agreement is
through December 31, 2011. Either party may terminate the agreement upon 180 days' prior written notice. If the agreement is terminated as
a result of Mr. Rivel's death, we will pay Datacom a fee in the amount of $300 thousand plus VAT.
Pursuant to the agreement, Datacom was entitled to NIS 102,700 plus VAT per month through December 2006 and to NIS 122,765
per month (adjusted to the Israeli CPI from August 2006) plus VAT beginning January 2007 as compensation for Mr. Rivel's services as our
Chief Executive Officer. Datacom is also entitled to a bonus of 6% of our annual net income up to $4 million in 2006 and up to $1 million
thereafter, 8% of our annual net income above $4 million and up to our historical highest annual net income in 2006 and above $1 million and
up to our historical highest annual net income thereafter, 10% of our annual net income above our historical highest annual net income and up
to 120% of our historical highest annual net income, and 15% of our annual net income above 120% of our historical highest annual net
income. For the purpose of determining the bonus, taxes, management fees to other shareholders and specified expenses and losses are
excluded from the calculation of annual net income. In addition, the agreement provided that the 2006 bonus shall not be less than the 2005
bonus. We also provide Mr. Rivel with certain benefits that are customary for senior officers in Israel, such as the use of a company car and
reimbursement of home telephone expenses.
Pursuant to this agreement, Mr. Rivel was granted options to purchase a total of 233,100 ordinary shares. The options vest in five
installments over a period of four years, beginning on December 31, 2006, when approximately 16 of the options vested. These options are
exercisable at exercise prices ranging from $5.60 per ordinary share to $8.35 per ordinary share. Unvested options will expire upon
termination of the service agreement and vested options will expire 6 months following termination of the services agreement.
We have also agreed to indemnify Datacom and David Rivel for any expense or loss they may incur as a result of claims made
against Datacom and David Rivel, which would have been indemnifiable by us or subject to insurance coverage had the claim been made
directly against David Rivel as our office holder.
We have also agreed with David Rivel that following the expiration or termination of the agreement with Datacom for any reason
other than as a result of Mr. Rivel's death, we will pay Mr. Rivel, in consideration for a non-competition undertaking on his part, which shall
extend between 12 and 24 months depending on the date the Datacom agreement terminates or expires, $150 thousand if the agreement would
have been terminated on or before December 31, 2008, $350 thousand if the agreement terminates during 2009, $450 thousand if the
agreement terminates during 2010 and $650 thousand if the agreement terminates or expires during 2011. In the event the Datacom
agreement would have been terminated on or before December 31, 2008, we would not have been required to make this payment to Mr. Rivel
if we had decided not to enforce such undertaking.
We also have employment agreements with Lior Rival, our Vice President Sales and Marketing, who is the son of David Rivel, and
with Maya Rival, our Vice-President Operations, who is the daughter of David Rivel. These agreements can be terminated at will without
notice, except as required by Israeli law. The terms of their employment are substantially similar to the terms of employment of company
employees in comparable positions. The compensation paid to Lior Rival and Maya Rival is included in the aggregate direct compensation
amount reported under Item 6 "Directors, Senior Management and Employees Compensation."
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Chairman Services Agreement


In August 2009 we entered into a Chairman Services Agreement with Mr. Gilad Ramot, the Chairman of our board of
directors. Pursuant to the agreement, in consideration for the services provided by Mr. Ramot to the company, Mr. Ramot is entitled to a
monthly fee of $5,000 and an annual bonus not to exceed $60,000. The payment of the annual bonus is subject to compliance with criteria
based on our annual operating results and the average trading price of our ordinary shares on NASDAQ. Pursuant to its terms, the Chairman
Services Agreement is initially effective for a one year period commencing January 1, 2009, and, subject to Mr. Ramot continuing to serve as
the Chairman of our board of directors and neither party terminating the agreement or electing not to extend it in accordance with its terms, the
Chairman Service Agreement will be automatically renewed for additional one year periods through December 31, 2013.
FreeTVNet Software
In May 2008, we acquired from Datacom, a company controlled by our Chief Executive Officer, David Rivel, the FreeTVNet
software for an aggregate purchase price of $300,000. FreeTVNet is a software that provides viewer support capabilities for Internet TV
services. The software supports the company in its delivery of TV and other content services over the Internet. In accordance with Israeli
law, the acquisition was approved by our audit committee, board of directors and by a special majority of our unaffiliated shareholders.
Commercial Agreements

In February 2006, we entered into a service agreement with Baby First TV LLC, or BFTV LLC, a company in which Kardan
Communications, one of our principal shareholders, holds 29.9% of the share capital and one of our directors serves as a
director. Under this agreement, BFTV LLC agreed to purchase from us international playout and uplink services in
consideration for monthly payments of $31.4 thousand until May 31, 2006 and $33.7 thousand for the remainder of the
agreement's term. In November 2006, we entered into an amendment to this agreement for additional services, pursuant to which
the monthly payments were increased to $40.0 thousand for the remainder of the agreement's term.

In January 2007 we entered into another service agreement with BFTV LLC pursuant to which BFTV LLC agreed to purchase
from us certain international playout and fiber connectivity services in consideration for monthly payments of $10.1 thousand.

In September 2007 we entered into another service agreement with BFTV LLC pursuant to which BFTV LLC agreed to
purchase from us certain international playout and uplink services in consideration for monthly payments of $20.2 thousand.

In October 2009 we entered into an Extension Agreement with BFTV LLC, pursuant to which BFTV LLC agreed to extend the
terms of all the agreements entered into between our company and BFTV LLC for an additional term of 3 years from the
expiration of each agreement, such that the agreements shall expire between December 2012 and September 2013, in
consideration for a discount to the total monthly fee of $10 thousand from May 2009 through December 2009, and $11 thousand
for each month thereafter.

In November 2008, we entered into a service agreement with IVP-Ivory Video Productions Ltd., a company in which Kardan
Communications holds 53.6% of the share capital and one of our directors serves as a director. Under this agreement IVP-Ivory
Video Productions Ltd. agreed to purchase from us certain video link services over an initial period of three years, which
automatically extends for five additional one-year periods, unless either party requests not to extend, in consideration for
monthly payments of approximately $7.8 thousand.
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In November 2008, we entered into a service agreement with IVP-Ivory Video Productions Ltd., under which IVP-Ivory Video
Productions Ltd. agreed to purchase from us certain uplink services over an initial period of three years, which automatically
extends for 5 additional one-year periods, unless either party requests not to extend, in consideration for monthly payments of
14 thousand, plus $0.5 per each subscriber of IVP-Ivory Video Productions Ltd. exceeding the first 2,000 subscribers.

In August 2009 we entered into an agreement with IVP-Ivory Video Productions Ltd. under which we agreed to cooperate in the
operation and marketing of an Israeli channel bundle on Dish Network's platform in consideration for a share of the revenues
generated by such bundle.

Indemnification and Insurance


We have entered into an insurance, indemnification and exculpation agreement with each of our directors and executive officers and
purchased directors' and officers' liability insurance. The insurance, indemnification and exculpation agreements and our articles of
association require us to indemnify our directors and officers to the full extent permitted by law. See Item 10.B. "Additional Information
Memorandum and articles of association Exculpation, Indemnification and Insurance of Directors and Officers."
C. Interests of experts and counsel
Not applicable.
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ITEM 8.

FINANCIAL INFORMATION

A. Consolidated statements and other financial information


You can find our consolidated financial statements in Item 18 "Financial Statements."
Legal proceedings
On May 25, 2008, Screenpeaks Ltd., a former Israeli customer of our company, filed a claim with the Tel Aviv District Court against
the Israeli Ministry of Communications, or the MOC, and our company for damages in the amount of NIS 23 million plus value added tax
(approximately $6.1 million). Screenpeaks alleges that we unlawfully terminated services to the plaintiff in accordance with the instructions
of the MOC. The MOC filed a Notice to a Third Party against us asserting that if the MOC be held liable for damages to Screenpeaks, then
we should indemnify it for such damages. In May 2009, the District Court ordered that the proceedings will first examine the question of
whether on the date the MOC instructed to terminate the agreement between the company and Screenpeaks, the agreement fulfilled the terms
and conditions of the license issued to us by the MOC. If it is determined that the agreement fulfilled the conditions of the MOC license, the
complaint against us will be rejected and the customer will be entitled to seek remedy only from the MOC. In the opinion of our company's
management and legal advisers, the claims are without merit, and in the event the plaintiff prevails, the amount we will be required to pay will
likely be insignificant. We are contesting these claims vigorously.
On November 5, 2009, the Regional Building and Zoning Committee sent our Chief Executive Officer a warning before filing an
indictment for allegedly building and placing antennas at our Re'em teleport without a permit. Our Chief Executive Officer was invited to a
hearing before the Regional Building and Zoning Committee to assert his defense to such allegations. The hearing has not taken place yet. For
additional information, see Item 4.B. "Information on the Company Business Overview Regulation Israeli Regulation Local Buildings
and Zoning Permits.
Dividend policy
We distributed to our shareholders cash dividends of $10.6 million and $8.5 million in 2008 and 2009, respectively. During 2007,
we did not distribute any dividends to our shareholders.
In March 2008, our board of directors adopted a new dividend policy to distribute not more than 50% of our cumulative retained
earnings, subject to applicable law, our contractual obligations and provided that such distribution would not be detrimental to our cash needs
or to any plans approved by our board of directors. Our board of directors will consider, among other factors, our expected results of
operations, financial condition, contractual restrictions, planned capital expenditures, financing needs and other factors that our board of
directors deems relevant in order to reach its conclusion that a distribution of dividends will not prevent us from satisfying our existing and
foreseeable obligations as they become due. Dividend declaration is not guaranteed and is subject to our board of directors' sole discretion,
which may elect to pay or not pay dividends in the future or change our dividend policy.
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The distribution of dividends is also limited by Israeli law, which permits the distribution of dividends only out of cumulative
retained earnings or out of retained earnings over the prior two years, provided that there is no reasonable concern that the payment of the
dividend will prevent us from satisfying our existing and foreseeable obligations as they become due. Furthermore, the distribution of
dividends may be subject to Israeli withholding taxes. See Item 10.B. "Additional Information Memorandum and articles of association
Dividends" and Item 10.D. "Additional Information Taxation Taxation in Israel," respectively.
B. Significant changes
Except as otherwise disclosed in this Annual Report, there has been no significant change in our financial position since
December 31, 2009.
ITEM 9.

THE OFFER AND LISTING

A. Offer and listing details


Our ordinary shares began trading publicly on the NASDAQ Global Market on November 1, 2006 under the symbol "RRST," and
commenced trading on the NASDAQ Global Select Market on January 1, 2008. Prior to November 1, 2006, there was no public market for
our ordinary shares.
The following table sets forth, for the periods indicated, the high and low sale prices of our ordinary shares as reported by the
NASDAQ Global Market and the NASDAQ Global Select Market:
High

Low

2006 (from November 1, 2006)


2007
2008
2009

$
$
$
$

15.89
26.50
19.99
15.68

$
$
$
$

11.25
10.35
7.27
9.50

2008
First quarter
Second quarter
Third quarter
Fourth quarter

$
$
$
$

19.99
15.66
13.98
12.57

$
$
$
$

14.57
10.15
10.31
7.27

2009
First quarter
Second quarter
Third quarter
Fourth quarter

$
$
$
$

13.70
15.68
13.21
12.78

$
$
$
$

9.50
9.52
11.00
9.61

Most recent six months


September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010 (through March 17, 2010)

$
$
$
$
$
$
$

13.21
12.78
11.93
12.34
12.50
11.78
11.81

$
$
$
$
$
$
$

11.08
10.43
9.61
11.05
11.25
9.52
10.43

On March 17, 2010, the last reported sale price of our ordinary shares on the NASDAQ Global Select Market was $11.79 per
share. According to our transfer agent, as of March 16, there were five holders of record of our ordinary shares.
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B. Plan of distribution
Not applicable.
C. Markets
Our ordinary shares began trading publicly on the NASDAQ Global Market on November 1, 2006 under the symbol "RRST," and
commenced trading on the NASDAQ Global Select Market on January 1, 2008.
D. Selling shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the issue
Not applicable.
ITEM 10.

ADDITIONAL INFORMATION

A. Share capital
Not applicable.
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B. Memorandum and articles of association


Incorporation
We were incorporated under the laws of the State of Israel in August 1981. Our registration number with the Israeli Registrar of
Companies is 51-089629-3. Our purpose under our memorandum of association is to engage in any business permitted by law.
Ordinary Shares
Our authorized share capital consists of 20,000,000 ordinary shares, par value NIS 0.01 per share. As of March 15, 2010, we had
17,326,716 ordinary shares outstanding.
The holders of our ordinary shares are entitled to one vote for each share held of record on all matters submitted to a vote of the
shareholders, except in the election of directors in which our shareholders are entitled to cumulative voting (see Item 6.C. "Directors, Senior
Management and Employees Board practices"). Holders of our ordinary shares are entitled to receive ratably such dividends, if any, as may
be declared by our board of directors out of funds legally available therefor.
In the event of our liquidation, dissolution or winding up, after payment of all of our debts and liabilities, the holders of our ordinary
shares are entitled to share ratably in all assets. These rights may be affected by the grant of preferential liquidation or dividend rights to the
holders of a class of shares that may be authorized in the future. Our ordinary shares have no preemptive or conversion rights or other
subscription rights.
The Companies Law and our articles of association provide that the rights of a particular class of shares may not be modified without
the vote of a majority of the affected class, unless otherwise provided for in the terms of the issuance of such class.
Shareholder Meetings
Under the Companies Law, an annual meeting of our shareholders must be held once every calendar year and not more than
15 months from the date of the previous annual shareholders meeting. In addition, our board of directors may, in its discretion, convene
additional meetings as special shareholders meetings. The board of directors also is required to convene a special shareholders meeting upon
the demand of any of the following: two directors; one quarter of the directors in office; the holder or holders of at least 5% of our share
capital, provided they hold at least 1% of the voting rights in our company; or the holder or holders of at least 5% of the voting rights in our
company. Our articles of association provide that each shareholder of record is entitled to receive prior notice of any shareholders meeting in
accordance with the requirements of the Companies Law, which is currently at least 21 days or 35 days, depending on the meeting agenda
matters.
The quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy holding at least
33 13% of the voting power. A meeting adjourned for lack of a quorum will be adjourned to the next day at the same time and place, or any
time and place as our directors designate in a notice to the shareholders. At the reconvened meeting, the required quorum consists of two
shareholders holding at least 10% of the issued and outstanding share capital. The chairman of the board of directors presides at each of our
shareholders meetings. The chairman of the meeting does not have an additional or casting vote.
As described above under Item 4.B. "Information on the Company Business Overview Regulation Israeli Regulation Ministry
of Communications," any shareholder seeking to vote at a general meeting of our shareholders must notify us prior to the meeting whether or
not its beneficial holdings are subject to the consent of the Ministry of Communications in view of the restrictions on transfer or acquisition of
means of control imposed by our license. If the shareholder does not provide such notice, its instructions shall be invalid and its vote shall not
be counted.
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Resolutions
All resolutions at shareholders meetings will be deemed adopted if approved by the holders of a majority of the voting power
represented and voting at the meeting, except for the following decisions which require a different majority:
(1)

a voluntary liquidation a majority of 75% of the shareholders voting at the shareholders meeting is needed.

(2)
a compromise or arrangement between a company and its creditors or shareholders, reorganization, stock split and reverse
stock split have to be approved by the majority in number of the persons participating in the vote (except for abstentions) together holding
three quarters of the value at the vote. In addition, these resolutions must be approved by a court.
(3)
election and dismissal of directors (except for outside directors) see Item 6.C. "Directors, Senior Management and
Employees Board practices."
(4)

amendment to the articles of association.

(5)
nomination and dismissal of an outside director see Item 6.C. "Directors, Senior Management and Employees Board
practices Outside directors."
(6)

related party transactions see " Fiduciary Duties and Approval of Related Party Transactions" below.

(7)
exculpation, indemnification or insurance of directors see "Exculpation, Indemnification and Insurance of Directors
and Officers" below.
(8)

compensation for a director that is different than the compensation for the other directors.

Election of Directors
Other than the outside directors, who are subject to special election requirements under Israeli law, our directors are elected by
cumulative voting of the shareholders present, in person or by proxy, at a shareholders meeting. See Item 6.C. "Directors, Senior Management
and Employees Board practices."
A director may nominate an alternate director, as long as the alternate qualifies to serve as a director.
Dividends
The holders of our ordinary shares are entitled to their proportionate share of any cash dividend, share dividend or dividend in kind
distributed with respect to our ordinary shares. We may declare dividends out of retained earnings. Even in the absence of retained earnings,
we may declare dividends out of earnings generated over the two most recent fiscal years (Profit Test). In either case, our board of directors
must reasonably believe that the dividend will not render us unable to meet our current or foreseeable obligations when due (Solvency
Test). If we do not comply with the Profit Test, a court may nevertheless allow us to distribute a dividend, provided the court is convinced
that the Solvency Test is satisfied.
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Our articles of association provide that the board of directors may declare and distribute dividends without the approval of the
shareholders.
Shareholder Duties
Under the Companies Law, a shareholder has a duty to act in good faith and in a customary manner towards the company and other
shareholders, and to refrain from abusing his or her power in the company, including when voting in a shareholders meeting or in a class
meeting on matters such as the following:

an amendment to our articles of association;

an increase in our authorized share capital;

a merger; or

approval of related party transactions that require shareholder approval.

In addition, any controlling shareholder, any shareholder who knows that he or she possesses the power to determine the outcome of
a shareholders meeting or a shareholders class meeting and any shareholder who has the power to prevent the appointment of an office holder,
is under a duty to act with fairness towards the company. The Companies Law does not define the substance of this duty of fairness, except to
state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness,
taking into account the position in the company of those who breached the duty of fairness.
Fiduciary Duties and Approval of Related Party Transactions
Fiduciary duties. The Companies Law codifies the fiduciary duties that office holders, which under the Companies Law includes
our directors and executive officers, owe to a company. An office holder's fiduciary duties consist of a duty of loyalty and a duty of care.
The duty of loyalty requires an office holder to act in good faith and for the benefit of the company, including to avoid any conflict of
interest between the office holder's position in the company and personal affairs, and prohibits any competition with the company or the
exploitation of any business opportunity of the company in order to receive personal advantage for himself or herself or for others. This duty
also requires an office holder to reveal to the company any information or documents relating to the company's affairs that the office holder
has received due to his or her position as an office holder. A company may approve any of the acts mentioned above provided that all the
following conditions apply: the office holder acted in good faith and neither the act nor the approval of the act prejudices the good of the
company and, the office holder disclosed the essence of his personal interest in the act, including any substantial fact or document, a
reasonable time before the date for discussion of the approval.
The duty of care requires an office holder to act with a level of care that a reasonable office holder in the same position would
employ under the same circumstances. This includes the duty to use reasonable means to obtain information regarding the advisability of a
given action submitted for his or her approval or performed by virtue of his or her position and all other relevant information material to these
actions.
Compensation. Under the Companies Law, unless the articles of association provide otherwise, the compensation arrangements for
officers who are not directors require approval of the board of directors. Our articles provide that transactions concerning compensation of an
office holder who is not a director require only the approval of our board of directors, a committee of our board of directors or the chief
executive officer. Arrangements regarding the compensation of directors require the approval of the audit committee, the board and the
shareholders, in that order.
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Disclosure of personal interest. The Companies Law requires that an office holder promptly disclose to the company any personal
interest that he or she may have and all related material information or documents known to him or her, in connection with any existing or
proposed transaction by the company. "Personal interest," as defined by the Companies Law, includes a personal interest of any person in an
act or transaction of the company, including a personal interest of his relative or of a corporation in which that person or a relative of that
person is a 5% or greater shareholder, a holder of 5% or more of the voting rights, a director or general manager, or in which he or she has the
right to appoint at least one director or the general manager. "Personal interest" does not apply to a personal interest stemming merely from
holding shares in the company.
The office holder must make the disclosure of his personal interest no later than the first meeting of the company's board of directors
that discusses the particular transaction. This duty does not apply to the personal interest of a relative of the office holder in a transaction
unless it is an "extraordinary transaction." The Companies Law defines an "extraordinary transaction" as a transaction that is not in the
ordinary course of business, not on market terms or that is likely to have a material impact on the company's profitability, assets or liabilities,
and a "relative" as a spouse, sibling, parent, grandparent, descendent, spouse's descendant and the spouse of any of the foregoing.
Approvals. The Companies Law provides that a transaction with an office holder or a transaction in which an office holder has a
personal interest requires board approval, unless the transaction is an extraordinary transaction or the articles of association provide
otherwise. Under our articles of association, the board of directors may authorize a committee of the board or the chief executive officer to
approve such a transaction. The transaction may not be approved if it is adverse to our interest. If the transaction is an extraordinary
transaction, or if it concerns exculpation, indemnification or insurance of an office holder, then the approvals of the company's audit
committee and the board of directors are required. Exculpation, indemnification, insurance or compensation of a director also requires
shareholder approval. The audit committee may not approve the transaction unless, at the time of the approval, at least two members of the
audit committee were outside directors and at least one of them was present at the meeting at which the audit committee approved the
transaction.
A director who has a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee
generally may not attend that meeting or vote on that matter, unless a majority of the board of directors or the audit committee has a personal
interest in the matter. If a majority of the board of directors or the audit committee has a personal interest in the transaction, shareholder
approval also would be required.
Shareholders
The Companies Law imposes on a controlling shareholder of a public company the same disclosure requirements described above as
it imposes on an office holder. For this purpose, a "controlling shareholder" is any shareholder who has the ability to direct the company's
actions, including any shareholder holding 25% or more of the voting rights if no other shareholder owns more than 50% of the voting rights
in the company. Two or more shareholders with a personal interest in the approval of the same transaction are deemed to be one shareholder.
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Approval of the audit committee, the board of directors and our shareholders, in that order, is required for:

extraordinary transactions, including a private placement, with a controlling shareholder or in which a controlling shareholder
has a personal interest; and

the terms of compensation or employment of a controlling shareholder or his or her relative, as an officer holder or employee of
our company.

The shareholders approval must include the majority of shares voted at the meeting. In addition to the majority vote, the shareholder
approval must satisfy either of two additional tests:

the majority includes at least one-third of the shares voted by shareholders who have no personal interest in the transaction; or

the total number of shares, other than shares held by the disinterested shareholders, that voted against the approval of the
transaction does not exceed 1% of the aggregate voting rights of our company.

Exculpation, Indemnification and Insurance of Directors and Officers


Indemnification of Office Holders
Under the Companies Law, a company may, if permitted by its articles of association, indemnify an office holder for any of the
following liabilities or expenses that they may incur due to an act performed or failure to act in his or her capacity as the company's office
holder:

monetary liability imposed on the office holder in favor of a third party in a judgment, including a settlement or an arbitral
award confirmed by a court,

reasonable legal costs, including attorneys' fees, expended by an office holder as a result of an investigation or proceeding
instituted against the office holder by a competent authority, provided that such investigation or proceeding concludes
without the filing of an indictment against the office holder and either:

no financial liability was imposed on the office holder in lieu of criminal proceedings, or

financial liability was imposed on the office holder in lieu of criminal proceedings but the alleged criminal offense
does not require proof of criminal intent, and

reasonable legal costs, including attorneys' fees, expended by the office holder or for which the office holder is charged by
a court:
m

in an action brought against the office holder by the company, on behalf of the company or on behalf of a third
party,

in a criminal action in which the office holder is found innocent, or

in a criminal action in which the office holder is convicted but in which proof of criminal intent is not required.

Under the Companies Law, a company may indemnify an office holder in respect of some liabilities, either in advance of an event or
following an event. If a company undertakes to indemnify an office holder in advance of an event, the indemnification, other than litigation
expenses, must be limited to foreseeable events in light of the company's actual activities when the company undertook such indemnification,
and reasonable amounts or standards, as determined by the board of directors.
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Insurance of Office Holders


Under the Companies Law, a company may, if permitted by its articles of association, obtain insurance for an office holder against
liabilities incurred in his or her capacity as an office holder. These liabilities include a breach of duty of care to the company or a third party,
including a breach arising out of negligent conduct of the office holder, a breach of duty of loyalty and any monetary liability imposed on the
office holder in favor of a third party.
Exculpation of Office Holders
Under the Companies Law, a company may, if permitted by its articles of association, exculpate an office holder from a breach of
duty of care in advance of that breach. Under our articles of association we may also exculpate an officer retroactively, to the extent permitted
by law. Our articles of association provide for exculpation both in advance or retroactively, to the extent permitted under Israeli law. A
company may not exculpate an office holder from a breach of duty of loyalty towards the company or from a breach of duty of care
concerning dividend distribution or a purchase of the company's shares by the company or other entities controlled by the company.
Limitations on Exculpation, Indemnification and Insurance
There are certain general limitations on the ability of an Israeli company to indemnify, insure or exculpate an office holder. A
company may indemnify or insure an office holder against a breach of duty of loyalty only to the extent that the office holder acted in good
faith and had reasonable grounds to assume that the action would not prejudice the company. In addition, an Israeli company may not
indemnify, insure or exculpate an office holder against a breach of duty of care if committed intentionally or recklessly (excluding mere
negligence), or committed with the intent to derive an unlawful personal gain, or for a fine or forfeit levied against the office holder in
connection with a criminal offense.
Our articles of association allow us to indemnify, exculpate and insure our office holders to the fullest extent permitted under the
Companies Law, provided that procuring this insurance or providing this indemnification or exculpation is approved by the audit committee
and the board of directors, as well as by the shareholders if the office holder is a director. Our articles of association also allow us to
indemnify any person who is not our office holder, including an employee, agent, consultant or contractor who is not an office holder.
Our audit committee, board of directors and shareholders have resolved to indemnify our directors and officers to the full extent
permitted by law and by our articles of association for liabilities not covered by insurance and that are of certain enumerated types of
events. In addition, we have entered into an insurance, indemnification and exculpation agreement with each of our directors and executive
officers.
Anti-Takeover Provisions
Mergers and Acquisitions. The Companies Law requires the parties to a proposed merger to file a merger proposal with the Israeli
Registrar of Companies, specifying certain terms of the transaction. Each merging company's board of directors and shareholders must
approve the merger. Shares in one of the merging companies held by the other merging company or certain of its affiliates are disenfranchised
for purposes of voting on the merger. A merging company must inform its creditors of the proposed merger. Any creditor of a party to the
merger may seek a court order blocking the merger, if there is a reasonable concern that the surviving company will not be able to satisfy all
of the obligations of the parties to the merger. Moreover, a merger may not be completed until at least 50 days have passed from the time that
the merger proposal was filed with the Israeli Registrar of Companies and at least 30 days have passed from the approval of the shareholders
of each of the merging companies.
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Tender Offer. The Companies Law provides that certain ownership thresholds in public companies may be crossed only by means of
a tender offer made to all shareholders. A purchaser must conduct a tender offer in order to purchase shares in publicly held companies if, as a
result of the purchase, the purchaser would hold 25% or more of the voting rights of a company in which no other shareholder holds 25% or
more of the voting rights, or the purchaser would hold more than 45% of the voting rights of a company in which no other shareholder holds
more than 45% of the voting rights. A tender offer is not required if: (i) the shares are acquired in a private placement that is approved by the
shareholders with the knowledge that as a result the purchaser would reach 25% or 45% of the voting rights, as applicable, (ii) the purchaser
reaches the 25% threshold by purchasing shares from a shareholder who held 25% or more of the voting rights immediately prior to the
transaction, or (iii) the purchaser crosses the 45% threshold by purchasing shares from a shareholder who held more than 45% of the voting
rights immediately prior to the transaction.
Under the Companies Law, a person may not purchase shares of a public company if, following the purchase, the purchaser would
hold more than 90% of the company's shares or of any class of shares, unless the purchaser makes a tender offer to purchase all of the target
company's shares or all the shares of the particular class, as applicable. If, as a result of the tender offer, the purchaser acquires more than
95% of the company's shares or a particular class of shares, the Companies Law provides that the purchaser automatically acquires ownership
of the remaining shares. However, if the purchaser is unable to purchase 95% or more of the company's shares or class of shares, the
purchaser may not own more than 90% of the shares or class of shares of the target company.
Ownership Limitations. Our license from the Israeli Ministry of Communications to operate our teleports provides that, without the
consent of the Israeli Minister of Communications, no means of control of RRsat may be acquired or transferred, directly or indirectly. Our
license was amended in connection with our initial public offering in November 2006 to provide, among other things, that should a
shareholder, other than our shareholders prior to the initial public offering, become a beneficial holder of 10% or more of our shares or acquire
shares in an amount resulting in such shareholder having significant influence over us without receiving the consent of the Ministry of
Communications, its holdings will be converted into dormant shares for as long as the Ministry of Communications' consent is required but
not obtained. The beneficial holder of such dormant shares will have no rights other than the right to receive dividends and other distributions
to shareholders and the right to participate in rights offerings. For additional information regarding the provisions of our amended license as it
relates to restrictions on the transfer of control, see Item 4.B. "Information on the Company Business Overview Regulation Israeli
Regulation Ministry of Communications."
Our license also states that means of control of the company, or of an interested shareholder of the company (which generally would
include a holder of 5% of the company's voting power), cannot be pledged unless such pledge agreement includes a condition that prohibits
the exercise of the pledge without obtaining the advance written approval of the Minster of Communication.
Tax Law. Israeli tax law treats some acquisitions, such as a stock-for-stock swap between an Israeli company and a foreign
company, less favorably than U.S. tax law. For example, Israeli tax law may subject a shareholder who exchanges his ordinary shares for
shares in a foreign corporation to immediate taxation.
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares is American Stock Transfer & Trust Company, New York, New York.
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C. Material contracts
Summaries of the following material contracts are included in this Annual Report in the places indicated:
Material Contract

Location

Purchase and Sale Agreement, dated February 13,


2008, between Skynet Satellite Corporation and RRsat
Global Communications Inc.

Item 4.D. "Information on the Company Property, plants


and equipment."

Agreement, dated March 26, 2008, between Bezeq,


The Israel Telecommunications Corp. Limited and the
Registrant

Item 4.D. "Information on the Company Property, plants


and equipment."

Space Segment Access Agreement, dated March 30,


2009, between Inmarsat Global Limited and the
Registrant

Item 4.B "Information on the Company Business


overview Overview."

Network Services Distribution Agreement, dated


March 30, 2009, between Inmarsat Global Limited
and the Registrant

Item 4.B "Information on the Company Business


overview Overview."

Letter agreement, dated July 1, 2009, between


Zu'aretz Avraham and the Registrant granting the
registrant an option to extend the lease for the main
teleport in Re'em, Israel, for two additional terms of
five years.

Item 4.D. "Information on the Company Property, plants


and equipment."

Each summary of a material contract is qualified in its entirety by the text of the material contract (or summarize thereof), which is
filed as an exhibit to this Annual Report.
D. Exchange controls
Non-residents of Israel who own our ordinary shares may freely convert all amounts received in Israeli currency in respect of such
ordinary shares, whether as a dividend, liquidation distribution or as proceeds from the sale of the ordinary shares, into freely-repatriable nonIsraeli currencies at the rate of exchange prevailing at the time of conversion (provided in each case that the applicable Israeli income tax, if
any, is paid or withheld).
Until May 1998, Israel imposed extensive restrictions on transactions in foreign currency. These restrictions were largely lifted in
May 1998. Since January 1, 2003, all exchange control restrictions have been eliminated although there are still reporting requirements for
foreign currency transactions. Legislation remains in effect, however, pursuant to which currency controls can be imposed by administrative
action at any time.
The State of Israel does not restrict in any way the ownership or voting of our ordinary shares by non-residents of Israel, except with
respect to subjects of countries that are in a state of war with Israel.
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E. Taxation
Taxation in Israel
The following is a discussion of the material tax consequences under Israeli tax laws relating to the ownership and disposition of our
ordinary shares and of the Israeli government programs we benefit from. This discussion does not address all aspects of Israeli tax law that
may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special
treatment under Israeli law. Examples of this kind of investor include banks, financial institutions, insurance companies and securities
dealers; persons that own, directly or indirectly, on the date the dividend was distributed or during the prior 12 months, 10% or more of our
outstanding voting rights; or a foreign corporation if Israeli residents hold 25% or more of its shares or have the right to 25% or more of its
income or profits.
Some parts of this discussion are based on new tax legislation that has not been subject to judicial or administrative
interpretation. Therefore, the views expressed in the discussion may not be accepted by the tax authorities in question. The discussion should
not be construed as legal or professional tax advice and does not cover all possible tax considerations.
Corporate Tax Structure in Israel
Israeli companies were subject to corporate tax at the rate of 26% of their taxable income in 2009. The rate was 29% for 2007, 27%
for 2008 and is scheduled to decline to 25% in 2010, 24% in 2011, 23% in 2012, 22% in 2013, 21% in 2014, 20% in 2015 and 18% in 2016
and subsequent years.
Special Provisions Relating to Taxation Under Inflationary Conditions
On February 26, 2008, the Israeli Parliament (the Knesset) enacted the Income Tax Law (Inflationary Adjustments) (Amendment No.
20) (Restriction of Effective Period), 2008, which we refer to as the Inflationary Adjustments Amendment. In accordance with the
Inflationary Adjustments Amendment, the effective period of the Income Tax Law (Inflationary Adjustments), 1985, which we refer to as the
Inflationary Adjustments Law, ceased at the end of the 2007 tax year and as from the 2008 tax year the provisions of the law no longer apply,
other than the transitional provisions intended at preventing distortions in the tax calculations.
In accordance with the Inflationary Adjustments Amendment, commencing the 2008 tax year, income for tax purposes was no longer
adjusted to a real (net of inflation) measurement basis. Furthermore, the depreciation of inflation immune assets and carried forward tax
losses were no longer linked to the Israeli consumer price index. Accordingly, these amounts were adjusted until the end of the 2007 tax year
after which they ceased to be linked to the Israeli consumer price index.
Until 2007, we were taxed under the Inflationary Adjustments Law. The Inflationary Adjustments Law was designed to neutralize
the erosion of capital investments in businesses and to prevent tax benefits resulting from the deduction of inflationary financial
expenses. The law applied a supplementary set of inflationary adjustments to the normal taxable profit computed according to historic cost
principles. The Inflationary Adjustments Law provided tax deductions and adjustments to depreciation deductions and unlimited tax loss
carryforwards to mitigate the effects resulting from an inflationary economy.
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Taxation of Non-Israeli Shareholders


Dividends
Our shareholders who are non-residents of Israel (both individuals and corporations) will be subject to Israeli income tax at the rate
of 20% (or 25% in the case of a shareholder that holds, directly or indirectly, including with others, at least 10% of certain means of control in
the company on the date the dividends are distributed or during the prior year) on dividends that they receive from us. This tax will be
withheld at the source. Under the U.S.-Israel Tax Treaty, the maximum tax on dividends paid to a holder of our ordinary shares who is a U.S.
resident is 25%.
Capital Gains
Israeli law imposes a capital gains tax on the sale of capital assets by an Israeli resident, and on the sale by non-residents of Israel of
capital assets located in Israel (or of direct or indirect rights to assets located in Israel), including shares of RRsat and securities held by
us. The Israeli Income Tax Ordinance distinguishes between "Real Gain" and "Inflationary Surplus." Inflationary Surplus is the portion of
the gain attributable to the increase in the Israeli consumer price index between the date of purchase and the date of sale. Real Gain is the
excess of the total capital gain over the Inflationary Surplus. Inflationary Surplus that accrued after December 31, 1993 is exempt from tax.
Our shareholders who are non-residents of Israel will be exempt from Israeli taxation on capital gains from the sale of our ordinary
shares, provided that our ordinary shares are publicly traded on a recognized stock exchange or regulated market outside of Israel, such as the
NASDAQ Global Market, and provided that such capital gains are not derived from a permanent establishment in Israel and that such
shareholders did not acquire their shares prior to the issuer's initial public offering. In addition, the U.S.-Israel Tax Treaty exempts U.S.
residents who hold an interest of less than 10% in an Israeli company from Israeli capital gains tax in connection with such sale, provided that
their holdings did not equal or exceed 10% at any time in the 12 months prior to a sale of their shares.
Law for the Encouragement of Capital Investments, 1959
The Law for the Encouragement of Capital Investments, 1959, known as the Investment Law, provides certain incentives for capital
investments in a production facility (or other eligible assets). An investment program that is implemented in accordance with the provisions
of the Investment Law, referred to as an "Approved Enterprise," is entitled to benefits. These benefits may include cash grants from the Israeli
government and tax benefits, based upon, among other things, the location of the facility in which the investment is made or the election of the
grantee.
A company that has elected to participate in the alternative benefits program and that subsequently pays a dividend out of the income
derived from the Approved Enterprise during the tax exemption period will be subject to corporate tax in respect of the amount distributed at
the rate that would have been applicable had the company not elected the alternative benefits program (generally 10% to 25%). If the
dividend is distributed during the benefit period or within the following 12 years (the 12-year limitation does not apply to a foreign investor's
company), the dividend recipient is taxed at the reduced withholding tax rate of 15%. After this period, the withholding tax rate is 25%.
We were granted in 2006 an "Approved Enterprise" status under the Investment Law for our contemplated expansion of export
revenues in the taxable years 2006 to 2012 as compared to our revenues in 2005. Under the terms of our Approved Enterprise program, our
income from that Approved Enterprise will be subject to a reduced tax rate of 25% for a period of up to a total of seven years, to be calculated
on the portion of our taxable income associated to the expansion (calculated on a pro rated basis to the additional revenues for the taxable year
compared to the base year, which is 2005). Under the terms of the program, which relates to our export of communications services to
television channels and television operators via satellites, we are required, among other things, to increase the export of our services by at least
$100 thousand annually and maintain arms' length terms for all related party transactions. In 2009, 2008 and 2007, we realized tax reductions
resulting from the "approved enterprise" status in an aggregate amount of $220 thousand, $160 thousand and $11420 thousand, respectively.
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The benefits available to an Approved Enterprise are conditioned upon terms stipulated in the Investment Law and regulations and
the criteria set forth in the applicable certificate of approval. If we do not fulfill these conditions in whole or in part, the benefits can be
canceled and we may be required to refund the amount of the benefits, linked to the Israeli consumer price index and with the addition of
interest.
There can be no assurance that we will comply with the above conditions in the future. In addition, it is possible that we may not be
able to operate in a way that maximizes utilization of the benefits under the Investment Law.
U.S. Federal Income Tax Consequences
The following is a summary of the material U.S. federal income tax consequences of the ownership and disposition of ordinary
shares. The following discussion is not exhaustive of all possible tax considerations. This summary is based upon the Internal Revenue Code
of 1986, as amended (the "Code"), regulations promulgated under the Code by the U.S. Treasury Department (including proposed and
temporary regulations), rulings, current administrative interpretations and official pronouncements of the Internal Revenue Service (the
"IRS"), and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with
retroactive effect. Such change could materially and adversely affect the tax consequences described below. No assurance can be given that
the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.
This discussion does not address state, local, or foreign tax consequences of the ownership and disposition of ordinary shares. (See
"Taxation in Israel" above.)
This summary is for general information only and does not address all aspects of U.S. federal income taxation that may be important
to a particular holder in light of its investment or tax circumstances or to holders subject to special tax rules, such as: banks; financial
institutions; insurance companies; dealers in stocks, securities, or currencies; traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings; tax-exempt organizations; real estate investment trusts; regulated investment companies; qualified
retirement plans, individual retirement accounts, and other tax-deferred accounts; expatriates of the United States; persons subject to the
alternative minimum tax; persons holding ordinary shares as part of a straddle, hedge, conversion transaction, or other integrated transaction;
persons who acquired ordinary shares pursuant to the exercise of any employee stock option or otherwise as compensation for services;
persons actually or constructively holding 10% or more of our voting stock; and U.S. Holders (as defined below) whose functional currency is
other than the U.S. dollar.
This discussion is not a comprehensive description of all of the U.S. federal tax consequences that may be relevant with
respect to the ownership and disposition of ordinary shares. We urge you to consult your own tax advisor regarding your particular
circumstances and the U.S. federal income and estate tax consequences to you of owning and disposing of ordinary shares, as well as
any tax consequences arising under the laws of any state, local, or foreign or other tax jurisdiction and the possible effects of changes
in U.S. federal or other tax laws.
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This summary is directed solely to holders that hold their ordinary shares as capital assets within the meaning of Section 1221 of the
Code, which generally means as property held for investment. For purposes of this discussion, the term "U.S. Holder" means a beneficial
owner of ordinary shares that is any of the following:

a citizen or resident of the United States or someone treated as a U.S. citizen or resident for U.S. federal income tax
purposes;

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

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

a trust if a U.S. court can exercise primary supervision over the trust's administration and one or more U.S. persons are
authorized to control all substantial decisions of the trust; or

a trust in existence on August 20, 1996 that has a valid election in effect under applicable Treasury Regulations to be treated
as a U.S. person.

