10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended January 2, 2010
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file no. 000-51598

iROBOT CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	77-0259 335
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8 Crosby Drive, Bedford, MA (Address of principal executive offices)	01730 (Zip Code)

(781) 430-3000

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Common Stock, $0.01 par value per share   The NASDAQ Stock Market LLC

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

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

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

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 þ     No o

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 o     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o
(Do not check if a smaller
reporting company) Smaller reporting company o

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

The aggregate market value of the Common Stock held by nonaffiliates of the registrant was approximately $268,894,000 based on the last reported sale of the Common Stock on the NASDAQ Global Market on June 27, 2009.

As of February 16, 2010, there were 25,095,696 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file a definitive Proxy Statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended January 2, 2010. Portions of such Proxy Statement are incorporated by reference into Part III of this Form 10-K.

iROBOT CORPORATION

ANNUAL REPORT ON FORM 10-K
Year Ended January 2, 2010

TABLE OF CONTENTS

			Page
Part I
	Item 1.	Business		3
	Item 1A.	Risk Factors		18
	Item 1B.	Unresolved Staff Comments		34
	Item 2.	Properties		34
	Item 3.	Legal Proceedings		34
	Item 4.	Submission of Matters to a Vote of Security Holders		34
Part II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		35
	Item 6.	Selected Financial Data		35
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		55
	Item 8.	Financial Statements and Supplementary Data		57
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		87
	Item 9A.	Controls and Procedures		87
	Item 9B.	Other Information		88
Part III
	Item 10.	Directors, Executive Officers and Corporate Governance		88
	Item 11.	Executive Compensation		88
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		88
	Item 13.	Certain Relationships and Related Transactions, and Directors Independence		89
	Item 14.	Principal Accounting Fees and Services		89
Part IV
	Item 15.	Exhibits, Financial Statement Schedules		89
EX-10.7 Lease Agreement between the Registrant and Burlington Crossing Office LLC for premises located at 63 South Avenue, Burlington, Massachusetts, dated as of October 29, 2002, as amended
EX-10.30 Third Amendment to Credit Agreement by and between the Registrant and Bank of America, N.A., dated February 12, 2010
EX-10.31 Second Amendment to Note by and between the Registrant and Bank of America, N.A., dated February 12, 2010
EX-23.1 Consent of PricewaterhouseCoopers LLP
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO
EX-32.1 Section 906 Certification of CEO & CFO

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PART I

ITEM 1.   BUSINESS

This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding our future results of operations and financial position, business strategy, plans and objectives of management for future operations, and plans for product development and manufacturing are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss certain of these risks in greater detail in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. Also, these forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and we have no plans to update our forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report. We caution readers not to place undue reliance upon any such forward-looking statements.

iRobot, Roomba, Scooba, iRobot Dirt Dog, PackBot, Warrior, Looj, Verro, Create, Negotiator, Virtual Wall, Home Base, and AWARE are trademarks of iRobot Corporation.

Overview

iRobot Corporation (“iRobot” or the “Company” or “we”) designs and builds robots that make a difference. For over 20 years, we have developed proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence to build industry-leading robots. Our Roomba floor vacuuming robots, Scooba floor washing robots and Looj gutter cleaning robot perform time-consuming domestic chores. Our PackBot and Small Unmanned Ground Vehicle (SUGV) tactical ground military robots perform battlefield reconnaissance and bomb disposal. Our Negotiator ground robot performs multi-purpose tasks for local police and first responders. Our Seaglider unmanned underwater robot performs long endurance oceanic missions. We sell our robots to consumers through a variety of distribution channels, including chain stores and other national retailers, and through our on-line store, and to the U.S. military and other government agencies worldwide. We maintain certifications for AS9100 and Capability Maturity Model Integration, or CMMI. These certifications enable us to service our military products and services.

Since our founding by roboticists who performed research at the Massachusetts Institute of Technology, we have accumulated expertise in all the disciplines necessary to design and build durable, high-performance and cost-effective robots through the close integration of software, electronics and hardware. Our core technologies serve as reusable building blocks that we adapt and expand to develop next generation and new products, reducing the time, cost and risk of product development. For example, our proprietary AWARE Robot Intelligence Systems enable the behavioral control of robots. Our AWARE systems allow our Roomba floor vacuuming robot to clean an entire floor while avoiding obstacles and not falling down stairs, and also allow our PackBot robots to accomplish complex missions such as waypoint navigation and real-time obstacle avoidance.

Our significant expertise in robot design and engineering, combined with our management team’s experience in military and consumer markets, positions us to capitalize on the growth we expect in the market for robot-based products. We believe that the sophisticated technologies in our existing consumer and military applications are adaptable to a broad array of markets such as law enforcement, homeland security, commercial cleaning, elder care, oil services, home automation, landscaping, agriculture, construction and other vertical markets. Our strategy is to maintain a leadership position in pursuing new applications for robot solutions by leveraging our ability to innovate, to bring new products to market quickly, to reduce costs through design and outsourcing capabilities, and to commercialize the results of our research, much of which is government funded.

Over the past seven years, we sold approximately 5 million of our home care robots. We also sold during that time more than 2,900 of our PackBot tactical military robots, most of which have been sold to the U.S. military and deployed on missions in Afghanistan and Iraq.

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Strategy

Our objective is to expand our leadership globally in designing and building practical robots and in developing robotic technology. Key elements of our strategy to achieve this objective include:

Continued Growth through Profitability, Operational Excellence and Customer Focus.  Our ability to continue to grow, to delight our customers with innovative products, and to deliver value and exceed end-user expectations depends on our ability to improve profitability and operating processes and to provide best-in-class service. We intend to consistently improve our profitability through disciplined allocation of resources and by reducing costs of materials, adjusting prices, optimizing our product and channel mix, focusing on our discretionary spending and reducing our seasonality. We will continue to focus on improving the scalability and efficiency of our supply chain process and our purchase and supply practices, and on mitigating single source supply exposure. We will identify, develop and enhance product features and functionality, as well as our ability to efficiently service customers who have problems, by enhancing customer outreach and surveys, and investigating and aggressively focusing on product reliability.

Deliver Great Products and Continue to Expand Our Existing Markets.  Our success is built upon our ability to deliver a broad range of innovative products rapidly at economical price points and to offer a broad product line to our customers. Within the consumer market, we offer floor cleaning products for various surfaces at multiple price points, a gutter cleaning product, a pool cleaning product, and a number of product accessories. We are extending our military robot offerings. In addition, we intend to leverage our increasing installed base to expand our revenues from recurring sales of consumables, services and support.

Innovate to Penetrate New Markets.  Our goal is to design and build innovative robots that make a difference. We develop robots with functionalities that are adaptable for use in a broad range of applications. We intend to increase the penetration of our products in existing markets, expand existing products into new markets, and develop and launch new products into current and adjacent markets. For example, we are fostering the emerging UUV (unmanned underwater vehicle) market and continuing to grow our international presence by entering new markets. In addition, during fiscal 2009, we announced the establishment of a newly-created healthcare business unit, committed to exploring the potential of robotics as an assistive technology to promote wellness and enhance quality of life for seniors.

Leverage Research and Development Across Different Products and Markets.  We leverage our research and development across all of our products and markets. For example, we use technological expertise developed through government-funded research and development projects across our other product development efforts. Similarly, expertise developed while designing consumer products is used in designing products for government and industrial applications. This strategy helps us in avoiding the need to start each robot project from scratch, developing robots in a cost-effective manner and minimizing time to market.

Continue to Strengthen Our Brand.  We intend to continue to enhance our brand image and corporate identity. The iRobot brand is designed to communicate innovation, reliability, safety and value. Our robots’ performance and uniqueness have enabled us to obtain strong word-of-mouth and extensive press coverage leading to increasing brand awareness, brand personality and momentum. We intend to continue to invest in our marketing programs to strengthen our brand recognition and reinforce our message of innovation, reliability, safety and value.

Complement Core Competencies with Strategic Alliances.  Our core competencies are the design, development and marketing of robots. We rely on strategic alliances to provide complementary competencies that we integrate into our products and to enhance market access. For example, our alliance with The Boeing Company allows us to accelerate product development of the SUGV, through extensive use of Commercial Off The Shelf (COTS) components, and our alliance with Advanced Scientific Concepts, Inc. allows us to integrate LADAR technology for navigation and mapping applications into our autonomous vehicles. We outsource other non-core activities, such as manufacturing and back-office functions, which helps us focus our resources on our core competencies.

Develop a Community of Third-Party Developers Around Our Platforms.  We have developed products around which communities of third-party developers can create related accessories, software and complementary products. We intend to foster this community by making our products into extensible platforms with open interfaces

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designed to carry payloads. For example, our robots are designed to allow third-party designers to add sensors and other functionalities, such as acoustic sniper detection and explosives detection.

Develop Employees and Culture of Accountability.  We intend to continue to hire only top talent and to invest in our employees through training and on-the-job experience. We will develop innovative people plans to become the employer of choice. In addition, we will foster a culture among our employees of accountability, trust and mutual reliance by closely tracking important employee milestones and metrics, expanding rewards and recognition for top performers, and better leveraging our stock grant program.

Technology

We are focused on behavior-based, artificially-intelligent systems developed to meet customer requirements in multiple market segments. In contrast to robotic manufacturing equipment or entertainment systems that are designed to repeat actions in specific, known environments, our systems are designed to complete missions in complex and dynamic real-world environments.

Our robots rely on the interplay among behavior-based artificially intelligent systems, real-world dynamic sensors, user-friendly interfaces and tightly-integrated, electromechanical designs to accomplish their missions efficiently.

AWARE Robot Intelligence Systems.  Our proprietary AWARE Robot Intelligence Systems are code bases that enable the behavioral control of robots. Moreover, the AWARE systems include modules that control behaviors, sensor fusion, power management and communication. Our AWARE systems allow our Roomba floor vacuuming robot and our Scooba floor washing robot to clean an entire floor while avoiding obstacles and not falling down stairs, and also allow our PackBot robots and our other unmanned ground vehicles to accomplish complex missions such as waypoint navigation and real-time obstacle avoidance.

Real-World, Dynamic Sensing.  The degree of intelligence that our robots display is directly attributable to their ability to perceive — or sense — the world around them. Using specialized hardware and signal processing, we have developed sensors that fit particular cost-performance criteria. In other cases, we use off-the-shelf sensing hardware, such as laser scanners, cameras and optical sensors. We have the exclusive right from Advanced Scientifics Concepts, Inc. to use its LADAR technology for unmanned ground vehicles and robots. This LADAR technology is a next-generation solid state sensor that marks an important advancement for navigation and mapping applications for all autonomous vehicles. Additionally, we have an agreement with ICx Technologies to integrate its explosive-detecting technology into our PackBot platform. The payload, called the ICx Fido for iRobot PackBot 500, can detect explosive vapors emanating from Improvised Explosive Devices (IEDs).

User-Friendly Interfaces.  Our robots require that users interact and instruct our robots in intuitive ways without extensive end-user set-up, installation, training or instruction. For example, our Roomba robots require only one button to have the robot begin its mission, determine the size of the room to be cleaned, thoroughly clean the room and return to its re-charger, right out of the box without any pre-programmed knowledge of the user’s home. Similarly, our PackBot robots use intuitive controllers, interoperable between systems, that integrate high-level supervisory commands from the user into the behaviors of the robot.

Tightly-Integrated, Electromechanical Design.  Our products rely on our ability to build inherently robust integrated electrical and mechanical components into required form factors. For instance, the computer that powers the PackBot tactical military robot must withstand being dropped from more than ten feet onto concrete. Such high performance specifications require tight design integration.

Combining these four components, we have created proprietary, reusable building blocks of robotics capabilities, including mobility platforms, manipulators, navigation and control algorithms and user interfaces. Our technology building blocks typically allow us to take a known platform and modify it for a new mission instead of starting from scratch for each application. We believe this allows us to design and develop innovative robots cost-effectively.

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Products and Development Contracts

We design and build robots for the consumer and government and industrial markets. With two decades of leadership in the robot industry, we remain committed to establishing robot and software platforms for invention and discovery, building key partnerships to develop mission-critical payloads and creating robots that improve the standards of safety and living worldwide.

Consumer Products

We sell various products that are designed for use in and around the home. Our current consumer products are focused on both indoor and outdoor cleaning applications. We believe our consumer products provide value to our customers by delivering better cleaning solutions at an affordable price and by freeing people from repetitive home cleaning tasks.

Home Floor Cleaning Robots

Over the past seven years, we sold approximately 5 million home floor cleaning robots. We currently offer multiple Roomba floor vacuuming robots and Scooba floor washing robots with varying price points and performance characteristics.

Our Roomba robot’s compact disc shape allows it to clean under beds and other furniture, resulting in cleaner floors since the Roomba can access more of the floor than standard upright vacuum cleaners. Roomba is programmed to keep operating until the floor is clean. In addition, Roomba eliminates the need to push a vacuum — it cleans automatically upon the push of a button.

We offer multiple Roomba models with various features. The suggested retail price for the Roomba robots range from $129 to $549 depending on model, configuration and accessory packages.

Scooba, our second major consumer product line, is the first floor washing robot available for home use. Our Scooba robot utilizes the expertise gained from years of Roomba development to create a robot that scrubs your floor.

Our Scooba robot’s innovative cleaning process allows the robot to simultaneously sweep, wash, scrub and dry hard floors, all at the touch of a button. Unlike a conventional mop that spreads dirty water on the floor, Scooba will apply only fresh water and cleaning solution to the floor from a clean tank. Scooba will clean dirt and grime, and is safe for use on all sealed, hard floor surfaces, including wood and tile.

Scooba has the ability to navigate around the room using a light-touch bumper and is smart enough to avoid carpets. Scooba features an advanced diagnostic system to provide the user with important maintenance feedback and improve user experience and product life. The suggested retail price for the Scooba robots range from $299 to $499.

Pool Cleaning Robots

Our Verro Pool Cleaning Robot is used to clean a standard size pool in about an hour while removing debris as small as two microns from the pool floor, walls and stairs. Verro is brought to market under the iRobot brand through a relationship with the Aqua Products Group companies including AquaJet LLC and Aquatron, Inc., which developed the pool cleaning robots. There are three models available with a range of suggested retail prices from $399 to $999.

Gutter Cleaning Robot

Our Looj Gutter Cleaning Robot was designed to simplify the difficult and dangerous job of gutter cleaning. The Looj cleans an entire stretch of gutter, reducing the number of times a ladder must be repositioned and climbed during gutter cleaning. The 2.25-inch high Looj drives under gutter straps propelled by a three-stage auger that dislodges and sweeps out dirt, leaves and other debris that can cause costly water damage, overspills and ice dams.

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The Looj also features a detachable handle that doubles as a wireless remote control, providing full control of the robot while cleaning. The suggested retail price for the Looj ranges from $129 to $169.

Programmable Robot

Our Create Programmable Robot is a fully assembled programmable robot. The Create has ten built-in demos and 32 sensors that allow users to experiment with robotics. An open cargo bay allows the user to add their grippers, wireless connections, computers or other hardware. The Create is based on the iRobot Roomba technology and is compatible with Roomba’s re-chargeable batteries, remote control and other accessories. The suggested retail price for the Create ranges from $129 to $299.

Government and Industrial Products

In government and industrial product markets, we currently offer both ground and maritime unmanned vehicles. Our tactical ground robots include the combat-tested 510 PackBot line of small, unmanned ground robots, the 310 SUGV and 320 SUGV (Small Unmanned Ground Vehicle) multi-purpose ground robots and the low-cost 210 Negotiator for state and local police and first responders. The PackBot, SUGV, and Negotiator robot series make up a family of robots using many common platform components and offer our patented flipper technology that enables robots to easily climb stairs, navigate rubble, and penetrate inaccessible areas. As of December 2009, more than 2,900 PackBot robots have been delivered to military and civil defense forces worldwide. The robots are currently priced between approximately $20,000 and $195,000 per unit, depending on configuration and quantities ordered. Within our maritime business, the 1Ka Seaglider is used on long endurance oceanic missions. Our government and industrial robots are designed for high-performance, durability and ease of use while performing search, reconnaissance, mapping, bomb disposal and other dangerous missions.

In 2009, we continued to refine the PackBot product line, focusing on enhanced modularity and providing new capabilities to support new mission areas. Our unique Aware 2 software was successfully incorporated into the advanced 510 PackBot chassis and operator control unit. As a result, PackBot can now support multiple configurations and payloads with the same chassis and operator control unit, providing customers with a single robot capable of multiple missions. iRobot also introduced Configure-To-Order (CTO) procurement options for our commercial 510 PackBot, allowing customers to tailor the product to their specific mission needs. The combined benefits of the Aware 2 software and CTO procurement options establish the 510 PackBot as a truly modular multi-mission robotic platform. Additionally, we have expanded the PackBot line to include the following configurations targeted to state and local first responders, Army and Marine Corps Combat Engineers, and others.

iRobot 510 PackBot (Advanced EOD configuration):  This advanced robot quickly adapts to different Improvised Explosive Devices (IEDs) and conventional ordnance, keeping Explosive Ordnance Disposal (EOD) personnel at safe stand-off distances.

iRobot 510 PackBot (FasTac configuration):  This multi-mission robot was specifically designed for combat infantry forces and is currently used in combat by maneuver and maneuver support units for a variety of tasks.

iRobot 510 PackBot (First Responder configuration):  This configuration provides a lower price alternative for state and local customers who may not need all the capability of the 510 PackBot with EOD capability.

iRobot 510 PackBot (Engineer configuration):  This configuration is based on the First Responder configuration but also includes tools for the Engineer mission and a lift kit for heavier items. Additionally, the Engineer configuration supports an optional thermal camera.

We continue to sell and support the 500 PackBot line for certain government customers. These configurations include:

EOD configuration:  This is a rugged, lightweight robot designed to conduct explosive ordnance disposal, hazardous materials, search-and-surveillance and other vital law enforcement tasks for bomb squads, SWAT teams, military units and other authorities.

ICx Fido Explosives Detection configuration:  This explosives-sniffing robot screens packages and other potentially dangerous items while the operator remains at a safe distance.

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We also offer more than 60 accessories for the PackBot that provide additional capabilities for the robot, expanding its range and scope of missions.

iRobot 210 Negotiator:  In 2008, we introduced the 210 Negotiator in a Civil Response configuration. This rugged robot performs basic reconnaissance for public safety professionals, increasing situational awareness in high-risk scenarios, including bomb identification, hostage situations, search and rescue and other dangerous missions.

310 SUGV:  In 2009, iRobot, in a strategic partnership with The Boeing Company, developed the 310 SUGV, a man-portable robot with dexterous manipulator and wearable controller for dismounted mobile operations. A smaller and lighter version of the combat-proven iRobot, PackBot, 310 SUGV enters areas that are inaccessible or too dangerous for people, providing state-of-the-art technology for infantry troops, combat engineers, mobile EOD technicians and other personnel. The 310 SUGV gathers situational awareness in dangerous conditions while keeping war fighters and public safety professionals out of harm’s way.

iRobot 1Ka Seaglider:  This Unmanned Underwater Vehicle (UUV) is used on long endurance oceanic missions to measure temperature, salinity, depth-averaged current and other data for oceanographers and military planners. Seagliders are typically deployed on autonomous missions for six months or more, replacing manned research vessels at considerable economic advantage.

Contract Research and Development Projects

We are involved in several contract development projects with various U.S. governmental agencies and departments. The durations of these projects range from a few months to several years. These projects are usually funded as either cost-plus, firm fixed price, or time and materials contracts. In a cost-plus contract, we are allowed to recover our actual costs plus a fixed fee. The total price of a cost-plus contract is based primarily on allowable costs incurred, but generally is subject to a maximum contract funding limit. Under a firm fixed price contract, we receive a fixed amount upon satisfying contractually defined deliverables. On our time and materials contracts, we recover a specific amount per hour worked based on a bill rate schedule, plus the cost of direct materials, subcontracts, and other non-labor costs, including an agreed-upon mark-up. A time and materials contract may provide for a not-to-exceed price ceiling, as well as the potential that we will absorb any cost overrun.

Government funding is provided to further the development of robot technologies with the expectation that if the projects result in the development of technically viable prototypes, the government will purchase multiple production units for future use in the field. The government funding that we receive allows us to accelerate the development of multiple technologies. While the U.S. government retains certain rights to military projects that it has funded, such as the right to use inventions and disclose technical data relating to those projects without constraining the recipient’s use of that data, we retain ownership of patents and know-how and are generally free to develop other commercial products, both consumer and industrial, utilizing the technologies developed during these projects. The rights which the government retains, however, may allow it to provide use of patent rights and know-how to others, and some of the know-how might be used by these third parties for their own development of consumer and industrial products. The contract development projects that we are currently undertaking include, but are not limited to:

Small Unmanned Ground Vehicle (SUGV) and Centralized Controller Device. (CCD):  2009 was a year of significant change and transformation for the Future Combat Systems (FCS) Program which was originally intended to transform the U.S. Army to be strategically responsive and dominant at every point on the spectrum of operations, through real-time network centric communications and systems of a family of manned vehicles and unmanned platforms by the next decade. Following a Defense Acquisition Board meeting, The Department of Defense terminated the Manned Ground Vehicle portion of FCS, accelerated the unmanned systems portion of FCS, and provided guidance for a restructuring of FCS into a series of smaller programs. A new entity, the Program Executive Office for Integration, or PEO-I, was created to manage the remaining elements of FCS. The new name for our program under the PEO-I is called Brigade Combat Team Modernization or BCTM.

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Our specific role in the BCTM program has been expanded and accelerated to design and develop the SUGV, (intended to be the “soldier’s robot”). The SUGV is a light-weight, man-portable robot that supports reconnaissance, remote sensing and urban warfare. Based on input from soldiers and commanders in the field, to focus on infantry first, the Army moved to more aggressively support current operations with modernized capabilities, including the SUGV. This acceleration of the SUGV development program has resulted in the inclusion of our product into the first implementation of capability currently referred to as Increment 1. The SUGV successfully completed a formal Limited User Test at Fort Bliss, Texas during the summer of 2009. This testing formed the basis of a positive decision to proceed with low rate initial production in December of 2009, which is expected to lead to fielding in 2011.

In addition, we have contracted with Lockheed Martin Corporation, the provider of the CCD for the BCTM program, to be a key supplier of design and development for the CCD’s controls and display through its estimated delivery in 2015. The CCD is a handheld device that will allow an individual soldier to remotely control or query the different systems within a brigade combat team — from a Class I Unmanned Aerial Vehicle to an unmanned ground system. Development of the common controller device is providing us the opportunity to build additional core competency in the design of user interface devices and human factors design.

Our involvement in the FCS program has enabled us to improve various management and control systems and enhance our engineering capabilities to achieve the Software Engineering Institute’s Configuration Maturity Model certification at Level III. The program has also funded the development of earned value measurement and advanced modeling and simulation.

iRobot 710 Warrior  Warrior is an approximately 350 pound tracked vehicle, capable of transporting up to 150 pounds of payload, with a small footprint and extreme mobility. This effort is currently supported by the Joint Ground Robotics Enterprise and U.S. Army Tank Automotive Research, Development and Engineering Center (TARDEC). The Warrior design incorporates a number of features present in our other robots and demonstrates many of the advantages that modular payloads and common interfaces can bring to the military robotics community.

Daredevil Project:  Daredevil is an applied research project funded by TARDEC in which we are investigating the development of an integrated sensor suite consisting of ultra wideband radar and high-resolution imaging sensors to provide improved sensing capabilities for Unmanned Ground Vehicles (UGVs), such as the iRobot PackBot.

UGV/UAV Collaboration, or MAGMA Project (Multi-Autonomous Ground Multi-Air unmanned vehicle collaboration):  In coordination with researchers from Carnegie Mellon University, the goal of this U.S. Army Armament Research, Development and Engineering Center (ARDEC)-funded project is to develop a collaborative engagement tool for mission planning and task allocation for the command and control of multiple unmanned air and ground vehicles.

LANdroids Project:  LANdroids is a Defense Advanced Research Projects Agency (DARPA) program that is developing robots that establish and maintain communications for war fighters in urban settings (in buildings, around buildings, etc.). We have a contract to develop pocket-sized autonomous robotic radio relay nodes that war fighters can toss on the ground as they deploy.

We are engaged in a number of other research programs funded by the DARPA, ARDEC, the Office of Naval Research (ONR), TARDEC, and several other U.S. governmental agencies.

Strategic Alliances

Strategic alliances are an important part of our product development and distribution strategies. We rely on strategic alliances to provide technology, complementary product offerings and increased and quicker access to markets. We seek to form relationships with organizations that can provide best-in-class technology or market advantages for establishing iRobot technology in new market segments.

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Examples of our recent strategic alliances include:

The Boeing Company:  We have entered into a strategic business agreement with The Boeing Company to develop and market a commercial version of the SUGV that is being developed under the Army’s BCTM (formerly FCS) program. This collaboration will accelerate product development though extensive use of COTS components to produce a commercial version of the SUGV several years earlier than planned for use by our U.S. military, domestic and international customers. In addition to cooperative development, we are working with The Boeing Company to market the SUGV by leveraging The Boeing Company’s extensive, domestic and international marketing network.

Advanced Scientific Concepts, Inc.:  In 2007, we entered into agreement with Advanced Scientific Concepts, Inc. for exclusive rights to use its LADAR technology for unmanned ground vehicles in exchange for future commitments to purchase units. LADAR is a next-generation solid state sensor technology that marks an important advancement for navigation and mapping applications for all autonomous vehicles. LADAR sensors have no moving parts and can be compact, light and rugged, making them highly suitable for military and industrial uses. We will assist Advanced Scientific Concepts, Inc. in designing versions of its LADAR technology for use on our military robots. We expect to demonstrate the technology to key customers starting in early 2010, with delivery of a product expected by third quarter 2010.

Our strategy of working closely with third parties extends to the design of our products. By offering extensible platforms designed to carry payloads, we have designed and manufactured our products to leverage the work of those individuals and organizations that offer specialized technological expertise. The PackBot, the Roomba and the Scooba robots are designed with open interfaces that allow third-party developers to add payloads to our robots, improving their functionality.

Sales and Distribution Channels

We sell our products through distinct sales channels to the consumer and government and industrial markets.

Home Robots

We sell our consumer products through a network of national retailers. In 2009, this network consisted of more than 30 retailers which often sell either one or some combination of our products. Internationally, our products have been sold in over 40 countries, primarily through a network of in-country distributors who resell to retail stores in their respective countries. We also offer our products domestically and internationally through the on-line store on our website.

We have a philosophy to choose supportive channel partners, and we have grown, and intend to continue to selectively grow our retail network globally and by product line. Certain smaller domestic retail operations are supported by distributors to whom we sell product directly. The table below represents the breakdown of our home robots product revenue for the fiscal years ended January 2, 2010 and December 27, 2008.

	Fiscal Year Ended
	January 2,			December 27,
Channel	2010			2008
Domestic		30.8	%		44.3	%
International		53.8			38.0
Direct		15.4			17.7
Total		100.0	%		100.0	%

Although our retail network is our primary distribution channel for our consumer products, our direct-to-consumer offerings through our on-line store is our single largest outlet, representing 15.4% and 17.7% of total home robots division revenue for fiscal 2009 and 2008, respectively. We have established valuable databases and customer lists that allow us to target directly those consumers most likely to purchase a new robot or upgrade. Our increased focus on international sales activities has resulted in an increase of $23.2 million in international home robots revenue for fiscal 2009 as compared to fiscal 2008. We believe we maintain a close connection with our

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customers in each of our markets, which provides an enhanced position from which to improve our distribution and product offerings.

In the United States, we maintain an in-house sales and product management team. Outside of the United States and Canada, we sell our consumer products through distributors and our website supported by our international sales team. Our consumer distribution strategy is intended to increase our global penetration and presence while maintaining high quality standards to ensure end-user satisfaction.

Government and Industrial

We sell our government and industrial products directly to end users and indirectly through prime contractors and distributors. While the majority of government and industrial products have been sold to date to various operations within the U.S. federal government, we also sell to state and local as well as to international government organizations. Our military products are sold overseas in compliance with the International Traffic in Arms Regulations, or ITAR. We have sold our products to the governments of various countries in the past several years, including the United Kingdom, France, Germany, Sweden, Norway, Israel, Australia, Republic of Korea, Singapore and others.

Customers for our government products, and research and development contracts for the year ended January 2, 2010, include:

Robot Product Customers	Research and Development Contracts
•   U.S. Army	•   U.S. Army Future Combat Systems (FCS/BCTM) Program
•   U.S. Marine Corp	•   U.S. Defense Advanced Research Projects Agency (DARPA)
•   U.S. Army and Marine Corps Robotic Systems Joint Program Office	•   U.S. Space and Naval Warfare Systems Command (SPAWAR)
•   U.S. Navy EOD Technical Division (Joint Services Explosive Ordnance Disposal Procurement Agency)	•   U.S. Army Tank-Automotive and Armaments Command (TACOM)
•   U.S. Air Force	•   Technical Support Working Group (TSWG)
•   Domestic Police and First Responders	•   U.S. Army Armament Research, Development and Engineering Center (ARDEC)
•   Foreign governments, including the United Kingdom, France, Germany, Sweden, Norway,	•   National Center for Defense Robotics (NCDR)
Israel, Australia, Republic of Korea, Singapore	•   Office of Naval Research (ONR)

Our government products are sold by a team of sales specialists with significant experience in selling to government and defense agencies. All of these individuals have years of experience selling military products to government procurement offices, both in the United States and internationally. We maintain a direct sales and support presence in Europe.

Customer Service and Support

We also invest in our ongoing customer service and support. Consumer customer service representatives, the majority of whom are employees of outsourced service organizations, are extensively trained on the technical intricacies of our consumer products. Government and industrial customer representatives are usually former military personnel who are experienced in logistical and technical support requirements for military operations.

Marketing and Brand

We market our home robots in the United States to end-user customers directly through our sales and product management team. We also market our consumer products in the United States through our retail network of more than 30 retailers and internationally through in-country distributors and our international sales team. We market our government and industrial products directly through our team of government sales specialists to end users and

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indirectly through prime contractors. We also market our product offerings through the iRobot website. Our marketing strategy is to increase our brand awareness and associate the iRobot brand with innovation, reliability, safety and value. Our sales and marketing expenses represented 13.7%, 15.2% and 18.0% of our total revenue in 2009, 2008 and 2007, respectively.

We believe that we have built a trusted, recognized brand by providing high-quality robots. We believe that customer word-of-mouth has been a significant driver of our brand’s success to date, which can work very well for products that inspire a high level of user loyalty because users are likely to share their positive experiences. Our grass-roots marketing efforts focus on feeding this word-of-mouth momentum and we use public relations as well as advertising to promote our products.

Our innovative robots and public relations campaigns have generated extensive press coverage. In addition, iRobot and our consumer robots have won several awards and our inclusion among the first-tier partners on the FCS program has greatly enhanced our brand and awareness among government and industrial customers. Through these efforts, we have been able to build our brand, and we expect that our reputation for innovative products and customer support will continue to play a significant role in our growth and success.

We expect to invest in national advertising, consumer and industry trade shows, direct marketing and public relations to further build brand awareness. We believe that our significant in-house experience designing direct marketing campaigns and promotional materials, combined with our media-targeting expertise, gives us a significant competitive advantage.

Our website is also playing an increasing role in supporting brand awareness, addressing customer questions and serving as a showcase for our products. Our home robots and accessories are also sold domestically and internationally through our on-line store. In 2009, the on-line store was the single largest outlet of our home robots division products.

Manufacturing

Our core competencies are the design, development and marketing of robots. Our manufacturing strategy is to outsource non-core activities, such as the production of our robots, to third-party entities skilled in manufacturing. By relying on the outsourced manufacture of both our consumer and military robots, we can focus our engineering expertise on the design of robots.

Using our engineering team, we believe that we can rapidly prototype design concepts and products to achieve optimal value, produce products at lower cost points and optimize our designs for manufacturing requirements, size and functionality.

Manufacturing a new product requires a close relationship between our product designers and the manufacturing organizations. Using multiple engineering techniques, our products are introduced to the selected production facility at an early-development stage and the feedback provided by manufacturing is incorporated into the design before tooling is finalized and mass production begins. As a result, we believe that we can significantly reduce the time required to move a product from its design phase to mass production deliveries, with improved quality and yields.

We outsource the manufacturing of our consumer products to two contract manufacturers, Jetta Company Limited and Kin Yat Industrial Co. Ltd., each of which manufactures our consumer products at a single plant in China. Jetta Company Limited has several manufacturing locations and has been manufacturing products since 1977. Jetta Company Limited brings substantial experience to our production requirements. Kin Yat Industrial Co. Ltd. has been in business since 1981, has several manufacturing locations in China, and began manufacturing our Roomba 500 series in 2007.

Our PackBot family of government and industrial products is manufactured by Gem City Engineering and Manufacturing Corporation, or GEM, at one plant in Dayton, Ohio. GEM’s location is particularly important as military products supplied to the U.S. government must have the majority of their content manufactured in the United States. GEM has multiple facilities and relies on subcontractors for certain component manufacturing capabilities. GEM has been in the business of manufacturing primarily machined metal products since 1936, and

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has produced numerous products for military contractors. We believe that GEM’s engineers are skilled in the production of products meeting military specifications, and in preparing final products for military inspection and conducting quality reviews.

Our Small Unmanned Ground Vehicle (SUGV) family of government and industrial products is manufactured by Benchmark Electronics, Inc., at a facility in Nashua, New Hampshire. Benchmark is a large geographically dispersed contract manufacturer headquartered in Angleton, Texas with locations around the world. Benchmark provides significant additional outsourced manufacturing capacity for iRobot. Benchmark sources its material from numerous subcontractors with the majority of the content manufactured in the United States to support military products.

Our Maritime family of underwater robotic products is manufactured by Polaris Contract Manufacturing, Inc. a wholly-owned subsidiary of Lockheed Martin, Inc., at a facility in Marion, Massachusetts. Our Negotiator family of products targeted for municipal markets is manufactured by Kaynes Technology Pvt. Ltd., at a facility in Mysore, India. These contract manufacturers provide high quality, scalable, cost effective manufacturing services.

Research and Development

We believe that our future success depends upon our ability to continue to develop new products and product accessories, and enhancements to and applications for our existing products. For the years ended January 2, 2010, December 27, 2008 and December 29, 2007, our research and development expenses were $14.7 million, $17.6 million and $17.1 million, respectively. In addition to our internal research and development activities, for the years ended January 2, 2010, December 27, 2008 and December 29, 2007, we have incurred research and development expenses under funded development arrangements with governments and industrial third parties of $30.8 million, $23.9 million and $18.8 million, respectively. Of our total research and development spending in 2009, 2008 and 2007, approximately 63.9%, 51.7% and 37.9%, respectively was funded by government-sponsored research and development contracts. For the years ended January 2, 2010, December 27, 2008 and December 29, 2007, the combined investment in future technologies, classified as cost of revenue and research and development expense, was $45.5 million, $41.5 million and $35.9 million, respectively. We intend to continue our investment in research and development to respond to and anticipate customer needs, and to enable us to introduce new products over the next few years that will continue to address our existing market sectors.

Team Organization

Our research and development is conducted by small teams dedicated to particular projects, examples of which include the Roomba team, Scooba team, Warrior team and PackBot team. In connection with our SUGV program, we have instituted a formal integrated product team structure consisting of integrated System of Systems, Integrated Logistical Support, Program Operations and Business Operations teams to work together to deliver a platform that integrates with the FCS/BCTM system of systems. Our domestic research and development efforts are primarily located at our headquarters in Bedford, Massachusetts, our office in Durham, North Carolina, and our special projects engineering office in San Luis Obispo, California. In addition, through 2009, we utilized an engineering design center in Mysore, India and a product development team in Hong Kong.

Spiral Development

One of the methods we use to develop military products is a “spiral development” process to get field tested equipment to the troops more quickly. After we develop a new product or product upgrade that will fulfill the desired requirements of the user, the product is tested with soldiers. The user provides performance feedback on the product to the in-field engineer. Revisions are made quickly and retested. This method has allowed our research and development team to not only make revisions on existing products quickly and efficiently, but also capture feedback for future upgrades and innovations to meet user needs. Periodically we send engineers in the field with our PackBot tactical military robots to solicit feedback from users which is often times incorporated into future product development and product enhancements.

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Leveraged Model

Our research and development efforts for our next-generation products are supported by a variety of sources. Our next-generation military products are predominately supported by U.S. governmental research organizations, such as the Defense Advanced Research Projects Agency, or DARPA, U.S. Space and Warfare Command, or SPAWAR, Technical Support Working Group, or TSWG, U.S. Army Tank-Automotive and Armaments Command, or TACOM, U.S. Army Armament Research, Development and Engineering Center, or ARDEC, and the BCTM program. While the U.S. government retains certain rights in the research projects that it has funded, we retain ownership of patents and know-how and are generally free to develop other commercial products, including consumer and industrial products, utilizing the technologies developed during these projects. Similarly, expertise developed while designing consumer products is used in designing products for government and industrial applications. We also work with strategic collaborators to develop industry-specific technologies. Moreover, we continue to reinvest in advanced research and development projects to maintain our technical capability and to enhance our product offerings.

Competition

The market for robots is highly competitive, rapidly evolving and subject to changing technologies, shifting customer needs and expectations and the likely increased introduction of new products. We believe that a number of established companies have developed or are developing robots that will compete directly with our product offerings, and many of our competitors have significantly more financial and other resources than we possess. Our current principal competitors include:

•  developers of robot floor cleaning products such as AB Electrolux, ACE ROBOT Co., Agait Technology Corp. (wholly owned subsidiary of ASUSTek Computer Inc.), Alfred Kärcher GmbH & Co., Evolution Robotics, Inc. LG Electronics Inc., Infinuvo/Metapo, Inc, Matsutek Enterprises Co Ltd., Microrobot CO., Ltd., Neato Robotics, Inc., Samsung Electronics Co., Ltd., Shenzhen Goldluck Electronic Co., Ltd., and Yujin Robotic Co. Ltd.;

•  developers of small unmanned ground vehicles such as Foster-Miller, Inc. — a wholly owned subsidiary of QinetiQ North America, Inc., Allen-Vanguard Corporation, and Remotec — a division of Northrop Grumman Corporation;

•  established government contractors working on unmanned systems such as Lockheed Martin Corporation, The Boeing Company, BAE Systems, Inc. and General Dynamics Corporation; and

•  developers of small unmanned underwater vehicles such as BlueFin Robotics, a wholly owned subsidiary of Battelle Memorial Institute, Hydroid a wholly owned subsidiary of Kongsberg Maritime AS; Webb Research — a wholly owned subsidiary of Teledyne Technologies Company, and Ocean Server Technology Inc.

While we believe many of our customers purchase our Roomba floor vacuuming robots and Scooba floor washing robots as a supplement to, rather than a replacement for, their traditional vacuum cleaners and wet floor cleaning methods, we do compete in some cases with providers of traditional cleaning products.

We believe that the principal competitive factors in the market for robots include product features, performance for the intended mission, cost of purchase, total cost of system operation, including maintenance and support, ease of use, integration with existing equipment, quality, reliability, customer support, brand and reputation.

Our ability to remain competitive will depend to a great extent upon our ongoing performance in the areas of product development and customer support. We cannot assure you that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering the markets in which we provide products.

Intellectual Property

We believe that our continued success depends in large part on our proprietary technology, the intellectual skills of our employees and the ability of our employees to continue to innovate. We rely on a combination of patent,

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copyright, trademark and trade secret laws, as well as confidentiality agreements, to establish and protect our proprietary rights.

As of January 2, 2010, we held 71 U.S. patents and more than 150 pending U.S. patent applications. Also, we held 34 foreign patents, additional design registrations, and more than 108 pending foreign applications. Our U.S. patents will begin to expire in 2019. We will continue to file and prosecute patent (or design registration, as applicable) applications when and where appropriate to attempt to protect our rights in our proprietary technologies. We also encourage our employees to continue to invent and develop new technologies so as to maintain our competitiveness in the marketplace. It is possible that our current patents, or patents which we may later acquire, may be successfully challenged or invalidated in whole or in part. It is also possible that we may not obtain issued patents for our pending patent applications or other inventions we seek to protect. In that regard, we sometimes permit certain intellectual property to lapse or go abandoned under appropriate circumstances and due to uncertainties inherent in prosecuting patent applications, sometimes patent applications are rejected and we subsequently abandon them. It is also possible that we may not develop proprietary products or technologies in the future that are patentable, or that any patent issued to us may not provide us with any competitive advantages, or that the patents of others will harm or altogether preclude our ability to do business.

Our registered U.S. trademarks include iRobot, Roomba, Scooba, iRobot Dirt Dog, Create, PackBot, Negotiator, Aware, Home Base, Looj, Verro, Virtual Wall, and Warrior. Our marks, iRobot, Roomba, Scooba, and certain other trademarks, have also been registered in selected foreign countries.

Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop technology that is similar to ours. Legal protections afford only limited protection for our technology. The laws of many countries do not protect our proprietary rights to as great an extent as do the laws of the United States. Despite our efforts to protect our proprietary rights, unauthorized parties have in the past attempted, and may in the future attempt, to copy aspects of our products or to obtain and use information that we regard as proprietary. Third parties may also design around our proprietary rights, which may render our protected products less valuable, if the design around is favorably received in the marketplace. In addition, if any of our products or the technology underlying our products is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions. We cannot assure you that our products do not infringe patents held by others or that they will not in the future. We have received in the past communications from third parties relating to technologies used in our Roomba floor vacuuming robots that have alleged infringement of patents or violation of other intellectual property rights. In response to these communications, we have contacted these third parties to convey our good faith belief that we do not infringe the patents in question or otherwise violate those parties’ rights. Although there have been no additional actions or communications with respect to these allegations, we cannot assure you that we will not receive further correspondence from these parties, or not be subject to additional allegations of infringement from others. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity, misappropriation, or other claims. Any such litigation could result in substantial costs and diversion of our resources. Moreover, any settlement of or adverse judgment resulting from such litigation could require us to obtain a license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit our use of the technology. Any required licenses may not be available to us on acceptable terms, if at all. If we attempt to design around the technology at issue or to find another provider of suitable alternative technology to permit us to continue offering applicable software or product solutions, our continued supply of software or product solutions could be disrupted or our introduction of new or enhanced software or products could be significantly delayed.

Regulations

We are subject to various government regulations, including various U.S. federal government regulations as a contractor and subcontractor to the U.S. federal government. Among the most significant U.S. federal government regulations affecting our business are:

•  the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the formation and administration of, and performance under government contracts;

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•  the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection with contract negotiations;

•  the Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement under cost-based government contracts;

•  the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a foreign official to help obtain, retain or direct business, or obtain any unfair advantages;

•  the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made on the basis of false facts provided to the government, and impose penalties on the basis of false statements, even if they do not result in a payment; and

•  laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

We also need special security clearances to continue working on and advancing certain of our projects with the U.S. federal government. Classified programs generally will require that we comply with various Executive Orders, federal laws and regulations and customer security requirements that may include restrictions on how we develop, store, protect and share information, and may require our employees to obtain government clearances.

The nature of the work we do for the federal government may also limit the parties who may invest in or acquire us. Export laws may keep us from providing potential foreign acquirers with a review of the technical data they would be acquiring. In addition, there are special requirements for foreign parties who wish to buy or acquire control or influence over companies that control technology or produce goods in the security interests of the United States. There may need to be a review under the Exon-Florio provisions of the Defense Production Act. Finally, the government may require a prospective foreign owner to establish intermediaries to actually run that part of the company that does classified work, and establishing a subsidiary and its separate operation may make such an acquisition less appealing to such potential acquirers.

In addition, the export from the United States of many of our products may require the issuance of a license by the U.S. Department of Commerce under the Export Administration Act, as amended, and its implementing Regulations as kept in force by the International Emergency Economic Powers Act of 1977, as amended. Some of our products may require the issuance of a license by the U.S. Department of State under the Arms Export Control Act and its implementing Regulations, which licenses are generally harder to obtain and take longer to obtain than do Export Administration Act licenses.

Our business may require the compliance with state or local laws designed to limit the uses of personal user information gathered online or require online services to establish privacy policies.

Government and Industrial Product Backlog

Our government and industrial product backlog consists of written orders or contracts to purchase our products received from our government and industrial customers. Total backlog of product sales to government and industrial customers, which includes federal, state, local and foreign governments, and non-government customers, as of January 2, 2010 and December 27, 2008 amounted to approximately $42.2 million and $8.4 million, respectively. Our funded research and development contracts may be cancelled or delayed at any time without significant, if any, penalty. As a result, we believe that backlog with respect to our funded research and development is not meaningful. There can be no assurance that any of our backlog will result in revenue.

Employees

As of January 2, 2010, we had 538 full-time employees located in the United States and abroad, of whom 254 are in research and development, 119 are in operations, 65 are in sales and marketing and 100 are in general and administration. We believe that we have a good relationship with our employees.

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Available Information

We were incorporated in California in August 1990 under the name IS Robotics, Inc. and reincorporated as IS Robotics Corporation in Massachusetts in June 1994. We reincorporated in Delaware as iRobot Corporation in December 2000. We conduct operations and maintain a number of subsidiaries in the United States and abroad, including operations in Hong Kong, the United Kingdom, China and India. We also maintain iRobot Securities Corporation, a Massachusetts securities corporation, to invest our cash balances on a short-term basis. Our website address is www.irobot.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

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ITEM 1A.   RISK FACTORS

We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. This discussion highlights some of the risks which may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may also impair our business operations. If any of the following risks or uncertainties actually occurs, our business, financial condition and operating results would likely suffer.

Risks Related to Our Business

We operate in an emerging market, which makes it difficult to evaluate our business and future prospects.

Robots represent a new and emerging market. Accordingly, our business and future prospects are difficult to evaluate. We cannot accurately predict the extent to which demand for consumer robots will increase, if at all. Moreover, there are only a limited number of major programs under which the U.S. federal government is currently funding the development or purchase of military robots. You should consider the challenges, risks and uncertainties frequently encountered by companies using new and unproven business models in rapidly evolving markets. These challenges include our ability to:

•  generate sufficient revenue and gross margin to maintain profitability;

•  acquire and maintain market share in our consumer and military markets;

•  manage growth in our operations;

•  attract and retain customers of our consumer robots;

•  develop and renew government contracts for our military robots;

•  attract and retain additional engineers and other highly-qualified personnel;

•  adapt to new or changing policies and spending priorities of governments and government agencies; and

•  access additional capital when required and on reasonable terms.

If we fail to successfully address these and other challenges, risks and uncertainties, our business, results of operations and financial condition would be materially harmed.

Our financial results often vary significantly from quarter-to-quarter due to a number of factors, which may lead to volatility in our stock price.

Our quarterly revenue and other operating results have varied in the past and are likely to continue to vary significantly from quarter-to-quarter. For instance, our consumer product revenue is significantly seasonal. For the fiscal years ended January 2, 2010 and December 27, 2008, we generated 59.7% and 58.6%, respectively, of our revenue from sales of consumer products in the second half of the year. This variability may lead to volatility in our stock price as equity research analysts and investors respond to these quarterly fluctuations. These fluctuations will be due to numerous factors including:

•  seasonality in the sales of our consumer products;

•  the size and timing of orders from retail stores for our home care robots;

•  the size and timing of orders from military and other government agencies;

•  the mix of products that we sell in the period;

•  disruption of supply of our products from our manufacturers;

•  the inability to attract and retain qualified, revenue-generating personnel;

•  unanticipated costs incurred in the introduction of new products;

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•  costs and availability of labor and raw materials;

•  costs of freight;

•  changes in our rate of returns for our consumer products;

•  our ability to introduce new products and enhancements to our existing products on a timely basis;

•  price reductions;

•  warranty costs associated with our consumer products;

•  the amount of government funding and the political, budgetary and purchasing constraints of our government agency customers;

•  cancellations, delays or contract amendments by government agency customers; and

•  significant cost overruns due to program management inefficiencies.

Predicting revenue for any particular quarter and from sales of our consumer products includes many challenges. Chain stores and other national retailers typically place orders for the holiday season in the third quarter and early in the fourth quarter. The timing of these holiday season shipments could materially affect our third or fourth quarter results in any fiscal year. Because of quarterly fluctuations, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Moreover, our operating results may not meet expectations of equity research analysts or investors. If this occurs, the trading price of our common stock could fall substantially either suddenly or over time.

Global economic conditions and any associated impact on consumer spending could have a material adverse effect on our business, results of operations and financial condition.