The term "Non-U.S. Holder" means a beneficial owner of ordinary shares that is not a U.S. Holder. As described in "Taxation of
Non-U.S. Holders" below, the tax consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.
If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial
owner of ordinary shares, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. A holder of ordinary shares that is a partnership and the partners in such partnership should
consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of ordinary shares.
Taxation of U.S. Holders
The discussion in "Distributions on Ordinary Shares" and "Dispositions of Ordinary Shares" below assumes that we will not be
treated as a passive foreign investment company ("PFIC") for U.S. federal income tax purposes. For a discussion of the rules that apply if we
are treated as a PFIC, see the discussion in "Passive Foreign Investment Company" below.
Distributions on Ordinary Shares
General. Subject to the discussion in "Passive Foreign Investment Company" below, if you actually or constructively receive a
distribution on ordinary shares, you must include the distribution in gross income as a taxable dividend on the date of your receipt of the
distribution, but only to the extent of our current or accumulated earnings and profits, as calculated under U.S. federal income tax
principles. Such amount must be included without reduction for any foreign (e.g., Israeli) taxes withheld. Dividends paid by us will not be
eligible for the dividends-received deduction allowed to corporations with respect to dividends received from certain domestic
corporations. Dividends paid by us may or may not be eligible for preferential rates applicable to qualified dividend income, as described
below.
To the extent a distribution exceeds our current and accumulated earnings and profits, it will be treated first as a non-taxable return of
capital to the extent of your adjusted tax basis in the ordinary shares, and thereafter as capital gain. Preferential tax rates for long-term capital
gain may be applicable to non-corporate U.S. Holders.
We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, you should expect that a
distribution will generally be reported as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as
capital gain under the rules described above.
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Qualified Dividend Income. With respect to non-corporate U.S. Holders (i.e., individuals, trusts, and estates), for taxable years
beginning before January 1, 2011, dividends that are treated as qualified dividend income ("QDI") are taxable at a maximum tax rate of
15%. Among other requirements, dividends generally will be treated as QDI if either (i) our ordinary shares are readily tradable on an
established securities market in the United States, or (ii) we are eligible for the benefits of a comprehensive income tax treaty with the United
States which includes an information exchange program and which is determined to be satisfactory by the U.S. Treasury. The IRS has
determined that the United States-Israel income tax treaty is satisfactory for this purpose.
In addition, for dividends to be treated as QDI, we must not be a PFIC (as discussed below) for either the taxable year in which the dividend
was paid or the preceding taxable year. We do not believe that we were a PFIC for the preceding taxable year or will be a PFIC for the current
taxable year. However, please see the discussion under "Passive Foreign Investment Company" below. Additionally, in order to qualify for
QDI treatment, you generally must have held the ordinary shares for more than 60 days during the 121-day period beginning 60 days prior to
the ex-dividend date. However, your holding period will be reduced for any period during which the risk of loss is diminished.
Moreover, a dividend will not be treated as QDI to the extent you are under an obligation (whether pursuant to a short sale or
otherwise) to make related payments with respect to positions in substantially similar or related property. Since the QDI rules are complex,
you should consult your own tax advisor regarding the availability of the preferential tax rates for dividends paid on ordinary shares.
Foreign Currency Distributions. A dividend paid in foreign currency (e.g., new Israeli shekel (NIS)) must be included in your
income as a U.S. dollar amount based on the exchange rate in effect on the date such dividend is received, regardless of whether the payment
is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, you generally will not recognize a
foreign currency gain or loss. However, if you convert the foreign currency into U.S. dollars on a later date, you must include in income any
gain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the difference between (i) the U.S. dollar value of
the amount you included in income when the dividend was received and (ii) the amount that you receive on the conversion of the foreign
currency into U.S. dollars. Such gain or loss will generally be ordinary income or loss and U.S. source for U.S. foreign tax credit purposes.
In-Kind Distributions. Distributions to you of new ordinary shares or rights to subscribe for new ordinary shares that are received as
part of a pro rata distribution to all of our shareholders will not be subject to U.S. federal income tax. The adjusted tax basis of the new
ordinary shares or rights so received will be determined by allocating your adjusted tax basis in the old ordinary shares between the old
ordinary shares and the new ordinary shares or rights received, based on their relative fair market values on the date of distribution. However,
in the case of a distribution of rights to subscribe for ordinary shares, the adjusted tax basis of the new rights will be zero if the fair market
value of the new rights is less than 15% of the fair market value of the old ordinary shares on the date of distribution and you do not make an
election to determine the adjusted tax basis of the rights by allocation as described above. Your holding period for the new ordinary shares or
rights will generally include the holding period for the old ordinary shares on which the distribution was made.
Foreign Tax Credits. Subject to certain conditions and limitations, including potential limitations under the United States-Israel
treaty, any foreign (e.g., Israeli) taxes paid on or withheld from distributions from us and not refundable to you may be credited against your
U.S. federal income tax liability or, alternatively, may be deducted from your taxable income. This election is made on a year-by-year basis
and applies to all foreign taxes paid by you or withheld from you that year.
Distributions will constitute foreign source income for foreign tax credit limitation purposes. The foreign tax credit limitation is
calculated separately with respect to specific classes of income. For this purpose, distributions characterized as dividends distributed by us
will generally constitute "passive category income" or, in the case of certain U.S. Holders, "general category income." Special limitations may
apply if a dividend is treated as QDI (as defined above).
Special rules may apply to individuals whose foreign source income during the taxable year consists entirely of "qualified passive
income" and whose creditable foreign taxes paid or accrued during the taxable year do not exceed $300 ($600 in the case of a joint return).
Since the rules governing foreign tax credits are complex, you should consult your own tax advisor regarding the availability of
foreign tax credits in your particular circumstances.
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Dispositions of Ordinary Shares


Subject to the discussion in "Passive Foreign Investment Company" below, you generally will recognize taxable gain or loss realized
on the sale or other taxable disposition of ordinary shares equal to the difference between the U.S. dollar value of (i) the amount realized on
the disposition (i.e., the amount of cash plus the fair market value of any property received), and (ii) your adjusted tax basis in the ordinary
shares. Such gain or loss will be capital gain or loss.
If you have held the ordinary shares for more than one year at the time of disposition, such capital gain or loss will be long-term
capital gain or loss. Preferential tax rates for long-term capital gain (currently, with a maximum rate of 15% for taxable years beginning
before January 1, 2011) will apply to non-corporate U.S. Holders. If you have held the ordinary shares for one year or less, such capital gain
or loss will be short-term capital gain or loss taxable as ordinary income at your marginal income tax rate. The deductibility of capital losses
is subject to limitations.
Generally, any gain or loss recognized will not give rise to foreign source income for U.S. foreign tax credit purposes, unless a
different result is achieved under the United States-Israel income tax treaty. You should consult your own tax advisor regarding the effect of
such treaty on the source of income.
You should consult your own tax advisor regarding the U.S. federal income tax consequences if you receive currency other than U.S. dollars
upon the disposition of ordinary shares.
Passive Foreign Investment Company
We generally will be a PFIC under Section 1297 of the Code if, for a taxable year, either (a) 75% or more of our gross income for
such taxable year is passive income (the "income test") or (b) 50% or more of the average percentage, generally determined by fair market
value, of our assets during such taxable year either produce passive income or are held for the production of passive income (the "asset
test"). "Passive income" includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and
securities, and certain gains from commodities transactions.
Certain "look through" rules apply for purposes of the income and asset tests described above. If we own, directly or indirectly, 25%
or more of the total value of the outstanding shares of another corporation, we generally will be treated as if we (a) held directly a
proportionate share of the other corporation's assets, and (b) received directly a proportionate share of the other corporation's income. In
addition, passive income does not include any interest, dividends, rents, or royalties that are received or accrued by us from a "related person"
(as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to income of such related person that is not
passive income.
Under the income and asset tests, whether or not we are a PFIC will be determined annually based upon the composition of our
income and the composition and valuation of our assets, all of which are subject to change. In determining that we are not a PFIC, we are
relying on our projected revenues and projected capital expenditures. If our actual revenues and capital expenditures do not match our
projections, we may become a PFIC. For example, if we do not spend enough of the cash (a passive asset) we raise from any financing
transactions we may undertake, the relative percentage of our passive assets will increase. In addition, our determination is based on a current
valuation of our assets, including goodwill (generally an active asset). In calculating goodwill, we have valued our total assets based on our
market capitalization, determined using the market price of our ordinary shares. Such market price may fluctuate, and may be especially
volatile for a technology company such as us. If our market capitalization is less than anticipated or subsequently declines, this will decrease
the value of our goodwill and we may become a PFIC. Furthermore, we have made a number of assumptions regarding the amount of value
allocable to goodwill. We believe our valuation approach is reasonable. However, it is possible that the IRS will challenge the valuation of
our assets, including goodwill, which may result in our being a PFIC.
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We do not believe that we were a PFIC for the preceding taxable year or will be a PFIC for the current taxable year. However,
because the PFIC determination is highly fact intensive and made at the end of each taxable year, there can be no assurance that we will not be
a PFIC for the current or any future taxable year or that the IRS will not challenge our determination concerning our PFIC status.
Default PFIC Rules under Section 1291 of the Code. If we are treated as a PFIC with respect to a U.S. Holder, the U.S. federal
income tax consequences to the U.S. Holder of the ownership and disposition of ordinary shares will depend on whether such U.S. Holder
makes an election to treat us as a qualified electing fund ("QEF") under Section 1295 of the Code (a "QEF Election") or a mark-to-market
election under Section 1296 of the Code (a "Mark-to-Market Election"). A U.S. Holder owning ordinary shares while we were or are a PFIC
that has not made either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a "Non-Electing U.S. Holder."
If you are a Non-Electing U.S. Holder, you will be subject to the default tax rules of Section 1291 of the Code with respect to:

any "excess distribution" paid on ordinary shares, which means the excess (if any) of the total distributions received by you
during the current taxable year over 125% of the average distributions received by you during the three preceding taxable
years (or during the portion of your holding period for the ordinary shares prior to the current taxable year, if shorter); and

any gain recognized on the sale or other taxable disposition (including a pledge) of ordinary shares.

Under these default tax rules:

any excess distribution or gain will be allocated ratably over your holding period for the ordinary shares;

the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we
were a PFIC will be treated as ordinary income in the current year;

the amount allocated to each of the other years will be treated as ordinary income and taxed at the highest applicable tax rate
in effect for that year; and

the resulting tax liability from any such prior years will be subject to the interest charge applicable to underpayments of tax.

In addition, notwithstanding any election you may make, dividends that you receive from us will not be eligible for the preferential
tax rates applicable to QDI (as discussed above in "Distributions on Ordinary Shares") if we are a PFIC either in the taxable year of the
distribution or the preceding taxable year, but will instead be taxable at rates applicable to ordinary income.
Special rules for Non-Electing U.S. Holders will apply to determine U.S. foreign tax credits with respect to foreign taxes imposed on
distributions on ordinary shares.
If we are a PFIC for any taxable year during which you hold ordinary shares, we will continue to be treated as a PFIC with respect to
you for all succeeding years during which you hold ordinary shares, regardless of whether we actually continue to be a PFIC. You may
terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the default tax rules of Section 1291 of the Code
discussed above) as if your ordinary shares had been sold on the last day of the last taxable year for which we were a PFIC.
If we are treated as a PFIC in any year with respect to you, you will be required to file an annual return on IRS Form 8621 regarding
distributions received on ordinary shares and any gain realized on the disposition of ordinary shares.
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QEF Election. If you own (or owned) ordinary shares while we are (or were) a PFIC and you make a QEF Election, you generally
will not be subject to the default rules of Section 1291 of the Code discussed above. Instead, you will be subject to current U.S. federal
income tax on your pro rata share of our ordinary earnings and net capital gain, regardless of whether such amounts are actually distributed to
you by us. However, you can make a QEF Election only if we agree to furnish you annually with certain tax information, and we currently do
not intend to prepare or provide such information.
Mark-to-Market Election. U.S. Holders may make a Mark-to-Market Election, but only if the ordinary shares are marketable
stock. The ordinary shares will be "marketable stock" as long as they remain listed on the NASDAQ Global Select Market and are regularly
traded. Stock is "regularly traded" for any calendar year during which it is traded (other than in de minimis quantities) on at least 15 days
during each calendar quarter. There can be no assurances, however, that our ordinary shares will be treated, or continue to be treated, as
regularly traded. If you own (or owned) ordinary shares while we are (or were) a PFIC and you make a Mark-to-Market Election, you
generally will not be subject to the default rules of Section 1291 of the Code discussed above. Rather, you generally will be required to
recognize ordinary income for any increase in the fair market value of the ordinary shares for each taxable year that we are a PFIC. You will
also be allowed to deduct as an ordinary loss any decrease in the fair market value to the extent of net marked-to-market gain previously
included in prior years. Your adjusted tax basis in the ordinary shares will be adjusted to reflect the amount included or deducted.
The Mark-to-Market Election will be effective for the taxable year for which the election is made and all subsequent taxable years,
unless the ordinary shares cease to be marketable stock or the IRS consents to the revocation of the election. You should consult your own tax
advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.
Since the PFIC rules are complex, you should consult your own tax advisor regarding them and how they may affect the U.S. federal
income tax consequences of the ownership and disposition of ordinary shares.
Information Reporting and Backup Withholding
Generally, information reporting requirements will apply to distributions on ordinary shares or proceeds on the disposition of
ordinary shares paid within the United States (and, in certain cases, outside the United States) to U.S. Holders other than certain exempt
recipients, such as corporations. Furthermore, backup withholding (currently at 28%) may apply to such amounts if the U.S. Holder fails to (i)
provide a correct taxpayer identification number, (ii) report interest and dividends required to be shown on its U.S. federal income tax return,
or (iii) make other appropriate certifications in the required manner. U.S. Holders who are required to establish their exempt status generally
must provide such certification on IRS Form W-9.
Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment to you may be credited
against your U.S. federal income tax liability and you may obtain a refund of any excess amounts withheld by filing the appropriate claim for
refund with the IRS and furnishing any required information in a timely manner.
Taxation of Non-U.S. Holders
Distributions on Ordinary Shares
Subject to the discussion in "Information Reporting and Backup Withholding" below, as a Non-U.S. Holder, you generally will not
be subject to U.S. federal income tax, including withholding tax, on distributions received on ordinary shares, unless the distributions are
effectively connected with a trade or business that you conduct in the United States (and, if an applicable income tax treaty so requires,
attributable to a permanent establishment that you maintain in the United States).
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If distributions are effectively connected with a U.S. trade or business (and, if applicable, attributable to a U.S. permanent
establishment), you generally will be subject to tax on such distributions in the same manner as a U.S. Holder, as described in "Taxation of
U.S. Holders Distributions on Ordinary Shares" above. In addition, any such distributions received by a corporate Non-U.S. Holder may
also, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Dispositions of Ordinary Shares
Subject to the discussion in "Information Reporting and Backup Withholding" below, as a Non-U.S. Holder, you generally will not
be subject to U.S. federal income tax, including withholding tax, on any gain recognized on a sale or other taxable disposition of ordinary
shares, unless (i) the gain is effectively connected with a trade or business that you conduct in the United States (and, if an applicable income
tax treaty so requires, attributable to a permanent establishment that you maintain in the United States), or (ii) you are an individual and are
present in the United States for at least 183 days in the taxable year of the disposition, and certain other conditions are present.
If you meet the test in clause (i) above, you generally will be subject to tax on any gain that is effectively connected with your
conduct of a trade or business in the United States in the same manner as a U.S. Holder, as described in "Taxation of U.S. Holders
Dispositions of Ordinary Shares" above. Effectively connected gain realized by a corporate Non-U.S. Holder may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income
tax treaty.
If you meet the test in clause (ii) above, you generally will be subject to tax at a 30% rate on the amount by which your U.S. source
capital gain exceeds your U.S. source capital loss.
Information Reporting and Backup Withholding
Payments to Non-U.S. Holders of distributions on, or proceeds from the disposition of, ordinary shares are generally exempt from
information reporting and backup withholding. However, a Non-U.S. Holder may be required to establish that exemption by providing
certification of non-U.S. status on an appropriate IRS Form W-8.
Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment to you may be credited
against your U.S. federal income tax liability and you may obtain a refund of any excess amounts withheld by filing the appropriate claim for
refund with the IRS and furnishing any required information in a timely manner.
F. Dividends and paying agents
Not applicable.
G. Statements by experts
Not applicable.
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H. Documents on display
We are subject to certain of the information reporting requirements of the Securities and Exchange Act of 1934, as amended. As a
"foreign private issuer," we are exempt from the rules and regulations under the Securities Exchange Act prescribing the furnishing and
content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit
recovery provisions contained in Section 16 of the Securities Exchange Act, with respect to their purchase and sale of the ordinary shares. In
addition, we are not required to file reports and financial statements with the Securities and Exchange Commission as frequently or as
promptly as U.S. companies whose securities are registered under the Securities Exchange Act. However, we file with the Securities and
Exchange Commission an annual report on Form 20-F containing consolidated financial statements audited by an independent registered
public accounting firm. We also furnish quarterly reports on Form 6-K containing unaudited financial information after the end of each of the
first three quarters. We intend to post our Annual Report on Form 20-F on our website (www.rrsat.com) promptly following the filing of our
Annual Report with the Securities and Exchange Commission. The reference to our website is an inactive textual reference only and the
information on, or accessible through, our website is not part of this Annual Report.
This report and other information filed or to be filed by us can be inspected and copied at the public reference facilities maintained by
the Securities and Exchange Commission at:
Securities and Exchange Commission
100 F Street, NE
Public Reference Room
Washington, D.C. 20549
Copies of these materials can also be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F
Street, NE, Washington, D.C. 20549, at prescribed rates.
The Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information
statements, and other information regarding registrants that make electronic filings with the Securities and Exchange Commission using its
EDGAR system.
Additionally, documents referred to in this Annual Report may be inspected at our principal executive offices located at Re'em, D.N.
Shikmim 79813, Israel.
I. Subsidiary information
Not applicable.
ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in interest rates and currency fluctuations. In order to limit our
exposure, we seek to engage with our customers in the currency equal to the currency of the network services contract purchased from
suppliers. Our objective is to reduce exposure and fluctuations in earnings and cash flows associated with changes in interest rates and foreign
currency rates. We do not use financial instruments for hedging purposes. However, we are not always able to apply this policy or to match
the term of the customer contract with the term of the supplier contract and may then be exposed to currency rates fluctuations.
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As of the end of the reported period, we invested our excess cash in bank accounts and deposits located with banks located in Israel,
Cyprus and in the United States. These instruments had maturities of twelve months or less when acquired. Due to the short-term nature of
these investments and our practice of holding those investments until their maturity, we believe that there is no material exposure to interest
rate risk arising from our investments. We invested some of the excess cash we had in longer-term financial instruments in order to achieve a
higher yield. Those funds are managed by two brokerage firms located in Israel and two brokerage firms located in the United States based on
our investment policy, reviewed from time to time with us and we believe that there is no material exposure to the principal amount or to
interest rate risks arising from these longer-term investments. Due to the credit rate and the dispersion we believe that there is no material
exposure to the principal amount or to interest rate risks arising from these longer-term investments. However, the economic crisis and the
volatility in the capital markets in the United States, Europe and in Israel may affect the financial stability of the entities in which we invested
(mainly debentures of these entities), and change the credit ratings of these long term investments, therefore triggering an increase in interest
rates and losses in these investments. Because of our ability to hold these investments until maturity, we believe we reduce the risk of
incurring losses in these investments provided the entity eventually pays principal and interest upon maturity.
ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.
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PART II
ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There are no defaults, dividend arrearages or delinquencies that are required to be disclosed.
ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There are no material modifications to, or qualifications of, the rights of security holders that are required to be disclosed.
The effective date of our first registration statement, filed on Form F-1 under the Securities Act of 1933 (No. 333-137930) relating to
the initial public offering of our ordinary shares, was October 31, 2006. The offering commenced on November 1, 2006 and terminated after
the sale of all the securities registered. The offering was managed by CIBC World Markets Corp., Thomas Weisel Partners LLC, William
Blair & Company, C.E. Unterberg, Towbin, LLC and Maxim Group LLC.
In the offering, we sold 4,195,000 ordinary shares for an aggregate offering price of $52.4 million and the selling shareholder sold
175,000 shares for an aggregate offering price of $2.2 million. The amount of underwriting discount paid by us in the offering was $3.7
million and the expenses of the offering, not including the underwriting discount, were approximately $1.5 million.
The net proceeds that we received as a result of the offering were approximately $47.4 million. As of December 31, 2009, we used
$15.6 million of the proceeds for our 2008 acquisition of Bezeq's satellite business, $4.9 million of the proceeds for our 2008 acquisition of
the Hawley Teleport in Pennsylvania. The remainder $26.9 million were in cash equivalents, short term deposits and marketable securities.
None of the net proceeds of the offering was paid directly or indirectly to any director, officer, general partner of ours or to their
associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates.
ITEM 15.

CONTROLS AND PROCEDURES

Disclosure controls and procedures


We performed an evaluation under the supervision and with the participation of our management, including our Chief Executive
Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period
covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure
controls and procedures as of the end of the period covered by this report, were effective to provide reasonable assurance (i) that information
required to be disclosed in filings and submissions under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms, and (ii) that information required to be disclosed in reports
that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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Management report on internal control over financial reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting as of December 31, 2009, based on the guidelines established in Internal Control Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Our internal control over financial reporting includes policies and
procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external reporting purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management's
assessment with the Audit Committee of our board of directors. Based on that evaluation, management has concluded that our internal control
over financial reporting was effective at December 31, 2009.
Our independent registered public accounting firm, Somekh Chaikin, a member firm of KPMG International, independently assessed
the effectiveness of the company's internal control over financial reporting. Somekh Chaikin has issued an attestation report, which is included
on pages F-3-F-4 of this Annual Report on Form 20-F.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves
human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over
financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that
material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these
inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to
reduce, though not eliminate, this risk.
Changes in internal control over financial reporting
During the period covered by this report, no changes in our internal controls over financial reporting have occurred that materially
affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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ITEM 16.

Reserved.

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Mr. David Assia is an "audit committee financial expert" and that he is independent under
the applicable Securities and Exchange Commission and NASDAQ Marketplace Rules.
ITEM 16B.

CODE OF ETHICS

In October 2006, our board of directors adopted a code of ethics that applies to all of our employees, directors and officers, including
the Chief Executive Officer, Chief Financial Officer, principal accounting officer and controller and other individuals who perform similar
functions. The code of ethics has been posted on our website at www.rrsat.com.
ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees and services


The table below summarizes the total remuneration that we paid to our independent accountants, Somekh Chaikin, a member firm of
KPMG International.
Year
Year
Ended
Ended
December December
31, 2008
31, 2009
(in thousands)
$
165 $
159
--58
16
--$
223 $
175

Audit fees
Audit-related fees
Tax fees (1)
All other fees
Total
_______________________
(1)

"Tax fees" are fees for professional services rendered by our auditors for tax compliance, tax advice on actual or contemplated
transactions, tax consulting associated with international transfer prices and employee benefits.

Audit committee's pre-approval policies and procedures


Our audit committee chooses and engages the independent auditors to audit our consolidated financial statements, with the approval
of our shareholders as required by Israeli law. Our management is required to obtain the audit committee's approval before engaging our
independent auditors to provide any audit or permitted non-audit services to us. This policy, which is designed to assure that such
engagements do not impair the independence of our auditors, requires pre-approval from the audit committee for the various audit and nonaudit services that may be performed by our auditors.
Our audit committee is not permitted to approve the engagement of our auditors for any services that would be inconsistent with
maintaining the auditor's independence or that are not permitted by applicable law.
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ITEM 16D.

EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE

None.
ITEM 16E.

PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.
ITEM 16F.

CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Not applicable.
ITEM 16G.

CORPORATE GOVERNANCE

See Item 3.D. "Key Information Risk factors Risks relating to our operations in Israel As a foreign private issuer whose shares
are listed on the NASDAQ Global Select Market, etc.", Item 6.C. "Directors, Senior Management and Employees Board practices", and Item
10.B. "Additional Information Memorandum and articles of association" for a description of the significant ways in which the registrant's
corporate governance practices differ from those followed by U.S. companies under the listing standards of the NASDAQ Global Select
Market.
118

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PART III
ITEM 17.

FINANCIAL STATEMENTS

Not applicable.
ITEM 18.

FINANCIAL STATEMENTS

See pages F-1 to F-47 below.

119

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ITEM 19.

EXHIBITS

1.1

Memorandum of Association of the Registrant and an amendment thereto (translated from Hebrew)(incorporated herein by
reference to Exhibit 3.1 to the Registrant's Form F-1, Commission File No. 333-137930, filed on October 10, 2006).

1.2

Amendment to Memorandum of Association of the Registrant (translated from Hebrew)(incorporated herein by reference to
Exhibit 3.5 to the Registrant's Form F-1, Commission File No. 333-137930, filed on October 10, 2006).

1.3

Amended and Restated Articles of Association of the Registrant (incorporated herein by reference to Exhibit 3.4 to the
Registrant's Form F-1, Commission File No. 333-137930, filed on October 10, 2006).

4.1

Registration Rights Agreement, dated September 13, 2006, among the Registrant and certain shareholders named therein
(incorporated herein by reference to Exhibit 10.1 to the Registrant's Form F-1, Commission File No. 333-137930, filed on October
10, 2006).

4.2

RRsat Global Communications Network Ltd. 2006 Israel Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2
to the Registrant's Form F-1, Commission File No. 333-137930, filed on October 10, 2006).

4.3

Lease Agreement, dated November 28, 2001, between Zu'aretz Avraham and the Registrant and an amendment thereto (translated
from Hebrew) (incorporated herein by reference to Exhibit 10.3 to the Registrant's Form F-1, Commission File No. 333-137930,
filed on October 10, 2006).

4.4

Form of Insurance, Indemnification and Exculpation Agreement between the Registrant and each of its directors and executive
officers (incorporated herein by reference to Exhibit 10.4 to the Registrant's Form F-1, Commission File No. 333-137930, filed on
October 10, 2006).

4.5

Special License to Render Telecommunication Services, Amendment No. 3, issued to the Registrant on October 29, 2008 by the
Israeli Ministry of Communications (translated from Hebrew) (incorporated herein by reference to Exhibit 4.5 to the Registrant's
Annual Report on Form 20-F for the year ended December 31, 2008, filed on March 24, 2009).

4.6

Purchase and Sale Agreement, dated February 13, 2008, between Skynet Satellite Corporation and RRsat Global Communications
Inc. (incorporated herein by reference to Exhibit 4.6 to the Registrant's Annual Report on Form 20-F for the year ended December
31, 2008, filed on March 24, 2009).

4.7

Agreement, dated March 26, 2008, between Bezeq, The Israel Telecommunications Corp. Limited and the Registrant (English
summary of Hebrew original) (incorporated herein by reference to Exhibit 4.7 to the Registrant's Annual Report on Form 20-F for
the year ended December 31, 2008, filed on March 24, 2009).

4.8

Letter agreement, dated July 1, 2009, between Zu'aretz Avraham and the Registrant (translated from Hebrew).+

4.9

Special License to Render Telecommunication Services, Amendment No. 4, issued to the Registrant on June 25, 2009 by the
Israeli Ministry of Communications (translated from Hebrew).

4.10

Space Segment Access Agreement, dated March 30, 2009, between Inmarsat Global Limited and the Registrant.+

4.11

Network Services Distribution Agreement, dated March 30, 2009, between Inmarsat Global Limited and the Registrant.+
120

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List of significant subsidiaries.

12.1

Certification of the Chief Executive Officer as required by Rule 13a-14(a).

12.2

Certification of the Chief Financial Officer as required by Rule 13a-14(a).

13.1

Certification of the Chief Executive Officer as required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code.

13.2

Certification of the Chief Financial Officer as required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United
States Code.

15

Consent of Somekh Chaikin, Member Firm of KPMG International, Independent Registered Public Accounting Firm.

Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange
Commission.
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RRsat Global Communications


Network Ltd.
and its Subsidiaries
Consolidated
Financial Statements
As of December 31, 2009

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Consolidated Financial Statements
Contents
Page
Report of Independent Registered Public Accounting Firm

F-3

Consolidated Balance Sheets

F-5

Consolidated Statements of Operations

F-7

Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income

F-8

Consolidated Statements of Cash Flows

F - 10

Notes to the Financial Statements

F - 13
F-2

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Somekh Chaikin
KPMG Millennium
Tower
17 Ha'arba'a Street, PO Box 609
Tel Aviv 61006 Israel

Telephone
Fax

972 3 684 8000


972 3 684 8444

Internet

www.kpmg.co.il

Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders of
RRsat Global Communications Network Ltd.:
We have audited the accompanying consolidated balance sheets of RRsat Global Communications Network Ltd. and subsidiaries (the
Company) as of December 31, 2008 and 2009, and the related consolidated statements of operations, changes in shareholders' equity and
comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2009. We also have audited the
Companys internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying managements report
under Item 15 - Controls and Procedures. Our responsibility is to express an opinion on these consolidated financial statements and an
opinion on the Company's internal control over financial reporting 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 audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits
of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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 unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the
financial statements.
F-3

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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.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2008 and 2009, and the results of their operations and their cash flows for each of the years in the threeyear period ended December 31, 2009, in conformity with generally accepted accounting principles in the United States of America. Also
in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
Somekh Chaikin
Certified Public Accountants (Isr.)
Member Firm of KPMG International
Tel-Aviv, Israel
March 17, 2010
F-4

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Consolidated Balance Sheets
In thousands except share data

Current assets
Cash and cash equivalents
Short- term deposits
Marketable securities
Accounts receivable:
Trade (net of provision for doubtful accounts of $2,188
and $4,484 as of December 31, 2008 and 2009 respectively)
Other
Fair value of embedded currency conversion derivatives
Deferred taxes
Prepaid expenses

Note

December 31
2008

December 31
2009

1D; 2

1E; 3
1F
4
1R
1M; 14

34,749
6,102

14,941
9,900
22,708

11,227
417
2,234
552
1,390

16,765
559
1,703
1,507
1,984

56,671

70,067

1,791

1,030

1E; 3

5,743

10D

7,897

7,787

1M; 14

505

1G

1,305

1,664

Fixed assets, at cost, less accumulated


depreciation and amortization

1H; 6

25,993

29,119

Goodwill

1I; 16

3,734

3,734

Intangible assets, at cost, less accumulated amortization

1J; 16

1,353

1,215

Total current assets


Deposits and long-term receivables
Marketable securities
Long- term prepaid expenses
Deferred taxes
Assets held for employee severance payments

Total assets

F-5

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104,487

115,121

RRsat Global Communications Network Ltd.


and its Subsidiaries
Consolidated Balance Sheets (Continued)
In thousands except share data
Note
Liabilities and shareholders equity
Current liabilities
Accounts payable:
Trade
Other
Fair value of embedded currency
conversion derivatives
Related parties
Deferred income

December 31
2008

December 31
2009

14I;7
1R
1O; 8

Total current liabilities


Long-term liabilities
Deferred income
Liability in respect of employee severance payments
Deferred taxes

1O; 8
9
1M; 14

Total long-term liabilities


Total liabilities
Commitments, contingent liabilities and liens

10

Shareholders' equity
Share capital:
Ordinary shares NIS 0.01 par value each (20,000,000 shares
authorized as of December 31, 2008 and 2009; 17,306,783
and 17,326,716 shares issued and fully paid as of
December 31, 2008 and 2009, respectively)
Additional paid in capital
Retained earnings
Accumulated other comprehensive loss

11

8,709
1,944

11,275
2,255

1,205
25
5,440

2,000
4
8,326

17,323

23,860

6,689
1,378
747

6,731
1,699
888

8,814

9,318

26,137

33,178

40
52,106
26,309
(105)

40
52,521
29,407
(25)

Total shareholders equity

78,350

81,943

Total liabilities and shareholders equity

104,487

115,121

The accompanying notes are an integral part of these financial statements.


F-6

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Consolidated Statements of Operations
In thousands except share data
Year ended December 31
2007
2008

Note
Revenues
Cost of revenues

1O; 12

59,221
38,419

Gross profit
Operating expenses
Sales and marketing
General and administrative
Total operating expenses
Operating income
Interest and marketable securities income
Currency fluctuation and other financing
expenses, net
Changes in fair value of embedded currency
conversion derivatives
Other income, net
Income before taxes on income
Income taxes
Net income

13

1R

1M; 14
$

Income per Ordinary Share


Basic income per Ordinary Share

78,993
53,477

2009
93,687
64,548

20,802

25,516

29,139

3,017
5,767

3,914
6,582

5,554
8,391

8,784

10,496

13,945

12,018
2,631

15,020
1,111

15,194
639

329

177

299

(646)
4
14,336
2,932
11,404 $

1,342
10
17,660
4,228
13,432

(1,326)
26
14,832
3,254
11,578

1L
0.66

0.78

0.67

0.65

0.77

0.67

Weighted average number of Ordinary


Shares used to compute basic income per
Ordinary Share

17,249,710

17,290,099

17,310,005

Weighted average number of Ordinary


Shares used to compute diluted income per
Ordinary Share

17,418,180

17,399,375

17,399,324

Diluted income per Ordinary Share

The accompanying notes are an integral part of these financial statements.


F-7

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and its Subsidiaries
Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income
In thousands except share data
Additional
paid-in
capital

Ordinary shares
Share
Amount
Balance as of
January 31, 2007

17,242,300

40

Accumulated
other
comprehensive
loss

Retained
earnings

51,280

12,025

Total

63,345

Changes during 2007


Vesting of RSU's
Stock based
compensation
Comprehensive - income:
Other comprehensive
loss -unrealized change
in investment securities,
net of deferred tax
benefit of $0.27
Net income
Total comprehensive
income
Balance as of
December 31, 2007

44,462

*-

*-

411

411

11,404

(1)
-

(1)
11,404

11,404

(1)

11,403

(1) $

75,159

17,286,762

40

51,691

23,429

Changes during 2008


Vesting of RSU's
Stock based
compensation
Dividend paid
$0.32 per share
Dividend paid
$0.29 per share
Comprehensive - income:
Other comprehensive
loss -unrealized change
in investment securities,
net of deferred tax
benefit of $37
Net income
Total comprehensive
income
Balance as of
December 31, 2008

20,021

*-

*-

415

415

(5,532)

(5,532)

(5,020)

(5,020)

13,432

(104)
-

(104)
13,432

13,432

(104)

13,328

(105) $

78,350

17,306,783

40

52,106

* Less than $1
The accompanying notes are an integral part of these financial statements
F-8

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26,309

RRsat Global Communications Network Ltd.


and its Subsidiaries
Consilidated Statements of Changes in Shareholders Equity and Comprehensive Income (continued)
In thousands except share data
Additional
paid-in
capital

Ordinary shares
Share
Amount
Balance as of
January 1, 2009

17,306,783

40

Accumulated
other
comprehensive
loss

Retained
earnings

52,106

26,309

(105) $

Total

78,350

Changes during 2009


Vesting of RSU's
Stock based
compensation
Dividend paid
$0.32 per share
Dividend paid
$0.17 per share
Comprehensive - income:
Other comprehensive
income -unrealized change
in investment securities,
net of deferred tax
expense of $27
Net income
Total comprehensive
income
Balance as of
December 31, 2009

19,933

*-

*-

415

415

(5,538)

(5,538)

(2,942)

(2,942)

11,578

80
-

80
11,578

11,578

80

11,658

17,326,716

40

52,521

29,407

(25)

81,943

* Less than $1
The accompanying notes are an integral part of these financial statements
F-9

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and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Year ended December 31
2007
2008
Cash flows from operating activities
Net income

Adjustments required to reconcile net income to net


cash provided by operating activities:
Depreciation and amortization
Provision for losses in accounts receivable
Deferred taxes
Discount accretion and premium amortization
of held- to- maturity securities, net
Discount accretion and premium amortization
of available- for- sale securities, net
Changes in liability for employee severance payments, net
Capital gains on sale of fixed assets, net
Stock- based compensation
Changes in fair value of embedded currency
conversion derivatives
Loss (profit) from trading securities, net

11,404

2,971
1,094
(329)

Changes in assets and liabilities:


Increase in accounts receivable - trade
Decrease (increase) in related parties, net
Decrease (increase) in accounts receivable - other
Increase in prepaid expenses, net
Decrease (increase) in deposits and
long-term receivables
Increase in accounts payable
Increase in deferred income
Net cash provided by operating activities

The accompanying notes are an integral part of these financial statements


F - 10

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13,432

3,971
972
324

2009

11,578

5,584
2,421
(1,346)

(1,361)

(635)

299

(16)
(10)
(4)
411

(246)
49
(10)
415

(396)
(38)
(26)
415

646
(445)

(1,342)
551

1,326
(340)

(1,328)
49
279
(696)

(1,778)
13
101
(471)

(7,959)
(21)
(142)
(594)

(86)
128
2,423

(687)
3,886
1,769

761
2,504
2,928

15,130

20,314

16,954

RRsat Global Communications Network Ltd.


and its Subsidiaries
Consolidated Statements of Cash Flows (Continued)
In thousands
Year ended December 31
2007
2008
Cash flows from investing activities
Investment in fixed assets
Investment in other assets
Investment in short- term deposits
Business combination (See C below)
Investment in available- for- sale securities
Investment in held- to- maturity securities
Decrease (increase) in trading securities, net
Proceeds from available- for- sale securities
Proceeds from held- to- maturity securities
Proceeds from sale of fixed assets

2009

(5,352) $
(1,033)
(3,048)
(33,989)
(1,570)
1,062
5,807
9

(11,026) $
(195)
(15,573)
(21,689)
1,877
18,707
24,462
15

(7,955)
(161)
(9,900)
(16,804)
(13)
1,846
4,652
53

Net cash used in investing activities

(38,114) $

(3,422) $

(28,282)

Cash flows from financing activities


Dividend paid
Net cash used in financing activities

$
$

(10,552) $
(10,552) $

(8,480)
(8,480)

Increase (decrease) in cash and cash equivalents

Balance of cash and cash equivalents at beginning of year

51,393

Balance of cash and cash equivalents at end of year

$
$

(22,984) $

6,340

(19,808)

28,409

34,749

28,409

34,749

14,941

138

306

679

3,650

3,392

5,208

A. Non-cash transactions
Investment in fixed assets
B. Supplementary cash flow information
Income taxes paid
The accompanying notes are an integral part of these financial statements.
F - 11

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and its Subsidiaries
Consolidated Statements of Cash Flows (Continued)
In thousands
Year ended December 31
2007
2008

2009

C. Business combination (Note 16)


Investment in fixed assets
Investment in other assets and prepaid expenses
Investment in intangible assets
Investment in goodwill
Net cash paid

The accompanying notes are an integral part of these financial statements.


F - 12

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3,748
6,840
1,251
3,734
15,573

RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
In thousands except share data
Note 1 - Organization and Summary of Significant Accounting Policies
A.

General

RRsat Global Communications Network Ltd. was formed in 1981 and it engages in providing global, end-to-end, content distribution
and management services to television and radio broadcasting industries through satellite, terrestrial fiber optic and Internet, and
mobile communications services through satellites (MSS).
B.

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries in the United States and
in Cyprus. The accounts of its subsidiaries are consolidated from the date of their inception. All intercompany balances and
transactions have been eliminated in consolidation.
In June 2009 the Financial Accounting Standards Board, or FASB, established the Accounting Standards Codification ("ASC"), or
Codification, as the primary source of authoritative GAAP recognized by the FASB to be applied to nongovernmental entities.
Although the establishment of the ASC did not change current GAAP, it did change the way the Company refers to GAAP throughout
this document to reflect the updated referencing convention.
C.

Functional and reporting currency

The accounting records of the Company are maintained in New Israeli Shekels (NIS) and U.S. dollars. The currency of the primary
economic environment in which the operations of the Company are conducted is the U.S. dollar. Therefore it has been determined to
be the Companys functional currency.
Transactions denominated in foreign currencies other than the U.S. dollar are translated into the functional currency using current
exchange rates. Gains and losses from the translation of foreign currency balances are recorded in the statement of operations.
D.

Cash and cash equivalents

All highly liquid deposits with original maturity of three months or less from the date of deposit are considered to be cash equivalents.
F - 13

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
E.

Marketable securities

Marketable securities at December 31, 2009 and 2008 consist of U.S. Agency debentures, corporate debentures, corporate shares,
government debentures, mutual funds, and treasury notes. The Company classifies its debt securities in one of three categories:
trading, available for sale or held to maturity and its equity securities into trading. Trading securities are bought and held principally
for the purpose of selling them in the near term. Held to maturity debt securities are those securities in which the Company has the
ability and intent to hold the security until maturity. All securities not included in trading or held to maturity are classified as available
for sale.
Trading and available for sale securities are recorded at fair value. The fair value of debt securities and equity securities is based on
quoted market prices in active markets at the reporting date for those investments. Held to maturity debt securities are recorded at
amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses on trading
securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are
excluded from earnings and are reported as a separate component of accumulated other comprehensive income (loss) until realized.
Realized gains and losses from the sale of available for sale securities are determined on a specific identification basis.
Premiums and discounts on debt securities are amortized or accreted over the life of the related held to maturity or available for sale
security as an adjustment to yield using the effective interest method. Such amortization and accretion is included in the Interest and
marketable securities income line item in the consolidated statements of operations. Dividend and interest income are recognized
when earned.
In April 2009, the FASB issued ASC 320-10 (formerly known as FSP FAS 115-2) and ASC 958-320 (formerly known as FAS 124-2),
Recognition and Presentation of Other-Than-Temporary Impairments (ASC 320-10 and ASC 958-320), which amends the
recognition guidance for other-than-temporary impairments (OTTI) of debt securities and expands the financial statements disclosures
for OTTI on debt and equity securities. When an other-than-temporary impairment has occurred, the amount of the other-thantemporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not
will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.
If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized
cost basis less any current-period credit loss, the other-than-temporary impairment is recognized in earnings equal to the entire
difference between the investments amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to
sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its
amortized cost basis less any current-period credit loss, the other-than-temporary impairment is separated into the amount representing
the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to the
credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors is recognized in
other comprehensive income, net of applicable income taxes. Standards ASC 320-10 and ASC 958-320 did not have material effect of
the Companys financial statements.
F - 14

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
F.

Provision for doubtful accounts

The financial statements include specific provisions for doubtful debts, which, in management's opinion, adequately reflect the loss
included in those debts the collection of which is doubtful. Doubtful debts, which according to Companys management opinion are
unlikely to be collected, are written-off from the Companys books, based on a management resolution. Management's determination
of the adequacy of the provision is based, inter alia, on an evaluation of the risk, by considering the available information on the
financial position of the debtors, the volume of their business, an evaluation of the security received from them and past experience.
The changes in the provision during the year:
Year ended December 31
2007
2008
2009
Opening balance
Additions during the year
Deductions during the year

987 $
1,094
(199)

1,882 $
972
(666)

2,188
2,421
(125)

Closing balance

1,882 $

2,188 $

4,484

G.

Assets held for employee severance benefits

Assets held for employee severance benefits represent contributions to severance pay funds and cash surrender value of life insurance
policies that are recorded at their current redemption value.
H.

Fixed assets

Fixed assets are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are calculated by the straight-line method on the basis of the estimated useful lives of the assets using
the following annual rates:
%
2.5
10-15
6-33
15

Buildings
Communication equipment
Office furniture and equipment
Motor vehicles
Leasehold improvements are amortized
over estimated useful life of the assets

10
F - 15

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
I.

Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are
not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually, on December 31 or upon
the occurrence of a trigger event. In accordance with the provisions of FASB ASC Topic 350, Intangibles - Goodwill and Other
(Statement No. 142, Goodwill and Other Intangible Assets), the goodwill impairment test is a two step test. Under the first step, the
fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less
than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of
the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the
reporting units goodwill over the implied fair value of that goodwill.
No impairment loss was required in 2009. See also Note 16.
J.

Intangible Assets

Intangible assets are stated at cost less accumulated amortization.


Amortization is calculated by the straight-line method on the basis of the estimated useful lives of the assets using annual rates
between 10-33%.
K.

Stock compensation plans

The Company accounts for its employee stock-based compensation awards in accordance with ASC Topic 718, Compensation - Stock
Compensation. ASC Topic 718 requires that all stock- based compensation be recognized as an expense in the financial statements
and that such cost be measured at the fair value of the awards ultimately expected to vest (net of forfeitures).
The Company amortizes its share- based compensation expense on a straight- line method.
F - 16

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
L.

Income per Ordinary Share

Basic income per Ordinary Share is calculated by dividing the net income attributable to Ordinary Shares by the weighted average
number of Ordinary Shares outstanding. The diluted income per Ordinary share calculation is similar to basic income per share except
that the weighted average of common shares outstanding is increased to include outstanding potential common shares, during the
period if dilutive. Potential common shares arise from stock options and unvested restricted shares units. The dilutive effect is
reflected by the application of the treasury stock method.
The following table summarizes information related to the computation of basic and diluted income per Ordinary Share for the years
indicated.
Year ended December 31
2007
2008
Income per Ordinary Share
Net income attributable to Ordinary Shares
Weighted average number of Ordinary Shares
outstanding used in basic income per
Ordinary Share calculation
Add assumed exercise of outstanding
dilutive potential Ordinary Shares

11,404 $

13,432 $

2009
11,578

17,249,710

17,290,099

17,310,005

168,470

109,276

89,319

17,418,180

17,399,375

17,399,324

Basic income per Ordinary Share

0.66

0.78

0.67

Diluted income per Ordinary Share

0.65

0.77

0.67

Weighted average number of Ordinary Shares


outstanding used in diluted income per
Ordinary Share calculation

F - 17

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
M.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.
Deferred tax assets and liabilities are classified as current or non current items in accordance with the nature of the assets or liabilities
to which they relate. When there are no underlying assets or liabilities the deferred tax assets and liabilities are classified in
accordance with the period of expected reversal. Income tax expenses represent the tax payable for the period and the changes during
the period in deferred tax assets and liabilities.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.
Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in
recognition or measurement are reflected in the period in which the change in judgement occurs.
The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative
expenses.
N.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates
and assumptions include the useful lives of fixed assets; fair value of acquisitions; allowances for doubtful accounts; the valuation of
embedded derivatives, valuation of deferred tax assets, investments in marketable securities, share-based compensation, income tax
uncertainties and other contingencies. The current economic environment has increased the degree of uncertainty inherent in those
estimates and assumptions.
F - 18

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
O.

Revenue recognition

The Company recognizes revenues when there is persuasive evidence of an arrangement, no significant obligations in respect of
installation remain, the price is fixed or determinable and the collection of the resulting receivable is probable. Revenues from services
are recognized on a straight-line basis, over the contractual term of the arrangement during which services are rendered, which
generally extends over terms of three to five years with an automatic renewal option for an additional two to five years. Deposits
received for the latest one-six months of long-term service arrangements are not recognized as revenues until the related services are
provided.
Revenues from sales of communication equipments are recognized upon the delivery to the customer and the transfer of the principal
risks and rewards arising from ownership over the sold products.
VAT collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded
from revenues in the consolidated statements of operation.
P.

Long-lived assets

In accordance with Impairment or Disposal of Long-Lived Assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and
Equipment - Overall, (FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets), long lived assets,
such as fixed assets, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long lived asset or
asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that
asset or asset group to its carrying value. If the carrying value of the long lived asset or asset group is not recoverable on an
undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is
determined through various valuation techniques including discounted cash flow models, quoted market values and third party
independent appraisals, as considered necessary.
Q.

Liability in respect of employee severance payments

The Company records its obligation with respect of employee severance payments as if it was payable at each balance sheet date (the
shut-down method) in accordance with the provisions of EITF 88-1, Determination of Vested Benefit Obligation for a Defined
Benefit Pension Plan. The liability is recognized on an undiscounted basis and is calculated on the basis of the latest salary of each
employee in Israel multiplied by the number of years of employment as of the balance sheet date. For employees subject to section 14
of the Israel Severance pay law- 1963, the liability is calculated as of the salary on the date of which section 14 has started being
effective per each employee.
R.

Fair value of embedded currency conversion derivatives

The Company accounts for derivatives and hedging activities in accordance with FASB ASC Topic 815, Derivatives and Hedging
(Statement No. 133, Accounting for Derivative Instruments and Certain Hedging Activities, as amended), which requires that all
derivatives instruments be recorded on the balance sheet at their respective fair value. The Company does not use derivative
instruments to hedge exposures to cash flow, market or foreign currency risks, but occasionally enters into commercial (foreign
currency) contracts in which a derivative instrument is embedded. For these embedded derivatives, for which the economic
characteristics and risks are not clearly and closely related to the economic characteristics and risks of the host contract, the changes in
fair value are recorded in the statement of operations.
F - 19

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
S.

Concentration of credit risk

Financial instruments that may subject the Company to significant concentrations of credit risk consist principally of cash and cash
equivalents, marketable securities and trade accounts receivable. Cash and cash equivalents are deposited with major financial
institutions in Israel and the U.S. The Company invests in securities with original maturity dates of up to three years with credit
ratings of A and above.
The Company performs ongoing credit evaluations of the financial condition of its customers. The risk of collection associated with
trade receivables is reduced by the large number and geographical dispersion of the Company's customer base and the Company's
policy of requiring collateral or security on sales to customers.
T.

Fair Value Measurements

On January 1, 2008, the Company adopted the provisions of FASB Statement No. 157, Fair Value Measurements, included in ASC
Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for
fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring
basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. ASC Topic 820 also establishes a framework for measuring fair
value and expands disclosures about fair value measurements.
F - 20

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and its Subsidiaries
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (contd)
U.

Accounting standards adopted in 2009

In April 2009, the Company adopted ASC 320-10 (formerly known as FSP FAS 115-2) and ASC 958-320 (formerly known as FAS
124-2), Recognition and Presentation of Other-Than-Temporary Impairments (ASC 320-10 and ASC 958-320) which significantly
changes the existing other-than-temporary impairment model for debt securities. It also modifies the presentation of other-thantemporary impairment losses and increases the frequency and expands required disclosures about other-than-temporary impairment for
debt and equity securities. ASC 320-10 and ASC 958-320 did not have material effect of the Companys financial statements. See also
Note 1E.
Effective April 1, 2009, the Company adopted ASC 820-10 (formerly known as FSP FASB statement No. 157-4) Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly. This ASC provides additional guidance for estimating fair value in accordance with ASC 820-10, Fair Value
measurements, when the volume and level of activity for the asset or liability have significantly decreased and when circumstances
indicate a transaction is not orderly. ASC 820-10 did not have material effect of the Companys financial statements.
Effective April 1, 2009, the Company adopted ASC 855-10 (formerly known as FASB SFAS No. 165), Subsequent Events. ASC
855-10 establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before
financial statements are available to be issued (subsequent events). These standards are largely the same guidance on subsequent
events which previously existed only in auditing literature.
Note 2 - Cash and Cash Equivalents
December
31
2008
Denominated in U.S. dollars
Denominated in Euro
Denominated in NIS
Other

December
31
2009

31,345 $
2,030
1,336
38

10,339
4,312
274
16

34,749 $

14,941

F - 21

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and its Subsidiaries
Notes to the Financial Statements
Note 3 - Marketable Securities
A. The carrying amount, gross unrealized holding gains, gross unrealized holding losses, and fair value of available for sale and held
to maturity debt securities by major security type and class of security are as follows:

Amortized
cost
As of December 31, 2009
Available- for- sale:
Corporate debentures- current
US Agency debentures- current

Held- to- maturity:


Corporate debentures- current

As of December 31, 2008


Available- for- sale:
Corporate debentures- Non current
US Agency debentures- current
US Agency debentures- Non current

Fair value

68 $
43
111 $

(136) $
(8)
(144) $

15,478
5,070
20,548

$
$

765 $
765 $

10 $
10 $

- $
- $

775
775

3,208 $
1,011
1,011
5,230 $

- $
16
16 $

(130) $
(28)
(158) $

3,078
983
1,027
5,088

4,078 $
1,638
5,716 $

- $
- $

(138) $
(69)
(207) $

3,940
1,569
5,509

$
$

B.

Gross
unrealized
holding
(losses)

15,546 $
5,035
20,581 $

$
Held- to- maturity:
Corporate debentures- current
Corporate debentures- Non current

Gross
unrealized
holding
gains

Maturities of debt securities classified as available- for- sale and held- to- maturity were as follows:
December 31 2008
Amortized
cost
Fair value

Available- for- sale:


Current maturities
Due after one year through five years

$
$

Held- to- maturity:


Current maturities
Due after one year through five years

$
$

December 31 2009
Amortized
cost
Fair value

1,011 $
4,219
5,230 $

983 $
4,105
5,088 $

20,581 $
20,581 $

20,548
20,548

4,078 $
1,638
5,716 $

3,940 $
1,569
5,509 $

765 $
765 $

775
775

F - 22

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and its Subsidiaries
Notes to the Financial Statements
Note 3 - Marketable Securities (contd)
C. Proceeds from the sale of investment securities available for sale were $2,792 in 2009 (2008- $17,980) ; gross realized gains
included in interest and marketable securities income in 2009 were $123 (2008-gross realized loss of $55).
D. The Company also maintains a $1,395 portfolio of investment securities classified as trading (December 31 2008- $1,041). Net
realized gains on trading securities during the year ended December 31 2009 were $281 (For year ended December 31 2008- net
realized losses were $99), and are included in interest and marketable securities income. Net unrealized gains on trading
securities held at year end and included in other comprehensive income for 2009 were $59 (Net unrealized losses for 2008$452).
E.

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category
and period that individual securities have been in a continuous unrealized loss position were as follows:

At December 31, 2009

Available for sale:


Corporate debentures
US Agency debentures

Less than 12 months


Unrealized
losses
Fair value
$
$

At December 31, 2008

Available for sale:


Corporate debentures
US Agency debentures
Held to maturity:
Corporate debentures

(136) $
(8)
(144) $

6,731 $
1,505
8,236 $

Less than 12 months


Unrealized
losses
Fair value
$

Total
Unrealized
losses
Fair value
(136) $
(8)
(144) $

6,731
1,505
8,236

Total
Unrealized
losses
Fair value

(130) $
(28)
(158) $

3,078 $
2,010
5,088 $

(130) $
(28)
(158) $

3,078
2,010
5,088

(207) $

5,509 $

(207) $

5,509

US Agency debentures: The unrealized losses on investments in U.S. Agency debentures were caused by increases in interest
rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized
cost of the investment. Because the Company has the ability and intent to hold these investments until a market price recovery or
maturity, these investments are not considered other than temporarily impaired.
Corporate debentures: The unrealized losses on investments in debentures were caused by increases in interest rates. The
contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the
investment. Because the Company has the ability and intent to hold these investments until a market price recovery or maturity,
these investments are not considered other than temporarily impaired.
F - 23

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and its Subsidiaries
Notes to the Financial Statements
Note 4 - Other Receivables
December
31
2008
Government institutions
Other

December
31
2009

324 $
93

447
112

417 $

559

Note 5 - Deposits and Long-Term Receivables


December
31
2008
Long-term deposits (1)
Prepaid expenses (2)

December
31
2009

42 $
1,749

85
945

1,791 $

1,030

(1)

Deposits in respect of operating leases of motor vehicles.

(2)

Prepaid expenses for the last one to six months of long-term service agreements with suppliers. As of December 31, 2009
the balance includes an amount of $587 (December 31, 2008 - $ 1,008) in U.S. dollars and an amount equivalent to
$358 in Euro (December 31, 2008 - $ 741).

Note 6 - Fixed Assets, at Cost, Less Accumulated Depreciation and Amortization


December
31
2008
Land
Building
Communications equipment
Office furniture and equipment
Motor vehicles
Leasehold improvements

379 $
4,949
29,105
1,529
632
4,162
40,756
14,763

379
5,928
35,199
2,430
729
4,339
49,004
19,885

25,993 $

29,119

Accumulated depreciation and amortization


Fixed assets , net

December
31
2009

Depreciation and amortization expense for the years ended December 31, 2007, 2008 and 2009 are $ 2,971, $ 3,913 and
$5,175, respectively.
F - 24

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and its Subsidiaries
Notes to the Financial Statements
Note 7 - Accounts Payable Other
December
31
2008
Liabilities regarding employees
Government institutions
Accrued expenses
Other

745 $
385
573
241
1,944 $

December
31
2009
1,120
227
720
188
2,255

Note 8 - Deferred Income


Deferred income represents an advance payment for the last one to six months of long-term service agreements with customers.
The service agreements with the customer are for various periods the last of which ends in 2018.
Note 9 - Liability in Respect of Employee Severance Payments
A.

Under Israeli law and labor agreements, the Company is required to make severance payments to retired or terminated employees and
to employees leaving employment in certain other circumstances. In respect of the liability to the employees, individual insurance
policies are purchased and deposits are made with recognized severance pay funds and/or by purchase of insurance policies of the
Company. The liability for severance pay is calculated on the basis of the latest salary paid to each employee multiplied by the number
of years of employment. The liability is covered by the amounts deposited including accumulated income thereon as well as by the
unfunded provision.

B.

According to Section 14 to the Severance Pay Law ("Section 14") the payment of monthly deposits by a company into recognized
severance and pension funds or insurance policies releases it from any additional severance obligation to the employees that have
entered into agreements with the company pursuant to such Section 14. Commencing 2009, the Company has entered into agreements
with a majority of its employees in order to implement Section 14. Therefore, beginning that date, the payment of monthly deposits by
the Company into recognized severance and pension funds or insurance policies releases it from any additional severance obligation to
those employees that have entered into such agreements and therefore the Company incurs no additional liability since that date with
respect to such employees. Amounts accumulated in the pension funds or insurance policies pursuant to Section 14 are not supervised
or administrated by the Company and therefore neither such amounts nor the corresponding accrual are reflected in the balance sheet.

C.

Consequently, the assets held for employee severance benefits reported on the balance sheet, in respect of deposits for those
employees who have signed agreements pursuant to Section 14, represent the redemption value of deposits made through each date the
Company has entered into agreements with each such employee in order to implement Section 14. Gains earned until December 31,
2009 are added to the redemption value of deposits per each employee. The liability for employee severance benefits, with respect to
those employees, represents the liability of the Company for employee severance benefits as of the date the Company has entered into
agreements with those employees in order to implement Section 14. As a result of the implementation of Section 14, as described
above, the liability with respect to those employees will remain constant, until such liability will be removed, either by termination of
employment or retirement, or by any future rise to the salary of an employee in a way that the rise paid to each employee multiplied by
the number of years of employment of such employee until the date of implemetation of section 14.
F - 25

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and its Subsidiaries
Notes to the Financial Statements
Note 9 - Liability in Respect of Employee Severance Payments (contd)
D.

Expenses recorded in respect of provision for employee severance payments for the years ended December 31, 2007, 2008 and 2009
are $ 351, $367, and $321, respectively.

Note 10 - Commitments, Contingent Liabilities and Liens


A.

The Company has several lease agreements for its facilities, the last of which will end by June 15, 2013 and which have
some extension options. In addition, the Company is engaged in long-term operating network leases. The annual payments
the Company is committed to pay over the next five years and thereafter (including the options), as of December 31, 2009,
are as follows:

2010
2011
2012
2013
2014
2015 and thereafter

43,657
26,320
18,299
13,760
10,309
4,880

$ 117,225
Operating lease expenses under long- term operating network leases for the years ended December 31, 2007, 2008 and
2009 are $29,983, $40,764 and $45,900 respectively. Rental expenses under the lease agreements for the years ended
December 31, 2007, 2008 and 2009 are $232, $284 and $327 respectively.
F - 26

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and its Subsidiaries
Notes to the Financial Statements
Note 10 - Commitments, Contingent Liabilities and Liens (contd)
B.

As at balance sheet date the amounts of guarantees are as follows:


December
31
2008

Guarantees provided by the banks to third parties

1,266 $

December
31
2009
3,314

The guarantees were granted to third parties (vendors) to secure the Companys performance under such contracts
(broadcasting services and leases) and to the Israeli Tax Authority. Guarantees were provided for up to one year
period and are renewed each year according to the vendors contract terms and conditions. The guarantees may be
exercised by the third party at any time, subject to the terms in the contracts between the Company and the third party.
In connection with a guarantee in the amount of approximately $925 that was provided by a bank to the Israeli Tax
Authority- please see Note 14J.
C.

The Company has two lines of credit provided to it by two banks (approximately $2,000 each). From time to time the
Company uses its lines of credit to provide guarantees required under its long term contracts with its suppliers. The
commitment fees are 0.1% from the total line of credit for each year. The Banks are allowed to cancel or change the line of
credit with 30 days notice.

D.

On March 11, 2007, the Israel Land Administration (ILA), authorized to allocate the Company a parcel of land of
approximately 538,200 square feet near Galon, Israel. In May 2007, the Company and the ILA entered into a development
agreement pursuant to which the Company undertook to commence building a teleport on the site within eighteen months
as of the date the approval of the allocation of the land, and to finish the building by no later than April 1, 2010.
Contingent upon the Company complying with the terms of the development agreement, the ILA shall, upon completion of
the building, enter into a lease agreement with the Company for a term of 49 years effectively starting from the date the
Company and the ILA entered into a development agreement, with an extension option of additional 49 years, as of the
date of the approval of the allocation of the land. The Company has not yet commenced to develop the site, and has
informed the ILA of the delay due to delays in obtaining building permits from the regional Building Land Zoning
Committee. Cancelation of the development agreement may result in refund of the fees paid for the land less a 15%
termination fee and 6% per annum fee. In the opinion of the Company, there is a remote chance that the ILA will cancel
the allocation of the land to the Company.
All payments under the lease agreement were prepaid, classified as non- current asset under prepaid expenses with
amortization occuring on a straight- line basis over the expected lease term.
F - 27

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and its Subsidiaries
Notes to the Financial Statements
Note 10 - Commitments, Contingent Liabilities and Liens (contd)
E.

The construction and operation of the Re'em teleport site and the Emek Ha'ela teleport site requires building permits from
local and regional zoning authorities, which are granted for limited periods and are subject to renewal from time to time.
The building permit for the Company's Re'em teleport site has expired on October 20, 2009. The Company has applied to
extend the permit for an additional 3-year term and is awaiting the decision of the Regional Building and Zoning
Committee. If the request is not granted, the Company intends to appeal for the decision. The building permits for the
Emek Ha'ela teleport site has no expiration date.

F.

Screenpeaks Ltd., a former Israeli customer, filed a complaint on May 22, 2008 against the Company and the Israeli
Ministry of Communications ("MOC") in the Tel Aviv District Court. The complaint alleges that the Company unlawfully
terminated services to the plaintiff in accordance with the instructions of the MOC. The plaintiff is seeking damages from
the Company and the MOC in the amount of NIS 23,000 (approximately $6,100). As part of the legal procedure the MOC
filed with the court a third party statement claiming it will seek remedies from the Company for any damage it will incur as
a result of a court decision in the favour of the plaintiff. The Company rejects the allegations and is contesting the claim
vigorously. On May 27, 2009 the District Court decided that the proceedings will first examine the question of whether on
the date the MOC instructed to terminate the agreement between the Company and the customer, the agreement fulfilled
the terms and conditions of the license issued to the Company by the MOC.
If it is made clear that the agreement fulfilled the conditions of the license, the complaint against the Company will be
rejected and the customer will be entitled to remedies only from the MOC. In the opinion of the Company's management
and legal advisers, in the event the plaintiff prevails, the amount the Company will be required to pay will likely be
immaterial. Therefore, no provision has been made in the consolidated financial statements with respect to the claim.

Note 11 - Share Capital


A.

Ordinary shares

All of the issued and outstanding Ordinary Shares of the Company are duly authorized, validly issued, fully paid and nonassessable. The Ordinary Shares of the Company are not redeemable and have no preemptive rights. The ownership or voting of
Ordinary Shares by non-residents of Israel is not restricted in any way by the Companys memorandum of association, its articles of
association or the laws of the State of Israel, except that citizens of countries which are, or have been, in a state of war with Israel
may not be recognized as owners of Ordinary Shares.
The Company's license from the Israeli Ministry of Communications to operate our teleports provides that, without the consent of the
Israeli Minister of Communications, no means of control of the Company may be acquired or transferred, directly or indirectly.
F - 28

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and its Subsidiaries
Notes to the Financial Statements
Note 11 - Share Capital (cont'd)
A.

Ordinary shares (cont'd)

In connection with the Company's initial public offering in November 2006, the Company's license was amended to provide that the
Company's entering into an underwriting agreement for the offering and sale of shares to the public, listing the shares for trading, and
depositing shares with a depositary was not considered a transfer of means of control. In addition, pursuant to the amendments,
transfers of the Company's shares that do not result in the transfer of control of the Company are permitted without the prior approval
of the Ministry of Communications, provided that:

In the event of a transfer or acquisition of shares without the consent of the Ministry of Communications, resulting in the
transferee becoming a beneficial holder of 5% or more of our shares or being entitled to a right to appoint a director or the
chief executive officer (or is a director or the chief executive officer), the Company must notify the Ministry of
Communications within 21 days of learning of such transfer; and

In the event of a transfer or acquisition of shares without the consent of the Ministry of Communications, resulting in the
transferee becoming a beneficial holder of 10% or more of our shares or having significant influence over the Company
(but which does not result in a transfer of control of the Company), the Company must notify the Ministry of
Communications within 21 days of learning of such transfer and request the consent of the Ministry of Communications
for such transfer.

In addition, should a shareholder, other than the Companys existing shareholders prior to the Initial Public Offering, become
a beneficiary holder of 10% or more of the Companys shares or acquire shares in an amount resulting in such shareholder having
significant influence over the Company without receiving the consent of the Minister of Communication, its holdings will be
converted into dormant shares for as long as the Minister's consent is required but not obtained. The beneficial holder of such dormant
shares will have no rights other than the right to receive dividends and other distributions to shareholders and the right to participate
in such offerings.
The Company's license also states that means of control of the Company, or of an interested shareholder of the Company (which
generally would include a holder of 5% of the Company's voting power or other means of control), cannot be pledged unless such
pledge agreement includes a condition that prohibits the exercise of the pledge without obtaining the advance written approval of the
Minster of Communication.
F - 29

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and its Subsidiaries
Notes to the Financial Statements
Note 11 - Share Capital (cont'd)
B.

Employees' stock options

(1)

Options granted to the CEO


On March 15, 2006, the Company signed an agreement with its CEO's wholly-owned company regarding his
compensation for management services. The agreement will be in effect up to the end of 2011.
According to the agreement there is an option plan for the CEO, which entitles him to 233,100 options (hereinafter - the
2006 options). The 2006 options shall vest, according to a graded- schedule, in five installments over a period of four
years, beginning on December 31, 2006. Each option entitles the holder to purchase one ordinary share of the Company.
The following table summarizes information relating to the 2006 options outstanding as of December 31, 2009:

Number of
options
37,800
37,800
44,100
50,400
63,000
233,100

Remaining
contractual
life (in years)

Exercise
Price (in $)

Grant date
fair value per
Share (in $)

Grant date
intrinsic
Value (in $)

2
2
2
2
2

5.60
6.16
6.77
7.45
8.35

5.60
5.60
5.60
5.60
5.60

Aggregate
intrinsic value
as of
December 31,
2009
(in $)
215,460
194,292
199,773
194,040
185,850
989,415

The fair value of the common stock was determined on December 21, 2005 and no significant events affected the valuation
between December 21, 2005 and the date of the grant.
As of December 31, 2009, there was approximately $107 of unrecognized compensation cost related to non-vested options
to be recognized over the weighted average period 1.25 years.
The fair value of each option granted in 2006 was estimated on the date of grant under Black-Scholes model, assuming
dividend yield of zero percent, due to dividend adjustment mechanism and using the following assumptions:
(1) Risk-Free, annual interest rate of 4.68%, which represented the risk free interest rate of US zero-coupon Government
Bonds.
(2) Weighted average expected life of 4 years.
(3) Expected average volatility of 39.51%, which represented a weighted average standard deviation rate for the stock prices of
similar companies traded in the NASDAQ National Market.
F - 30

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and its Subsidiaries
Notes to the Financial Statements
Note 11 - Share Capital (cont'd)
B.
(1)

Employees' stock options (cont'd)


Options granted to the CEO (cont'd)
The options activities are as follows:
Number
of
shares

Weighted
average
exercise
price

WeightedAverage
grant-date
fair value

Options outstanding at December 31, 2006, 2007, 2008


and 2009

233,100 $

6.99 $

1.83

Options exercisable as at December 31, 2008

170,100 $

6.58 $

1.83

Options exercisable as at December 31, 2009

119,700 $

6.20 $

1.83

From grant date through December 31, 2009, none of the 2006 options were exercised or forfeited and no new options were
granted during 2009.
(2)

Restricted share units granted to employees and directors


In the fourth quarter of 2006, the Company adopted an equity incentive plan ("the Plan").
Under the Plan, the Company may grant its directors, officers and employees restricted shares, restricted share units and options
to purchase its ordinary shares.
Restricted Share Units are granted in the form of units to acquire one share. Until the shares are issued subject to the vesting of
such unit, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the units to acquire
Shares.
The total number of ordinary shares that will be available for grant under the plan is 441,000 ordinary shares. The plan is under
Section 102 of the Israeli Income Tax Ordinance which provides certain tax benefits in connection with share-based
compensation to employees, officers and directors.
On October 31, 2006, the Company has granted a total of 105,840 restricted share units which vest over four years from the grant
date. The grant date fair value of the restricted share units was $12.50 per share.
F - 31

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and its Subsidiaries
Notes to the Financial Statements
Note 11 - Share Capital (cont'd)
B.
(2)

Employees' stock options (cont'd)


Restricted shares units granted to employees and directors (cont'd)
Restricted share units activity during the periods indicated is as follows:
Number of
restricted
shares units
105,840
(44,462)
(1,012)
60,366
(20,021)
(480)
39,865
(19,933)
(87)
19,845

Balance at January 1, 2007


Vested
Forfeited
Balance at December 31, 2007
Vested
Forfeited
Balance at December 31, 2008
Vested
Forfeited
Balance at December 31, 2009

As of December 31, 2009, there was approximately $275 unrecognized cost related to non- vested restricted share units to be vested
over 0.83 years. No restricted shares units are exercisable as of December 31, 2009.
The following summarizes the allocation of stock-based compensation charge for the 2006 options and the restricted share units
granted:
Year ended December 31
2007
2008
2009
80
81
81
100
101
101
231
233
233

Cost of revenues
Sales and marketing
General and administrative

411

415

415

Year ended December 31


2007
2008
2009
Tax benefit recognized in respect of stock- based
compensation expenses
(3)

59

See Note 19B as for granting of 14,880 options in January 2010.


F - 32

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and its Subsidiaries
Notes to the Financial Statements
Note 12 - Segments Results
ASC 280-10 (formerly known as FSP FASB statement No. 131), Disclosures about Segments of an Enterprise and Related
Information", establishes standards for reporting information about operating segments. The following information is provided in
accordance with the requirements of SFAS No. 131 and is consistent with how business results are reported to the Chief operating
decision maker.
The Companys' segments are strategic business units that offer different communication services and are managed accordingly. As a
result of the acquisitions of the 711 business unit (See Note 16B) in November 2008, the Company presents for the first time two
operating segments. The Company analyzes its operating segments based on the segment's gross profit. The Company has two
reportable segments: (1) Mobile satellite communications services (hereinafter- Mobile satellite communication services), and
(2) Content management and distribution services to television and radio broadcasting industries (hereinafter- Content management
and distribution services).
Management evaluates each segments performance based upon revenues and gross profit. Management believes such discussions are
the most informative representation of how it evaluates performance. Business segment revenues and gross profit are presented below.
F - 33

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and its Subsidiaries
Notes to the Financial Statements
Note 12 - Segments Results (cont'd)
The following tables show components of results of operations by segment:
Year ended December 31, 2009
Mobile Satellite
Communication
Services

Content
management
and distribution
services

Total revenue

4,488

89,199

93,687

Gross profit

74

29,065

29,139

Total

Sales and marketing


General and administrative

5,554
8,391

Operating income

Financial income, net

15,194
(388)

Other income, net

26

Income before taxes on in income


Current assets

1,332

Long term assets

14,832

21,186

22,518

2,694

2,694

Fixed assets, at cost, less accumulated


depreciation and amortization

2,244

26,875

29,119

Intangible assets, at cost,


less accumulated amortization

863

352

1,215

Unallocated assets *

59,575

Total assets

115,121

5,584

Depreciation and amortization

F - 34

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320

5,264

RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 12 - Segments Results (cont'd)
Year ended December 31, 2008
Mobile Satellite
Communication
Services

Content
management
and distribution
services

Total revenue

737

78,256

78,993

Gross profit

77

25,439

25,516

Total

Sales and marketing


General and administrative

3,914
6,582

Operating income

Financial income, net

15,020
2,630

Other income, net

10

Income before taxes on in income


Current assets

746

Long term assets

17,660

15,074

15,820

3,096

3,096

Fixed assets, at cost, less accumulated


depreciation and amortization

1,147

24,846

25,993

Intangible assets, at cost,


less accumulated amortization

1,064

289

1,353

Unallocated assets *

58,225

Total assets

104,487

3,971

Depreciation and amortization

42

3,929

* The Company does not allocate the goodwill in the amount of $3,734 for each segment, as this goodwill is the future synergy to the
Company from the use of the Emeq Haela facility for expanding its business.
F - 35

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and its Subsidiaries
Notes to the Financial Statements
Note 12 - Segments Results (cont'd)
Revenues and long lived assets by geographic areas:
Year ended December 31
2007
2008

Revenues:
North America
Europe
Asia
Israel
Middle East (other than Israel)
Rest of the world

2009

13,203
25,889
5,970
5,686
7,006
1,467

19,399
32,222
8,773
5,425
9,250
3,924

20,996
39,551
10,528
6,440
12,196
3,976

59,221

78,993

93,687

December
31
2008

Long lived assets:

Israel
North America
Total

$
$

20,876
5,117
25,993

December
31
2009
$
$

23,858
5,261
29,119

Note 13 - Interest and marketable securities income


Year ended December 31
2007
2008
Interest on deposits, net
Interest on debt securities
Discount accretion and premium amortization
of held- to- maturity securities, net
Discount accretion and premium amortization
of available- for- sale securities, net
Profits (loss) from trading securities, net

1,052
117

1,361
16
85
$

F - 36

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2,631

693
88

2009
157
45

635

(299)

246
(551)

396
340

1,111

639

RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 14 - Taxes on Income
A.

Income tax expense included in the statement of operations


Year ended December 31
2007
2008

Current taxes
Taxes in respect to previous years
Deferred taxes
Income tax expense *

3,285 $
(24)
(329)
2,932 $

3,922 $
(18)
324
4,228 $

2009
4,600
(1,346)
3,254

* Most of the Company taxes are calculated based on Israeli tax law except for taxes of the Company USA subsidiary that are
calculated based on USA tax law.
B.

Adjustments for inflation


Income tax is computed on the basis of the Companys results in nominal NIS determined for statutory purposes. The
Company has been assessed for tax purposes under the Income Tax Law (Inflationary Adjustments 1985), the purpose of
which is to prevent taxation on inflationary profits.
On February 26, 2008, the Israeli Income Tax Law (Inflationary Adjustments) (Amendment No. 20) (Restriction of Period
of Application) 2008 (the Amendment) was passed by the Knesset. According to the Amendment, the Inflationary
Adjustments Law will no longer be applicable subsequent to the 2007 tax year, except for certain transitional provisions.
Further, according to the Amendment, commencing with the 2008 tax year, the adjustment of income for the effects of
inflation for tax purposes is no longer calculated. Additionally, depreciation on fixed assets and tax loss carryforwards are
no longer linked to future changes in the CPI, such that these amounts will continue to be linked only to the CPI as of the
end of the 2007 tax year and will not be linked to CPI changes after this date.

C.

Tax benefits under the Law for Encouragement of Capital Investment (hereinafter - the Investment Law)
The Company received from the Israeli Investment Center approval to it being considered to be an Approved Enterprise
as defined in the Investment Law for its export expansion plan as from the 2006 tax year. Any income from that Approved
Enterprise will be subject to a reduced tax rate of 25% for a period up to a total of seven years. Under the terms of the
program, which relates to the Companys export of communication services to television channels and television
operations via satellites the Company is required to fulfill certain conditions and management of the Company believes
that as of the date of the financial statements the Company has complied with those conditions.
Dividend distribution originating from income of an Aprroved Enterprise will be subject to a withholding tax at a rate of
15% provided that dividend is distributed during the period stipulated under the Israeli law.
F - 37

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 14 - Taxes on Income (cont'd)
D.

Taxation of the subsidiary


At December 31, 2009, the Companys subsidiary had approximately US$ 950 net operating loss carryforwards for US
federal income tax reporting purposes, which will expire through 2029. In addition, at December 31, 2009, the subsidiary
had approximately US$ 720 net operating loss carryforwards for state income tax reporting purposes, which will expire
through 2029.

E.

Income before income taxes and income taxes expense (benefit) included in the consolidated
statements of operations
Year ended December 31
2007
2008

Income (loss) before income taxes:


Israel
Foreign Jurisdiction

$
$

Income tax expense (benefit):


Current taxes:
Israel
Foreign Jurisdiction

14,531 $
(195)
14,336 $

$
$

3,261
3,261

3,904
3,904

(329)
(329)
2,932 $

324
324
4,228

Deferred taxes:
Israel
Foreign Jurisdiction
Total

F - 38

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17,932 $
(272)
17,660 $

2009

15,760
(928)
14,832

4,600
4,600

(825)
(521)
(1,346)
3,254

RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 14 - Taxes on Income (cont'd)
F.

On July 14, 2009, the Knesset passed the Law for Economic Efficiency (ammendments for legislation for implementation
of the economic program for 2009-2010 ), which provides for a gradual reduction in the company tax rate to 18% as from
2016. According to the amendmends the Company tax rate will be reduced in the following manner: in 2009 - 26%, in
2010 - 25%, in 2011 -24%, in 2012- 23%, in 2013- 22%, in 2014- 21%, in 2015- 20%, and from 2016 onward the tax rate
will be 18%. The implication of the change in the tax rates as aforesaid is effective starting from the financial statements
for 2009, in a manner of a reduction of the deferred tax liabilities and recognizing tax benefit of $95.

G.

Reconciliation between the tax on the pre-tax adjusted earnings and the tax expense included in the
statement of operations
Year ended December 31
2007
2008

Statutory tax rate

29%

Income before taxes on income as


reported in the statement of operations

Computed expected tax expense

14,336

27%

4,157

Non-deductible expenses
Effect of Approved Enterprise tax rate
Foreign tax differential
Deferred taxes for losses from previous years
Taxes in respect to previous years
Change in valuation allowance
Differences between the definition of
capital and assets for Israeli tax purposes
Increase related to current year tax positions
Other differences
$
Basic and diluted earnings per share
amounts of the benefit resulting from the
"Approved Enterprise" status

17,660

2009
26%

4,768

14,832
3,856

173
(220)
(24)
580

149
(160)
(18)
86

35
(114)
(75)
(203)
94

(1,730)
(4)

(876)
287
(8)

(254)
78
(163)

2,932

0.01

F - 39

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4,228

0.01

3,254

0.01

RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 14 - Taxes on Income (cont'd)
H.

Deferred taxes

As of December 31, 2008 and 2009, the tax effects of temporary differences that give rise to significant portions of deferred tax assets
and liabilities are attributable to the following:
December
31
2008

December
31
2009

Deferred tax assets:


Provision for doubtful debts
Vacation pay accruals
Stock-based compensation
Foreign currency embedded derivatives
Marketable securities
Net operating loss carryforwards
Severance pay fund

569
86
125
453
18

1,122
102
183
74
520
521
6

Total gross deferred tax assets

1,251

2,528

Less valuation allowance

(416)

Net deferred tax assets

835

(510)
$

2,018

Deferred tax liabilities:


Fixed assets
Foreign currency embedded derivatives
Goodwill

(750) $
(265)
(15)

(801)
(93)

Total gross deferred tax liabilities

(1,030) $

(894)

Net deferred tax asset (liability)

(195) $

1,124

The net change in valuation allowance for the years ended December 31, 2007, 2008 and 2009 was an increase of $580, a decrease of
$164 and increase of $94, respectively.
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 not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible.
F - 40

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 14 - Taxes on Income (cont'd)
H.