Continued economic uncertainty and reductions in consumer spending may result in reductions in sales of our consumer robots, which would adversely affect our business, results of operations and our financial condition. In addition, recent disruptions in national and international credit markets have lead to a scarcity of credit, tighter lending standards and higher interest rates on consumer and business loans. Continued disruptions in credit markets may materially limit consumer credit availability and restrict credit availability of our retail customers, which would also impact purchases of our consumer robots. Any reduction in sales of our consumer robots, resulting from reductions in consumer spending or continued disruption in the availability of credit to retailers or consumers, could materially and adversely affect our business, results of operations and financial condition.

Our future profitability may fluctuate, and we have a limited operating history on which you can base your evaluation of our business.

As of January 2, 2010, we had an accumulated deficit of $7.6 million. Over the past six years, our accumulated deficit has decreased by $19.5 million due to annual operating profitability. Because we operate in a rapidly evolving industry, there are challenges to predicting our future operating results, and we cannot be certain that our revenues will grow at rates that will allow us to maintain profitability during every fiscal quarter, or even every fiscal year. In addition, we only have limited operating history on which you can base your evaluation of our business. Failure to maintain profitability may result in our inability to access capital under our existing credit arrangements.

A majority of our business currently depends on our consumer robots, and our sales growth and operating results would be negatively impacted if we are unable to enhance our current consumer robots or develop new consumer robots at competitive prices or in a timely manner.

For the years ended January 2, 2010 and December 27, 2008, we derived 55.5% and 56.4% of our total revenue from our consumer robots, respectively. For the foreseeable future, we expect that a significant portion of our revenue will continue to be derived from sales of consumer robots in general and home floor care products in particular. Accordingly, our future success depends upon our ability to further penetrate the consumer home care market, to enhance our current consumer products and develop and introduce new consumer products offering enhanced performance and functionality at competitive prices. The development and application of new

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technologies involve time, substantial costs and risks. Our inability to achieve significant sales of our newly introduced robots, or to enhance, develop and introduce other products in a timely manner, or at all, would materially harm our sales growth and operating results.

We depend on the U.S. federal government for a significant portion of our revenue, and any reduction in the amount of business that we do with the U.S. federal government would negatively impact our operating results and financial condition.

For the years ended January 2, 2010 and December 27, 2008, we derived 36.9% and 40.3% of our total revenue, respectively, directly or indirectly, from the U.S. federal government and its agencies. Any reduction in the amount of revenue that we derive from a limited number of U.S. federal government agencies without an offsetting increase in new sales to other customers would have a material adverse effect on our operating results.

Our participation in specific major U.S. federal government programs is critical to both the development and sale of our military robots. For example, in the years ended January 2, 2010 and December 27, 2008, 40.3% and 56.7% of our total contract revenue was derived from our participation in the U.S. Army’s FCS/BCTM program, respectively. Future sales of our PackBot robots will depend largely on our ability to secure contracts with the U.S. military under its robot programs. We expect that there will continue to be only a limited number of major programs under which U.S. federal government agencies will seek to fund the development of, or purchase, robots. Our business will, therefore, suffer if we are not awarded, either directly or indirectly through third-party contractors, government contracts for robots that we are qualified to develop or build. In addition, if the U.S. federal government or government agencies terminate or reduce the related prime contract under which we serve as a subcontractor, revenues that we derive under that contract could be lost, which would negatively impact our business and financial results. Moreover, it is difficult to predict the timing of the award of government contracts and our revenue could fluctuate significantly based on the timing of any such awards.

Even if we continue to receive funding for research and development under these contracts, there can be no assurance that we will successfully complete the development of robots pursuant to these contracts or that, if successfully developed, the U.S. federal government or any other customer will purchase these robots from us. The U.S. federal government has the right when it contracts to use the technology developed by us to have robots supplied by third parties. Any failure by us to complete the development of these robots, or to achieve successful sales of these robots, would harm our business and results of operations.

Our contracts with the U.S. federal government contain certain provisions that may be unfavorable to us and subject us to government audits, which could materially harm our business and results of operations.

Our contracts and subcontracts with the U.S. federal government subject us to certain risks and give the U.S. federal government rights and remedies not typically found in commercial contracts, including rights that allow the U.S. federal government to:

•  terminate contracts for convenience, in whole or in part, at any time and for any reason;

•  reduce or modify contracts or subcontracts if its requirements or budgetary constraints change;

•  cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;

•  exercise production priorities, which allow it to require that we accept government purchase orders or produce products under its contracts before we produce products under other contracts, which may displace or delay production of more profitable orders;

•  claim certain rights in products provided by us; and

•  control or prohibit the export of certain of our products.

Several of our prime contracts with the U.S. federal government do not contain a limitation of liability provision, creating a risk of responsibility for direct and consequential damages. Several subcontracts with prime contractors hold the prime contractor harmless against liability that stems from our work and do not contain a

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limitation of liability. These provisions could cause substantial liability for us, especially given the use to which our products may be put.

In addition, we are subject to audits by the U.S. federal government as part of routine audits of government contracts. As part of an audit, these agencies may review our performance on contracts, cost structures and compliance with applicable laws, regulations and standards. If any of our costs are found to be allocated improperly to a specific contract, the costs may not be reimbursed and any costs already reimbursed for such contract may have to be refunded. Accordingly, an audit could result in a material adjustment to our revenue and results of operations. Moreover, if an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with the government.

If any of the foregoing were to occur, or if the U.S. federal government otherwise ceased doing business with us or decreased the amount of business with us, our business and operating results could be materially harmed and the value of your investment in our common stock could be impaired.

Some of our contracts with the U.S. federal government allow it to use inventions developed under the contracts and to disclose technical data to third parties, which could harm our ability to compete.

Some of our contracts allow the U.S. federal government rights to use, or have others use, patented inventions developed under those contracts on behalf of the government. Some of the contracts allow the federal government to disclose technical data without constraining the recipient in how that data is used. The ability of third parties to use patents and technical data for government purposes creates the possibility that the government could attempt to establish additional sources for the products we provide that stem from these contracts. It may also allow the government the ability to negotiate with us to reduce our prices for products we provide to it. The potential that the government may release some of the technical data without constraint creates the possibility that third parties may be able to use this data to compete with us in the commercial sector.

Government contracts are subject to a competitive bidding process that can consume significant resources without generating any revenue.

Government contracts are frequently awarded only after formal competitive bidding processes, which are protracted. In many cases, unsuccessful bidders for government agency contracts are provided the opportunity to protest certain contract awards through various agency, administrative and judicial channels. If any of the government contracts awarded to us are protested, we may be required to expend substantial time, effort and financial resources without realizing any revenue with respect to the potential contract. The protest process may substantially delay our contract performance, distract management and result in cancellation of the contract award entirely.

We depend on single source manufacturers, and our reputation and results of operations would be harmed if these manufacturers fail to meet our requirements.

We currently depend on one contract manufacturer, Jetta Company Limited, to manufacture our Roomba 400 series and Scooba series of home robot products at a single plant in China, and one contract manufacturer, Kin Yat Industrial Co Limited, to manufacture our Roomba 500 series of home robot products at a single plant in China. In addition, we rely on several other single source contract manufacturers, including Gem City Engineering and Manufacturing for the manufacturing of our PackBot products, Kaynes Technology Pvt. Ltd., for the manufacturing of our Negotiator products, and Polaris Contract Manufacturing, Inc. for the manufacturing of our Maritime family of underwater robotic products. We do not have a long-term contract with Jetta Company Limited and the manufacture of our consumer products is provided on a purchase-order basis. These manufacturers supply substantially all of the raw materials and provide all facilities and labor required to manufacture our products. If these companies were to terminate their arrangements with us or fail to provide the required capacity and quality on a timely basis, we would be unable to manufacture our products until replacement contract manufacturing services could be obtained. To qualify a new contract manufacturer, familiarize it with our products, quality standards and other requirements, and commence volume production is a costly and time-consuming

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process. We cannot assure you that we would be able to establish alternative manufacturing relationships on acceptable terms.

Our reliance on these contract manufacturers involves certain risks, including the following:

•  lack of direct control over production capacity and delivery schedules;

•  lack of direct control over quality assurance, manufacturing yields and production costs;

•  lack of enforceable contractual provisions over the production and costs of consumer products;

•  risk of loss of inventory while in transit from China or India;

•  risks associated with international commerce with China and India, including unexpected changes in legal and regulatory requirements, changes in tariffs and trade policies, risks associated with the protection of intellectual property and political and economic instability; and

•  Our attempts to add additional manufacturing resources may be significantly delayed and thereby create disruptions in production of our products.

Any interruption in the manufacture of our products would be likely to result in delays in shipment, lost sales and revenue and damage to our reputation in the market, all of which would harm our business and results of operations. In addition, while our contract obligations with our contract manufacturers in China are typically denominated in U.S. dollars, changes in currency exchange rates could impact our suppliers and increase our prices.

Any efforts to expand our product offerings beyond our current markets may not succeed, which could negatively impact our operating results.

We have focused on selling our robots in the home floor care and military markets. We plan to expand into other markets. For example, we have devoted significant time and incurred expenses in connection with the development of our consumer robots. In addition, we have devoted significant time and incurred expenses in connection with the development of the Negotiator product for the civil law enforcement market and the Seaglider product for the maritime market. Efforts to expand our product offerings beyond the two markets that we currently serve, however, may divert management resources from existing operations and require us to commit significant financial resources to an unproven business, either of which could significantly impair our operating results. Moreover, efforts to expand beyond our existing markets may never result in new products that achieve market acceptance, create additional revenue or become profitable.

If we are unable to implement appropriate controls and procedures to manage our growth, we may not be able to successfully implement our business plan.

Our headcount and operations are growing rapidly. This rapid growth has placed, and will continue to place, a significant strain on our management, administrative, operational and financial infrastructure. From December 27, 2008 to January 2, 2010,the number of our employees increased from 479 to 538. We anticipate further growth will be required to address increases in our product offerings and the geographic scope of our customer base. Our success will depend in part upon the ability of our senior management to manage this growth effectively. To do so, we must continue to hire, train, manage and integrate a significant number of qualified managers and employees. If our new employees perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or retaining these or our existing employees, our business may suffer.

In addition, we face risks associated with managing operations outside the United States, including operations in Hong Kong, China, India and the United Kingdom. To manage the expected continued growth of our headcount and operations, we will need to continue to improve our information technology infrastructure, operational, financial and management controls and reporting systems and procedures, and manage expanded operations in geographically distributed locations. Our expected additional headcount and capital investments will increase our costs, which will make it more difficult for us to offset any future revenue shortfalls by offsetting expense reductions in the short term. If we fail to successfully manage our growth, we will be unable to successfully execute our business plan, which could have a negative impact on our business, financial condition or results of operations.

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If the consumer robot market does not experience significant growth or if our products do not achieve broad acceptance, we will not be able to achieve our anticipated level of growth.

We derive a substantial portion of our revenue from sales of our consumer robots, including our home care robots. For the years ended January 2, 2010 and December 27, 2008, consumer robots accounted for 55.5% and 56.4%, respectively, of our total revenue. We face challenges in predicting the future growth rate or the size of the consumer robot market in general or the home care robot market in particular. Demand for home care robots may not increase, or may decrease, either generally or in specific geographic markets, for particular types of robots or during particular time periods. The expansion of the home robot market and the market for our products depends on a number of factors, such as:

•  the cost, performance and reliability of our products and products offered by our competitors;

•  public perceptions regarding the effectiveness and value of robots;

•  customer satisfaction with robots; and

•  marketing efforts and publicity regarding robots.

Even if consumer robots gain wide market acceptance, our robots may not adequately address market requirements and may not continue to gain market acceptance. If robots generally, or our robots specifically, do not gain wide market acceptance, we may not be able to achieve our anticipated level of growth, and our revenue and results of operations would suffer.

Our business and results of operations could be adversely affected by significant changes in the policies and spending priorities of governments and government agencies.

We derive a substantial portion of our revenue from sales to and contracts with U.S. federal, state and local governments and government agencies, and subcontracts under federal government prime contracts. For the years ended January 2, 2010 and December 27, 2008, U.S. federal government orders, contracts and subcontracts accounted for 36.9% and 40.3%, respectively, of our total revenue. We believe that the success and growth of our business will continue to depend on our successful procurement of government contracts either directly or through prime contractors. Many of our government customers are subject to stringent budgetary constraints and our continued performance under these contracts, or award of additional contracts from these agencies, could be jeopardized by spending reductions or budget cutbacks at these agencies. We cannot assure you that future levels of expenditures and authorizations will continue for governmental programs in which we provide products and services. A significant decline in government expenditures generally, or with respect to programs for which we provide products, could adversely affect our government product and funded research and development revenues and prospects, which would harm our business, financial condition and operating results. Our operating results may also be negatively impacted by other developments that affect these governments and government agencies generally, including:

•  changes in government programs that are related to our products and services;

•  adoption of new laws or regulations relating to government contracting or changes to existing laws or regulations;

•  changes in political or public support for security and defense programs;

•  delays or changes in the government appropriations process;

•  uncertainties associated with the war on terror and other geo-political matters; and

•  delays in the payment of our invoices by government payment offices.

These developments and other factors could cause governments and governmental agencies, or prime contractors that use us as a subcontractor, to reduce their purchases under existing contracts, to exercise their rights to terminate contracts at-will or to abstain from renewing contracts, any of which would cause our revenue to decline and could otherwise harm our business, financial condition and results of operations.

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We face intense competition from other providers of robots, including diversified technology providers, as well as competition from providers offering alternative products, which could negatively impact our results of operations and cause our market share to decline.

We believe that a number of companies have developed or are developing robots that will compete directly with our product offerings. Additionally, large and small companies, government-sponsored laboratories and universities are aggressively pursuing contracts for robot-focused research and development. Many current and potential competitors have substantially greater financial, marketing, research and manufacturing resources than we possess, and there can be no assurance that our current and future competitors will not be more successful than us. Moreover, while we believe many of our customers purchase our floor vacuuming robots as a supplement to, rather than a replacement for, their traditional vacuum cleaners; we also compete in some cases with providers of traditional vacuum cleaners. Our current principal competitors include:

•  developers of robot floor cleaning products such as AB Electrolux, ACE ROBOT Co., Agait Technology Corp. (wholly owned subsidiary of ASUSTek Computer Inc.), Alfred Kärcher GmbH & Co., Evolution Robotics, Inc. LG Electronics Inc., Infinuvo/Metapo, Inc, Matsutek Enterprises Co Ltd., Microrobot CO., Ltd., Neato Robotics, Inc., Samsung Electronics Co., Ltd., Shenzhen Goldluck Electronic Co., Ltd., and Yujin Robotic Co. Ltd.;

•  developers of small unmanned ground vehicles such as Foster-Miller, Inc. — a wholly owned subsidiary of QinetiQ North America, Inc., Allen-Vanguard Corporation, and Remotec — a division of Northrop Grumman Corporation; and

•  established government contractors working on unmanned systems such as Lockheed Martin Corporation, the Boeing Company, BAE Systems, Inc. and General Dynamics Corporation.

•  developers of small unmanned underwater vehicles such as BlueFin Robotics, a wholly owned subsidiary of Battelle Memorial Institute, Hydroid a wholly owned subsidiary of Kongsberg Maritime AS; Webb Research — a wholly owned subsidiary of Teledyne Technologies Company, and Ocean Server Technology Inc.

In the event that the robot market expands, we expect that competition will intensify as additional competitors enter the market and current competitors expand their product lines. Companies competing with us may introduce products that are competitively priced, have increased performance or functionality, or incorporate technological advances that we have not yet developed or implemented. Increased competitive pressure could result in a loss of sales or market share or cause us to lower prices for our products, any of which would harm our business and operating results.

The market for robots is highly competitive, rapidly evolving and subject to changing technologies, shifting customer needs and expectations and the likely increased introduction of new products. Our ability to remain competitive will depend to a great extent upon our ongoing performance in the areas of product development and customer support. We cannot assure you that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering the markets in which we provide products. Our failure to compete successfully could cause our revenue and market share to decline, which would negatively impact our results of operations and financial condition.

Our business is significantly seasonal and, because many of our expenses are based on anticipated levels of annual revenue, our business and operating results will suffer if we do not achieve revenue consistent with our expectations.

Our home robots revenue is significantly seasonal. For the fiscal years ended January 2, 2010 and December 27, 2008, we generated 59.7% and 58.6%, respectively, of our revenue from sales of consumer products in the second half of the year. We expect a majority of such revenue will continue to be generated in the second half of the year for the foreseeable future. As a result of this seasonality, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance.

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We base our current and future expense levels on our internal operating plans and sales forecasts, including forecasts of holiday sales for our consumer products. A significant portion of our operating expenses, such as research and development expenses, certain marketing and promotional expenses and employee wages and salaries, do not vary directly with sales and are difficult to adjust in the short term. As a result, if sales for a quarter, particularly the final quarter of a fiscal year, are below our expectations, we might not be able to reduce operating expenses for that quarter and, therefore, we would not be able to reduce our operating expenses for the fiscal year. Accordingly, a sales shortfall during a fiscal quarter, and in particular the fourth quarter of a fiscal year, could have a disproportionate effect on our operating results for that quarter or that year. As a result of these factors, we may report operating results that do not meet the expectations of equity research analysts and investors. This could cause the trading price of our common stock to decline.

If critical components of our products that we currently purchase from a small number of suppliers become unavailable, we may incur delays in shipment, which could damage our business.

We and our outsourced manufacturers obtain hardware components, various subsystems, raw materials and batteries from a limited group of suppliers, some of which are sole suppliers. We do not have any long-term agreements with these suppliers obligating them to continue to sell components or products to us. Our reliance on these suppliers involves significant risks and uncertainties, including whether our suppliers will provide an adequate supply of required components of sufficient quality, will increase prices for the components and will perform their obligations on a timely basis. If we or our outsourced manufacturers are unable to obtain components from third-party suppliers in the quantities and of the quality that we require, on a timely basis and at acceptable prices, we may not be able to deliver our products on a timely or cost-effective basis to our customers, which could cause customers to terminate their contracts with us, reduce our gross margin and seriously harm our business, results of operations and financial condition. Moreover, if any of our suppliers become financially unstable, we may have to find new suppliers. It may take several months to locate alternative suppliers, if required, or to re-tool our products to accommodate components from different suppliers. We may experience significant delays in manufacturing and shipping our products to customers and incur additional development, manufacturing and other costs to establish alternative sources of supply if we lose any of these sources. We cannot predict if we will be able to obtain replacement components within the time frames that we require at an affordable cost, or at all. In particular, the prices of ABS plastic and nickel (for batteries) have fluctuated greatly and we cannot provide assurance that the prices of these components will not materially impact our results of operations.

Our products are complex and could have unknown defects or errors, which may give rise to claims against us, diminish our brand or divert our resources from other purposes.

Our robots rely on the interplay among behavior-based artificially intelligent systems, real-world dynamic sensors, user-friendly interfaces and tightly-integrated, electromechanical designs to accomplish their missions. Despite testing, our new or existing products have contained defects and errors and may in the future contain defects, errors or performance problems when first introduced, when new versions or enhancements are released, or even after these products have been used by our customers for a period of time. These problems could result in expensive and time-consuming design modifications or warranty charges, delays in the introduction of new products or enhancements, significant increases in our service and maintenance costs, exposure to liability for damages, damaged customer relationships and harm to our reputation, any of which could materially harm our results of operations and ability to achieve market acceptance. Our quality control procedures relating to the raw materials and components that it receives from third-party suppliers as well as our quality control procedures relating to its products after those products are designed, manufactured and packaged may not be sufficient. In addition, increased development and warranty costs, including the costs of any mandatory or voluntary recall or product upgrades, could be substantial and could reduce our operating margins. Moreover, because military robots are used in dangerous situations, the failure or malfunction of any of these robots, including our own, could significantly damage our reputation and support for robot solutions in general. The existence of any defects, errors, or failures in our products could also lead to product liability claims or lawsuits against us. A successful product liability claim could result in substantial cost, diminish our brand and divert management’s attention and resources, which could have a negative impact on our business, financial condition and results of operations.

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The robot industry is and will likely continue to be characterized by rapid technological change, which will require us to develop new products and product enhancements, and could render our existing products obsolete.

Continuing technological changes in the robot industry and in the markets in which we sell our robots could undermine our competitive position or make our robots obsolete, either generally or for particular types of services. Our future success will depend upon our ability to develop and introduce a variety of new capabilities and enhancements to our existing product offerings, as well as introduce a variety of new product offerings, to address the changing needs of the markets in which we offer our robots. Delays in introducing new products and enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products or enhancements at competitive prices may cause existing and potential customers to forego purchases of our products and purchase our competitors’ products. Moreover, the development of new products has required, and will require, that we expend significant financial and management resources. We have incurred, and expect to continue to incur, significant research and development expenses in connection with our efforts to expand our product offerings. If we are unable to devote adequate resources to develop new products or cannot otherwise successfully develop new products or enhancements that meet customer requirements on a timely basis, our products could lose market share, our revenue and profits could decline, or we could experience operating losses. Moreover, if we are unable to offset our product development costs through sales of existing or new products or product enhancements, our operating results and gross margins would be negatively impacted.

If we are unable to attract and retain additional skilled personnel, we may be unable to grow our business.

To execute our growth plan, we must attract and retain additional, highly-qualified personnel. Competition for hiring these employees is intense, especially with regard to engineers with high levels of experience in designing, developing and integrating robots. Many of the companies with which we compete for hiring experienced employees have greater resources than we have. In addition, in making employment decisions, particularly in the high-technology industries, job candidates often consider the value of the equity they are to receive in connection with their employment. Therefore, significant volatility in the price of our stock may adversely affect our ability to attract or retain technical personnel. Furthermore, changes to accounting principles generally accepted in the United States relating to the expensing of stock options may discourage us from granting the sizes or types of stock options that job candidates may require to accept our offer of employment. If we fail to attract new technical personnel or fail to retain and motivate our current employees, our business and future growth prospects could be severely harmed.

We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time-consuming and limit our ability to use certain technologies in the future.

If the size of our markets increases, we would be more likely to be subject to claims that our technologies infringe upon the intellectual property or other proprietary rights of third parties. In addition, the vendors from which we license technology used in our products could become subject to similar infringement claims. Our vendors, or we, may not be able to withstand third-party infringement claims. Any claims, with or without merit, could be time- consuming and expensive, and could divert our management’s attention away from the execution of our business plan. Moreover, any settlement or adverse judgment resulting from the claim could require us to pay substantial amounts or obtain a license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit our use of the technology. There can be no assurance that we would be able to obtain a license from the third party asserting the claim on commercially reasonable terms, if at all, that we would be able to develop alternative technology on a timely basis, if at all, or that we would be able to obtain a license to use a suitable alternative technology to permit us to continue offering, and our customers to continue using, our affected product. In addition, we may be required to indemnify our retail and distribution partners for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling in such a claim. An adverse determination could also prevent us from offering our products to others. Infringement claims asserted against us or our vendors may have a material adverse effect on our business, results of operations or financial condition.

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If we fail to maintain or increase our consumer robot sales through our primary distribution channels, which include third-party retailers, our product sales and results of operations would be negatively impacted.

Chain stores and other national retailers are the primary distribution channels for our consumer robots. We do not have long-term contracts regarding purchase volumes with any of our retail partners. As a result, purchases generally occur on an order-by-order basis, and the relationships, as well as particular orders, can generally be terminated or otherwise materially changed at any time by our retail partners. A decision by a major retail partner, whether motivated by competitive considerations, financial difficulties, economic conditions or otherwise, to decrease its purchases from us, to reduce the shelf space for our products or to change its manner of doing business with us could significantly damage our consumer product sales and negatively impact our business, financial condition and results of operations. In addition, during recent years, various retailers, including some of our partners, have experienced significant changes and difficulties, including consolidation of ownership, increased centralization of purchasing decisions, restructurings, bankruptcies and liquidations. These and other financial problems of some of our retailers increase the risk of extending credit to these retailers. A significant adverse change in a retail partner relationship with us or in a retail partner’s financial position could cause us to limit or discontinue business with that partner, require us to assume more credit risk relating to that partner’s receivables or limit our ability to collect amounts related to previous purchases by that partner, all of which could harm our business and financial condition. Disruption of the iRobot on-line store could also decrease our home care robot sales.

If we fail to enhance our brand, our ability to expand our customer base will be impaired and our operating results may suffer.

We believe that developing and maintaining awareness of the iRobot brand is critical to achieving widespread acceptance of our existing and future products and is an important element in attracting new customers. Furthermore, we expect the importance of global brand recognition to increase as competition develops. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts, including our mass media outreach, in-store training and presentations and public relations, and our ability to provide customers with reliable and technically sophisticated robots at competitive prices. If customers do not perceive our products to be of high quality, our brand and reputation could be harmed, which could adversely impact our financial results. In addition, brand promotion efforts may not yield significant revenue or increased revenue sufficient to offset the additional expenses incurred in building our brand. If we incur substantial expenses to promote and maintain our brand, we may fail to attract sufficient customers to realize a return on our brand-building efforts, and our business would suffer.

If our existing collaborations are unsuccessful or we fail to establish new collaborations, our ability to develop and commercialize additional products could be significantly harmed.

If we cannot maintain our existing collaborations or establish new collaborations, we may not be able to develop additional products. We anticipate that some of our future products will be developed and commercialized in collaboration with companies that have expertise outside the robot field. For example, we are currently collaborating with: The Boeing Company, acting by and through its Integrated Defense Systems Combat Systems business unit, on the development of the PackBot SUGV-Early; Lockheed-Martin on the FCS Command Controller device; ICx Nomadics for joint development of explosive and chemical detection unmanned systems, under the Joint Force protection Advanced Security System. Under these collaborations, we may be dependent on our collaborators to fund some portion of development of the product or to manufacture and market either the primary product that is developed pursuant to the collaboration or complementary products required in order to operate our products. In addition, we cannot assure you that we will be able to establish additional collaborative relationships on acceptable terms.

Our existing collaborations and any future collaborations with third parties may not be scientifically or commercially successful. Factors that may affect the success of our collaborations include the following:

•  our collaborators may not devote the resources necessary or may otherwise be unable to complete development and commercialization of these potential products;

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•  our existing collaborations are and future collaborations may be subject to termination on short notice;

•  our collaborators may be pursuing alternative technologies or developing alternative products, either on their own or in collaboration with others, that may be competitive with our products, which could affect our collaborators’ commitment to the collaboration with us;

•  reductions in marketing or sales efforts or a discontinuation of marketing or sales of our products by our collaborators could reduce our revenue;

•  our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or harm our reputation in the business and financial communities; and

•  our collaborators may pursue higher priority programs or change the focus of their development programs, which would weaken our collaborators’ commitment to us.

We depend on the experience and expertise of our senior management team and key technical employees, and the loss of any key employee may impair our ability to operate effectively.

Our success depends upon the continued services of our senior management team and key technical employees, such as our project management personnel and senior engineers. Moreover, we often must comply with provisions in government contracts that require employment of persons with specified levels of education and work experience. Each of our executive officers, key technical personnel and other employees could terminate his or her relationship with us at any time. The loss of any member of our senior management team might significantly delay or prevent the achievement of our business objectives and could materially harm our business and customer relationships. In addition, because of the highly technical nature of our robots, the loss of any significant number of our existing engineering and project management personnel could have a material adverse effect on our business and operating results.

We are subject to extensive U.S. federal government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.

As a contractor and subcontractor to the U.S. federal government, we are subject to and must comply with various government regulations that impact our operating costs, profit margins and the internal organization and operation of our business. Among the most significant regulations affecting our business are:

•  the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the formation and administration of, and performance under government contracts;

•  the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection with contract negotiations;

•  the Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement under cost-based government contracts;

•  the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a foreign official to help obtain, retain or direct business, or obtain any unfair advantage;

•  the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made on the basis of false facts provided to the government, and impose penalties on the basis of false statements, even if they do not result in a payment;

•  laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data;

•  Certain contracts from the U.S. federal government may require us to maintain certain certifications including but not limited to AS9100 and CMMI;

•  Contractor Purchasing Systems review (CPSR) requirements, which evaluate the efficiency and effectiveness with which we spend U.S. Government funds; and

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•  The sale of our products in countries outside the United States is regulated by the governments of those countries. While compliance with such regulation will generally be undertaken by international distributors, we may assist with such compliance and in certain cases may be liable if a distributor fails to comply.

Also, we need special clearances to continue working on and advancing certain of our projects with the U.S. federal government. Obtaining and maintaining security clearances for employees involves a lengthy process, and it is difficult to identify, recruit and retain employees who already hold security clearances. If our employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain the clearances or terminate employment with us, then a customer requiring classified work could terminate the contract or decide not to renew it upon its expiration. In addition, we expect that many of the contracts on which we will bid will require us to demonstrate our ability to obtain facility security clearances and employ personnel with specified types of security clearances. To the extent we are not able to obtain facility security clearances or engage employees with the required security clearances for a particular contract, we may not be able to bid on or win new contracts, or effectively rebid on expiring contracts. For example, if we were to lose our security clearance, we would be unable to continue to participate in the U.S. Army’s Brigade Combat Team Modernization program. Classified programs generally will require that we comply with various Executive Orders, federal laws and regulations and customer security requirements that may include restrictions on how we develop, store, protect and share information, and may require our employees to obtain government clearances.

Our failure to comply with applicable regulations, rules and approvals could result in the imposition of penalties, the loss of our government contracts or our suspension or debarment from contracting with the federal government generally, any of which would harm our business, financial condition and results of operations.

If we fail to protect, or incur significant costs in defending, our intellectual property and other proprietary rights, our business and results of operations could be materially harmed.

Our success depends on our ability to protect our intellectual property and other proprietary rights. We rely primarily on patents, trademarks, copyrights, trade secrets and unfair competition laws, as well as license agreements and other contractual provisions, to protect our intellectual property and other proprietary rights. Significant technology used in our products, however, is not the subject of any patent protection, and we may be unable to obtain patent protection on such technology in the future. Moreover, existing U.S. legal standards relating to the validity, enforceability and scope of protection of intellectual property rights offer only limited protection, may not provide us with any competitive advantages, and may be challenged by third parties. In addition, the laws of countries other than the United States in which we market our products may afford little or no effective protection of our intellectual property. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property or otherwise gaining access to our technology. Unauthorized third parties may try to copy or reverse engineer our products or portions of our products or otherwise obtain and use our intellectual property. Some of our contracts with the U.S. federal government allow the federal government to disclose technical data regarding the products developed on behalf of the government under the contract without constraining the recipient on how it is used. This ability of the government creates the potential that third parties may be able to use this data to compete with us in the commercial sector. If we fail to protect our intellectual property and other proprietary rights, our business, results of operations or financial condition could be materially harmed.

In addition, defending our intellectual property rights may entail significant expense. We believe that certain products in the marketplace may infringe our existing intellectual property rights. We have, from time to time, resorted to legal proceedings to protect our intellectual property and may continue to do so in the future. We may be required to expend significant resources to monitor and protect our intellectual property rights. Any of our intellectual property rights may be challenged by others or invalidated through administrative processes or litigation. If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity and scope of the intellectual property or other proprietary rights of others, the proceedings could result in significant expense to us and divert the attention and efforts of our management and technical employees, even if we were to prevail.

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Acquisitions and potential future acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute stockholder value and impair our financial results.

As part of our business strategy, we intend to consider additional acquisitions of companies, technologies and products that we believe could accelerate our ability to compete in our core markets or allow us to enter new markets. Acquisitions involve numerous risks, any of which could harm our business, including:

•  difficulties in integrating the operations, technologies, products, existing contracts, accounting and personnel of the target company and realizing the anticipated synergies of the combined businesses;

•  difficulties in supporting and transitioning customers, if any, of the target company;

•  diversion of financial and management resources from existing operations;

•  the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if we had allocated the purchase price or other resources to another opportunity;

•  risks of entering new markets in which we have limited or no experience;

•  potential loss of key employees, customers and strategic alliances from either our current business or the target company’s business;

•  assumption of unanticipated problems or latent liabilities, such as problems with the quality of the target company’s products; and

•  inability to generate sufficient revenue to offset acquisition costs.

Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could harm our financial results. In addition, if we finance acquisitions by issuing convertible debt or equity securities, our existing stockholders may be diluted, which could lower the market price of our common stock. As a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate. The failure to successfully evaluate and execute acquisitions or investments or otherwise adequately address these risks could materially harm our business and financial results.

We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders.

We anticipate that our current cash, cash equivalents, cash provided by operating activities and funds available through our working capital line of credit, will be sufficient to meet our current and anticipated needs for general corporate purposes. We operate in an emerging market, however, which makes our prospects difficult to evaluate. It is possible that we may not generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital needs. For example in fiscal 2007 we consumed $27 million of our cash and short term investments. If similar consumptions of cash were to continue, we may need additional financing to execute on our current or future business strategies, including to:

•  hire additional engineers and other personnel;

•  develop new, or enhance existing, robots and robot accessories;

•  enhance our operating infrastructure;

•  acquire complementary businesses or technologies; or

•  otherwise respond to competitive pressures.

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, if and when needed, our ability to fund our operations, take advantage of unanticipated

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opportunities, develop or enhance our products, or otherwise respond to competitive pressures would be significantly limited. In addition, our access to credit through our working capital line of credit may be limited by the restrictive financial covenants contained in that agreement, which require us to maintain profitability.

Environmental laws and regulations and unforeseen costs could negatively impact our future earnings.

The manufacture and sale of our products in certain states and countries may subject us to environmental and other regulations. We also face increasing complexity in our product design as we adjust to new and upcoming requirements relating to our products, including the restrictions on lead and certain other substances in electronics that apply to specified electronics products put on the market in the European Union (Restriction of Hazardous Substances in Electrical and Electronic Equipment Directive). Similar laws and regulations have been or may be enacted in other regions, including in the United States, Canada, Mexico, China, the United Kingdom, Germany and Japan. There is no assurance that such existing laws or future laws will not impair future earnings or results of operations.

Business disruptions resulting from international uncertainties could negatively impact our profitability.

We derive, and expect to continue to derive, a portion of our revenue from international sales in various European markets, Canada, Japan, Korea and Singapore. For the fiscal years ended January 2, 2010 and December 27, 2008, sales to non-U.S. customers accounted for 33.3% and 23.4% of total revenue, respectively. Our international revenue and operations are subject to a number of material risks, including, but not limited to:

•  difficulties in staffing, managing and supporting operations in multiple countries;

•  difficulties in enforcing agreements and collecting receivables through foreign legal systems and other relevant legal issues;

•  fewer legal protections for intellectual property;

•  foreign and U.S. taxation issues, tariffs, and international trade barriers;

•  difficulties in obtaining any necessary governmental authorizations for the export of our products to certain foreign jurisdictions;

•  potential fluctuations in foreign economies;

•  government currency control and restrictions on repatriation of earnings;

•  fluctuations in the value of foreign currencies and interest rates;

•  general economic and political conditions in the markets in which we operate;

•  domestic and international economic or political changes, hostilities and other disruptions in regions where we currently operate or may operate in the future;

•  changes in foreign currency exchange rates;

•  different and changing legal and regulatory requirements in the jurisdictions in which we currently operate or may operate in the future; and

•  Outside of the United States, we primarily rely on a network of exclusive distributors, some of whom may be operating without written contracts.

Negative developments in any of these areas in one or more countries could result in a reduction in demand for our products, the cancellation or delay of orders already placed, threats to our intellectual property, difficulty in collecting receivables, and a higher cost of doing business, any of which could negatively impact our business, financial condition or results of operations. Moreover, our sales, including sales to customers outside the United States, are primarily denominated in U.S. dollars, and downward fluctuations in the value of foreign currencies relative to the U.S. dollar may make our products more expensive than other products, which could harm our business.

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If we experience a disaster or other business continuity problem, we may not be able to recover successfully, which could cause material financial loss, loss of human capital, regulatory actions, reputational harm, or legal liability.

If we experience a local or regional disaster or other business continuity problem, such as an earthquake, terrorist attack, pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations. As we grow our operations in new geographic regions, the potential for particular types of natural or man-made disasters, political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks increases.

If we suffer any data breaches involving the designs, schematics or source code for our products, our business and financial results could be adversely affected.

We securely store our designs, schematics and source code for our products as they are created. A breach, whether physical, electronic or otherwise, of the systems on which this sensitive data is stored could lead to damage or piracy of our products. If we are subject to data security breaches, we may have a loss in sales or increased costs arising from the restoration or implementation of additional security measures, either of which could materially and adversely affect our business and financial results.

If we are unable to continue to obtain U.S. federal government authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business, we could be prohibited from shipping our products to certain countries, which would harm our ability to generate revenue.

We must comply with U.S. laws regulating the export of our products. In addition, we are required to obtain a license from the U.S. federal government to export our PackBot, Warrior and SUGV lines of tactical military robots. We cannot be sure of our ability to obtain any licenses required to export our products or to receive authorization from the U.S. federal government for international sales or domestic sales to foreign persons. Moreover, the export regimes and the governing policies applicable to our business are subject to change. We cannot assure you of the extent that such export authorizations will be available to us, if at all, in the future. In some cases where we act as a subcontractor, we rely upon the compliance activities of our prime contractors, and we cannot assure you that they have taken or will take all measures necessary to comply with applicable export laws. If we or our prime contractor partners cannot obtain required government approvals under applicable regulations in a timely manner or at all, we would be delayed or prevented from selling our products in international jurisdictions, which could materially harm our business, operating results and ability to generate revenue.

State and local taxing authorities may determine that we are required to collect and remit sales tax in additional jurisdictions.

We collect and remit sales tax in states in which we have a physical presence or in which we believe nexus exists, which obligates us to collect sales tax. Other states may, from time to time, claim that we have state-related activities constituting a sufficient nexus to require such collection. Additionally, many other states seek to impose sales tax collection obligations on companies that sell goods to customers in their state, or directly to the state and its political subdivisions, even without a physical presence. A successful assertion by one or more states that we should collect sales tax on the sale of merchandise could result in substantial tax liabilities related to past sales.

Currently, U.S. Supreme Court decisions restrict the imposition of obligations to collect state and local sales and use taxes with respect to sales made over the Internet. However, a number of states, as well as the U.S. Congress, have been considering initiatives that could limit or supersede the Supreme Court’s position regarding sales and use taxes on Internet sales. If any of these initiatives were successful, we could be required to collect sales and use taxes in additional states, which could result in substantial tax liabilities and penalties in connection with past sales.

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Our income tax provision and other tax liabilities may be insufficient if taxing authorities are successful in asserting tax positions that are contrary to our position. Additionally, there is no guarantee that we will realize our deferred tax assets.

From time to time, we are audited by various federal, state and local authorities regarding income tax matters. Significant judgment is required to determine our provision for income taxes and our liabilities for federal, state, local and other taxes. Although we believe our approach to determining the appropriate tax treatment is supportable and in accordance with relevant authoritative guidance it is possible that the final tax authority will take a tax position that is materially different than that which is reflected in our income tax provision. Such differences could have a material adverse effect on our income tax provision or benefit, in the reporting period in which such determination is made and, consequently, on our results of operations, financial position and/or cash flows for such period.

At January 2, 2010, we had gross deferred tax assets of $18.6 million and a valuation allowance of $3.8 million resulting in net deferred tax asset of $14.8 million. Future adjustments, either increases or decreases, to our deferred tax asset valuation allowance will be determined based upon changes in the expected realization of our net deferred tax assets. The realization of our deferred tax assets ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under the tax law. Due to significant estimates utilized in establishing the valuation allowance and the potential for changes in facts and circumstances, it is possible that we will be required to record adjustments to the valuation allowance in future reporting periods. Our results of operations would be impacted negatively if we determine that increases to our deferred tax asset valuation allowance are required in a future reporting period.

Our directors and management will exercise significant control over our company, which will limit your ability to influence corporate matters.

As of January 2, 2010, our directors and executive officers and their affiliates collectively beneficially owned approximately 20.6% of our outstanding common stock. As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might negatively affect the market price of our common stock.

Provisions in our certificate of incorporation and by-laws, our shareholder rights agreement or Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Provisions of our certificate of incorporation and by-laws and Delaware law may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions include:

•  limitations on the removal of directors;

•  a classified board of directors so that not all members of our board are elected at one time;

•  advance notice requirements for stockholder proposals and nominations;

•  the inability of stockholders to act by written consent or to call special meetings;

•  the ability of our board of directors to make, alter or repeal our by-laws; and

•  the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval.

The affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote is necessary to amend or repeal the above provisions of our certificate of incorporation. In addition, absent approval of our board of

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directors, our by-laws may only be amended or repealed by the affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote.

We have also adopted a shareholder rights agreement that entitles our stockholders to acquire shares of our common stock at a price equal to 50% of the then-current market value in limited circumstances when a third party acquires or announces its intention to acquire 15% or more of our outstanding common stock.

In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

Our corporate headquarters are located in Bedford, Massachusetts, where we lease approximately 157,000 square feet. This lease expires on May 1, 2020. We lease 15,700 square feet in Durham, North Carolina supporting our government and industrial division’s unmanned underwater vehicles. We lease 6,150 square feet of space at a facility in Burlington, Massachusetts, for our prototype work on unmanned ground vehicles. We also lease 7,550 square feet in Mysore, India and we lease smaller facilities in Hong Kong; Shenzhen, China; London, England; San Luis Obispo, California; and Crystal City, Virginia. We do not own any real property. We believe that our leased facilities and additional or alternative space available to us will be adequate to meet our needs for the foreseeable future.

ITEM 3.   LEGAL PROCEEDINGS

From time to time and in the ordinary course of business, we are subject to various claims, charges and litigation. The outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, which could materially affect our financial condition or results of operations.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the NASDAQ Global Market under the symbol “IRBT”. The following table sets forth, for the periods indicated, the high and low sales prices per share for our common stock as reported on the NASDAQ Global Market.

	High		Low
Fiscal 2008:
First quarter	$	22.42	$	16.76
Second quarter	$	18.63	$	12.48
Third quarter	$	17.62	$	11.29
Fourth quarter	$	15.82	$	7.17
Fiscal 2009:
First quarter	$	10.20	$	7.00
Second quarter	$	13.50	$	7.40
Third quarter	$	13.59	$	10.21
Fourth quarter	$	17.85	$	11.23

As of February 16, 2010, there were approximately 25,095,696 shares of our common stock outstanding held by approximately 137 stockholders of record and the last reported sale price of our common stock on the NASDAQ Global Market on February 16, 2010 was $16.88 per share.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock. We currently expect to retain future earnings, if any, to finance the growth and development of our business and we do not anticipate paying any cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities

During the fiscal quarter ended January 2, 2010, there were no repurchases made by us or on our behalf, or by any “affiliated purchasers,” of shares of our common stock.

ITEM 6.   SELECTED FINANCIAL DATA

The selected historical financial data set forth below as of January 2, 2010 and December 27, 2008 and for the years ended January 2, 2010, December 27, 2008 and December 29, 2007 are derived from our financial statements, which have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, and which are included elsewhere in this Annual Report on Form 10-K. The selected historical financial data as of December 29, 2007, December 30, 2006 and December 31, 2005 and for the years ended December 30, 2006 and December 31, 2005 are derived from our financial statements, which have been audited by PricewaterhouseCoopers LLP and which are not included elsewhere in this Annual Report.

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The following selected consolidated financial data should be read in conjunction with our consolidated financial statements, the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results to be expected for any future period.

	Year Ended
	January 2,		December 27,		December 29,			December 30,		December 31,
	2010		2008		2007			2006		2005
	(In thousands, except earnings per share amounts)
Consolidated Statements of Operations:
Revenue
Product revenue	$	262,199	$	281,187	$	227,457		$	167,687	$	124,616
Contract revenue		36,418		26,434		21,624			21,268		17,352
Total revenue		298,617		307,621		249,081			188,955		141,968
Cost of revenue
Cost of product revenue		176,631		190,250		147,689			103,651		81,855
Cost of contract revenue		30,790		23,900		18,805			15,569		12,534
Total cost of revenue		207,421		214,150		166,494			119,220		94,389
Gross Margin		91,196		93,471		82,587			69,735		47,579
Operating Expenses
Research and development		14,747		17,566		17,082			17,025		11,601
Selling and marketing		40,902		46,866		44,894			33,969		21,796
General and administrative		30,110		28,840		20,919			18,703		12,072
Litigation and related expenses(1)		—		—		2,341			—		—
Total operating expenses		85,759		93,272		85,236			69,697		45,469
Operating (Loss) Income		5,437		199		(2,649	)		38		2,110
Net Income	$	3,330	$	756	$	9,060		$	3,565	$	2,610
Net Income Attributable to Common Stockholders	$	3,330	$	756	$	9,060		$	3,565	$	1,553
Net Income Per Common Share Basic	$	0.13	$	0.03	$	0.37		$	0.15	$	0.13
Diluted	$	0.13	$	0.03	$	0.36		$	0.14	$	0.11
Shares Used in Per Common Share Calculations
Basic		24,998		24,654		24,229			23,516		12,007
Diluted		25,640		25,533		25,501			25,601		14,331

(1) Consists of costs for litigation relating to lawsuits filed against Robotic FX, Inc. and Jameel Ahed, as well as settlement costs related to the litigation.

	January 2,		December 27,		December 29,		December 30,		December 31,
	2010		2008		2007		2006		2005
	(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	71,856	$	40,852	$	26,735	$	5,583	$	76,064
Short term investments		4,959		—		16,550		64,800		—
Total assets		199,584		163,678		169,092		135,308		124,935
Total liabilities		66,390		44,002		58,865		40,389		37,379
Total stockholders’ equity		133,194		119,676		110,227		94,919		87,556

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section has been derived from our consolidated financial statements and should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the “safe harbor” created by those sections. In particular, statements contained in this Annual Report on Form 10-K that are not historical facts, including, but not limited to statements concerning new product sales, product development and offerings, Roomba, Scooba, Looj and Verro products, PackBot tactical military robots, the Small Unmanned Ground Vehicle, Unmanned Underwater Vehicle, our home robot and government and industrial robot divisions, competition and strategy and our market position, market acceptance of our products, seasonal factors, revenue recognition, profits, growth of revenues, composition of revenues, cost of revenues, operating expenses, sales, marketing and support expenses, general and administrative expenses, research and development expenses, compensation costs, our ability to attract and retain qualified personnel, credit facility and equipment facility, valuations of investments, valuation and composition of stock-based awards, and liquidity, constitute forward-looking statements and are made under these safe harbor provisions. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seek,” “intends,” “plans,” “estimates,” “anticipates,” or other comparable terms. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We urge you to consider the risks and uncertainties discussed in greater detail under the heading “Risk Factors” in evaluating our forward-looking statements. We have no plans to update our forward-looking statements to reflect events or circumstances after the date of this report. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made.

Overview

iRobot designs and builds robots that make a difference. For over 20 years, we have developed proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence to build industry-leading robots. Our Roomba floor vacuuming robot and Scooba floor washing robot perform time-consuming domestic chores in the home, while our Looj gutter cleaning robot and Verro pool cleaning robot perform tasks outside the home. Our PackBot and Small Unmanned Ground Vehicle (SUGV) tactical ground military robots perform battlefield reconnaissance and bomb disposal. Our Negotiator ground robot performs multi-purpose tasks for local police and first responders. Our 1Ka Seaglider unmanned underwater robot performs long endurance oceanic missions. We sell our robots to consumers through a variety of distribution channels, including chain stores and other national retailers, and through our on-line store, and to the U.S. military and other government agencies worldwide. We maintain certifications for AS9100 and Capability Maturity Model Integration, or CMMI. These certifications enable us to service our military products and services.

As of January 2, 2010, we had 538 full-time employees. We have developed expertise in the disciplines necessary to build durable, high-performance and cost-effective robots through the close integration of software, electronics and hardware. Our core technologies serve as reusable building blocks that we adapt and expand to develop next generation and new products, reducing the time, cost and risk of product development. Our significant expertise in robot design and engineering, combined with our management team’s experience in military and consumer markets, positions us to capitalize on the expected growth in the market for robots.

Over the past seven years, we have sold approximately 5 million of our home care robots. We have also sold more than 2,900 of our PackBot tactical military robots, most of which have been sold to the U.S. military and deployed on missions in Afghanistan and Iraq.

Although we have successfully launched consumer and government and industrial products, our continued success depends upon our ability to respond to a number of future challenges. We believe the most significant of these challenges include increasing competition in the markets for both our consumer and government and

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industrial products, our ability to obtain U.S. federal government funding for research and development programs, and our ability to successfully develop and introduce products and product enhancements.

Initial Public Offering

On November 15, 2005, we completed our initial public offering of 4,945,000 shares of common stock at $24.00 per share, comprised of 3,260,870 primary shares and 1,684,130 shares offered by selling stockholders, which includes the exercise of the over-allotment option by the underwriters of the offering. In connection with the offering, all of the outstanding shares of our preferred stock were converted into an equal number of shares of common stock. The sale of the 3,260,870 shares of common stock in connection with our initial public offering resulted in net proceeds to us of approximately $70.4 million after deducting underwriters’ discounts and offering-related expenses. A summary of the terms of the offering can be found in our Registration Statement No. 333-126907 on Form S-1, as amended, as filed with the Securities and Exchange Commission.

Revenue

We currently derive revenue from product sales and research and development programs. Product revenue is derived from the sale of our various home cleaning robots and government and industrial robots and related accessories. Research and development revenue is derived from the execution of contracts awarded by the U.S. federal government, other governments and a small number of other partners. In the future, we expect to derive increasing revenue from product maintenance and support services due to a focused effort to market these services to the expanding installed base of our robots.

We currently derive a majority of our product revenue from the sale of our home cleaning robots and our PackBot tactical military robots. For the fiscal years ended January 2, 2010 and December 27, 2008, product revenues accounted for 87.8% and 91.4% of total revenue, respectively. For the fiscal years ended January 2, 2010 and December 27, 2008, our funded research and development contracts accounted for approximately 12.2% and 8.6% of our total revenue, respectively. We expect to continue to perform funded research and development work with the intent of leveraging the technology developed to advance our new product development efforts. In the future, however, we expect that revenue from funded research and development contracts could grow modestly on an absolute dollar basis and represent a decreasing percentage of our total revenue due to the anticipated growth in consumer and military product revenue.

For the fiscal years ended January 2, 2010 and December 27, 2008 approximately 56.9% and 56.0%, respectively, of our home robot product revenue resulted from sales to 15 customers. For fiscal 2007 the customers were comprised primarily of U.S. retailers, and for fiscal 2008, the customers were comprised of both U.S. retailers and international distributors. Direct-to-consumer revenue generated through our on-line store accounted for 15.4% of our home robot product revenue for the fiscal year ended January 2, 2010 compared to 17.7% in the fiscal year ended December 27, 2008. In addition,78.6% and 93.3% of military product revenue, and 94.5% and 89.8% of funded research and development contract revenue, resulted from orders and contracts with the U.S. federal government in the fiscal years ended January 2, 2010 and December 27, 2008, respectively.

For the fiscal years ended January 2, 2010 and December 27, 2008, sales to non-U.S. customers accounted for 33.3% and 23.4% of total revenue, respectively.

Our revenue from product sales is generated through sales to our retail distribution channels, our distributor network and to certain U.S. and foreign governments. We recognize revenue from the sales of home robots under the terms of agreements with customers upon transfer of title and risk of loss to the customer, net of estimated returns, provided that collection is determined to be probable and no significant obligations remain.

Revenue from consumer product sales is significantly seasonal, with a majority of our consumer product revenue generated in the second half of the year (in advance of the holiday season). The timing of holiday season shipments could materially affect our third or fourth quarter consumer product revenue in any fiscal year. Revenue from our military robot sales and revenue from funded research and development contracts are occasionally influenced by the September 30 fiscal year-end of the U.S. federal government, but are not otherwise significantly

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seasonal. In addition, our revenue can be affected by the timing of the release of new products and the award of new contracts.

Cost of Revenue

Cost of product revenue includes the cost of raw materials and labor that go into the development and manufacture of our products as well as manufacturing overhead costs such as manufacturing engineering, quality assurance, logistics and warranty costs. For the fiscal years ended January 2, 2010 and December 27, 2008, cost of product revenue was 67.4% and 67.7% of total product revenue, respectively. Raw material costs, which are our most significant cost items, can fluctuate materially on a periodic basis, although many components have been historically stable. Additionally, unit costs can vary significantly depending on the mix of products sold. There can be no assurance that our costs of raw materials will not increase. Labor costs also comprise a significant portion of our cost of revenue. Compared to our PackBot tactical military robots, labor costs for our home robots comprise a greater percentage of the associated cost of revenue. We outsource the manufacture of our home robots to contract manufacturers in China. While labor costs in China traditionally have been favorable compared to labor costs elsewhere in the world, including the United States, we believe that labor in China is becoming more scarce. Consequently, the labor costs for our home robots could increase in the future.

Cost of contract revenue includes the direct labor costs of engineering resources committed to funded research and development contracts, as well as third-party consulting, travel and associated direct material costs. Additionally, we include overhead expenses such as indirect engineering labor, occupancy costs associated with the project resources, engineering tools and supplies and program management expenses. For the fiscal years ended January 2, 2010 and December 27, 2008, cost of contract revenue was 84.5% and 90.4% of total contract revenue, respectively.

Gross Margin

Our gross margin as a percentage of revenue varies according to the mix of product and contract revenue, the mix of products sold, total sales volume, the level of defective product returns, and levels of other product costs such as warranty, scrap, re-work and manufacturing overhead. For the years ended January 2, 2010 and December 27, 2008, gross margin was 30.5% and 30.4% of total revenue, respectively.

Research and Development Expenses

Research and development expenses consist primarily of:

•  salaries and related costs for our engineers;

•  costs for high technology components used in product and prototype development; and

•  costs of test equipment used during product development.

We have significantly expanded our research and development capabilities and expect to continue to expand these capabilities in the future. We are committed to consistently maintaining the level of innovative design and development of new products as we strive to enhance our ability to serve our existing consumer and military markets as well as new markets for robots. In October 2009, we announced the establishment of a newly-created healthcare business unit, committed to exploring the potential of robotics as an assistive technology to promote wellness and enhance quality of life for seniors. We anticipate that research and development expenses will increase in absolute dollars for the foreseeable future.

For the fiscal years ended January 2, 2010 and December 27, 2008, research and development expense was $14.7 million and $17.6 million, or 4.9% and 5.7% of total revenue, respectively.

In addition to our internal research and development activities discussed above, we incur research and development expenses under funded development arrangements with both governments and other third parties. For the fiscal years ended January 2, 2010 and December 27, 2008, these expenses amounted to $30.8 million and $23.9 million, respectively. In accordance with generally accepted accounting principles, these expenses have been classified as cost of revenue rather than research and development expense. For the years ended January 2, 2010,

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December 27, 2008 and December 29, 2007, the combined investment in future technologies, classified as cost of revenue and research and development expense, was $45.5 million, $41.5 million and $35.9 million, respectively.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses consist primarily of:

•  salaries and related costs for sales and marketing personnel;

•  salaries and related costs for executives and administrative personnel;

•  advertising, marketing and other brand-building costs;

•  fulfillment costs associated with direct-to-consumer sales through our on-line store;

•  customer service costs;

•  professional services costs;

•  information systems and infrastructure costs;

•  travel and related costs; and

•  occupancy and other overhead costs.

We anticipate that selling, general and administrative expenses will increase in absolute dollars but remain relatively flat as a percentage of revenue in the foreseeable future as we continue to build the iRobot brand and also maintain company profitability.

For the fiscal years ended January 2, 2010 and December 27, 2008, selling, general and administrative expense was $71.0 million and $75.7 million, or 23.8% and 24.6% of total revenue, respectively.

Litigation and Related Expenses

In fiscal 2007, we incurred $2.3 million of litigation and settlement-related costs associated with two related lawsuits filed by us in August 2007. The first of these lawsuits was filed in Massachusetts Superior Court, and subsequently transferred to the United States District Court for the District of Massachusetts, against Robotic FX, Inc. and Jameel Ahed alleging, among other things, misappropriation of trade secrets and breach of contract. The second lawsuit was filed in the United States District Court for the Northern District of Alabama against Robotic FX, Inc. alleging willful infringement of two patents owned by us. See Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a more detailed discussion of this litigation and related settlement.

Fiscal Periods

We operate and report using a 52-53 week fiscal year ending on the Saturday closest to December 31. Accordingly, our fiscal quarters will end on the Saturday that falls closest to the last day of the third month of each quarter.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.

We believe that of our significant accounting policies, which are described in the notes to our consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, we believe that the following accounting policies are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.

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Revenue Recognition

We recognize revenue from sales of consumer products under the terms of the customer agreement upon transfer of title and risk of loss to the customer, provided the price is fixed or determinable, collection is determined to be probable and no significant obligations remain. Sales to resellers are subject to agreements allowing for limited rights of return for defective products only, rebates and price protection. We have typically not taken product returns except for defective products. Accordingly, we reduce revenue for our estimates of liabilities for these rights at the time the related sale is recorded. We establish a provision for sales returns for products sold by resellers directly based on historical return experience and other relevant data. Our international distributor agreements do not currently allow for product returns and, as a result, no reserve for returns is established for this group of customers. We have aggregated and analyzed historical returns from resellers and end users which form the basis of our estimate of future sales returns by resellers or end users. When a right of return exists, the provision for these estimated returns is recorded as a reduction of revenue at the time that the related revenue is recorded. If actual returns from retailers differ significantly from our estimates, such differences could have a material impact on our results of operations for the period in which the actual returns become known. Our returns reserve is calculated as a percentage of gross consumer product revenue. A one percentage point increase or decrease in our actual experience of returns would have a material impact on our quarterly and annual results of operations. The estimates for returns are adjusted periodically based upon historical rates of returns. The estimates and reserve for rebates and price protection are based on specific programs, expected usage and historical experience. Actual results could differ from these estimates. If future trends or our ability to estimate were to change significantly from those experienced in the past, incremental reductions or increases to revenue may result based on this new experience.

Under cost-plus research and development contracts, we recognize revenue based on costs incurred plus a pro-rata portion of the total fixed fee. We recognize revenue on firm fixed price (FFP) contracts using the percentage-of- completion method. For government product FFP contracts revenue is recognized as the product is shipped or in accordance with the contract terms. Costs and estimated gross margins on contracts are recorded as work is performed based on the percentage that incurred costs bear to estimated total costs utilizing the most recent estimates of costs and funding. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements and government audit, may result in revisions to costs and income, and are recorded or recognized, as the case may be, in the period in which the revisions are determined. Since many contracts extend over a long period of time, revisions in cost and funding estimates during the progress of work have the effect of adjusting earnings applicable to past performance in the current period. When the current contract estimate indicates a loss, provision is made for the total anticipated loss in the current period. Revenue earned in excess of billings, if any, is recorded as unbilled revenue. Billings in excess of revenue earned, if any, are recorded as deferred revenue.

Accounting for Stock-Based Awards

Effective January 1, 2006, we adopted the relevant authoritative guidance which establishes accounting for equity instruments exchanged for employee services. Under the provisions of this guidance, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grants). We adopted the prospective transition method as provided by this guidance and, accordingly financial statement amounts for the prior periods presented in this Annual Report on Form 10-K have not been restated to reflect the fair value method of expensing share-based compensation. Prior to January 1, 2006, we accounted for share-based compensation to employees in accordance with the authoritative guidance in effect at that time.

In a review of our stock-based compensation accounting methodology performed during the second quarter of fiscal 2007, we determined that a cumulative adjustment of $0.5 million of incremental stock-based compensation expense, and a balance sheet reclassification of $0.8 million from deferred compensation to additional paid-in capital, were required due to a correction in the application of the relevant authoritative guidance. Upon adoption of this guidance on January 1, 2006, we incorrectly valued 259,700 stock options that were granted between the date that we filed our initial Form S-1 registration statement with the Securities and Exchange Commission on July 27, 2005 and the date we became a public company (November 8, 2005). We believe that this adjustment did not have a material impact to our full year results for 2007. In addition, we do not believe the adjustment is material to the

41

amounts reported by us in previous periods. This cumulative adjustment is included in the gross margin and operating expenses for the fiscal year ended December 29, 2007.

Entities that became public companies after June 15, 2005 and used the minimum value method of measuring equity share options and similar instruments as a non-public company for either recognition or pro forma disclosure purposes under previous authoritative guidance must apply the provisions of the current authoritative guidance prospectively to new and/or modified awards after the adoption of this current guidance. Companies should continue to account for any portion of awards outstanding at the date of initial application of the current authoritative guidance using the accounting principles originally applied to those awards. Accordingly we did not record any cumulative effect of a change in accounting principle associated with the adoption of the current authoritative guidance on January 1, 2006.

Under the provisions of the relevant authoritative guidance, we recognized $6.3 million of stock-based compensation expense during the fiscal year ended January 2, 2010 for stock options granted subsequent to our initial filing of our Form S-1 with the SEC. The unamortized fair value as of January 2, 2010 associated with these grants was $10.3 million with a weighted average remaining recognition period of 2.31 years.

The risk-free interest rate is derived from the average U.S. Treasury constant maturity rate, which approximates the rate in effect at the time of grant, commensurate with the expected life of the instrument. The dividend yield is zero based upon the fact that we have never paid and have no present intention to pay cash dividends. The expected term calculation is based upon the simplified method provided under the relevant authoritative guidance, the expected term is developed by averaging the contractual term of the stock option grants (7 or 10 years) with the associated vesting term (typically 4 to 5 years). Given our initial public offering in November 2005 and the resulting short history as a public company, we could not rely solely on company specific historical data for purposes of establishing expected volatility. Consequently, we performed an analysis that included company specific historical data combined with data of several peer companies with similar expected option lives to develop expected volatility assumptions.

Based upon the above assumptions, the weighted average fair value of each stock option granted for the fiscal year ended January 2, 2010 was $4.91, excluding the new options issued in conjunction with the stock option exchange program for which no incremental compensation expense was realized.

During the fiscal year ended January 2, 2010, the Company recognized $0.1 million and $1.0 million of stock based compensation associated with restricted stock awards and restricted stock units, respectively. Unamortized expense associated with restricted stock awards and restricted stock units at January 2, 2010, was $0.1 million and $3.2 million, respectively.

We have assumed a forfeiture rate for all stock options, restricted stock awards and restricted stock-based units granted subsequent to the Company’s initial filing of its Form S-1 with the SEC. In the future, we will record incremental stock-based compensation expense if the actual forfeiture rates are lower than estimated and will record a recovery of prior stock-based compensation expense if the actual forfeitures are higher than estimated.

Accounting for stock-based awards requires significant judgment and the use of estimates, particularly surrounding assumptions such as stock price volatility and expected option lives, as well as expected option forfeiture rates to value equity-based compensation.

Accounting for Income Taxes

Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We monitor the realization of our deferred tax assets based on changes in circumstances, for example, recurring periods of income for tax purposes following historical periods of cumulative losses or changes in tax laws or regulations. Our income tax provision and our assessment of the ability to realize our deferred tax assets involve significant judgments and estimates. In fiscal 2007, we completed an analysis of historical and projected future

42

profitability which resulted in the full release of the valuation allowance relating to federal deferred tax assets. We continue to maintain a valuation allowance against state deferred tax assets due to less certainty of their ability to realize given the shorter expiration period associated with these state deferred tax assets and the generation of state tax credits in excess of the state tax liability. At January 2, 2010, we have total deferred tax assets of $18.6 million and a valuation allowance of $3.8 million resulting in a net deferred tax asset of $14.8 million.

During the quarter ending January 2, 2010, we recorded an out-of-period adjustment in the income tax provision of $0.2 million to correct an error with respect to the earnings of our India subsidiary. We believe that this adjustment did not have a material impact to our full year 2009 results. In addition, we do not believe the adjustment is material to the amounts reported in previous periods.

Warranty

We typically provide a one-year warranty (with the exception of European consumer products which typically have a two-year warranty period and our government and industrial spares and Negotiator products which typically have a warranty period of less than one year) against defects in materials and workmanship and will either repair the goods, provide replacement products at no charge to the customer or refund amounts to the customer for defective products. We record estimated warranty costs, based on historical experience by product, at the time we recognize product revenue. As the complexity of our products increases, we could experience higher warranty claims relative to sales than we have previously experienced, and we may need to increase these estimated warranty reserves.

Inventory Valuation

We value our inventory at the lower of the actual cost of our inventory or its current estimated market value. We write down inventory for obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions. Because of the seasonality of our consumer product sales and inventory levels, obsolescence of technology and product life cycles, we generally write down inventory to net realizable value based on forecasted product demand. Actual demand and market conditions may be lower than those that we project and this difference could have a material adverse effect on our gross margin if inventory write-downs beyond those initially recorded become necessary. Alternatively, if actual demand and market conditions are more favorable than those we estimated at the time of such a write-down, our gross margin could be favorably impacted in future periods.

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Overview of Results of Operations

The following table sets forth our results of operations for the periods shown:

	Fiscal Year Ended
	January 2,			December 27,		December 29,
	2010			2008		2007
	(In thousands)
Revenue
Product revenue	$	262,199		$	281,187	$	227,457
Contract revenue		36,418			26,434		21,624
Total revenue		298,617			307,621		249,081
Cost of Revenue
Cost of product revenue(1)		176,631			190,250		147,689
Cost of contract revenue(1)		30,790			23,900		18,805
Total cost of revenue		207,421			214,150		166,494
Gross margin		91,196			93,471		82,587
Operating Expenses
Research and development(1)		14,747			17,566		17,082
Selling and marketing(1)		40,902			46,866		44,894
General and administrative(1)		30,110			28,840		20,919
Litigation and related expenses(2)		—			—		2,341
Total operating expenses		85,759			93,272		85,236
Operating (Loss) Income		5,437			199		(2,649	)
Other Income (Expense), Net		(81	)		926		3,151
Income Before Income Taxes		5,356			1,125		502
Income Tax Expense (Benefit)		2,026			369		(8,558	)
Net Income	$	3,330		$	756	$	9,060

(1) Stock-based compensation recorded in 2009, 2008 and 2007 breaks down by expense classification as follows.

	Fiscal Year Ended
	January 2,		December 27,		December 29,
	2010		2008		2007
	(In thousands)
Cost of product revenue	$	1,127	$	753	$	692
Cost of contract revenue		575		462		386
Research and development		351		359		377
Selling and marketing		1,410		1,055		1,074
General and administrative		4,099		3,310		2,182

(2) Consists of costs for litigation relating to lawsuits filed against Robotic FX, Inc. and Jameel Ahed, as well as settlement costs related to ending the litigation. See Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a more detailed discussion of this litigation and related settlement.

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The following table sets forth our results of operations as a percentage of revenue for the periods shown:

	Fiscal Year Ended
	January 2,			December 27,			December 29,
	2010			2008			2007
Revenue
Product revenue		87.8	%		91.4	%		91.3	%
Contract revenue		12.2			8.6			8.7
Total revenue		100.0			100.0			100.0
Cost of Revenue
Cost of product revenue		59.2			61.8			59.3
Cost of contract revenue		10.3			7.8			7.5
Total cost of revenue		69.5			69.6			66.8
Gross margin		30.5			30.4			33.2
Operating Expenses
Research and development		4.9			5.7			6.9
Selling and marketing		13.7			15.2			18.0
General and administrative		10.1			9.4			8.4
Litigation and related expenses		—			—			1.0
Total operating expenses		28.7			30.3			34.3
Operating (Loss) Income		1.8			0.1			(1.1	)
Other Income (Expense), Net		0.0			0.3			1.3
Income Before Income Taxes		1.8			0.4			0.2
Income Tax Expense (Benefit)		0.7			0.1			(3.4	)
Net Income		1.1	%		0.3	%		3.6	%

Comparison of Years Ended January 2, 2010 and December 27, 2008

Revenue

	Fiscal Year Ended
	January 2,		December 27,
	2010		2008		Dollar Change			Percent Change
	(In thousands)
Total Revenue	$	298,617	$	307,621	$	(9,004	)		(2.9	)%

Our revenue decreased 2.9% to $298.6 million in fiscal 2009 from $307.6 million in fiscal 2008. Revenue decreased approximately $7.7 million, or 4.5%, in our home robots division and $1.3 million, or 0.9%, in our government and industrial division.

The $7.7 million decrease in revenue from our home robots division was driven by a 6.3% decrease in units shipped. Total home robots shipped in fiscal 2009 were approximately 988,000 units compared to approximately 1,054,000 units in fiscal 2008. The decrease in home robot division revenue and units shipped was attributable to decreased domestic demand of our home robot products in both retail and direct channels. The decrease in domestic and direct revenue was partially offset by increased international sales of our home robot products resulting from our increased efforts to expand our global presence. In fiscal 2009, home robot revenue from domestic retailers decreased $25.8 million and direct to consumers sales through our on-line store decreased $5.1 million, as compared to fiscal 2008. This was partially offset by an increase of 34.2% of home robots units shipped internationally in fiscal 2009 as compared to fiscal 2008. International home robots revenue increased $23.2 million in fiscal 2009 as compared to fiscal 2008.

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The $1.3 million decrease in revenue from our government and industrial division was driven by a $15.0 million decrease in government and industrial robots revenue partially offset by a $3.7 million increase in product life cycle revenue (spare parts and accessories) and a $10.0 million increase in recurring contract development revenue generated under research and development contracts. The $15.0 million decrease in government and industrial robots revenue was due to a 17.0% decrease in units in fiscal 2009 as compared to fiscal 2008. Total government and industrial robots shipped in fiscal 2009 were 789 units compared to 951 units in fiscal 2008. The $10.0 million increase in recurring contract development revenue generated under research and development contracts was the result of revenue from new contract awards and increased funding on existing contracts for our PackBot, SUGV and research programs and contracts acquired through our September 2008 acquisition of Nekton Research, LLC.

Cost of Revenue

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008			Dollar Change			Percent Change
	(In thousands)
Total cost of revenue	$	207,421		$	214,150		$	(6,729	)		(3.1	)%
As a percentage of total revenue		69.5	%		69.6	%

Total cost of revenue decreased to $207.4 million in fiscal 2009, compared to $214.2 million in fiscal 2008. This decrease was due to the decrease in home robot and government and industrial product units shipped and lower costs associated with product mix in our government and industrial division, partially offset by an increase in cost of contracts resulting from new contract awards and increased funding on existing contracts for our PackBot, SUGV and research programs and contracts acquired through our September 2008 acquisition of Nekton Research, LLC.

Gross Margin

	Fiscal Year Ended
	January 2,			December 27
	2010			2008			Dollar Change			Percent Change
	(In thousands)
Total gross margin	$	91,196		$	93,471		$	(2,275	)		(2.4	)%
As a percentage of total revenue		30.5	%		30.4	%

Gross margin decreased $2.3 million, or 2.4%, to $91.2 million (30.5% of revenue) in fiscal 2009, from $93.5 million (30.4% of revenue) in fiscal 2008. The increase in gross margin as a percentage of revenue was the result of the home robots division gross margin increasing 3.5 percentage points offset by a decrease in the government and industrial division gross margin of 4.2 percentage points. The 3.5 percentage point increase in the home robots division is attributable to price increases and the introduction of higher-priced products into the international market. In addition, domestic margins increased due to an increase in volume and margins on refurbished products in fiscal 2009 as compared to fiscal 2008. Also, during fiscal 2008, we recorded costs but did not record revenue for shipments to Linens “N’ Things as a result of its bankruptcy filing. The 4.2 percentage point decrease in the government and industrial division is attributable to higher overhead expense on lower revenue, partially offset by higher margins due to product mix in fiscal 2009 as compared to fiscal 2008.

Research and Development

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008			Dollar Change			Percent Change
	(In thousands)
Total research and development	$	14,747		$	17,566		$	(2,819	)		(16.0	)%
As a percentage of total revenue		4.9	%		5.7	%

Research and development expenses decreased by $2.8 million, or 16.0%, to $14.7 million (4.9% of revenue) in fiscal 2009, from $17.6 million (5.7% of revenue) for fiscal 2008. The decrease in research and development

46

expenses is due to a decrease in compensation and employee-related costs, contractor costs, occupancy expenses and material associated with internal research and development projects.

In addition to our research and development activities classified as research and development expense, we incur research and development expenses under funded development arrangements with governments and industrial third parties. For fiscal 2009, these expenses amounted to $30.8 million compared to $23.9 million for fiscal 2008. In accordance with generally accepted accounting principles, these expenses have been classified as cost of contract revenue rather than research and development expense. The combined investment in future technologies, classified as cost of revenue and research and development expense, was $45.5 million for fiscal 2009, compared to $41.5 for fiscal 2008.

Selling and Marketing

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008			Dollar Change			Percent Change
	(In thousands)
Total selling and marketing	$	40,902		$	46,866		$	(5,964	)		(12.7	)%
As a percentage of total revenue		13.7	%		15.2	%

Selling and marketing expenses decreased by $6.0 million, or 12.7%, to $40.9 million (13.7% of revenue) in fiscal 2009 from $46.9 million (15.2% of revenue) in fiscal 2008. This was driven by a decrease in our home robots division of $6.3 million primarily attributable to a reduction of $4.5 million in television and other marketing expenses for fiscal 2009 as compared to fiscal 2008 as a result of our strategy to aggressively manage our expenses. The decrease of selling and marketing expenses in our home robots division was also attributable to decreases of $1.2 million in sales commission expenses as a result of lower sales to domestic retailers and $0.6 million in direct fulfillment expenses related to lower direct sales in fiscal 2009 as compared to fiscal 2008.

In fiscal 2010, we expect to continue to invest in sales and marketing to increase brand awareness. Accordingly, we anticipate selling and marketing expenses will increase in absolute dollars but remain at the same level or slightly above fiscal 2009 as a percentage of revenue.

General and Administrative

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008			Dollar Change		Percent Change
	(In thousands)
General and administrative	$	30,110		$	28,840		$	1,270		4.4	%
As a percentage of total revenue		10.1	%		9.4	%

General and administrative expenses increased by $1.3 million, or 4.4%, to $30.1 million (10.1% of revenue) in fiscal 2009 from $28.8 million (9.4% of revenue) in fiscal 2008. The increase in general and administrative expenses was primarily driven by increases of $2.7 million in incentive compensation and stock-based compensation partially offset by a decreases of $1.0 million in bad debt expense and $0.4 million in compensation and other general and administrative expenses in fiscal 2009 as compared to fiscal 2008.

Other Income (Expense), Net

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008			Dollar Change			Percent Change
	(In thousands)
Other Income (expense), net	$	(81	)	$	926		$	(1,007	)		(108.7	)%
As a percentage of total revenue		0.0	%		0.3	%

Other income (expense), net amounted to $(0.1) million in fiscal 2009 compared to $0.9 million in fiscal 2008. Other income (expense), net for fiscal 2009 was directly related to foreign currency exchange losses resulting from

47

foreign currency exchange rate fluctuations. Other income (expense), net for fiscal 2008 was directly related to interest income resulting from investments in auction rate securities and money market accounts. All of our auction rate securities investments have been settled and our current money market investments earn significantly reduced interest rates as compared to fiscal 2008.

Income Tax Provision

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008			Dollar Change		Percent Change
	(In thousands)
Income tax provision (benefit)	$	2,026		$	369		$	1,657		N/A
As a percentage of total revenue		0.7	%		0.1	%

In fiscal 2009, we recorded a $2.0 million tax provision based on an effective income tax rate of 37.8%. The provision for income taxes for fiscal 2009 consists of $1.6 million of federal taxes and $0.4 million of state taxes. Included in the 2009 provision is a $0.2 million provision associated with an out-of-period error correction with respect to the earnings of our India subsidiary and a $0.3 million one-time benefit from the conversion of incentive stock options to non-qualified stock options as a result of our stock option exchange program which concluded in our second fiscal quarter of 2009.

In fiscal 2008, we recorded a $0.4 million tax provision based on an effective income tax rate of 32.8%. The provision for income taxes for fiscal 2008 consisted of $0.1 million of federal alternative minimum taxes and $0.3 million of state taxes.

Comparison of Years Ended December 27, 2008 and December 29, 2007

Revenue

	Fiscal Year Ended
	December 27,		December 29,
	2008		2007		Dollar Change		Percent Change
	(In thousands)
Total Revenue	$	307,621	$	249,081	$	58,540		23.5	%

Our revenue increased 23.5% to $307.6 million in fiscal 2008 from $249.1 million in fiscal 2007. Revenue increased approximately $29.1 million, or 20.2%, in our home robots division and $29.4 million, or 28.1%, in our government and industrial division.

The $29.1 million increase in revenue from our home robots division was driven by a $25.3 million increase in home robot revenue due to a 17.4% increase in units shipped and a 1.4% increase in average selling prices, along with a $5.6 million increase in product life cycle revenue (spare parts and accessories). Total home care robots shipped in fiscal 2008 totaled approximately 1,054,000 units compared to approximately 898,000 units in fiscal 2007. The increase in home robot division revenue and units shipped was primarily attributable to increased international demand for our home robot products resulting from our increased efforts to expand our global presence. In fiscal 2008, home robots shipped internationally increased 162% as compared to fiscal 2007. International home robots revenue increased $44.2 million in fiscal 2008 as compared to fiscal 2007. This was offset by decreases in revenue from domestic retailers of $12.0 million and direct to consumer revenue of $3.1 million in fiscal 2008 as compared to fiscal 2007.

The $29.4 million increase in revenue from our government and industrial division was driven by a $25.4 million increase in government and industrial robots revenue due to a 101.9% increase in units shipped in fiscal 2008 as compared to fiscal 2007. This was partially offset by a 30.2% decrease in associated net average selling prices related to product mix primarily attributable to a shift of our military product line into lower priced FasTac units as compared to MTRS (Man Transportable Robot System) units last year, and a $0.7 million decrease in product life cycle revenue (spare parts and accessories).

Recurring contract development revenue generated under research and development contracts increased $4.8 million in our government and industrial division. Contract revenue in fiscal year 2008 includes $1.7 million of

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contract revenue from recently acquired Nekton. Our increased contract revenue was the result of our acquisition of Nekton, incremental funding on existing contracts and new contract awards during fiscal 2008 offset by reduced revenue on completed prior year contracts

Cost of Revenue

	Fiscal Year Ended
	December 27,			December 29,
	2008			2007			Dollar Change		Percent Change
	(In thousands)
Total cost of revenue	$	214,150		$	166,494		$	47,656		28.6	%
As a percentage of total revenue		69.6	%		66.8	%

Total cost of revenue increased to $214.2 million in fiscal 2008, compared to $166.5 million in fiscal 2007. The increase is primarily due to higher costs associated with the 17.4% increase in the unit sales of our home care robots, and the 101.9% increase in the unit sales of our military robots in fiscal 2008 as compared to fiscal 2007.

We incur research and development expenses under funded development arrangements with both governments and industrial third parties, which in accordance with generally accepted accounting principles in the United States of America, are classified as cost of revenue rather than research and development expense. For fiscal 2008, these expenses amounted to $23.9 million compared to $18.8 million for the comparable period in 2007. The increase in these expenses was primarily due to increased headcount in our contract research and development function.

Gross Margin

	Fiscal Year Ended
	December 27,			December 29
	2008			2007			Dollar Change		Percent Change
				(In thousands)
Total gross margin	$	93,471		$	82,587		$	10,884		13.2	%
As a percentage of total revenue		30.4	%		33.2	%

Gross margin increased $10.9 million, or 13.2%, to $93.5 million (30.4% of revenue) in fiscal 2008, from $82.6 million (33.2% of revenue) in fiscal 2007. The decrease in gross margin as a percentage of revenue fiscal 2008 compared to fiscal 2007 was the result of the home robots division gross margin decreasing 3.6 percentage points, and by the government and industrial division gross margin decreasing 1.8 percentage points. The 3.6 percentage point decrease in the home robots division was driven primarily by a retail customer bankruptcy, provisions taken for excess inventory and defective product returns, promotional incentives and channel mix. The government and industrial division decrease was attributable to higher net warranty costs, provisions taken for excess inventory and product mix.

Research and Development

	Fiscal Year Ended
	December 27,			December 29,
	2008			2007			Dollar Change		Percent Change
	(In thousands)
Total research and development	$	17,566		$	17,082		$	484		2.8	%
As a percentage of total revenue		5.7	%		6.9	%

Research and development expenses increased by $0.5 million, or 2.8%, to $17.6 million (5.7% of revenue) in fiscal 2008, from $17.1 million (6.9% of revenue) for fiscal 2007. The increase in research and development expenses is primarily due to an increase in compensation and employee related costs, increased occupancy costs associated with our move to our new facility and the write off of in-process research and development costs relating to the Nekton acquisition, offset by a decrease in consultant expense.

In addition to our internal research and development activities discussed above, we incur research and development expenses under funded development arrangements with both governments and industrial third parties.

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For fiscal 2008, these expenses amounted to $23.9 million compared to $18.8 million for the comparable period in 2007. These expenses have been classified as cost of revenue rather than research and development expense as they are executed under funded research contracts.

Selling and Marketing

	Fiscal Year Ended
	December 27,			December 29,
	2008			2007			Dollar Change		Percent Change
	(In thousands)
Total selling and marketing	$	46,866		$	44,894		$	1,972		4.4	%
As a percentage of total revenue		15.2	%		18.0	%

Selling and marketing expenses increased by $2.0 million, or 4.4%, to $46.9 million (15.2% of revenue) in fiscal 2008 from $44.9 million (18.0% of revenue) in fiscal 2007.

The increase was primarily driven by increases in our government and industrial division of $1.7 million in costs associated with bid and proposal activities, increased labor costs and other marketing related costs. Corporate marketing expenses increased by $0.7 million in fiscal 2008 as compared to fiscal 2007 primarily driven by public relations spending to continue building brand awareness. These increases were partially offset by an overall decrease in selling and marketing expenses of the home robots division of $0.4 million attributed to a decrease of $4.0 million related to our direct response infomercial program, which ran during fiscal 2007 and was not repeated in fiscal 2008, $0.2 decrease in other marketing related costs, offset by increases of $1.4 million in television, on-line and print media, $1.8 million in freight and fulfillment related expenses, $0.7 million in labor and sales commissions.

In fiscal 2009, we expect to continue to invest in sales and marketing to increase brand awareness. Accordingly, we anticipate selling and marketing expenses will remain at the same level or slightly above fiscal 2008 in absolute dollars.

General and Administrative

	Fiscal Year Ended
	December 27,			December 29,
	2008			2007			Dollar Change		Percent Change
	(In thousands)
General and administrative	$	28,840		$	20,919		$	7,921		37.9	%
As a percentage of total revenue		9.4	%		8.4	%

General and administrative expenses increased by $7.9 million, or 37.9%, to $28.8 million (9.4% of revenue) in fiscal 2008 from $20.9 million (8.4% of revenue) in fiscal 2007. The increase in general and administrative expenses was primarily driven by increases of $2.1 million in compensation expense due to increased headcount, $1.2 million in stock-based compensation, $1.0 million in incentive compensation, $1.0 million in bad debt expense associated with collectability concerns of receivables due from three of our retail customers given their financial condition and bankruptcy filings, $0.8 million in occupancy and depreciation expenses relating to the move to our new corporate headquarters, $0.5 million in executive severance and $0.2 million of goodwill amortization relating to our acquisition of Nekton.

Litigation and Related Expenses

	Fiscal Year Ended
	December 27,		December 29,
	2008		2007			Dollar Change			Percent Change
	(In thousands)
Litigation and related expenses		—	$	2,341		$	(2,341	)		N/A
As a percentage of total revenue		—		1.0	%

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Litigation and related expenses in fiscal 2007 consisted of costs for trade secret misappropriation, breach of contract and patent infringement litigation relating to lawsuits filed against Robotic FX, Inc. and Jameel Ahed as well as settlement costs related to ending the litigation.

Other Income, Net

	Fiscal Year Ended
	December 27,			December 29,
	2008			2007			Dollar Change			Percent Change
	(In thousands)
Other Income, net	$	926		$	3,151		$	(2,225	)		(70.6	)%
As a percentage of total revenue		0.3	%		1.3	%

For fiscal 2008, other income, net amounted to $0.9 million compared to $3.2 million in fiscal 2007. The decrease in other income, net in fiscal 2008 was primarily related to a $2.1 million decrease in interest income as a result of lower investment account balances and reduced interest rates earned on the portfolio, and a $0.1 million increase in other expense, relating to foreign currency losses, as compared to fiscal 2007. Other income, net for fiscal 2008 consisted of $1.1 million in interest income resulting from our cash and investments, offset by $0.1 million in interest expense and $0.1 million in foreign currency losses.

Income Tax Provision

	Fiscal Year Ended
	December 27,			December 29,
	2008			2007			Dollar Change		Percent Change
	(In thousands)
Income tax provision (benefit)	$	369		$	(8,558	)	$	8,927		N/A
As a percentage of total revenue		0.1	%		(3.4	)%

In fiscal 2008, we recorded a $0.4 million tax provision based on an effective income tax rate of 32.8%. The provision for income taxes for fiscal 2008 consists of $0.1 million of federal alternative minimum taxes and $0.3 million of state taxes.

In fiscal 2007, we recorded an $8.6 million tax benefit, which was primarily attributable to the full release of the valuation allowance relating to federal deferred tax assets.

Liquidity and Capital Resources

At January 2, 2010, our principal sources of liquidity were cash and cash equivalents totaling $71.9 million, short-term investments of $5.0 million and accounts receivable of $35.2 million. Prior to our initial public offering in November 2005, we funded our growth primarily with proceeds from the issuance of convertible preferred stock for aggregate net cash proceeds of $37.5 million, occasional borrowings under a working capital line of credit and cash generated from operations. In our initial public offering, we raised $70.4 million net of underwriting and professional fees associated with the offering.

We manufacture and distribute our products through contract manufacturers and third-party logistics providers. We believe that this approach gives us the advantages of relatively low capital investment and significant flexibility in scheduling production and managing inventory levels. By leasing our office facilities, we also minimize the cash needed for expansion. Accordingly, our capital spending is generally limited to leasehold improvements, computers, office furniture and product-specific production tooling, internal use software and test equipment. In the fiscal years ended January 2, 2010 and December 27, 2008, we spent $5.0 million and $14.8 million, respectively, on capital equipment.

Our strategy for delivering products to our retail customers gives us the flexibility to provide container shipments directly to the retailer from China and, alternatively allows our retail partners to take possession of product on a domestic basis. Accordingly, our home robots product inventory consists of goods shipped to our third-party logistic providers for the fulfillment of retail orders and direct-to-consumer sales. Our inventory of government and industrial products is relatively low as they are generally built to order. Our contract manufacturers

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are responsible for purchasing and stocking the majority of components required for the production of our products, and they invoice us when the finished goods are shipped.

Our consumer product sales are, and are expected to continue to be, highly seasonal. This seasonality has historically resulted in a net use of cash in support of operating needs during the second and third quarters of the year, with the low point generally occurring in the third quarter, and a favorable cash flow during the first and fourth quarters. The cash balance of $71.9 million at January 2, 2010 is primarily the result of our significant focus over the past year on managing working capital, with specific emphasis placed on reducing inventory levels. We have relied on our working capital line of credit to cover short-term cash needs resulting from the seasonality of our consumer business in prior years. We currently do not have any borrowings outstanding under our existing working capital line of credit.

Discussion of Cash Flows

Net cash provided by operating activities for the fiscal year ended January 2, 2010 was $40.6 million, an increase of $21.5 million compared to the $19.1 million of net cash provided by operating activities for the fiscal year ended December 27, 2008. The increase in net cash provided by operating activities was primarily driven by the following factors:

•  An increase in cash resulting from an increase in accounts payable, accrued expenses and accrued compensation of $21.5 million in 2009 compared to a decrease of $20.7 million in 2008, primarily due to the timing of cash payments under normal operating cycles;

•  An increase in cash resulting from a decrease in inventory of $2.2 million in 2009 compared to a decrease of $10.7 million in 2008, primarily driven by the implementation of operational initiatives to improve our inventory management and reduce overall inventory levels beginning in 2008, with less of an impact in 2009; and

•  An increase in cash resulting from a decrease in accounts receivable of $0.8 million in 2009 compared to a decrease of $12.2 million in 2008, primarily driven by improvements in payment terms and accounts receivable management focused on improved accounts receivable turns beginning in 2008, with less of an impact in 2009.

Net cash used in investing activities for the fiscal year ended January 2, 2010 was $12.5 million, an increase of $4.5 million compared to the $8.0 million of net cash used in investing activities for the fiscal year ended December 27, 2008. This increase in net cash used in investing activities was primarily driven by the following:

•  Purchase of investments of $5.0 million in 2009 compared to proceeds from the net sale of investments of $16.6 million in 2008;

•  Purchases of property and equipment associated with the move to our new headquarters in 2008; and

•  The purchase of Nekton Research, LLC in 2008, with the initial investment of $9.7 million compared to an additional investment of $2.5 million in 2009.

Net cash provided from financing activities for fiscal year ended January 2, 2010 was $2.9 million, a decrease of $0.1 million compared to the $3.0 million of net cash provided by financing activities for the fiscal year ended December 27, 2008.

Working Capital Facility

We have an unsecured revolving credit facility with Bank of America, N.A., which is available to fund working capital and other corporate purposes. The amount available for borrowing under our credit facility is the lesser of: (a) $45.0 million or (b) amounts available pursuant to a borrowing base calculation determined pursuant to the terms and conditions of the credit facility. As of January 2, 2010, $43.0 million was available for borrowing. The interest on loans under our credit facility will accrue, at our election, at either (i) Bank of America’s prime rate minus 1% or (ii) the Eurodollar rate plus 1.25%. The credit facility will terminate and all amounts outstanding thereunder will be due and payable in full on June 5, 2010.

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As of January 2, 2010, we had letters of credit outstanding of $2.0 million under our working capital line of credit. This credit facility contains customary terms and conditions for credit facilities of this type, including restrictions on our ability to incur or guaranty additional indebtedness, create liens, enter into transactions with affiliates, make loans or investments, sell assets, pay dividends or make distributions on, or repurchase, our stock, and consolidate or merge with other entities.

In addition, we are required to meet certain financial covenants customary with this type of agreement, including maintaining a minimum specified tangible net worth and a minimum specified annual net income.

This credit facility contains customary events of default, including for payment defaults, breaches of representations, breaches of affirmative or negative covenants, cross defaults to other material indebtedness, bankruptcy and failure to discharge certain judgments. If a default occurs and is not cured within any applicable cure period or is not waived, our obligations under the credit facility may be accelerated.

As of January 2, 2010, we were in compliance with all covenants under the credit facility.

On February 12, 2010, we entered into an agreement to amend our credit facility, including the following changes:

•  The amount available for borrowing was reduced to $40 million.

•  Under the amended agreement, the interest on loans under our credit facility will accrue, at our election, at either (i) the greater of the BBA LIBOR Daily Floating Rate or the Prime Rate of Lender plus fifty (50) basis points, or (ii) the LIBOR rate plus 2.00%.

•  The credit facility termination date was extended to June 5, 2012.

•  The borrowing base calculation was deleted from the agreement.

•  A minimum specified interest coverage ratio covenant was added to the financial covenants.

•  The minimum specified annual net income covenant was replaced with a minimum adjusted EBITDA covenant.

Equipment Financing Facility

We have a $5.0 million secured equipment facility with Banc of America Leasing & Capital, LLC under which we can finance the acquisition of equipment, furniture and leasehold improvements. We may borrow amounts or enter into lease agreements under the equipment facility until May 1, 2010, with terms from 36 to 60 months depending upon the nature of the collateral. Our obligations under the equipment facility will be secured by any financed equipment.

As of January 2, 2010, we have entered into operating leases for equipment valued at approximately $0.2 million which has reduced the funds available under this equipment facility to $4.8 million.

The equipment facility contains customary terms and conditions for equipment facilities of this type, including, without limitation, restrictions on our ability to transfer, encumber or dispose of the financed equipment. In addition, we are required to meet certain financial covenants customary to this type of agreement, including maintaining a minimum specified tangible net worth and a minimum specified annual net income.

The equipment facility contains customary events of default, including for payment defaults, breaches of representations, breaches of affirmative or negative covenants, cross defaults to other material indebtedness, bankruptcy and failure to discharge certain judgments. If a default occurs and is not cured within any applicable cure period or is not waived, or if we repay all of our indebtedness under our credit facility with Bank of America, N.A., our obligations under this equipment facility may be accelerated.

As of January 2, 2010, we were in compliance with all covenants under the equipment facility.

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Working Capital and Capital Expenditure Needs

We currently have no material cash commitments, except for normal recurring trade payables, expense accruals and operating leases, all of which we anticipate funding through working capital, funds provided by operating activities and our existing working capital line of credit. We do not currently anticipate significant investment in property, plant and equipment, and we believe that our outsourced approach to manufacturing provides us with flexibility in both managing inventory levels and financing our inventory. We believe our existing cash and cash equivalents, short-term investments, cash provided by operating activities, and funds available through our working capital line of credit will be sufficient to meet our working capital and capital expenditure needs over at least the next twelve months. In the event that our revenue plan does not meet our expectations, we may eliminate or curtail expenditures to mitigate the impact on our working capital. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our marketing and sales activities, the timing and extent of spending to support product development efforts, the timing of introductions of new products and enhancements to existing products, the acquisition of new capabilities or technologies, and the continuing market acceptance of our products and services. Moreover, to the extent that existing cash and cash equivalents, short-term investments, cash from operations, and cash from short-term borrowing are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. As part of our business strategy, we intend to consider additional acquisitions of companies, technologies and products, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Contractual Obligations

We generally do not enter into binding purchase commitments. Our principal commitments consist of obligations under our working capital line of credit, leases for office space and minimum contractual obligations for services. The following table describes our commitments to settle contractual obligations in cash as of January 2, 2010:

	Payments Due by Period
	Less Than		1 to 3		3 to 5		More Than
	1 Year		Years		Years		5 Years		Total
					(In thousands)
Operating leases	$	2,641	$	4,693	$	4,175	$	11,133	$	22,642
Minimum contractual payments		5,000		7,000		—		—		12,000
Other obligations		464		627		—		—		1,091
Total	$	8,105	$	12,320	$	4,175	$	11,133	$	35,733

Our minimum contractual payments consist entirely of payments to our provider of direct fulfillment services for direct to consumer sales of our home robots, which payments are incurred in the ordinary course of business. Based on historical and current operations, we believe that we will exceed these minimum contractual obligations in our ordinary course of business. Other obligations consist of software license and services agreement for our home robots division web support.

Off-Balance Sheet Arrangements

As of January 2, 2010, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board, or FASB issued amendments to the accounting and disclosure requirements for business combinations and noncontrolling interests in consolidated financial statements. The amendment to the accounting and disclosure requirements for business combinations will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. The amendment to the accounting and disclosure requirements for noncontrolling interests in consolidated financial statements will change the accounting and reporting for minority interests, which will be

54

recharacterized as noncontrolling interests and classified as a component of equity. These amendments are effective for fiscal years beginning on or after December 15, 2008. We adopted these amendments at the beginning of fiscal 2009 and will change our accounting treatment for business combinations and noncontrolling interests, if any, on a prospective basis.

On April 1, 2009, FASB issued an amendment to the accounting and disclosure requirements for assets acquired and liabilities assumed in a business combination that arise from contingencies. This amendment addresses application issues regarding the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. We adopted this amendment on April 1, 2009 and will change our accounting treatment for business combinations, if any, on a prospective basis.

In May 2009, FASB issued an amendment to the accounting and disclosure requirements for subsequent events. This amendment establishes general standards of accounting for disclosing events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. This amendment is effective for interim or annual financial periods ending after June 15, 2009. The implementation of this amendment did not impact our consolidated financial statements.

In June 2009, FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities, or VIEs. The elimination of the concept of a Qualifying Special Purpose Entity removes the exception from applying the consolidation guidance within this amendment. This amendment requires an enterprise to perform a qualitative analysis when determining whether or not it must consolidate a VIE. This amendment also requires an enterprise to continuously reassess whether it must consolidate a VIE. Additionally, this amendment requires enhanced disclosures about an enterprise’s involvement with VIEs and any significant change in risk exposure due to that involvement, as well as how its involvement with VIEs impacts the enterprise’s financial statements. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to consolidate a VIE. This amendment is effective for financial statements issued for fiscal years beginning after November 15, 2009. We do not expect this amendment to have an impact on our financial position or results of operations.

In June 2009, FASB issued FASB Accounting Standards Codification, or the Codification. The Codification will become the single source for all authoritative Generally Accepted Accounting Principles, or GAAP recognized by FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change GAAP and will not have an effect on our financial position or results of operations. We adopted this accounting standard during the three month period ending September 26, 2009.

In September 2009, FASB issued an amendment to the accounting and disclosure requirements for multiple-deliverable revenue arrangements. This guidance addresses how to separate deliverables and how to measure and allocate consideration to one or more units of accounting. Specifically, the guidance requires that consideration be allocated among multiple deliverables based on relative selling prices. The guidance establishes a selling price hierarchy of (1) vendor-specific objective evidence, (2) third-party evidence and (3) estimated selling price. This guidance is effective for annual periods beginning after December 15, 2009 but may be early adopted as of the beginning of an annual period. We are currently evaluating the effect that this guidance will have on our financial position and results of operations.

From time to time, new accounting pronouncements are issued by FASB and are adopted by us as of the specified effective date. Unless otherwise discussed, We believe that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

We maintain sales and business operations in foreign countries. As such, we have exposure to adverse changes in exchange rates associated with operating expenses of our foreign operations, but we believe this exposure to be

55

immaterial. We currently accept orders for home robot products in currencies other than the U.S. dollar and we expect this practice to continue in the future. We regularly monitor the level of non-U.S. dollar accounts receivable balances to determine if any actions, including possibly entering into foreign currency forward contracts, should be taken to minimize the impact of fluctuating exchange rates on our results of operations.