Deferred taxes (cont'd)

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies
in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize
the benefits of these deductible differences, net of the existing valuation allowance at December 31, 2009. The amount of the deferred
tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the
carryforward period are reduced.
I.

Accounting for uncertainty in income taxes

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
2008
Balance at January 1
Increase related to prior year tax positions
Increase related to current year tax positions
Balance at December 31

2009
312
287
599

599
213
78
890

The unrecognized tax benefits at December 31, 2007, 2008 and 2009 were zero, $599 and $890 respectively, if recognized, would
affect the effective tax rate of the Company.
No interest or penalties have been recorded at the date of adoption and for the years ended December 31, 2007, 2008 and 2009. The
Company and its subsidiaries files income tax returns in Israel, Cyprus and USA. As of December 31, 2009, the Israeli tax returns of
the Company are open to examination by the Israeli income tax authorities for the tax years of 2005 through 2009 and the tax returns
of the foreign subsidiaries are open to examination by the tax authorities for the tax years 2007 through 2009. In addition, The
Company is unable to provide an estimate of the range of the total amount of unrecognized tax benefits that is reasonably possible to
change significantly within the next twelve months.
J.

The Company is required to apply for witholding tax exemption from the Israeli Tax Authority (hereinafter- ITA) for all
payments to foreign vendors. In December 2009 the Company provided the ITA with a bank guarantee in the amount
of approximately $924 for a period of six months until June 2010 for such exemption until the completion of ITA's review
in respect of the witholding tax liability. The Company believes that it is more likely than not that the ITA will not impose
any tax witholding upon the completion of its reveiw.
F - 41

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 15 - Acquisitions
A.

In May 2008, the Company acquired from SkyNet Satellite Corporation ("SkyNet") the real property, communication equipment and
licenses of the Hawley Teleport located in Pike County, Pennsylvania. The parcel of land contains approximately 200 acres, and
buildings with approximately 40,000 square feet. The aggregate purchase price was $4,876 million and was paid mostly in cash, and
the remainder ($250) in future services to be provided to SkyNet . The fair value of the assets purchased was $6,400, and since the
Company has accounted for this acquisition as an asset purchase and not as business combination, the difference of $1,500 was
allocated proportionately between the assets. As a result of the acquisition, the Company leverages its global network to generate
additional revenues.
The following table summarizes the estimated value of the assets acquired :

Land
Building
Communications equipment
Licenses

379
2,694
1,656
147

Total assets acquired

4,876

B.

In November 2008, the Company acquired from Bezeq The Israeli Telecommunication Corporation Ltd. ("Bezeq") its satellite
business including the Bezeqsat and "711" business units (services to television and radio and mobile satellite communication
services) and real property and assets of the Emeq Haela teleport located in Israel. As a result of the acquisition, the Company
enhanced its infrustructure and service offering. The aggregate purchase price was $15,573 and was paid in cash. The Company has
accounted for this acquisition as business combination. Results of the operations of the acquired business are included in the statement
of operations since November 4, 2008.
The following table summarizes the estimated fair value of the assets acquired :

Building
Equipment
Other assets ( prepayment on leased land)
Intangible assets*
Goodwill **

2,222
1,526
6,840
1,251
3,734

Total assets acquired

15,573

Intangible assets consist of a franchise agreement, brand name and customer relationship.

**

The goodwill is expected to be fully deductible for tax purposes.


F - 42

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 16 - Goodwill and Other Intangible Assets
A. Acquired Intangible Assets
December 31, 2009
Weighted
Remaining
Gross
average
carrying amortization Accumulated
amount
period
amortization
Amortizing intangible assets:
Franchise agreement
Brand name
Customer relationship
Licenses
Total

857
274
281
147
1,559

4.3 yrs $
4.3 yrs
3 yrs
8.6 yrs
$

(179)
(58)
(87)
(20)
(344)

December 31, 2008


Weighted
Remaining
Gross
average
carrying amortization Accumulated
amount
period
amortization
Amortizing intangible assets:
Franchise agreement
Brand name
Customer relationship
Licenses
Total

696
274
281
147
1,398

5.3 yrs $
5.3 yrs
4 yrs
9.6 yrs
$

(20)
(8)
(12)
(5)
(45)

The expected intangible assets amortization expense for each of the next five years is as follows:
2010
2011
2012
2013
2014

319
311
241
214
81
1,166

Aggregate amortization expense for amortizing intangible assets was $0, $45 and $299 for the years ended December 31, 2007, 2008
and 2009, respectively.
B.

Goodwill

Goodwill is the future synergy to the Company from the use of the Emeq Haela facility for expanding its business.
F - 43

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 17 - Transactions and Balances with Related Parties
A.

Transactions with related parties


Year ended December 31
2007
2008

2009

Revenues from sales and services (C)

1,231

1,474

1,145

General and administrative

31

25

41

Managements fees to shareholders (D)

398

398

398

Purchase of fixed asset

300

B.

Balances with related parties


December
31
2008

December
31
2009

Trade receivables

389

237

Other payables

25

C.

Revenues from related parties

The Company is engaged with customers, which are related parties of one of its shareholders.
F - 44

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 17 - Transactions and Balances with Related Parties (cont'd)
D.

Managements fees to shareholders

In October 2006, the Company entered into agreement with Del-Ta Engineering Ltd. (shareholder, hereinafter- "Del- Ta") and Kardan
Communications Ltd. (shareholder, hereinafter- "Kardan") that sets forth the management and consulting services that Del-Ta and
Kardan are obligated to provide and the annual management fee payable thereunder as follows: (i) $235 to Del-Ta and (ii) $163 to
Kardan. This agreement provided initially for a one year term and renews automatically for one year periods unless terminated by the
Company or, jointly, by Del-Ta and Kardan. Each of Del-Ta and Kardan agreed not to terminate or amend the agreement without the
consent of the other service provider. Del-Ta Engineering and Kardan also agreed that for so long as each has a representative serving
on the Compamy's board of directors, neither party will vote any shareholder vote in favor of terminating or not renewing the
agreement. The payments pursuant to this agreement aggregated $398 in each of 2007, 2008 and 2009.
Note 18 - Fair Value Measurements
On January 1, 2008, the Company adopted ASC Topic 820 for fair value measurements of financial assets and financial liabilities and
on January 1, 2009, adopted ASC Topic 820 to fair value measurements of nonfinancial items that are recognized or disclosed at fair
value in the financial statements on a recurring basis. ASC Topic 820 clarifies that fair value is an exit price, representing the amount
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC Topic
820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy are as follows:
*

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability
to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is
significant to the fair value measurement.
F - 45

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 18 - Fair Value Measurements (cont'd)
In accordance with ASC Topic 820 the Companys available-for-sale and trading securities are classified within Level 1 because they
are valued using quoted market prices in active markets. The Companys embedded currency conversion derivatives are classified
within Level 2 because they are valued using quoted inputs from an active market for its assumptions.
As of December 31, 2009, the Company held approximately $5,838 of U.S government or government agency marketable securities
($5,070 are calssified as available for sale, and $768 as trading) and approximately $16,506 of marketable corporate debt securities
($15,478 are calssified as available for sale, $765 as held to maturity and $263 as trading).
Assets and liabilities measured at fair value at December 31, 2008 and 2009, are summarized below:

December
31,
2009

Fair Value Measurements at Reporting Date


Using
Quoted
Prices in
Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)

Assets:
Trading securities
Available-for-sale securities:
Corporate debentures
US government or government agency debentures
Fair value of embedded currency conversion derivatives
Total

1,395

1,395

Fair value of embedded currency conversion derivatives

15,478
5,070
1,703
23,646

2,000

15,478
5,070
21,943

1,703
1,703

2,000

Liabilities:

F - 46

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RRsat Global Communications Network Ltd.


and its Subsidiaries
Notes to the Financial Statements
Note 18 - Fair Value Measurements (cont'd)

December
31,
2008

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:
Trading securities
Available-for-sale securities:
Corporate debentures
US government or government agency debentures
Fair value of embedded currency conversion derivatives
Total

1,041

1,041

Fair value of embedded currency conversion derivatives

3,078
2,010
2,234
8,363

1,205

3,078
2,010
6,129

2,234
2,234

1,205

Liabilities:

In addition, the Companys' financial assets and liabilities consist of cash and cash equivalents, short- term investments, trade and
other receivables and trade and other payables. The carrying amount of these financial instruments approximate fair value because of
the short maturity of these investments. Assets held for severance benefits are recorded at their current cash redemption value.
Note 19 - Subsequent Events
A.

On February 1, 2010, the Company's Board of Directors declared a cash dividend in the amount of $0.23 per ordinary share, and in the
aggregate amount of approximately $4,000. The dividend was paid on March 2, 2010 to all of the Company's shareholders of record at
the end of the trading day on the NASDAQ on February 16, 2010.

B.

On January 25, 2010, the Company granted to its outside directors 14,880 options to purchase Company shares at an exercise price of
$12.50 per share. The options shall vest in three equal installments at the end of each year during the three years from the grant date.
F - 47

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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
RRSAT GLOBAL COMMUNICATIONS
NETWORK LTD.
By: /s/ David Rivel
David Rivel
Chief Executive Officer
By: /s/ Gil Efron
Gil Efron
Chief Financial Officer
Date: March 17, 2010
122

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Exhibit 4.8

July 1, 2009
To,
Mr. Avraham Zuaretz
Moshav Neve Mivtach

Hand delivered

Hello Avraham,
Re: Unprotected Lease Agreement (Business Structure) dated November 28, 2001
Further to our yesterday's meeting, I would like to put down in writing the agreements reached between us in connection with amending the
above referenced lease agreement (hereinafter: the "Agreement"). I would appreciate it if you confirm the agreements detailed hereinafter with
your signature at the bottom of this letter:
1.

RRsat Global Communications Network Ltd. (formerly, R.R. Satellite Communications Ltd.) (hereinafter: "RRsat") is granted a right
to extend the term of the Agreement by two additional terms of 5 years each, i.e. from 1.1.2012 until 31.12.2016 and from 1.1.2017
until 31.12.2021 (hereinafter: the "Optional Terms").

2.

In consideration for your courteous agreement to grant RRsat the right to extend the Agreement for the Optional Terms, RRsat agrees
that commencing as of July 1, 2009 and for the entire duration of the lease period, including the Optional Terms, the rent will be [* *
*] per month, plus VAT according to law.

3.

It is agreed that RRsat shall be entitled to [* * *] with a written notice which will be sent to you [* * *].

4.

Except as specifically stated above, all other terms of the Agreement will remain in effect without any change.
Sincerely,
(signature)
David Rivel, Founder and CEO
RRsat Global Communications Network Ltd.

I confirm my consent to the above:


(signature)
_______________
Avraham Zuaretz
Date: ______________

Main Offices: 4 Hagoren St., Industrial Park, Omer 84965, Israel Tel: +972-8-8610000 Fax:
+972-8-8610501
Marketing Department: Reem Junction, D.N. Shikmim 79813, Israel Tel: +972-8-8610000 Fax:
+972-8-8610555
info@rrsat.com www.rrsat.com
*** Confidential portions of this document have been redacted and filed separately with the Security and Exchange Commission.

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Exhibit 4.9

STATE OF ISRAEL
Ministry of Communications
Special License to render telecommunication services numbered 5-10439-2-95049
to RRSat Global Communications Network Ltd. Company
Amendment no. 4
By virtue of the power pursuant to Section 4(e) of the Communications (Telecommunication and Broadcasting) Law, 5742-1982 and pursuant
to Section 5 of the Telegraph Ordinance [New Version] 5732-1972, and the rest of the powers granted to us pursuant to any law, we hereby
amend a special license to render telecommunication services - video and audio transmission services via stationary or mobile land satellite
stations, which was granted to RRSat Global Communications Network Ltd. Company (hereinafter RRSat) on the date of 27 Tevet 5762
(31.12.2001) and renewal on the date of Thursday, 28 Tamuz 5768 (31.07.2008) as detailed below:
Amendment to Section 1 1.
2.

In the definition of the Client in paragraph (b), after the words "of the said services" will come: "in Israel or
a Foreign Provider".
After the definition of "Type of Recipients" will come:
"Foreign Provider" a license holder abroad for the said services or an entity abroad that provides the said
services under the laws of such country."

Amendment to Section 5 3.

In Section 5.5 "Restrictions after Section 5.5.4", will come:


"5.5.5

Amendment to Section 6 4.

If an authorized authority in Israel or abroad determined that a service provided by a Foreign


Provider is unlawful in an origin or destination country, the Licensee will demand from the Foreign
Provider to cure such illegality immediately, and if it does not do so, the Licensee will arrange for
the termination of the provisioning of the service for such Foreign Provider in such country with
immediate effect."

After subsection 6.1.3.7, will come:


"6.1.3.8 In an agreement with a Foreign Provider will include these:
(a)

A declaration by the Foreign Provider that the activities and services provided by it are in
accordance with the laws in the Foreign Provider's country of origin and the destination
country.

(b)

A clarification that in the event that an authorized authority in Israel or abroad shall
determine that the service is unlawful in the country of origin of the Foreign Provider or
a destination country, the Foreign Provider must cure such illegality immediately, and if it
does not do so, the service in such country will be terminated with immediate effect.

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Special License No. 5-10439-2-95049 to RRsat Global Communications Network Ltd., For the provision of video and audio
transmission services via stationary or mobile land satellite stations Amendment 4
Amendment to Section 14 5.

Instead of the existing "Appendix A1 - Principal structure of the system for voice and data transmission, will
come:
"Appendix A1 - Voice and Data Transmission Services" attached hereto.

2 Tamuz 5769
24 June 2009

[signature]
Zeev Raz
Stand-in Senior Deputy Director
General Engineering and Licensing
Ministry of Communications

Cc: Special Licenses circulation

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[signature]
Haim Geron, Adv.
Director General (Acting)
Ministry of Communications

Exhibit 4.10

Space Segment Access Agreement

SPACE SEGMENT ACCESS AGREEMENT


INMARSAT GLOBAL LIMITED
and
RRSAT GLOBAL COMMUNICATIONS NETWORK LIMITED

INMARSAT PROPRIETARY

Inmarsat 2008

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Space Segment Access Agreement

CONTENTS
Page
1.

DEFINITIONS

2.

AUTHORISATION TO PROVIDE SERVICES

3.

TERM

10

4.

SERVICE ACTIVATION AND PROVISION

10

5.

TECHNOLOGICAL FRAUD MANAGEMENT

14

6.

AUTHORISATION SUBJECT TO COMPLIANCE

15

7.

CHARGES

16

8.

TAXES AND TAX CREDITS

21

9.

ADDITIONAL OBLIGATIONS OF DP

23

10.

ADDITIONAL OBLIGATIONS OF THE COMPANY

23

11.

NETWORK PERFORMANCE

25

12.

REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

26

13.

DISCLAIMERS OF LIABILITY

27

14.

VARIATION

30

15.

INSURANCE

31

16.

CONFIDENTIALITY

31

17.

PUBLICITY

33

18.

INTELLECTUAL PROPERTY

33

19.

TIME LIMITS

34

20.

AMENDMENTS

34

21.

SUSPENSION OF AUTHORIZATION

34

22.

TERMINATION

35

23.

CONSEQUENCES OF TERMINATION

36

24.

FINANCIAL SECURITY

37

25.

ASSIGNMENTS AND SUBCONTRACTING

37

INMARSAT PROPRIETARY

ii

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Inmarsat 2008

Space Segment Access Agreement

26.

WAIVER

38

27.

INVALIDITY

38

28.

FORCE MAJEURE

38

29.

NOTICES

39

30.

LANGUAGE AND COMMUNICATIONS

40

31.

ENTIRE AGREEMENT AND RELATIONSHIP OF PARTIES

41

32.

SETTLEMENT OF DISPUTES

41

33.

COUNTERPARTS

43

34.

COSTS OF THIS AGREEMENT

43

35.

RIGHTS OF THIRD PARTIES

43

36.

GOVERNING LAW

43

INMARSAT PROPRIETARY

iii

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Inmarsat 2008

Space Segment Access Agreement

ANNEXES
A

INMARSAT LES TECHNICAL CRITERIA AND OPERATING PROCEDURES

ALLOCATION OF LES IDENTITIES

MANDATORY PROCEDURAL REQUIREMENTS FOR ISPs

CHARGES, VOLUME DISCOUNT SCHEMES & TERMS AND CONDITIONS

STANDARD DISCLAIMER CLAUSE

RULES OF PROCEDURE FOR NETWORK PLANNING MEETINGS

LES TECHNICAL PERFORMANCE OBJECTIVES

NETWORK PERFORMANCE OBJECTIVES

POINTS OF SERVICE ACTIVATION CRITERIA

TECHNOLOGICAL FRAUD PREVENTION PROCEDURES

BRANDING GUIDELINES

TRADE MARK LICENCE AGREEMENT

IPR LICENCE AGREEMENT

INMARSAT PROPRIETARY

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Space Segment Access Agreement

SPACE SEGMENT ACCESS AGREEMENT


THIS AGREEMENT is made on this 30th day of March 2009.
BETWEEN
INMARSAT GLOBAL LIMITED, a company incorporated under the laws of England and Wales with registered number 3675885 whose
registered office is at 99 City Road, London, EC1Y 1AX, United Kingdom, (the Company); and
RRSAT GLOBAL COMMUNICATIONS LIMITED, a public company incorporated under the laws of Israel, with registered number
51-089629-3 whose registered office is at 4 Hagoren Street, Industrial Park, Omer 84965, Israel (the DP).
The Company and the DP shall each be referred to herein individually as a Party and collectively as the Parties.
WHEREAS
(A)

The Company desires to provide telecommunications services via the Space Segment (as defined below) to the DP.

(B)

The DP desires to access telecommunications services via the Space Segment from the Company and to distribute
telecommunications services to its customers.

(C)

The Company and the DP have entered into agreements for the provision of telecommunications services, the latest of which
commenced on 15 April 2004 and expires on 14 April 2009, and the Parties wish to continue their relationship in accordance with
the terms and conditions of this Agreement.

IT IS AGREED as follows:
1.

DEFINITIONS

1.1

In this Agreement, including any exhibits and Annexes hereto, the following terms shall have the following meanings unless
otherwise expressly provided:

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Accounting Authority means an accounting authority within the meaning of ITU-T Recommendation D.90.
Affiliate means a Person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under
common control with, another Person (and, for the purpose of the foregoing, control (including the terms controlling, controlled
by, and under common control with) means the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, or by contract).
Authorisation means the authorisation of the DP to provide Services via the Space Segment pursuant to Clause 2.
Branding Guidelines means the guidelines for marketing using the Inmarsat Marks as set out in Annex K.
Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on which banks are generally
open for business in London.
Charges means the charges payable by the DP to the Company for the provision of Services via the Space Segment pursuant to
Clause 7.
Commencement Date means the date on which this Agreement becomes effective, being 14 April 2009 or the date this Agreement
is executed by both Parties, whichever is the later.
Direct Marketing means targeted marketing through vertical sector advertising to defined target sectors or user groups.
Distribution Partner or DP or LESO or LES Operator means any operator of an LES, that enters into an agreement to obtain use
of the Space Segment from the Company on the terms and conditions set forth in this Agreement or on terms and conditions which
are substantially similar.
Effective Date means 14 April 1999.
End User means a Person that is the ultimate user of an Existing Service and/or an Evolved Service.
Evolved Service means any service which is substantially based on an Existing Service and which the Company elects to offer to the
DP under this Agreement.
Existing Services means any service listed in the Schedule of Charges in Annex D.

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Space Segment Access Agreement

Generic Marketing means promoting awareness of the Companys brand including, but not limited to, in the general press and
media forums.
Goods means any promotional or advertising materials related to the Services, as well as SIM cards to which the Inmarsat Marks are
applied under the provisions of the Trade Mark Licence Agreement.
MPDS means the Companys mobile packet data service.
Inmarsat Marks shall have the meaning set forth in the Trade Mark Licence Agreement.
ISP or Inmarsat Service Provider means an entity that has contracted with one or more DPs to distribute, promote, retail and bill
Services to End Users and who has received an ISP code from the Company.
LES or Land Earth Station means the satellite antennas, switching facilities and related equipment located at a fixed location that
form an interconnection point between the Satellites and the terrestrial telecommunications networks for the purpose of providing
Services, or using Space Segment capacity.
DP's Relevant Net Revenues shall have the meaning set forth in Clause 13.4.
LES Technical Criteria and Operating Procedures means all relevant system definition manuals (SDMs), technical requirements
documents and network operating procedures set out in the list in Annex A, as amended from time to time, as well as future SDMs
and other related documents relating to Evolved Services, as determined by the Company.
MES means a mobile earth station (including any SIM card that can be used in conjunction with an MES) used to access the Services.
Network Planning Meeting means a meeting between the Company and the DPs held in accordance with Annex F.
Ocean Region means global beam satellite coverage areas of the Satellites, together with such other ocean regions as shall be
introduced in the future.
Operational Emergency means a situation in which, in the good faith opinion of the Company, on the basis of the information
available to it, has caused or is likely to cause damage, unavailability, delay, degradation, interruption or interference to the Space
Segment.

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Space Segment Access Agreement

Organization means the International Mobile Satellite Organization established by the Convention on the International Mobile
Satellite Organization on 16 July 1979, as amended.
Payment Due Date shall have the meanings given in Clause 7.
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organization, association, pool, syndicate,
sole proprietorship or government or agency or political subdivision thereof or any other form of organization not specifically listed.
Points of Service Activation shall have the meaning set forth in Clause 4.2.
Public Services Agreement means the agreement between the Company and the Organization dated April 1999 or any replacement
thereof.
Reseller means any entity engaged by the DP to resell Services provided through the Land Earth Station of the DP including, without
limitation, ISPs or tenant entities in a Shared LES Agreement.
Restriction of a Service (or to Restrict or a Restricted Service) means the withdrawal of an element of that Service (including but
not limited to voice, fax, data or telex), or the limitation of Satellite resources allocated to a Service, or an element of that Service,
to the extent that the quality of service may be intentionally and permanently degraded such that it affects the ability of the DPs to
provide that Service.
Satellite means an object located beyond the earth's atmosphere that is used for radio communications and, more particularly for
the purpose of this Agreement, includes any satellite that is owned, leased and/or operated by the Company now and in the future,
including subsequent generation satellites.
Services means Existing Services and Evolved Services, or any one of them as the context requires.
Shared Base Station means each of the dual region MPDS Base Stations owned and operated by the Company at the
Commencement Date.
Shared LES Agreement means an agreement or arrangement between the DP (as host) and a third party (as tenant, which in all
cases shall be required to meet the criteria in Clause 2.5(b) hereof) whereby the DP agrees to provide facilities at its Land Earth
Station to the tenant to permit shared use of the host LES, while allowing the tenant to be identified by an LES identification code
separate from that of the hosts LES identification code for service provision and/or traffic management purposes. Notwithstanding
the foregoing, the agreement of the host DP to allocate a TNID programmed at its LES shall not be deemed to be a Shared LES
Agreement for the purposes of this Agreement.

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Space Segment Access Agreement

Space Segment means the Satellites and all other centralised infrastructure owned, leased, or operated by or on behalf of the
Company to support the operation of the Satellites and the Services in all Ocean Regions.
Telecommunications Breakdown means any unavailability, delay or interruption to the availability of the Space Segment provided
that, for the purpose of this Agreement, a Telecommunications Breakdown shall not include any unavailability or interruption of a
Service that is caused by a decision of the Company to relocate a Satellite or to Restrict or withdraw such Service under Clause 2.9
hereof.
Term has the meaning ascribed to it in Clause 3.
TMLA or Trade Mark Licence Agreement shall mean the agreement between the Parties for the licence by the Company of the
Inmarsat Marks contained in Annex L hereto.
TNID means a terrestrial network identification number.
X-OP-105 means the operational procedure referred to as X-OP-105 in Annex A hereto, as may be amended or replaced from
time to time.
Value Added Services means any products or services that the DP offers for use in conjunction with the Services that are not
inconsistent with the LES Technical Criteria and Operating Procedures.
Wholesale Charges shall have the meaning ascribed to it in Annex D.
1.2

Words in the singular include the plural and vice versa where the context requires.

1.3

Headings are for guidance only and do not affect the construction or interpretation of this Agreement.

1.4

In this Agreement, unless the context otherwise requires, references to Clauses, paragraphs and Annexes are to Clauses, paragraphs
and Annexes of this Agreement.

1.5

The Annexes form part of this Agreement and any reference to this Agreement includes the Annexes.

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Space Segment Access Agreement

2.

AUTHORISATION TO PROVIDE SERVICES

DP Authorisation
2.1

Subject always to the availability of Space Segment, the Company authorises the DP, on a non-exclusive basis, to access
telecommunications services provided by the Company via the Space Segment in order to provide Services via the DPs Land Earth
Stations identified in Clause 2.2.

2.2

The Authorisation provided by the Company herein is limited to the DPs provision of telecommunications services via the Space
Segment only through its Land Earth Stations existing as of the Commencement Date and known as Station 711 located at Emeq
Ha-Ella, Israel and operating through the Atlantic Ocean Region-East and Indian Ocean Region. The Company has allocated LES
identification numbers (IDs) and/or access codes to the DP for use in each of the DPs LES(s) and shall allocate such IDs and/or
access codes to the DP as necessary for any arrangement made pursuant to a Shared LES Agreement duly authorised for operation
through the DPs LES(s). The DP shall have the right to maintain any LES IDs allocated to it by the Company that are in effect as
of the Commencement Date. The allocation and maintenance of LES IDs shall be in accordance with the criteria set forth in Annex
B. Such LES shall include any replacement antenna or switching facility.

2.3

The DP shall provide no less than ninety (90) days prior written notice to the Company of any Service(s) that it intends to provide, at
any time, via the Space Segment that is/are in addition to those Services that the DP provides at the Commencement Date. Subject
to Clause 6.1, the DP does not need the Companys consent to provide such additional Services in accordance with the terms and
conditions of this Agreement.

2.4

If the DP wishes to restrict or withdraw any of the Services offered by the DP at any time during the Term it shall provide to the
Company no less than one hundred and eighty (180) days notice in writing, or such other shorter period as the Parties may otherwise
agree.

2.5

The DP may enter into arrangements with any Reseller to provide Services through the DPs LESs, subject to the following terms
and conditions:
(a)

ISPs. The LESO shall comply with the procedural requirements particularised in Annex C, as may be amended from time
to time in accordance with Clause 20.

(b)

Shared LES Agreements. The DP shall provide written notice to the Company of the identity of any entity with which the
DP enters into a Shared LES Agreement no less than thirty (30) days prior to commencement of LES authorisation testing
preceding the provision of service under the Shared LES Agreement. The host entity shall apply to the Company to utilize
an LES ID and access code for the tenant entity in accordance with the procedures in Annex B, provided always that the
tenant entity shall in all cases be required to be a DP and shall either:

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Space Segment Access Agreement

(i)

be operating a physical LES with the same system definition as the hosted Service, including but without limitation,
Inmarsat B, Inmarsat M, mini-M, Fleet, GAN and aeronautical; or

(ii)

be operating a physical LES and have operated a physical LES with the same system definition as the hosted
Service at or for a period since the Effective Date (notwithstanding that the DP has subsequently ceased to operate
such Service); or

(iii)

have otherwise been authorised by the Company prior to the Commencement Date,

in order to be a tenant under a Shared LES Agreement. Alternatively, the tenant entity shall demonstrate to the Company
that it has executed a legally binding and enforceable contract to build an LES with the same system definition and to
begin to provide service via such LES no later than six (6) months following the date on which the Company allocates
the Shared LES ID, failing which the Company shall withdraw such Shared LES ID immediately following the expiration
of such six (6)-month period. The Company shall attribute traffic to the tenant entity in the Shared LES Agreement for
traffic aggregation purposes. It is acknowledged that where any DP wishes to close down all its LESs and terminate this
Agreement, it may thereafter continue to provide Services as a service provider through another DP and may, for a period
of up to five (5) years from the Commencement Date, continue use of its existing allocated LES ID in relation to such
Services as were formerly provided by it as a DP. The right to continue use of the allocated LES ID shall remain subject
to the provisions of Annex B of this Agreement, notwithstanding termination of this Agreement and the Company shall
enter into an agreement with the former DP and the host entity in this regard. Subject to the provisions of this Clause, any
reference in Annex B to the DP shall be deemed to include any former DP. LES IDs will not be permitted to be used in
respect of Services that the former DP did not offer as a DP.
(c)

Other Reseller Arrangements. The DP shall have the right to enter into any arrangement for the distribution of Services
through the DPs Land Earth Station(s) with any type of Reseller other than an ISP or tenant in a Shared LES Agreement,
or to engage any other agent or representative for that purpose, without further notice to or consent of the Company.

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Space Segment Access Agreement

(d)
2.6

Responsibility for Compliance with Agreement. The DP shall be responsible hereunder for the actions of any Resellers
engaged by the DP for the purposes of assuring the compliance of any such Reseller with the applicable terms and conditions
of this Agreement, including without limitation, the LES Technical Criteria and Operating Procedures.

In connection with its provision of Services via the Space Segment, the DP shall:

(a)

provide twenty-four (24) hours a day, seven (7) days a week 1st and 2nd line technical and provisioning after-sales customer
service and helpline to support Resellers and End Users (via Resellers) and for this purpose shall keep its personnel
adequately trained regarding the Services that the DP chooses to provide. At all times such support shall be sufficient to
support the DPs customer base and suited to their market conditions. The Inmarsat customer care support desk shall provide
third line support to the DPs where the DPs access to the Space Segment or any other part of the network not under their
control is lost or curtailed;

(b)

provide reasonable co-operation and information relating to any marketing information reasonably requested by the
Company and reasonably required for the purpose of evaluation of the DPs performance under this Agreement;

(c)

where the Company provides funding to the DP as part of a marketing program, dual brand the design of all Goods covered
by the marketing program relating to the Services with both the DP and the Company branding. Marketing and promotional
materials that are not part funded by the Company shall be dual branded where it is commercially reasonable and appropriate
to do so;

(d)

use all commercially reasonable endeavours to promote and market the Services that the DP chooses to provide and to meet
customer needs and expectations in a reasonable manner;

(e)

provide commercially reasonable support for collaborative initiatives led by the Company to (i) identify generic quality
of service problems with the Companys core systems relating to Existing Services and Evolved Services; (ii) propose
and implement solutions for those problems identified in (i); and (iii) monitor the progress of these solutions and provide
appropriate feedback;

(f)

not by itself or with others participate in any illegal practices in connection with its distribution of the Services;

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Space Segment Access Agreement

(g)

in connection with the promotion and marketing of the Services, not represent that it is an agent of the Company; and

(h)

have the right to develop any Value Added Services based on the Services.

2.7

The Company has the right to authorise other entities, on a non-exclusive basis, to operate a Land Earth Station in order to provide
Services via the Space Segment. The Company shall notify the DPs of any new authorisation within thirty (30) days of any such
authorisation. Any entity authorized by the Company to operate a Land Earth Station to provide Services via the Space Segment
following the Commencement Date shall be considered a DP for the purposes of this Agreement after the date on which such
entity enters into an agreement with the Company on terms and conditions the same as, or substantially similar to, the terms and
conditions contained in this Agreement and commences operation of a Land Earth Station.

2.8

Nothing in this Agreement shall prevent or restrict the Company, either itself or via an Affiliate or jointly with other Persons, from
selling or otherwise providing Services to third parties other than via a DP.

Restriction or Withdrawal of a Service


2.9

The Company has the right to Restrict or withdraw a Service or an element of a Service (including but not limited to voice, data,
fax, telex) in one or more Ocean Regions subject to the following conditions:

(a)

the Company shall, other than in the case of an Operational Emergency or for the purpose of necessary commercial spectrum
management, provide no less than six (6) months prior written notice to the DP and all DPs providing the Service to be
Restricted or withdrawn in the relevant Ocean Region(s) and specify the reasons for the Restriction or withdrawal of the
Service in question;

(b)

no later than thirty (30) days following the notice from the Company specified in paragraph (a) above, at the request of
any DP the Company shall convene a Network Planning Meeting so that it can: (i) consider the views of the DPs before
implementing any proposed Restriction or withdrawal; and (ii) demonstrate that the Restriction or withdrawal satisfies the
condition in paragraph (c) below;

(c)

any Restriction or withdrawal shall, wherever practical, apply in a non-discriminatory manner to all DPs which may have
previously provided the Service within the relevant Ocean Region(s); and

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(d)

2.10

the Company shall in good faith consider, inter alia, investments in equipment or facilities and contractual arrangements
made by the DP, other affected DPs and End Users in reliance upon the availability of the Service to be Restricted or
withdrawn and the possibility of continuing the Service in certain cases under mutually agreeable lease arrangements.

For the avoidance of doubt, the Company acknowledges and agrees that the DP shall be excused from any obligation to satisfy
outstanding service and/or traffic commitments with respect to a withdrawn or Restricted Service.

Competition

2.11

Nothing in this Agreement shall prevent the DP from becoming a distributor of the services of, or holding any economic interest in,
any entity that provides mobile satellite telecommunications services, regardless of whether such entity competes with the Company,
provided that the DP does not unfairly or unreasonably favour such services or entity or unfairly or unreasonably discriminate against
the Services distributed under this Agreement. Nothing in this Agreement shall prevent the Company from placing restrictions on
entities that become DPs after the Commencement Date in respect of the distribution of other services.

3.

TERM
This Agreement shall commence on the Commencement Date and continue until the Company terminates the same by giving not
less than two (2) years prior written notice to the DP, subject always to a minimum term ending 14 April 2014 (the Term) unless
this Agreement is terminated earlier under an applicable provision herein.

4.

SERVICE ACTIVATION AND PROVISION

4.1

The Parties shall make arrangements to permit End Users to use the Services provided through the Space Segment and the DPs Land
Earth Station. Whilst the Company may publish recommended prices, the DP shall have full rights and responsibility to establish
the service rates at which the DP distributes Services to its Resellers and End Users. The Parties shall cooperate to provide for the
minimization of credit risks associated with the provision of Services to End Users in accordance with this Clause 4.

4.2

The Company shall authorize such number of Points of Service Activation as may be necessary to facilitate widespread activation
of End User MESs, consistent with applicable law, (for the purpose of this Agreement, each Point of Service Activation shall be
referred to individually as a PSA, and collectively as PSAs) and shall appoint the DP to act as a PSA, upon the DP's request
and if permitted by applicable national law, provided, however, that (i) the Company shall impose on each PSA, as a condition of its
appointment, the Points of Service Activation Criteria in Annex I and (ii) the DP, as a condition of such appointment, shall comply
with the Points of Service Activation Criteria in Annex I. The Parties acknowledge that, within a particular national regulatory
framework, a PSA may be required to include a national regulatory authority, in which case the term "PSA", as used hereunder, shall
be deemed to include, collectively, such national regulatory authority and such other entity that complies with the Points of Service
Activation Criteria in the PSA Schedule. The Company shall monitor and enforce compliance with the Points of Service Activation
Criteria throughout the term hereof. The LESO shall strictly adhere to the procedures for registration, activation, deactivation and
barring as defined in the Companys Service Activation Manual and operational procedures, as amended from time to time in
accordance with Clause 20.

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4.3

The Company shall treat all information relating to the identity and corporate or personal details relating to End Users that the
Company receives from a PSA, including all such information (including commissioning data-bases) obtained by the Company from
the Organization, as Confidential Information (within the meaning of Clause 16) hereunder for the benefit of the DP and other DPs.

4.4

The Company may disclose information referred to in Clause 4.3 above: (i) to maritime safety and distress rescue agencies for the
purpose of assisting with distress and safety missions; or (ii) on request from a recognised authority as part of ongoing investigation
on production of a court order or otherwise as required by applicable law or regulation; or (iii) in order to provide enhancements to
the Services as required.

4.5

The Company may disclose information referred to in Clause 4.3 above to a third party for the purpose of conducting market
research, provided always that:
(a)

the third party shall be restricted from further disclosing such information under contractual obligations of confidentiality;

(b)

the Company shall notify all DPs thirty (30) days in advance of any such market research being carried out and shall provide
to the DP full details of the proposed market research and the DPs customers to be approached. Where the DP has a contract
for delivery of the Services with a particular customer, the DP may object to such customer being contacted within ten (10)
Business Days of such notification by the Company and the Company shall not contact such customer;

(c)

the Company shall ensure that any report or other end product produced by the third party as a result of the market research
conducted, shall present all information relating to End Users in a form that is aggregated and anonymous and shall not
include any information relating to the identity and corporate or personal details of any End User;

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(d)

the Company shall distribute the report or other end product from any such market research to the DP and all other DPs
simultaneously and as soon as is reasonably practicable after the completion of the research and may also distribute it to
manufacturers of LESs, MESs and other equipment related to the Services;

(e)

subject to Clause 10.2, the Company shall use such information in relation to the Services and for no other purpose; and

(f)

the foregoing shall not prevent the utilisation of the information referred to in Clause 4.3 above by the Company to the
extent that the information pertains only to (an) individual DP(s) and such individual DP(s) has/have authorised the use of
such information.

4.6

Save as set out above in Clauses 4.4 and 4.5 the Company may not, without the consent of the DP and other DPs acting through the
Network Planning Consultative Group Meeting, disclose the information referred to in Clause 4.3 to any third party and shall not
use the ESAS database for any Direct Marketing or Generic Marketing.

4.7

Following notification by a PSA of a prospective End Users valid application for service in accordance with the Points of Service
Activation Criteria set out in Annex I, the Company shall facilitate the activation of such End User's MES by providing in electronic
form to the DP the MES identification number, recognized billing entity and other information as may be necessary for service
activation of such MES.
The Company shall not activate any MES that is not associated with an ISP or Accounting Authority or other entity approved by the
Company, and which accepts financial responsibility for payment of End User charges in a manner consistent with the requirements
of the Points of Service Activation Criteria in Annex I.
With respect to MESs that are activated prior to the Effective Date, the Company shall use its best efforts to impose the Points of
Service Activation Criteria on any PSA in existence as of the Effective Date (Existing PSAs) and shall keep the DPs informed
following the Effective Date of the identities of any Existing PSA that has not agreed to the Points of Service Active Criteria (a noncompliant PSA). The Company shall provide without delay to the DP, immediately upon the presentation by the DP of reasonable
proof of non-payment by the owner of any MES associated with any non-compliant PSA, the corporate and personal details of such
MES owner for the DPs debt collection purposes.

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The Company shall not activate any MES associated with an Existing PSA that remains a non-compliant PSA unless the Company
has undertaken the necessary steps to verify the information concerning an MES owner or operator that is required to be verified by
the PSA using the procedures outlined in Annex I. The Company shall provide without delay to the DP the personal or corporate
details of the MES Owner/Operator and the details of the AA, ISP or other entity that has accepted financial responsibility in relation
to that MES Owner or Operator for debt collection purposes in the event that the DP is not paid by the AA, ISP or other approved
entity in question for a period of more than thirty (30) days beyond the date on which such payment should be rendered under
applicable regulations.
4.8

The DP shall not activate on its network any MES that has not been authorized through the Companys service activation procedures,
as notified to the DP from time to time.

4.9

The DP shall not be obliged to provide Services to any MES that does not meet the DPs own criteria (such as the creditworthiness
of the end user or responsible billing entity associated with such MES), so long as the DP does so in a manner that is consistent with
the DPs obligations to provide distress and safety service under its national laws and regulations.

4.10

Except as expressly provided to the contrary in Clauses 4.13 and 5 of this Agreement, the DP shall be responsible to the Company
for payment of all Charges arising from the DPs provision of Services to any MES through the DPs Land Earth Station.

4.11

If an MES has been refused access by the DP in accordance with the DP's own criteria (such as creditworthiness of the End User),
and provided that such MES has not been subject to a mandatory financial bar (as provided for in X-OP-105 ), the DP shall continue
to provide access to such MES for fixed-to-mobile traffic, but only if it can do so under circumstances in which: (i) the DP is not
exposed to the risk of non-payment associated with such traffic; or (ii) the MES has no outstanding debt to the DP.