Interest Rate Sensitivity

At January 2, 2010, we had unrestricted cash and cash equivalents of $71.9 million and short term investments of $5.0 million. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. Some of the securities in which we invest, however, may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk in the future, we intend to maintain our portfolio of cash equivalents in a variety of securities, commercial paper, money market funds, debt securities and certificates of deposit. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. As of January 2, 2010, all of our cash equivalents were held in money market accounts.

Our exposure to market risk also relates to the increase or decrease in the amount of interest expense we must pay on our outstanding debt instruments, primarily certain borrowings under our working capital line of credit and our equipment financing facility. The advances under the working capital line of credit bear a variable rate of interest determined as a function of the prime rate or the Eurodollar rate at the time of the borrowing. The advances under the equipment financing facility bear either a variable or fixed rate of interest, at our election, determined as a function of the LIBOR rate at the time of borrowing. At January 2, 2010, we had letters of credit outstanding of $2.0 million under our working capital line of credit and $0.2 million outstanding under our equipment financing facility.

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ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

iROBOT CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		58
Consolidated Balance Sheets at January 2, 2010 and December 27, 2008		59
Consolidated Statements of Operations for the Years ended January 2, 2010, December 27, 2008 and December 29, 2007		60
Consolidated Statements of Stockholders’ Equity for the Years ended January 2, 2010, December 27, 2008 and December 29, 2007		61
Consolidated Statements of Cash Flows for the Years ended January 2, 2010, December 27, 2008 and December 29, 2007		62
Notes to Consolidated Financial Statements		63

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Report of Independent Registered Public Accounting Firm

To Board of Directors and Stockholders of

iRobot Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15 (a) (1) present fairly, in all material respects, the financial position of iRobot Corporation and its subsidiaries at January 2, 2010 and December 27, 2008, and the results of their operations and their cash flows for each of the three years in the period ended January 2, 2010 in conformity with accounting principles generally accepted 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 January 2, 2010, 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 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 Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated 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 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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.

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.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 19, 2010

58

iROBOT CORPORATION

CONSOLIDATED BALANCE SHEETS

	January 2,			December 27,
	2010			2008
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	71,856		$	40,852
Short term investments		4,959			—
Accounts receivable, net of allowance of $90 and $65 at January 2, 2010 and December 27, 2008, respectively		35,171			35,930
Unbilled revenue		1,831			2,014
Inventory		32,406			34,560
Deferred tax assets		8,669			7,299
Other current assets		4,119			3,340
Total current assets		159,011			123,995
Property and equipment, net		20,230			22,929
Deferred tax assets		6,089			4,508
Other assets		14,254			12,246
Total assets	$	199,584		$	163,678
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30,559		$	19,544
Accrued expenses		14,384			10,989
Accrued compensation		13,525			6,393
Deferred revenue and customer advances		3,908			2,632
Total current liabilities		62,376			39,558
Long term liabilities		4,014			4,444
Commitments and contingencies (Note 11):
Redeemable convertible preferred stock, 5,000,000 shares authorized and zero outstanding		—			—
Common stock, $0.01 par value, 100,000,000 and 100,000,000 shares authorized and 25,091,619 and 24,810,736 shares issued and outstanding at January 2, 2010 and December 27, 2008, respectively		251			248
Additional paid-in capital		140,613			130,637
Deferred compensation		(64	)		(314	)
Accumulated deficit		(7,565	)		(10,895	)
Accumulated other comprehensive loss		(41	)		—
Total stockholders’ equity		133,194			119,676
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	199,584		$	163,678

See accompanying Notes to Consolidated Financial Statements

59

iROBOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Fiscal Year Ended
	January 2,			December 27,		December 29,
	2010			2008		2007
	(In thousands, except per share amounts)
Revenue:
Product revenue	$	262,199		$	281,187	$	227,457
Contract revenue		36,418			26,434		21,624
Total revenue		298,617			307,621		249,081
Cost of revenue:
Cost of product revenue(1)		176,631			190,250		147,689
Cost of contract revenue(1)		30,790			23,900		18,805
Total cost of revenue		207,421			214,150		166,494
Gross margin		91,196			93,471		82,587
Operating expenses:
Research and development(1)		14,747			17,566		17,082
Selling and marketing(1)		40,902			46,866		44,894
General and administrative(1)		30,110			28,840		20,919
Litigation and related expenses(2)		—			—		2,341
Total operating expenses		85,759			93,272		85,236
Operating income (loss)		5,437			199		(2,649	)
Other income (expense), net		(81	)		926		3,151
Income before income taxes		5,356			1,125		502
Income tax expense (benefit)		2,026			369		(8,558	)
Net income	$	3,330		$	756	$	9,060
Net income per share
Basic	$	0.13		$	0.03	$	0.37
Diluted	$	0.13		$	0.03	$	0.36
Number of shares used in per share calculations
Basic		24,998			24,654		24,229
Diluted		25,640			25,533		25,501

(1) Stock-based compensation recorded in 2009, 2008 and 2007 breaks down by expense classification as follows:

	Fiscal Year Ended
	January 2,		December 27,		December 29,
	2010		2008		2007
			(In thousands)
Cost of product revenue	$	1,127	$	753	$	692
Cost of contract revenue		575		462		386
Research and development		351		359		377
Selling and marketing		1,410		1,055		1,074
General and administrative		4,099		3,310		2,182

(2) Consists of costs for litigation relating to lawsuits filed against Robotic FX, Inc. and Jameel Ahed, as well as settlement costs related to ending the litigation. See Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a more detailed discussion of this litigation and related settlement.

See accompanying Notes to Consolidated Financial Statements

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iROBOT CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

																Accumulated
							Additional									Other
	Common Stock						Paid-In			Deferred			Accumulated			Comprehensive			Stockholder’s			Comprehensive
	Shares			Value			Capital			Compensation			Deficit			Loss			Equity			Income
Balance at December 30, 2006		23,790,759		$	238		$	117,718		$	(2,326	)	$	(20,711	)		—		$	94,919
Amortization of deferred compensation relating to restricted stock											59									59
Issuance of common stock for exercise of stock options		793,283			8			1,380												1,388
Stock withheld to cover tax withholdings requirements upon exercise of stock options		(110,396	)		(1	)		(1,587	)											(1,588	)
Repurchase of restricted stock award		(4,047	)																	—
Cumulative adjustment to stock based compensation								(836	)		836									—
Issuance of restricted stock awards		25,332																		—
Tax benefit of excess stock based compensation deduction								1,626												1,626
Amortization of deferred compensation relating to stock options								4,477			175									4,652
Reversal of deferred compensation related to cancelled stock options								(571	)		571									—
Director’s deferred compensation								111												111
Net income														9,060						9,060			9,060
Comprehensive Income																						$	9,060
Balance at December 29, 2007		24,494,931		$	245		$	122,318		$	(685	)	$	(11,651	)	$	—		$	110,227
Amortization of deferred compensation relating to restricted stock											14									14
Issuance of common stock for exercise of stock options		289,970			3			1,008												1,011
Conversion of deferred compensation		2,906																		—
Vesting of restricted stock units		22,929																		—
Tax benefit of excess stock based compensation deduction								1,648												1,648
Amortization of deferred compensation relating to stock options								5,602			323									5,925
Reversal of deferred compensation related to cancelled stock options								(34	)		34									—
Director’s deferred compensation								95												95
Net income														756						756			756
Comprehensive Income																						$	756
Balance at December 27, 2008		24,810,736		$	248		$	130,637		$	(314	)	$	(10,895	)	$	—		$	119,676
Issuance of common stock for exercise of stock options		243,791			3			735												738
Vesting of restricted stock units		42,829																		—
Tax benefit of excess stock based compensation deduction								1,873												1,873
Amortization of deferred compensation relating to stock options								7,318			244									7,562
Stock withheld to cover tax withholdings requirements upon vesting of restricted stock units		(5,737	)					(76	)											(76	)
Reversal of deferred compensation related to cancelled stock options								(6	)		6									—
Unrealized loss on short term investment																	(41	)		(41	)		(41	)
Director’s deferred compensation								132												132
Net income														3,330						3,330			3,330
Comprehensive Income																						$	3,289
Balance at January 2, 2010		25,091,619		$	251		$	140,613		$	(64	)	$	(7,565	)	$	(41	)	$	133,194

See accompanying Notes to Consolidated Financial Statements

61

iROBOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Fiscal Year Ended
	January 2,			December 27,			December 29,
	2010			2008			2007
				(In thousands)
Cash flows from operating activities:
Net income	$	3,330		$	756		$	9,060
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		8,074			7,029			5,311
Loss on disposal of property and equipment		202			231			48
Stock based compensation		7,562			5,939			4,711
In-process research and development relating to acquisition of Nekton Research LLC		—			200			—
Benefit from deferred tax assets		(3,317	)		(1,967	)		(10,198	)
Non-cash director deferred compensation		132			95			111
Changes in operating assets and liabilities — (use) source
Accounts receivable		759			12,221			(19,171	)
Unbilled revenue		183			230			(283	)
Inventory		2,154			10,662			(24,332	)
Other current assets		(816	)		(1,042	)		595
Accounts payable		11,015			(25,350	)		17,012
Accrued expenses		3,385			3,002			967
Accrued compensation		7,132			1,634			(624	)
Deferred revenue		1,276			1,026			1,121
Long-term liabilities		(430	)		4,444			—
Net cash provided by (used in) operating activities		40,641			19,110			(15,672	)
Cash flows from investing activities:
Additions of property and equipment		(5,038	)		(14,817	)		(10,352	)
Purchase of Nekton Research, LLC, net of cash received		(2,500	)		(9,743	)		—
Change in other assets		—			—			(2,500	)
Purchase of investments		(5,000	)		(29,997	)		(52,950	)
Sales of investments		—			46,547			101,200
Net cash provided by (used in) investing activities		(12,538	)		(8,010	)		35,398
Cash flows from financing activities:
Borrowings under revolving line of credit		—			5,500			—
Repayment of borrowings under revolving credit line		—			(5,500	)		—
Income tax withholding payment associated with stock option exercise		—			—			(1,588	)
Income tax withholding payment associated with restricted stock vesting		(76	)
Proceeds from stock option exercises		738			1,011			1,388
Tax benefit of excess stock based compensation deductions		2,239			2,006			1,626
Net cash provided by financing activities		2,901			3,017			1,426
Net increase in cash and cash equivalents		31,004			14,117			21,152
Cash and cash equivalents, at beginning of period		40,852			26,735			5,583
Cash and cash equivalents, at end of period	$	71,856		$	40,852		$	26,735
Supplemental disclosure of cash flow information
Cash paid for interest	$	—		$	60		$	41
Cash paid for income taxes	$	1,127		$	89		$	140

Supplemental disclosure of noncash investing and financing activities (in thousands)

During 2009, 2008 and 2007, the Company transferred $2,318, $893 and $1,509 respectively, of inventory to property and equipment.

See accompanying Notes to Consolidated Financial Statements

62

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Nature of the Business

iRobot Corporation (“iRobot” or the “Company”) develops robotics and artificial intelligence technologies and applies these technologies in producing and marketing robots. The majority of the Company’s revenue is generated from product sales and government and industrial research and development contracts.

The Company is subject to risks common to companies in high-tech industries including, but not limited to, uncertainty of progress in developing technologies, new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, the need to obtain financing, if necessary, global economic conditions and associated impact on consumer spending, and changes in policies and spending priorities of the U.S. federal government and other government agencies.

2.   Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include those of iRobot and its subsidiaries, after elimination of all intercompany accounts and transactions. iRobot has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.

Use of Estimates

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these estimates and judgments, including those related to revenue recognition, sales returns, bad debts, warranty claims, inventory reserves, valuation of investments, assumptions used in valuing stock-based compensation instruments and income taxes. The Company bases these estimates on historical and anticipated results, and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from the Company’s estimates.

Fiscal Year-End

The Company operates and reports using a 52-53 week fiscal year ending on the Saturday closest to December 31. Accordingly, the Company’s fiscal quarters will end on the Saturday that falls closest to the last day of the third month of each quarter.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the time of purchase to be cash equivalents. The Company invests its excess cash primarily in money market funds or savings accounts of major financial institutions. Accordingly, its cash equivalents are subject to minimal credit and market risk. At January 2, 2010 and December 27, 2008, cash equivalents were comprised of money market and savings account funds totaling $63.1 million and $39.5 million, respectively. These cash equivalents are carried at cost, which approximates fair value.

63

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Short Term Investments

The Company’s investments are classified as available-for-sale and are recorded at fair value with any unrealized gain or loss recorded as an element of stockholders’ equity. The fair value of investments is determined based on quoted market prices at the reporting date for those instruments. As of January 2, 2010, and December 27, 2008, investments consisted of:

	January 2,				December 27,
	2010				2008
			Fair				Fair
	Cost		Market Value		Cost		Market Value
			(In thousands)
U.S. Government bond	$	5,000	$	4,959	$	—	$	—

As of January 2, 2010, the Company’s investment has a maturity date of March 2012.

Revenue Recognition

The Company derives its revenue from product sales, government research and development contracts, and commercial research and development contracts. The Company sells products directly to customers and indirectly through resellers and distributors. The Company recognizes revenue from sales of home robots under the terms of the customer agreement upon transfer of title and risk of loss to the customer, net of estimated returns, provided that collection is determined to be probable and no significant obligations remain. Sales to resellers are subject to agreements allowing for limited rights of return for defective products only, rebates and price protection. The Company has typically not taken product returns except for defective products. Accordingly, the Company reduces revenue for its estimates of liabilities for these rights at the time the related sale is recorded. The Company makes an estimate of sales returns for products sold by resellers directly based on historical returns experience and other relevant data. The Company’s international distributor agreements do not currently allow for product returns and, as a result, no reserve for returns is established for this group of customers. The Company has aggregated and analyzed historical returns from resellers and end users which form the basis of its estimate of future sales returns by resellers or end users. When a right of return exists, the provision for these estimated returns is recorded as a reduction of revenue at the time that the related revenue is recorded. If actual returns differ significantly from its estimates, such differences could have a material impact on the Company’s results of operations for the period in which the returns become known. The estimates for returns are adjusted periodically based upon historical rates of returns. The estimates and reserve for rebates and price protection are based on specific programs, expected usage and historical experience. Actual results could differ from these estimates.

Under cost-plus-fixed-fee type contracts, the Company recognizes revenue based on costs incurred plus a pro rata portion of the total fixed fee. Revenue on firm fixed price (FFP) contracts is recognized using the percentage-of-completion method. For government product FFP contracts revenue is recognized as the product is shipped or in accordance with the contract terms. Costs and estimated gross margins on contracts are recorded as revenue as work is performed based on the percentage that incurred costs compare to estimated total costs utilizing the most recent estimates of costs and funding. Changes in job performance, job conditions, and estimated profitability, including those arising from final contract settlements and government audit, may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Since many contracts extend over a long period of time, revisions in cost and funding estimates during the progress of work have the effect of adjusting earnings applicable to past performance in the current period. When the current contract estimate indicates a loss, a provision is made for the total anticipated loss in the current period. Revenue earned in excess of billings, if any, is recorded as unbilled revenue. Billings in excess of revenue earned, if any, are recorded as deferred revenue.

64

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables.

Activity related to the allowance for doubtful accounts was as follows:

	Fiscal Year Ended
	January 2,			December 27,			December 29,
	2010			2008			2007
				(In thousands)
Balance at beginning of period	$	65		$	65		$	163
Provision		32			1,005			—
Deduction(*)		(7	)		(1,005	)		(98	)
Balance at end of period	$	90		$	65		$	65

(*) Deductions related to allowance for doubtful accounts represent amounts written off against the allowance, less recoveries.

Inventory

Inventory is stated at the lower of cost or net realizable value with cost being determined using the first-in, first-out (FIFO) method. The Company maintains a reserve for inventory items to provide for an estimated amount of excess or obsolete inventory.

Activity related to the inventory reserve was as follows:

	Fiscal Year Ended
	January 2,			December 27,			December 29,
	2010			2008			2007
				(In thousands)
Balance at beginning of period	$	2,770		$	441		$	554
Provision		2,117			2,622			106
Deduction(*)		(1,174	)		(293	)		(219	)
Balance at end of period	$	3,713		$	2,770		$	441

(*) Deductions related to inventory reserve accounts represent amounts written off against the reserve.

65

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property and Equipment

Property and equipment are recorded at cost and consist primarily of computer equipment, business applications software and machinery. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

	Estimated
	Useful Life
Computer and research equipment	3 years
Furniture	5
Machinery	2-5
Tooling	2
Business applications software	5
Capital leases and leasehold improvements	Term of lease

Expenditures for additions, renewals and betterments of plant and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. As assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations.

Long-Lived Assets, including Purchased Intangible Assets

The Company periodically evaluates the recoverability of long-lived assets, including other purchased intangible assets whenever events and changes in circumstances, such as reductions in demand or significant economic slowdowns in the industry, indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the asset group are evaluated in relation to the future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. There were no impairment charges recorded during any of the periods presented.

Goodwill

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. The Company tests goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment) annually or more frequently if the Company believes indicators of impairment exist. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill.

Research and Development

Costs incurred in the research and development of the Company’s products, classified as cost of contract and research and development, are expensed as incurred.

66

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Internal Use Software

The Company capitalizes costs associated with the development and implementation of software obtained for internal use. At January 2, 2010 and December 27, 2008, the Company had $4.9 million and $5.1 million respectively, of costs related to enterprise-wide software included in fixed assets. Capitalized costs are being amortized over the assets’ estimated useful lives. The Company has recorded $0.9 million, $0.8 million and $0.7 million of amortization expense for the years ended January 2, 2010, December 27, 2008 and December 29, 2007, respectively.

Concentration of Credit Risk and Significant Customers

The Company maintains its cash in bank deposit accounts at high quality financial institutions. The individual balances, at times, may exceed federally insured limits. At January 2, 2010 and December 27, 2008 the Company exceeded the insured limit by $79.4 million and $40.4 million, respectively.

Financial instruments which potentially expose the Company to concentrations of credit risk consist of accounts receivable. Management believes its credit policies are prudent and reflect normal industry terms and business risk. At January 2, 2010 and December 27, 2008, 35% and 26%, respectively, of the Company’s accounts receivable were due from the federal government. For the years ended January 2, 2010, December 27, 2008, and December 29, 2007 revenue from one customer, the federal government, represented 36.9%, 40% and 35% of total revenue, respectively.

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts to sell Canadian dollars for United States dollars. The Company’s objective in entering into these contracts was to reduce foreign currency exposure to appreciation or depreciation in the value of its Canadian dollar based accounts receivable balances by partially offsetting a portion of such exposure with gains or losses on the forward contracts.

These foreign currency contracts did not qualify for hedge accounting. Accordingly, the foreign currency forward contracts were marked-to-market and recorded at fair value with unrealized gains and losses reported along with foreign currency gains or losses in the caption “other income (expense), net” on the Company’s consolidated statements of operations. As of January 2, 2010 the Company did not have any foreign currency forward contracts.

Stock-Based Compensation

Effective January 1, 2006, the Company adopted the relevant authoritative guidance which establishes accounting for equity instruments exchanged for employee services. Under the provisions of this guidance, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grants). The Company adopted the prospective transition method as provided by this guidance and, accordingly financial statement amounts for the prior periods presented in this Annual Report on Form 10-K have not been restated to reflect the fair value method of expensing share-based compensation. Prior to January 1, 2006, the Company accounted for share-based compensation to employees in accordance with the authoritative guidance in effect at that time.

In a review of its stock-based compensation accounting methodology performed during the second quarter of fiscal 2007, the Company determined that a cumulative adjustment of $0.5 million of incremental stock-based compensation expense, and a balance sheet reclassification of $0.8 million from deferred compensation to additional paid-in capital, were required due to a correction in the application of the relevant authoritative guidance. Upon adoption of this guidance on January 1, 2006, the Company incorrectly valued 259,700 stock options that were granted between the date that it filed its initial Form S-1 registration statement with the Securities and Exchange Commission on July 27, 2005 and the date it became a public company (November 8, 2005). The

67

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company believes that this adjustment did not have a material impact to its full year results for 2007. In addition, management does not believe the adjustment is material to the amounts reported by the Company in previous periods. This cumulative adjustment is included in the gross margin and operating expenses for the fiscal year ended December 29, 2007.

Entities that become public companies after June 15, 2005 and used the minimum value method of measuring equity share options and similar instruments as a non-public company for either recognition or pro forma disclosure purposes under previous authoritative guidance must apply the provisions of the current authoritative guidance prospectively to new and/or modified awards after the adoption of this current guidance. Companies should continue to account for any portion of awards outstanding at the date of initial application of the current authoritative guidance using the accounting principles originally applied to those awards. Accordingly, the Company did not record any cumulative effect of a change in accounting principle associated with the adoption of the current authoritative guidance on January 1, 2006.

The Company has historically granted stock options at exercise prices that equaled the fair value of its common stock as estimated by its board of directors, with input from management, as of the date of grant. Because there was no public market for the Company’s common stock prior to its initial public offering on November 9, 2005, its board of directors determined the fair value of its common stock by considering a number of objective and subjective factors, including the Company’s operating and financial performance and corporate milestones, the prices at which it sold shares of convertible preferred stock, the superior rights and preferences of securities senior to its common stock at the time of each grant, and the risk and non-liquid nature of its common stock. The Company has not historically obtained contemporaneous valuations by an unrelated valuation specialist because, at the time of the issuances of stock options, the Company believed its estimates of the fair value of its common stock to be reasonable based on the foregoing factors.

In connection with the initial public offering, the Company retrospectively reassessed the fair value of its common stock for options granted during the period from July 1, 2004 to November 8, 2005. As a result of this reassessment, the Company determined that the estimated fair market value used in granting options for the period from July 1, 2004 to December 31, 2004 was reasonable and appropriate. Accordingly, no deferred compensation was recorded for these grants. For the period from January 1, 2005 through November 8, 2005, the Company determined that the estimated fair value of its common stock increased from $4.60 to $21.60 due to a number of factors such as, among other things, the likelihood of an initial public offering, its improving operating results and the achievement of other corporate milestones in 2005. Based upon this determination, the Company recorded deferred compensation of approximately $3.4 million in the twelve months ended December 31, 2005 relating to stock options with exercise prices below the retrospectively reassessed fair market value on the date of grant. The Company recognized associated stock-based compensation expense of $0.2 million, $0.3 million and $0.2 million for the fiscal years ended January 2, 2010, December 27, 2008 and December 29, 2007, respectively. As of January 2, 2010, the deferred stock-based compensation balance associated with these grants was $0.1 million, which the Company expects to recognize as stock-based compensation expense in 2010.

Under the provisions of the relevant authoritative guidance, the Company recognized $6.3 million of stock-based compensation expense during the fiscal year ended January 2, 2010 for stock options granted subsequent to the Company’s initial filing of its Form S-1 with the SEC. The unamortized fair value as of January 2, 2010 associated with these grants was $10.3 million with a weighted average remaining recognition period of 2.31 years.

On May 29, 2009, the Company completed a one-time stock option exchange program as approved by its stockholders on May 28, 2009. In accordance with the terms and conditions of the stock option exchange program, the Company issued new options to purchase an aggregate of 310,607 shares of the Company’s common stock in exchange for the cancellation of options to purchase an aggregate of 678,850 of the Company’s common stock. The exchange ratios were designed to result in the fair value, for accounting purposes, of the new options being approximately equal to the fair value of the exchanged eligible options to ensure the Company minimized any

68

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

additional compensation expense in connection with the stock option exchange program. The Company incurred no additional compensation expense in connection with the program.

The fair value of each option grant for the fiscal years ended January 2, 2010 (excluding the new options issued in conjunction with the stock option exchange program described in the preceding paragraph for which no incremental compensation expense was realized), December 27, 2008 and December 29, 2007 was computed on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Fiscal Year Ended	Fiscal Year Ended	Fiscal Year Ended
	January 2,	December 27,	December 29,
	2010	2008	2007
Risk-free interest rate	1.45% — 2.50%	2.24% — 3.45%	3.23% — 4.90%
Expected dividend yield	—	—	—
Expected life	3.50 — 4.75 years	3.50 — 4.75 years	3.50 — 4.75 years
Expected volatility	55.0% — 56.5%	55.0%	50.0% — 55.0%

The risk-free interest rate is derived from the average U.S. Treasury constant maturity rate, which approximates the rate in effect at the time of grant, commensurate with the expected life of the instrument. The dividend yield is zero based upon the fact the Company has never paid and has no present intention to pay cash dividends. The expected term calculation is based upon the simplified method provided under the relevant authoritative guidance, the expected term is developed by averaging the contractual term of the stock option grants (7 or 10 years) with the associated vesting term (typically 4 to 5 years). Given the Company’s initial public offering in November 2005 and the resulting short history as a public company, the Company could not rely solely on company specific historical data for purposes of establishing expected volatility. Consequently, the Company performed an analysis that included company specific historical data combined with data of several peer companies with similar expected option lives to develop expected volatility assumptions.

Based upon the above assumptions, the weighted average fair value of each stock option granted for the fiscal year ended January 2, 2010 was $4.91, excluding the new options issued in conjunction with the stock option exchange program for which no incremental compensation expense was realized.

The Company has assumed a forfeiture rate for all stock options granted subsequent to the Company’s initial filing of its Form S-1 with the SEC. In the future, the Company will record incremental stock-based compensation expense if the actual forfeiture rates are lower than estimated and will record a recovery of prior stock-based compensation expense if the actual forfeitures are higher than estimated.

69

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below summarizes stock option plan activity:

						Weighted Average		Aggregate
	Number of			Weighted Average		Remaining		Intrinsic
	Shares			Exercise Price		Contractual Term		Value(1)
Outstanding at December 30, 2006		3,499,710		$	8.34
Granted		812,778			17.33
Exercised		(793,283	)		1.75
Canceled		(273,117	)		7.29
Outstanding at December 29, 2007		3,246,088		$	12.29
Granted		1,007,660			14.58
Exercised		(289,970	)		3.49
Canceled		(439,847	)		15.71
Outstanding at December 27, 2008		3,523,931		$	13.24
Granted		941,406			11.09
Exercised		(243,791	)		3.02
Canceled		(824,918	)		19.89
Outstanding at January 2, 2010		3,396,628		$	11.77		5.14 years	$	21.6 million
Vested and expected to vest at January 2, 2010		3,242,185		$	11.73		5.12 years	$	20.8 million
Exercisable as of January 2, 2010		1,672,157		$	10.99		4.72 years	$	12.5 million
Weighted average fair value of options granted during the fiscal year ended January 2, 2010				$	3.30
Options available for future grant at January 2, 2010		3,124,979

(1) The aggregate intrinsic value on the table was calculated based upon the positive difference between the closing market value of the Company’s stock on January 2, 2010 of $17.60 and the exercise price of the underlying option.

During fiscal years 2009, 2008 and 2007, the total intrinsic value of stock options exercised was $2.0 million, $3.2 million and $11.7 million, respectively. No amounts relating to stock-based compensation have been capitalized.

70

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes information about stock options outstanding at January 2, 2010:

			Options Outstanding
			Weighted Average					Options Exercisable
	Number		Remaining			Weighted Average		Number		Weighted Average
Range of Exercise Prices	Outstanding		Contractual Life			Exercise Price		Exercisable		Exercise Price
$ 0.55 - $ 2.78		447,330		4.16	years	$	2.36		447,330	$	2.36
4.60 -  4.96		382,355		5.13			4.88		296,870		4.88
5.66 -  9.08		483,099		6.12			8.46		43,154		6.79
11.55 - 12.50		347,869		4.80			12.36		12,625		11.55
12.82 - 14.05		549,325		5.86			13.61		168,950		13.95
14.09 - 15.38		359,460		5.43			14.57		130,644		14.55
15.84 - 17.13		369,679		4.18			16.44		256,730		16.41
17.40 - 24.00		433,561		5.17			21.26		293,521		21.64
24.88 - 27.22		22,125		2.78			26.93		20,590		26.95
27.80 - 27.80		1,825		3.24			27.80		1,743		27.80
$ 0.55 - $27.80		3,396,628		5.14	years	$	11.77		1,672,157	$	10.99

The table below summarizes activity relating to restricted stock awards:

	Number of			Weighted Average
	Shares Underlying			Grant Date Fair
	Restricted Stock			Value
Outstanding at December 30, 2006		48,999		$	2.77
Granted		25,332			16.03
Vested		(24,500	)		2.77
Forfeited		(4,047	)		2.77
Outstanding at December 29, 2007		45,784		$	10.11
Granted		—			—
Vested		(29,038	)		6.69
Forfeited		—			—
Outstanding at December 27, 2008		16,746		$	16.03
Granted		—			—
Vested		(5,582	)		16.03
Forfeited		—			—
Outstanding at January 2, 2010		11,164		$	16.03

During the fiscal year ended January 2, 2010, the Company recognized $0.1 million of stock based compensation expense associated with restricted stock awards. As of January 2, 2010, the unamortized fair value of all restricted stock awards was $0.1 million which the Company expects to recognize as stock-based compensation expense in 2010.

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The table below summarizes activity relating to restricted stock units:

	Number of			Weighted Average
	Shares Underlying			Grant Date Fair
	Restricted Stock			Value
Outstanding at December 30, 2006		—		$	—
Granted		24,780			19.05
Vested		—			—
Forfeited		(333	)		18.74
Outstanding at December 29, 2007		24,447		$	19.05
Granted		168,547			15.40
Vested		(22,929	)		17.64
Forfeited		(1,349	)		18.02
Outstanding at December 27, 2008		168,716		$	15.60
Granted		183,139			9.94
Vested		(46,162	)		15.09
Forfeited		(4,469	)		16.23
Outstanding at January 2, 2010		301,224		$	12.23

During the fiscal year ended January 2, 2010, the Company recognized $1.0 million of stock based compensation expense associated with restricted stock units. As of January 2, 2010, the unamortized fair value of all restricted stock units was $3.2 million. The Company expects to recognize associated stock-based compensation expense of $1.1 million, $1.0 million, $0.8 million and $0.3 million in 2010, 2011, 2012 and 2013, respectively.

Advertising Expense

The Company expenses advertising costs as they are incurred. During the years ended January 2, 2010, December 27, 2008 and December 29, 2007 advertising expense totaled $7.0 million, $11.6 million and $15.9 million, respectively.

Net Income Per Share

The following table presents the calculation of both basic and diluted net income per share:

	Fiscal Year Ended
	January 2,		December 27,		December 29,
	2010		2008		2007
Net income	$	3,330	$	756	$	9,060
Weighted average shares outstanding		24,998		24,654		24,229
Dilutive effect of employee stock options and restricted shares		642		879		1,272
Diluted weighted average shares outstanding		25,640		25,533		25,501
Basic income per share	$	0.13	$	0.03	$	0.37
Diluted income per share	$	0.13	$	0.03	$	0.36

Potentially diluted securities representing approximately 2.3 million, 2.1 million and 1.5 million shares of common stock for the fiscal years ended January 2, 2010, December 27, 2008 and December 29, 2007, respectively,

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were excluded from the computation of diluted earnings per share for these periods because their effect would have been antidilutive.

Income Taxes

Effective December 31, 2006, the Company adopted the relevant authoritative guidance which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The impact of adoption on the Company’s opening balance of retained earnings was zero. As of the beginning of fiscal year 2009, the Company had no material unrecognized tax benefits and no material unrecognized tax benefits were recorded in the fiscal year ended January 2, 2010. The Company recognizes interest and penalties related to unrecognized tax benefits in its tax provision and there were no accrued interest or penalties as of January 2, 2010, December 27, 2008 or December 29, 2007.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. The statute of limitations for assessment by the IRS and state tax authorities is closed for fiscal years prior to December 31, 2006, although carryforward attributes that were generated prior to fiscal year 2006 may still be adjusted upon examination by the IRS or state tax authorities if they either have been or will be used in a future period. There are currently no federal or state audits in progress.

Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company monitors the realization of its deferred tax assets based on changes in circumstances, for example recurring periods of income for tax purposes following historical periods of cumulative losses or changes in tax laws or regulations. The Company’s income tax provisions and its assessment of the ability to realize its deferred tax assets involve significant judgments and estimates.

In fiscal 2007, the Company completed an analysis of historical and projected future profitability which resulted in the full release of the valuation allowance relating to federal deferred tax assets. The Company continues to maintain a valuation allowance against state deferred tax assets due to less certainty of their ability to realize given the shorter expiration period associated with these state deferred tax assets and the generation of state tax credits in excess of the state tax liability. At January 2, 2010, the Company has total deferred tax assets of $18.6 million and a valuation allowance of $3.8 million resulting in a net deferred tax asset of $14.8 million.

Comprehensive Income

Comprehensive income includes unrealized losses on certain investments. The differences between net income and comprehensive income were as follows:

	Fiscal Year Ended
	January 2,			December 27,
	2010			2008
Net income, as reported	$	3,330		$	756
Unrealized losses on investments		(41	)		—
Total comprehensive income	$	3,289		$	756

Fair Value Measurements

The Company has adopted the authoritative guidance for fair value measurement as of December 30, 2007, for financial instruments. Although the adoption of this guidance did not materially impact its financial condition,

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results of operations, or cash flow, the Company is now required to provide additional disclosures as part of its financial statements.

The Company has adopted the authoritative guidance for fair value measurement as of December 28, 2008 for nonfinancial assets and nonfinancial liabilities. This adoption did not impact the Company’s consolidated financial statements.

The authoritative guidance for fair value establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s assets measured at fair value on a recurring basis at January 2, 2010, were as follows:

	Fair Value Measurements as of January 2, 2010
Description	Level 1		Level 2		Level 3
			(In thousands)
Assets:
Money Market Accounts	$	20,077	$	—	$	—
Investment in U.S. Government bonds		—		4,959		—
Total assets measured at fair value	$	20,077	$	4,959	$	—

The bond investment is valued based on observable market values as of the Company’s reporting date and is included in level 2 inputs. The bond investment is recorded at fair value and marked-to-market at the end of each reporting period and realized and unrealized gains and losses are included in comprehensive income for that period. The fair value of the Company’s bond investment is included in short term investments in its consolidated balance sheet.

The Company’s assets measured at fair value on a recurring basis at December 27, 2008, were as follows:

	Fair Value Measurements as of December 27, 2008
Description	Level 1		Level 2			Level 3
			(In thousands)
Assets:
Money Market Accounts	$	39,512	$	—		$	—
Foreign Currency forward contracts		—		(55	)		—
Total assets measured at fair value	$	39,512		(55	)	$	—

Foreign currency forward contracts are valued based on observable market spot and forward rates as of our reporting date and are included in level 2 inputs. The Company uses these derivative instruments to mitigate foreign currency receivable transactions exposure. All contracts are recorded at fair value and marked to market at the end of each reporting period and realized and unrealized gains and losses are included in net income for that period. The fair value of the Company’s foreign currency forward contracts was included in receivables in its consolidated balance sheet.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued amendments to the accounting and disclosure requirements for business combinations and noncontrolling interests in consolidated financial statements. The amendment to the accounting and disclosure requirements for business combinations will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in

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subsequent periods. The amendment to the accounting and disclosure requirements for noncontrolling interests in consolidated financial statements will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. These amendments are effective for fiscal years beginning on or after December 15, 2008. The Company adopted these amendments at the beginning of fiscal 2009 and will change its accounting treatment for business combinations and noncontrolling interests, if any, on a prospective basis.

On April 1, 2009, FASB issued an amendment to the accounting and disclosure requirements for assets acquired and liabilities assumed in a business combination that arise from contingencies. This amendment addresses application issues regarding the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. The Company adopted this amendment on April 1, 2009 and will change its accounting treatment for business combinations, if any, on a prospective basis.

In May 2009, FASB issued an amendment to the accounting and disclosure requirements for subsequent events. This amendment establishes general standards of accounting for disclosing events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. This amendment is effective for interim or annual financial periods ending after June 15, 2009. The implementation of this amendment did not impact the Company’s consolidated financial statements.

In June 2009, FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). The elimination of the concept of a Qualifying Special Purpose Entity (“QSPE”), removes the exception from applying the consolidation guidance within this amendment. This amendment requires an enterprise to perform a qualitative analysis when determining whether or not it must consolidate a VIE. This amendment also requires an enterprise to continuously reassess whether it must consolidate a VIE. Additionally, this amendment requires enhanced disclosures about an enterprise’s involvement with VIEs and any significant change in risk exposure due to that involvement, as well as how its involvement with VIEs impacts the enterprise’s financial statements. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to consolidate a VIE. This amendment is effective for financial statements issued for fiscal years beginning after November 15, 2009. The Company does not expect this amendment to have an impact on its financial position or results of operations.

In June 2009, FASB issued FASB Accounting Standards Codification (“Codification”). The Codification will become the single source for all authoritative Generally Accepted Accounting Principles (“GAAP”) recognized by FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change GAAP and will not have an effect on the Company’s financial position or results of operations. The Company adopted this accounting standard during the three month period ending September 26, 2009.

In September 2009, FASB issued an amendment to the accounting and disclosure requirements for multiple-deliverable revenue arrangements. This guidance addresses how to separate deliverables and how to measure and allocate consideration to one or more units of accounting. Specifically, the guidance requires that consideration be allocated among multiple deliverables based on relative selling prices. The guidance establishes a selling price hierarchy of (1) vendor-specific objective evidence, (2) third-party evidence and (3) estimated selling price. This guidance is effective for annual periods beginning after December 15, 2009 but may be early adopted as of the beginning of an annual period. The Company is currently evaluating the effect that this guidance will have on its financial position and results of operations.

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued

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standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.

3.   Inventory

Inventory consists of the following at:

	January 2,		December 27,
	2010		2008
	(In thousands)
Raw materials	$	3,735	$	3,443
Work in process		687		746
Finished goods		27,984		30,371
	$	32,406	$	34,560

4.   Property and Equipment

Property and equipment consists of the following at:

	January 2,		December 27,
	2010		2008
	(In thousands)
Computer and equipment	$	12,789	$	11,307
Furniture		1,656		1,669
Machinery		1,517		1,502
Tooling		3,723		6,454
Leasehold improvements		12,579		12,359
Software purchased for internal use		4,858		5,082
		37,122		38,373
Less: accumulated depreciation		16,892		15,444
	$	20,230	$	22,929

Depreciation expense for the years ended December 27, 2008, December 29, 2007 and December 30, 2006 was $7.5 million, $6.9 million, and $5.3 million, respectively.

5.   Other Assets

Other assets consists of the following at:

	January 2,		December 27,
	2010		2008
	(In thousands)
Goodwill and intangible assets, net	$	11,754	$	9,746
Investment in Advanced Scientific Concepts, Inc.		2,500		2,500
	$	14,254	$	12,246

Goodwill and Intangible assets are the result of the acquisition of Nekton Research, LLC (“Nekton”), See Notes 13 and 14 to the Consolidated Financial Statements for a more detailed discussion of the Goodwill and intangible assets, net.

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In November 2007, the Company recorded an investment of $2.5 million in a series of preferred stock of Advanced Scientific Concepts, Inc. This investment is accounted for at cost utilizing the cost method. The Company regularly monitors this investment to determine if facts and circumstances have changed in a manner that would require a change in accounting methodology. Additionally, the Company regularly evaluates whether or not this investment has been impaired by considering such factors as economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment. If any such impairment is identified, a reduction in the carrying value of the investment would be recorded at that time.

6.   Accrued Expenses

Accrued expenses consist of the following at:

	January 2,		December 27,
	2010		2008
	(In thousands)
Accrued warranty	$	6,105	$	5,380
Accrued direct fulfillment costs		1,836		1,236
Accrued rent		532		470
Accrued sales commissions		472		801
Accrued accounting fees		401		376
Accrued income taxes		2,177		248
Accrued other		2,861		2,478
	$	14,384	$	10,989

7.   Revolving Line of Credit

The Company has an unsecured revolving credit facility with Bank of America, N.A., which is available to fund working capital and other corporate purposes. The amount available for borrowing under its credit facility is the lesser of: (a) $45.0 million or (b) amounts available pursuant to a borrowing base calculation determined pursuant to the terms and conditions of the credit facility. As of January 2, 2010, $43.0 million was available for borrowing. The interest on loans under the credit facility will accrue, at the Company’s election, at either (i) Bank of America’s prime rate minus 1% or (ii) the Eurodollar rate plus 1.25%. The credit facility will terminate and all amounts outstanding thereunder will be due and payable in full on June 5, 2010.

As of January 2, 2010, the Company had letters of credit outstanding of $2.0 million under its working capital line of credit. This credit facility contains customary terms and conditions for credit facilities of this type, including restrictions on the Company’s ability to incur or guaranty additional indebtedness, create liens, enter into transactions with affiliates, make loans or investments, sell assets, pay dividends or make distributions on, or repurchase, the Company’s stock, and consolidate or merge with other entities.

In addition, the Company is required to meet certain financial covenants customary with this type of agreement, including maintaining a minimum specified tangible net worth and a minimum specified annual net income.

This credit facility contains customary events of default, including for payment defaults, breaches of representations, breaches of affirmative or negative covenants, cross defaults to other material indebtedness, bankruptcy and failure to discharge certain judgments. If a default occurs and is not cured within any applicable cure period or is not waived, the Company’s obligations under the credit facility may be accelerated.

As of January 2, 2010, the Company was in compliance with all covenants under its credit facility.

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On February 12, 2010, the Company entered into an agreement to amend its credit facility, including the following changes:

•  The amount available for borrowing was reduced to $40 million.

•  Under the amended agreement, the interest on loans under the Company’s credit facility will accrue, at its election, at either (i) the greater of the BBA LIBOR Daily Floating Rate or the Prime Rate of Lender plus fifty (50) basis points, or (ii) the LIBOR rate plus 2.00%.

•  The credit facility termination date was extended to June 5, 2012.

•  The borrowing base calculation was deleted from the agreement.

•  A minimum specified interest coverage ratio covenant was added to the financial covenants.

•  The minimum specified annual net income covenant was replaced with a minimum adjusted EBITDA covenant.

8.   Common Stock

Common stockholders are entitled to one vote for each share held and to receive dividends if and when declared by the Board of Directors and subject to and qualified by the rights of holders of the preferred stock. Upon dissolution or liquidation of the Company, holders of common stock will be entitled to receive all available assets subject to any preferential rights of any then outstanding preferred stock.

9.   Stock Option Plans

The Company has options outstanding under three stock incentive plans: the 1994 Stock Option Plan (the “1994 Plan”), the 2004 Stock Option and Incentive Plan (the “2004 Plan”) and the 2005 Stock Option and Incentive Plan (the “2005 Plan” and together with the 1994 Plan and the 2004 Plan, the “Plans”). The 2005 Plan is the only one of the three plans under which new awards may currently be granted. Under the 2005 Plan, which became effective October 10, 2005, 1,583,682 shares were initially reserved for issuance in the form of incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards and restricted stock awards. Additionally, the 2005 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning in 2007, by 4.5% of the outstanding number of shares of common stock on the immediately preceding December 31. Stock options returned to the Plans as a result of their expiration, cancellation or termination are automatically made available for issuance under the 2005 Plan. Eligibility for incentive stock options is limited to those individuals whose employment status would qualify them for the tax treatment associated with incentive stock options in accordance with the Internal Revenue Code of 1986, as amended. As of January 2, 2010, there were 3,124,979 shares available for future grant under the 2005 Plan.

Options granted under the Plans are subject to terms and conditions as determined by the compensation committee of the board of directors, including vesting periods. Options granted under the Plans are exercisable in full at any time subsequent to vesting, generally vest over periods from zero to five years, and expire seven or ten years from the date of grant or, if earlier, 60 or 90 days from employee termination. The exercise price of incentive stock options is equal to the closing price on the NASDAQ Global Market on the date of grant. The exercise price of nonstatutory options may be set at a price other than the fair market value of the common stock.

On September 25, 2009, in connection with his employment, the Company granted the president of its newly-created healthcare business unit a stock option exercisable for 100,000 shares of the Company’s common stock at the closing price of $12.82 and 25,000 restricted stock units. The stock option will vest 25% on the first anniversary of the grant date and quarterly over the following three years, and the restricted stock units will vest 25% on each anniversary of the grant date.

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On June 26, 2009, each of the Company’s eight non-employee board members was issued an annual grant of 10,000 stock options with an exercise price pre share of $13.46. These stock options will vest 100% on the first anniversary of the grant date.

On April 24, 2009, in connection with his employment, the Company granted the president of its home robots division a stock option exercisable for 150,000 shares of the Company’s common stock at the closing price of $9.80 and 35,000 restricted stock units. The stock option will vest 25% on the first anniversary of the grant date and quarterly over the following three years, and the restricted stock units will vest 25% on each anniversary of the grant date.

10.   Income Taxes

The components of income tax expense were as follows:

	2009			2008			2007
	(In thousands)
Current
Federal	$	5,019		$	2,137		$	1,450
State		369			231			187
Foreign		42			10			3
Total current tax provision		5,430			2,378			1,640
Deferred
Federal		(3,404	)		(2,009	)		(10,198	)
Total income tax provision (benefit)	$	2,026		$	369		$	(8,558	)

No provision has been made for deferred taxes on undistributed earnings of non-U.S. subsidiaries as these earnings have been indefinitely reinvested. Determination of the amount of unrecognized deferred tax liability on these undistributed earnings is not practicable.

During the quarter ending January 2, 2010, the Company recorded an out-of-period adjustment in the income tax provision of $0.2 million to correct an error with respect to the earnings of the Company’s India subsidiary. The Company believes that this adjustment did not have a material impact to its full year 2009 results. In addition, management does not believe the adjustment is material to the amounts reported by the Company in previous periods.

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The components of net deferred tax assets are as follows at January 2, 2010 and December 27, 2008:

	2009			2008
	(In thousands)
Net deferred tax assets
Current net deferred tax assets
Reserves and accruals	$	9,922		$	8,372
Valuation allowance		(1,253	)		(1,073	)
Total current net deferred tax assets		8,669			7,299
Non-current net deferred tax assets
Capital loss carryforwards		99			99
Tax credits		1,450			2,119
Fixed assets		1,398			1,256
Stock based compensation		5,757			3,413
Valuation allowance		(2,615	)		(2,379	)
Total non-current net deferred tax assets		6,089			4,508
Total net deferred tax assets	$	14,758		$	11,807

The gross deferred tax assets as of January 2, 2010 and December 27, 2008 were $18.6 million and $15.3 million, respectively.

In 2007, the Company made the determination that the realization of certain deferred tax assets was more likely than not based on future projections of taxable income. The Company released the valuation allowance associated with these assets and recorded a income statement benefit of $10.2 million in fiscal 2007. The valuation allowance as of January 2, 2010 relates to all state deferred tax assets, including state credits, and state net operating losses.

As of December 27, 2008, the Company has utilized all of its available net operating loss carryforwards for federal and state purposes. As of January 2, 2010, the Company does possess research and development credits carryforwards to offset future federal and state taxes of $0.7 million and $2.2 million respectively, and investment tax credit carryforwards to offset future state taxes of $0.6 million, which expire at various dates from 2012 to 2024. As of December 27, 2008, the Company possessed research and development credits carryforwards to offset future federal and state taxes of $2.9 million and $2.2 million, respectively, and investment tax credit carryforwards to offset future state taxes of $0.7 million. Under the Internal Revenue Service Code, certain substantial changes in the Company’s ownership could result in an annual limitation on the amount of these tax carryforwards which can be utilized in future years.

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The reconciliation of the expected tax (benefit) expense (computed by applying the federal statutory rate to income before income taxes) to actual tax expense was as follows:

	2009			2008			2007
	(In thousands)
Expected federal income tax	$	1,991		$	382		$	171
Permanent items		125			127			91
State taxes		94			(690	)		301
Credits		(367	)		(494	)		(1,148	)
Non deductible stock compensation		259			189			276
Conversion of incentive stock options(1)		(346	)		—			—
Other		111			16			(115	)
Increase (decrease) in valuation allowance		159			839			(8,134	)
	$	2,026		$	369		$	(8,558	)

(1) The Company recorded a discrete benefit from the conversion of incentive stock options to non-qualified stock options as a result of its stock option exchange program which concluded in the second fiscal quarter of 2009.

At January 2, 2010, the Company had no material unrecognized tax benefits. Additionally, there were no accrued interest or penalties as of January 2, 2010, December 27, 2008 or December 29, 2007.