4.12

In order to achieve the purpose set out in X-OP-105, the Parties shall implement the Barring Procedures set forth in X-OP-105, as
amended from time to time. In the event that the Company notifies the DP of a mandatory bar on an MES in accordance with such
procedures, the Company shall impose financial penalties on the DP in the event the DP violates such bar and shall impose the same
conditions on the DP with respect to the maintenance and lifting of such bar as provided for in the Barring Procedures set forth in
X-OP-105. In the event that, after notification by the Company pursuant to this Clause, the DP provides service to an MES that is
subject to a mandatory bar in violation of the requirements of the Barring Procedures, then the DP agrees that it shall pay to the
Company the penalty Charges provided for in Annex D. In the event that the Company fails to notify the DP of the lifting of a
mandatory bar under the circumstances required by the procedures set forth in X-OP-105, then the Company shall not be entitled to
receive the penalty Charges from the DP from the date on which the Company should have provided such notice in accordance with
such procedures.

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4.13

Notwithstanding the foregoing, in the event that the Company fails to notify the DP or the other DPs of the implementation of a
mandatory bar under the circumstances required by the Barring Procedures set forth in X-OP-105, then the DP shall not be obligated
to pay Charges for Services provided to any MES that would have been subject to the mandatory bar. The Company shall have no
other liability for failure to provide notice of the implementation or lifting of a mandatory bar except as expressly provided for in
this Clause 4.

5.

TECHNOLOGICAL FRAUD MANAGEMENT

5.1

The Parties shall use their best endeavours to eliminate economic losses and inconvenience to legitimate End Users arising from
technological fraud such as, without limitation, the cloning of MESs and theft of MES identification codes. The Company shall
use its reasonable endeavours to develop and implement where possible technical means for detection and prevention of such
technological fraud.

5.2

The DP shall have no obligation to pay Charges for Services in cases where the DP has unknowingly carried traffic to or from an
MES through which technological fraud has been perpetrated, provided that the DP shall immediately notify the Company in the
event that the DP knows or suspects that a particular MES is fraudulent or is being fraudulently operated and shall provide reasonable
proof to the Company that fraud has occurred. For the avoidance of doubt any fraud originating from, or due to connection with,
third party mobile networks shall be the responsibility of the DP and the Company shall have no liability in respect thereof.

5.3

The DP shall comply with the Technological Fraud Prevention Procedures set forth in Annex J, as amended from time to time in
accordance with Clause 20.

5.4

Notwithstanding the foregoing, the DP shall have an obligation to pay Charges under the circumstances outlined in Clause 5.2 in
the event that: (i) the DP receives non-refundable payment for the Services provided from the End User in question; or (ii) the DP
provides Services to the MES in question after the Company informs the DP that the Company has reason to believe that such
MES is fraudulent or is being fraudulently operated; or (iii) the DP's failure to comply with the Technological Fraud Prevention
Procedures contained in Annex J has allowed such technological fraud to take place.

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6.

AUTHORISATION SUBJECT TO COMPLIANCE

6.1

Subject to Clause 6.4 below, the Authorisation shall be conditional upon compliance by the DP with the LES Technical Criteria and
Operating Procedures in respect of all Services being provided by the DP, or by a Reseller using the DPs Land Earth Stations. The
DP shall also comply with the minimum LES Technical Performance Objectives set forth in Annex G. The DP shall inform the
NOC in advance of any planned outage of any of its LESs and, in the event that the LES has an unplanned outage, it shall report the
reason for such outage to the NOC within 24 hours. Subject to Clauses 6.4 and 20, the Company shall apply the same LES Technical
Criteria and Operating Procedures to all DPs for Services provided through the Land Earth Stations of such DPs. DPs and their LESs
shall cooperate with the Companys Network Operations Centre (NOC) in analyzing and debugging LES Technical Performance
issues as they arise and are identified by the DPs or the NOC. LESs shall make power level or other parameter adjustments as
requested by the NOC after appropriate analysis but within 24 hours of such a request.

6.2

If the DP fails to comply with its obligations under Clause 6.1 above the Company shall give notice to the DP requiring its noncompliance to be remedied within a reasonable time (which shall not be less than ten (10) days except in the event of an Operational
Emergency) taking into account all of the circumstances, and after consultation with the DP.
If the non-compliance continues after the time specified in the Companys notice under sub-paragraph (a) herein, the Company shall
have the right, with immediate effect:
(a)

to suspend the Authorisation for non-compliant Services in respect of the LES or LESs concerned; or

(b)

to suspend the Authorisation with respect to any tenant entity in a Shared LES Agreement with the LESO in the event that
such non-compliance is caused by the tenant entity; or

(c)

to suspend the entire Authorisation where the non-compliance affects all the Services provided and all of the LESs operated
by the DP.

Notice of suspension shall be given by the Company to the DP immediately after any such action and such suspension shall continue
until the date on which the DP resumes compliance with the LES Technical Criteria and Operating Procedures, as determined by the
Company acting in good faith.
For the avoidance of doubt, this Sub-Clause 6.2 shall be without prejudice to the applicable provisions of Clause 21.

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6.3

Notwithstanding the foregoing and subject to the provisions of Clause 6.2 above, the Company shall have the right to suspend the
Authorisation with respect to Services provided, or Land Earth Stations operated, by the DP without notice in the event that such
Services or Land Earth Stations are not compliant with the requirements of the LES Technical Criteria and Operating Procedures
and such failure of compliance has led to the occurrence of, or has the potential to create, an Operational Emergency, or reduces the
capability to support maritime or aeronautical distress traffic, or reduces the capacity of the Space Segment.

6.4

The Company may grant waivers to the LES Technical Criteria and Operating Procedures after the Commencement Date, provided
that any such waiver (or a functionally equivalent waiver) that is granted to other DPs shall be granted to the DP if the DP
demonstrates similar hardship in similar circumstances. Upon request by the DP at the time that the DP seeks a waiver, the Company
shall disclose the existence of waivers granted to other DPs that are similar to the waiver requested by the DP.

6.5

DPs and their LESs shall actively support in real-time quarterly or other periodic contingency exercises as requested by the Company
which test the ability of the LES and the Company to provide for distress and commercial traffic in simulated events of a Satellite
failure. DPs shall also maintain a capability to support necessary system and parameter changes as described in the contingency
procedures such that the LES and the Company are able to provide for distress and commercial traffic in the event of an actual
Satellite failure. To support these requirements DPs shall have available on a twenty-four (24) hour per day, seven (7) day per week
basis, staff who: (i) are trained in the relevant procedures; (ii) are authorized to execute the procedures; and (iii) have the resources
and facilities available to so execute such procedures so that distress traffic may be recovered within the time limit agreed between
the Company and the Organization.

7.

CHARGES

7.1

The DP shall pay to the Company, subject to the provisions of this Clause 7:
(a)

the Wholesale Charges calculated in accordance with Annex D for Services via the Space Segment provided hereunder to
the DP by the Company, which Charges and the terms and conditions in Annex D may be adjusted from time to time by the
Company at its discretion in accordance with Annex D; and

(b)

such Value Added Tax (VAT), sales taxes and such similar taxes as the Company is obligated to add, impose or collect on
or by reference to such Charges.

For the avoidance of doubt, except as otherwise provided in Clauses 4.13 and 5.2, the DP shall be responsible for the payment to
the Company of the amounts in (a) and (b) above for all Services that are provided via the Space Segment using its LES (including
those Services provided by Resellers)

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7.2

The Charges set out in Annex D are currently denominated in United States Dollars (US$). The Company may denominate all or
part of such Charges in one or more currencies subject to the DP being given a minimum of one hundred and eighty (180) days
written notice thereof and provided always that wherever practical such change shall be applied in a non-discriminatory manner.

7.3

The amounts set out in Clause 7.1 (a) and (b) above shall, subject to Clause 7.2, be paid to the Company in US dollars provided
that the Company may elect to have some or all of the Charges paid in another fully convertible currency that is acceptable to the
Company subject to the agreement of the DP and subject to the DP being given a minimum of thirty (30) days written notice thereof
and provided always that wherever practical such change shall be applied in a non-discriminatory manner.

Payment of Charges
7.4

The Company may provide, at its sole discretion, credit to DPs after assessing their payment history, their financial position, any
financial security provided, and their overall relationship with the Company. Following such an assessment, the standard payment
terms set out below may be varied accordingly by the Company.

7.5

The Company may at its sole discretion request information from the DP to enable it to assess the financial position of the DP which
the DP shall be obligated to provide.

7.6

With respect to demand-assigned Services as set out in Annex D the Company shall invoice the DP on a calendar month basis. The
Company shall prepare and distribute invoices no later than ten (10) calendar days after the end of the preceding month. Each
invoice shall be dated as of the day that it is produced and shall be made available on that date in electronic format to the DP. Each
such invoice shall be due for payment (the Payment Due Date) [*****]1. Each such invoice shall contain a traffic statement for
the month covered by the invoice and each traffic statement shall contain the following information, as appropriate:
(a)

the Land Earth Station through which the traffic has been passed;

(b)

information to assist the DP to differentiate tenant traffic where appropriate;

(c)

summary of traffic volumes by service;

***** Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.

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(d)

differentiation of chargeable and non-chargeable traffic;

(e)

any other information relevant to charging, such as call direction; and

(f)

non-discounted and discounted monetary values

7.7

With respect to invoices for volume commitments, the Company shall invoice the DP in accordance with the terms specified for
each such volume commitment which shall always be in advance of the period to which the volume commitment refers. Each such
invoice shall be dated as of the day that it is produced and shall be made available in electronic format to the DP on that date. Each
such invoice shall contain the information set forth in Clause 7.6 above, as appropriate, and the Payment Due Date shall be the last
Business Day prior to the period to which the volume commitment refers.

7.8

With respect to Fixed Charges as set out in Sections 6.8.3 and 6.11 of Annex D, the Company shall invoice the DP at least thirty
(30) days in advance of the start of the period to which the Service refers. Each such invoice shall be dated as of the day that it is
produced and shall be made available in electronic format to the DP on that date. Each invoice in respect of such Services shall
contain the information set forth in Clause 7.6 above, as appropriate, and the Payment Due Date shall be the last Business Day prior
to the start of the period to which the Service refers.

7.9

The Company shall have the right to issue adjustments to invoices after the date of any given invoice in the event of the discovery
of errors or adjustments affecting invoices for such prior periods. The right to issue adjustments shall be limited to [*****]2 months
after the date of any given invoice, except where any such adjustment is required by law, in which case the relevant legal limit shall
apply. The Company shall, on discovery of any such error, notify DPs in writing of the intention to make such adjustments within
thirty (30) days of such discovery.

7.10

An interest charge shall be imposed, at a rate of the current three (3) month US dollar London Inter-Bank Offer Rate (LIBOR)
[*****], on any payment due under this Agreement remaining unpaid after the Payment Due Date. Such interest charge shall be
computed commencing on the first day following the Payment Due Date. Interest shall be payable within thirty (30) days of:
(a)

the date on which payment of the Charges is received by the Company; or

(b)

the final day of each month,

***** Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.

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whichever is the earlier. These provisions shall be without prejudice to any other remedy to which the Company is entitled under
this Agreement including the right to suspend or terminate the Authorisation.

7.11

Any payment to be made under this Agreement shall be made by electronic funds transfer directly to the bank account designated
by the Company in writing and shall be deemed to be received by the Company on the date the amount is credited to the Companys
bank account and available for use by the Company. The DP shall be solely responsible for the costs associated with such electronic
fund transfers. Where a Payment Due Date falls on other than a Business Day, payment on the next Business Day is acceptable, and
a late payment interest charge will not be made.

7.12

The DP may nominate an entity to act on its behalf for the purposes of billing and any associated or related matters, provided
always that it shall provide thirty (30) days prior written notice to the Company of such nomination, including all relevant details
of the nominated entity. The DP shall at all times remain liable for payment of the Charges irrespective of whether the DP or the
billing entity is named on the invoice and irrespective of any such responsibilities that are placed with that entity. Where the DP has
nominated such an entity, the Company shall be entitled to rely on any instructions, decisions or communications as if they had been
made by the DP.

Failure to pay

7.13

If any payment required under this Agreement has not been received by the Company by the Payment Due Date, the Company
may serve a written demand for payment. Subject to Clauses 7.18 through 7.22 below, if the payment to which such written
demand refers remains outstanding for thirty (30) days following receipt of such written demand, the Company may suspend the
Authorisation. In the case where payment remains outstanding for more than sixty (60) days after the date on which the Company
becomes entitled to suspend the Authorisation, the Company shall have a right to terminate this Agreement forthwith.

The Companys right to vary the payment provisions

7.14

Without prejudice to the provisions of Clause 7.13 above, where the DP has failed to pay the Charges such that the Company
would be entitled to suspend the Authorisation pursuant to Clause 7.13 above, on the second occurrence of such failure to pay, the
provisions of Clause 7.6 above shall be automatically varied such that the Payment Due Date shall be reduced to thirty (30) days
after the end-date of the month to which the invoice refers. In such circumstances, the Company shall be entitled to require the DP to
put in place additional credit protection including but not limited to a bank guarantee, parent company guarantee, escrow account or
any other credit protection as the Company in its reasonable opinion deems appropriate. Failure by the DP to provide such financial
security within the time period stipulated by the Company shall be deemed to be a material breach of the DPs obligations under this
Agreement.

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7.15

Following a reduction in the Payment Due Date pursuant to Clause 7.14 above, provided the DP pays for subsequent Charges on
or before the Payment Due Date for a continuous period of twelve (12) months following such reduction, Clause 7.6 above shall be
automatically varied such that the Payment Due Date shall be reinstated to the period specified in Clause 7.6.

7.16

Notwithstanding the provisions of Clause 7.15 above, on the third occurrence of a failure to pay that would entitle the Company to
suspend the Authorisation, the provisions of Clause 7.6 above shall be automatically and permanently varied such that the Payment
Due Date shall be reduced to thirty (30) days.

7.17

If the DP or an entity guaranteeing the DPs obligations under this Agreement, defaults on its prime borrowings, enters
administration, becomes insolvent, or if its financial position is such that, within the framework of applicable national law, legal
action leading toward winding-up, bankruptcy, or dissolution may be taken, the Payment Due Date pursuant to Clause 7.6 above
will be automatically reduced to thirty (30) days and the Company may require payment on demand of all outstanding amounts due
and payment in advance in respect of the provision of Services in the future.

Invoice disputes

7.18

The DP shall notify the Company as soon as possible but no later than thirty (30) days after the receipt of an invoice in the event of
any disagreement regarding the Charges set out in that invoice. Any such notice shall be in writing and shall include the reasons for
the disagreement and, if applicable, a preliminary quantification of the disputed amount by means of a comparison of the Companys
traffic statement underlying the invoice, or part thereof, with the DPs own call data records. If the DP fails to provide to the
Company the DP's relevant call data records or any other relevant records within sixty (60) days from the date of receipt of the
invoice, the invoice shall be deemed to be undisputed and immediately payable in full by the DP, together with interest in accordance
with Clause 7.10. Following provision of the DP's relevant call data records, the Company and the DP shall enter into discussions
and shall use their reasonable commercial efforts, including reciprocal provision of relevant records, to resolve disputes within ninety
(90) days from the date of receipt of the invoice. In the event that, as a result of such discussions, it is determined that the DP should
pay any amount to the Company, the DP shall pay interest to the Company in accordance with Clause 7.10 for any amounts paid
after the Payment Due Date notwithstanding initiation of such discussions.

7.19

The DP shall in all circumstances pay the undisputed amount of any invoice by the relevant Payment Due Date.

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7.20

In the event that the Parties are unable to resolve a dispute concerning all or a portion of an invoice within the ninety (90) day period
set forth in Clause 7.18, then such dispute will be deemed to be a formal dispute. In the event of a formal dispute, the Company and
the DP, acting through their respective chief financial officers (or their designates), shall act in good faith to attempt to resolve the
dispute within thirty (30) days following initiation of the formal dispute.

7.21

In the event that the Company and the DP are unable to resolve the formal dispute in accordance with Clause 7.20 within the thirty
(30) day period specified therein, the dispute shall be determined by an expert in accordance with Clause 32.2. Where any payment
made in accordance with Clause 7.20 has resulted in either an underpayment or an overpayment by the DP, such underpayment
or overpayment shall be paid by the DP or refunded by the Company, as appropriate, including accrued interest calculated in
accordance with Clause 7.10 from the Payment Due Date (if the payment is made by the DP) or from the later of the date of the
overpayment by the DP or the Payment Due Date (if the payment is made by the Company), within fourteen (14) days of the
determination resolving the dispute.

Non-discrimination
7.22

In establishing Charges, the Company will not discriminate on the basis of the nationality of DPs.

8.

TAXES AND TAX CREDITS

8.1

The DP shall be liable for all taxes, levies, duties, costs, charges, withholdings, deductions or any charges of equivalent effect
imposed on, or in respect of, the Services by any authority having the power to impose such taxes (whether or not the taxes described
therein are collected by withholding or otherwise)

8.2

The Company shall remain responsible for any income tax imposed on its profits or net income by taxation authorities in the United
Kingdom or any other territory as a result of the Company maintaining a permanent establishment in that territory. In the event
that the Company is responsible for an income tax in accordance with this Clause and the DP may be required to withhold and
remit to a taxation authority by deduction or otherwise, on or in respect of any amount to be paid by the DP to the Company under
this Agreement as instalment or other payment of the Companys income tax liability, such amount withheld and remitted will be
considered paid to the Company by the DP. The DP will provide reasonable assistance to the Company in its discussions with the
relevant taxation authorities to minimize the amount of such withholdings or deductions including the provision of tax certificates
to determine the amount of tax withheld.

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8.3

In the event that any tax, duty, impost, levy or like charge becomes payable in any territory in accordance with Clause 8.1 (but not,
for the avoidance of doubt, taxes described in Clause 8.2), either by deduction or otherwise, on or in respect of any amount to be
paid by the DP to the Company, or which the DP may be required to withhold in respect of any amount due to the Company under
the Agreement, such tax, duty, impost, levy or like charge shall be for the account of the DP and the DP shall pay to the Company
such an amount as to yield to the Company a net amount equal to the amount that but for such tax, levy, impost or charge would
have been received by the Company. The Company will provide, insofar as it is able, reasonable assistance to the DP to minimize
the amount of such withholdings or deductions, including providing any relevant certification of its status as a non-resident of a
jurisdiction or of its entitlement to benefits under a treaty.

8.4

If, and to the extent that, the DP pays a tax in accordance with Clause 8.3 and the Company receives and retains the benefit of a
refund of a tax or credit against income tax imposed on its profits (whether in the United Kingdom or any other territory in which
the Company maintains a permanent establishment) or other tax liability which is attributable to the tax paid by the DP (a "Tax
Credit"), then the Company shall reimburse such amount to the DP or, at the DPs option, the DP may deduct the applicable amount
from amounts payable to the Company hereunder, provided the Company is satisfied with the nature, amount and form of any such
reimbursement, including the provision of tax certificates to determine the amount of tax withheld. The Company shall be deemed
to have received and retained the benefit of a Tax Credit when such a claim for such credit has been agreed and accepted by the
relevant tax authority. A Tax Credit shall be deemed to arise to the extent that the Company's current year tax payments are lower
than they would have been without the benefit of the said Tax Credit. Use of Tax Credits shall be determined under a first-in, firstout basis;
The DP may identify a Tax Credit for which the Company may be eligible and assist the Company in claiming such Tax Credit. In
the event that the DP claims a reimbursement hereunder, the DP shall identify any such Tax Credit to the Company and provide all
necessary information and assistance to the Company to claim such Tax Credit. The Company shall make reasonable efforts to claim
Tax Credits so identified, save that the Company is under no obligation to claim a Tax Credit or pursue a Tax Credit that has been
denied by tax authorities beyond the normal representations of the Company to such tax authorities. The Company will assist the DP
in further pursuit of denied Tax Credits provided the DP bears all costs of external advice or representations to the tax authorities or
other relevant levels of appeal.
In the event of an audit or other enquiry by any relevant tax authority related to taxes or Tax Credits related to the Services provided
by the DP, the parties shall provide such information to each other as may reasonably be regarded as necessary to comply with such
audit, subject only to limitations imposed by law, confidentiality agreements with third parties, or where the information is deemed
to be commercially sensitive.

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9.

ADDITIONAL OBLIGATIONS OF DP
In addition to other obligations of the DP set forth herein, the DP agrees as follows:
(a)

if the DP chooses to provide Services via the Space Segment, it shall do so subject to and in compliance with any
applicable national laws and regulations, and shall use reasonable efforts to give effect to the Companys desire to provide
Services without discrimination on the basis of nationality;

(b)

to use all reasonable endeavours to obtain, and to use reasonable endeavours to require its Resellers to obtain, all
necessary licences and approvals and otherwise to comply with all statutes, by-laws, regulations and requirements of any
government or other competent authority applicable to the DP and to the provision of Services or the use of MESs for the
provision of the Services via the Space Segment by the DP;

(c)

not to hold itself out as agent for the Company in any correspondence or other dealings relating directly or indirectly to
the provision of the Services via the Space Segment; provided that the DP may use the Inmarsat Marks subject to the
provisions of Clause 18 hereof; and

(d)

the DP shall be fully responsible for terrestrial interconnection of its LES(s) for the purpose of originating or terminating
traffic, subject to applicable national law.

10.

ADDITIONAL OBLIGATIONS OF THE COMPANY

10.1

In addition to other obligations set forth herein, the Company agrees as follows:
(a)

to use all reasonable endeavours to procure and maintain all licences, approvals and government authorisations necessary
to provide the Space Segment for provision of the Services by the DP hereunder and to comply with all statutes, by-laws,
regulations and requirements of any government or other competent authority applicable to the Company;

(b)

notwithstanding the provisions of Clause 10.1(a) above, the procurement or maintenance of all licences, approvals or
authorisations shall be at the reasonable discretion of the Company in any country where the relevant authority imposes
fiscal or other requirements as a condition of granting such licence and such licences or conditions are likely to give rise
to a financial liability on the Company during the term of this Agreement, subject to the following procedure being
implemented:

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(i)

as soon as possible after notification of such fiscal or other requirements, the Company shall inform all DPs of
the country requirements;

(ii)

the Company shall consult with any DP that wishes to provide the Services in such a country with a view to
apportionment of costs between the Company and all other DPs that wish to provide Services in that country
or structuring the delivery of the Services in a manner that will comply with the requirements of the relevant
authority;

(iii)

where the Company and the DPs are unable to reach agreement on such an arrangement the Company may
elect not to pursue a licence in that country or may rescind an already existing licence in that country;

(iv)

the total liability of the Company in relation to all such licences or authorisations for all countries in any
calendar year shall not exceed [*****];

(v)

allocation of funds available between such countries shall be at the reasonable discretion of the Company;

(vi)

where additional DPs commence the provision of Services in that country, they will be required to contribute
to the overall costs of maintaining such a presence in that country on the same basis as all other DPs providing
Services in that country.

(c)

to use all reasonable endeavours in undertaking such steps as are necessary to assure that the Company is entitled to: (i)
maintain orbital slots for the Satellites throughout the Term of this Agreement; (ii) maintain the numbering schemes of
the Organization in effect prior to the Commencement Date; and (iii) maintain the authority to allocate MES identification
numbers after the Commencement Date as necessary to perform its obligations hereunder; and

(d)

not to hold itself out as agent or principal of the DP in any correspondence or other dealings relating to the provision of
the Services via the Space Segment.

***** Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.

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10.2

The Company may engage in Generic Marketing to support and promote the Companys brand and may work in conjunction with
the DP on joint marketing activities.

10.3

The Company may also engage in Direct Marketing to individuals or entities, provided that:

(a)

the Company shall not contact MES users in the ESAS database for the purposes of conducting such Direct Marketing
(but, for the avoidance of doubt, nothing in this Clause 10 or otherwise in this Agreement shall apply to or preclude the
Company from conducting Direct Marketing or any other marketing (including but not limited to any marketing related
to those activities referred to in Clause 2.8) using information contained in the ESAS database where such information is
freely available to the Company from other sources);

(b)

the Company shall notify all DPs providing a particular Service in advance of any Direct Marketing being carried out in
relation to that Service and shall provide to all such DPs full details of the proposed Direct Marketing;

(c)

the DPs providing a Service to which Direct Marketing is to relate shall have ten (10) Business Days from the date the
notification is sent by the Company within which to comment on the Direct Marketing proposal and, in the absence of
any objections within that time period from such DPs, the Company shall be free to proceed with that Direct Marketing;

(d)

if any DP providing the Service has objections to the Direct Marketing proposal, it shall notify the Company within
the time period, giving full details of its objections and the rationale for such objections. The Company shall take any
objections raised by such a DP into consideration and shall respond to such objections within five (5) Business Days of
receipt. If the outstanding objections are resolved, the Company shall be free to proceed with the Direct Marketing.

(e)

if outstanding objections referred to in paragraph (d) above are not resolved, the DP may propose an alternative
solution. If the DP does not present a satisfactory solution or reasonable alternative recommendation, the Company may
proceed with the Direct Marketing where at least one DP that provides that particular Service consents to the Direct
Marketing.

11.

NETWORK PERFORMANCE

11.1

The Company shall provide, or shall procure the provision of, the operations infrastructure necessary to support the operation of
the Satellites through which the Services are provided, and shall use its reasonable endeavours to achieve the Network Performance
Objectives set out in Annex H

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11.2

The Company shall not incur any financial liability to the DP if the performance of any of the Satellites or of the operations
infrastructure fails to achieve the Network Performance Objectives specified in Annex H.

11.3

In the event that the Company fails to meet the minimum Network Performance Objectives set forth in Annex H, then the DP shall
receive outage credits for any traffic commitment or other fixed-period Service affected by such outage as follows: No allowance
or credit will be made for any unavailability, delay or interruption in the availability of a Service which is of less than one hour's
duration. Any such unavailability, delay or interruption which is of one hour or more duration shall be credited to the DP in an
amount equal to the proportionate charge in one hour multiples for each one hour, or major fraction thereof during which such
unavailability, delay or interruption has occurred. In addition to the foregoing, in the event that the Company relocates a Satellite
or substitutes a Satellite of one generation with a Satellite of another generation and, as a result thereof, the DP is unable to meet
a traffic commitment that it undertakes prior to such relocation or substitution, then the DP shall be excused from such traffic
commitment. During contingency operations following the failure of a Satellite, the Company will endeavour to provide Satellite
capacity to enable the DP to continue to pass commercial traffic. The arrangements by which the DP chooses to access this Satellite
capacity remain the responsibility of the DP.

12.

REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

12.1

The Company represents and warrants to the DP that the following statements are true and accurate as regards the Company as of
the date of the signing of this Agreement and, if such date is prior to the Commencement Date, they are deemed to be repeated on
the Commencement Date:
(a)

the execution, delivery and performance of this Agreement have been duly authorised by all necessary corporate action on
the part of the Company;

(b)

the Company owns or leases the Satellites and has a right to use the orbital slots and associated frequency spectrum for
the Satellites and associated frequency spectrum for the Satellites, such spectrum access and use being subject to annual
revision and associated agreements being reached between Satellite Operators. Notwithstanding the foregoing, nothing in
this Agreement shall prevent the Company from procuring capacity on a satellite owned by a third party for the provision of
Services should the Company wish to do so provided that the Company shall comply with all of its own obligations under
this Agreement, including, without limitation, the Network Performance Objective specified in Annex H;

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12.2

13.

(c)

this Agreement constitutes the legal, valid and binding obligations of the Company;

(d)

the Company has obtained all clearances, telecommunications and other licences, consents and approvals necessary to
enable it to operate the Space Segment for the provision of the Services; and

(e)

the Company is in compliance with any applicable telecommunications or other law and regulation of the United Kingdom
and any other relevant country governing any ground-based part of the Space Segment.

The DP represents and warrants to the Company that the following statements are true and accurate as regards the DP as of the
date of signing of this Agreement and, if such date is prior to the Commencement Date, they are deemed to be repeated on the
Commencement Date:
(a)

the execution, delivery and performance of this Agreement have been duly authorised by all necessary corporate action
on the part of the DP;

(b)

this Agreement constitutes legal, valid and binding obligations of the DP; and

(c)

the DP has obtained all clearances, telecommunication and other licences, consents and approvals necessary to enable the
DP to operate its Land Earth Station(s) for the provision of the Services; and

(d)

the DP has required its Resellers to obtain all necessary licences and approvals and otherwise to comply with all statutes,
by-laws, regulations and requirements of any government or other competent authority applicable to the provision of the
Services via the Space Segment.

DISCLAIMERS OF LIABILITY

Telecommunications Breakdown and Application of Barring Procedures

13.1

Subject to this Clause 13, the DP agrees that the Company (for itself and as trustee for the benefit of the other Indemnitees, as defined
in Clause 13.8 herein) shall not be liable on any basis whatsoever to the DP, its Affiliates, Resellers, customers or other End Users
for any direct, indirect or consequential loss, damage or expense, including, without limitation, loss of profits or revenues, loss of
distribution rights, abortive expenditure or damage to property and injury or death to persons, arising from or in connection with:
(i) any Telecommunications Breakdown, regardless of cause including, but without limitation, satellite or other equipment failure
or malfunction, or any unavailability, delay or interruption of telecommunications services caused as a result thereof; or (ii) any
suspension of service to a mobile earth station resulting from actions by the Company acting in good faith at the request of the DP
or other DPs in accordance with the Barring Procedures set out in X-OP-105.

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13.2

Notwithstanding Clause 13.1, the Company shall compensate the DP for loss in the event that the Telecommunications
Breakdown described in Clause 13.1 above is caused by the wilful or reckless act or a knowing or reckless omission of the Company
in circumstances where the Company knew that such act would have such effect or was reckless as to whether or not such act or
omission would have such effect.

13.3

In the event of the Company becoming liable in accordance with Clause 13.2 to compensate the DP, the loss suffered by the
DP shall be deemed to be, and limited to, a proportionate part of the DPs Relevant Net Revenues (as defined in Clause 13.4)
calculated by reference to each hour or fraction of an hour (being not less than one quarter) during the period of time in which the
Telecommunications Breakdown occurred. The Company shall pay such amount to the DP, provided that in no circumstances shall
the aggregate amount payable by the Company to the DP and all other DPs affected by such Telecommunications Breakdown under
this Clause 13.3 in respect of all occurrences or series of occurrences arising out of the same proximate cause in any calendar year,
exceed ten million United States dollars (U.S. $10 million). In calculating the amount payable, account will be taken of variations
in the volumes of traffic at different times based on the average diurnal profile for the Ocean Region in which the DP is located.

13.4

For the purpose of Clause 13.3, the term DPs Relevant Net Revenues means the DPs proportional share (based on overall system
traffic) of the gross revenues received by all DPs affected by such Telecommunications Breakdown from the provision of Services
by all affected DPs during the twelve (12) months preceding the first incident giving rise to the claim less: (i) the amount of Charges
that were payable to the Company in relation to such revenues; and (ii) the variable land-line charges associated therewith (subject
to the ten million United States dollars (U.S. $10 million) limitation set forth in Clause 13.3).

Disclaimers to be Passed on to End Users


13.5
(a)

The DP shall use commercially reasonable efforts to incorporate, and to require that Resellers incorporate, in the terms
and conditions applicable to any customers and End Users to which the DP or its Resellers provide Services following
the Commencement Date, disclaimers of liability substantially similar to (but in no case less broad than) that set forth in
Clause 13.1 in favour of the Company, the Companys Affiliates and itself. Such disclaimers shall be in form or substance
consistent with the disclaimer set forth in Annex E, or as close to such form as is permitted by the applicable law.

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(b)

The Company shall, through the PSA, procure that any End User of the Services, as a condition of service activation,
must sign a written waiver of liability vis--vis the Company and the DP (or all DPs collectively) for any loss, damages or
associated costs arising in connection with the provision of Services to the maximum extent to which the Company and the
DP are legally permitted to waive such liability.

Damage to Space Segment or Loss of Services

13.6

Subject to the exclusions set out in Clause 13.7 below, the DP shall be liable to the Company, and shall indemnify and hold the
Company harmless vis--vis claims by any third party (including but not limited to other DPs) against the Company, for any loss
or damage to the Space Segment caused by any act or omission of the DP, its Resellers, contractors, employees, agents, lessees or
assignees, or any of them (which in no case shall exceed the sum of one hundred million United States dollars (U.S. $100 million)
in any calendar year), except that the DP shall have no liability to the Company for loss or damage arising out of the provision
of Services by the DP via the Space Segment in a manner authorised by this Agreement (subject to Clause 6.4 above), the LES
Technical Criteria and Operating Procedures, or as otherwise authorised in writing by the Company.

13.7

Nothing in this Agreement shall exclude or limit the liability of either Party for death or personal injury resulting from such Partys
own negligence in any jurisdiction where, as a matter of law, such liability cannot be excluded or limited and, save as specified in
Clauses 13.9 and 13.11 below, neither Party shall be liable for any indirect, special, punitive, incidental or consequential damages
arising out of or under this Agreement.

Indemnities
13.8

As used in this Clause 13, the term the other Indemnitees means any Affiliate or director, officer, employee or agent of an
Indemnified Party (as defined below) or of its Affiliate.

13.9

Either Party (the Indemnifying Party) shall indemnify the other Party (the Indemnified Party) and the other Indemnitees
from and against any direct or indirect loss, damage, liability or expense arising from any claim by a third party, pursuant to or
in connection howsoever with any libel, slander, or invasion of privacy or any allegation thereof by the Indemnifying Party, its
Affiliates, Resellers or customers, as the case may be, arising in connection with the provision of Services via the Space Segment
(provided that, for the purpose of this Agreement, other DPs shall not be deemed to be the customers of the Company and the
Company shall not be obligated to indemnify the DP for claims arising hereunder that are attributable to another DP).

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13.10

Notwithstanding the foregoing, neither Party shall be under any obligation to indemnify the other Party or the other Indemnitees of
the other Party under this Clause if any such claim would have arisen against the Party seeking indemnification under this Clause 13
regardless of the alleged acts or omissions of the Party from which indemnification is sought or those of its Affiliates, Resellers or
customers.

13.11

The DP shall indemnify the Company and the other Indemnitees from and against all direct or indirect loss, damage, liability or
expense arising from any claim by any third party resulting from or arising in connection with any event which is required to be
disclaimed under Clause 13.5 above. For the purpose of this Clause 13.11, the DP shall be deemed to be the Indemnifying Party and
the Company shall be deemed to be the Indemnified Party.

Defence of Indemnified Claims

13.12

With respect to any claim for damage or loss that is required to be indemnified hereunder, the Indemnifying Party shall, at its
own expense, defend any such claim subject to the conditions that the Indemnified Party (or, as the case may be, the other
Indemnitees) shall give the Indemnifying Party reasonable notice of the receipt of any such claim, and provide such cooperation
to the Indemnifying Party as is reasonably necessary for the defence of the claim, including, without prejudice to the generality of
the foregoing, the filing of all pleadings and other court processes, the provision of all relevant information and documents, and
providing reasonable access to relevant employees.

13.13

If, in the event of any claim subject to Clause 13.12, the applicable law does not permit the Indemnifying Party to defend the claim
as contemplated herein, then the Indemnified Party shall conduct its defence under instructions from the Indemnifying Party and
shall not make any admissions, settlements or compromises without the prior written consent of the Indemnifying Party.

13.14

The provisions of Clause 13.6 through 13.13 regarding indemnification shall survive the expiration or termination of the Agreement.

14.

V ARIATION

14.1

The Company may at any time vary the specification of the Services provided that such variation applies wherever practical to all
DPs in a non-discriminatory manner.

14.2

The Company shall notify the DPs in writing of any intended variation to the Services as soon as reasonably practicable and in any
event no less than thirty (30) Business Days prior to the date on which the Company intends to implement such variation, except in
the case of an Operational Emergency, in which case the Company may make such variation without notice to the DP. Following an
Operational Emergency the Company shall provide notice of any variation to the DP as soon as is reasonably practicable.

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15.

INSURANCE

15.1

The Company and the DP shall each maintain either liability insurance from a third party insurer or self-insurance in an amount
sufficient to cover the indemnities which each Party has granted, respectively, under this Agreement, to the other Party. Each Party
shall, upon request of the other Party, provide the other Party with evidence of such insurance or, as the case may be, net asset value
that is sufficient to cover the indemnities granted under this Agreement.

15.2

In addition to the insurance described in Clause 15.1 above, the Company shall obtain and maintain insurance, to the extent that
insurance is available on commercially reasonable terms that are acceptable to the Company (in a commercially reasonable amount
that is standard for the satellite communication services industry) to cover third party claims resulting from telecommunications
breakdown of any nature whatsoever that relates to the availability of the Space Segment. At its option, the DP shall be named as
an additional insured on such policy, in which event the DP shall be required to contribute, along with other DPs, to the cost of
such insurance policy. Any such contribution will become payable within thirty (30) days of the date of the receipt by the DP of
an invoice from the Company. The Company shall also provide such other information about such insurance policy as the DP may
reasonably request.

16.

CONFIDENTIALITY

16.1

"Confidential Information" means all information of a confidential nature disclosed (whether in writing, orally or by another
means and whether directly or indirectly) by one Party (the "Disclosing Party") to the other Party (the "Receiving Party") whether
before or after the date of this Agreement including, without limitation, information relating to the Disclosing Party's business
affairs, products, operations, processes, plans or intentions, product information, know-how, design rights, trade secrets and market
opportunities.

16.2

During the term of this Agreement and after termination or expiration of this Agreement for any reason the Receiving Party:
(a)

shall keep the Confidential Information confidential;

(b)

may not disclose the Confidential Information to another person except with the prior written consent of the Disclosing
Party or in accordance with Clauses 16.3 and 16.4; and

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(c)
16.3

may not use the Confidential Information for a purpose other than the performance of its obligations under this Agreement.

During the term of this Agreement the Receiving Party may disclose the Confidential Information to the following to the extent
reasonably necessary for the purposes of this Agreement:
(a)

its employees;

(b)

any Governmental Body or regulatory authority (including but not limited to the Securities and Exchange Commission or
any other listing or securities authority) or as required as part of a debt financing or financial restructuring process;

(c)

its professional advisers; or

(d)

rescue agencies for the purposes of assisting in distress and safety missions,

(each a "Recipient").
16.4

The Receiving Party shall ensure that each Recipient is made aware of and complies with all the Receiving Party's obligations of
confidentiality under this Agreement as if the Recipient was a Party to this Agreement.

16.5

Clauses 16.1 through 16.4 do not apply to Confidential Information which:


(a)

at the date of this Agreement, or at any time after the date of this Agreement, comes into the public domain other than
through breach of this Agreement by the Receiving Party or a Recipient;

(b)

can be shown by the Receiving Party to the Disclosing Party's reasonable satisfaction to have been known by the Receiving
Party before disclosure by the Disclosing Party to the Receiving Party; or

(c)

subsequently comes lawfully into the possession of the Receiving Party from another.

16.6

Upon request from the Disclosing Party the Receiving Party shall promptly return to the Disclosing Party or destroy (as requested)
all copies of Confidential Information.

16.7

For the avoidance of doubt and without limiting the generality of Clause 16.3(b) above, either Party may disclose all or part of the
terms of this Agreement to the extent necessary to comply with the requirements of any United Kingdom, United States or other
listing or securities filing authority should that Party seek such listing or filing for itself or, if part of a wider group of companies,
should its direct or indirect parent company so seek such listing or filing.

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17.

P UBLICITY

17.1.

The DP shall not release and shall use its best efforts to ensure that none of its Resellers or Customers release into the public
domain without the prior written approval of the Company (such approval not to be unreasonably withheld or delayed) any publicity,
including but not limited to news releases, articles, brochures, advertisements or prepared speeches concerning this Agreement or
the Service(s) performed or to be performed under this Agreement.

17.2.

In order for the Company to provide the approval referred to in Clause 17.1 above, the Company shall be given a reasonable time to
review the proposed publicity prior to the date scheduled for its release. The Company reserves the right to refuse, amend, or delay
publication in the event it believes that such publication may:
(a)

be misleading, inaccurate or otherwise breach any laws or regulation; or

(b)

cause material damage or loss to the Company or its reputation;

(c)

breach any term of this Agreement (including, but not limited to, the Trade Mark Licence Agreement and the Branding
Guidelines).

17.3.

The Company shall be entitled to release general publicity or other information into the public domain without the prior written
approval of the DP. The Company shall, however, consult with the DP when the information or publicity is specific to the
DP concerning the content and timing of information releases including but not limited to news releases, articles, brochures,
advertisements, prepared speeches, to be made by the Company or any of its sub-contractors concerning this agreement or the
service(s) performed or to be performed under this Agreement.

17.4.

For the avoidance of doubt and as stated above in Clause 16.7, either Party may disclose all or part of the terms of this Agreement
to the extent necessary to comply with any United Kingdom, United States or other listing or securities filing authorities should the
Party seek such listing or filing for itself or, if part of a wider group of companies, its direct or indirect parent should so seek such
listing or filing.

18.

INTELLECTUAL PROPERTY

18.1

The Company represents and warrants that it owns, or has a valid licence to use, certain patents, trade secrets, copyrights and other
intellectual property embodied in the LES Technical Criteria and Operating Procedures. This Agreement confers upon the DP the
right to enter into a royalty-free licence agreement with the Company, the form of which is set forth in Annex M, to use such patents,
trade secrets, copyrights or other intellectual property embodied in the LES Technical Criteria and Operating Procedures as may be
necessary for the DP to provide Services in accordance with the terms and conditions of this Agreement and shall provide no other
rights of ownership or of use unless otherwise expressly provided for herein, or as otherwise mutually agreed by the Parties.

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18.2

The Company represents and warrants, and the DP acknowledges and agrees, that the Company owns or has authority to use or to
sub-licence the Inmarsat Marks particularised in the Trade Mark Licence Agreement, a form of which is set forth in Annex L.. The
DP shall not obtain any ownership interest in or any licence to use the Inmarsat Marks, except as provided for in the Trade Mark
Licence Agreement which the DP and the Company have executed on the Commencement Date. The DP shall have no authority to
authorise any Reseller, Customer, agent or other entity to use the Inmarsat Marks, except as expressly permitted by the Company in
an executed licence agreement between the Company and such Reseller, customer, agent or other entity.

19.

TIME LIMITS
Any period of time referred to in this Agreement shall be counted from the day following the event marking the start of the period
of time and shall end on the last day of the period laid down. When the last day of a period of time is not a Business Day, the period
shall be extended to the next Business Day.

20.

AMENDMENTS
The terms and conditions of this Agreement shall not be amended or modified in any manner by the Parties except by agreement
in writing signed by both Parties, provided always that the Company may amend or vary any of the Annexes upon provision to the
DP of sixty (60) days prior written notice or compliance by the Company with the notice period and procedures for consultation
particularised in such Annexes. Within such sixty (60) day period, or such other period as stated in the relevant Annexes, as the case
may be, the Company shall endeavour to give at least a thirty (30) day period to the DP for the purpose of consultation. For the
avoidance of doubt, nothing in this Clause 20.1 shall restrict or reduce any notice periods or periods of consultation particularised in
the Annexes.

21.

SUSPENSION OF AUTHORIZATION

21.1

If the DP fails to comply with any material term of this Agreement, then the Company may give to the DP written notice which
shall specify the term or terms of this Agreement in respect of which the DP is not compliant. If the DP fails to cure the lack
of compliance within a period of thirty (30) days from the date of such notice (or such longer period as may be permitted by the
Company), the Company may suspend the Authorisation at any time thereafter upon giving written notice to the DP, except that such
thirty (30) day period may be shortened in the event of an Operational Emergency or as otherwise provided for in this Agreement,
particularly in Clauses 6 and 7.12.

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21.2

The Company's right of suspension in this Clause 21 shall operate without prejudice to the rights of the Company to suspend
the Authorisation under other express provisions of this Agreement or to terminate this Agreement in accordance with
Clause 22. Notwithstanding the foregoing, in the event that the Company does not terminate the Agreement in whole or in part, or
cannot do so consistent with Clause 22, then the Company shall lift the suspension of the Authorisation on the date on which the DP
resumes compliance with the terms of this Agreement.

22.

TERMINATION

Termination for Cause

22.1

Either Party (the Terminating Party) may terminate this Agreement where the other Party (the Defaulting Party) is in default in
the performance of any material term under this Agreement and has failed to cure the default within sixty (60) days from the date of
written notice from the Terminating Party, provided that if the Defaulting Party is the DP and the cause of the default is failure of
payment of the Charges, then the applicable cure period shall be as provided for in Clause 7.12.

22.2

The Terminating Party may terminate the Agreement by written notice to the Defaulting Party if:
(a)

an encumbrancer takes possession or a receiver is appointed over any of the property or assets of the Defaulting Party; or

(b)

the Defaulting Party makes any voluntary arrangement with its creditors or becomes subject to an administration order
within the meaning of the bankruptcy laws of the United Kingdom or an equivalent order under the laws of the jurisdiction
in which the DP or Company (as the case may be) operates; or

(c)

the Defaulting Party goes into liquidation (except for the purposes of an amalgamation, reconstruction or other
reorganization and in such manner that the entity resulting from the reorganization effectively agrees to be bound by or to
assume the obligations imposed on the Defaulting Party under this Agreement); or

(d)

the Defaulting Party ceases, or threatens to cease, to carry on business.

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Termination for Convenience


22.3

During the Term, the DP may terminate this Agreement for its convenience upon at least twelve (12) months written notice to the
Company.

23.

CONSEQUENCES OF TERMINATION

Payment of Charges

23.1

Upon the termination or expiration of this Agreement for whatever reason, any outstanding indebtedness of the Parties to one another
shall become immediately due and payable together with any interest due (calculated in accordance with Clause 7.9) up until the
date of payment, provided that the Company shall refund the DP the amount of any Charges that the DP has prepaid for any period
of time after the date of termination (provided that, in the event that the Agreement is terminated due to the default of the DP or at
the DP's convenience, then such amount shall be subject to adjustments to recapture the pro rata amounts of any discount that the
DP may have received by virtue of such prepayment).

23.2

The amounts payable by the DP to the Company upon termination or expiration of this Agreement shall include any Charges that
would have been payable in accordance with the terms of any traffic commitments (such as take-or-pay commitments) mutually
agreed by the Parties, subject to the relevant provisions of this Agreement unless the Agreement is terminated due to a material
default by the Company, in which case, such traffic commitment-related Charges that are in excess of the Services actually taken in
accordance with such commitment shall not be payable.

Other Consequences
23.3

Upon the termination or expiration of this Agreement for whatever reason, the Company shall no longer be obligated to provide
telecommunications services via the Space Segment to the DP and the DP shall cease to provide Services via the Space Segment
through those of its LES(s) that are within the scope of the termination. In addition:
(a)

The Trade Mark Licence Agreement and the IPR Licence Agreement shall immediately terminate in accordance with their
terms.

(b)

The Parties shall each return to the other or, if requested by the Disclosing Party (as defined in Clause 16), destroy all
Confidential Information belonging to the other Party. Any destruction of documents must be confirmed in writing to the
Disclosing Party.

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23.4

Upon termination of this Agreement, the DP shall use its reasonable endeavours to make or assist with any transitional arrangements
necessary to meet the continuing needs of its Resellers, End Users and/or customers for the Services formerly provided by the DP.

23.5

The rights set forth in this Clause 23 shall not prejudice any other right or remedy of either Party, at law, subject to Clause 32.

24.

FINANCIAL SECURITY

24.1

If the Company determines, as a condition of entering into this Agreement or at any time during the term of this Agreement, that
it would be commercially prudent to obtain financial security against the DP failing to perform any of its obligations under this
Agreement, the Company shall be entitled, following reasonable consultation with the DP, to require the DP to provide such financial
security in an amount and form that the Company, acting reasonably, deems appropriate.

24.2.

Failure by the DP to provide such financial security within and for the time period stipulated by the Company shall be deemed to be
a material breach of the DPs obligations under this Agreement.

24.3.

In the event of a financial security (including, without limitation, a guarantee) being given by the DP or on the DPs behalf pursuant
to this Clause 24, the terms of the financial security shall be subject to review by the Company from time to time.

25.

ASSIGNMENTS AND SUBCONTRACTING

25.1

The DP may not assign or transfer a right or obligation under this Agreement, except that it may assign any of its rights or transfer
any of its obligations to:
(a)

any Affiliate of the DP pursuant to any intra-group reconstruction or reorganisation of the DP or of its business; or

(b)

a third party,

with the prior written consent of the Company, which consent shall not be unreasonably withheld and provided always that in either
circumstance the DP shall remain liable to the Company for all of its obligations under this Agreement.
25.2

The Company shall have the right to assign or novate this Agreement in whole or in part:

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(a)

to its ultimate holding company or a subsidiary or an Affiliate of any tier at its absolute discretion; or

(b)

to any other third party with the consent of the DP, such consent not to be unreasonably withheld or delayed.

26.

WAIVER

26.1

No delay in exercising or failing to exercise by either Party of any right or remedy hereunder and no custom or practice of the Parties
at variance with the terms hereof shall constitute a waiver of any of the Parties' rights or remedies hereunder.

26.2

No waiver by either Party of any particular default by the other Party shall affect or impair either Party's rights in respect of any
subsequent default of any kind by the other Party, nor shall any delay or omission of either Party to exercise any rights arising from
any default affect or impair a Party's rights in respect of the said default or any other default of the other Party hereunder. Subsequent
acceptance by the Company of any payments by the DP shall not be deemed a waiver of any preceding breach by the DP of any of
the terms or conditions of this Agreement.

27.

INVALIDITY
Should any provision of this Agreement be found to be invalid, illegal or unenforceable under the laws of any relevant jurisdiction
in any respect, the invalid, illegal or unenforceable aspects of such provision shall be given no effect and shall be deemed not to be
included in this Agreement without invalidating any of the remaining provisions of this Agreement. The Parties shall forthwith enter
into good faith negotiations to amend the Agreement in such a way that, as amended, is valid, legal, enforceable and, to the maximum
extent possible, reflects the intended effect of the invalid, illegal or unenforceable provision.

28.

FORCE MAJEURE

28.1

In this Clause, "Force Majeure Event" means an event beyond the reasonable control of a Party (the Affected Party) including,
without limitation, strike, lock out or labour dispute (except where the same solely relates to the Affected Partys workforce), act
of God, war, riot, civil commotion, malicious damage, compliance with a law or governmental order, rule, regulation or direction
(other than as a result of an act or omission of the Affected Party), accident, breakdown or unavailability of plant or machinery, fire,
flood, storm, difficulty or increased cost in obtaining workers, goods or transport, externally caused transmission failure or Satellite
failure or Satellite launch failure or delay or satellite malfunction which in every case is not reasonably foreseeable and is beyond
the reasonable control and without the fault or negligence of the Affected Party.

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28.2

If the Affected Party is prevented, hindered or delayed from or in performing any of its obligations under this Agreement by a Force
Majeure Event:
(a)

the Affected Party's obligations under this Agreement are suspended while the Force Majeure Event continues and to the
extent that it is prevented, hindered or delayed;

(b)

as soon as reasonably possible after the start of the Force Majeure Event the Affected Party shall notify the other Party in
writing of the Force Majeure Event, the date on which the Force Majeure Event started and the effects of the Force Majeure
Event on its ability to perform its obligations under this Agreement;

(c)

the Affected Party shall make all reasonable efforts to mitigate the effects of the Force Majeure Event on the performance
of its obligations under this Agreement; and

(d)

as soon as reasonably possible after the end of the Force Majeure Event the Affected Party shall notify the other Party in
writing that the Force Majeure Event has ended and resume performance of its obligations under this Agreement.

28.3

If the Force Majeure Event continues for more than six (6) months starting on the day the Force Majeure Event starts, a Party may
terminate this Agreement by giving not less than thirty (30) days prior written notice to the other Party.

29.

NOTICES

29.1

A notice under or in connection with this Agreement (a "Notice"):

29.2

(a)

shall be in writing;

(b)

shall be in the English language; and

(c)

shall be delivered personally or sent by first class post (and air mail if overseas) or by fax to the Party due to receive the
Notice at the address specified in Clause 29.2 or to another address specified by that Party by not less than seven days
written notice to the other Party received before the Notice was despatched.

The address referred to in Clause 29.1 is:


(a) in the case of The Company:

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Address:
Fax:
[*****]

99 City Road, London, EC1Y 1AX, United Kingdom


+44 (0)20 7728 1602

and a copy to:


Address:
99 City Road, London, EC1Y 1AX, United Kingdom
Fax:
+44 (0)20 7728 1602
[*****]
(b) in the case of the DP:
Address:
[*****]

4 Hagoren St, industrial Park, Omer 84956, Israel

and a copy to:


Address:
4 Hagoren St, industrial Park, Omer 84956, Israel
[*****]
29.3

A Notice is deemed given:


(a)

if delivered personally, when the person delivering the notice obtains the signature of a person at the address referred to in
Clause 29.2;

(b)

if sent by post, except air mail, two Business Days after posting it;

(c)

if sent be electronic mail (e-mail), on the date of sending;

(c)

if sent by air mail, six Business Days after posting it; and

(d)

if sent by fax, when confirmation of its transmission has been recorded by the sender's fax machine.

30.

LANGUAGE AND COMMUNICATIONS

30.1

All documentation and communications required under this Agreement shall be in the English language.

30.2

All communications pertinent to the Authorisation shall be made or confirmed in writing.

***** Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.

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31.

ENTIRE AGREEMENT AND RELATIONSHIP OF PARTIES

31.1

This Agreement, together with its Annexes, constitutes the entire agreement between the Parties and supersedes any prior
understandings and communications, whether written or oral, between the Parties relating to the matters addressed herein.

31.2

The Parties intend that the relationship created between them by this Agreement shall be as independent contractors. This
Agreement is not to be construed in any way as creating any partnership, principal-agent, master-servant, joint venture or other
similar relationship between the Parties.

32.

SETTLEMENT OF DISPUTES

32.1

The Parties shall use all reasonable endeavours to resolve any dispute amicably, which shall include the escalation of such dispute to
senior management who shall meet to discuss the resolution of same in good faith within fifteen (15) days of a notice being served
requesting such meeting and setting out the relevant particulars of the dispute.

Disputes to be determined by an expert

32.2

With respect to any matter or dispute that is required by the express terms of this Agreement to be resolved by an expert under
this Clause, the matter or dispute, on the application of either Party, shall be referred for resolution to an independent firm of
internationally recognised chartered accountants in London that is agreeable to both Parties or, failing agreement within thirty (30)
days from the date on which the matter or dispute arises, to be selected by the President (for the time being) of the Institute of
Chartered Accountants in England and Wales. Once engaged, the firm shall act as an expert and not as an arbitrator and shall be
charged by the Parties to render its decision within ninety (90) days of the date of submission of the matter or dispute in question
or within such shorter period as may be agreed by the Parties. Any determination rendered by the expert shall be binding on the
Parties, provided that either Party may invoke the arbitration procedures under Clause 32.5 to review the decision of the expert;
provided further, however, that the appealing Party shall bear all of the expenses of the arbitration and of the other Party (in relation
to its participation in the arbitration) (the amount of which is to be determined by the arbitral tribunal) in the event that the arbitration
affirms the determination of the expert (notwithstanding the provisions of Clause 32.4).

32.3

The DP and the Company undertake to give all necessary information and assistance to the expert, including making all relevant
accounting records available on a timely basis in order to resolve the matter in dispute.

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32.4

Except as provided in Clause 32.2 above, the Company and the DP shall each bear their own costs and expenses in connection with
the resolution of the dispute. The costs and expenses of the expert shall be paid in equal shares by the Parties.

Disputes to be determined by arbitration

32.5

Subject to Clause 32.6, any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or
invalidity thereof, shall be referred to and finally resolved by arbitration in accordance with the Arbitration Rules of the London
Court of International Arbitration (LCIA) presently in force (the Rules). The appointing authority shall be the LCIA. Unless
otherwise agreed by the Parties, the number of arbitrators shall be three (3) (of whom each Party shall select one (1) and the third
to be agreed by the other two (2) arbitrators). The language of the arbitration shall be English and the place of arbitration shall be
London. Any arbitration award rendered in accordance with this Clause shall be final and binding on the Parties. The Parties waive
irrevocably their right to any form of appeal, review or recourse to any state court or other judicial authority, insofar as such waiver
may be validly made.

32.6

For the avoidance of doubt, any dispute, controversy or claim which is required by the terms of this Agreement to be resolved by
an expert under Clause 32.2 may be referred to arbitration in accordance with Clause 32.5 only after the expert has rendered his
determination under Clause 32.2.

32.7

Notwithstanding Article 25.3 of the Rules, any Party may apply to any state court or other judicial authority for interim or
conservatory measures at any stage prior to, or after, the commencement of an arbitration under Clause 32.5.

32.8

The DP irrevocably:

(a)

consents generally in accordance with the State Immunity Act 1978 to relief being given against it in England or any other
jurisdiction by way of injunction or order for specific performance or for the recovery of any property whatsoever or other
provisional or protective measures and to its property being subject to any process for the enforcement of a judgment or any
process effected in the course or as a result of any action in rem; and

(b)

waives and agrees not to claim any immunity from suits and proceedings (including actions in rem) in England or any other
jurisdiction and from all forms of execution, enforcement or attachment to which it or its property is now or may hereafter
become entitled under the laws of any jurisdiction and declares that such waiver shall be effective to the fullest extent
permitted by such laws, and in particular the United States Sovereign Immunities Act of 1976.

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32.9

Each Party irrevocably waives any objections to the jurisdiction of any court referred to in Clause 32.7.

33.

COUNTERPARTS
This Agreement may be entered into by the Parties to it on separate counterparts, each of which, when executed and delivered, shall
be an original, but all the counterparts shall together constitute one and the same instrument.

34.

COSTS OF THIS AGREEMENT


Each Party shall bear its own costs in relation to the preparation, execution and performance of this Agreement.

35.

RIGHTS OF THIRD PARTIES


A third party that is not a party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any
term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act or
any right of a Party to this Agreement to enforce any term of this Agreement for and on behalf of such third party where applicable.

36.

GOVERNING LAW

36.1

The construction, validity and performance of this Agreement and all matters arising from or connected with it are governed by
English law and, save for any application for injunctive relief made by either Party (which may be made in any court of competent
jurisdiction), any dispute or difference of any kind whatever arising under, out of, or in connection with this Agreement shall be
subject to the provisions of Clause 32 herein.

36.2

If so requested in writing by the Company the DP shall, within thirty (30) days of such request, appoint an agent for service of
process or any other document or proceedings in England in relation to the subject matter of this Agreement, and shall notify the
Company forthwith. The address of the Company for service of such process and any other such document or proceedings shall be
that specified in Clause 29, unless and until any alternative address is notified to the DP for that purpose.

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AS WITNESS duly authorised representatives of the Parties have signed this Agreement on the day and year above written.
SIGNED by Perry Melton
Chief Operating Officer
for and on behalf of
Inmarsat Global Limited
SIGNED by David Rivel
CEO and Gilad Ramot, Chairman
for and on behalf of
RRSAT Global Communications
Network Limited

INMARSAT PROPRIETARY

)
)...........
)
)
)..............................................................
)

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Annex A
INMARSAT LES TECHNICAL CRITERIA AND OPERATING PROCEDURES
The Technical Criteria and Operating Procedures listed in this Annex are incorporated into this Agreement by reference.
Technical criteria for Inmarsat Land Earth Stations are contained in the following documents and subsequent Change Notes, as appropriate.
Recommended Test Procedures are associated with the appropriate documents for the purposes of LES authorisation for access to the Inmarsat
Space Segment. Operating procedures are listed in the Attachment to this Annex.
Document Title

Date

Subsequent
Change Notes

Inmarsat Aeronautical System Definition Manual

Issue/
CD003
(excl. CN94)

Inmarsat-M/B System Definition Manual

3.0

09/00

Inmarsat mini-M System


Definition Manual
[Includes: GAN(M4),Fleet(F),
Swift64 (Aero M4)]

CD007

07/03

CD004

11/04 CN 140, 141bis,


142, 143bis, 144bis,
145, 146, 147bis.

02/01 CN94

Inmarsat-C System
Definition Manual
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Annex A

Document Title
Issue/
CD001

Date
07/03

Inmarsat-D/D+ System
Definition Manual
Appendix 7 (D2 Mode)

002

11/06

Inmarsat-M/B and mini-M


Mobility Management System
Definition Manual (MOBMAN)
Inmarsat-M/B and mini-M

1.2
CN001

03/00

Mobile Packet Data System


[MPDS (IPDS)]

3.0
CN009

12/05

Inmarsat-D/D+ System
Definition Manual

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Annex A
PROCEDURE
INMARSAT C
General & Admin

ISSUE
NO

TITLE

C-ID-003

List of the Inmarsat-C LESs and the Test MES International Mobile Numbers
(IMN)

C-ID-004

DELETED AS OBSOLETE

C-OP-005

ISSUE
DATE

June 00

Maintenance of the Inmarsat-C Assignable Frequency Lists

Apr 00

C-OP-007

Transmission of Service Announcements in the Inm-C System Using Enhanced


Group Calls (EGC)

July 00

C-OP-009

DELETED AS OBSOLETE

C-OP-010

Management of EGC Closed Networks IDs and Data Network IDs in InmarsatC System

Jan 06

C-OP-011

LES Bulletin Board and NCS LES Descriptor Maintenance

Sept 00

C-OP-012

Procedure for the LESOs PSA in aiding the Removal of Ghost Data Network
(ID) (DNID) From a Decommissioned MES

Jan 06

Processing of Ship-to-Shore Distress Alerts and Handling the Follow-up


Distress Communications

Aug 06

C-OP-305

Inmarsat-C Land Earth Station Verification Test Procedures

May 05

C-OP-306

Inmarsat-C Land Earth Station Line Up Procedures and Operation Checks

June 01

Reporting Procedures
C-OP-104
LES Procedures

Contingency Technical Procedures


Attach 1

Example of a New LES Definition

02/01

June 01

Attach 2

LAPB Parameters

02/01

June 01

C-OP-505

Inm-C NCS Contingency Procedures

Jan 07

Attach 1

LES Information

02/07

Jan 07

C-OP-506

Protection of Inmarsat-C Operations in the Event of Channel Interference

1 Oct 00

Attach 1

Pool of Spare Frequency Slots for Inmarsat-C Network

10/00

1 Oct 00

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Annex A
PROCEDURE
INMARSAT D

ISSUE
NO

TITLE

ISSUE
DATE

General & Admin


D-OP-005

Maintenance of the Inmarsat-D Assignable Frequency Lists

1 Jan 96

D-OP-011

Inmarsat-D Bulletin Board Maintenance Procedure1

Nov 98

D-OP-301

Inmarsat-D LES Verification Test Procedures

1 Sep 97

D-OP-302

Inmarsat-D LES Line-Up Procedures and Operations Checks

1 Nov 97

LES Procedures

Contingency Technical Procedures


D-OP-505

Inmarsat-D LES Transmitting Bulletin Board Contingency Procedures

1 Dec 95

D-OP-506

Degradation of Blockage of Inmarsat-D Operation1

Dec 95

F-OP-104

Processing of Inmarsat Fleet F77 Distress, Urgency and Safety Priority Access
Requests And the Handling of such calls

May 07

Attach 1

List of Rescue Co-ordination Centres (RCCs) Associated with Inmarsat Land


Earth Stations operating within the Global Maritime Distress and Safety System

Aug 06

List of Inmarsat-M/B LESs and the Test MES International Mobile Numbers
(IMN)

Oct 02

Processing of Inmarsat-B Ship-to-Shore Distress priority access request and


handling the follow-up distress calls

May 07

M/B-OP-301

LES Phase 3 Verification Test Procedures

July 03

Attachment 1

C-Band Signalling

July 03

Attachment 2

NCS/LES Interworking Test Procedure

July 03

INMARSAT F
Reporting Procedures

INMARSAT M/B
General & Admin
M/B-ID-007
Reporting Procedures
B-OP-104
LES Procedures

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Annex A
PROCEDURE
M/B-OP-302

TITLE
LES Line-Up and Interworking Tests Prior to Entering Commercial Service

ISSUE
NO
4

ISSUE
DATE
Sept 00

M/B-OP-303

Provision of operational procedures for operation of the Inmarsat-M/B NCS

Feb 00

M/B-OP-311

Periodical Testing of LES Stand-Alone Operation

1 Oct 95

List of Inmarsat Mini-M LESs and the Test MES International Mobile Numbers
(IMN)

Oct 02

mM-OP-301

LES On-Air Verification Test Procedures

July 04

Attach 1

GAN (M4) LES Phase 3 Verification Test Procedures

July 03

Attach 2

Fleet F77 LES Phase 3 Verification Test Procedures

July 03

Attach 3

Swift 64 LES Phase 3 Verification Test Procedures

July 03

Attach 4

Fleet F55/F33 LES Phase 3 Verification Test Procedures

July 03

Attach 5

MPDS (IPDS) Call Waiting LES Phase 3 Verification Test Procedures

July 04

mM-OP-302

LES Line-Up and Interworking Tests Prior to Entering Commercial Service

Sept 00

Network Information for the Local Global Location Registers GLR-LS

Apr 02

GLR-L On-Air Verification Test Procedures

1 Jan 99

INMARSAT mM
General & Admin
mM-ID-007
Reporting Procedures
see page 7
LES Procedures

INMARSAT Mobman
General & Admin
Mobman-OP-001
LES Procedures
Mobman-OP-301

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Annex A
PROCEDURE
INMARSAT MPDS

ISSUE
NO

TITLE

ISSUE
DATE

LES Procedures
MPDS HLES

MPDS Home Land Earth Station Verification Test Procedure

Nov 01

MPDS/RLES-OP-301

MPDS Regional Land Earth Station Verification Test Procedure

Oct 01

MPDS/SBS-OP-303

Provision of Operational Procedures For Operation of the Inmarsat MPDS SBS

June 01

MPDS/SBS-OP-506

Protection of Inmarsat MPDS operations in the event of Channel Interference

Dec 01

SBS Backup Site Switchover Procedure

June 02

R-ID-001

System Configuration for Aeronautical Service Including Satellite Contingency

Nov 07

R-ID-005

List of Inm-Aero GESs & the Test AES Inmarsat Mobile Number (IMN)

Apr 07

R-OP-001

Abbreviated Numbering for Air Traffic Services Routing in the Aeronautical


System

June 06

R-OP-012

Maintenance of the Aeronautical System Table

Nov 06

R-OP-101

Management of Aeronautical Distress Calls

1 Nov 94

R-OP-102

Reporting of Aircraft Earth Stations Barred from Access to the Inmarsat-Aero


System

May 06

R-OP-308

Test Requirements, Inter-GES Interworking

June 06

R-OP-309

Inm-Aero Ground Earth Station Line Up Procedures & Operation Checks

Apr 07

May 06

Contingency Technical Procedures


MPDS/SBS/0P-501
INMARSAT R
General & Admin

Reporting Procedures

LES Procedures

Contingency Technical Procedures


R-OP-507

Degradation or Blockage of Inm-Aero Operation by Interfering Signals


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Annex A
PROCEDURE
INM- (All Services)

ISSUE
NO

TITLE

ISSUE
DATE

General & Admin


-AD-001

Structure & Control of the NOH (for Inmarsat internal use only)

Apr 01

-AD-002

Guidelines for the Production & Control of Operations Procedure & Information
Documents (For Inmarsat internal use only)

April 01

-AD-003

NOH Administration & Configuration Control Procedures (for Inmarsat internal


use only)

April 01

-AD-004

NOH Database User Requirements (for Inmarsat internal use only)

7 Mar 94

-ID-002

Inmarsat LES Identification Codes

1 Aug 96

-ID-006

List of Contact Names, Numbers and Addresses for Inmarsat Staff and Land
Earth Stations

40

June 06

-OP-003

Land Earth Station Pointing Data

June 01

-OP-013

Configuration Maintenance (applies to all Inmarsat LESs except for Inmarsat-A)

1 Jan 95

-OP-014

Prefix Codes for MES Access to Specialised Services via the Inmarsat Systems

10

June 05

-OP-015

Spot Beam Coverage Definition

Nov 01

-OP-101

Inmarsat Network supervision and reporting to the Inmarsat NOC

June 01

-OP-102

Reporting on Outages

15

Nov 01

-OP-105

Procedure for Barring and Unbarring Maritime and Land Mobile Earth Stations
in the Inmarsat System

June 04

Procedure for accessing the Maritime Rescue Co-ordination Centres (MRCC)


Database

Nov 00

Procedure to be applied by Inmarsat Customer Services for Accounting


Authority to access their data in ESAS to prevent bad debt

May 03

-OP-108

Procedure for Accessing the Application Service Provider (ASP) Database

Aug 07

-OP-110

Operational Procedure for Claiming Financial Relief for Technological Fraud on


Inmarsat-mini M Family of Services

Jan 09

Reporting Procedures

-OP-106
-OP-107

LES Procedures
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Annex A
PROCEDURE
-OP-310

TITLE
Inmarsat Land Earth Stations - RF Verification

ISSUE
NO
3

ISSUE
DATE
1 Feb 98

Attach 1

RF Requirements for the Inmarsat Network

01/98

1 Feb 98

Attach 2

Boresight Test Procedures

01/98

1 Feb 98

Attach 3

LES Measurements Using the Inmarsat CSMS

1 Aug 95

Attach 4

Measurement of the Ratio G/T with the Aid of Radio Stars

1 Aug 95

Attach 5

Radiation Diagrams for use as Design Objectives For Antennas of Earth


Stations Operation With Geostationary Satellites

1 Aug 95

Attach 6

The Bell System - Technical Journal

1 Aug 95

-OP-311

LES Alignment at C-Band Downlink

17 Dec 98

Contingency Technical Procedures


-OP-501/E

Emergency Change-Over of Services in AOR East from INM3-F2 to INM3-F5

25

Nov 07

Attach 1

AOR East Inm-R System Table & Spot Beam Map Information

15/07

Oct 07

Attach 2

LES Translation Table

01/03

Aug 03

Attach 3

Administration of the SafetyNet Re-routeing Hub

05/06

Nov 06

Attach 4

Signalling Frequencies

03/07

June 007

-OP-501/I

Emergency Change-Over of Existing & Evolved Services in the IOR from


INM3-F1 at 64.5E to INM4-F1 at 63.9E

211

Jan 08

Attach 1

LES Contact Details

DELETED

Attach 2

IOR Inm-R System Table & Spot Beam Map Information

09/07

Nov 07

Attach 3

Administration of the Safetynet Re-Routeing Hub

03/05

Jan 05

Attach 4

Signalling Frequencies

04/08

Jan 08

-OP-501/P

Emergency Change-Over of Services in the POR from INM3-F3 AT 178E


(POR) to INM3-F4 at 142W (PAC-C) and INM2-F4 at 109E (IND-E)

25

Aug 07

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Annex A
Attach 1

POR Inm-R System Table & Spot Beam Map Information

15/07 Oct 07

Attach 2

Table of Estimated LES Antenna Repointing Times

03/07 Jan 07

Attach 3

Administration of the SafetyNET Re-routeing Hub

02/05 Jan 05

Attach 4

Signalling Frequencies

02/05 Nov 05

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Annex A
PROCEDURE
-OP-501/W

ISSUE
NO

ISSUE
DATE

TITLE
Emergency Change-Over of Services in AOR West from INM4-F2 to INM2-F2
at 98W (PAC-E) & INM3-F4 at 142W (PAC-C)

23

Nov 07

Attach 1

AOR West Inm-R System Table Information

10/07

Oct 07

Attach 2

Administration of the SafetyNet Hub

05/06

Nov 06

Attach 3

Signalling Frequencies

02/05

Nov 05

-OP-502

AFC Reference Station Changeover for Shared AFC Operation

Dec 05

-OP-504

Radio Frequency Interference Detection and Elimination Procedures

1 Sep 98

Attach 1

Interference Report Form

1 Nov 95

Attach 2

Spectral Plots of Main Carriers

1 Nov 95

-OP-I3-I4/W

Transition Plan & Detailed Procedure for changeover of Services in the AORW
from INM3-F4 to INM4-F2

Jan 06

Attach 1

LES Contact Details

Jan 06

Attach 2

AOR-W INM-R Spot Beam Map

Jan 06

Attach 3

AOR-W INM-R System Table

Jan 06

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Annex B
ALLOCATION OF LES IDENTITIES
1.

ALLOCATION OF PHYSICAL LES IDS

2.

ASSIGNMENT OF LES IDS

3.

ALLOCATION OF SHARED LES IDS

4.

TECHNICAL AND OPERATIONAL REQUIREMENTS

POLICY AND PROCEDURES FOR ALLOCATION


OF LES IDs and SHARED LES IDs
1.

Allocation of Physical LES IDs

1.1.

All physical LESs must be allocated LES IDs in order to operate within the network.

1.2.

Subject to 2.2 of this Annex and other relevant provisions of this Agreement, the DP shall be entitled to retain any LES ID (or, as the case
may be, shared LES ID) given to the DP by the Organization and maintained by the DP as of the Commencement Date. Any conditions
associated with the assignments of LES IDs retained by the DP as of the Commencement Date shall not be deemed to set any precedent,
except as otherwise required by this Annex.

1.3.

If system changes are deemed necessary by the Company to increase available LES ID capacity (as agreed in accordance with Clause
20), it shall be a prerequisite to undertaking such changes to ensure that existing DPs do not incur LES upgrade costs.

2.

Assignment of LES IDs

2.1.

For those systems where unused LES ID capacity is available, and whilst there is a regular demand for LES IDs (physical and shared),
the Company may, but is not obligated to, retain at least ten (10) unassigned IDs in order to accommodate future new physical LES
requirements. If the demand for physical LESs slackens appreciably, the Company may at its discretion reduce the number of unassigned
IDs to less than ten (10).

2.2.

Any LES IDs (including shared LES IDs) not being used by a DP for a period exceeding six (6) months, as evidenced by a failure to
start passing billable traffic, shall be returned to the Company upon provision of written notice by the Company.

3.

Allocation of Shared LES IDs

3.1.

Tenant entities in shared LES arrangements will be assigned LES IDs by the Company, in order to globalise their services, provided
that, at the time of any requested assignment:
(i)

the tenant entity must already have a physical LES of the same system definition operating within the Company network; or
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Annex B
(ii)

the tenant entity must be operating a physical LES and have operated a physical LES of the same system definition as the hosted
service operating within the Company network at or for a period since the Effective Date (notwithstanding that the LES Operator
has subsequently ceased to operate such Service); or

(iii)

the tenant entity has demonstrated that a contract has been signed for implementation of a physical LES of the same system
definition to operate within the Company network, provided that in such event the tenant entity must construct and begin to pass
billable traffic through such physical LES no later than the date that is six (6) months following the date on which the shared LES
ID is allocated, failing which the tenant entity shall return the shared LES ID to the Company. Notwithstanding the foregoing,
tenant entities in shared LES arrangements to provide Inmarsat D and D+ services shall not be required to have had a physical
LES of the same system definition in order to receive a shared LES ID to provide such services.

It is acknowledged that where any DP wishes to close down all its LESs and terminate this Agreement, it may thereafter continue to
provide Services as a service provider through another DP and may, for a period of up to five (5) years from the Commencement Date,
continue use of its existing allocated LES Id in relation to such Services as were formerly provided by it as a DP. The right to continue
use of the allocated LES ID shall remain subject to the provisions of this Annex B of this Agreement, notwithstanding termination of
this Agreement and the Company shall enter into an agreement with the former DP and the host entity in this regard. Subject to the
provisions of this Clause, any reference in this Annex B to the DP shall be deemed to include any former DP. LES IDs will not be
permitted to be used in respect of Services that the former DP did not offer as a DP.
For the avoidance of doubt, the operation of a physical LES with any one (1) of the Fleet service standards (i.e F33, F55, F77) shall
entitle the DP to enter into shared LES Agreements in accordance with the provisions hereof and receive shared LES IDs for all Fleet
service standards. Save as aforesaid, LES IDs will not be permitted to be used in respect of Services that the former DP did not offer
as a DP.
3.2.

If a physical LES is jointly owned and/or operated by a group of DPs, any shared LES IDs shall be similarly assigned to that group
unless otherwise agreed by the group. Individual members of the group shall not therefore be entitled to be assigned their own individual
shared LES IDs.

3.3.

In the event of shortage of capacity for shared LES IDs, other means of identifying tenant entities
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Annex B
(e.g. use of TNIDs) are preferred, rather than making changes in the system design in order to increase available ID capacity. TNIDs
may be assigned by the DP at its discretion, subject to prior notification to the Company for overall system coordination purposes.
3.4.

As a precondition to the allocation of shared LES IDs, the host DP shall have confirmed that the prospective tenant is duly licensed or
permitted to provide Services under the applicable laws and regulations in the country or origin of the tenant and in which the tenant
plans to operate or provide Services.

4.

Technical and Operational Requirements

4.1.

All relevant Technical Criteria and Operational Procedures shall apply to shared LESs as for physical LESs.

4.2.

In the event of NCS failure, shared LESs may be permitted to operate if such operation is in accordance with the technical requirements
of the affected system. The host LES may be permitted to operate subject to Company authorisation in accordance with prevailing
requirements.

4.3.

The host DP shall multiplex shared LES IDs as well as the host LES ID on the minimum required number of LES TDM signalling
channels. If the host DP can demonstrate a need for additional signalling channels in order to accommodate traffic throughput, an
additional LES TDM frequency will be assigned at the discretion of the Company, provided that assignments of separate LES TDM
frequencies that are in place as of the Commencement Date may be retained by the DP.

4.4.

The Company shall not be obliged to assign shared LES IDs for any service once the supply of unassigned LES IDs for that service
reduces to ten (10) or fewer.
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Annex C
MANDATORY PROCEDURAL REQUIREMENTS FOR INMARSAT SERVICE PROVIDERS (ISP)
1.

ACTIVATION OF AN ISP

2.

MANDATORY PROCEDURAL REQUIREMENTS

3.

NOTIFICATION ON TERMINATION OF CONTRACT

4.

NOTIFICATION OF AGREEMENT WITH EXISTING ISPS

1.

Activation of an ISP

1.1.

The DP shall provide formal written notification, that is signed by the authorised DP-ISP contact, that provides notice to the Company
of no less than fifteen (15) days prior to the commencement of the provision of Services following the establishment of a contractual
relationship with an ISP, regardless of whether such ISP already has an ISP code. At the time that the contract (ISP/DP Contract) has
been notified to the Company, the DP shall also provide the Company with written confirmation of compliance with the requirements
stated in section 2 below including the following information:

name of company

address and contact numbers (telephone, fax, email, etc)

name of contact person

number of years established as a company at the address provided

1.2.

Following such notice, the Company shall allocate an ISP code to any such entity within five (5) days, provided that the DP and such
entity meet the Requirements specified in this document.

1.3.

The Company may publish the name of any ISP or the relationship of any ISP with the DP unless the DP instructs the Company in
writing not to publish such information; provided, however, that the Company may in all cases disclose such information in connection
with fraud prevention activities.

1.4.

If the ISP details change or alter, the DP shall immediately inform the Company of such changes or alterations. However, if changes
and alterations are reported to the Company from a third party, the Company shall communicate the information received to the DP for
confirmation. If within five (5) Business Days the DP has not responded, the changes and alterations shall be considered as confirmed.

2.

Mandatory Procedural Requirements

2.1.

The DP shall include the following Mandatory Procedural Requirements for Inmarsat Service Providers (ISP) as part of the ISP/DP
contract:
2.1.1. ISPs must include the Terms and Conditions for Utilization of Space Segment by Mobile Earth Stations (MESs) in all their
agreements with MES Owners and Operators, as amended from time to time;
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Annex C
2.1.2. ISPs must not accept application from MES Owners and/or Operators who intend to use the MES for Maritime distress and safety
purposes with the exception of MESs that are designed to be used for Maritime distress and safety when registered with an ISP;
2.1.3. ISPs shall not accept applications for additional Inmarsat Mobile Numbers (IMNs) for any MES or SIM card which has been
activated by another ISP;
2.1.4. The Company reserves all rights to withdraw ISP codes to prevent breach of the Mandatory Procedural Requirements, fraud, or
for use of the system in a manner inconsistent with the LES Technical Criteria and Operating Procedures or other requirements
of this Agreement;
2.1.5. ISPs must comply fully with such ISP operational procedures as are defined and modified by the Company from time to time;
2.1.6. ISPs must co-operate fully in the implementation of the Companys procedures for preventing and resolving fraud, and provide
directly to the DP any information relating to stolen terminals or suspected technological fraud;
2.1.7. ISPs must authorise the release to the Company and other DPs of information relating to any termination of a contract between
the DP and the ISP;
2.1.8. ISPs must send all requests for barring MESs from accessing the Space Segment to the contracted DP. The Company shall not
be involved in the barring of the MES unless otherwise requested by the DP.
3.