11.   Commitments and Contingencies

Legal

On August 17, 2007, the Company filed a lawsuit in Massachusetts Superior Court against Robotic FX, Inc. and Jameel Ahed alleging, among other things, misappropriation of trade secrets and breach of contract, and seeking both injunctive and monetary relief. The case was subsequently removed to the United States District Court for the District of Massachusetts. On November 2, 2007, the court issued a preliminary injunction, and on December 21, 2007 issued a permanent injunction, against Robotic FX, Inc. and Mr. Ahed preventing the sale of products using certain of the Company’s trade secrets, including the Robotic FX Negotiator product.

In addition, on August 17, 2007, the Company filed a lawsuit in the United States District Court for the Northern District of Alabama against Robotic FX, Inc. alleging willful infringement of two patents owned by the Company, and seeking both injunctive and monetary relief. On December 21, 2007, the court entered a judgment that Robotic FX, Inc. knowingly infringed on both asserted patents.

In a related settlement, Robotic FX, Inc. was dissolved and certain residual assets were retained by the Company at its election. Mr. Ahed is prohibited from participating in competitive activities in the robotics industry for five years.

The cumulative litigation and settlement-related expenditures associated with this dispute are expected to total approximately $3.0 million, including an obligation to make cash payments up to $0.4 million through 2012, contingent upon Mr. Ahed and Robotic FX, Inc. continuing to meet obligations pursuant to various agreements, including but not limited to certain non-competition provisions. The Company paid $0.1 million to Mr. Ahed during the fiscal year ended January 2, 2010. These contingent payments will continue to be expensed, when and if earned.

Lease Obligations

The Company leases its facilities. Rental expense under operating leases for fiscal 2009, 2008 and 2007 amounted to $3.9 million, $3.8 million, and $2.1 million, respectively. The Company recorded $0.7 million of expense in the fiscal year ended December 27, 2008 for remaining lease commitments, net of estimated sublease

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income, at its former corporate headquarters in Burlington, MA. Future minimum rental payments under operating leases were as follows as of January 2, 2010:

	Operating
	Leases
2010	$	2,642
2011		2,439
2012		2,254
2013		2,087
2014		2,087
Thereafter		11,133
Total minimum lease payments	$	22,642

Guarantees and Indemnification Obligations

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred by the indemnified party, generally the Company’s customers, in connection with any patent, copyright, trade secret or other proprietary right infringement claim by any third party with respect to the Company’s software. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of January 2, 2010 and December 27, 2008, respectively.

Warranty

The Company provides warranties on most products and has established a reserve for warranty based on identified warranty costs. The reserve is included as part of accrued expenses (Note 6) in the accompanying balance sheets.

Activity related to the warranty accrual was as follows:

	Fiscal Year Ended
	January 2,			December 27,			December 29,
	2010			2008			2007
				(In thousands)
Balance at beginning of period	$	5,380		$	2,491		$	2,462
Provision		4,870			7,728			6,649
Warranty usage(*)		(4,145	)		(4,839	)		(6,620	)
Balance at end of period	$	6,105		$	5,380		$	2,491

(*) Warranty usage includes the pro rata expiration of product warranties not utilized.

Sales Taxes

The Company collects and remits sales tax in jurisdictions in which it has a physical presence or it believes nexus exists, which therefore obligates the Company to collect and remit sales tax. The Company is not currently aware of any asserted claims for sales tax liabilities for prior taxable periods.

The Company continually evaluates whether it has established a nexus in new jurisdictions with respect to sales tax. The Company has recorded a liability for potential exposure in several states where there is uncertainty about the point in time at which the Company established a sufficient business connection to establish a nexus. The Company continues to analyze possible sales tax exposure, but does not currently believe that any individual claim

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iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

or aggregate claims that might arise will ultimately have a material effect on its consolidated results of operations, financial position or cash flows.

12.   Employee Benefits

The Company sponsors a retirement plan under Section 401(k) of the Internal Revenue Code (the “Retirement Plan”). All Company employees, with the exception of temporary, contract and international employees are eligible to participate in the Retirement Plan after satisfying age and length of service requirements prescribed by the plan. Under the Retirement Plan, employees may make tax-deferred contributions, and the Company, at its sole discretion, and subject to the limits prescribed by the IRS, may make either a nonelective contribution on behalf of all eligible employees or a matching contribution on behalf of all plan participants.

The Company elected to make a matching contribution of approximately $1.2 million, $0.9 million and $0.8 million for the plan years ended January 2, 2010, December 27, 2008 and December 29, 2007 (“Plan-Year 2008,” “Plan-Year 2007” and “Plan-Year 2006”), respectively. The employer contribution represents a matching contribution at a rate of 50% of each employee’s first six percent contribution. Accordingly, each employee participating during Plan-Year 2009, Plan-Year 2008 and Plan-Year 2007 is entitled up to a maximum of three percent of his or her eligible annual payroll. The employer matching contribution for Plan-Year 2009 is included in accrued compensation.

13.   Acquisition of Nekton Research, LLC

In September 2008 the Company acquired Nekton, an unmanned underwater robot technology company based in Raleigh, North Carolina. The Company acquired Nekton for a purchase price of $10 million, consisting primarily of cash and direct acquisition costs, with the potential for additional consideration up to $5 million based on the achievement of certain business and financial milestones. In connection with the acquisition, the Company assumed $0.1 million in net liabilities, and initially recorded $4.5 million of intangible assets and $5.4 million of goodwill. Approximately $0.2 million of the purchase price was allocated to in-process research and development and was expensed upon completion of the acquisition. In December 2009, $2.5 million of additional consideration was paid and recorded as goodwill, under the earn-out provisions of the original agreement, bringing the total goodwill recorded for this acquisition to $7.9 million. There will be no additional consideration paid in connection with this acquisition.

The consolidated financial statements for the year ended December 27, 2008 include the results of operations of Nekton commencing as of September 8, 2008, the acquisition date. No supplemental pro forma information is presented for the acquisition due to the immaterial effect of the acquisition on the Company’s results of operations.

14.   Goodwill and other intangible assets

The carrying amount of the goodwill at January 2, 2010 of $7.9 million is from the acquisition of Nekton completed in September 2008. In October 2009, the Company completed its annual goodwill impairment test and did not identify any goodwill impairment.

Other intangible assets include the value assigned to completed technology, research contracts, and a trade name. The estimated useful lives for all of these intangible assets are two to ten years. The intangible assets are being amortized on a straight-line basis, which is consistent with the pattern that the economic benefits of the intangible assets are expected to be utilized.

Intangible assets at January 2, 2010 and December 27, 2008 consisted of the following:

	January 2, 2010						December 27, 2008
			Accumulated						Accumulated
	Cost		Amortization		Net		Cost		Amortization		Net
			(In thousands)						(In thousands)
Completed technology	$	3,700	$	496	$	3,204	$	3,700	$	124	$	3,576
Research contracts		100		64		36		100		16		84
Tradename		700		96		604		700		24		676
Total	$	4,500	$	656	$	3,844	$	4,500	$	164	$	4,336

83

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

There were no goodwill or intangible assets at December 29, 2007.

Amortization expense related to acquired intangible assets was $492,000 and $164,000 for the fiscal years ended January 2, 2010 and December 27, 2008. The estimated future amortization expense related to current intangible assets in each of the five succeeding fiscal years is expected to be as follows:

	(In thousands)
2010		480
2011		444
2012		444
2013		444
2014		444
Total	$	2,256

15.   Industry Segment, Geographic Information and Significant Customers

The Company operates in two reportable segments, the home robots division and the government and industrial division. The nature of products and types of customers for the two segments vary significantly. As such, the segments are managed separately.

Home Robots

The Company’s home robots division offers products to consumers through a network of retail businesses throughout the United States, to certain countries through international distributors and retailers, and through the Company’s on-line store. The Company’s home robots division includes mobile robots used in the maintenance of domestic households.

Government and Industrial

The Company’s government and industrial division offers products through a small U.S. government-focused sales force, while products are sold to a limited number of countries, other than the United States, through international distribution. The Company’s government and industrial robots are used by various U.S. and foreign governments, primarily for reconnaissance and bomb disposal missions.

84

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below presents segment information about revenue, cost of revenue, gross margin and income before income taxes:

	Fiscal Year Ended
	January 2,			December 27,		December 29,
	2010			2008		2007
	(In thousands)
Revenue:
Home Robots	$	165,860		$	173,602	$	144,483
Government & Industrial		132,757			134,019		104,598
Total revenue		298,617			307,621		249,081
Cost of revenue:
Home Robots		112,429			123,833		97,878
Government & Industrial		94,992			90,317		68,616
Total cost of revenue		207,421			214,150		166,494
Gross margin:
Home Robots		53,431			49,769		46,605
Government & Industrial		37,765			43,702		35,982
Total gross margin		91,196			93,471		82,587
Research and development		14,747			17,566		17,082
Selling and marketing		40,902			46,866		44,894
General and administrative		30,110			28,840		20,919
Litigation and related expenses		—			—		2,341
Other income (expense), net		(81	)		926		3,151
Income before income taxes	$	5,356		$	1,125	$	502

As of January 2, 2010, goodwill of $7.9 million and purchased intangible assets, net of $3.8 million recorded in conjunction with the acquisition of Nekton in September 2008, as well as the $2.5 million investment in Advanced Scientific Concepts, Inc., are directly associated with the government and industrial division. Other long lived assets are not directly attributable to individual business segments.

Geographic Information

For the fiscal years ended January 2, 2010 and December 27, 2008, sales to non-U.S. customers accounted for 33.3% and 23.4% of total revenue, respectively. For the year ended January 2, 2010, sales to non-U.S. customers in any single country did not account for more than 10% of total revenue.

Significant Customers

For the fiscal years ended January 2, 2010 and December 27, 2008, U.S. federal government orders, contracts and subcontracts accounted for 36.9% and 40.3% of total revenue, respectively.

16.   Quarterly Information (Unaudited)

	Fiscal Quarter Ended
	March 29,			June 28,			September 27,		December 27,		March 28,			June 27,			September 26,		January 2,
	2008			2008			2008		2008		2009			2009			2009		2010
	(In thousands, except per share amounts)
Revenue	$	57,302		$	67,202		$	92,415	$	90,702	$	56,936		$	61,340		$	78,619	$	101,722
Gross margin		15,360			16,468			28,930		32,713		16,206			16,409			24,195		34,386
Net income (loss)		(4,005	)		(4,513	)		3,852		5,422		(1,787	)		(2,609	)		2,594		5,132
Diluted earnings (loss) per share	$	(0.16	)	$	(0.18	)	$	0.15	$	0.21	$	(0.07	)	$	(0.10	)	$	0.10	$	0.20

85

iROBOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

17.   Subsequent Events

The Company has evaluated subsequent events through February 19, 2010, which represents the filing date of this Form 10-K with the SEC. As of February 19, 2010, there were no subsequent events which required recognition or disclosure.

86

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, we have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness, as of the end of the period covered by this report, of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) promulgated by the SEC under the Exchange Act. Based upon that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures, as of the end of such period, were adequate and effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, 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 and includes those policies and procedures that:

•  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•  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

•  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.

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.

Under the supervision and with the participation of management, including our principal executive and financial officers, we assessed the Company’s internal control over financial reporting as of January 2, 2010, based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of January 2, 2010 based on the specified criteria.

The effectiveness of the Company’s internal control over financial reporting as of January 2, 2010 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Changes in Internal Control Over Financial Reporting

During the quarter ended January 2, 2010, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

87

ITEM 9B.   OTHER INFORMATION

On February 12, 2010, we entered into a Third Amendment to Credit Agreement, or the Amendment, to our unsecured revolving credit facility with Bank of America, N.A. dated June 5, 2007. The Amendment provides for, among other things:

•  The reduction of the amount available for borrowing under the credit facility to $40 million;

•  The revision of the interest rate on loans under our credit facility to, at our election, either (i) the greater of the BBA LIBOR Daily Floating Rate or the Prime Rate of Lender plus fifty (50) basis points, or (ii) the LIBOR rate plus 2.00%;

•  The extension of the credit facility termination date to June 5, 2012;

•  The deletion of the borrowing base calculation from the credit agreement;

•  The addition of a minimum specified interest coverage ratio covenant; and

•  The replacement of the minimum specified annual net income covenant with a minimum adjusted EBITDA covenant.

The foregoing description of the Amendment is not complete and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 10.30 hereto, and is incorporated herein by reference. In connection with the Amendment, we entered into a Second Amendment to Note to that certain Note dated June 5, 2007 executed by us in favor of Bank of America, N.A., which is filed as Exhibit 10.31 hereto.

Our policy governing transactions in our securities by our directors, officers, and employees permits our officers, directors, funds affiliated with our directors, and certain other persons to enter into trading plans complying with Rule 10b5-l under the Exchange Act. We have been advised that certain of our officers and directors (including Colin Angle, Chief Executive Officer, Joseph Dyer, President — Government and Industrial Robots Division, Glen Weinstein, Senior Vice President, General Counsel and Secretary, and Helen Greiner, Director) of the Company have entered into a trading plan (each a “Plan” and collectively, the “Plans”) covering periods after the date of this Annual Report on Form 10-K in accordance with Rule 10b5-l and our policy governing transactions in our securities. Generally, under these trading plans, the individual relinquishes control over the transactions once the trading plan is put into place. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our company.

We anticipate that, as permitted by Rule 10b5-l and our policy governing transactions in our securities, some or all of our officers, directors and employees may establish trading plans in the future. We intend to disclose the names of our executive officers and directors who establish a trading plan in compliance with Rule 10b5-l and the requirements of our policy governing transactions in our securities in our future Quarterly and Annual Reports on Form 10-Q and 10-K filed with the SEC. We, however, undertake no obligation to update or revise the information provided herein, including for revision or termination of an established trading plan, other than in such quarterly and annual reports.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended January 2, 2010.

ITEM 11.   EXECUTIVE COMPENSATION

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended January 2, 2010.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended January 2, 2010.

88

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended January 2, 2010.

ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended January 2, 2010.

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following are filed as part of this Annual Report on Form 10-K:

1.   Financial Statements

The following consolidated financial statements are included in Item 8:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at January 2, 2010 and December 27, 2008

Consolidated Statements of Operations for the Years ended January 2, 2010, December 27, 2008, and December 29, 2007

Consolidated Statements of Stockholders’ Equity (Deficit) for the Years ended January 2, 2010, December 27, 2008, and December 29, 2007

Consolidated Statements of Cash Flows for the Years ended January 2, 2010, December 27, 2008, and December 29, 2007

Notes to Consolidated Financial Statements

2.   Financial Statement Schedules

All other schedules have been omitted since the required information is not present, or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or the Notes thereto.

3.   Exhibits — See item 15(b) of this report below

(b)   Exhibits

The following exhibits are filed as part of and incorporated by reference into this Annual Report:

Exhibit
Number			Description
	2	.1	Agreement and Plan of Merger by and among the Registrant, Farragut Acquisition, LLC, Nekton Research, LLC and the Members Representative named therein, dated September 5, 2008 (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on September 8, 2008 and incorporated by reference herein)
	3	.1(1)	Form of Second Amended and Restated Certificate of Incorporation of the Registrant dated November 15, 2005
	3	.2(1)	Amended and Restated By-laws of the Registrant
	4	.1(1)	Specimen Stock Certificate for shares of the Registrant’s Common Stock
	4	.2(1)	Shareholder Rights Agreement between the Registrant and Computershare Trust Company, Inc., as the Rights Agent dated November 15, 2005
	10	.1(1)	Fifth Amended and Restated Registration Rights Agreement by and among the Registrant, the Investors and the Stockholders named therein, dated as of November 10, 2004
	10	.2†(1)	Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers
	10	.3†	Registrant’s Senior Executive Incentive Compensation Plan (filed as Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2006 and incorporated by reference herein)

89

Exhibit
Number			Description
	10	.4†(1)	Amended and Restated 1994 Stock Plan and forms of agreements thereunder
	10	.5†	Amended and Restated 2001 Special Stock Option Plan and forms of agreements thereunder (filed as Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated by reference herein)
	10	.6†	Amended and Restated 2004 Stock Option and Incentive Plan and forms of agreements thereunder (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.7*	Lease Agreement between the Registrant and Burlington Crossing Office LLC for premises located at 63 South Avenue, Burlington, Massachusetts, dated as of October 29, 2002, as amended
	10	.8†	Form of Executive Agreement between the Registrant and certain executive officers of the Registrant, as amended (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 8, 2009 and incorporated by reference herein)
	10	.9†(1)	Employment Agreement between the Registrant and Colin Angle, dated as of January 1, 1997
	10	.10†(1)	Employment Agreement between the Registrant and Joseph W. Dyer, dated as of February 18, 2004
	10	.11(1)	Government Contract DAAE07-03-9-F001 (Small Unmanned Ground Vehicle)
	10	.12(1)	Government Contract N00174-03-D-0003 (Man Transportable Robotic System)
	10	.13†	2005 Stock Option and Incentive Plan, as amended, and forms of agreements thereunder (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 2, 2009 and incorporated by reference herein)
	10	.14#(1)	Manufacturing and Services Agreement between the Registrant and Gem City Engineering Corporation, dated as of July 27, 2004
	10	.15†	Non-Employee Directors’ Deferred Compensation Program, as amended (filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2007 and incorporated by reference herein)
	10	.16	Lease Agreement between the Registrant and Boston Properties Limited Partnership for premises located at 4-18 Crosby Drive, Bedford, Massachusetts, dated as of February 22, 2007 (filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2006 and incorporated by reference herein)
	10	.17	Credit Agreement between the Registrant and Bank of America, N.A., dated as of June 5, 2007 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.18	Master Loan and Security Agreement between the Registrant and Banc of America Leasing and Capital, LLC, dated as of June 13, 2007 and Addendum to Master Loan and Security Agreement between the Registrant and Banc of America Leasing Capital, LLC, dated as of June 19, 2007 (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.19#	Manufacturing Agreement between the Registrant and Kin Yat Industrial Co. Ltd., dated as of March 23, 2007 (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.20†	Senior Executive Incentive Compensation Plan (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2008 and incorporated by reference herein)
	10	.21†	Transitional Services and Departure Agreement by and between the Registrant and Geoffrey P. Clear, dated April 30, 2008 (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2008 and incorporated by reference herein)
	10	.22	First Amendment and Waiver to Credit Agreement by and between the Registrant and Bank of America, N.A., dated April 30, 2008 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 29, 2008 and incorporated by reference herein)
	10	.23	Second Amendment and Waiver to Credit Agreement by and between the Registrant and Bank of America, N.A., dated September 5, 2008 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 10, 2008 and incorporated by reference herein)

90

Exhibit
Number			Description
	10	.24	First Amendment to Note by and between the Registrant and Bank of America, N.A., dated April 30, 2008 (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 29, 2008 and incorporated by reference herein)
	10	.25†	Form of Deferred Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and incorporated by reference herein)
	10	.26†	Form of Restricted Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and incorporated by reference herein)
	10	.27	Amendment No. 1 to the Master Loan and Security Agreement between the Registrant and Banc of America Leasing and Capital, LLC, dated as of May 15, 2008 (filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and incorporated by reference herein)
	10	.28†	Amended and Restated Independent Contractor Agreement by and between the Registrant and Rodney A. Brooks, dated August 8, 2008 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008 and incorporated by reference herein)
	10	.29†	Employment Separation Agreement by and between the Registrant and Helen Greiner, dated October 22, 2008 (filed as Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the year ended December 27, 2008 and incorporated by reference herein)
	10	.30*	Third Amendment to Credit Agreement by and between the Registrant and Bank of America, N.A., dated February 12, 2010
	10	.31*	Second Amendment to Note by and between the Registrant and Bank of America, N.A., dated February 12, 2010
	21	.1	Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated by reference herein)
	23	.1*	Consent of PricewaterhouseCoopers LLP
	24	.1	Power of Attorney (incorporated by reference to the signature page of this report on Form 10-K)
	31	.1*	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
	31	.2*	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
	32	.1*	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

†	Indicates a management contract or any compensatory plan, contract or arrangement.
#	Confidential treatment requested for portions of this document.
(1)	Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-126907)
*	Filed herewith

91

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

iROBOT CORPORATION

By:  /s/  Colin M. Angle

Colin M. Angle

Chairman of the Board,

Chief Executive Officer and Director

Date: February 19, 2010

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Colin M. Angle and John Leahy, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following persons in the capacities indicated on February 19, 2010.

Signature	Title(s)
/s/  Colin M. Angle Colin M. Angle	Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)
/s/  John Leahy John Leahy	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
/s/  Alison Dean Alison Dean	Senior Vice President, Corporate Finance (Principal Accounting Officer)
/s/  Ronald Chwang Ronald Chwang	Director
/s/  Jacques S. Gansler Jacques S. Gansler	Director
/s/  Rodney A. Brooks Rodney A. Brooks	Director
/s/  Andrea Geisser Andrea Geisser	Director
/s/  George C. McNamee George C. McNamee	Director

92

Signature	Title(s)
/s/  Helen Greiner Helen Greiner	Director
/s/  Peter Meekin Peter Meekin	Director
/s/  Paul J. Kern Paul J. Kern	Director
/s/  Paul Sagan Paul Sagan	Director

93

EXHIBIT INDEX

Exhibit
Number			Description
	2	.1	Agreement and Plan of Merger by and among the Registrant, Farragut Acquisition, LLC, Nekton Research, LLC and the Members Representative named therein, dated September 5, 2008 (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on September 8, 2008 and incorporated by reference herein)
	3	.1(1)	Form of Second Amended and Restated Certificate of Incorporation of the Registrant dated November 15, 2005
	3	.2(1)	Amended and Restated By-laws of the Registrant
	4	.1(1)	Specimen Stock Certificate for shares of the Registrant’s Common Stock
	4	.2(1)	Shareholder Rights Agreement between the Registrant and Computershare Trust Company, Inc., as the Rights Agent dated November 15, 2005
	10	.1(1)	Fifth Amended and Restated Registration Rights Agreement by and among the Registrant, the Investors and the Stockholders named therein, dated as of November 10, 2004
	10	.2†(1)	Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers
	10	.3†	Registrant’s Senior Executive Incentive Compensation Plan (filed as Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2006 and incorporated by reference herein)
	10	.4†(1)	Amended and Restated 1994 Stock Plan and forms of agreements thereunder
	10	.5†	Amended and Restated 2001 Special Stock Option Plan and forms of agreements thereunder (filed as Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated by reference herein)
	10	.6†	Amended and Restated 2004 Stock Option and Incentive Plan and forms of agreements thereunder (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.7*	Lease Agreement between the Registrant and Burlington Crossing Office LLC for premises located at 63 South Avenue, Burlington, Massachusetts, dated as of October 29, 2002, as amended
	10	.8†	Form of Executive Agreement between the Registrant and certain executive officers of the Registrant, as amended (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 8, 2009 and incorporated by reference herein)
	10	.9†(1)	Employment Agreement between the Registrant and Colin Angle, dated as of January 1, 1997
	10	.10†(1)	Employment Agreement between the Registrant and Joseph W. Dyer, dated as of February 18, 2004
	10	.11(1)	Government Contract DAAE07-03-9-F001 (Small Unmanned Ground Vehicle)
	10	.12(1)	Government Contract N00174-03-D-0003 (Man Transportable Robotic System)
	10	.13†	2005 Stock Option and Incentive Plan, as amended, and forms of agreements thereunder (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 2, 2009 and incorporated by reference herein)
	10	.14#(1)	Manufacturing and Services Agreement between the Registrant and Gem City Engineering Corporation, dated as of July 27, 2004
	10	.15†	Non-Employee Directors’ Deferred Compensation Program, as amended (filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2007 and incorporated by reference herein)
	10	.16	Lease Agreement between the Registrant and Boston Properties Limited Partnership for premises located at 4-18 Crosby Drive, Bedford, Massachusetts, dated as of February 22, 2007 (filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2006 and incorporated by reference herein)
	10	.17	Credit Agreement between the Registrant and Bank of America, N.A., dated as of June 5, 2007 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.18	Master Loan and Security Agreement between the Registrant and Banc of America Leasing and Capital, LLC, dated as of June 13, 2007 and Addendum to Master Loan and Security Agreement between the Registrant and Banc of America Leasing Capital, LLC, dated as of June 19, 2007 (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)

Exhibit
Number			Description
	10	.19#	Manufacturing Agreement between the Registrant and Kin Yat Industrial Co. Ltd., dated as of March 23, 2007 (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein)
	10	.20†	Senior Executive Incentive Compensation Plan (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2008 and incorporated by reference herein)
	10	.21†	Transitional Services and Departure Agreement by and between the Registrant and Geoffrey P. Clear, dated April 30, 2008 (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2008 and incorporated by reference herein)
	10	.22	First Amendment and Waiver to Credit Agreement by and between the Registrant and Bank of America, N.A., dated April 30, 2008 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 29, 2008 and incorporated by reference herein)
	10	.23	Second Amendment and Waiver to Credit Agreement by and between the Registrant and Bank of America, N.A., dated September 5, 2008 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 10, 2008 and incorporated by reference herein)
	10	.24	First Amendment to Note by and between the Registrant and Bank of America, N.A., dated April 30, 2008 (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 29, 2008 and incorporated by reference herein)
	10	.25†	Form of Deferred Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and incorporated by reference herein)
	10	.26†	Form of Restricted Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and incorporated by reference herein)
	10	.27	Amendment No. 1 to the Master Loan and Security Agreement between the Registrant and Banc of America Leasing and Capital, LLC, dated as of May 15, 2008 (filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and incorporated by reference herein)
	10	.28†	Amended and Restated Independent Contractor Agreement by and between the Registrant and Rodney A. Brooks, dated August 8, 2008 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2008 and incorporated by reference herein)
	10	.29†	Employment Separation Agreement by and between the Registrant and Helen Greiner, dated October 22, 2008 (filed as Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the year ended December 27, 2008 and incorporated by reference herein)
	10	.30*	Third Amendment to Credit Agreement by and between the Registrant and Bank of America, N.A., dated February 12, 2010
	10	.31*	Second Amendment to Note by and between the Registrant and Bank of America, N.A., dated February 12, 2010
	21	.1	Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated by reference herein)
	23	.1*	Consent of PricewaterhouseCoopers LLP
	24	.1	Power of Attorney (incorporated by reference to the signature page of this report on Form 10-K)
	31	.1*	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
	31	.2*	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
	32	.1*	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

†	Indicates a management contract or any compensatory plan, contract or arrangement.
#	Confidential treatment requested for portions of this document.
(1)	Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-126907)
*	Filed herewith

EX-10.7

                                                                    EXHIBIT 10.7

                                  LEASE BETWEEN
                         BURLINGTON CROSSING OFFICE LLC
                                       AND
                               iROBOT CORPORATION
                                       FOR
                                 63 SOUTH AVENUE
                            BURLINGTON, MASSACHUSETTS



                                      INDEX

                                                      
ARTICLE 1 - REFERENCE DATA

  1.1.   Subject Referred To                              1
  1.2.   Exhibits                                         3

ARTICLE 2 - PREMISES AND TERM                             4

  2.1.   Premises                                         4
  2.2.   Term                                             4

ARTICLE 3 - CONSTRUCTION                                  5

  3.1.   Intentionally Deleted                            5
  3.2.   Intentionally Deleted                            5
  3.3.   General Provisions Applicable to Construction    5
  3.4.   Preparation of Premises for Occupancy            5

ARTICLE 4 - RENT                                          5

  4.1.   Rent                                             5
  4.2.   Operating Cost Escalation                        5
  4.3.   Payments                                         9

ARTICLE 5 - LANDLORD'S COVENANTS/REPRESENTATIONS          9

  5.1.   Landlord's Covenants during the Term             9
  5.2.   Interruptions                                   12
  5.3.   Landlord' s Representations                     13

ARTICLE 6 - TENANT'S COVENANTS                           13

  6.1.   Tenant's Covenants during the Term              13
  6.2.   Approval by Tenant's Board of Directors         20

ARTICLE 7 - CASUALTY AND TAKING                          20

  7.1.   Casualty and Taking                             20
  7.2.   Reservation of Award                            21



                                        i



                                      INDEX
                                   (CONTINUED)

                                                      
ARTICLE 8 - RIGHTS OF MORTGAGEE                          21

  8.1.     Priority of Lease                             21
  8 2.     Limitation on Mortgagee's Liability           22
  8.3.     Intentionally Deleted                         22
  8.4.     No Prepayment or Modification, etc.           22
  8.5.     No Release or Termination                     22
  8.6.     Continuing Offer                              23
  8.7.     Mortgagee's Approval                          23
  8.8.     Submittal of Financial Statement              23

ARTICLE 9 - DEFAULT                                      23

  9.1.     Events of Default                             23
  9.2.     Tenant's Obligations After Termination        24

ARTICLE 10 - MISCELLANEOUS                               25

  10.1.    Titles                                        25
  10.2.    Notice of Lease                               25
  10.3.    Intentionally Deleted                         25
  10.4.    Notices from One Party to the Other           25
  10.5.    Bind and Inure                                25
  10.6.    No Surrender                                  26
  10.7.    No Waiver, Etc.                               26
  10.8.    No Accord and Satisfaction                    26
  10.9.    Cumulative Remedies                           26
  10.10.   Partial Invalidity                            27
  10.11a.  Landlord's Right to Cure                      27
  10.11b.  Tenant's Right to Cure                        27
  10.12.   Estoppel Certificate                          27
  10.13.   Waiver of Subrogation                         28
  10.14.   Brokerage                                     28
  10.15.   Confidentiality                               28

ARTICLE 11 - SECURITY DEPOSIT                            29



                                       ii


                    Date of Lease Execution October 29, 2002

                                 REFERENCE DATA

1.1.  SUBJECTS REFERRED TO

      Each reference in this Lease to any of the following subjects shall
      incorporate the data stated for that subject in this Section 1.1

                                     
Landlord                                Burlington Crossing Office LLC

Managing Agent                          The Gutierrez Company

Landlord's and Managing
Agent's Address                         Burlington Office Park
                                        One Wall Street
                                        Burlington, Massachusetts 01803

Landlord's Representative               John A Cataldo, Executive Vice President

Tenant                                  iRobot Corporation

Tenant's Address (for Notice & Billing) Twin City Office Center
                                        22 McGrath Highway, Suite 6
                                        Somerville, MA 02143

Tenant's Representative                 Glen Weinstein

Building                                63 South Avenue
                                        Burlington, Massachusetts

Floor                                   First

Tenant's Space                          Such space shown on the plan attached
                                        hereto as Exhibit "A" located within the
                                        Building on the Floor

Rentable Floor Area of Tenant's Space   24,004 Square Feet

Total Rentable Floor Area of the
Building                                81,685 Square Feet

Commencement Date                       December 1, 2002

Free Rent Period                        See Section 4.1



                                        1


                                     
Term Expiration Date                    December 31, 2008

Term                                    Six years, and one month

Fixed Rent                              Months 1-2    No rent due  $0.00 monthly
                                        Months 3-8    $9.90/RSF    $19,803.30
                                         monthly
                                        Months 9-14   $11.90/RSF   $23,803.97
                                         monthly
                                        Months 15-25  $17.40/RSF   $34,805.80
                                         monthly
                                        Months 26-37  $19.40/RSF   $38,806.47
                                         monthly
                                        Months 38-49  $20.40/RSF   $40,806.80
                                         monthly
                                        Months 50-61  $21.40/RSF   $42,807.13
                                         monthly
                                        Months 62-73  $22.40/RSF   $44,807.47
                                         monthly

Monthly Fixed Rent                      For each month during the Term, the
                                        monthly Fixed Rent amount set forth
                                        above

Annual Estimated Operating Costs        Actuals CY 2003 (approximately $7.25/RSF
                                        - included in the Fixed Rent)

Estimated Cost of Electrical Service    To be separately submetered in
to Tenant's Space                       accordance with  Exhibit "D"
                                        The anticipated cost of such
                                        electricity is  90 cents  ($0.90)
                                        per rentable square foot

First Fiscal Year for Tenant's Paying
Operating Costs Escalation              Year beginning January 1, 2004

Security Deposit                        See Article 11

Guarantor                               None

Permitted Uses                          The development, marketing,
                                        manufacturing, machining, sale and
                                        delivery of robots and associated
                                        technology and the providing of
                                        professional services in connection
                                        therewith

Real Estate Broker(s)                   CB Richard Ellis/Whittier Partners, Inc
                                        Richards Barry Joyce & Partners

Public Liability Insurance - Bodily
Injury and Property Damage              Each Occurrence $1,000,000
                                        Aggregate $2,000,000



                                        2


                        
Special Provisions         Exhibit "H"  Option to Extend
                           Exhibit "T"  Expansion Rights/ Right of First Refusal
                           Exhibit "K"  Subordination, Non-Disturbance
                                        and Attornment Agreement



1.2.  EXHIBITS

      The Exhibits listed below in this Section are incorporated in this Lease
      by reference and are to be construed as part of this Lease:

EXHIBIT A   Plan Showing Tenant's Space
EXHIBIT B   Legal Description of Lot
EXHIBIT C   Intentionally Deleted
EXHIBIT D   Landlord's Services
EXHIBIT E   Rules and Regulations
EXHIBIT F   Intentionally Deleted
EXHIBIT G   Estoppel Certificate
EXHIBIT H   Option to Extend
EXHIBIT I   Expansion Rights / Right of First Refusal
EXHIBIT J   Intentionally Deleted
EXHIBIT K   Subordination, Non-Disturbance and Attornment Agreement

                                        3


                                    ARTICLE 2.
                                PREMISES AND TERM.

2.1.  PREMISES.

      Subject to and with the benefit of the provisions of this Lease and any
ground lease or land disposition agreement relating to that certain parcel of
land on which the Building is located known as Lot 14 on Land Court Plan 6728J,
as more particularly described on Exhibit "B" attached hereto and made a part
hereof (the "Lot"), Landlord hereby leases to Tenant and Tenant leases from
Landlord, Tenant's Space in the Building, excluding exterior faces of exterior
walls, the common facilities area and building service fixtures and equipment
serving exclusively or in common other parts of the Building Tenant's Space,
with such exclusions, is hereinafter referred to as the "Premises".

      Tenant shall have, as appurtenant to the Premises, the right to use in
common with others entitled thereto, subject to reasonable rules of general
applicability to tenants of the Building from time to time made by Landlord of
which Tenant is given notice(a) the common facilities included in the Building
or on the Lot, including the parking facilities (which currently consists of 362
parking spaces and which at all times during the Term shall consist of at least
3.3 spaces per 1,000 square feet of leased area, the parking facilities shall be
used by Tenant on a "non-reserved" basis with all other tenants in the Building,
including their employees and/or invitees, and for which use there shall not be
an additional charge to Tenant, its employees or invitees), bathrooms and other
facilities, to the extent from time to time designated by Landlord, and (b) the
Building service fixtures and equipment serving the Premises Other tenants of
the Building have been provided use of the parking spaces on the same
non-reserved basis as provided to Tenant pursuant to subparagraph (a) above.

      Landlord reserves the right from time to time, without unreasonable
interference with Tenant's use (a) to install, repair, replace, use, maintain
and relocate for service to the Premises and to other parts of the Building or
either, building service fixtures and equipment wherever located in the
Building, and (b) to alter or relocate any other common facility provided that
substitutions are substantially equivalent or better.

2.2.  TERM.

      To have and to hold for a period (the 'Term") commencing on the
Commencement Date and continuing until the Term Expiration Date, unless sooner
terminated as provided in Section 7 1 or in Article 9, or unless extended as
provided in Exhibit "H" hereto.

                                        4


                                   ARTICLE 3.
                                  CONSTRUCTION.

3.1.  INTENTIONALLY DELETED.

3.2.  INTENTIONALLY DELETED.

3.3.  GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION.

      All construction work required or permitted by this Lease, shall be done
in a good and workmanlike manner and in compliance with all applicable laws and
all lawful ordinances, regulations and orders of governmental authority and
insurers of the Building Landlord may inspect any work of Tenant at reasonable
times and shall promptly give notice of observed defects.

3.4.  PREPARATION OF PREMISES FOR OCCUPANCY.

      Landlord shall deliver the Premises on an "as-is" basis subject to a
general clean-up of the space to include "touch up" painting where necessary.
Landlord represents that the Building's systems are in good working order and
fully functional.

                                   ARTICLE 4.
                                      RENT.

4.1.  RENT.

      Tenant agrees to pay, without any offset or reduction whatever, fixed rent
equal to l/12th of the Fixed Rent in equal installments in advance on the first
day of each calendar month included in the Term, and for any portion of a
calendar month at the beginning or end of the Term, at the pro rata rate payable
for such portion in advance. The term "Rent" shall at all times be used herein
to mean Fixed Rent plus additional rent payable under this Lease Notwithstanding
the foregoing, Fixed Rent shall be abated from December 1, 2002 through January
31, 2003.

4.2.  OPERATING COST ESCALATION.

      With respect to the First Fiscal Year for Tenant's Paying Operating Cost
Escalation, or fraction thereof, and any Fiscal Year (as such term shall refer
to the successive twelve (12) month periods commencing on January 1st and ending
on December 31st included within the Term) or fraction thereafter, Tenant shall
pay to Landlord, as additional rent, Operating Cost Escalation (as defined
below), if any, on or before the thirtieth (30th) day following receipt by
Tenant of Landlord's Statement (as defined below) As soon as practicable after
the end of each Fiscal Year ending during the Term and after Lease termination,
Landlord shall render a statement ("Landlord's Statement") in reasonable detail
and according to usual accounting.

                                        5


practices certified by Landlord and showing for the preceding Fiscal Year or
fraction thereof, as the case may be, "Landlord's Operating Costs", and
specifying Tenant's "Pro Rata Share" (which such term shall refer to the
fraction, the numerator of which is the Rentable Floor Area of Tenant's Space,
and the denominator of which is the Total Rentable Floor Area of the Building)
for such Fiscal Year,

      EXCLUDING the interest and amortization on mortgages for the Building and
Lot or leasehold interests therein and the cost of special services rendered to
tenants (including Tenant) for which a special charge is made, depreciation of
buildings and other improvements, improvements, repairs or alterations to spaces
leased to other tenants, costs of any items to the extent Landlord receives
reimbursement from insurance proceeds or from a third party, and expenses for
capital items other than those permitted for purposes of reducing Landlord's
Operating Costs pursuant to the following paragraph,

      BUT INCLUDING, without limitation real estate taxes on the Building and
Lot, installments and interest on assessments for public betterments or public
improvements, expenses of any proceedings for abatement of taxes and assessments
with respect to any Fiscal Year or fraction of a Fiscal Year, provided, however,
that any tax refunds shall be applied to reduce Landlord's Operating Costs,
premiums for insurance, compensation and all fringe benefits, workmen's
compensation, insurance premiums and payroll taxes paid by Landlord to, for or
with respect to all persons engaged in the operating, maintaining, or cleaning
of the Building and Lot, steam, water, sewer, electric, gas, telephone, and
other utility charges not billed directly to tenants by Landlord or the utility,
but not including the cost to Landlord of electricity furnished for lighting,
electrical facilities, equipment, machinery, fixtures and appliances used by
Tenant in Tenant's Space (other than Building heating, ventilating and air
conditioning equipment) as set forth in Paragraph VII of Exhibit "D", costs of
building and cleaning supplies and equipment (including rental), cost of
maintenance, cleaning and repairs, cost of snow plowing or removal, or both, and
care of landscaping, payments to independent contractors under service contracts
for cleaning, operating, managing (not to exceed five percent (5%) of collected
gross rents of the Building), maintaining and repairing the Building and Lot
(which payments may be to affiliates of Landlord provided the same are at
reasonable rates consistent with the type of occupancy and the services
rendered), the cost of providing amenities to the Building, and all other
reasonable and necessary expenses paid in connection with the operation,
cleaning, maintenance, and repair of the Building and Lot, or either, and
properly chargeable against income, it being agreed that if Landlord installs a
new or replacement capital item for the purpose of reducing Landlord's Operating
Costs, the annual costs thereof as reasonably amortized by Landlord over the
useful life of the item so installed in accordance with generally accepted
accounting principles, with legal interests on the unamortized amount, shall be
included in Landlord's Operating Costs.

      In case of services which are not rendered to all areas on a comparable
basis or in case service consumption vanes among tenants in the Building, the
proportion allocable to the Premises shall be the same proportion which the
Rentable Floor Area of Tenant's Space bears to the total rentable floor area to
which such service is so rendered, or to which such

                                        6


disproportionate service or use is rendered (such latter area to be determined
in the same manner as the Total Rentable Floor Area of the Building).

      Notwithstanding anything contained herein to the contrary, Tenant is not
obligated to pay its Pro Rata Share of Landlord's Operating Costs which is
included in Fixed Rent at such amount equal to the actual Landlord's Operating
Costs for CY 2003 (approximately $7.25 per RSF, but shall only be obligated to
pay the increase above such amount (i.e Operating Cost Escalation) as herein
provided.

      "Operating Cost Escalation" shall be equal to (a) less (b).

      (a)   the product of Landlord's Operating Costs per rentable square foot
            (based upon the Total Rentable Floor Area of the Building as set
            forth in Section 1.1 hereof) as indicated in Landlord's Statement
            times the Rentable Floor Area of Tenant's Space, and

      (b)   the product of the Annual Estimated Operating Costs per rentable
            square foot (based upon the Total Rentable Floor Area of the
            Building as set forth in Section 1.1 hereof) times the Rentable
            Floor Area of Tenant's Space, which shall never be less than such
            amount equal to the actual Landlord's Operating Costs for CY 2003
            (approximately $7.25 RSF and which is already included in Fixed
            Rent).

      If, with respect to any Fiscal Year or fraction thereof during the Term,
Tenant is obligated to pay Operating Cost Escalation, then Tenant shall pay, as
additional rent, on the first day of each month of each ensuing Fiscal Year
thereafter, until Landlord's Statement for an ensuing Fiscal Year reflects that
Tenant is not obligated to pay Operating Cost Escalation, Estimated Monthly
Escalation Payments equal to 1/12th of the annualized Operating Cost Escalation
for the immediately preceding Fiscal Year, Estimated Monthly Escalation Payments
for each ensuing Fiscal Year shall be made retroactively from the first day of
such Fiscal Year. In no event shall Tenant be obligated to pay more than the
actual Operating Cost Escalation during any Fiscal Year. Therefore, for any
Fiscal Year, such Estimated Monthly Escalation Payments shall be credited
towards Tenant's obligation to pay an Operating Cost Escalation for such Fiscal
Year, with an additional payment made by Tenant or credit issued by Landlord, as
applicable.

      The term "real estate taxes" as used above shall mean all taxes of every
kind and nature assessed by any governmental authority on the Lot, the Building
and improvements, or both, which the Landlord shall become obligated to pay
because of or in connection with the ownership, leasing and operation of the
Lot, the Building and improvements, or both, subject to the following There
shall be excluded for such taxes all income taxes, excess profits taxes, excise
taxes, franchise taxes, estate, succession, inheritance and transfer taxes,
provided, however, that if at any time during the Term the present system of ad
valorem taxation of real property shall be changed so that in lieu of the whole
or any part of the ad valorem tax on real property, there shall be assessed on
Landlord a capital levy or other tax on the gross rents.

                                        7


received with respect to the Lot, Building and improvements, or both, a federal,
state, county, municipal, or other local income, franchise, excise or similar
tax, assessment, levy or charge (distinct from any now in effect) measured by or
based, in whole or in part, upon any such gross rents, then any and all of such
taxes, assessments, levies or charges, to the extent so measured or based, shall
be deemed to be included within the term "real estate taxes." Upon Tenant's
reasonable request, Landlord shall furnish to Tenant copies of receipted real
estate tax bills showing payment in full of the real estate taxes applicable to
the Lot (and all improvements thereon) for the preceding tax fiscal year. Under
no circumstance will "real estate taxes" include any taxes now due or which
become due for a period prior to the Commencement Date.

      Landlord shall have the right from time to time during the Term hereof,
but not more than once per lease year, to change the periods of accounting under
this Section 4.2 to any annual period other than the Fiscal Year and upon any
such change all items referred to in this Section shall be appropriately
apportioned. In all Landlord's Statements, rendered under this Section, amounts
for periods partially within and partially without the accounting periods shall
be appropriately apportioned, and any items which are not determinable at the
time of a Landlord's Statement shall be included therein on the basis of
Landlord's estimate, and with respect thereto Landlord shall render promptly
after determination a supplemental Landlord's Statement, and appropriate
adjustment shall be made according thereto. All Landlord's Statements shall be
prepared on an accrual basis of accounting.

      All records that the Landlord is required to maintain hereunder shall be
maintained by the Landlord for a period of two (2) years following the
expiration of the Fiscal Year to which such records relate. Tenant shall have
the right, through its employees or representatives, to examine and audit such
records at reasonable times, but no more than once per Fiscal Year, upon not
less than five (5) days prior written notice. Such records shall be maintained
at Landlord's Address set forth in Section 1.1, or such other place within the
Commonwealth of Massachusetts as Landlord shall designate from time to time for
the keeping of such records. The costs of such audits shall be borne by Tenant,
provided, however, that if such audit establishes that the actual Operating Cost
Escalation for the Fiscal Year in question is less than the Landlord's final
determination of the Operating Cost Escalation as set forth in Landlord's
Statement submitted to Tenant by at least five percent (5%), then Landlord shall
pay the reasonable cost of such audit. If as a result of such audit, it is
determined that Tenant must pay additional amounts to Landlord on account of the
Operating Cost Escalation, or that Tenant has overpaid Landlord on account of
the Operating Cost Escalation, then the undercharged or overpaid party shall
reimburse the other party for the payment due, together with interest thereon
from the date of Landlord's Statement at the interest rate set forth in Section
4.3 hereof.

      Notwithstanding any other provision of this Section 4.2, if the Term
expires or is terminated as of a date other than the last day of a Fiscal Year
at the end of the Term, Tenant's last payment to Landlord under this Section 4.2
shall be made on the basis of Landlord's best estimate of the items otherwise
includable in Landlord's Statement and shall be made on or before the later of
(a) ten (10) days after Landlord delivers such estimate to Tenant, or (b) the
last day of the Term, with an appropriate payment or refund to be made upon
submission of Landlord's Statement.

                                        8


4.3   PAYMENTS.

      All payments of fixed and additional rent shall be made to Managing Agent,
or to such other person as Landlord may from time to time designate. If any
installment of Rent, fixed or additional, or on account of leasehold
improvements performed by Landlord or its contractor on Tenant's behalf,
pursuant to Article 3 hereof, is paid more than ten (10) days after written
notice that such payment is due (provided, however, that Tenant shall not be
entitled to written notice more than two (2) times in any twelve (12) month
period), at Landlord's election, it shall bear interest at the rate of 18% per
annum from such due date, which interest shall be immediately due and payable as
further additional rent.

                                    ARTICLE 5
                      LANDLORD'S COVENANTS/REPRESENTATIONS

5.1   LANDLORD'S COVENANTS DURING THE TERM.

      Landlord covenants during the Term

       5.1.1  Building Services - To furnish, through Landlord's employees or
              independent contractors, the services listed in Exhibit "D",
              because of U.S. Department of Defense requirements particular to
              Tenant's Permitted Uses, Landlord further agrees that services
              provided outside of business hours may only be performed by
              citizens of the United States or permanent residents or refugees
              under 8 U.S.C. Section 1324b(a)(3),

       5.1.2  Additional Building Services - To furnish, through Landlord's
              employees or independent contractors, reasonable additional
              Building operation services upon reasonable advance request of
              Tenant at equitable rates from time to time established by
              Landlord to be paid by Tenant,

       5.1.3  Repairs - Except as otherwise provided in Article 7, to make such
              repairs to the roof, exterior walls, floor slabs, HVAC (where
              repairs are not due to Tenant's negligence) and common facilities
              of the Building as may be necessary to keep them in serviceable
              condition and in the condition set forth in Section 5.1.5 below,

       5.1.4  Quiet Enjoyment - That Landlord has the right to make this Lease
              and that Tenant, on paying the Rent and performing its obligations
              hereunder, shall peacefully and quietly have, hold and enjoy the
              Premises throughout the Term without any manner of hindrance or
              molestation from Landlord or anyone claiming under Landlord,
              subject, however, to all the terms and provisions hereof,

                                        9


       5.1.5  Common Areas - To keep and maintain the common areas and parking
              facilities of the Building in good order, condition and repair,
              including, without limitation, to snowplow and sand the parking
              areas and sidewalks located upon the Lot up to the entrances of
              the Building, and in a safe, clean, sightly and sanitary condition
              in accordance with good and accepted Building practices and in a
              manner consistent with first-class buildings of a similar size and
              nature to that of the Building,

       5.1.6  Insurance - Throughout the Term of this Lease, Landlord shall
              purchase and keep in force and effect, or cause to be purchased
              and kept in force and effect, Commercial General Liability
              Insurance, written on an occurrence and not on a claims-made
              basis, containing provisions adequate to protect Landlord from and
              against claims for bodily injury, and claims for property damage
              occurring upon the Lot or the Building located thereon and/or
              occurring on the Premises due to the acts or omissions of Landlord
              or its officers, agents, employees or independent contractors, or
              due to Landlord's failure to comply with, or default or other
              breach of, the provisions of this Lease, such insurance having
              bodily injury and property damage combined limits of liability of
              not less than $1,000,000 per occurrence, which coverage may be
              provided by supplementing the Commercial General Liability policy
              with an Umbrella Liability policy.

              Landlord shall also purchase and keep in force, or cause to be
              purchased and kept in force, insurance upon the Lot and Building
              (including the Premises) against loss or damage by a hazard
              insured under a so-called "Special Form" policy and such
              additional insurance as would customarily be carried by prudent
              owners of similar buildings in the same locale as the Building,
              and in all events including collapse, vandalism, water damage and
              sprinkler leakage, comprehensive boiler and machinery insurance,
              in an amount equal to the actual replacement cost of the Building
              (including the Premises), including the value of all additions,
              alterations, replacements and repairs thereto made by Landlord, as
              well as machinery, equipment and their systems forming a part
              thereof, or in such greater amount as shall be required to prevent
              Landlord or Tenant or other tenants of the Building from becoming
              a co-insurer within the terms of the applicable policies. The
              phrase "actual replacement cost" shall mean the actual replacement
              cost (excluding cost of excavations, foundations, and footings)
              without diminution of such cost for depreciation or obsolescence.
              The foregoing policy shall contain an agreed-amount clause waiving
              co-insurance, and Landlord shall annually update the amount of
              insurance coverage and arrange to continue the agreed-amount
              clause. The foregoing policy shall also contain, to the extent
              applicable, endorsements providing coverage for demolition costs,
              increased cost of construction, and contingent liability from
              operation of building laws.

                                       10


              Landlord shall also maintain the requisite flood insurance as is
              customary and as may be required by Landlord's mortgagee(s).

              The annual costs paid by Landlord in maintaining the foregoing
              insurance during the Term shall be included in Landlord's
              Operating Costs set forth in Article 4 hereof, and Tenant shall
              pay its pro rata share as specified in said Article 4.

              All insurance required in this Section or elsewhere in this Lease
              shall be effected under valid and enforceable policies issued by
              insurers of recognized responsibility licensed to do business in
              the State in which the Building is located and rated by Best's
              Insurance Reports or any successor publication of comparable
              standing and carrying a rating of A-VII or better, or the then
              equivalent of such rating. All such policies shall be written as
              primary policies not contributing with or in excess of coverage
              which Landlord may carry.

              Nothing contained in this Article or elsewhere in this Lease shall
              prohibit a party from obtaining a policy or policies of blanket
              insurance which may cover other property of the insuring party
              provided that (x) any such blanket policy expressly allocates to
              the properties hereunder to be insured not less than the amount of
              insurance required hereunder, and (y) such blanket policy shall
              not diminish the obligations of the insuring party so that the
              proceeds from such policies shall be an amount no less than the
              amount of the proceeds that would be available if the insuring
              obtained the required insurance under policies separately insuring
              the risks which this Lease requires to be insured.

              Each party agrees to have included in each of its insurance
              policies a waiver of the insurer's rights of subrogation against
              the other party set forth in Section 10.13 hereof to the extent
              applicable without payment of any additional premiums.

              Landlord agrees to furnish evidence of the foregoing insurance by
              providing Tenant with Certificate(s) of Insurance on or before the
              Commencement Date hereunder and from time to time hereafter during
              the Term of this Lease upon the reasonable request of Tenant,

       5.1.7  Tenant's Costs - In case Tenant shall, without any fault on its
              part, be made party to any litigation commenced by or against
              Landlord or by or against any parties in possession of the
              Premises or any part thereof claiming under Landlord, Landlord
              shall pay all costs including, without implied limitation,
              reasonable counsel fees (at rates standard to the Boston market
              rates) and judgments or amounts incurred by or imposed upon Tenant
              in connection with such litigation and also to pay all such costs
              and fees incurred by Tenant in

                                       11


              connection with the successful enforcement by Tenant of any
              obligations of Landlord under this Lease,

       5.1.8  Additional Storage Space - Landlord's affiliate, Burlington
              Crossing LLC, agrees to allow Tenant to use additional space,
              without additional rent, within the adjacent 6,000 square foot
              building owned by Landlord and further described in Exhibit "T"
              hereof for the purposes of storing one or more electric or diesel
              powered vehicles (provided, however, that all fuel is removed
              prior to storage), or other equipment related to Tenant's
              Permitted Uses. Use of such space is subject to all of the terms
              and provisions of this Lease other than the payment of Base Rent.
              Landlord may, in its sole discretion, require Tenant to remove the
              vehicles on forty-five (45) days prior written notice (i.e. such
              use shall be until such time as notified by Landlord hereunder).
              It is hereby acknowledged and agreed that Landlord shall use good
              faith, diligent efforts to provide alternate on-site storage space
              to Tenant, and

       5.1.9  Indemnity - To defend, with counsel reasonably acceptable to
              Tenant, save harmless, and indemnify Tenant from any liability for
              injury, loss, accident or damage to any person or property and
              from any claims, actions, proceedings and expenses and costs in
              connection therewith (including, without implied limitation,
              reasonable counsel fees) arising directly from the negligent or
              willful acts, omissions and/or misconduct of Landlord and not
              caused directly by the negligent or willful acts, omissions and/or
              misconduct of Tenant. In no event shall Landlord be obligated to
              indemnify Tenant for any willful or negligent act or omission of
              Tenant or any of Tenant's employees, agents, contractors or
              licensees.

5.2   INTERRUPTIONS.

      Landlord shall not be liable to Tenant for any compensation or reduction
of rent by reason of inconvenience or annoyance or for loss of business arising
from power losses or shortages or from the necessity of Landlord's entering the
Premises for any of the purposes in this Lease authorized, or for repairing the
Premises or any portion of the Building or Lot. After the Commencement Date, in
case Landlord is prevented or delayed from making any repairs, alterations or
improvements, or furnishing any service or performing any other covenant or duty
to be performed on Landlord's part, by reason of any cause reasonably beyond
Landlord's control, Landlord shall not be liable to Tenant therefore, nor,
except as expressly otherwise provided in Article 7, shall Tenant be entitled to
any abatement or reduction of rent by reason thereof, nor shall the same give
rise to a claim in Tenant's favor that such failure constitutes, actual or
constructive, total or partial, eviction from the Premises.

      Landlord reserves the right to stop any service or utility system when
necessary by reason of accident or emergency or until necessary repairs have
been completed. Except in case of emergency repairs, Landlord will give Tenant
reasonable advance notice of any contemplated

                                       12



stoppage and will use reasonable efforts to avoid unnecessary inconvenience to
Tenant by reason thereof.

      Notwithstanding the foregoing, after the Commencement Date, if a total
interruption that has been caused by the negligence or willful misconduct of
Landlord, or by construction of improvements (as opposed to repairs) continues
for more than thirty (30) consecutive business days, Tenant shall be allowed to
abate the Rent by 50% for the pro rata portion of the month in which the
interruption takes place and continues.

5.3   LANDLORD'S REPRESENTATIONS.

      Landlord hereby represents and warrants to Tenant that the existing
certificate of occupancy for the Building and the zoning classification and
local laws and ordinances applicable to the Premises as of the date of execution
of this Lease permit the use of the Premises for the Permitted Uses and allow a
sign to be placed on the Building as provided in Section 6.1.18 hereof.

                                    ARTICLE 6
                               TENANT'S COVENANTS

6.1   TENANT'S COVENANTS DURING THE TERM.

      Tenant covenants during the Term and such further time as Tenant occupies
      any part of the Premises.

       6.1.1  Tenant's Payments - To pay when due (a) all Fixed Rent and
              additional rent, (b) all taxes which may be imposed on Tenant's
              personal property in the Premises (including, without limitation,
              Tenant's fixtures and equipment) regardless to whomever assessed,
              (c) all charges by public utility for telephone and other utility
              services (including service inspections therefor) rendered to the
              Premises not otherwise required hereunder to be furnished by
              Landlord without charge and not consumed in connection with any
              services required to be furnished by Landlord without charge, and
              (d) as additional rent, all charges of Landlord for services
              rendered pursuant to Section 5.1.2 hereof,

       6.1.2  Repairs and Yielding Up - Except as otherwise provided in Article
              7 and Section 5.1.3, to keep the Premises in good order, repair
              and condition, reasonable wear only excepted, and at the
              expiration or termination of this Lease peaceably to yield up the
              Premises and all changes and additions therein in such order,
              repair and condition, first removing all goods and effects of
              Tenant and any items, the removal of which is required by
              agreement or specified therein to be removed at Tenant's election
              and which Tenant elects to remove, and repairing all damage caused
              by such

                                       13


              removal and restoring the Premises and leaving them clean and
              neat, any property not so removed shall be deemed abandoned and
              may be removed and disposed of by Landlord, in such manner as
              Landlord shall determine, and Tenant shall pay Landlord the entire
              cost and expense incurred by it by effecting such removal and
              disposition and any damage resulting therefrom, it being agreed
              that the acceptance of reasonable use and wear shall not apply so
              as to permit Tenant to keep the Premises in anything less than
              suitable, tenantable and usable condition, considering the nature
              of the Premises and the use reasonably made thereof, or in less
              than good and tenantable repair,

       6.1.3  Occupancy and Use - From the Commencement Date, to use and occupy
              the Premises only for the Permitted Uses, and not to injure or
              deface the Premises, Building or Lot, and not to permit in the
              Premises any auction sale, nuisance, or the emission from the
              Premises of any objectionable noise or odor, nor any use thereof
              which is improper, offensive, contrary to law or ordinances, or
              liable to invalidate or increase the premiums for any insurance on
              the Building or its contents or liable to render necessary any
              alteration or addition to the Building,

       6.1.4  Rules and Regulations - To comply with the Rules and Regulations
              set forth in Exhibit "E" and all other reasonable Rules and
              Regulations hereafter made by Landlord, of which Tenant has been
              given notice, for the care and use of the Building and Lot and
              their facilities and approaches, it being understood that Landlord
              shall not be liable to Tenant for the failure of other tenants of
              the Building to conform to such Rules and Regulations,

       6.1.5  Safety Appliances - To keep the Premises equipped with all safety
              appliances required by law or ordinance or any other regulation of
              any public authority because of any use made by Tenant and to
              procure all licenses and permits so required because of such use
              and, if requested by Landlord, to do any work so required because
              of such use, it being understood that the foregoing provisions
              shall not be construed to broaden in any way Tenant's Permitted
              Uses,

       6.1.6  Assignment and Subletting - Not without prior written consent of
              Landlord (which consent shall not be unreasonably withheld or
              delayed by Landlord) to assign this Lease, to make any sublease,
              or to permit occupancy of the Premises or any part thereof by
              anyone other than Tenant, voluntarily or by operation of law, it
              being understood that Tenant shall, as additional rent, reimburse
              Landlord promptly for reasonable legal and other expenses incurred
              by Landlord in connection with any request by Tenant for consent
              to assignment or subletting. No assignment or subletting shall
              affect the continuing primary liability of Tenant (which,

                                       14


              following assignment, shall be joint and several with the
              assignee). No consent to any of the foregoing in a specific
              instance shall operate as waiver in any subsequent instance. If
              Tenant requests Landlord's consent to assign this Lease or sublet
              more than forty percent (40%) of the Premises, Landlord shall have
              the option, exercisable by written notice to Tenant given within
              thirty (30) days after receipt of such request, to terminate this
              Lease as of a date specified in such notice which shall be not
              less than forty-five (45), or more than sixty (60) days after the
              date of such notice, and any rental received by Tenant from
              sub-tenant must be remitted to Landlord, provided, however, in the
              event Landlord notifies Tenant of its right to recapture as
              aforesaid, Tenant shall have the right, exercisable by written
              notice within fifteen (15) days of receipt of Landlord's notice,
              to withdraw its request to so assign or sublet the Premises.
              Landlord and Tenant hereby further agree that if Landlord approves
              a sublease or assignment with a total rentable amount greater than
              the total rent due from Tenant to Landlord under this Lease, then
              Tenant shall pay to Landlord forthwith upon Tenant's receipt of
              each such installment of such excess rent during the term of any
              approved sublease or assignment, as additional rent hereunder, an
              amount equal to fifty percent (50%) of the positive excess between
              all fixed rent and additional rent received by Tenant under the
              sublease or assignment (after reimbursement to Tenant of all
              reasonable brokerage fees, reasonable attorney fees, reasonable
              tenant improvement allowances and any other subletting costs
              reasonably incurred by Tenant) and the Fixed Rent and additional
              rent to Landlord under this Lease. In the event the sublease is
              less than the full Premises hereunder, the above rent adjustment
              shall be equally prorated on a square foot basis.

              Notwithstanding the foregoing, Tenant shall have the right,
              without Landlord's consent, to sublet, assign or otherwise
              transfer its interest in this Lease to any parent, affiliate or
              operating subsidiary of Tenant, or subsidiary or affiliate of
              Tenant's parent, or to a corporation with which it may merge or
              consolidate, provided, however, that such sublessee, assignee, or
              transferee agrees to be bound by all the terms and provisions of
              this Lease and written documentation evidencing same is provided
              to Landlord.

              Anything contained in the foregoing provisions of this section to
              the contrary notwithstanding, neither Tenant nor any other person
              having interest in the possession, use, occupancy or utilization
              of the Premises shall enter into any lease, sublease, license,
              concession or other agreement for use, occupancy or utilization of
              space in the Premises which provides for rental or other payment
              for such use, occupancy or utilization based, in whole or in part,
              on the net income or profits derived by any person from the
              Premises leased, used, occupied or utilized (other than an amount

                                       15


              based on a fixed percentage or percentages of receipts or sales),
              and any such purported lease, sublease, license, concession or
              other agreement shall be absolutely void and ineffective as a
              conveyance of any right or interest in the possession use,
              occupancy or utilization of any part of the Premises,

       6.1.7  Indemnity - To defend, with counsel reasonably acceptable to
              Landlord, save harmless, and indemnify Landlord from any liability
              for injury, loss, accident or damage to any person or property and
              from any claims, actions, proceedings and expenses and costs in
              connection therewith (including, without implied limitation,
              reasonable counsel fees) (i) arising from the omission, fault,
              willful act, negligence or other misconduct of Tenant or from any
              use made or thing done or occurring on the Premises not due to the
              omission, fault, willful act, negligence or other misconduct of
              Landlord, or (ii) resulting from the failure of Tenant to perform
              and discharge its covenants and obligations under this Lease,

       6.1.8  Tenant's Liability Insurance - To maintain public liability
              insurance in the Premises in amounts which shall, at the beginning
              of the Term, be at least equal to the limits set forth in Section
              1.1 and from time to time during the Term, shall be for such
              higher limits, if any, as are customarily carried in the area in
              which the Premises are located on property similar to the Premises
              and used for similar purposes and to furnish Landlord with the
              certificates thereof,

       6.1.9  Tenant's Workmen's Compensation Insurance - To keep all Tenant's
              employees working in the Premises covered by workmen's
              compensation insurance in statutory amounts and to furnish
              Landlord with certificates thereof,

       6.1.10 Landlord's Right of Entry - To permit Landlord and Landlord's
              agents entry, to examine the Premises at reasonable times upon
              notice to Tenant (except in the event of an emergency where notice
              shall be given as soon as possibly practicable) and, if Landlord
              shall so elect, to make repairs or replacements, to remove, at
              Tenant's expense, any changes, additions, signs, curtains, blinds,
              shades, awnings, aerials, flagpoles, or the like not consented to
              in writing, and to show the Premises to prospective tenants during
              the six (6) months preceding expiration of the Term and to
              prospective purchasers and mortgagees at all reasonable times. Any
              such entry by Landlord (or its contractors) hereunder shall be
              conducted in such a manner as to reasonably minimize any
              disruption to Tenant's operations therein. Landlord hereby
              acknowledges that in connection with any such entry, Landlord (or
              its contractors or invitees as hereinabove permitted) may come
              into contact with sensitive and confidential material of Tenant,
              and therefore Landlord agrees to enter (and/or have its
              contractors or

                                       16


              invitees enter) into reasonable disclosure documents regarding the
              non-disclosure of such sensitive and confidential material of
              Tenant,

       6.1.11 Loading - Not to place a load upon the Premises exceeding an
              average rate of one hundred and fifty (150) pounds of live load
              per square foot of floor area, and not to move any safe, vault or
              other heavy equipment in, about or out of the Premises except in
              such a manner and at such times as Landlord shall in each instance
              approve, Tenant's business machines and mechanical equipment which
              cause vibration or noise that may be transmitted to the Building
              structure or to any other leased space in the Building shall be
              placed and maintained by Tenant in settings of cork, rubber,
              spring, or other types of vibration eliminators sufficient to
              eliminate such vibration or noise,

       6.1.12 Landlord's Costs - In case Landlord shall, without any fault on
              its part, be made party to any litigation commenced by or against
              Tenant or by or against any parties in possession of the Premises
              or any part thereof claiming under Tenant, Tenant shall pay, as
              additional rent, all costs including, without implied limitation,
              reasonable counsel fees (at rates standard to the Boston market
              rates) and judgments or amounts incurred by or imposed upon
              Landlord in connection with such litigation and as additional
              rent, also to pay all such costs and fees incurred by Landlord in
              connection with the successful enforcement by Landlord of any
              obligations of Tenant under this Lease,

       6.1.13 Tenant's Property - All the furnishings, fixtures, equipment,
              effects and property of every kind, nature and description of
              Tenant and of all persons claiming by, through or under Tenant
              which, during the continuance of this Lease or any occupancy of
              the Premises by Tenant or anyone claiming under Tenant, may be on
              the Premises or elsewhere in the Building or on the Lot shall be
              at the sole risk and hazard of Tenant, and if the whole or any
              part thereof shall be destroyed or damaged by fire, water or
              otherwise, or by the leakage or bursting of water pipes, steam
              pipes, or other pipes, by theft, or from any other cause, no part
              of said loss or damage is to be charged to or to be borne by
              Landlord, except to the extent that such damage is directly caused
              by Landlord's negligence or willful misconduct,

       6.1.14 Labor or Materialmen's Liens - To pay promptly when due the entire
              cost of any work done on the premises by Tenant, its agents,
              employees, or independent contractors, not to cause or permit any
              liens for labor or material performed or furnished in connection
              therewith to attach to the Premises, and upon receipt of written
              notice of such liens, to timely discharge any such liens which may
              so attach,

                                         17


            6.1.15      Changes or Additions - Not to make any changes or
                        additions to the Premises without Landlord's prior
                        written consent (which consent shall, in the instances
                        of non-structural changes or additions only, not be
                        unreasonably withheld or delayed),

            6.1.16      Holdover - To pay to Landlord twice the Fixed and
                        additional rent then applicable for each month or
                        portion thereof Tenant shall retain possession of the
                        Premises or any part thereof after the termination of
                        this Lease, whether by lapse of time or otherwise, and
                        also to pay all damages sustained by Landlord on account
                        thereof, the provisions of this subsection shall not
                        operate as a waiver by Landlord of any right of re-entry
                        provided in this Lease,

            6.1.17      Hazardous Materials - Tenant shall not (either with or
                        without negligence) cause or permit the escape, disposal
                        or release of any biologically or chemically active or
                        other hazardous substances, or materials onto or in the
                        vicinity of the Premises. Tenant shall not allow the
                        storage or use of such substances or materials in any
                        manner not sanctioned by law or by the highest standards
                        prevailing in the industry for the storage and use of
                        such substances or materials, nor allow to be brought
                        into the Premises any such materials or substances
                        except to use in the ordinary course of Tenant's
                        business. Tenant agrees to furnish, upon Landlord's
                        request, a written inventory of the identity of such
                        substances or materials used in the ordinary course of
                        Tenant's business. Without limitation, hazardous
                        substances and materials shall include those described
                        in the Comprehensive Environmental Response,
                        Compensation and Liability Act of 1980, as amended, 42
                        U.S.C. Section 9601 et seq, the Resource Conservation
                        and Recovery Act, as amended, 42 U.S.C. Section 6901 et
                        seq, the Massachusetts Hazardous Waste Management Act,
                        as amended, M G L c 21C, the Massachusetts Oil and
                        Hazardous Material Release Prevention and Response Act,
                        as amended, M G L c 21E, any applicable local ordinance
                        or bylaw, and the regulations adopted under these acts
                        (collectively, the "Hazardous Waste Laws"). If any
                        lender or governmental agency shall ever require testing
                        to ascertain whether or not there has been any release
                        of hazardous materials, then the reasonable costs
                        thereof shall be reimbursed by Tenant to Landlord upon
                        demand as additional charges if such requirement applies
                        to the Premises and only if such release is determined
                        by a third party consultant to have been caused by
                        Tenant. If Tenant receives from any federal, state or
                        local governmental agency any notice of violation or
                        alleged violation of any Hazardous Waste Law, or if
                        Tenant is obligated to give any notice under any
                        Hazardous Waste Law, Tenant agrees to forward to
                        Landlord a copy of any such notice within three (3)
                        business days of Tenant's receipt or transmittal
                        thereof. In addition, Tenant shall execute affidavits,
                        representations and the like from time to time at
                        Landlord's request

                                       18


                        concerning Tenant's best knowledge or belief regarding
                        the presence of hazardous substances or materials on the
                        Premises. In all events, Tenant shall indemnify Landlord
                        in the manner provided in Section 6.1.7 of this Lease
                        from any release of hazardous substances or materials if
                        caused by Tenant or persons acting under Tenant on the
                        Premises or in the Building or on the Lot. Landlord
                        retains the right to inspect the Premises at all
                        reasonable times, upon reasonable notice to Tenant, to
                        ensure compliance with this paragraph. The within
                        covenants shall survive the expiration or earlier
                        termination of the Term,

            6.1.18      Signs and Advertising - Except as hereinafter expressly
                        provided, Tenant will not place or suffer to be placed
                        or maintained on the exterior or roof of the Premises
                        any sign, decoration, lettering or advertising matter or
                        any other thing of any kind Tenant will, at its sole
                        cost and expense, maintain such sign, decoration,
                        lettering, advertising matter, or other thing as may be
                        permitted hereunder in good condition and repair at all
                        times.

                        Tenant shall have the right, at its sole cost and
                        expense, subject to applicable sign ordinances and to
                        Landlord's prior approval, to install a clean and
                        professionally lettered sign customary or appropriate in
                        the conduct of Tenant's business designating iRobot
                        Corporation on the South Avenue side of the Building (in
                        such location as designated on Exhibit "A" of this
                        Lease). Landlord will fully cooperate with Tenant in
                        filing any required signage application, permit and/or
                        variance for said signage as described in this Section
                        6.1.18. Tenant is responsible for any permitting or
                        variance fees. It is hereby acknowledged by and between
                        Landlord and Tenant that Tenant shall also be entitled
                        to standard building signage at the entries to the
                        Premises and on the lobby directory of the Building,

            6.1.19      Security - All security shall be the Tenant's sole
                        responsibility. In no event shall Landlord be
                        responsible for providing any security to the Premises
                        or to the Building's common areas and parking
                        facilities,

            6.1.20      Rooftop Communication Equipment - Subject to the
                        provisions hereinafter provided, Tenant shall have the
                        right from time to time during the Term hereof to
                        install rooftop communication equipment (i.e. satellite
                        or antenna devices or GPS systems) on the roof of the
                        Building.  Subject to applicable law, matters of title,
                        and the consent of Landlord (which consent shall not be
                        unreasonably withheld or delayed), Tenant, at its sole
                        cost and expense, has the right to install such
                        equipment on the roof of the Building. The size and
                        location of the installation shall be at a site
                        acceptable to Landlord, and the approval of any such
                        size and location shall not be reasonably withheld or
                        delayed by Landlord. Tenant shall install the equipment
                        in accordance with sound construction practices, and in
                        accordance with all applicable laws, rules, codes and
                        ordinances, and in a

                                       19


                        good and workmanlike manner. Tenant shall use such
                        roofing contractor required to comply with the existing
                        roof warranties, as designated by Landlord. Tenant shall
                        indemnify, defend and hold Landlord harmless from and
                        against any and all liability or loss arising from or
                        out of the installation or removal of such rooftop
                        communication equipment. Upon expiration of the Term,
                        Tenant shall be responsible for the removal of the same
                        and for repairing any damage caused therefrom, and

            6.1.21      Access - Subject to the terms and provisions of this
                        Lease, applicable law and so long as Tenant's use is
                        conducted in such a manner as to minimize any disruption
                        to other tenants of the Building (including their
                        employees, agents, invitees, licensees and the like),
                        Tenant shall have the right to use (i) certain common
                        areas as "testing areas" (specifically such areas as are
                        designated as such on Exhibit "A" attached hereto), and
                        (ii) the side door of the Building for purposes of
                        bringing robots in and out of the Building.

6.2   APPROVAL BY TENANT'S BOARD OF DIRECTORS.

      Tenant's obligation to perform its covenants and agreements hereunder is
subject to the condition precedent that this Lease be approved by Tenant's Board
of Directors. Unless Tenant gives Landlord written notice within ten (10) days
after the date hereof that the Board disapproves this Lease, then this condition
shall be deemed to have been satisfied or waived and the provisions of this
Section 6.2 shall be of no further force or effect. If Tenant provides such
notice of disapproval to Landlord, then all of Landlord's and Tenant's
obligations hereunder shall be deemed terminated and this Lease shall terminate
without recourse to the parties hereto.

                                    ARTICLE 7
                              CASUALTY AND TAKING

7.1   CASUALTY AND TAKING.

      In case during the Term all or any substantial part of the Premises, the
Building, or Lot or any one or more of them, are damaged materially by fire or
any other cause or by action of public or other authority in consequence thereof
or are taken by eminent domain or Landlord receives compensable damage by reason
of anything lawfully done in pursuance of public or other authority, this Lease
shall terminate at Landlord's or Tenant's election, which may be made,
notwithstanding. Landlord's entire interest may have been divested, by notice
given to Tenant, or Landlord as applicable, within thirty (30) days after the
occurrence of the event giving rise to the election to terminate, which notice
shall specify the effective date of termination which shall be not less than
thirty (30) nor more than sixty (60) days after the date of notice of such
termination. If in any such case the Premises are rendered unfit for use and
occupation and the Lease is not so terminated, Landlord shall use due diligence
to put the Premises, or in case of taking, what may remain thereof (excluding
any items installed or paid for by Tenant which Tenant may be required or
permitted to remove) into proper condition for use and occupation to

                                       20


the extent permitted by the net award of insurance or damages, and a just
proportion of the Fixed Rent and additional rent according to the nature and
extent of the injury shall be abated until the Premises or such remainder shall
have been put by Landlord in such condition, and in case of a taking or any
other aforementioned cause which permanently reduces the area of the Premises, a
just proportion of the Fixed Rent and additional rent shall be abated for the
remainder of the Term and an appropriate adjustment shall be made to the Annual
Estimated Operating Costs.

7.2   RESERVATION OF AWARD.

      Landlord reserves to itself any and all rights to receive awards made for
damages to the Premises, Building or Lot and the leasehold hereby created, or
any one or more of them, accruing by reason of exercise of eminent domain or by
reason of anything lawfully done in pursuance of public or other authority.
Tenant hereby releases and assigns to Landlord all Tenant's rights to such
awards, and covenants to deliver such further assignments and assurances thereof
as Landlord may from time to time request, hereby irrevocably designating and
appointing Landlord as its attorney-in-fact to execute and deliver in Tenant's
name and behalf all such further assignments thereof. It is agreed and
understood, however, that Landlord does not reserve to itself, and Tenant does
not assign to Landlord, any damages payable for (i) movable trade fixtures
installed by Tenant or anybody claiming under Tenant, at its own expense, or
(ii) relocation expenses recoverable by Tenant from such authority in a separate
action.

                                   ARTICLE 8
                              RIGHTS OF MORTGAGEE

8.1   PRIORITY OF LEASE

      Landlord shall have the option to subordinate this Lease to any mortgagee
or deed of trust of the Lot or Building, or both ("the mortgaged premises"),
provided that the holder thereof enters into an agreement (substantially in the
form attached hereto as Exhibit "K" or such other form requested by such
mortgagee and reasonably acceptable to Tenant) with Tenant by the terms of which
the holder will agree to recognize the rights of Tenant under this Lease and to
accept Tenant as tenant of the Premises under the terms and conditions of this
Lease in the event of acquisition of title by such holder through foreclosure
proceedings or otherwise and Tenant will agree to recognize the holder of such
mortgage as Landlord in such event, which agreement shall be made to expressly
bind and inure to the benefit of the successors and assigns of Tenant and of the
holder and upon anyone purchasing the mortgaged premises at any foreclosure
sale. Any such mortgage to which this Lease shall be subordinated may contain
such terms, provisions and conditions as the holder deems usual or customary.
Unless Landlord exercises such option, this Lease shall be superior to and shall
not be subordinated to any mortgage or other voluntary lien or other encumbrance
on the mortgaged premises. Landlord agrees to obtain and furnish to Tenant a
Subordination and Non-Disturbance Agreement in said form attached hereto as
Exhibit "K" within thirty (30) days after execution of this Lease by both
parties hereto. Landlord acknowledges that Paragraph 4 of Exhibit K requires
that Tenant pay rent directly to the Mortgagee in the event demand is made upon
Tenant by Mortgagee.

                                       21


8.2   LIMITATION ON MORTGAGEE'S LIABILITY.

      Upon entry and taking possession of the mortgaged premises for any purpose
other than foreclosure, the holder of a mortgage shall have all rights of
Landlord, and during the period of such possession, the duty to perform all
Landlord's obligations hereunder. Except during such period of possession, no
such holder shall be liable, either as mortgagee or as holder of a collateral
assignment of this Lease, to perform, or be liable in damages for failure to
perform any of the obligations of Landlord unless and until such holder shall
enter and take possession of the mortgaged premises for the purpose of
foreclosing a mortgage. Upon entry for the purpose of foreclosing a mortgage,
such holder shall be liable to perform all of the obligations of Landlord,
provided that a discontinuance of any foreclosure proceeding shall be deemed a
conveyance under the provisions of Section 10.5 to the owner of the equity of
the mortgaged premises.

8.3   INTENTIONALLY DELETED.

8.4   NO PREPAYMENT OR MODIFICATION, ETC.

      No Fixed Rent, additional rent, or any other charge shall be paid more
than one (1) month prior to the due dates thereof, and payments made in
violation of this provision shall (except to the extent that such payments are
actually received by a mortgagee in possession or in the process of foreclosing
its mortgage) be a nullity as against such mortgagee, and Tenant shall be liable
for the amount of such payments to such mortgagee. No assignment of this Lease
and no agreement to make or accept any surrender, termination or cancellation of
this Lease and no agreement to modify so as to reduce the rent, change the Term,
or otherwise materially change the rights of Landlord under this Lease, or to
relieve Tenant of any obligations or liability under this Lease, shall be valid
unless consented to in writing by Landlord's mortgagees of record, if any.

8.5   NO RELEASE OR TERMINATION.

      No act or failure to act on the part of Landlord which would entitle.
Tenant under the terms of this Lease, or by law, to be relieved of Tenant's
obligations hereunder or to terminate this Lease, shall result in a release or
termination of such obligations or a termination of this Lease unless (i) Tenant
shall have first given written notice of Landlord's act or failure to act to
Landlord's mortgagees of record, if any, specifying the act or failure to act on
the part of Landlord which could or would give basis to Tenant's rights, and
(ii) such mortgagees, after receipt of such notice, have failed or refused to
correct or cure the condition complained of within a reasonable time thereafter,
but nothing contained in this Section 8.5 shall be deemed to impose any
obligation on any such mortgagee to correct or cure any such condition.
"Reasonable time" as used above means and includes a reasonable time to obtain
possession of the mortgaged premises, if the mortgagee elects to do so, and a
reasonable time to correct or cure the condition if such condition is determined
to exist.

                                       22


8.6   CONTINUING OFFER.

      The covenants and agreements contained in this Lease with respect to the
rights, powers and benefits of a mortgagee (particularly, without limitation
thereby, the covenants and agreements contained in this Article 8) constitute a
continuing offer to any person, corporation or other entity, which by accepting
or requiring an assignment of this Lease or by entry or foreclosure assumes the
obligations herein set forth with respect to such mortgagee, and such mortgagee
shall be entitled to enforce such provisions in its own name. Tenant agrees on
request of Landlord to execute and deliver from time to time any agreement which
may reasonably be deemed necessary to implement the provisions of this Article
8.

8.7   MORTGAGEE'S APPROVAL.

      Landlord's obligation to perform its covenants and agreements hereunder is
subject to the condition precedent that this Lease be approved by the holder of
any mortgage of which the Premises are a part and by the issuer of any
commitment to make a mortgage loan which is in effect on the date hereof. Unless
Landlord gives Tenant written notice within ten (10) days after the date hereof
that such holder or issuer, or both, disapprove this Lease, then this condition
shall be deemed to have been satisfied or waived and the provisions of this
Section 8.7 shall be of no further force or effect. If Landlord provides such
notice of disapproval to Tenant, then all of Landlord's and Tenant's obligations
hereunder shall be deemed terminated and this Lease shall terminate without
recourse to the parties hereto.

8.8   SUBMITTAL OF FINANCIAL STATEMENT.

      Subject to reasonable confidentiality restrictions, at any time and from
time to time during the Term of this Lease (but not more than quarterly), within
fifteen (15) days after request therefor by Landlord, Tenant shall supply to
Landlord and/or any Mortgagee a current financial statement (i.e. , unaudited
quarterly and audited for annual statements) or such other financial information
as may be reasonably required by any such party.

                                    ARTICLE 9
                                     DEFAULT

9.1   EVENTS OF DEFAULT.

      If any default by Tenant continues after written notice, in case of Fixed
Rent or additional rent for more than ten (10) days, or in any other case for
more than thirty (30) days and such additional time, if any, as is reasonably
necessary to cure the default if the default is of such a nature that it cannot
reasonably be cured in thirty (30) days, or if Tenant makes any assignment for
the benefit of creditors, or files a petition under any bankruptcy or insolvency
law, or if such a petition is filed against Tenant and is not dismissed within
ninety (90) days, or if a receiver or similar officer becomes entitled to
Tenant's leasehold hereunder and it is not returned to Tenant within ninety (90)
days, or if such leasehold is taken on execution or other process of law in any

                                       23


action against Tenant, then, and in any such cases, Landlord and the agents and
servants of Landlord may, in addition to and not in derogation of any remedies
for any preceding breach of covenant, immediately or at any time thereafter
while such default continues and without further notice and with or without
process of law, if permitted by applicable law, enter into and upon the Premises
or any part thereof in the name of the whole or mail a notice of termination
addressed to Tenant at the Premises and repossess the same as of Landlord's
former estate and expel. Tenant and those claiming through or under Tenant and
remove its and their effects (forcibly, if necessary) without being deemed
guilty of any manner of trespass and without prejudice to any remedies which
might otherwise be used for arrears of rent or prior breach of covenant, and
upon such entry or mailing as aforesaid, this Lease shall terminate, but Tenant
shall remain liable as hereinafter provided. Tenant hereby waives all statutory
rights (including, without limitation, rights of redemption, if any) to the
extent such rights may be lawfully waived, and Landlord, without notice to
Tenant, may store Tenant's effects and those of any person claiming through or
under Tenant at the expense and risk of Tenant and, if Landlord so elects, may
sell such effects at public auction or private sale and apply the net proceeds
to the payment of all sums due to Landlord from Tenant, if any, and pay over the
balance, if any, to Tenant. Notwithstanding the foregoing provisions of this
Section 9.1, Landlord shall not have the right to sell or otherwise alienate
Tenant's computers or any robotic equipment or government owned equipment.

9.2   TENANT'S OBLIGATIONS AFTER TERMINATION.

      In the event that this Lease is terminated under any of the provisions
contained in Section 9.1 or shall be otherwise terminated for breach of any
obligation of Tenant, Tenant covenants to pay forthwith to Landlord, as
compensation, the excess of the total rent reserved for the residue of the Term
over the rental value of the Premises for said residue of the Term. In
calculating the rent reserved, there shall be included, in addition to the Fixed
Rent and all additional rent, the value of all other consideration agreed to be
paid or performed by Tenant for said residue. Tenant further covenants as an
additional and cumulative obligation after any such ending to pay punctually to
Landlord all the sums and perform all the obligations which Tenant covenants in
this Lease to pay and to perform in the same manner and to the same extent and
at the same time as if this Lease had not been terminated. In calculating the
amounts to be paid by Tenant under the next foregoing covenant, Tenant shall be
credited with any amount paid to Landlord as compensation as provided in the
first sentence of this Section 9.2 and also with the net proceeds of any rents
obtained by Landlord by reletting the Premises, after deducting all Landlord's
reasonable expenses in connection with such reletting, including, without
implied limitation, all repossession costs, brokerage commissions, fees for
legal services and expense of preparing the Premises for such reletting, it
being agreed by Tenant that Landlord may (i) relet the Premises or any part or
parts thereof for a term or terms which may, at Landlord's option, be equal to
or less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant such concessions and free rent as Landlord in
its sole reasonable judgment considers advisable or necessary to relet the same,
and (ii) make such alterations, repairs and decorations in the Premises as
Landlord in its sole judgment considers advisable or necessary to relet the
same, and no action of Landlord in accordance with the foregoing or failure to
relet or to collect rent under reletting shall operate or be construed to
release or reduce Tenant's liability as aforesaid.

                                       24


      Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater, equal to, or less than the amount of the loss or damages
referred to above.

                                   ARTICLE 10
                                 MISCELLANEOUS

10.1  TITLES.

      The titles of the Articles are for convenience and are not to be
considered in construing this Lease.

10.2  NOTICE OF LEASE.

      Simultaneously, upon the execution of this Lease, both parties shall
execute and deliver a short form of this Lease in a form appropriate for
recording or registration, and if this Lease is terminated before the Term
expires, an instrument in such form acknowledging the date of termination.
Landlord hereby agrees to coordinate the execution and recording of such short
form of this Lease, at its sole cost and expense.

10.3  INTENTIONALLY DELETED.

10.4  NOTICES FROM ONE PARTY TO THE OTHER.

      No notice, approval, consent requested or election required or permitted
to be given or made pursuant to this Lease shall be effective unless the same is
in writing. Communications shall be addressed, if to Landlord, at Landlord's
Address, together with a copy to Gloria M. Gutierrez, Esq., Hinckley, Allen &
Snyder LLP, 28 State Street, Boston, MA 02109, or at such other address or
addresses as may have been specified by prior notice to Tenant and, if to
Tenant, at Tenant's Address until the Commencement Date, and thereafter at the
Premises, and in either event with a copy to Glen D. Weinstein, Esq., at the
same address as Tenant, or at such other place or places as may have been
specified by prior notice to Landlord. Any communication so addressed shall be
deemed duly served if mailed by registered or certified mail, return receipt
requested, delivered by hand, or by overnight express service by a carrier
providing a receipt of delivery.

10.5  BIND AND INURE.

      The obligations of this Lease shall run with the land, and this Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns,

                                       25


except that the Landlord named herein and each successive owner of the Premises
shall be liable only for the obligations accruing during the period of its
ownership. Neither the Landlord named herein nor any successive owner of the
Premises whether an individual, trust, a corporation or otherwise shall have any
personal liability beyond their equity interest in the Premises.

10.6  NO SURRENDER.

      The delivery of keys to any employees of Landlord or to Landlord's agent
or any employee thereof shall not operate as a termination of this Lease or a
surrender of the Premises.

10.7  NO WAIVER, ETC.

      The failure of Landlord or of Tenant to seek redress for violation of, or
to insist upon the strict performance of any covenant or condition of this Lease
or, with respect to such failure of Landlord, any of the Rules and Regulations
referred to in Section 6.1.4, whether heretofore or hereafter adopted by
Landlord, shall not be deemed a waiver of such violation nor prevent a
subsequent act, which would have originally constituted a violation, from having
all the force and effect of an original violation, nor shall the failure of
Landlord to enforce any of said Rules and Regulations against any other tenant
in the Building be deemed a waiver of any such Rules or Regulations. The receipt
by Landlord of Fixed Rent or additional rent with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach by Landlord,
unless such waiver be in writing signed by Landlord. No consent or waiver,
express or implied, by Landlord or Tenant to or of any breach of any agreement
or duty shall be construed as a waiver or consent to or of any other breach of
the same or any other agreement or duty.

10.8  NO ACCORD AND SATISFACTION.

      No acceptance by Landlord of a lesser sum than the Fixed Rent and
additional rent then due shall be deemed to be other than on account of the
earliest installment of such rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed as
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
pursue any other remedy in this Lease provided.

10.9  CUMULATIVE REMEDIES.

      The specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by Tenant of any provisions of this Lease. In addition to
the other remedies provided in this Lease, Landlord shall be entitled to seek
the restraint by injunction of the violation or attempted or threatened
violation of any of the covenants, conditions or provisions of this Lease or to
seek a decree compelling specific performance of any such covenants, conditions
or provisions.

                                       26


10.10 PARTIAL INVALIDITY.

      If any term of this Lease, or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such term to persons or circumstances other
than those as to which it is invalid or unenforceable, shall not be affected
thereby, and each term of this Lease shall be valid and enforceable to the
fullest extent permitted by law.

10.11(a) LANDLORD'S RIGHT TO CURE.

      If Tenant shall at any time default in the performance of any obligation
under this Lease which default shall remain uncured after the expiration of any
applicable notice and cure periods therefor, Landlord shall have the right, but
shall not be obligated, to enter upon the Premises and to perform such
obligation, notwithstanding the fact that no specific provision for such
substituted performance by Landlord is made in this Lease with respect to such
default. In performing such obligation, Landlord may make any payment of money
or perform any other act. All sums so paid by Landlord (together with interest
at the rate of 4% per annum in excess of the then prime rate of interest being
charged by a majority of the banks in Boston), and all necessary incidental
costs and expenses in connection with the performance of any such acts by
Landlord, shall be deemed to be additional rent under this Lease and shall be
payable to Landlord immediately on demand. Landlord may exercise the foregoing
rights without waiving any other of its rights or releasing Tenant from any of
its obligations under this Lease.

10.11(b) TENANT'S RIGHT TO CURE.

      If Landlord shall at any time default in the performance of any obligation
under this Lease beyond all applicable notice and cure periods, if expressly
provided herein, otherwise after written notice and Landlord's failure to cure
the same within twenty (20) days of receipt of such notice or such additional
time if such cure is of such nature that cannot be cured within twenty (20) days
and Landlord is diligently prosecuting such cure to completion, then Tenant
shall have the right, but shall not be obligated, to perform such obligation on
Landlord's behalf, provided that such obligation applies solely to the Premises
and not to (i) the Common Areas and, (ii) the structural components of the
Building, or (ii) the Building service fixtures and equipment not exclusively
serving the Premises. Landlord shall (within thirty (30) days of receipt thereof
showing satisfactory evidence of Tenant's payment of same) reimburse Tenant for
such costs in performing Landlord's obligations (with interest accruing if not
reimbursed by Landlord as herein required at the rate set forth in Paragraph (a)
above).

10.12 ESTOPPEL CERTIFICATE.

      Tenant and Landlord agree on the Commencement Date, and from time to time
thereafter, upon not less than fifteen (15) days' prior written request by the
other, to execute, acknowledge and deliver to the other a statement in writing
in the form attached hereto as Exhibit "G", certifying that this Lease is
unmodified and in full force and effect, that Tenant has no defenses, offsets or
counterclaims against its obligations to pay the Fixed Rent and additional

                                       27


rent and to perform its other covenants under this Lease, that there are no
uncured defaults of Landlord or Tenant under this Lease (or, if there are any
defenses, offsets, counterclaims, or defaults, setting them forth in reasonable
detail), and the dates to which the Fixed Rent, additional rent and other
charges have been paid. Any such statements delivered pursuant to this Section
10.12 may be relied upon by any prospective purchaser or mortgage of premises
which include the Premises or any prospective assignee of any such mortgagee,
and any persons specified in the notice requesting such certificate.

10.13 WAIVER OF SUBROGATION.

      Landlord and Tenant mutually agree, with respect to any hazard which is
covered by casualty or property insurance then being carried by them, or
required to be carried hereunder (whether or not such insurance is then in
effect) to release each other from any and all claims with respect to such loss,
and they further mutually agree that their respective insurance companies shall
have no rights of subrogation against the other on account thereof. Landlord and
Tenant agree that any policies presently existing or to be obtained on or after
the date hereof (including renewals of present policies) shall, to the extent
available without payment of any additional premium, include a clause or
endorsement to the effect that any such release shall not adversely affect or
impair said policies or prejudice the right of the insured to recover
thereunder. The parties further agree that if said waiver of subrogation shall
be unobtainable or unenforceable or shall void the respective policies, then
their respective policies shall not be invalidated, and said waiver shall become
null and void and of no further force and effect.

10.14 BROKERAGE.

      Tenant and Landlord represent and warrant that they have dealt with no
broker in connection with this transaction other than those listed in Section
1.1, and agrees to defend, indemnify and save Landlord or Tenant, as the case
may be, harmless from and against any and all claims for a commission arising
out of this Lease made by anyone other than those listed in Section 1.1.
Landlord agrees to pay all brokerage commissions or fees due to said brokers
listed in Section 1.1.

10.15 CONFIDENTIALITY.

      This Lease document is a confidential document by and between Landlord
and Tenant and shall not be disclosed, copied, distributed or circulated to any
person(s) other than to such parties and their respective mortgagees, successors
or assigns, their legal counsel or their accountants, without prior written
consent of the Landlord. In no event, however, shall the foregoing prevent
Tenant from disclosing the existence of the Lease or a general description of
its contents.

                                       28


                                   ARTICLE 11
                                SECURITY DEPOSIT

      A "Security Deposit" in the initial amount of One Hundred Twelve Thousand
($112,000.00) Dollars shall be delivered to Landlord prior to the Commencement
Date.  Such Security Deposit shall be held by Landlord without liability for
interest and as security for the performance of Tenant's obligations under this
Lease.

      The Security Deposit may at Tenant's election, be in the form of (a) cash
escrow or (b) a letter of credit, which letter of credit shall (i) be in form
reasonably acceptable to Landlord, (ii) name Landlord as its beneficiary, (iii)
expire not less than one (1) year after the issuance thereof, and (iv) be drawn
on an FDIC-insured financial institution reasonably satisfactory to Landlord.
Landlord hereby approves of Silicon Valley Bank. Tenant shall from time to time,
as necessary, renew or replace or amend the original and any subsequent letter
of credit no less than ten (10) days prior to the stated expiration date of the
letter of credit then held by Landlord, and if Tenant fails to renew or replace
or amend said letter of credit by not later than ten (10) days prior to
expiration, Landlord may draw upon such letter of credit and hold the proceeds
thereof in a segregated account as a Security Deposit pursuant to the terms of
this Article 1.1. Any renewal of or replacement for the original or any
subsequent letter of credit shall meet the requirements for the original letter
of credit as set forth above.

      Landlord may, from time to time, without prejudice to any other remedy,
use all or a portion of the Security Deposit to cure any default by Tenant that
remains uncured after the expiration of any applicable notice and grace periods,
including, without limitation, any uncured default in connection with any
arrearages of Fixed Rent, costs incurred by Landlord to repair damage to the
Premises caused by Tenant, and any costs incurred by Landlord to clean (other
than normal wear and tear) the Premises upon termination of this Lease.
Following any such application of the Security Deposit, Tenant shall, upon
demand, provide Landlord with an additional cash security deposit in an amount
equal to the amount of Security Deposit applied by Landlord, or, if the Security
Deposit is in the form of a letter of credit, then restore the letter of credit
to its full amount. If Tenant is not in default as of December 31, 2007 and if
Landlord has not previously had to draw down the Security Deposit, then Landlord
shall reduce the Security Deposit to an amount of Seventy-Five Thousand
($75,000.00) Dollars, and the remaining Thirty-Seven Thousand ($37,000.00)
Dollars shall be returned to Tenant. If the Security Deposit is in the form of a
letter of credit, then such reduction shall be effected as follows. Landlord
shall return the letter of credit to Tenant provided that Tenant has delivered a
replacement (or amended) letter of credit, in an amount reduced by Thirty-Seven
Thousand ($37,000.00) Dollars from the amount of the previous letter of credit,
which replacement (or amended) letter of credit shall comply with the foregoing
requirements. If Tenant is not in default at the termination of this Lease,
after Tenant surrenders the Premises to Landlord in accordance with this Lease
and all amounts due Landlord from Tenant are finally determined and paid by
Tenant or through application of the Security Deposit, the balance of the
Security Deposit shall be returned to Tenant.