Notification on Termination of Contract

3.1.

The DP shall immediately notify the Company when an ISP/DP contract has been terminated.

4.

NOTIFICATION OF AGREEMENT WITH EXISTING ISPs

4.1.

The DP shall notify the Company whenever an agreement has been signed with existing ISPs. Such notification shall include the
confirmation of compliance with the requirements in section 2 above, and shall also include the following information:

name of company
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Annex C

4.2.

address and contact numbers (telephone, fax, email, etc)

name of contact person

number of years established as a company at the address provided

The Company shall confirm to the DP the ISP Code that has been allocated to the ISP.
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Annex D
Inmarsat Global Limited
Space Segment Access Agreement
Annex D
Wholesale Charges and Terms and Conditions
Version 1.0, effective from 15 April 2009
This Annex has been redacted in its entirety.*
* Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
INMARSAT CONFIDENTIAL AND PROPRIETARY
Use, duplication or disclosure of this document or any information contained herein is subject to the restrictions set out in the Space Segment
Access Agreement as between Inmarsat and its Distribution Partners.

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Annex E
STANDARD DISCLAIMER CLAUSE
1.

The DPs customer agrees with the DP that neither the DP nor the Company nor any of their respective Affiliates, Resellers or agents
shall be liable on any basis whatsoever (including in contract and in tort) to the DPs customer for any direct, indirect or consequential
loss, damage or expense, including, without limitation, loss of profits or revenues, loss of use, loss of distribution rights, abortive
expenditure or damage to property or injury or death to persons arising from or in connection with:
1.1.

any unavailability, delay, interruption, disruption or degradation in or of the Space Segment or of any telecommunications carried
on the Space Segment, regardless of cause including, but without limitation, equipment failure or malfunction; or

1.2.

the suspension by the DP or the Company of the MESs authorization to use Services provided by the DP or the Company, due
to any cause whatsoever.

2.

Nothing in this Clause shall exclude or limit the DPs or the Companys liability for death or personal injury resulting from its own
negligence in any jurisdiction where, as a matter of law, such liability cannot be excluded or limited.

3.

The DP shall, acting for itself and on behalf of and as trustee for the Company and the other indemnitees, take any action necessary to
enforce this disclaimer.

4.

In the event that the DPs customer is a Reseller of services, it shall incorporate in the terms and conditions applicable to its customers,
agents and Resellers, the disclaimers of liability that it has agreed to under this Agreement both in favour of the DP, the Company and
their respective Affiliates, Resellers or agents.
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Annex F
RULES OF PROCEDURE FOR NETWORK PLANNING MEETINGS
1.

REPRESENTATION

2.

SESSIONS

The following is an outline of the Rules of Procedure for Network Planning Meetings (NPMs). The Company will develop more detailed
procedures as required.
1.

Representation

1.1.

Representatives at the NPMs other than those of the Company shall be any person duly authorised by a Distribution Partner, as notified
in writing to the Company at least seven (7) days in advance of each meeting.

1.2.

Representation per Distribution Partner shall normally be no more than two (2) persons.

2.

Sessions

2.1.

The Meetings shall normally be held at the headquarters of the Company, or elsewhere, where possible and/or necessary. Each DP shall
bear its own costs of participation.

2.2.

The Company shall convene NPMs annually in order to consider technical issues associated with the Companys network, including
but not limited to network performance, establishment, operation and performance of Land Earth Stations, provision of Services and
allocation of Space Segment capacity.

2.3.

The Company shall convene meetings as often as it deems necessary, in consultation with DPs, to meet its objectives (if applicable) in
respect of Clause 2.9 of this Agreement, and shall provide notice of at least two (2) weeks, together with an agenda for the meeting.

2.4.

The Meeting shall be chaired by a senior officer of the Company.


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Annex G
LES TECHNICAL PERFORMANCE O BJECTIVES
This Annex has been redacted in its entirety.*
* Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
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Annex H
NETWORK PERFORMANCE OBJECTIVES
(Clause 11.2 of this Agreement refers)
1.

SATELLITE AVAILABILITY

2.

SATELLITE CAPACITY GRADE OF SERVICE (GOS)

3.

NETWORK AVAILABILITY

4.

DEFINITIONS

The Company shall use its reasonable endeavours to achieve the following network performance objectives, including the Satellites:
1.

Satellite Availability

1.1.

The minimum performance level for Satellite availability shall be 99.0% per annum.

1.2.

The target performance level for Satellite availability shall be 99.9% per annum.

2.

Satellite Capacity Grade of Service (GoS)

2.1.

The Company will manage the Satellite capacity grade of service to deliver, so far as is possible, a commercially acceptable service
across the Companys portfolio of services.

3.

Network Availability

3.1.

The minimum performance level for network availability shall be 99.9% over any time period, over a minimum period of three
(3) months.

3.2.

The target performance level for network availability shall be 99.96% over any time period, over a minimum period of three (3) months.

4.

Definitions

4.1.

Network Availability is determined by factors associated with the Companys operations infrastructure including network coordination
station (NCS) equipment, NCS site conditions (weather, interference, etc.), NCS back-up provisions, automatic frequency compensation
(AFC) equipment, AFC site conditions, AFC back-up provisions, etc.
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Annex I
POINTS OF SERVICE ACTIVATION CRITERIA
In accordance with Clause 4.2 of the Agreement, the Company shall impose on every Point of Service Activation (PSA), as a condition of the
PSAs initial appointment or continued status as a PSA, the following criteria (collectively the PSA Criteria):
1.1.

The PSA shall comply with all national laws and regulations applicable to it and shall ensure that each end-user that commissions its
mobile earth station through the PSA (the MES owner or operator) certifies to the PSA that it complies with applicable national laws
and regulations.

1.2.

The PSA shall ensure that, as a condition of commissioning a mobile earth station, the MES owner or operator has signed the Companys
Terms and Conditions for the utilisation of the Space Segment, which shall include, inter alia, the following:
(i)

waivers of financial liability of the Company and the DP and other LES Operators for claims arising from unavailability,
degradation or failure of the Space Segment, any land earth station or any other telecommunications failure;

(ii)

an explicit acknowledgment that the personal and corporate details of the MES owner or operator may be disclosed to the DP for
the purpose of debt collection in the event that the DP is unable to collect an outstanding debt from the Accounting Authority
(AA) or other responsible billing entity identified in the MES owners or operators commissioning application; and

(iii)

a requirement that the MES owner or operator to notify the PSA immediately in the event of any changes in the particulars
of the MES owner or operator, including but not limited to, billing details, relationship with an AA or ISP, equipment and
service details, and contact person for distress and safety purposes, failing which the MES owners or operators service may be
terminated without notice.

1.3.

The PSA shall strictly adhere to the procedures for registration, activation, deactivation and barring as defined in the Companys Service
Activation Manual, as amended from time to time.

1.4.

The PSA shall not submit an application to activate a mobile earth station to the Company unless and until the PSA has undertaken
reasonable steps to confirm as correct the MES owner or operator details, such as name, address and contact details, that are set forth on
each MES owners or operators service activation application; and the Company shall not activate an MES owner or operator unless the
Company has received acknowledgment by the PSA that it has undertaken reasonable steps to confirm such information to be correct.

1.5.

The PSA shall maintain the integrity of the database by informing the Company, through the Electronic Service Activation System
(ESAS) or otherwise, within one (1) Business Day after obtaining notification of the changes from the MES owner or operator and
ensuring that the changes have been verified to be correct.
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Annex I
1.6.

The PSA shall not submit an application to activate a mobile earth station to the Company unless the PSA obtains written verification
that each MES owner or operator has appointed a valid AA, ISP or other entity that has been approved by the Company; that the named
AA, ISP or approved entity has acknowledged in writing that it accepts the financial responsibility for settling traffic accounts for the
mobile earth station(s) set forth in the MES owners or operators service application and acknowledges that the Company will provide
the personal or corporate details of the MES owner or operator to the DP or other LES Operator for debt collection purposes in the
event that the DP or other LES Operator is not paid by the AA, ISP or other approved entity in question for a period of more than thirty
(30) days beyond the date on which such payment should be rendered under applicable regulations.

1.7.

The PSA should ensure that when an MES owner or operator discontinues the Account with an AA or an ISP, the Owner/Operator shall
immediately provide a replacement AA or ISP otherwise the MES shall be deactivated by the PSA.

1.8.

The PSA shall maintain and secure the pool of IMNs as provided by the Company and shall not issue an IMN to an MES owner or
operator until the MES owner or operator has signed the Inmarsat Terms and Conditions for Utilization of Space Segment and its service
application has been approved.

1.9.

The PSA shall not approve the application of an MES owner or operator until it has completed all of the procedures required by
paragraphs 1.1 1.8 above, failing which the PSA shall accept financial responsibility to the DP for any end-user whose end-user
charges are uncollectible due to the failure of the PSA to implement the procedures 1.1 1.8 required herein with respect to such enduser. The PSA shall transmit the service activation information to the Company without delay following the approval of an application.

1.10. The PSA shall transmit service activation information, including verification of the items required to be verified hereunder (e.g.
verification of an existing relationship with a valid AA or ISP, etc), by using electronic means such as ESAS or by any other system
provided that the information transmitted follows the format defined by the Company.
1.11. The PSA shall immediately notify the Company of any proven or suspected case of fraudulent use of the Inmarsat system, and of any
MES reported stolen from, or lost by, its owner.
1.12. The PSA shall release, on a confidential basis, to the appropriate authorities, such commercial and operational data as may be relevant
to the investigation of any case of fraudulent use of the Inmarsat system, and of cases involving a stolen MES.
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Annex I
1.13. The PSA shall implement all agreed operational procedures relevant to the management and monitoring of fraud, including the
implementation of specific recommendations and measures, as maybe introduced or amended by the Company from time to time.
1.14. The PSA shall acknowledge that the Company may distribute operational information including, but not limited to, the IMNs, terminal/
SIM model, services, serial number, billing data, to the DP or other LES Operators, MES Manufacturers and Rescue Coordination
Centres.
1.15. The PSA shall ensure that when an MES is installed on a ship or aircraft it shall not conduct a deactivation of the MES unless the MES
owner or operator has been notified in accordance with the procedure set out in X-OP-105.
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Annex J
TECHNOLOGICAL FRAUD PREVENTION PROCEDURES
This Annex has been redacted in its entirety.*
* Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
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Annex K
BRANDING GUID ELINES
(Inmarsat Logo Partner Guidelines July 2007)
(Clause 11.2 of this Agreement refers)
Cover + 11 pages
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Inmarsat Global Limited

Introduction
Dear Partners,
As part of the review of Inmarsats brand strategy, we have discontinued the use of the Via Inmarsat
logos (including Via Inmarsat BGAN). You are now able to use the Inmarsat logo to co-brand your
marketing materials that you have designed yourselves. The goal is to simplify the approach, remove
any confusion as to which logo to use and unify our marketing efforts behind the master Inmarsat
brand.
New Trademark License Agreement
In order to use the Inmarsat logo, you will need to sign a new Trademark License Agreement (TMLA).
You can download the TMLA from the Connect area of the Inmarsat web site. You will need to sign
and return it and will then receive a copy of the Inmarsat logo.
Logo guidelines
We have developed these guidelines on how you can use the Inmarsat logo. We would appreciate your
strict adherence. If you have any questions regarding the use of the Inmarsat logo or would like us to
review a draft of your materials incorporating the Inmarsat logo, please contact David Klar, Manager,
Channel Marketing on +44 (0)20 7728 1705 or email: david_klar@inmarsat.com
We appreciate that you may have existing stocks of marketing materials with the Via Inmarsat logo.
You may continue to use these, but when you produce new co-branded marketing materials, we kindly
request that you use the Inmarsat logo and NOT the Via Inmarsat logo.
Co-branding
You may use the Inmarsat logo to co-brand your own marketing and sales materials. In addition, we
would be pleased to co-brand our Inmarsat marketing materials with your logo and the Inmarsat logo.
For Inmarsat co-branded materials, please contact Clare Butler, Marketing Communications Manager
on +44 (0)20 7728 1376 or email: clare_butler@inmarsat.com

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The Inmarsat logo


The Inmarsat logo is the focal point of
the Inmarsat brand identity. It comprises
2 elements: the logotype and the
specially drawn symbol, which cannot
be separated they both form part of the
logo. There are different versions of the
Inmarsat logo (colour, black and white)
to suit different applications as shown
later in this document.

Logo colourways
The Inmarsat logo can be reproduced in a number of different ways. Use the following as a guide for selecting which colour Inmarsat logo to
use for your application. Your choice should depend on the colour and complexity of the background you are placing the logo on, the medium
you are using and also the colour of your own logo. Where possible, choose a version of the Inmarsat logo that complements your own logo.

PMS logo

4 colour logo

This version is made up of spot


colours only and is for applications
such as vinyl lettering where four
colour is not practical or possible.

This is the preferred logo option for


co-branding your communications. It
is generated from a 4 colour process.
FOR USE ON A WHITE
BACKGROUND ONLY.

Black logo
For single colour print jobs
when use of colour is not
possible or for use on complex
light coloured backgrounds.

White logo
For reversing out on single colour
print jobs or for use on complex
dark backgrounds.

Process Black

White

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Logo usage
To ensure that the Inmarsat logo is always accurately reproduced, always use the original logo master artwork provided by Inmarsat. Never
alter or distort the logo master artwork in any way.

Logo usage examples


Below you will find some examples of how to use and how NOT to use the Inmarsat logo.

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Logo clear space

Logo minimum sizes


Clear space
To ensure sufficient standout, it is important to leave adequate clear space around
the Inmarsat logo. The Inmarsat logo requires a minimum clear space around it
as shown by the cyan gridlines. This is based on the x-height of the word mark.
Neither your logo nor any other image/graphic/text should encroach on this clear
space around the Inmarsat logo.

To ensure legibility and accurate reproduction of the


Inmarsat logo, there is a minimum size, which should
be adhered to. The minimum size for standard print
applications is 25mm wide. The Inmarsat logo should
NOT be used any smaller than this. With certain
applications such as small promotional items eg. memory
sticks, black and white versions of the logo can be used as
small as 13mm, although larger is preferred.
If the logo has to be small, please ensure that it is
legible.

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Relationship to partner logo


Relative proportions
When you use the Inmarsat logo in marketing
materials that you have designed yourself, it is
important that:

The Inmarsat logo should appear


approximately 3/4 the size of your logo

The Inmarsat logo should never be


positioned so that it appears to be more
prominent than your own logo

The Inmarsat logo should never appear in


isolation i.e. without your logo

You always adhere to the Inmarsat logo


minimum size and clear space rules
when positioning your logo in proximity
to the Inmarsat logo

Co-branding of Inmarsat materials


If you choose to have Inmarsat marketing
materials co-branded with your logo, in most
cases your logo will appear alongside the
Inmarsat logo and equal in size.
Relative proportion examples

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Inmarsat service names


When using Inmarsats service names in your marketing materials, you should not re-name them as if they are your companys services, for
example:
x Satcos (Your names) BGAN (service)
Please use:
BGAN from Inmarsat
FleetBroadband from Inmarsat
Inmarsats BGAN service
NB. You are not required to use a TM or after the Inmarsat name.
Refer to the table below for the correct spelling of our service names.
Land Mobile
IsatPhone
LandPhone
BGAN
R-BGAN
GAN
Mini M
Mini C
Inmarsat C
Inmarsat D+

Maritime
FleetBroadband (FB)
FleetBroadband 500(FB500)
FleetBroadband 250 (FB250)
Fleet 77 (F77)
Fleet 55 (F55)
Fleet 33 (F33)
FleetPhone
Inmarsat B
Inmarsat A
Inmarsat E

Aero
SwiftBroadband (SB)
Swift 64
Classic aeronautical services
Aero C
Aero L
Mini M Aero
Aero I
Aero H+

Strapline
Your eligibility to use the Inmarsat logo in your marketing materials does NOT permit your use of the Broadband for a mobile planet strapline
unless it is in Inmarsat-designed co-branded materials.
The strapline is not part of the Inmarsat logo; it is a positioning statement associated with Inmarsats high-speed data products. It is trademarked
for use by Inmarsat only.

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Further information
gContact david_klar@inmarsat.com
or telephone +44(0)20 7728 1705
www.inmarsat.com/connect
Whilst the above information has been prepared by Inmarsat in good faith, and all reasonable efforts have been made to ensure its accuracy,
Inmarsat makes no warranty or representation as to the accuracy, completeness or fitness for purpose or use of the information. Inmarsat shall
not be liable for any loss or damage of any kind, including indirect or consequential loss, arising from use of the information and all warranties
and conditions, whether express or implied by statute, common law or otherwise, are hereby excluded to the extent permitted by English law.
Inmarsat is a trademark of the International Mobile Satellite Organisation, Inmarsat LOGO is a trademark of Inmarsat (IP) Company Limited.
Both trademarks are licensed to Inmarsat Global Limited.
Inmarsat Global Limited 2007. All rights reserved. Inmarsat partner logo guidelines July 2007

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Annex L
TRADE MARK LICENCE AG REEMENT
Inmarsat Global Limited
and
[DP]
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Annex L
TRADE MARK LICENCE AGREEMENT
This Agreement is made on this [] day of [] 2009.
Between
(1)

Inmarsat Global Limited, a company incorporated under the laws of England and Wales, with registered company number 3675885
whose registered office at headquarters is 99 City Road, London EC1Y 1AX ("the Licensor"); and

(2)

[Name of DP/Licensee] with its [registered office]/ [principal place of business] at [address] ("the Licensee).

Whereas
A.

The International Mobile Satellite Organization (the Organization), an international organization established by the Convention on the
International Maritime Satellite Organization, is the registered proprietor of the trade mark INMARSAT and has granted to the Licensor
a licence to use the trade mark INMARSAT, together with the right to appoint sub-licensees of same.

B.

The Organization has sought and obtained protection for the trade mark INMARSAT in 1981 and 1998 pursuant to Article 6ter of the
Paris Convention for the Protection of Industrial Property, as revised at Lisbon on 31st October 1958 and at Stockholm on 14 July 1967
(the Paris Convention).

C.

Inmarsat (IP) Company Limited is the proprietor of the trade mark Inmarsat LOGO and has granted to the Licensor a licence to use the
Inmarsat LOGO, together with the right to appoint sub-licensees of this trade mark.

D.

The Licensor and the Licensee entered into an agreement for the provision of the Services (as defined) by the Licensee via the Space
Segment (as defined) which commenced on 15 April 2004 and which expires on 14 April 2009, pursuant to which the Licensor granted
a licence to the Licensee to use the Inmarsat LOGO and the trade mark INMARSAT .

E.

The Parties wish to continue their relationship for a further term under the conditions set out in a subsequent agreement for the provision
of the Services, known as the Space Segment Access Agreement (the SSAA), of even date and the Licensor wishes to grant a further
licence to the Licensee to use the Inmarsat Marks (as defined) accordingly, pursuant to the terms set out in this Agreement.
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Annex L
The Parties Hereby Agree as Follows:
1.

Definitions and interpretations

1.1

In this Agreement, the following expressions shall have the respective meanings assigned to them:
Affiliate means a Person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is
under common control with, another Person (and, for the purpose of the foregoing, control (including the terms controlling,
controlled by, and under common control with) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of voting securities, or by contract).
Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on which banks are generally
open for business in London.
Commencement Date means the date on which the SSAA becomes effective, being 14 April 2009 or the date the SSAA is
executed by both Parties, whichever is the later.
INMARSAT shall mean the trade mark owned by the Organization and licensed to the Licensor, the registration details for which
are contained in Annex 1, together with the applications for registration that have been made by the Organization and the rights in
the trade mark as yet unregistered or applied for.
Inmarsat LOGO shall mean the trade mark owned by Inmarsat (IP) Company Limited and licensed to the Licensor, the
registration details for which are contained in Annex 2, together with the applications for registration that have been made by
Inmarsat (IP) Company Limited and the rights in the trade mark as yet unregistered or applied for.
Inmarsat Marks shall mean, collectively, INMARSAT and the Inmarsat LOGO.
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organization, association, pool,
syndicate, sole proprietorship or government or agency or political subdivision thereof or any other form of organization not
specifically listed.
Reseller means the same as Reseller in the SSAA.
Services means the same as Services in the SSAA.
Space Segment means the same as Space Segment in the SSAA.
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SSAA or Space Segment Access Agreement means the agreement between the Parties for the continued provision of the
Services using the Space Segment.
Term means the term of this Agreement as set out in Clause 9.1 herein.
Territory means, collectively, the Registered Territory and the Unregistered Territory for the Inmarsat Marks.
Registered Territory means the countries specified in part (a) of each of Annexes 1 and 2 to this Agreement (as from time to
time amended by the Licensor) in relation to the Inmarsat Marks.
Unregistered Territory means all countries in the World other than those listed in parts (a) and/or (b) of Annexes 1 and 2 to this
Agreement.
1.2

The headings in this Agreement are for ease of reference only and shall not affect its construction.

1.3

In this Agreement, if the context so requires, references to the singular shall include the plural and vice versa.

1.4

Unless otherwise stated, a reference to a recital, clause (or sub-clause) or an Annex is a reference to a recital, clause (or sub-clause) of
this Agreement or an Annex to this Agreement.

1.5

Any reference to a person includes a natural person, firm, partnership, company, corporation, association, organisation, government,
state, foundation and trust (in each case whether or not having a separate legal personality).

2.

Licence and Paris Convention Authorisation

2.1

Subject to Clause 2.2 below, in consideration of the premises hereinafter contained, the SSAA and other valuable consideration, the
Licensor hereby grants to the Licensee and the Licensee hereby accepts, a non-exclusive licence on a royalty-free basis to use the
Inmarsat Marks (in accordance with the Licensors directions) on or in relation to the Services for the promotion, distribution and sale
of the same in the Territory on the terms and conditions set out in this Agreement and for no other purpose, as from the Commencement
Date.

2.2

As a precondition to the Licensor authorising the Licensee to use the trade mark INMARSAT for the purposes of the Paris Convention
on behalf of the Organization, the Licensee shall promptly (and in any event, within 7 days of the date hereof) execute and deliver to the
Licensor as agent for the Organization a side letter in the form set out in
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Annex 3 (the Side Letter). The Licensee shall not be deemed to be authorised by the Licensor to use the trade mark INMARSAT as
one of the Inmarsat Marks for the purposes of the Paris Convention, and the licence granted pursuant to Clause 2.1 above shall not be
effective in so far as it relates to the trade mark INMARSAT as one of the Inmarsat Marks, until such time as the Side Letter has been
received by the Licensor.
2.3

On request of the Licensee, the Licensor will grant to the Licensee's Resellers licenses of the Inmarsat Marks on terms substantially the
same as the terms of this Agreement.

3.

Use of the Inmarsat Marks

3.1

Any use by the Licensee of the Inmarsat Marks shall be in the form stipulated by the Licensor and the Licensee shall observe the
directions given by the Licensor as to colours used and size of the Inmarsat Marks, as well as their manner, disposition and presentation
in respect of the Services and any accompanying materials.

3.2

Whenever the Inmarsat Marks are used by the Licensee, it shall, if requested to do so by the Licensor, attach to the Inmarsat Marks
wording to show that they are registered trade marks used by the Licensee with the permission of the Licensor.

3.3

The use of the Inmarsat Marks by the Licensee shall at all times be in keeping with and seek to maintain their distinctiveness and
reputation as determined by the Licensor, and the Licensee shall forthwith cease any use which is not consistent therewith as the Licensor
may require. In particular, the Licensee shall not use the Inmarsat Marks in any way that would tend to allow them to become generic,
lose their distinctiveness, become liable to mislead the public, or be materially detrimental to, or inconsistent with, the good name,
goodwill and image of the Licensor or of the Organization.

3.4

The Licensee acknowledges and agrees that the exercise of the licence granted under this Agreement is subject to all applicable laws,
enactments, regulations and other similar instruments in the Territory. The Licensee further understands and agrees that it shall at all
times be solely liable and responsible for compliance with all such applicable laws, enactments, regulations and other similar instruments
in the Territory with respect to advertising and promotion which make use of the Inmarsat Marks, or any of them. For the avoidance
of doubt, nothing in this Clause 3.4 imposes any liability or responsibility on the Licensee for infringement of third party intellectual
property rights in the Territory resulting from the use of the Inmarsat Marks in accordance with the terms of this Agreement unless the
Licensee had prior knowledge of the existence of such rights.

3.5

The Licensee shall, upon the Licensors request from time to time, provide such assistance and information as the Licensor shall require
in order to enable it to audit the use made of the Inmarsat Marks to enable it to enforce its rights to maintain quality control hereunder
and, in relation to the trade mark INMARSAT, to enable it to enforce those obligations contained in the Side Letter as agent for the
Organization.
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3.6

Nothing in this Agreement shall entitle the Licensee to use the Inmarsat Marks as part of any corporate business or trading name or style
of the Licensee, or to adopt the Inmarsat Marks, or either of them, as domain names.

3.7

No goodwill shall be deemed to pass to the Licensee from its use of the Inmarsat Marks pursuant to the terms of this Agreement.

3.8

It shall be a condition of this Agreement that the Licensee shall at all times observe the relevant provisions of the SSAA, in particular
but without limitation, Clause 2.6 thereof relating to the Licensees provision of Services, and Clause 6.1 thereof relating to the Licensee
using reasonable endeavours to comply with the minimum LES Technical Performance Objectives annexed to that Agreement.

4.

Advertising and Promotion


The Licensee may use the Inmarsat Marks in the promotion and sale of the Services (including Licensee brochures, literature,
advertising/promotional materials, stationery and use on its website(s)). The Licensor shall have the right to approve all materials on
which the Inmarsat Marks appear in order to ensure the proper use of the Inmarsat Marks, which approval shall not be unreasonably
withheld. One sample of each form used by the Licensee of advertising and promotional materials containing the Inmarsat Marks
shall be furnished to the Licensor on a pre-approval basis. The Licensee specifically undertakes to amend within thirty (30) days and
to the satisfaction of the Licensor, any such materials that are not approved by the Licensor should use of the Inmarsat Marks not
conform to proper use standards required under the trade mark laws of any of the countries comprising the Territory, or to protect
the validity of the Inmarsat Marks.

5.

Ownership of the Inmarsat Marks

5.1

The Licensee acknowledges that the Inmarsat Marks and the goodwill associated therein are the exclusive property of Inmarsat (IP)
Company Limited and the Organization and are licensed to the Licensor.

5.2

The Licensee further acknowledges that all use by the Licensee of the Inmarsat Marks and all rights and goodwill attaching to or arising
out of such use, will inure to the benefit of the Licensor, Inmarsat (IP) Company Limited and/or the Organization. The Licensee shall
at any time, at the request and expense of the Licensor, whether during or after the term of this Agreement, execute such assignments,
assurances or other documents as shall be reasonably required by the Licensor, Inmarsat (IP) Company Limited or the Organization to
give effect to the provisions of this Clause 5.2.

5.3

The Licensee will not make any representation or do any act or thing which indicates that it has title to or ownership of the Inmarsat
Marks, or claim any rights in or to the Inmarsat Marks, except as authorised by the terms of this Agreement. In particular, but
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without limitation, the Licensee shall not represent its use of the Inmarsat Marks as indicating or holding out that a legal partnership
arrangement exists between the Licensor, Inmarsat (IP) Company Limited or the Organization and the Licensee, or that any other
relationship exists between the parties other than that of licensor and licensee (or sub-licensee, as appropriate).
5.4

The Licensee shall, subject to the payment by the Licensor of any reasonable expenses incurred thereby, render assistance to the
Licensor, if required, in maintaining registered trade mark protection for the Inmarsat Marks and for the purpose of enabling Inmarsat
(IP) Company Limited and the Organization to register in the Territory any or all of the Inmarsat Marks and for the purpose of applying
for the same on behalf of Inmarsat (IP) Company Limited or the Organization. Such assistance shall include, but not be limited to,
providing to the Licensor such details of the Licensees use of the Inmarsat Marks as the Licensor may require, together with, at the
request and reasonable expense of the Licensor, the execution of all documents that may be reasonably required to give effect to the
provisions of this Clause 5.4.

5.5

The Licensor shall make available to the Licensee, on reasonable notice, during office hours, copies of the current Annexes as shall
apply from time to time.

6.

Infringement

6.1

If the Licensee becomes aware of any actual or suspected infringement of the Inmarsat Marks, or of any other unauthorised use of the
Inmarsat Marks in the Territory by a third party, it shall immediately inform the Licensor in writing, giving full particulars of the actual
or suspected infringement or unauthorised use.

6.2

The Licensor, at its sole discretion, shall take whatever action it considers necessary in relation to any actual or suspected infringement
or unauthorised use. If the Licensor decides to take action of any kind, the Licensor shall have sole control of the conduct of such action.
The Licensor shall bear the entire costs and expense associated with the conduct of any such action and any recovery or compensation
that may be awarded as a result of such action, including but not limited to any settlement that may be reached, shall belong to the
Licensor.

6.3

The Licensee, if called upon in writing by the Licensor, shall cooperate fully with the Licensor at the Licensors sole expense, in the
conduct of such action. Such cooperation shall not entitle the Licensee to any claim for recovery or compensation in respect thereof and
all such recovery or compensation shall belong solely to the Licensor as stated in Clause 6.2 above.

7.

Infringement Action Against the Licensee

7.1

The Licensee acknowledges that the Licensor has neither registered nor applied to register the Inmarsat Marks in the Unregistered
Territory and has not undertaken searches in respect of each trade mark constituting the Inmarsat Marks to establish whether any party
has registered or makes use of the same in the Unregistered Territory.
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7.2

If the Licensee is or becomes aware of any registered or unregistered trade marks in the Unregistered Territory at the commencement of,
or during, the term of this Agreement that conflict with the Inmarsat Marks, the Licensee shall promptly notify the Licensor in writing
of such trade mark(s).

7.3

If legal action is commenced or threatened against the Licensee as a result of its authorised use of the Inmarsat Marks, the Licensee shall
also promptly notify the Licensor in writing.

7.4

Upon receipt of written notice of any legal action related to any claim, suit or demand made against the Licensee for its use of the
Inmarsat Marks in the Territory in accordance with the terms of this Agreement, the Licensor, at its sole discretion and expense, shall
take whatever steps it deems necessary to protect and defend the Licensee against such claim, suit or demand or address the claim of
the third party in accordance with Clause 7.5 below. The Licensee shall have no authority to settle or compromise any such claim and
the Licensor shall enjoy any recovery or settlement awarded or otherwise received in respect of such claim. The Licensor shall have the
authority to settle or compromise any such claim provided, however, that the consent of the Licensee shall be required if any settlement
or compromise provides for non-monetary relief against the Licensee. For the avoidance of doubt, the Licensor shall be solely liable for
any monetary damages resulting from or arising out of any claim, suit or demand made against the Licensee for its use of the Inmarsat
Marks in the Territory in accordance with the terms of this Agreement where the Licensee is required under the terms of the SSAA to
use the Inmarsat Marks in connection with the Services, provided that the Licensor has received notice of such claim from the Licensee.

7.5

Where a claim is made for an alleged infringement arising from use of the Inmarsat Marks in an Unregistered Territory, the Licensor
shall use all reasonable endeavours to negotiate a licence or other agreement with the claimant to resolve the alleged infringement
if necessary. The Licensee acknowledges that if the Licensor is unable to negotiate a licence or to otherwise resolve the alleged
infringement, the Licensee may be required to cease use of the Inmarsat Marks in the Unregistered Territory. Where, in order for the
Licensee to continue using the Inmarsat Marks, a licence fee is levied by a third party in settlement of any alleged infringement, the
Licensee may elect to either pay such licence fee or to cease to use the Inmarsat Marks in the relevant Unregistered Territory.

8.

Disclaimers and Warranties

8.1

Whilst the Licensee acknowledges and agrees that nothing in this Agreement implies that any trade mark applications listed in part (b) of
either Annexes 1 or 2 shall proceed to grant, or that any registrations listed in part (a) of either of those Annexes shall be valid, the
Licensor represents and warrants that the said trade marks are registered in the countries listed.
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8.2

The Licensor makes no representation or warranty with respect to the use of the Inmarsat Marks in relation to the Services and disclaims
to the fullest extent permitted by law all liabilities that may arise from any Services rendered using the Inmarsat Marks.

8.3

The Licensor makes no representation or warranty with respect to the existence of possible third party rights in the Inmarsat Marks or
similar marks in the Territory. The Licensor makes no representation or warranty that the use of the Inmarsat Marks by the Licensee in
the Territory shall not infringe the rights of any third party.

8.4

The Licensee warrants that it will use the Inmarsat Marks only as authorised under this Agreement, and that it will comply with
and follow all appropriate laws, regulations, guidelines, rules and practices, (including the standards of any appropriate professional
association) in the Territory with respect to its use of the Inmarsat Marks in relation to the Services.

8.5

The Licensee shall indemnify and keep indemnified the Licensor, the Organization and their Affiliates, assigns and successors against
any and all claims (whether threatened or actual), losses, damages, liabilities, costs, penalties, fines and expenses (including without
limitation legal expenses) resulting from or arising out of the performance or non-performance by the Licensee of this Agreement, or
resulting from any claim by any third party (including any governmental authority) relating to the distribution, sale, advertising or use
of the Services provided by the Licensee using the Inmarsat Marks.

9.

Term and Termination

9.1

This Agreement shall commence on the Commencement Date and shall continue in force until termination or expiration of the SSAA in
accordance with the terms thereof, unless earlier terminated in accordance with Clause 9.2 below.

9.2

Either Party may terminate this Agreement without prejudice to any of its other remedies under this Agreement forthwith by notice in
writing to the other if:

9.3

(a)

the other Party is in material breach of the terms of this Agreement, and has not remedied the breach within thirty (30) days of
having been given notice in writing specifying the breach; or

(b)

the other Party becomes insolvent or is unable to pay its debts in the ordinary course of business;

The Licensor may terminate this Agreement without prejudice to any of its other remedies under this Agreement forthwith by notice in
writing to the Licensee if:
(a)

the Licensee takes any action that would or might invalidate or put into dispute the Licensors, Inmarsat (IP) Company Limiteds
or the Organizations (as the case may be) title in the Inmarsat Marks or any of them, or assists any other person directly or
indirectly in any such action;
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9.4

(b)

the Licensee takes any action that would or might invalidate any registration of the Inmarsat Marks or any of them, or assists any
other person directly or indirectly in any such action; or

(c)

the Licensee takes any action that would or might support an application to remove any of the Inmarsat Marks from the registers
of the Registered Territory or elsewhere, or assists any other person directly or indirectly in any such action.

Upon the expiry or termination of this Agreement, for whatever reason, the Licensee shall:
(a)

immediately cease its use of the Inmarsat Marks, and shall have no further right to use the Inmarsat Marks, except as otherwise
specified under this Clause. The Licensee shall dispose of all promotional and other materials bearing or relating to the Inmarsat
Marks in accordance with the Licensors instructions; and

(b)

execute all documents necessary for cancellation of the Licensee as a registered user or registered licensee and refrain from
engaging in any act that would lead a person to think that the Licensee is still associated or connected with the Licensor.

10.

Assignment and Subcontracting

10.1

The DP may not assign or transfer a right or obligation under this Agreement, except that it may assign any of its rights or transfer any
of its obligations to:
(a)

any Affiliate of the DP pursuant to any intra-group reconstruction or reorganisation of the DP or of its business; or

(b)

a third party,
with the prior written consent of Inmarsat, which consent shall not be unreasonably withheld and provided always that
in either circumstance the DP shall remain liable to Inmarsat for all of its obligations under this Agreement.

10.2

The Licensor shall have the right to assign or novate this Agreement in whole or in part:
(a)

to its ultimate holding company or a subsidiary or an Affiliate of any tier at its absolute discretion; or
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(b)
11.

to any other third party with the consent of the DP, such consent not to be unreasonably withheld or delayed.

Entire Agreement
This Agreement and its Annexes constitute the entire agreement between the parties relating to the subject matter herein and
supersede any prior oral or written agreements between the parties in relation to the same. Any modification of this Agreement shall
be effective only if agreed in writing and signed by both parties.

12.

Waiver
No failure or delay to enforce any provision of this Agreement shall be construed as a waiver thereof or as a waiver of any other
provision contained herein.

13.

Notices

13.1

A notice under or in connection with this Agreement (a Notice):

13.2

(a)

shall be in writing;

(b)

shall be in the English language; and

(c)

shall be delivered personally or sent by first class post (and air mail if overseas) [or by fax] to the Party due to receive the Notice
at the address specified in Clause 13.2 or to another address specified by that Party by not less than seven days written notice to
the other Party received before the Notice was despatched.

The address referred to in Clause 13.1 is:


(a)

in the case of The Licensor:


Address: [*****]
Fax: [*****]
Email: [*****]
Marked for the attention of: [*****]

(b)

in the case of the Licensee:


Address:
Fax:

*****

Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
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Email:
Marked for the attention of [];
[and a copy to:
Address:
Fax:
Email:
Marked for the attention of []:
13.3

14.

A Notice is deemed given:


(a)

if delivered personally, when the Person delivering the notice obtains the signature of a Person at the address referred to in Clause
[];

(b)

if sent by post, except air mail, two Business Days after posting it

(c)

if sent be electronic mail (e-mail), on the date of sending;

(d)

if sent by air mail, six Business Days after posting it; and

(e)

if sent by fax, when confirmation of its transmission has been recorded by the sender's fax machine.

Severance
To the extent permitted by law, all provisions of this Agreement shall be severable and no provision shall be affected by the
invalidity of any other provision.

15.

Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an original.

16.

Governing Law and Jurisdiction

16.1

The construction, validity and performance of this Agreement and all matters arising from or connected with it are governed by English
law and, save for any application for injunctive relief made by either Party (which may be made in any court of competent jurisdiction),
any dispute or difference of any kind whatever arising under, out of, or in connection with this Agreement shall be subject to the
exclusive jurisdiction of the English courts.
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16.2

If so requested by the Licensor, the Licensee shall, within thirty (30) days of such request, appoint an agent for service of process or any
other document or proceedings in England in relation to the subject matter of this Agreement, and shall notify the Licensor forthwith.
The address of the Licensor for service of such process and any other such document or proceedings shall be that specified in Clause
13.2 above, unless and until any alternative address is notified to the Licensee for that purpose.

In Witness Whereof, the parties hereto have caused their duly authorised representative to sign this Agreement on their behalf the day and year
first above written.
SIGNED by
for and on behalf of
Inmarsat Global Limited

)
)
)

SIGNED by [NAME]
for and on behalf of
[DP/LICENSEE]

)
)
)

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ANNEX 1
This Annex to Annex L has been redacted in its entirety.*
* Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
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ANNEX 2
This Annex to Annex L has been redacted in its entirety.*
* Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
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ANNEX 3
[please re-type on company headed paper]
INMARSAT SUB-LICENCE
To:

International Mobile Satellite Organization


99 City Road
London, EC1Y 1AX
United Kingdom

From: [company ]
[address
Inc country]

Date:
Confidential

Dear Sirs
INMARSAT Sub-Licence
In consideration of your agreeing to permit Inmarsat Global Limited to grant to us a sub-licence to use the trade mark INMARSAT (the
Mark)and your authorising us to use the Mark pursuant to Article 6ter of the Paris Convention, we hereby undertake that:
1.

our use of the Mark shall at all times be in keeping with and shall seek to maintain the distinctiveness and reputation associated with the
Mark as such as from time to time determined by you;

2.

we shall, upon your written notice, immediately cease any use of the Mark that is not consistent with paragraph 1 above.

3.

where we use the Mark we shall, if you so request, attach wording to show that it is a mark used by us with your permission; and

4.

we shall, upon your request from time to time, provide such assistance and information as you may reasonably require to enable you to
audit our use of the Mark and enable you to enforce your rights under this letter.