      Notwithstanding the foregoing, the parties hereby agree that Tenant may
withhold up to Thirty Thousand Dollars ($30,000.00) from the Security Deposit
that, as described above, is

                                       29


due to Landlord prior to the Commencement Date, but only so long as the amount
withheld is applied toward the cost of constructing tenant improvements in the
Premises (any such construction to be performed in accordance with the terms of
this Lease) However, the amount so withheld shall subsequently be repaid to
Landlord in order to replenish the Security Deposit to its originally intended
amount of One Hundred Twelve Thousand ($112,000.00) Dollars. Such repayment
shall occur as follows beginning on the first day of the first full month of the
Term of the Lease, Tenant shall remit to Landlord, in the same manner as, and
together with, Tenant's payment of Base Rent, at least one/twelfth (1/12th) of
the total amount of the Security Deposit that was withheld, with such payments
to continue until the full amount of the Security Deposit has been restored.

                            (Signatures on next page)

                                       30


      EXECUTED as a sealed instrument in two or more counterparts on the day and
year first above written.

TENANT                                 LANDLORD

iROBOT CORPORATION                     BURLINGTON CROSSING OFFICE LLC
                                       BY  THE GUTIERREZ COMPANY,
                                           ITS MANAGING MEMBER

By /s/ Geoffrey P. Clear               By  /s/ Arturo J. Gutierrez
   --------------------------------        -------------------------------------
   Geoffrey P. Clear                        Arturo J. Gutierrez
   Chief Financial Officer                  President

                                       As to Section 5.1.8 and Exhibit I only

                                       BURLINGTON CROSSING LLC
                                       BY  THE GUTIERREZ Company,
                                           ITS MANAGING MEMBER

                                       By  /s/ Arturo J. Gutierrez
                                           -------------------------------------
                                           Arturo J. Gutierrez
                                           President

                                       31


                                   EXHIBIT "A"

                         PLAN SHOWING TENANT'S SPACE AND
                        LOCATION OF PROPOSED SIGNAGE AND
                                  TESTING AREAS

                                (To be Supplied)

                                       32


                                   EXHIBIT "B"

                            LEGAL DESCRIPTION OF LOT

      That certain parcel of land, together with the buildings and improvements
thereon, situated in the Town of Burlington, County of Middlesex, Commonwealth
of Massachusetts, and described as follows.

      Said parcel is shown as Lot 14 on Land Court Plan 6728J and contains 7.781
acres, more or less, according to said Land Court Plan.

                                       33


                                   EXHIBIT "C"

                            [INTENTIONALLY DELETED]

                                       34


                                   EXHIBIT "D"

                               LANDLORD'S SERVICES

I.    CLEANING.

      A.    General.

            1.    All cleaning work will be performed between 6:00 PM and
                  midnight, Monday through Friday, unless otherwise necessary
                  for stripping, waxing, etc.

            2.    Abnormal waste removal (e.g., bulk packaging, wood or
                  cardboard crates, refuse from cafeteria operation, etc.) shall
                  be Tenant's responsibility. Tenant's lunch room shall not be
                  deemed to be a cafeteria for purposes of this paragraph.

      B.    Daily Operations (once each weekday).

            1.    Tenant Areas.

                  a.    Empty and clean all waste receptacles. Wash receptacles
                        as necessary.

                  b.    Vacuum all rugs and carpeted areas.

                  c.    Empty, damp-wipe and dry all ashtrays.

            2.    Lavatories.

                  a.    Sweep and wash floors with disinfectant.

                  b.    Wash both sides of toilet seats with disinfectant.

                  c.    Wash all mirrors, basins, bowls, urinals.

                  d.    Spot-clean toilet partitions.

                  e.    Empty and disinfect sanitary napkin disposal
                        receptacles.

                  f.    Refill toilet tissue, towel, soap and sanitary napkin
                        dispensers.

            3.    Public Areas.

                  a.    Wipe down entrance doors and clean glass (interior and
                        exterior).

                  b.    Vacuum elevator carpets and wipe down doors and walls.

      C.    Operations as Needed (but not less than every other day).

            1.    Tenant and Public Areas.

                  a.    Buff all resilient floor areas every other day.

                  b.    Clean water coolers.

                                       35


      D.    Weekly Operations.

            1.    Tenant Areas, Lavatories, Public Areas

                  a.    Hand dust and wipe clean all horizontal surfaces with
                        treated cloths to include exposed furniture, office
                        equipment, window sills, door ledges, chair rails,
                        baseboards, convector tops, etc within normal reach.

                  b.    Remove finger marks from private entrance doors, light
                        switches, and doorways.

                  c.    Sweep all stairways.

      E.    Monthly Operations.

            1.    Tenant and Public Areas.

                  a.    Thoroughly vacuum seat cushions on chairs, sofas, etc.

                  b.    Vacuum and dust grillwork.

            2.    Lavatories.

                  a.    Wash down interior walls and toilet partitions.

      F.    As Required and Weather Permitting (but not less than three times
            per year).

            1.    Entire Building.

                  a.    Clean inside of all windows.

                  b.    Clean outside of all windows.

      G.    Yearly.

            1.    Tenant and Public Areas.

                  a.    Strip and wax all resilient tile floor areas.

II.   HEATING, VENTILATING AND AIR CONDITIONING.

      1.    Landlord shall provide and maintain in good order and repair during
            the Term heating, ventilation and air conditioning as required to
            provide reasonably comfortable temperatures for normal business day
            occupancy (except holidays), Monday through Friday, from 8:00 AM to
            8:00 PM, and Saturday from 8:00 AM to 1:00 PM if so requested by
            Tenant by providing 24 hour notice. HVAC services beyond the
            aforesaid hours of operation can be made available to Tenant, if so
            requested by Tenant by providing 24 hour notice, at a cost of
            approximately $15 per hour per unit.

      2.    Maintenance on any additional or special air conditioning equipment
            and the associated operating cost will be at Tenant's expense.

                                       36


III.  WATER.

      Hot water for lavatory purposes and cold water for drinking, lavatory and
      toilet purposes.

IV.   ELEVATORS (If building is elevated).

      Elevators for the use of all tenants and the general public for access to
      and from all floors of the Building, programming of elevators (including,
      but not limited to, service elevators), shall be as Landlord from time to
      time determines best for the Building as a whole.

V.    RELAMPING OF LIGHT FIXTURES.

      Relamping, ballasts and starters within the Premises.

VI.   CAFETERIA, VENDING AND PLUMBING INSTALLATIONS.

      1.    Any space to be used primarily for lunchroom or cafeteria operation
            shall be Tenant's responsibility to keep clean and sanitary.
            Cafeteria, vending machines or refreshment service installations by
            Tenant must be approved by Landlord in writing. All maintenance,
            repairs and additional cleaning necessitated by such installations
            shall be at Tenant's expense.

      2.    Except for restrooms contained in the Premises, Tenant is
            responsible for the maintenance and repair of plumbing fixtures and
            related equipment installed in the leased premises for its exclusive
            use (such as in coffee room, cafeteria or employee exercise area).

      3.    Landlord shall be responsible to provide and maintain in good order
            and repair during the Term hereof all plumbing and electrical
            systems servicing the Premises.

VII.  ELECTRICITY.

      1.    Tenant shall pay for all electricity consumed in Tenant's Space. The
            consumption shall be measured by a separate submeter, and Tenant
            shall pay for such consumption directly to Landlord. Tenant's use of
            electrical energy in Tenant's Space shall not at any time exceed the
            capacity of any of the electrical conductors or equipment in or
            otherwise serving Tenant's Space. To ensure that such capacity is
            not exceeded and to avert possible adverse effects upon the
            Building's electrical system, Tenant shall not, without prior
            written notice to Landlord in each instance, connect to the Building
            electric distribution system any fixtures, appliances or equipment
            which operates on a voltage in excess of 120 volts nominal, or make
            any alteration or addition to the electric system of the Tenant's
            Space. Tenant hereby further agrees (i) not to exceed the amperage
            for the service panel without Landlord's prior written consent, and
            (ii) to notify Landlord in the event. Tenant requires excess
            voltage, whereupon the parties will cooperate and work with each
            other to provide Tenant with such excess voltage, at Tenant's cost
            and expense Unless Landlord shall reasonably object to the
            connection of any such fixtures, appliances

                                       37


            or equipment, all additional risers or other equipment required
            therefore shall be provided by Landlord and the cost thereto shall
            be paid by Tenant upon Landlord's demand.

      2.    It is understood that the electrical service to the Premises may be
            furnished by one or more suppliers of electricity and that the cost
            of electricity may be billed as a single charge or divided into and
            billed in a variety of categories such as distribution charges,
            transmission charges, generation charges, public good charges and
            other similar categories and may also include a reasonable fee,
            commission or other charge by a broker, aggregator or other
            intermediary for obtaining or arranging the supply of electricity.
            Landlord shall, upon providing prior written notice to Tenant, have
            the right to select the supplier of electricity to the Building,
            Premises and Lot, and, as Tenant's agent, to designate the same to a
            local utility, to aggregate the supply of electricity for the
            Building, Premises and Lot with other buildings, to purchase
            electricity for the Building, Premises and Lot through a broker,
            aggregator or other intermediary and/or buyers group or other group
            and to change the supplier of electricity and/or manner of
            purchasing electricity from time to time.

            If Landlord undertakes activities for the purpose of reducing
            Landlord's or Tenant's operating costs, provided Landlord reasonably
            anticipates such activities should reduce Landlord's or Tenant's
            operating costs, (such as negotiating an agreement with a utility or
            another energy supplier or engaging an energy consultant or
            undertaking conservation or other energy efficient measures that may
            require capital expenditures), Tenant shall pay its proportionate
            share of all costs and expenses associated with such actions
            (including but not limited to brokers' commissions, legal fees and
            capital expenditures which shall be amortized in accordance with the
            provisions of Section 4.2 of the Lease), as additional rent, as and
            when payment is made by Landlord, so long as Tenant's approval has
            been obtained by Landlord in advance, which such approval shall not
            be unreasonably withheld or delayed by Tenant and which such
            approval of Tenant shall only be required so long as Tenant remains
            the sole tenant of the Building.

      3.    Utility lines and other facilities that supply the Premises,
            whenever installed, may be the subject of a requirement that the
            owner of the Premises make payments for the lines or other
            facilities upon the occurrence of certain events, if, for example, a
            tenant utilizing such facilities discontinues purchasing energy from
            the provider of the facilities, Landlord may be required to enter
            into agreements that would obligate it to make such payments in the
            future. Landlord agrees to notify the Tenant of any such agreements,
            any amendments, modifications, replacements or substitutions
            thereto, Landlord hereby acknowledging that there are no such
            agreements currently in force or effect. If such payments are
            required, whether based on contract or tariff, from Landlord with
            respect to such facilities that are utilized by the Tenant, the
            Landlord shall so inform Tenant in writing, and the Tenant thereby
            agrees that it shall reimburse the Landlord for its proportionate
            share of all such payments as additional rent, when and as made by
            the Landlord, with no profit to Landlord.

      4.    As used in this Section VII, the term "supplier(s) of electricity"
            shall mean one or more companies (including but not limited to an
            electric utility, generator, independent or non-regulated company
            or intermediary or broker or group) that provides electricity to the
            Premises or to the Landlord to be provided to the Premises, as the
            case may be.

                                       38


                                   EXHIBIT "E"

                             RULES AND REGULATIONS

1.    The entrance, lobbies, passages, corridors, elevators and stairways shall
      not be encumbered or obstructed by Tenant, Tenant's agents, servants,
      employees, licensees, and visitors be used by them for any purpose other
      than for ingress and egress to and from the Premises. The moving in or out
      of all safes, freight, furniture, or bulky matter of any description must
      take place during the hours which Landlord may determine from time to
      time. Landlord reserves the right to inspect all freight and bulky matter
      to be brought into the Building and to exclude from the Building all
      freight and bulky matter which violates any of these Rules and Regulations
      or the Lease of which these Rules and Regulations are a part.

2.    No curtains, blinds, shades, screens, or signs other than those furnished
      by Landlord shall be attached to, hung in, or used in connection with any
      window or door of the Premises without the prior written consent of the
      Landlord. Interior signs on doors shall be painted or affixed for Tenant
      by Landlord or by sign painters first approved by Landlord, at the expense
      of Tenant, and shall be of a size, color and style acceptable to Landlord.

3.    No additional locks or bolts of any kind shall be placed upon any of the
      doors or windows by Tenant, nor shall any changes be made in existing
      locks or the mechanism thereof without the prior written consent of
      Landlord. Tenant must, upon the termination of its tenancy, restore to
      Landlord all keys of stores, shops, booths, stands, offices and toilet
      rooms, either furnished to or otherwise procured by Tenant, and in the
      event of the loss of any keys so furnished, Tenant shall pay to Landlord
      the cost thereof.

4.    Canvassing, soliciting and peddling in the Building are prohibited, and
      Tenant shall cooperate to prevent the same.

5.    Tenant may request heating and/or air conditioning during other periods in
      addition to normal working hours by submitting their request in writing to
      the Building Manager's office no later than 2:00 PM the preceding workday
      (Monday through Friday) on forms available from the Building Manager. The
      request shall clearly state the start and stop hours of the "off-hour"
      service. Tenant shall submit to the Building Manager a list of personnel
      who are authorized to make such requests. Charges are to be determined by
      the Building Manager on the additional hours of operations and shall be
      fair and reasonable and reflect the additional operating costs involved.

6.    Tenant shall comply with all security measures from time to time
      established by Landlord for the Building.

7.    The Building is a non-smoking building.

                                       39


                                   EXHIBIT "F"

                            [INTENTIONALLY DELETED]

                                       40


                                   EXHIBIT "G"

                              ESTOPPEL CERTIFICATE

 (This may be edited for estoppel certificates requested of Landlord by Tenant)

      THIS CERTIFICATE is made to

with respect to a Lease between                              as Landlord and the
undersigned, covering a building located in      , such lease being dated      ,
as amended by (list all amendments).

      The undersigned has been advised that       (the "Bank"), is about to
enter into a transaction whereby the Bank is making a loan secured by the
aforesaid real estate and the Lease to the undersigned, and under which the Bank
may acquire an ownership interest in such real estate. In connection with this
transaction, the entire interest of the Landlord under the Lease to the
undersigned will be assigned to the Bank. The undersigned acknowledges that the
Bank is and will be relying upon the truth, accuracy and completeness of this
letter in proceeding with the transaction described above.

      The undersigned, for the benefit of the bank, their successors and
assigns, hereby certifies, represents, warrants, agrees and acknowledges that

      1.    The Lease is in full force and effect in accordance with its terms
            without modification or amendment except as noted above and the
            undersigned is the holder of the Tenant's/Landlord's interest under
            the Lease.

      2.    The undersigned is in possession of all of the Premises described in
            the Lease under and pursuant to the Lease and is doing business
            thereon, and the premises are completed as required by the Lease.

      3.    The undersigned has no claims or offsets with respect to any of its
            obligations as Tenant/Landlord under the Lease, and neither the
            undersigned nor the Landlord/Tenant is claimed to be in default
            under the Lease.

      4.    The undersigned Tenant has not paid any rental or installments
            thereof in advance of the due date as set forth in the Lease.

      5.    The undersigned Tenant/Landlord has no notice of prior assignment,
            hypothecation or pledge of rents of the Lease or the Landlord's
            interest thereunder or of the Tenant's interest thereunder.

      6.    The term of the Lease has commenced and is presently scheduled to
            expire on ______________________________. If there are any rights of
            extension or renewal under the terms of the Lease, the same have
            not, as of the date of this letter, been exercised.

      7.    Until such time as the Bank shall become the Landlord, if the
            undersigned should assert a claim that the Landlord has failed to
            perform an obligation to the undersigned under the

                                       41


      terms of the Lease or otherwise, notice thereof shall promptly be
      furnished to the Bank, and the undersigned agrees that the undersigned
      will not exercise any rights which the undersigned might otherwise have on
      account of any such failure until notice thereof has been given to the
      Bank, and the Bank has had the same opportunity to cure any such failure
      as the Landlord may have under the terms of the Lease.

  8.  Each of the statements set forth in Paragraphs 1 through 7 are true,
      accurate and complete except as follows (state specifically any
      exception).

DATED:

ATTEST:

                                        By:_____________________________________

                                        By:_____________________________________

                                       42


                                   EXHIBIT "H"

                                OPTION TO EXTEND

      Provided Tenant is not then in default under this Lease at the time of the
exercise thereof, Tenant shall have one (1) option to extend the term of this
Lease for a period of three (3) years. Such option to extend is to be exercised
by Tenant, notifying Landlord in writing thereof, at least twelve (12) months
prior to the end of the initial Term of this Lease. The exercise of such option
shall automatically extend the Term of this Lease, except that (i) there shall
be no additional option to extend after the termination of this option, and (ii)
the applicable Fixed Rent payable by Tenant during such extended term shall be
at ninety-five percent (95%) of the "Market Rent" as set forth herein.

      The Market Rent for the Premises shall be determined as follows:

      (a)   The Market Rent shall be proposed by Landlord within ten (10) days
            of receipt of Tenant's notice that it intends to exercise its option
            to extend the Term (the "Landlord's Proposed Market Rent"). The
            Landlord's Proposed Market Rent shall be the Market Rent unless
            Tenant notifies Landlord, within ten (10) days of Tenant's receipt
            of Landlord's Proposed Market Rent, that Landlord's Proposed Market
            Rent is not satisfactory to Tenant (such notice being referred to as
            "Tenant's Rejection Notice").

      (b)   If the Market Rent is not otherwise agreed upon by Landlord and
            Tenant within ten (10) days after Landlord's receipt of Tenant's
            Rejection Notice, then the Market Rent shall be determined by the
            following appraisal procedure. Tenant shall provide Landlord with
            notice specifying the name and address of the appraiser designated
            by Tenant (the "Tenant's Appraisal Notice").

            Landlord shall, within five (5) days after receipt of Tenant's
            Appraisal Notice, notify Tenant of the name and address of the
            appraiser designated by Landlord. Such two appraisers shall, within
            twenty (20) days after the designation of the second appraiser, make
            their determinations of the Market Rent in writing and give notice
            thereof to each other and to Landlord and Tenant. Such two
            appraisers shall have ten (10) days after the receipt of notice of
            each other's determination to confer with each other and to attempt
            to reach agreement as to the determination of the Market Rent. If
            such appraisers shall concur in such determination, they shall give
            notice thereof to Landlord and Tenant and such concurrence shall be
            final and binding upon Landlord and Tenant. If such appraisers shall
            fail to concur as to such determination within said ten (10) day
            period, they shall give notice thereof to Landlord and Tenant and
            such appraisers shall immediately designate a third appraiser. If
            the two appraisers shall fail to agree upon the designation of such
            third appraiser within ten (10) days after said ten (10) day period,
            then they or either of them shall give notice of such failure to
            agree to Landlord and Tenant, and if Landlord and Tenant fail to
            agree upon the selection of such third appraiser within five (5)
            days after the appraiser(s) appointed by the parties give notice as
            aforesaid, then either party on behalf of both may apply to the
            American Arbitration Association, or any successor thereto, or on
            his or her failure, refusal, or inability to act, to a court of
            competent jurisdiction, for the designation of such third appraiser

                                       43


            All appraisers shall be real estate appraisers or consultants who
            shall have had at least seven (7) years continuous experience in the
            business of appraising real estate in the suburban Boston area.

            The third appraiser shall conduct such hearings and investigations
            as he or she may deem appropriate and shall, within ten (10) days
            after the date of his or her designation, make an independent
            determination of the Market Rent.

      (c)   If none of the determinations of the appraisers varies from the
            average of the determinations of the other appraisers by more than
            ten percent (10%), the average of the determinations of the three
            appraisers shall be the Market Rent for the Premises. If, on the
            other hand, the determination of any single appraiser varies from
            the average of the determinations of the other two appraisers whose
            determinations are closest in number by more than ten percent (10%),
            then the average of the determinations of the two closest appraisers
            shall be the Market Rent. The determination of the appraisers, as
            provided above, shall be conclusive and binding upon the parties and
            shall have the same force and effect as a judgment made in a court
            of competent jurisdiction. Each party shall pay the fees, costs and
            expenses of the appraiser selected by it pursuant to this Exhibit
            "H" (and its own counsel fees) and one-half (1/2) of all other
            expenses and fees of any such third appraiser.

      (d)   In no event, however, shall Fixed Rent during the extension term be
            less than $22 40 per square foot.

      (e)   In the event the Market Rent is not determined prior to the date on
            which the extension term commences, Tenant shall pay the Fixed Rent
            at the rate set forth in Landlord's Proposed Market Rent of
            Paragraph (a) until the Market Rent is so determined in accordance
            with the terms and conditions of this Exhibit "H". At the time
            Market Rent is determined, Tenant shall pay to Landlord the excess
            (if any) of the Market Rent over the Fixed Rent under Landlord's
            Proposed Market Rent of Paragraph (a), for the portion of such time
            period then having elapsed, or Landlord shall pay to Tenant or shall
            credit Tenant's next installment of Fixed Rent due hereunder with
            the excess (if any) of the Rent under Landlord's Proposed Market
            Rent of Paragraph (a) over the Market Rent for the portion of such
            time period then having elapsed.

                                       44


                                   EXHIBIT "I"

                   EXPANSION RIGHTS / RIGHT OF FIRST REFUSAL

      In the event that, during the Term of this Lease, Tenant enters into a
direct lease with Landlord (or its affiliates, including without limitation,
affiliates of The Gutierrez Company) for at least 36,004 rentable square feet in
another building owned by Landlord or one of said affiliates, and further
provided that the rent under said new lease is at then Market Rent, as defined
in Exhibit "H" of this Lease, then Tenant shall be permitted to vacate the
Premises (as such term is described in this Lease) upon the commencement date of
the new lease, as though said commencement date where the originally
contemplated expiration date under this Lease. The foregoing provision shall be
binding upon the successors and assigns of Landlord and Tenant, expressly
excluding, however, any mortgagee of Landlord.

      Additionally (but subject to Landlord's or The Gutierrez Company's or
either of their respective affiliates' own use of the Offer Space (defined
below) or plans for redevelopment of the building containing the Offer Space, as
more particularly described below), in no event shall Landlord decide to lease,
agree to lease, or accept any offer to lease additional space within the
adjacent 6,000 square foot building owned by Landlord's affiliate, Burlington
Crossing LLC, having an address of 33 Second Avenue, Burlington, MA (the "Offer
Space") unless Landlord first affords Tenant an opportunity to lease the Offer
Space in accordance with the provisions of this Exhibit "I" and only after
written notice to Tenant. Such notice shall contain the proposed essential terms
with respect to the Offer Space (Landlord's summary thereof shall herein be
referred to as the "Offer"). The Offer shall set forth all of the essential
terms and conditions upon which Landlord proposes to lease the Offer Space to
Tenant. Upon receipt of the Offer from Landlord, and provided further that there
does not then exist an uncured, continuing Event of Default under this Lease and
provided further that the Tenant specified in Section 1.1 hereof or an entity
that controls Tenant, or is controlled by or with Tenant, is then leasing and
occupying at least 75% of the rentable square feet of the Premises, then Tenant
shall have a right to lease the Offer Space by giving notice to Landlord to such
effect within fourteen (14) days after Tenant's receipt of Landlord's notice of
such Offer. If such notice is not so timely given by Tenant, then Landlord shall
be free to lease the Offer Space, or portion thereof, to any third party on any
terms and conditions it determines in its sole discretion at any time after the
expiration of said fourteen (14) day period.

      Notwithstanding anything to the contrary in this Exhibit "I", if Tenant
notifies Landlord of its election to lease the Offer Space and then fails to
execute and deliver the required amendment to this Lease (or separate lease
agreement, as applicable) once the same has been mutually agreed upon by
Landlord and Tenant in accordance with this Exhibit "I" then (i) Tenant shall be
deemed to have waived its rights to lease the Offer Space under this Exhibit
"I," (ii) Landlord shall have the unrestricted right to lease such space upon
whatever terms and conditions as are negotiated by Landlord in its sole
discretion, and (iii) Tenant's right of first offer under this Exhibit "I" shall
become null and void and of no further force and effect. The recording by the
Landlord of an affidavit to such effect shall be conclusive evidence of the
termination or waiver of Tenant's first offer option hereunder. Otherwise, if
the Landlord and Tenant, each acting reasonably and in good faith, fail to agree
on a mutually agreeable form of amendment to this Lease (or separate lease
agreement, as the case may be) within said thirty (30) day period upon receipt
of Landlord's proposed form of agreement, unless such date is extended by mutual
agreement of both parties hereto, then such failure shall be treated as a
non-exercise by Tenant of its right of first refusal, with the consequence that
Landlord shall be free to lease the Offer Space or any

                                       45


portion thereof to any third party, but if the Offer Space should once again
become available thereafter, then at that time Tenant shall once again have the
right of first refusal set forth in this Exhibit "I".

      As aforesaid, Tenant's right hereunder are expressly subject and
subordinate to Landlord's (or its affiliates') own use of the Offer Space or
plans for redevelopment of the building containing the Offer Space. Landlord
agrees that either Landlord, The Gutierrez Company, or either of their
respective affiliates', as the case may be, shall notify Tenant in writing of
any such exercise of this reserved right, whereupon Tenant's right of first
refusal on the Offer Space shall become null and void

                                       46


                                   EXHIBIT "J"

                            [INTENTIONALLY DELETED]

                                       47


                                   EXHIBIT "K"

                           LESSEE'S LEASE STATEMENT AND
                       SUBORDINATION, NON-DISTURBANCE AND
                              ATTORNMENT AGREEMENT

      THIS AGREEMENT made as of the 29th day of October, 2002, by and between
iRobot Corporation, having an address of Twin City Office Center, Suite 6, 22
McGrath Highway Somerville, MA 02143 (hereinafter referred to as "Lessee") and
Fleet National Bank, having a place of business at
_________________________________________________________________ (hereinafter
referred to as "Mortgagee").

      WHEREAS, Mortgagee has made a mortgage loan to Burlington Crossing Office
LLC, as successor in title to Burlington Crossing LLC, (hereinafter referred to
as "Lessor"), secured by a Mortgage and Security Agreement dated May 31, 1996,
and filed with the Middlesex South District Registry of Deeds (Registered Land
Section) as Document No. 1004035, as affected by an Intercreditor Agreement
dated May 31, 1996, and filed with said Deeds as Document No. 1004039, as
affected by a Modification to Construction Mortgage and Security Agreement and
Collateral Assignment of Leases and Rents dated as of December 23, 1997, and
filed with said Deeds as Document No. 1050675, and as further affected by an
Assumption Agreement and Consent of Mortgagee dated as of April 7, 1998, and
filed with said Deeds as Document No. 1062313 (collectively, the "Mortgage") on
land owned by Lessor located at 63 South Avenue, Burlington, Massachusetts (the
"Premises"), upon which is located a building containing approximately
eighty-one thousand six hundred and eighty-five (81,685) square feet
(hereinafter referred to as the "Building").

      NOW, THEREFORE, in consideration of the mutual covenants herein contained,
Lessee and Mortgagee do hereby agree as follows

1.    Lessee hereby certified and represents to Mortgagee that

      (i)   it has entered into a written lease with Lessor (the "Lease") dated
            October 29, 2002, for a portion of the Building (the "Demised
            Premises") to be located on the Premises, notice of which Lease is
            recorded with the Middlesex South District Registry of Deeds
            (Registered Land Section) herewith,

      (ii)  there presently exists no default in the performance of the Lease by
            the Lessor, and the Lease is presently in full force and effect, and

      (iii) Lessee holds no claim against the Lessor when might be set-off
            against accruing rentals.

2.    Lessee and Mortgagee hereby consent and agree that

      (i)   the Lease shall be, and the same hereby is, made subordinate in each
            and every respect to the lien of the Mortgage and to all advances
            made thereunder (and under the Construction Loan Agreement executed
            simultaneously therewith), and

      (ii)  any of the foregoing notwithstanding, if the interests of Lessor in
            the Premises shall be acquired by Mortgagee by reason of foreclosure
            of the Mortgage or other proceedings

                                       48


            brought to enforce the rights of Mortgagee, by deed in lieu of
            foreclosure or by and other method, or acquired by any other
            purchaser or purchasers pursuant to the foreclosure sale (Mortgagee
            or such purchaser(s), as the case may be, being referred to as
            "Purchaser"), the Lease and the rights of Lessee thereunder shall
            continue in full force and effect and shall not be terminated or
            disturbed, except in accordance with the terms of the Lease. Lessee
            shall be bound to Purchaser under all the terms, covenants, and
            conditions of the Lease for the balance of the term thereof
            remaining, and any extensions or renewals thereof which may be
            effected in accordance with any option therefor contained in the
            Lease, with the same force and effect as if Purchaser were the
            Lessor under the Lease provided.

            (a)   Lessee is not in default after expiration of any applicable
                  grace or notice periods under the Lease under any provision of
                  the Lease or this Agreement at the time Mortgagee exercises
                  any such right, remedy or privilege,

            (b)   the Lease at that time is in force and effect according to its
                  original terms or with such amendments or modifications as
                  Mortgagee shall have approved as provided below,

            (c)   Lessee thereafter continues to fully and punctually perform
                  all of its obligations under the Lease without default
                  thereunder, and

            (d)   Lessee attorns to Purchaser as provided below, and

      (iii) in the event of any foreclosure of the Mortgage by Mortgagee, its
            successors or assigns, or at the request of Mortgagee at any time
            pursuant to the assignment of the Lease to Mortgagee, Lessee will
            recognize Mortgagee, its successors and assigns, or any Purchaser,
            as the new lessor under the Lease will attorn to and continue to be
            bound by each and every term of the Lease, and upon such attornment,
            the Lease and the rights of Lessee shall continue in full force and
            effect as if it were a direct Lease between Mortgagee, or any
            Purchaser, and Lessee upon all of the terms, covenants and
            conditions of the Lease for the balance of the term thereof
            remaining, provided, however, Mortgagee, or any Purchaser, shall not
            be:

            (a)   liable for any act or omission of any prior landlord
                  (including Lessor), or

            (b)   responsible for the cure of any default under the Lease
                  arising prior to the time Mortgagee or such Purchaser takes
                  possession of the Premises, or

            (c)   subject to any offsets or defenses which Lessee might have
                  against any prior landlord (including Lessor), or

            (d)   bound by any rent or additional rent which Lessee might have
                  paid for more than the then current month and/or month
                  immediately following the then current month to any prior
                  landlord (including Lessor), or

            (e)   bound by any agreement or modification of the Lease made
                  without Mortgagee's written consent, or

                                       49


            (f)   liable for any security deposit or other sums held by any
                  prior landlord (including Lessor) unless the same was actually
                  received by Mortgagee, or

            (g)   required to rebuild the Building or any part thereof in the
                  event of casualty damage to or condemnation of any material
                  portion of the Building or the Demised Premises, or

            (h)   required to complete any construction of or renovations to the
                  Demised Premises and/or the Building, notwithstanding any
                  obligations of the Lessor with respect thereto under the
                  Lease.

      (iv)  Mortgagee may at any time unilaterally subordinate (or cause to be
            subordinated) the lien of the Mortgage on the Premises to the Lease.

3.    Lessee hereby acknowledges receipt of notice that pursuant to an
      Assignment of Leases and Rents from Lessor, all leases and rents involving
      the Building, including the Lease of Lessee, are assigned to the Mortgagee
      as security for its loan, hereby acknowledges that it has received no
      notice of any sale, transfer or assignment of the Lease or of rentals
      thereunder by Lessor, other than pursuant to said Assignment of Leases and
      Rents, and hereby agrees that it will not (i) join in any material change
      or modification of the Lease so as to reduce the rent, change the Term, or
      otherwise materially change the rights of Landlord under the Lease, or to
      relieve Tenant of any obligations or liability under the Lease, (ii)
      anticipate rentals thereunder, or (iii) agree to terminate or cancel the
      Lease or surrender said Premises, without the prior written consent of
      Mortgagee.

4.    Lessee hereby agrees that upon Mortgagee's demand, it will make all
      payments of rent then and thereafter due to Lessor directly to Mortgagee
      and not to Lessor or any independent rental agent which Lessor might at
      any time utilize.

5.    Lessee hereby agrees that the interest of the Lessor in the Lease has been
      assigned to Mortgagee solely as security for the purposes indicated in the
      said Assignment of Leases and Rents, and that, until such time as
      Mortgagee has taken possession of the Premises and exercised its rights
      under said Assignment of Leases and Rents, Mortgagee assumes no duty,
      liability or obligation whatever under the Lease, or any extension or
      renewal thereof, by virtue of said Assignment of Leases and Rents.

6.    Lessee hereby agrees to notify Mortgagee, its successors and assigns of
      any default on the part of Lessor under the Lease and grants to Mortgagee,
      it successors and assigns, the right and opportunity to cure any such
      default.

7.    This Agreement shall be binding upon and shall more to the benefit of
      Lessee and Mortgagee and their respective heirs, executors,
      administrators, successors and assigns, as the case may be.

                 [Signatures continue on next consecutive page]

                                       50


IN WITNESS WHEREOF, the parties hereto have executed this Agreement, under seal,
as of the day and year first written above

 WITNESS                                   LESSEE

                                           iROBOT CORPORATION

/s/ Helen Greiner                          By  Helen Greiner
- -----------------------------
                                           Title President

/s/ M. David Adler                         By M. David Adler
- -----------------------------
                                           Title Treasurer & Sr. Vice President

WITNESS                                    MORTGAGEE

                                           FLEET NATIONAL BANK

/s/ Colleen Mclarty                        By /s/ Aidan home
- -----------------------------                 ----------------------
                                           Title   vice president

                                           By_______________________
                                           Title____________________

                            STATE OF MASSACHUSETTS

COUNTY OF MIDDLESEX
                                            10/29, 2002

      THEN personally appeared before me Helen Greiner, as President  of iRobot
Corporation, and acknowledged the foregoing instrument to be his/her free act
and deed as ___________________________, as aforesaid, and the free act and deed
of said corporation

                                           /s/ Mary Ellen DeAngelis
                                           -------------------------------
                                           NOTARY PUBLIC
                                           My Commission Expires

         [Notarial acknowledgements continue on next consecutive page]

                                                  MARY ELLEN DeANGELIS
                                                       NOTARY PUBLIC
                                           Commonwealth of Massachusetts
                                           My Commission Expires Sept. 4, 2009

                                       51


                          COMMONWEALTH OF MASSACHUSETTS

COUNTY OF _________                                              10/29, 2002

      THEN personally appeared before me M. David Adler, as Treasurer of iRobot
Corporation, and acknowledged the foregoing instrument to be his/her free act
and deed as ____________________________, as aforesaid, and the free act and
deed of said corporation

                                        /s/ Mary Ellen DeAngelis
                                        ------------------------
                                        NOTARY PUBLIC
                                        My Commission Expires

                                             MARY ELLEN DeANGELIS
                                             NOTARY PUBLIC
                                             Commonwealth of Massachusetts
                                             My Commission Expires Sept. 4, 2009

                          COMMONWEALTH OF MASSACHUSETTS

COUNTY OF SUFFOLK                                                    11/8, 2002

      THEN personally appeared before me Aidan Hume, as Vice President, of Fleet
National Bank, and acknowledged the foregoing instrument to be his/her free act
and deed as Vice President, as aforesaid, and the free act and deed of said
Fleet National Bank

                                /s/ Kathleen L. Whalen
                                -----------------------
                                NOTARY PUBLIC
                                Commonwealth of
                                My Commission Expires  Kathleen L. Whalen
                                                         NOTARY PUBLIC
                                               My commission expires Mar 4, 2005

                          COMMONWEALTH OF MASSACHUSETTS

COUNTY OF SUFFOLK                                             __________ , 2002

THEN personally appeared before
me_________________________________________________, as _____________________ of
Fleet National Bank, and acknowledged the foregoing instrument to be his/her
free act and deed as ___________________________, as aforesaid, and the free
act and deed of said Fleet National Bank

                                        _________________________________
                                        NOTARY PUBLIC
                                        My Commission Expires

                                       52


                                                          Instrument No. 1241646
                                                               recorded 11/27/02

                                 NOTICE OF LEASE

      In accordance with the provisions of Massachusetts General Laws (Ter Ed)
Chapter 183, Section 4, as amended, notice is hereby given of a certain lease
(hereinafter referred to as the "Lease") dated as of October 29, 2002 by and
between BURLINGTON CROSSING OFFICE, LLC (hereinafter referred to as "Landlord")
and iROBOT CORPORATION (hereinafter referred to as "Tenant").

                                   WITNESSETH

1. The address of the Landlord is c/o The Gutrerrez Company, Burlington Office
Park, One Wall Street, Burlington, Massachusetts 01803, Attention John A
Cataldo.

2. The address of the Tenant is Twin City Office Center, 22 McGrath Highway,
Suite 6 Somerville, MA 02143, Attention Glen Weinstein.

3. The Lease was executed on October 29, 2002.

4. The Term of the Lease is six (6) years and one (1) month, beginning on the
Commencement Date, which is December 1, 2002.

5. The demised premises is approximately 24,004 square feet of space on the 1st
floor of the building (the "Building") located at 63 South Avenue, Burlington,
County of Middlesex, Commonwealth of Massachusetts, commonly known at 63 South
Avenue, more particularly described on Exhibit "A" attached hereto and made a
part hereof.

6. Subject to the provisions of Exhibit "H" of the Lease, the Tenant has the
option to extend the Term of the Lease for one (1) additional period of three
(3) years.

7. Subject to the provisions of Section "I" of the Lease, Tenant has a right of
first offer for space within the adjacent 6,000 square foot building owned by
Landlord's affiliate, Burlington Crossing LLC, having an address of 33 Second
Avenue, Burlington, MA

                            (Continued on next page)



      This Notice of Lease has been executed merely to give notice of the Lease,
and all of the terms, conditions and covenants of which are incorporated herein
by reference. The parties hereto do not intend this Notice of Lease to modify or
amend the terms, conditions and covenants of the Lease which are incorporated
herein by reference.

      IN WITNESS WHEREOF, the parties hereto have duly executed this Notice of
Lease as of this 29th day of October, 2002.

TENANT                                      LANDLORD

iROBOT CORPORATION                          BURLINGTON CROSSING OFFICE LLC
                                            BY THE GUTIERREZ COMPANY,
                                            ITS MANAGING MEMBER

By. /s/ Helen Greiner                       By. /s/ John A Cataldo
    -----------------                           --------------------------------
Name Helen Greiner                          Name John A Cataldo
Title President                             Title EVP and Assistant Treasurer

By /s/ M David Adler
   -----------------
Name M David Adler
Title Treasurer

                                        2



                          COMMONWEALTH OF MASSACHUSETTS

middlesex, ss                                                         10/29/2002

Then personally appeared before me Helen Greiner the President of iRobot
Corporation, and acknowledged the foregoing instrument to be his free act and
deed, and the free act and deed of iRobot Corporation.

                                   /s/ Mary Ellen DeAngelis
                                   ------------------------
                                   NOTARY PUBLIC
                                   My Commission Expires

                                                  MARY ELLEN DeANGELIS
                                                    NOTARY PUBLIC
                                               Commonwealth of Massachusetts
                                             My Commission Expires Sept. 4, 2009

                          COMMONWEALTH OF MASSACHUSETTS

middlesex, ss                                                         10/29/2002

Then personally appeared before me John A Cataldo, the Executive Vice President
and Assistant Treasurer of Burlington Crossing office LLC, and acknowledged the
foregoing instrument to be his free act and deed, and the free act and deed of
Burlington Crossing Office LLC

                                           /s/ Theresa L. Borelli
                                           ----------------------------
                                           NOTARY PUBLIC
                                           My Commission Expires 4-9-04

                                        3



                                   EXHIBIT "A"

      That certain parcel of land, together with the buildings and improvements
thereon, situated in the Town of Burlington, County of Middlesex, Commonwealth
of Massachusetts, and described as follows.

      Said parcel is shown as Lot 14 on Land Court Plan 6728J and contains 7.781
acres, more or less, according to said Land Court Plan.

      For title reference see Certificate of Title No 211190, Book 1186, Page 40
414048 vl

                                        4



                            FIRST AMENDMENT TO LEASE

      This First Amendment to Lease (this "Amendment") is made as of April 23,
2003 between BURLINGTON CROSSING OFFICE LLC, a Massachusetts limited liability
company, having its offices located at c/o. The Gutierrez Company, One Wall
Street, Burlington, Massachusetts 01803 (hereinafter referred to as "Landlord")
and iROBOT CORPORATION, a Delaware corporation, having its offices located at 63
South Avenue, Burlington, Massachusetts 01803 (hereinafter referred to as
"Tenant")

                                 WITNESSETH THAT

      WHEREAS, by instrument dated October 29,2002 (the "Lease"), the Landlord
demised to Tenant 24,004 rentable square feet located on a portion of the first
(1st) floor of the building (the "Building") known as 63 South Avenue,
Burlington, Massachusetts (said 24,004 rentable square feet of space being
defined in Section 2.1 of the Lease as the "Premises"), and

      WHEREAS, Landlord and Tenant desire to amend the Lease to expand the
Premises to include 10,210 rentable square feet of additional space located on
another portion of the first (1st) floor of the Building (the "Additional
Premises"),

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged and the mutual covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:

1.    Initial capitalized terms used herein but not defined herein shall have
      the meanings ascribed to them in the Lease.

2.    The following amendments are hereby made to the Lease, which amendments
      shall be effective as of June 1,2003.

      (a)   Article 1 of the Lease is amended by deleting Article 1 in its
            entirety and by replacing the same with Article 1 attached hereto as
            Schedule 1.

      (b)   Schedule 2 of this Amendment is added to the Lease as a new Exhibit
            "A-1".

      (c)   Section 2.1 of the Lease is amended by deleting the last sentence of
            the first paragraph thereof and replacing it with the following:

            "The Premises is depicted on the plans attached hereto as Exhibit
            "A" and Exhibit A-1". The portion of the Premises depicted on
            Exhibit "A" is hereafter referred to as the "Original Premises," and
            the portion of the Premises depicted on Exhibit A-1" is hereafter
            referred to as the "Additional Premises" Commencing on June 1,2003,
            the

                                        1



            term "Premises" shall mean the Original Premises together with the
            Additional Premises".

      (d)   Article 3 is amended by adding thereto a new Section 3.5, as
            follows:

            "3.5. ADDITIONAL PREMISES

                  The Additional Premises shall be delivered to Tenant on June
            1,2003, in "as is" condition, subject to a general clean-up of the
            space to include "touch-up" painting where necessary and the
            construction of two double door wide passage ways between the
            Original Premises and the Additional Premises Landlord represents
            that the Building's systems are in good working condition".

3.    Landlord and Tenant each represent and warrant that it has dealt with no
      broker, other than Richards Barry Joyce & Partners, in connection with
      this Amendment and agree to defend, indemnify and save the other party
      harmless from and against any and all claims for a commission arising out
      of this Lease made by anyone other than the aforementioned broker.

4.    Except as modified by this Amendment, the Lease is hereby ratified and
      confirmed.

5.    This Amendment may be signed in any number of counterparts and each
      thereof shall be deemed to be an original and all such counterparts shall
      be but one and the same agreement.

6.    Landlord's obligations to perform hereunder are subject to the condition
      precedent that Landlord's Mortgagee approves of this Amendment by
      executing and delivering to Landlord the Mortgagee's Consent form attached
      hereto as Schedule 3.

7.    Tenant's obligation to perform its covenants and agreements hereunder is
      subject to the condition precedent that this First Amendment to Lease be
      approved by Tenant's Board of Directors Unless Tenant gives Landlord
      written notice within ten (10) days after the date hereof that the Board
      disapproves this First Amendment to Lease, then this condition shall be
      deemed to have been satisfied or waived and the provisions of this Section
      7 shall be of no further force or effect. If Tenant provides such notice
      of disapproval to Landlord, then all of Landlord's and Tenant's
      obligations hereunder shall be deemed terminated and this First Amendment
      to Lease shall terminate without recourse to the parties hereto.

                                        2



      Executed as an instrument under seal as of the date first above written

TENANT                                LANDLORD

iROBOT CORPORATION                    BURLINGTON CROSSING OFFICE LLC
                                      A Massachusetts limited liability company,
                                      BY THE GUTIERREZ COMPANY,
                                         Managing Member

By  /s/ Geoffrey P. Clear
    ---------------------
Name GEOFFREY P. CLEAR
Title CHIEF FINANCIAL OFFICER

                                      By /s/ John A. Cataldo
                                         -------------------
                                      Name John A. Cataldo
                                      Title Executive Vice President

                                        3


                                   SCHEDULE 1

                    Date of Lease Execution October 29, 2002

                                 REFERENCE DATA

1.1.   SUBJECTS REFERRED TO.

      Each reference in this Lease to any of the following subjects shall
      incorporate the data stated for that subject in this Section 1.1.

LANDLORD                       Burlington Crossing Office LLC

MANAGING AGENT                 The Gutierrez Company

LANDLORD'S AND MANAGING
AGENT'S ADDRESS                Burlington Office Park
                               One Wall Street
                               Burlington, Massachusetts 01803

LANDLORD'S REPRESENTATIVE      John A Cataldo

TENANT                         iRobot Corporation

TENANT'S ADDRESS (FOR NOTICE
& BILLING)                     63 South Avenue
                               Burlington, Massachusetts 01803

TENANT'S REPRESENTATIVE        Glen Weinstein

BUILDING                       63 South Avenue
                               Burlington, Massachusetts

FLOOR                          1

TENANT'S SPACE                 Such space shown on the plans attached hereto as
                               Exhibit "A" and Exhibit "A-1", located within the
                               Building on Floor 1

RENTABLE FLOOR AREA OF
TENANT'S SPACE                 (a) As to the Original Premises
                                   24,004 square feet on the First Floor

                               (b) As to the Additional Premises
                                   10,210 square feet on the First Floor

                               (c) Total "Rentable Floor Area of Tenant's
                                   Space" 34,214 square feet

                                       4


TOTAL RENTABLE FLOOR AREA
OF THE BUILDING                81,685 square feet

SCHEDULED TERM
COMMENCEMENT DATE              December 1, 2002

TERM EXPIRATION DATE           December 31, 2008

APPROXIMATE TERM               Six years and one month from the Commencement
                               Date for the Original Premises

FIXED RENT                     June 2003 - July 2003 $9.90/RSF /Annum
                                   $28,226.55 Monthly
                               August 2003 - January 2004 $11.90/RSF /Annum
                                   $33,928.88 Monthly
                               February 2004-December 2004 $17.40/RSF/Annum
                                   $49,610.30 Monthly
                               January 2005-December 2005 $19.40/RSF/Annum
                                   $55,312.63 Monthly
                               January 2006-December 2006 $20.40/RSF/Annum
                                   $58,163.80 Monthly
                               January 2007-December 2007 $21.40/RSF/Annum
                                   $61,014.97 Monthly
                               January 2008-December 2008 $22.40/RSF/Annum
                                   $63,866.13 Monthly

MONTHLY FIXED RENT             For each month during the Term, the Monthly Fixed
                               Rent amount set forth above

ANNUAL ESTIMATED OPERATING
COSTS                          Actual current year 2003 (approximately $7.25 per
                               rentable square foot included in the Fixed Rent)

ESTIMATED COST OF ELECTRICAL
SERVICE TO TENANT'S SPACE      To be separately sub-metered in accordance with
                               Exhibit "D". The anticipated cost of such
                               electricity is $0.90 per rentable square foot per
                               annum

FIRST FISCAL YEAR FOR TENANT'S
PAYING OPERATING COST
ESCALATION                     Year beginning January 1, 2004

SECURITY DEPOSIT               See Article 1.1

GUARANTOR(S)                   None

                                       5


PERMITTED USES                 The development, marketing, manufacturing,
                               machining, sale and delivery of robots and
                               associated technology and the providing of
                               professional services in connection therewith

REAL ESTATE BROKER(S)          Richards Barry Joyce & Partners

PUBLIC LIABILITY INSURANCE     BODILY INJURY AND PROPERTY DAMAGE
             EACH COVERAGE     $1,000,000.00
                 AGGREGATE     $2,000,000.00

1.2. EXHIBITS.

     The Exhibits listed below in this Section are incorporated in this Lease by
     reference and are to be construed as part of this Lease.