We acknowledge that you may appoint Inmarsat Global Limited to represent you as your agent in relation to the matters set out in this letter.
FOR AN ON BEHALF OF [DP/Licensee]
Signed:
Name:
PLEASE PRINT
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IPR LICENCE AGREEMENT
Inmarsat Global Limited
and
[Name of DP/Licensee]
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IPR LICENCE AGREEMENT
This Agreement is made this [##] day of [##] 20XX.
Between:
(1)

Inmarsat Global Limited, a company incorporated under the laws of England and Wales, with registered number 3675885 whose
registered office is at 99 City Road, London, EC1Y 1AX ( the Licensor) and;

(2)

[DP/Licensee] a [private/public] company incorporated under the laws of [##], with registered number [
office]/ [principal place of business] is at [##] (the Licensee).

] whose [registered

Whereas:
A.

The Licensor and the Licensee entered into an agreement for the provision of the Services (as defined) by the Licensee via the Space
Segment (as defined) which commenced on 15 April 2004 and which expires on 14 April 2009, and the Parties wish to continue their
relationship for a further term under the conditions set out in a subsequent agreement, entitled the Space Segment Access Agreement
(the SSAA), of even date.

B.

The Licensor has created the LES Technical Criteria and Operating Procedures relating to the Services, in which it owns or controls
certain IPR (as defined below), the use of which may be required by the Licensee in order to provide the Services under the SSAA.

C.

The LES Technical Criteria and Operating Procedures may also include IPR in the form of Foreground Data and Background Data
which has been developed by third parties for the Licensor (Third Party IPR).

D.

Some IPR included in the LES Technical Criteria and Operating Procedures is the subject of third party patents (Third Party Patents)
in relation to which the Licensor has the special right to grant sub-licences for use with certain Services in relation to the Space Segment.

E.

The Licensor wishes to grant to the Licensee and the Licensee wishes to accept a licence of the IPR in the LES Technical Criteria and
Operating Procedures, including the Third Party IPR and Third Party Patents, to enable it to provide the Services via the Space Segment.
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F.

Some technology included in the LES Technical Criteria and Operating Procedures is subject to third party IPR in relation to which the
Licensor does not have the right to grant sub-licences for use (Contractor Third Party IPR). In all such cases, the IPR holders have
agreed to grant to Inmarsats distribution partners, of whom the Licensee is one, a non-exclusive licence for use with the Space Segment
either on a royalty free or a royalty bearing basis. If the Licensee wishes to take a licence of such Contractor Third Party IPR, it should
apply direct to the IPR owners as such a licence shall not be included in this Agreement.

NOW IT IS HEREBY AGREED as follows:


1.

Definitions

1.1

In this Agreement, except where the context otherwise requires, the following terms shall have the following meanings:
Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on which banks are generally
open for business in London.
Commencement Date means the date on which the SSAA becomes effective, being 14 April 2009 or the date the SSAA is
executed by both Parties, whichever is the later.
Contractor Third Party IPR means all those patents and other IPR owned by third parties pursuant to a contract with the
Licensor as set out in Attachment 1.
GAN System means a development of the Inmarsat Mini-M system as defined in the Mini-M system definition manual, in which
the turbo code channels are added at the transmission and/or reception level, so as to enable a worldwide range of data and fax
services to be offered at 14400 bits/sec, 28800 bits/sec, and 128000 bits/sec.
Inmarsat Purposes means in connection with the design, development, manufacture, reconstruction, modification, establishment,
marketing, operation or maintenance of equipment, components or software for use with the satellites and all other centralised
infrastructure owned, leased or operated by or on behalf of the Licensor for the purpose of providing mobile satellite communications
services.
IPR means any intellectual property rights including but not limited to copyright, all patents and applications therefore listed in
Attachment 1, all corresponding foreign applications and patents issuing thereon, together with all re-issues and extensions thereof,
software, know-how, technical or other information, forming part of the LES Technical Criteria and Operating Procedures.
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LES Technical Criteria and Operating Procedures means all relevant system definition manuals (SDMs), technical
requirement documents and network operating procedures set out in the list in Annex A to the SSAA, as amended from time to time,
as well as future SDMs and other related documents related to Services.
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organization, association, pool,
syndicate, sole proprietorship or government or agency or political subdivision thereof or any other form of organization not
specifically listed.
Services means the same as Services in the SSAA.
Space Segment means the same as Space Segment in the SSAA.
SSAA or Space Segment Access Agreement means the agreement between the Parties for the continued provision of the
Services using the Space Segment.
Term means the term of this Agreement as set out in Clause 7.1 herein.
Third Party IPR means IPR owned and/or controlled by a third party or third parties in respect of which the Licensor has a nonexclusive, royalty free right to use and to authorise select third parties to use the same throughout the World for Inmarsat Purposes.
Third Party Patents means all those patents owned by third parties and not developed in relation to the Space Segment as are set
out in Attachment 1.
Upgrades means updates to the LES Technical Criteria and Operating Procedures for the Services which provide corrections of
or developments to the LES Technical Criteria and Operating Procedures for the Services as part of the maintenance of the Services
or development of the Services.
1.2

Any word or phrase defined in the SSAA shall have the same meaning in this Agreement unless otherwise defined.

1.3

The singular includes the plural and vice versa.

1.4

Unless the context otherwise indicates, references to Clauses, sub-clauses, recitals and to Annexes are to Clauses and sub-clauses of,
and recitals and Annexes to this Agreement.
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1.5

Headings to Clauses in this Agreement are included for the purpose of ease of reference only and shall not have any effect on the
construction or the interpretation of this Agreement.

1.6

References in this Agreement to any statute or statutory provision shall include any statute or statutory provision which amends, extends,
consolidates or replaces the same and shall include any orders, regulations, instruments or other subordinate legislation made under the
relevant statute.

2.

Grant of Licence

2.1

Subject to the terms and conditions hereof the Licensor hereby grants to the Licensee a non-exclusive, non-transferable licence to use
the LES Technical Criteria and Operating Procedures and the IPR therein together with the Third Party IPR in relation to the provision
of Services by the Licensee using the Space Segment.

2.2

Subject to the terms and conditions hereof the Licensor hereby grants to the Licensee a non-exclusive, non-transferable licence to use
the Third Party Patents in relation to the GAN Service only, in relation to the provision of the Services by the Licensee via the Space
Segment.

2.3

The Licensee hereby acknowledges and agrees that should it wish to take a licence of the Contractor Third Party IPR, it shall apply
direct to the IPR owners as such a licence is not be included in this Agreement.

3.

Upgrades

3.1

The Licensor shall notify the Licensee during the Term of any Upgrades as soon as such Upgrades are made generally available to other
parties in receipt of the LES Technical Criteria and Operating Procedures.

3.2

The Licensor shall, upon notification to the Licensee of any Upgrades, specify whether same are mandatory or discretionary and the
Licensee shall be under no obligation to take a licence of any discretionary Upgrades.

3.3

All mandatory Upgrades shall be royalty free.

3.4

Where the Licensee wishes to take a licence of any discretionary Upgrades which the Licensor may issue during the Term of this
Agreement, the Parties shall consult, with a view to agreeing in good faith, any licence fee and the terms of payment in respect of same.
The licence of such Upgrades shall be subject to all other terms and conditions of this Agreement.
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4.

Confidentiality

4.1

Confidential Information means all information of a confidential nature disclosed (whether in writing, orally or by another means
and whether directly or indirectly) by one Party (the Disclosing Party) to the other Party (the Receiving Party) whether before or
after the date of this Agreement including, without limitation, information relating to the Disclosing Partys business affairs, products,
operations, processes, plans or intentions, product information, know-how, design rights, trade secrets and market opportunities.

4.2

During the term of this Agreement and after termination or expiration of this Agreement for any reason the Receiving Party:

4.3

(a)

shall keep the Confidential Information confidential;

(b)

may not disclose the Confidential Information to another person except with the prior written consent of the Disclosing Party or
in accordance with Clauses 4.3 and 4.4; and

(c)

may not use the Confidential Information for a purpose other than the performance of its obligations under this Agreement.

During the term of this Agreement the Receiving Party may disclose the Confidential Information to the following to the extent
reasonably necessary for the purposes of this Agreement:
(a)

its employees;

(b)

any Governmental Body or regulatory authority (including but not limited to the Securities and Exchange Commission or any
other listing or securities authority or as required as part of a debt financing or financial restructuring process;

(c)

its professional advisers; or

(d)

rescue agencies for the purposes of assisting in distress and safety missions;
(each a Recipient).

4.4

The Receiving Party shall ensure that each Recipient is made aware of and complies with all the Receiving Partys obligations of
confidentiality under this Agreement as if the Recipient was a Party to this Agreement.

4.5

Clauses 4.1 to 4.4 do not apply to Confidential Information which:


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(a)

at the date of this Agreement or at any time after the date of this Agreement comes into the public domain other than through
breach of this Agreement by the Receiving Party or a Recipient;

(b)

can be shown by the Receiving Party to the Disclosing Partys reasonable satisfaction to have been known by the Receiving Party
before disclosure by the Disclosing Party to the Receiving Party; or

(c)

subsequently comes lawfully into the possession of the Receiving Party from another.

4.6

Upon request from the Disclosing Party the Receiving Party shall promptly return to the Disclosing Party or destroy (as requested) all
copies of Confidential Information.

4.7

For the avoidance of doubt, either Party may disclose all or part of the terms of this Agreement to the extent necessary to comply with
any United Kingdom, United States or other listing or securities filing authorities should the Party seek such listing or filing for itself or,
if part of a wider group of companies, its direct or indirect parent company.

5.

Disclaimer and Limitation of Liability

5.1

The Licensor makes no representation or warranty with respect to the existence of possible third party rights in the IPR, the Third Party
IPR or the Third Party Patents anywhere in the World and the Licensor makes no representation or warranty that the use by the Licensee
of any of the IPR, the Third Party IPR or the Third Party Patents licensed hereunder shall not infringe the rights of any third party.

5.2

The Licensor gives no warranty and the Licensee acknowledges and agrees that nothing in this Agreement implies that any patent
applications licensed as part of the IPR shall proceed to grant or, if already granted, shall be valid.

5.3

The Licensor makes no warranty, express or implied, or representation as to the validity, accuracy, completeness or fitness for purpose
or use of the IPR, the Third Party IPR or the Third Party Patents. The Licensee uses the IPR, the Third Party IPR and/or the Third Party
Patents at its own risk and on the basis that it may be unsuitable for the Licensees purposes. The Licensor shall not be liable for any
loss (other than personal injury or death) of any kind, including indirect or consequential loss, arising from the Licensees use of the
IPR, the Third Party IPR or the Third Party Patents, whether in contract, tort (including, without limitation, negligence) or otherwise at
law or equity. The Licensee shall defend, indemnify and hold harmless the Licensor against all claims by third parties arising from their
use of the Licensees Services but not for personal injury or death. All warranties and conditions, whether express or implied by statute,
common law or otherwise are hereby excluded to the extent permitted by English Law.
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5.4

The Licensor has the right to modify, amend, withdraw or delete all or part of the LES Technical Criteria and Operating Procedures
from time to time and at any time without incurring any liability to the Licensee.

6.

Protection of the IPR

6.1

If:
(a)

any IPR is attacked; or

(b)

any application for a patent is made by or any patent is granted to a third party by reason of which the third party may be granted
or may have been granted rights which conflict with any of the rights granted to the Licensee under any of the IPR; or

(c)

any unlicensed activities are carried on by any third party which constitute an infringement of the Licensors IPR,
the Licensee shall forthwith notify the Licensor of any such matters and shall join the Licensor in taking all such steps (if any) as in
the Licensors opinion (in his total discretion) shall be desirable for the protection of the Licensors rights. The expenses incurred in
taking such steps and any profits which may be obtained shall be for the account of the Licensor.

7.

Term and Termination

7.1

This Agreement shall commence on the Commencement Date and shall continue in force until termination or expiration of the SSAA in
accordance with the terms thereof, unless earlier terminated in accordance with Clause 7.2 below.

7.2

The Licensor shall have the right to terminate this Agreement, without prejudice to any of its other rights and remedies, forthwith by
notice in writing to the Licensee in the event that:
(a)

the Licensee shall default in due performance or observance of any of its material obligations on its part to be performed
or observed hereunder and (in the case of a remediable breach) fails to remedy such breach within thirty (30) days of being
requested by written notice to do so; or
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(b)
8.

the Licensee becomes insolvent or is unable to pay its debts in the ordinary course of business;

Consequences of Termination
In the event of termination of this Agreement howsoever arising:
(a)

all outstanding sums payable by the Licensee to the Licensor shall immediately become due and payable;

(a)

all rights and licenses shall cease;

(b)

the Licensee shall cease all and any exploitation of the IPR, the Third Party IPR or the Third Party Patents; and

(c)

the Licensee shall return promptly to the Licensor all copies of the IPR, the Third Party IPR and the Third Party Patents and any
other information, to the extent that same remains confidential under the provisions of Clause 4 of this Agreement.

9.

General

9.1

The termination of this Agreement howsoever arising shall be without prejudice to the provisions of Clause 4 and Clause 8 and to any
rights of either Party which may have accrued by, at, or up to the date thereof.

9.2

In the event that any Clause or any part of any Clause contained in this Agreement is declared invalid or unenforceable by the judgment
or decree by consent or otherwise of a court of competent jurisdiction from whose decision no appeal is or can be taken, all other clauses
or parts of clauses contained in this Agreement shall remain in full force and effect and shall not be affected thereby for the term of this
Agreement.

10.

No Other Agreement or Warranties


This Agreement, together with the SSAA, constitutes the entire agreement between the parties relating to the subject matter
hereof and each Party confirms to the other that it has not entered into this Agreement on the basis of, or in reliance upon, any
representations or warranties made or given by the other Party, its servants or agents.
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11.

Assignment and Subcontracting

11.1

The DP may not assign or transfer a right or obligation under this Agreement, except that it may assign any of its rights or transfer any
of its obligations to:
(a)

any Affiliate of the DP pursuant to any intra-group reconstruction or reorganisation of the DP or of its business; or

(b)

a third party,
with the prior written consent of Inmarsat, which consent shall not be unreasonably withheld and provided always that in
either circumstance the DP shall remain liable to Inmarsat for all of its obligations under this Agreement.

11.2

12.

The Company shall have the right to assign or novate this Agreement in whole or in part:
(a)

to its ultimate holding company or a subsidiary or an Affiliate of any tier at its absolute discretion; or

(b)

to any other third party with the consent of the DP, such consent not to be unreasonably withheld or delayed.

Entire Agreement
This Agreement and its Annexes constitute the entire agreement between the parties relating to the subject matter herein and
supersede any prior oral or written agreements between the parties in relation to the same. Any modification of this Agreement shall
be effective only if agreed in writing and signed by both parties.

13.

Waiver
No failure or delay to enforce any provision of this Agreement shall be construed as a waiver thereof or as a waiver of any other
provision contained herein.

14.

Notices

14.1

A notice under or in connection with this Agreement (a Notice):


(a)

shall be in writing;
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14.2

(b)

shall be in the English language; and

(c)

shall be delivered personally or sent by first class post (and air mail if overseas) [or by fax] to the Party due to receive the Notice
at the address specified in Clause [] or to another address specified by that Party by not less than seven days written notice to
the other Party received before the Notice was despatched.

The address referred to in Clause [] is:


(a)

in the case of The Licensor:


Address:
Fax:
Marked for the attention of [];
[and a copy to:
Address:
Fax:
Marked for the attention of [];]

(b)

in the case of the Licensee:


Address:
Fax:
Marked for the attention of [];
[and a copy to:
Address:
Fax:
Marked for the attention of []:
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14.3

A Notice is deemed given:


(a)

if delivered personally, when the Person delivering the notice obtains the signature of a Person at the address referred to in Clause
[];

(b)

if sent by post, except air mail, two Business Days after posting it

(c)

if sent be electronic mail (e-mail), on the date of sending;

(d)

if sent by air mail, six Business Days after posting it; and

(e)

if sent by fax, when confirmation of its transmission has been recorded by the senders fax machine.

15.

Governing Law and Jurisdiction

15.1

The construction, validity and performance of this Agreement and all matters arising from or connected with it are governed by English
law and, save for any application for injunctive relief made by either Party (which may be made in any court of competent jurisdiction),
any dispute or difference of any kind whatever arising under, out of, or in connection with this Agreement shall be subject to the
exclusive jurisdiction of the English courts.

15.2

If so requested by the Licensor the Licensee shall, within thirty (30) days of such request, appoint an agent for service of process or any
other document or proceedings in England in relation to the subject matter of this Agreement, and shall notify the Licensor forthwith.
The address of the Licensor for service of such process and any other such document or proceedings shall be that specified above at the
head of this Agreement, unless and until any alternative address is notified to the Licensee for that purpose.

In Witness Whereof the parties have executed this Agreement in a manner binding upon them the day and year first above written
SIGNED by
for and on behalf of
Inmarsat Global Limited

)
)
)

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SIGNED by [NAME]
for and on behalf of
[DP/Licensee]

)
)
)

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Attachment 1
This Attachment to Annex M has been redacted in its entirety.*
* Confidential portions of this document have been redacted and filed separately with the Securities and Exchange Commission.
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Exhibit 4.11

Network Services Distribution Agreement

NETWORK SERVICES DISTRIBUTION AGREEMENT


INMARSAT GLOBAL LIMITED
and
RRSAT GLOBAL COMMUNICATIONS NETWORK LIMITED

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CONTENTS
Page
1.

INTERPRETATION

2.

TERM

3.

APPOINTMENT OF DISTRIBUTION PARTNER

4.

COMPANYS OBLIGATIONS

5.

DISTRIBUTION PARTNERS OBLIGATIONS

6.

REGULATORY OBLIGATIONS OF THE COMPANY

11

7.

REGULATORY OBLIGATIONS OF DISTRIBUTION PARTNER

11

8.

CHARGES

12

9.

TAXES AND TAX CREDITS

17

10.

TRADE MARKS AND BRANDING GUIDELINES

18

11.

OWNERSHIP AND PROTECTION OF CODES AND OTHER INFORMATION

19

12.

WARRANTIES

20

13.

CONFIDENTIALITY

21

14.

PUBLICITY

22

15.

LIMITATION OF LIABILITY

23

16.

INDEMNITIES

24

17.

VARIATION

25

18.

BARRING AND SUSPENSION OF SIM CARDS

25

19.

TERMINATION

26

20.

CONSEQUENCES OF TERMINATION

27

21.

FINANCIAL SECURITY

28

22.

FORCE MAJEURE

28

23.

ASSIGNMENT AND USE OF SERVICE PROVIDERS

29

24.

DISPUTE RESOLUTION

30

25.

AMENDMENTS

31

26.

WAIVER

32

27.

NOTICES

32

28.

INVALIDITY

33

29.

LANGUAGE AND COMMUNICATIONS

34

30.

ENTIRE AGREEMENT AND RELATIONSHIP OF PARTIES

35

31.

COUNTERPARTS

35

32.

COSTS OF THIS AGREEMENT

35

33.

RIGHTS OF THIRD PARTIES

35

34.

GOVERNING LAW

35

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Network Services Distribution Agreement

ANNEXES
ANNEX 1

Service Description

ANNEX 2

Charges and Terms and Conditions

ANNEX 3

Distribution Partner Obligations and Performance

ANNEX 4

Distribution Partner Technical Performance Criteria

ANNEX 5

Service Levels

ANNEX 6

Branding Guidelines

ANNEX 7

Technological Fraud Prevention Procedures

ANNEX 8

Trade Mark Licence Agreement

ANNEX 9

Service Commencement, Distribution Partner Launch & Service Availability Dates

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Inmarsat 2009

Network Services Distribution Agreement

THIS AGREEMENT is made on this 30th day of March 2009


BETWEEN:
1.

Inmarsat Global Limited, a company incorporated in England and Wales (registered no. 3675885) whose registered office is at 99
City Road, London, EC1Y 1AX, England (the Company); and

2.

RRSAT GLOBAL COMMUNICATIONS LIMITED, a public company incorporated under the laws of Israel, with registered
number 51-089629-3 whose registered office is at 4 Hagoren Street, Industrial Park, Omer 84965, Israel (the DP).

Recitals
(A)

The Company operates a telecommunications network, comprising a satellite constellation and terrestrial infrastructure capable of
providing communications services on a near global basis. Access to the facilities and services provided by this network is to be
made available to end users via a number of means, including Distribution Partners to be appointed by the Company.

(B)

The DP wishes to market and resell the Services to its Service Providers and/or Subscribers subject to the terms and conditions of
this Agreement.

1.

Interpretation

1.1.

In this Agreement:
Affiliate Affiliate means a Person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by,
or is under common control with, another Person (and, for the purpose of the foregoing, control (including the terms controlling,
controlled by, and under common control with) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of voting securities, or by contract);
Agreement means this agreement and its Annexes;
APN means Access Point Node;
"Branding Guidelines" means the trade mark branding and usage guidelines produced by the Companys marketing
communications department from time to time as set out in Annex 6;

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"BSS" means the business support system, being several functional modules that enable the DP to send and receive transactions, call
data records and information relating to provisioning, billing, sales leads and customer management;
Business Day means a day other than a Saturday or Sunday or public holiday in England and Wales on which banks are generally
open for business in London;
Call Data Records or CDRs means the data record showing particulars of mobile satellite transmissions, which shall include
the SIM card identification number, country code of call origination, data volume transmitted or call duration (as appropriate), and
date and time.
"Charges" means the charges payable by the DP to the Company for the provision of the Services via the Space Segment as set out
in Annex 2;
"Control" means, in relation to any company, partnership or other entity, the beneficial ownership of more than 50% of the issued
share capital of, or the legal power to direct or cause the direction of the general management of the company, partnership or entity
in question, or its holding company or present undertaking;
CRM means the Companys or the DPs customer relationship management system;
"Distribution Partner Code" means a unique code issued by the Company to the DP for the purposes of identifying the DP within
the BSS;
DPI means Distribution Partner Interface;
"Distribution Partner Launch Date" means the date on which the DP makes available the Service(s) to its Service Providers and
Subscribers as detailed in Annex 9;
"E.212 Number" means the international mobile subscriber identifier;
Effective Date means the date on which this Agreement becomes effective, being 14 April 2009 or the date this Agreement is
executed by both parties, whichever is the later;
Governmental Authorisation means any approval, consent, licence, permit, waiver, or other authorisation issued, granted, given,
or otherwise made available by or under the authority of any Governmental Body;

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Governmental Body means any foreign, federal, state, local or other governmental authority or regulatory body entitled to
exercise any administrative, executive, judicial, legislative, police or regulatory power;
Inmarsat Indemnified Parties means the Company or any Affiliate of the Company, and their officers, employees or agents;
Inmarsat Network means all or any part of the terrestrial or Satellite based communications network over which the Companys
Services are provided, whether directly or indirectly owned or operated by the Company, or via or in conjunction with third parties.
Inmarsat Operations and Procedures means the technical and operating procedures in relation to the Service(s) as made
available by the Company from time to time at the Companys discretion.
Insolvency Event" means, in relation to a Person, that:
(a)

a resolution is passed or an order is made by a court of competent jurisdiction for its winding up or dissolution;

(b)

it enters into voluntary or involuntary liquidation (other than a solvent liquidation for the purposes of an
amalgamation or reconstruction with the prior written consent of the other Party);

(c)

an administrator, administrative receiver, liquidator, receiver or similar officer is appointed with respect to it or over
all or substantially all of its assets or any proceedings are commenced for the appointment of any such officer;

(d)

it is unable to pay its debts as and when they fall due, or becomes insolvent; or

(e)

any analogous event occurs under the law of any other jurisdiction.

"Intellectual Property means any intellectual property including patents, trade marks, service marks, registered designs,
applications and rights to apply for any of those rights, trade, business and company names, internet domain names and email
addresses, unregistered trade marks and service marks, copyrights, database rights, rights in software, know how, rights in designs
and inventions;

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Operational Emergency means a situation which, in the reasonable opinion of the Company, acting in good faith, has caused or
is likely to cause damage, unavailability, delay, interruption or interference to the Space Segment;
"Parties" means the DP and the Company, and "Party" shall mean either of them, as applicable;
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organization, association, pool,
syndicate, sole proprietorship or government or agency or political subdivision thereof or any other form of organisation not
specifically listed;
POP means Point of Presence;
Reseller means any entity engaged by the DP to resell the Services;
Satellite means an object located beyond the Earth's atmosphere that is used for radio communications and, more particularly for
the purpose of this Agreement, includes any satellite that is owned, leased and/or operated by or on behalf of the Company now and
in the future, including subsequent generation satellites;
Satellite Access Station or "SAS" means a ground station interfacing with one or more Satellites, with an interface to the
terrestrial network in support of any Service;
"Services" means the services to be provided by the Company to the DP pursuant to this Agreement and which the DP is authorised
to and shall make available to Service Providers and Subscribers, as set out in Annex 1, together with any additional services that the
Company elects to offer under this Agreement, at which time Annex 1 and any other affected Annexes shall be amended accordingly;
Service Availability Date means the date or dates upon which the Company makes available the Services to the DP under this
Agreement;
Service Incorporation Date means the date or dates on which a Service or Services are first incorporated into this Agreement;
Service Levels means the standards and measures set for the Services which are applicable to the Company and the DP as set out
in Annex 5;
Service Numbers means those internationally recognised E.164 Numbers allocated for the Services;

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Service Providers means those persons who purchase Services from the DP and resell those Services;
Service Provider Contract means the agreement in place between the DP and each Service Provider in respect of the Services;
SIM Card means a subscriber identity module card which uniquely identifies the end user of a User Terminal;
Space Segment means the Satellites and all other centralised infrastructure owned, leased, or operated by or on behalf of the
Company to support the operation of the Satellites and the Services;
Subscriber means a company or individual who contracts to subscribe to the Services via the DP or via a Service Provider
appointed by the DP and who is notified to the Company by the DP from time to time;
Subscriber Contract means the agreement in place between the DP or Service Provider on the one hand and any Subscriber on
the other;
Technological Fraud has the meaning ascribed to it in Annex 7;
Technological Fraud Prevention Procedures has the meaning ascribed to it in Annex 7;
Trade Marks means the trade marks or trade mark applications set out in the Trade Mark Licence Agreement;
Trade Mark Licence Agreement means the agreement between the Parties for the licence by the Company of the Trade Marks
contained in Annex 8 hereto;
User Terminal or UT means a mobile earth station terminal used in any of the Services;
1.2.

In this Agreement a reference to:


1.2.1.

a statutory provision includes a reference to the statutory provision as modified or re-enacted, or both, from time to
time after the date of this Agreement and any subordinate legislation made or other thing done under the statutory
provision after the date of this Agreement;

1.2.2.

a document is a reference to that document as modified or replaced from time to time;

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1.3.

1.2.3.

the singular includes the plural and vice versa (unless the context otherwise requires);

1.2.4.

a Clause or Annex, unless the context otherwise requires, is a reference to a Clause of, or Annex to, this Agreement.

Unless expressly agreed otherwise between the Parties in writing, the following order of precedence between this Agreement and
the Annexes to this Agreement shall apply:
1.3.1.

the main body of this Agreement and Annex 2;

1.3.2.

the remainder of the Annexes to this Agreement not listed in Clause 1.3.1 above.

1.4.

The headings in this Agreement are for convenience only and shall not affect its interpretation.

2.

Term
This Agreement shall commence on the Effective Date and continue until the Company terminates the same by giving not less than
two (2) years written notice to the DP, subject always to a minimum term ending 14 April 2014 (the Term), unless this Agreement
is terminated earlier under an applicable provision herein.

3.

Appointment of Distribution Partner

3.1.

The Company grants to the DP the non-exclusive right to access the Inmarsat Network for the provision of the Services. For the
avoidance of doubt, nothing in this Agreement shall prevent or restrict the Company, either itself or via an Affiliate or jointly with
other Persons, from selling or otherwise providing Services to third parties other than via a DP

3.2.

In order for the DP to provide the Services to Subscribers by resale of the Services to Subscribers, and to enable Subscribers to access
the Inmarsat Network, the DP agrees to market and promote the Services on the terms and conditions contained in this Agreement.

3.3.

The DP shall be entitled to a unique DP Code given by the Company, which shall be used for network and operational management
purposes only.

3.4.

No rights or licences are granted by the Company to the DP other than those expressly provided for in this Agreement.

3.5.

The DP may describe itself as the Companys Authorised DP for the Services, but shall not hold itself out as the Companys agent
for sales of the Services, or as being entitled to bind the Company in any way save as expressly provided for in this Agreement.

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3.6.

Nothing in this Agreement shall entitle the DP, its Service Providers or Subscribers to any priority of supply in relation to the
Services as against other DPs, DPs Service Providers or Subscribers respectively, or as against any other services provided by the
Company other than under this Agreement.

3.7.

The relationship between the Parties is non-exclusive. The Company has and shall enter into separate agreements with other DPs
for the distribution of the Services.

4.

Companys Obligations

With effect from the Service Availability Date the Company shall:
4.1.

obtain all necessary network identification, Service Numbers and addressing codes to enable proper routing of DP/Service Provider
traffic; and

4.2.

provide the Services to the DP during the term of this Agreement on the terms and conditions set out in this Agreement;

4.3.

provide the DPI for SIM Card activation, including processing orders, terminating the orders, terminating the Service, terminating
the Subscriber and barring Subscriber access;

4.4.

provide system/network availability as set out in Annex 5;

4.5.

provide to the DP the Inmarsat Operations and Procedures and instruction manuals where relevant to the DPs role in reselling the
Services as may be available from time to time at the Companys discretion;

4.6.

set the Charges as referred to in Clause 8 and Annex 2;

4.7.

provide wholesale billing data for the Services to the DP (or its nominated billing service contractor). The Companys responsibility
for such information shall cease when the CDRs and/or billing data has been passed to the DP (or its nominated billing service
contractor) in accordance with the service levels set out in Annex 5;

4.8.

provide to the DP and its contractors, relevant standards and interfaces to enable the DP to provide retail billing to its Service
Providers and Subscribers;

4.9.

provide centralised customer care to the DP on a twenty-four (24) hours a day, seven (7) days a week basis, which shall include an
enquiry handling process in accordance with the service levels set out in Annex 5;

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4.10.

provide and charge at the Companys prevailing rates any other technical support as may be reasonably requested by the DP;

4.11.

from time to time, provide free product training to the DP, provided always that, should the DP require additional training, the
Company reserves the right to charge for the provision of same. In addition, the Company reserves the right to impose fees due to
cancellations less than two (2) weeks in advance, or due to inadequate attendance by the DPs nominated attendees.

4.12.

keep the DP informed about any new features of the Services as reasonably necessary to enable the DP to properly perform its
obligations under this Agreement;

4.13.

use reasonable endeavours to assist the DP with its efforts to eliminate economic losses and inconvenience to legitimate Subscribers
arising from Technological Fraud, including but not limited to, the cloning of SIM Cards;

4.14.

comply with the Technological Fraud Prevention Procedures relevant to the DP as set out in Annex 7, as amended from time to time
in accordance with Clause 25;

4.15.

comply with all reasonable security measures required for interfacing with the DPs infrastructure and to ensure the security of
billing information and any payment details being transmitted between the Parties across the DPI and all reasonable security
measures required for interfacing with the DP POP, in each case as agreed between the Company and the DP. Such security
measures shall include, but not be limited to, any requirements set out in the Inmarsat Operations and Procedures, as well as the
provision of routers, firewalls and other equipment. The Company shall also test its own equipment on a regular basis to safeguard
security.

5.

Distribution Partners Obligations

With effect from the Service Availability Date the DP shall:


5.1

use all commercially reasonable endeavours to promote and market the Services covered by this Agreement and to meet customer
needs and expectations in a reasonable manner.

5.2

comply with the minimum DP Performance Obligations in Annex 3 and where the DP or its Service Providers or Subscribers connect
terrestrial infrastructure to the Inmarsat Network (through their own APNs) the Distribution Partner shall use reasonable endeavours
to comply with the Distribution Partner Technical Performance Criteria as detailed in Annex 4 of this Agreement.

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5.3

comply with all reasonable security measures required for interfacing with the BSS and to ensure the security of billing information
and any payment details being transmitted between the Parties (or to the DPs contracted third party, if applicable) and all reasonable
security measures required for interfacing with the Inmarsat Network. Such security measures shall include, but not be limited to,
any requirements set out in the Inmarsat Operations and Procedures and the provision of routers, firewalls and other equipment for
the DP such that the DP shall maintain network security on DP managed network elements. The DP shall provide a secure electronic
link or leased line to the BSS to collect or send data to the file stores and conduct testing on a regular basis to ensure security;

5.4

provide twenty-four (24) hours a day, seven (7) days a week technical and provisioning after-sales customer service and helpline
to: (i) undertake appropriate fault finding to determine whether faults reported are Subscriber, UT or Service related; (ii) support
Service Providers and Subscribers to ensure that the Service Level Agreements in Annex 5 are on a back-to-back basis with the
DPs distribution channel and, for this purpose, shall keep its personnel adequately trained regarding the Services. At all times such
support shall be sufficient to support the DPs customer base and suited to their market conditions. For the avoidance of doubt, the
Companys customer care support desk shall also provide support to the DP where access to the Space Segment, SAS, or any other
part of the Inmarsat Network not under its control is lost or curtailed.

5.5

provide appropriate after sales customer support and helpline support to Service Providers and Subscribers;

5.6

undertake appropriate fault finding to determine whether faults reported are Subscriber, UT or service related;

5.7

activate Subscribers via the DPI or CRM, ensuring that all mandatory BSS fields as required by the Company are completed prior
to SIM activation;

5.8

ensure the continued accuracy of all information that the DP inputs into the BSS by whatever method. For the avoidance of doubt,
the Company shall not be liable for loss of revenue due to incomplete or inaccurate information entered in the BSS by the DP;

5.9

provide retail billing to its Service Providers and Subscribers (either itself or via a nominated billing services contractor);

5.10

remit payment to the Company for the Services in accordance with Clause 8;

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5.11

accept responsibility under the terms of this Agreement for any Service Provider or Subscriber bad debt or credit risk, except to the
extent directly related to a breach of this Agreement by the Company;

5.12

use its reasonable endeavours to eliminate economic losses, and inconvenience to legitimate Subscribers arising from Technological
Fraud including, without limitation, the cloning of SIM cards and theft of SIM card identification numbers. For the avoidance of
doubt, any fraud originating from, or due to connection with, third party networks shall be the responsibility of the DP and the
Company shall have no liability in respect thereof;

5.13

have no obligation to pay the Charges for the Services as referred to in Clause 8 in cases where the DP has unknowingly carried
traffic to or from a User Terminal through which Technological Fraud has been perpetrated for the sixty (60) days prior to the
notification of the Company by the DP that it knows or suspects that a particular Subscribers User Terminal is fraudulent or is
being fraudulently operated, provided that the DP shall immediately provide such notification upon becoming so aware and shall
provide reasonable proof to the Company that Technological Fraud has occurred. For clarity, the DP shall be liable to pay Charges
so incurred outside such sixty (60) day period;

5.14

comply with the Technological Fraud Prevention Procedures relevant to the DP as set out in Annex 7 and as amended from time to
time in accordance with Clause 25;

5.15

notwithstanding the foregoing, have an obligation to pay Charges under the circumstances outlined in Clause 5.13 above in the event
that:

5.16

5.1.1.

the DP receives non-refundable payment for all the Services provided from the Subscriber in question, or in the event
that the DP receives such non-refundable payment in part only then it shall have an obligation to pay an equivalent
amount of the Charges; or

5.1.2.

the DP provides the Services to the Subscribers User Terminal in question after the Company informs the DP that
the Company has reason to believe, and provides reasonable proof to the DP, that such Subscribers User Terminal is
fraudulent or is being fraudulently operated; or

5.1.3.

the DP's failure to comply with the Technological Fraud Prevention Procedures in Annex 7 has allowed
Technological Fraud to take place;

provide access to the Companys CRM to its own personnel including subcontracted personnel (other parties or companies who
request this access shall require the Companys permission and shall be required to comply with data protection and security
provisions as applicable);

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5.17

poll the DPI for collection of CDRs used for billing purposes at specified time intervals agreed with the Company to ensure that its
internal records in relation to the Services usage are up-to-date;

5.18

comply with Inmarsat Operations and Procedures and any amendments to Inmarsat Operations and Procedures which are made in
accordance with Clause 25. Where the DP or its Service Providers or Subscribers connect directly to the Inmarsat Network via its
own infrastructure (PoP and/or APN) the DP shall report to the Company in an accurate and timely manner in accordance with
Annex 4 any DP infrastructure operational events relevant to operational procedures or loss of service; and

5.19

be responsible for its relevant interconnect solution, as set out in the applicable Company interconnection document for the Service
concerned, in force from time to time, a copy of which the DP hereby acknowledges has been provided to it.

6.

Regulatory Obligations of the Company

The Company shall use all reasonable endeavours to procure and maintain any Governmental Authorisations necessary to provide the Space
Segment and operate its SASs for the provision of the Services and use reasonable endeavours to comply with all statutes, by-laws, regulations
and requirements of any government or other competent authority applicable to the Company, save always that the procurement or maintenance
of all Governmental Authorisations shall be at the reasonable discretion of the Company in any country or flag state where the relevant authority
imposes onerous financial, commercial or technical requirements as a condition of granting such licences.
7.

Regulatory Obligations of Distribution Partner

The DP shall:

7.1.

assume responsibility itself or procure that its Service Providers assume responsibility for all Governmental Authorisations
(including activation and billing requirements) that may be required for the service provision or operation of User Terminals by
the flag state or in all countries where the DP carries on business in relation to the Services, or where the User Terminals are
used. On request from the Company, the DP shall use reasonable endeavours to provide documentary proof to the Company of any
Governmental Authorisations;

7.2.

have an obligation in respect of compliance with applicable government export regulations and the like for service and use of User
Terminals under DP licence in particular countries;

7.3.

obtain all registrations under relevant data protection legislation, if any;

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7.4.

be responsible for informing its Service Providers and Subscribers, at the time of activation or when relevant changes are published
by the regulator, about applicable regulatory requirements;

7.5.

in the interests of ensuring that as many Service DPs as possible enter the market, refrain from unreasonably opposing applications
from other DP/Service Providers in any jurisdiction;

7.6.

subject to legal obligations (including without limitation, any relating to data protection legislation) which so preclude, provide all
information to the Company to the extent reasonably necessary to enable the Company to respond to regulatory requirements, such
as legal intercept/forced routing of traffic, terminal directories or traffic reports in a timely manner;

7.7.

assume responsibility itself or shall procure that its Service Providers or Subscribers assume responsibility for the payment of import
taxes and duties arising from the import of User Terminals and promotional goods and/or publicity material for the Services.

8.

Charges

8.1.

The DP shall pay to the Company, subject to the provisions of this Clause 8:
8.1.1.

the Charges calculated in accordance with Annex 2 for Services provided hereunder to the DP by the Company, which
Charges may be adjusted from time to time by the Company at its discretion in accordance with Annex 2; and

8.1.2.

such Value Added Tax (VAT), sales taxes and such similar taxes as the Company is obligated to add, impose or collect
on or by reference to such Charges.

For the avoidance of doubt, except as otherwise provided in Clauses 5.13, the DP shall be responsible for the payment of the amounts
in 8.1.1 and 8.1.2 above to the Company for all Services that are provided, including those Services provided by Service Providers,
Subscribers and Resellers.
8.2.

The Charges set out in Annex 2 are currently denominated in United States Dollars (US$). The Company may denominate all or part
of such Charges in one or more currencies subject to the DP being given a minimum of one hundred and eighty (180) days written
notice thereof and provided always that, wherever practical, such change shall be applied in a non-discriminatory manner.

8.3.

The amounts set out in Clause 8.1.1 and 8.1.2 above shall be paid to the Company in United States Dollars (US$) provided that the
Company may elect to have some or all of the Charges paid in another fully convertible currency that is acceptable to the Company
subject to the agreement of the DP and the DP being given a minimum of thirty (30) days prior written notice thereof and provided
always that wherever practical such change shall be applied in a non-discriminatory manner.

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Payment of Charges
8.4.

The Company may provide, at its sole discretion, credit to DPs after assessing their payment history, their financial position, any
financial security provided, and their overall relationship with the Company. Following such an assessment, the standard payment
terms set out below may be varied accordingly by the Company.

8.5.

The Company may at its sole discretion request information from the DP to enable it to assess the
which the DP shall be obligated to provide.

8.6.

With respect to the Services as set out in Annex 2, the Company shall invoice the DP on a calendar month basis. The Company
shall prepare and distribute invoices no later than ten (10) calendar days after the end of the pre