     EXHIBIT A     Plan Showing Tenant's Space

     EXHIBIT A-1   Plan Showing Tenant's Additional Space

     EXHIBIT B     Legal Description of Lot

     EXHIBIT C     Intentionally Deleted

     EXHIBIT D     Landlord's Services

     EXHIBIT E     Rules and Regulations

     EXHIBIT F     Intentionally Deleted

     EXHIBIT G     Estoppel Certificate

     EXHIBIT H     Option to Extend

     EXHIBIT I     Expansion Rights / Right of First Refusal*

     EXHIBIT J     Intentionally Deleted

     EXHIBIT K     Subordination, Non-Disturbance and Attornment Agreement

                                       6


                                   SCHEDULE 2

                                  EXHIBIT A-1.1

                Plan Showing Tenant's Space (Additional Premises)

                                [TO BE PROVIDED]

                                       7


                                   SCHEDULE 3

                              CONSENT OF MORTGAGEE

      The undersigned Mortgagee hereby consents and approves the terms and
provisions set forth in this First Amendment to Lease dated as of April 23, 2003
by and between BURLINGTON CROSSING OFFICE LLC ("Landlord") and iROBOT
CORPORATION ("Tenant").

                                         MORTGAGEE

                                         FLEET NATIONAL BANK

/s/ [ILLEGIBLE]                          By /s/ Aidan E. Hume
- ------------------------                    --------------------------
Witness                                  Name AIDAN E. HUME
                                         Title VICE PRESIDENT
                                         Date 5/5/03

                                       8


                                   EXHIBIT "I"

                    EXPANSION RIGHTS / RIGHT OF FIRST REFUSAL

      In the event that, during the Term of this Lease, Tenant enters into a
direct lease with Landlord (or its affiliates, including without limitation,
affiliates of The Gutierrez Company) for at least 51,321 rentable square feet in
another building owned by Landlord or one of said affiliates, and further
provided that the rent under said new lease is at then Market Rent, as defined
in Exhibit "H" of this Lease, then Tenant shall be permitted to vacate the
Premises (as such term is described in this Lease) upon the commencement date of
the new lease, as though said commencement date where the originally
contemplated expiration date under this Lease. The foregoing provision shall be
binding upon the successors and assigns of Landlord and Tenant, expressly
excluding, however, any mortgagee of Landlord.

Additionally (but subject to Landlord's or The Gutierrez Company's or either of
their respective affiliates' own use of the Offer Space (defined below) or plans
for redevelopment of the building containing the Offer Space, as more
particularly described below), in no event shall Landlord decide to lease, agree
to lease, or accept any offer to lease additional space within the adjacent
6,000 square foot building owned by Landlord's affiliate, Burlington Crossing
LLC, having an address of 33 Second Avenue, Burlington, MA (the "Offer Space")
unless Landlord first affords Tenant an opportunity to lease the Offer Space in
accordance with the provisions of this Exhibit "I" and only after written notice
to Tenant Such notice shall contain the proposed essential terms with respect to
the Offer Space (Landlord's summary thereof shall herein be referred to as the
"Offer"). The Offer shall set forth all of the essential terms and conditions
upon which Landlord proposes to lease the Offer Space to Tenant. Upon receipt of
the Offer from Landlord, and provided further that there does not then exist an
uncured, continuing Event of Default under this Lease and provided further that
the Tenant specified in Section 1.1 hereof or an entity that controls Tenant, or
is controlled by or with Tenant, is then leasing and occupying at least 75% of
the rentable square feet of the Premises, then Tenant shall have a right to
lease the Offer Space by giving notice to Landlord to such effect within
fourteen (14) days after Tenant's receipt of Landlord's notice of such Offer. If
such notice is not so timely given by Tenant, then Landlord shall be free to
lease the Offer Space or portion thereof, to any third party on any terms and
conditions it determines in its sole discretion at any time after the expiration
of said fourteen (14) day period.

Notwithstanding anything to the contrary in this Exhibit "I", if Tenant notifies
Landlord of its election to lease the Offer Space and then fails to execute and
deliver the required amendment to this Lease (or separate lease agreement, as
applicable) once the same has been mutually agreed upon by Landlord and Tenant
in accordance with this Exhibit "I," then (i) Tenant shall be deemed to have
waived its rights to lease the Offer Space under this Exhibit "I," (ii) Landlord
shall have the unrestricted right to lease such space upon whatever terms and
conditions as are negotiated by Landlord in its sole discretion, and (iii)
Tenant's right of first offer under this Exhibit "I" shall become null and void
and of no further force and effect. The recording by the Landlord of an
affidavit to such effect shall be conclusive evidence of the termination or
waiver of Tenant's first offer option hereunder. Otherwise, if the Landlord and
Tenant, each acting reasonably and in good faith, fail to agree on a mutually
agreeable form of amendment to this Lease (or separate lease agreement, as the
case may be) within said thirty (30) day period upon receipt of Landlord's
proposed form of agreement, unless such date is extended by mutual agreement of
both parties hereto, then such failure shall be treated as a non-exercise by
Tenant of its right of first refusal, with the consequence that Landlord shall
be free to lease the Offer Space or any



portion thereof to any third party, but if the Offer Space should once again
become available thereafter, then at that time Tenant shall once again have the
right of first refusal set forth in this Exhibit "I".

      As aforesaid, Tenant's right hereunder are expressly subject and
subordinate to Landlord's (or its affiliates') own use of the Offer Space or
plans for redevelopment of the building containing the Offer Space. Landlord
agrees that either Landlord, The Gutierrez Company, or either of their
respective affiliates', as the case may be, shall notify Tenant in writing of
any such exercise of this reserved right, whereupon Tenant's right of first
refusal on the Offer Space shall become null and void.



                            SECOND AMENDMENT TO LEASE

      This Second Amendment to Lease (this "Amendment") is made as of the 22nd
day of February, 2005, between Burlington Crossing Office LLC, a Massachusetts
limited liability company, having its offices at c/o The Gutierrez Company, One
Wall Street, Burlington, Massachusetts 01803 (hereinafter referred to as
"Landlord") and iRobot Corporation, a Delaware corporation, having its offices
located at 63 South Avenue, Burlington, Massachusetts 01803 (hereinafter
referred to as the "Tenant").

                                 WITNESSETH THAT

      WHEREAS, by instrument dated October 29, 2002, as amended by a First
Amendment to Lease dated April 23, 2003 (collectively, the "Lease") Landlord
demised to Tenant certain premises consisting of 34,314 rentable square feet of
tenant space (the "Premises"), located at 63 South Avenue, Burlington,
Massachusetts, and as more particularly described in the Lease (the "Building"),
and.

      WHEREAS, Landlord and Tenant desire to amend the Lease to expand the
Premises to (i) include the balance of the first floor consisting of 24,120
square feet currently occupied by Lahey Clinic Hospital, Inc ("Lahey"), except
for a communications closet shown on Schedule 1 attached hereto and made a part
hereof (the "Data Closet"), which shall be used by Tenant on a non-exclusive
basis with other tenant(s) of the Building, currently Lahey, pursuant to the
terms of a separate agreement between Tenant and Lahey, as hereinafter provided
in Paragraph 5(i) below (the "First Floor Space"), (ii) to provide for the
modification to and lease of the 6,150 square foot 33 Second Avenue building for
Tenant's use, (iii) to provide for a possible expansion workshop of 3,000 square
feet to the 33 Second Avenue building, (iv) to provide for the use of temporary
space at 33 Second Avenue, and (v) to address certain other matters as set forth
herein.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and the mutual covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:

      1. Initial capitalized terms used herein, but not defined herein, shall
have the meanings ascribed to them in the Lease.

      2. Section 2.1 of the Lease is hereby amended by adding the following
paragraphs at the end of said Section.

      "2.1.1 Temporary Space - Landlord and Tenant hereby acknowledge and agree
that Tenant shall have the right to use and occupy the Temporary Space (as
hereinafter defined), subject to all the terms and provisions of this Section or
elsewhere in this Lease, except as otherwise provided herein to the contrary,
until such time as the full renovations to 33 Second

                                       1


Avenue ("33 Second Avenue Work") (as hereinafter defined in Section 2.1.1A
below) is completed and ready for Tenant's occupancy, or in the event that
Landlord is unable to obtain the required permits for the 33 Second Avenue Work,
as hereinafter provided, until December 31, 2005. Alternatively, in the event
that Landlord is unable to obtain the required permits necessary to fully
renovate the entire 33 Second Avenue building, then Tenant shall have the
option, exercisable within thirty (30) days of receipt of Landlord's notice that
it has been unsuccessful in obtaining the necessary permits for the construction
of the Workshop, to continue to use and occupy the Temporary Space, subject to
the terms and provisions of this Lease, except that the Fixed Rent due for
Tenant's continued occupancy of the Temporary Space shall be $1.00 per square
foot per annum paid monthly in advance, and Tenant shall be responsible to make
any such additional improvements to the Temporary Space as may be required by
the Building Inspector or other applicable authorities of the Town of
Burlington. Any additional improvements requested by Tenant, and so required as
aforesaid, shall be performed by GCCI, at Tenant's cost, specifically at cost
plus ten percent (10%). Otherwise, Tenant shall vacate and surrender the
Temporary Space in accordance with the provisions of Section 6.1.2 hereof. The
parties hereby further agree to execute an amendment to this Lease, upon the
request of either party, confirming the permanent addition of the Temporary
Space to the "Premises" hereunder in the event that Tenant elects to continue
its occupancy thereof (i.e., the term "Premises" shall be expanded to include
the Temporary Space and a new rent schedule shall be provided). Landlord has
made certain temporary renovation improvements to approximately 2,755 square
feet of the building located at 33 Second Avenue (the "Temporary Space").
Landlord has been paid by Tenant for the cost of such Temporary Space
improvements. Except for the $1.00 per square foot set forth previously in this
section, Tenant shall not be required to pay Fixed Rent on the Temporary Space,
but will reimburse Landlord its pro rata share of taxes and utilities allocable
to the Temporary Space, as additional rent, on a monthly basis from November 1,
2004 until the 33 Second Avenue Work is completed, or until its lease of the
Temporary Space is terminated as provided in this Section 2.1.1, after which
event Section 2.1.1A shall apply.

2.1.1A 33 Second Avenue Work - Tenant has requested Landlord renovate the 6,150
square foot 33 Second Avenue building and provide an exclusive adjacent area in
the current parking lot for testing of an additional approximately 8,500 square
feet (such testing area to be protected by jersey barriers and/or fencing) and
other rough terrain testing space on the slopes and drive at the southwest
corner of the lot to also be made available for Tenant's use until the end of
the Term, as hereinafter provided in this Section 2.1.1A. A portion of the 33
Second Avenue building is currently being used as the Temporary Space. Landlord
has provided Tenant with initial plans titled "33 Second Avenue/63. South Avenue
iRobot - Expansion Building Options, Drawing A -1 (Tenant Review & Pricing)
1/6/05," attached as Schedule 3, and Site Plan - Proposed Option "B", 33 Second
Avenue, Burlington, MA, dated 12/8/04, attached as Schedule 3-A, and an initial
estimate of the approximate cost of such 33 Second Avenue Work of one hundred
eighty-three thousand four hundred seventy-nine ($183,479) dollars and, if
requested by Tenant, an additional two hundred fourteen thousand five hundred
ninety-nine ($214,599) dollars for the Workshop. Upon execution of this
Amendment and receiving Tenant's electrical requirements from Tenant, Landlord,
or at Tenant's option and sole expense a third party architect, reasonably
acceptable to Landlord, will prepare more detailed plans for construction and
bidding for the 33 Second Avenue Work and will present them to Tenant for

                                       2

approval. Once such construction plans have been approved by Tenant, Landlord
will obtain bids for such work and will present Tenant with a not to exceed cost
for such work ("Cost of the Work"). Included in the Cost of the Work shall be
general conditions and the cost of GCCI's overhead and profit equal to seven
percent (7%) of such work, and a five percent (5%) contingency reserve. Landlord
will not expend the five percent (5%) contingency reserve without first
informing Tenant. Tenant agrees to reimburse Landlord as set forth later in this
Section 2.1.1A for the actual cost of said work not to exceed the Cost of the
Work unless there is a change in scope or Tenant approved change order. Upon
written approval by Tenant of the Cost of the Work, Landlord agrees to use
reasonable efforts to have the 33 Second Avenue Work completed so that the work
is completed within three (3) months following approval by Tenant of Landlord's
construction and bidding plans and Cost of the Work (the "Scheduled Completion
Date"), which completion date shall, however, be extended for a period equal to
that of any delays due to governmental regulations, unusual scarcity of or
inability to, obtain labor or materials, labor difficulties, casualty or other
causes reasonably beyond Landlord's control. The 33 Second Avenue Work shall be
deemed completed, and rent payable thereon shall commence on the earlier of (a)
the date on which Tenant occupies any part of the 33 Second Avenue building
other than the Temporary Space, (b) the date on which the 33 Second Avenue Work
is substantially completed as certified by Landlord ("33 Second Avenue Rent
Commencement Date"). Landlord shall permit Tenant access for installing its own
equipment furnishings in the 33 Second Avenue building if it can be done without
material interference with Landlord's remaining work. Notwithstanding the
foregoing provisions, if the 33 Second Avenue Work is not complete and the
building is not ready for occupancy on or before a date which is sixty (60) days
after the Scheduled Completion Date stated above for whatever reason other than
Tenant's fault or the allowable delays set forth above, Tenant may elect not to
lease said 33 Second Avenue building and not to reimburse Landlord for
Landlord's costs by giving notice to Landlord of such election. Upon receipt of
such election, Landlord shall have an additional fifteen (15) days to complete
said work. If said work is completed within such fifteen (15) day period, then
Tenant's election above shall be null and void, it being understood that said
election by it shall be Tenant's sole remedy at law and in equity for Landlord's
failure to have the 33 Second Avenue building ready for Tenant's occupancy.
Tenant agrees to use and occupy the 33 Second Avenue building subject to the
terms and conditions of this Lease, except as otherwise set forth herein to the
contrary.

Tenant shall reimburse Landlord for the actual cost of the 33 Second Avenue Work
but not, without Tenant's prior written consent, in excess of the Tenant
approved Cost of the Work Parties agree that such reimbursement shall be paid by
an adjustment to the Fixed Rent under the Lease. Specifically such actual cost
shall be amortized over a term of five (5) years at a seven percent (7%) rate,
i.e., a constant annual payment of 23.77% of the actual cost of the 33 Second
Avenue Work, plus twelve thousand two hundred ($12,200) dollars per year. Thus,
for example, if the cost of the 33 Second Avenue Work were two hundred sixty
thousand ($260,000) dollars, then the additional Annual Fixed Rent would be
equal to two hundred sixty thousand ($260,000) dollars times 2377 which equals
sixty-one thousand eight hundred two ($61,802) dollars, plus twelve thousand two
hundred ($12,200) dollars, for a total additional Fixed Rent of seventy-three
thousand eight hundred two ($73,802) dollars per year, six thousand one hundred
fifty dollars and sixteen cents ($6,150.16) per month. Any increase in Operating
Costs or real estate taxes or additional Landlord's services called for in
Section 5.1 required because of Tenant's occupancy

                                       3


of the 33 Second Avenue building shall be paid for by Tenant (i.e., 100% of such
costs shall be allocable to Tenant) on a monthly basis, as additional rent. It
is hereby expressly understood and agreed that any such costs shall not be
included within the "Operating Cost Base" for the Building. Landlord and Tenant
agree that they shall enter into a mutually satisfactory amendment to this Lease
in order to reflect Tenant's occupancy of the 33 Second Avenue building, adding
it to the Premises, and the rent adjustments hereunder. Upon termination of this
Lease for any reason prior to five (5) years after the 33 Second Avenue Rent
Commencement Date, Tenant shall pay Landlord the unamortized balance of such
costs within ten (10) days of receipt of an invoice therefor. However, in the
event that, within three (3) years of the termination of the Lease for any
reason, except by reason of Tenant's default, Landlord subsequently leases 33
Second Avenue to others, then, at such time as such new 33 Second Avenue tenant
makes its first rent payment thereon, Landlord will rebate to Tenant the
following amount of the unamortized balance of the 33 Second Avenue Cost of the
Work previously paid by Tenant to Landlord upon termination of this Lease
("Unamortized Balance"). Such rebate to be calculated as follows:

      1. Any Landlord costs associated with the re-leasing of 33 Second Avenue
to include, but not be limited to broker commissions, tenant improvements, other
concessions, shall be added to the Unamortized Balance. The resulting subtotal
shall be amortized over the new lease term at eight percent (8%). To that
amortized subtotal total shall be added one ($1.00) dollar per rentable square
foot times the square footage of space leased under the new lease for 33 Second
Avenue. That grand total of the amortized subtotal plus one ($1.00) dollar per
rentable square foot total to be divided into the average annual triple net rent
of the leased space. If the quotient of such division equals or exceeds 1.0,
then Landlord shall rebate to Tenant total amount of the Unamortized Balance. If
the resulting quotient is less than 1.0, then Landlord shall return that portion
represented by the quotient times the Unamortized Balance. Example follows:

      Assuming the following facts and conditions.

                                                                       
A     Landlord leased 6,150 square feet of 33 Second Avenue
      for five (5) years @ average rent triple net of $7.50/SF      =     $ 46,125/ year

B     Lease Up Costs Total                                          =     $104,550
      1B      Commissions @ $6.00/SF          $36,900
      2B      Tenant Improvements @ $10.00/SF $61,500
      3B      Other @$1.00/SF                 $ 6,150

C     Unamortized Balance of 33 Second Avenue Work                  =     $ 87,700
                                                                          --------

D     Subtotal Costs                                                =     $192,250

E     D x 5-year amortization @ 8% = $192,250 x 0.2434              =     $ 46,794

F     $1.00 per Square Foot Re-leased Space                         =     $  6,150
                                                                          --------
G     Grand Total of Amortized Costs + $1.00/SF                     =     $ 52,944

H     A/G = $46,125/$52,944 = 0.871

      Landlord rebates Tenant H x C = 0.871 x $87,700 = $76,387



                                       4

The provisions of this section shall survive termination of this Lease.

      2.1.2. Workshop - As requested by Tenant, Landlord hereby agrees to use
good faith, diligent efforts to obtain any and all approvals and permits
necessary for the construction of a prefab steel building as an expansion to the
rear of 33 Second Avenue located as shown on the plan attached hereto as
Schedules 3 and 3-A, containing approximately 3,000 square feet (the "Workshop"
and at times, the "Workshop Work") Tenant shall provide Landlord with
specifications for the Workshop on or before April 1, 2005. Landlord will not
approve any alterations that will require unusual expense to demolish the
Workshop on lease termination Landlord agrees to develop, at Tenant's cost, the
modification of the Site Plan and all other plans and/or studies required for
Landlord to obtain the necessary state and local permits and approvals for the
construction of the Workshop and the bidding of the work necessary to construct
the Workshop. Tenant acknowledges that Landlord has indicated a variance shall
be required for such expansion. Landlord agrees to try to obtain such permits,
using the efforts as aforesaid, on or before June 30, 2005. Landlord and Tenant
agree to work and cooperate with each other so as to reach mutual agreement on
any modifications to the plans as may be requested by the applicable permit
granting authorities. In the event that Landlord is unsuccessful in obtaining
all necessary permits and approvals for the construction of the Workshop by
September 30, 2005, Landlord's obligations under this Section 2.1.2 shall
terminate, and such failure shall not be deemed to be a default by Landlord
hereunder. Tenant agrees to reimburse Landlord for its permitting expenses
incurred hereunder, up to a maximum of five thousand ($5,000) dollars, within
thirty (30) days of receipt of Landlord's invoice therefor, containing
reasonable backup documentation evidencing the same.

      In the event that Landlord obtains all of such permits, then Landlord
shall then obtain bids for the construction of said Workshop and present to
Tenant a not to exceed cost to construct such Workshop ("Cost of the Workshop
Work") and a scheduled completion date for such work ("Scheduled Completion
Date"). Included in the Cost of the Workshop Work shall be general conditions,
the cost of GCCI's overhead and profit, equal to seven percent (7%) of the work,
and a five percent (5%) contingency reserve. Landlord will not expend the five
percent (5%) contingency reserve without first informing Tenant. After approval
of the plans for the Cost of the Workshop Work by Tenant, Landlord shall
commence construction of the Workshop and diligently prosecute the same to
completion (i.e., the parties further agreeing that no overtime shall be
required). The Workshop Work shall be deemed completed and Fixed and additional
Rent payable thereon shall commence on the earlier of (a) the date on which
Tenant occupies any part of the Workshop, (b) the date on which the Workshop
Work shown on the Workshop plans accepted by Tenant is substantially completed
as certified by Landlord's architect ("Workshop Rent Commencement Date").
Landlord shall permit Tenant access for installing its own equipment and
furnishings in the Workshop if it can be done without material interference with
Landlord's remaining work. Notwithstanding the foregoing provisions, if the
Workshop is not complete and the building ready for occupancy on or before a
date which is ninety (90) days after the Scheduled Completion Date for whatever
reason other than Tenant's fault or the allowable delays previously set forth in
2.1.1A, Tenant may elect not to lease said Workshop and not to reimburse
Landlord for Landlord's costs by giving notice to Landlord of

                                       5


such election. Upon receipt of such election, Landlord shall have an additional
fifteen (15) days to complete said work. If said work is completed within such
fifteen (15) day period, then Tenant's election above shall be null and void, it
being understood that said election by it shall be Tenant's sole remedy at law
and in equity for Landlord's failure to have the Workshop ready for Tenant's
occupancy. Upon Landlord's substantial completion and obtaining a certificate of
occupancy (which may be temporary) for the Workshop and providing Tenant with a
copy thereof, Tenant agrees to use and occupy the Workshop subject to the terms
and conditions of this Lease, except as otherwise set forth herein to the
contrary.

      Tenant shall reimburse Landlord for the actual cost of construction of the
Workshop, not to exceed the Cost of the Workshop Work unless there is a change
in scope or Tenant approved change order. The parties agree that such
reimbursement shall be paid by Tenant in the form of an adjustment to the Fixed
Rent under this Lease. Specifically, such costs shall be amortized over the
remaining Term of this Lease at a per annum rate of seven percent (7%), plus six
thousand ($6,000) dollars per year, to be paid monthly in advance as additional
Fixed Rent. Any increase in Operating Costs or real estate taxes or additional
Landlord's services called for by Section 5.1 required because of Tenant's
occupancy of the Workshop shall be paid for by Tenant (i.e., 100% of such costs
shall be allocable to Tenant) on a monthly basis, as additional rent. It is
hereby expressly understood and agreed that any such costs shall not be included
within the "Operating Cost Base" for the Building. Landlord and Tenant agree
that they shall enter into a mutually satisfactory amendment to this Lease in
order to reflect Tenant's occupancy of the Workshop, adding it to the Premises,
and the Rent adjustments hereunder. In the event that this Lease terminates
prior to December 31, 2008, then Tenant shall be required to make a Termination
Payment equal to the unamortized balance of the actual costs of the construction
of the Workshop. In the event that, within three (3) years of the termination of
the Lease for any reason, except by reason of Tenant's default, Landlord
subsequently leases the Workshop to others, then, at such time as such new
Workshop tenant makes its first rent payment thereon, Landlord will rebate to
Tenant the following amount of the unamortized balance of the Workshop Cost of
the Work previously paid by Tenant to Landlord upon termination of this Lease
("Unamortized Balance") Such rebate to be calculated as follows:

      1. Any Landlord costs associated with the re-leasing of the Workshop to
include, but not be limited to broker commissions, tenant improvements, other
concessions, shall be added to the Unamortized Balance. The resulting subtotal
shall be amortized over the new lease term at eight percent (8%). To that
amortized subtotal total shall be added one ($1.00) dollar per rentable square
foot times the square footage of space leased under the new lease for the
Workshop. That grand total of the amortized subtotal plus one ($1.00) dollar per
rentable square foot total to be divided into the average annual triple net rent
of the leased space. If the quotient of such division equals or exceeds 1.0,
then Landlord shall rebate to Tenant total amount of the Unamortized Balance. If
the resulting quotient is less than 1.0, then Landlord shall return that portion
represented by the quotient times the Unamortized Balance Example follows:

      Assuming the following facts and conditions.

                                       6


                                                                           
A.    Landlord leased 3,000 square feet of the Workshop for
      three (3) years @ average rent triple net of $5.00/ SF           =      $15,000/ year
B.    Lease Up Costs Total                                             =      $19,000
      1B.  Commissions @ $3.33/SF                    $10,000
      2B.  Tenant Improvements @ $3.00/SF            $ 9,000
      3B.  Other @ $-0-/SF                           $  -0-
C.    Unamortized Balance of the Workshop Work                         =      $70,700
                                                                              -------
D.    Subtotal Costs                                                   =      $89,700
E.    D x 3-year amortization @ 8% = $89,700 x 0.3761                  =      $33,736
F.    $1.00 per Square Foot Re-leased Space                            =      $ 3,000
                                                                              -------
G.    Grand Total of Amortized Costs + $1.00/ SF                       =      $36,736
H.    A/G = $15,000/ $36,736 = 0.408

      Landlord rebates Tenant H x C = 0.408 x $70,700 = $28,846



The provisions of this section shall survive termination of this Lease".

      3. Landlord and Tenant hereby agree that references in the Lease to "Lot"
or "Premises" shall include any and all testing areas or other areas, such as
parking areas permitted to be used and/or occupied by Tenant under this Lease,
should such areas not be within the definition of "Lot" hereunder (for example,
but not by way of limitation, the provisions of Sections 6.1.3, 6.1.4, 6.1.5,
6.1.7, 6.1.8, 6.1.9, 6.1.12, and 6.1.13 shall apply to all of said additional
areas).

      4. Article 10 of the Lease is hereby amended by inserting the following as
a new Section 10.16.

      "Section 10.16. (Covenants Independent). Each provision hereof constitutes
an independent covenant, enforceable separately from each other covenant hereof.
To the extent any provision hereof or any application of any provision hereof
may be declared unenforceable, such provision or application shall not affect
any other provision hereof or other application of such provision. Tenant
acknowledges and agrees that Tenant's obligation to pay Fixed Rent and
additional rent is independent of any and all obligations of Landlord hereunder,
with the result that Tenant's sole remedy for any alleged breach by Landlord of
its obligation hereunder shall be to commence a judicial proceeding against
Landlord seeking specific performance, and not to deduct or set off Fixed Rent
or additional rent or terminate this Lease".

      5. Upon the later to occur of all of the foregoing events (the "Expansion
Events" or such date upon which the Expansion Events occur hereinafter being
referred to as the "Expansion Date") (i) the termination of the existing Lahey
lease with respect to the First Floor Space subject to Lahey's right to use the
Data Closet, in common with Tenant, pursuant to the terms of a separate
agreement between Tenant and Lahey as aforesaid, or a future tenant of

                                       7


Landlord as applicable (the "Expansion Space"), (ii) Landlord's receipt of the
applicable termination payments from Lahey, (iii) Lahey vacating said space in
accordance with the terms and provisions of its lease with Landlord, and (iv)
Tenant hereby accepting such space in its then "as is" condition, then Landlord
and Tenant hereby agree that the term "Premises" as used in this Lease shall
include the Expansion Space. Accordingly, upon the occurrence of the Expansion
Events, (A) Section 1.1 of the Lease shall be amended as follows (i) the
definition of "Rentable Floor Area of Tenant's Space" shall be amended by
deleting the existing language in its entirety and by replacing the same with
"58,334 square feet, subject to further expansion as provided in Sections 2.1.1
and 2.1.2 hereof, and (ii) the definition of "Fixed Rent" set forth in Section
1.1 of the Lease shall be amended by deleting the same in its entirety and by
replacing the same with a new Fixed Rent schedule reflecting the addition of the
Expansion Space (i.e., 24,120 square feet) and Landlord's agreement that the
Fixed Rent allocable to the Expansion Space shall be $18.50 per rentable square
foot for the period commencing upon the occurrence of the Expansion Events and
ending on September 30, 2007, and thereafter (i) $21.40 per rentable square foot
from October 1, 2007 through and including December 31, 2007, and (ii) $22.40
per rentable square foot from January 1, 2008 through and including December 31,
2008, and (B) Section 1.2 of the Lease shall be amended by adding the plan
attached hereto as Exhibit "A-3" as a new Exhibit "A-3" thereto. As aforesaid in
Paragraphs 2.1.1A and 2.1.2 above, Landlord and Tenant hereby agree that they
shall enter into a mutually satisfactory amendment to this Lease in order to
reflect the necessary Rent adjustments hereunder and any other relevant
provisions of the Lease necessitated by the events outlined in this Amendment.

      6. Section 1.2 of the Lease is hereby amended by deleting Exhibit "D" of
the Lease and by replacing the same with Exhibit "D-l" attached hereto and made
a part hereof Accordingly, all references in the Lease to Exhibit "D" shall now
refer to Exhibit "D-1" attached hereto.

      7. Effective on the Expansion Date, Section 8.2 of the Lease shall be
amended by adding the following at the beginning of the second sentence thereof,
"Except as otherwise provided in Exhibit "I" hereof, and".

      8. Effective on the Expansion Date (as hereinbefore defined in Section 5
above), Exhibit "I" of the Lease is hereby amended by (i) deleting the square
footage figure of "51,321" and by replacing the same with "87,000", (ii) adding
the following after the words. " Market Rent as defined in Exhibit "H" of this
Lease" in line 4 thereof, "but in no event lower than (a) $22.40 (quoted on a
gross basis) plus tenant electricity, or (b) rent which is sufficient in
Landlord's reasonable and good faith opinion, to finance the non-land project
costs of such expansion building, and further provided that the term of the new
expansion building lease is not for less than ten (10) years", (iii) adding
the following at the end of the first sentence after the words "under this
Lease", the following "and upon payment by Tenant to Landlord of any unamortized
cost of the 33 Second Avenue Work and/or the Workshop Work (as defined in
Sections 2.1.1A and 2.1.2 hereof), which such cost figures either shall be
furnished by Landlord to Tenant within forty-five (45) days of completion of the
33 Second Avenue Work and/or the Workshop Work and again within five (5) days of
receipt of Tenant's termination notice together with reasonable supporting
documentation evidencing the same (the "Termination Payment")", and (iv)
replacing the entire second sentence with the following "The foregoing provision
(and

                                       8


the provisions with respect to the permitting and construction of the Temporary
Space or the 33 Second Avenue Work and/or the Workshop Work pursuant to Sections
2.1.1, 2.1.1A, and 2.1.2 hereof) shall be binding upon the successors and
assigns of Landlord and Tenant, expressly excluding, however, any mortgagee of
Landlord, its successors and/or assigns, and shall not constitute a default by
Landlord of its obligations under this Exhibit "I" (or Section 2.1.1 or 2.1.2,
as it relates to the Temporary Space, 33 Second Avenue Work, or Workshop as
aforesaid)".

      9. The Lease is hereby amended by adding Exhibit "J" attached hereto and
made a part hereof as the new Exhibit "J" to the Lease Accordingly, Section 1.2
of the Lease is hereby amended by deleting the words "Intentionally Deleted"
after Exhibit "J" and by replacing the same with "Right of First Offer".

      10. Landlord and Tenant each represent and warrant that is has dealt with
no broker, other than Richards Barry Joyce & Partners, in connection with this
Amendment and agree to defend, indemnify and save the other party harmless from
and against any and all claims for a commission arising out of this Lease made
by anyone other than the aforementioned broker. The parties further agree that
Landlord's compensation obligation to said broker shall be limited to the lease
of the Expansion Space from July 31, 2007 to December 31, 2008.

      11. Except as modified by this Amendment, the Lease is hereby ratified and
confirmed.

      12. This Amendment may be signed in any number of counterparts and each
thereof shall be deemed to be an original, and all such counterparts shall be
but one and the same agreement.

      13. Landlord's obligations to perform hereunder are subject to the
condition precedent that Landlord's mortgagee approves of this Amendment by
executing and delivering to Landlord the Mortgagee's Consent form attached
hereto as Schedule 4, unless Landlord gives Tenant written notice within thirty
(30) days after the date hereof that Landlord's mortgagee disapproves this
Amendment, then this condition shall be deemed to have been satisfied or waived,
and the provisions of this Section 13 shall be of no further force or effect. If
Landlord's mortgagee provides such notice of disapproval to Landlord, then all
of Landlord's and Tenant's obligations hereunder shall be deemed terminated, and
this Amendment shall terminate without recourse to the parties hereto.

      14. Tenant's obligation to perform its covenants and agreements hereunder
is subject to the condition precedent that this Amendment be approved by
Tenant's Board of Directors Unless Tenant gives Landlord written notice within
ten (10) days after the date hereof that the Board disapproves this Amendment,
then this condition shall be deemed to have been satisfied or waived, and the
provisions of this Section 14 shall be of no further force or effect. If Tenant
provides such notice of disapproval to Landlord, then all of Landlord's and
Tenant's obligations hereunder shall be deemed terminated, and this Amendment
shall terminate without recourse to the parties hereto.

                                       9

EXECUTED as an instrument under seal as of the date first written above

TENANT                                 LANDLORD

iRobot Corporation                     Burlington Crossing Office LLC
                                       A Massachusetts limited liability company
                                       By  The Gutierrez Company,
                                           Managing Member

By /s/ Geoffrey P. Clear               By /s/ Arturo J. Gutierrez
  -----------------------------          ------------------------------------
Name: GEOFFREY P. CLEAR                  Arturo J. Gutierrez
Title: CHIEF FINANCIAL OFFICER           President
        & TREASURER

                                       10



                                  SCHEDULE - 1

                                  DATA CLOSET

                                  [FLOOR PLAN]




                                  SCHEDULE - 3

                                  [FLOOR PLAN]


                                  SCHEDULE 3-A

                                    I-ROBOT
                                33 SECOND AVENUE
                           OPTION "B" - NO EXPANSION
                               02/18/05 - REV (2)

                                                                     PAGE 1 OF 2



                                                                                            
1.    REROOF EXISTING BLDG. (INCLU. REPAIR ROOF DECK, ETC.) 5,700 S.F. @ 2.50/S.F.         =    14,250.00

2.    SELECT DEMO IN EXISTING BLDG.                                                        =    15,000.00

3.    INSULATE & SHEETROCK PERIMETER WALLS 320 L.F.X10'=3,200 S.F @$6/S.F.                 =     7,200.00

4.    STORM WINDOW (INSIDE) AT EXISTING 92'X6'= 552 S.F. @                                 =    10,000.00

5.    REMOVE & PROVIDE RAMP AT ENTRANCE.                                                   =     1,500.00

6.    NEW OPENING AT MASONRY BEARING WALL 1 EA.                                            =       500.00

7.    FURR & SHEETROCK INTERIOR MASONRY WALL AND PATCH EXISTING                            =     8,370.00

8.    NEW TOILET ROOM - PLUMBING & TRENCHING                                               =    20,000.00

9.    NEW DECK HIGH PARTITIONS 106 L.F. @ $55.00/L.F.                                      =     5,830.00

10.   NEW DOORS, FRAMES & HDWR. 8 EA. @ $600/EA.                                           =     4,800.00

11.   ACOUSTICAL CEILINGS 1,200 S.F. @ $2/S.F.                                             =     2,400.00

12.   CARPET, VCT&BASE                                                                     =     3,500.00

13.   PAINTING                                                                             =     3,000.00

14.   HVAC 6,000 S.F.                                                                      =    20,000.00

15.   SPRINKLERS NOT REQUIRED                                                              =    _________

16.   ELECTRICAL, LIGHTS, POWER, LIFE SAFETY & FIRE ALARM 6,000 S.F.                       =    20,000.00

17.   BUILDING PERMIT $10/1,000                                                            =     1,250.00

18.   SUPERVISION $2,860/WK.                                                               =     8,580.00




                                  SCHEDULE 3-A

I-ROBOT                                                              PAGE 2 OF 2
33 SECOND AVENUE
OPTION "B" - NO EXPANSION
02/18/05 - REV (2)

                                                                  
19.   PROJECT MANAGER @ $4,207/WK. @ 50%                         =     12,621.00

20.   CLEAN-UP & GENERAL LABOR @ 1,000/WK.                       =      3,000.00

21.   DUMPSTERS 6 EA. @ 600/DUMP                                 =      1,800.00

22.   POSTAGE, DRWG. REPRO., FAX, ETC.                           =      1,250.00
                                                                     -----------
      SUBTOTAL                                                   =   $164,851.00
      6% FEE                                                            9,891.00
                                                                     -----------
      SUBTOTAL                                                   =   $174,742.00
      CONTINGENCY 5%                                             =      8,737.00
                                                                     -----------
      TOTAL BUDGET                                               =   $183,479.00



CHERYL/IROBOT-NOEXPANSION



                                  SCHEDULE 3-A

                                    I-ROBOT
                                33 SECOND AVENUE
                        OPTION "B" - 3000 S.F. EXPANSION
                               02/18/05 - REV (2)

                                                                     PAGE 1 OF 2



                                                                             
1.    ADD CATCH BASIN                                                      =     $3,000.00

2.    CHAIN LINK DOUBLE GATE 2 EA. @ $2,000 EA.                            =      4,000.00

3.    JERSEY BARRIES 10 EA. @ 200 EA.                                      =      2,000.00

4.    RECLAIM BIT. PAVEMENT 225 TONS @ $10/TON                             =      2,250.00

5.    EXCAVATE & BACKFILL FOOTINGS 4 DAYS @ $1,000/DAY                     =      4,000.00

6.    GRAVEL BASE FOR SLAB ON GRADE 130 CYDS. @ $18/C.Y.                   =      2,340.00

7.    NEW UTILITIES NOT REQUIRED                                                __________

8.    CONCRETE FOUNDATIONS 40 C.Y. @175/C.Y.                               =      7,000.00

9.    CONCRETE SLAB ON GRAD 50 C.Y. @ 200/C.Y.                             =     10,000.00

10.   PREFAB. PACKAGED BLDG. MATERIAL                                      =     26,000.00

11.   PREFAB. PACKAGED BLDG. ERECTION 3,000 S.F. @ 2.25/S.F.               =     18,000.00

12.   HVAC 3,0000 S.F.                                                     =     40,000.00

13.   SPRINKLERS NOT REQUIRED                                              =    __________

14.   ELECTRICAL, LIGHTS, POWER, LIFE SAFETY & FIRE ALARM 3,000 S.F.       =     40,000.00

15.   BUILDING PERMIT $10/1,000                                            =      1,250.00

16.   SUPERVISION @$2,860/WK.                                              =     14,300.00

17.   PROJECT MANAGER @ $4,207/WK. @ 50%                                   =     12,621.00

18.   CLEAN-UP & GENERAL LABOR @ 1,000/WK.                                 =      3,000.00

19.   DUMPSTERS 3 EA. @ 600/DUMP.                                          =      1,800.00




                                  SCHEDULE 3-A

I-ROBOT                                                              PAGE 2 OF 2
33 SECOND AVENUE
OPTION "B" - 3,000 S.F. EXPANSION
02/18/05 - REV (2)

                                                                  
19.   POSTAGE, DRWG. REPRO., FAX, ETC.                        =         1,250.00
                                                                     -----------
      SUBTOTAL                                                =      $192,811.00
      6% FEE                                                  =        11,569.00
                                                                     -----------
      SUBTOTAL                                                =      $204,380.00
      CONTINGENCY 5%                                          =        10,219.00
                                                                     -----------
      TOTAL BUDGET                                            =      $214,599.00



CHERYL/IROBOTREVISED2/18


                                   SCHEDULE 4

                              CONSENT OF MORTGAGEE

The undersigned Mortgagee hereby consents and approves the terms and provisions
set forth in this Second Amendment to Lease dated as of________________________,
2005, by and between Burlington Crossing Office LLC ("Landlord') and iRobot
Corporation ("Tenant")

                                    MORTGAGEE

                                    BANK OF AMERICA

___________________________         By _________________________________________
Witness

                                    Name________________________________________

                                    Title_______________________________________

                                    Date________________________________________

                                       13



                                  EXHIBIT "A-3"

                            PLAN OF EXPANSION SPACE

                                (TO BE SUPPLIED)

                                       14



                                  EXHIBIT "D-1"

                              LANDLORD'S SERVICES

I.    CLEANING.

      A.    BUILDING LOBBIES AND COMMON AREAS.

            1.    Entrance doors and partition glass to be cleaned nightly. Wipe
                  down frames and fixtures as needed.

            2.    Remove entrance mats and clean sand and dirt from pits and
                  floors, clean and replace mats nightly.

            3.    Floors to be swept and washed nightly. Maintain a high luster
                  finish following manufacturer's specifications.

            4.    Walls to be dusted and spot cleaned as necessary, thoroughly
                  washed twice a year.

            5.    Empty and wipe clean trash receptacles nightly including
                  exterior smoker's stations.

            6.    Dust, with treated cloth, security desks, window sills,
                  directory frames, planters, etc, nightly.

            7.    Clean director glass nightly.

            8.    Vacuum all carpeted areas nightly, treat and spot clean
                  stains, clean fully as needed.

            9.    Vinyl tile floors to be dry mopped nightly, spot washed with
                  clean water as needed and spray buffed weekly.

            10.   Sweep all stairwells in building nightly and keep in clean
                  condition, washing same as necessary.

            11.   Do all high dusting (not reached in nightly cleaning)
                  quarterly, which includes the following.

                  (a)   Dust all pictures, frames, charts, graphs and similar
                        wall hangings.

                  (b)   Dust exposed piped, ventilation and air conditioning
                        grilles, louvers, ducts and high molding, as needed.

                                       15



            12.   Clean and maintain luster on ornamental metal work as needed
                  within arm's reach.

            13.   Dust all drapes and blinds as needed.

            14.   Wash and disinfect drinking fountains using a non-scented
                  disinfectant nightly. Polish all metal surfaces on the unit
                  nightly.

            15.   Strip and wax all resilient tile floors yearly.

            16.   Shampoo all common area carpets at additional contract price
                  at least once per year.

      B.    LAVATORIES - NIGHTLY.

            1.    Empty paper towel receptacles, bag and transport waste paper
                  to designated area, disinfect receptacle and add new liner.

            2.    Empty sanitary napkin disposal receptacles, bag and transport
                  waste, disinfect receptacle and add new liner.

            3.    Refill toilet tissue, hand towel dispensers, and sanitary
                  napkin dispensers.

            4.    Scour, wash and disinfect all basins, bowls and urinals using
                  non-scented disinfectants.

            5.    Wash, disinfect and wipe dry both sides of toilet seat using
                  non-scented disinfectants.

            6.    Wash and polish all mirrors, counters, faucets, flushometers,
                  bright work and enameled surfaces.

            7.    Spot clean toilet partitions, doors, door frames, walls,
                  lights and light switches.

            8.    Remove all cobwebs from walls and ceilings.

            9.    Sweep and wash all floors, using proper non-scented
                  disinfectants.

            10.   Add water to floor drains weekly, disinfect monthly.

            11.   Turn off lights.

                                       16



      C.    ELEVATORS - NIGHTLY.

            1.    Thoroughly clean walls.

            2.    Wipe clean control panels, door frames and mirrors.

            3.    Vacuum cab and floor door tracks.

            4.    Vacuum floors, shampoo as needed, wash stone floors.

            5.    Dust ceilings.

      D.    GENERAL CLEANING (MONDAY THROUGH FRIDAY - HOLIDAYS EXCLUDED) TENANT
            AREAS NIGHTLY - UNLESS NOTED.

            1.    Empty and clean all waste receptacles nightly and remove waste
                  paper and waste materials, including folded paper boxes and
                  cartons, to designated area Replace liners as needed Check and
                  wash waste baskets if soiled. Abnormal waste removal (e.g.
                  computer installation paper, bulk packaging, wood or cardboard
                  crates, refuse from cafeteria operation, etc. ) shall be
                  Tenant's responsibility.

            2.    Weekly hand dust with treated cloth and wipe clean or feather
                  dust[er] all accessible areas on furniture, desks, files,
                  telephones, fixtures and window sills.

            3.    Clean all glass table tops and tenant entrance glass. Spot
                  clean glass partitions.

            4.    Spot clean all walls, door frames and light switches.

            5.    Wipe clean and polish all bright metal work as needed within
                  arm's reach.

            6.    All stone, ceramic, tile, marble, terrazzo and other unwaxed
                  flooring to be swept, using approved dust-down preparation.

            7.    All wood, linoleum, rubber asphalt, vinyl and other similar
                  type of floors to be swept, using approved dust-down
                  preparation and mopped or cleaned with dry system cleaner
                  nightly.

            8.    Reception areas, halls, high traffic areas to be vacuumed
                  nightly.

            9.    Offices and cubicles to be spot vacuumed nightly. Complete
                  vacuum weekly.

            10.   Spot clean carpet stains.

                                       17


            11.   Wash and clean all water fountains and coolers nightly. Sinks
                  and floors adjacent to sinks to be washed nightly.

            12.   Dust blinds as needed.

            13.   Vinyl tile floors to be dry mopped nightly, spot washed with
                  clean water as needed and spray buffed every two weeks.

      E.    SHOWERS.

            1.    Wash shower walls and floors nightly, using proper non-scented
                  disinfectants.

            2.    Clean and disinfect shower curtains weekly.

            3.    Scrub showers with bleach weekly.

            4.    Wash tile walls with proper grout cleaning compound as needed.

            5.    Add water to floor drains weekly, disinfect monthly.

            6.    Turn off lights.

II.   HEATING, VENTILATING AND AIR CONDITIONING.

      1.    Heating, ventilation and air conditioning as required to provide
            reasonably comfortable temperatures for normal business day
            occupancy (except holidays), Monday through Friday, from 8:00 AM to
            6:00 PM, and Saturday from 8:00 AM to 1:00 PM, if so requested by
            Tenant, by providing at least 24 hours notice HVAC services beyond
            the aforesaid hours of operation can be made available to Tenant, if
            so requested by Tenant, by providing at least 24 hours prior written
            notice and at a cost of $25.00 per hour per unit.

      2.    Maintenance on any additional or special air conditioning equipment,
            and the associated operating cost thereof, will be at Tenant's
            expense.

III.  WATER.

      Hot water for lavatory purposes and cold water for drinking, lavatory and
      toilet purposes.

                                       18



IV.   ELEVATORS.

      Elevators for the use of all tenants and the general public for access to
      and from all floors of the Building, programming of elevators (including,
      but not limited to, service elevators), shall be as Landlord from time to
      time determines best for the Building as a whole.

V.    SECURITY/ACCESS.

      Twenty-four (24) hour entry to the Building is available to Tenant and
      Tenant's employees, after normal Building hours of operation. Tenant shall
      have unresticted access to its Premises at all times, and not just during
      normal building hours and operation. All security within the Premises
      shall be the responsibility of the Tenant.

VI.   BUILDING HOURS.

      Normal building hours of operation are Monday through Friday from 8:00 AM
      to 6:00 PM. The Building operates on Saturday from 8:00 AM to 1:00 PM,
      with access to the Building subject to the provisions as outlined in Item
      V contained herein. Except for the heating, ventilating and air
      conditioning system, which operates in accordance with the schedule as
      described in Item II contained herein, all Building systems, including but
      not limited to electrical, mechanical, elevator, fire safety and
      sprinkler, and water, operates 24 hours per day, 7 days per week, subject
      to repairs, failures and interrupted service beyond Landlord's control.

VII.  CAFETERIA, VENDING AND PLUMBING INSTALLATIONS.

      1.    Any space to be used primarily for lunchroom or cafeteria operation
            shall be Tenant's responsibility to keep clean and sanitary.
            Cafeteria, vending machines or refreshment service installations by
            Tenant must be approved by Landlord in writing. All maintenance,
            repairs and additional cleaning necessitated by such installations
            shall be at Tenant's expense.

      2.    Tenant is responsible for the maintenance and repair of plumbing
            fixtures and related equipment installed in the Premises for its
            exclusive use (such as in coffee room, cafeteria or employee
            exercise area).

VIII. SIGNAGE.

      Tenant shall be entitled to such signage currently in place as of the date
      hereof.

                                               19



IX.   ELECTRICITY.

      Tenant shall pay for all electricity consumed in the Premises. Landlord
      shall invoice Tenant for the cost of Tenant's electricity on a monthly
      basis based on the sub-meter readings measuring Tenant's actual electrical
      consumption. Tenant shall reimburse Landlord for such consumption within
      thirty (30) days upon receipt of Landlord's invoice therefor.

      Tenant's use of electrical service in the Premises shall not at any time
      exceed the capacity of any of the electrical conductors or other equipment
      in or otherwise serving the Premises or the Building standard, as
      hereinafter provided. To ensure that such capacity is not exceeded and to
      avert possible adverse effects upon the Building's electrical system,
      Tenant shall not, without at least thirty (30) days prior written notice
      to and consent of Landlord in each instance, connect to the Building
      electric distribution system any fixtures, appliances or equipment which
      operates on a voltage in excess of 277/480 volts nominal, or make any
      alteration or addition to the electric system of the Premises. In the
      event Tenant shall use (or request that it be allowed to use) electrical
      service in excess of that deemed by Landlord to be standard for the
      Building, Landlord may refuse to provide such excess usage or refuse to
      consent to such usage or may consent upon such conditions as Landlord
      reasonably elects (including, but not limited to, the installation of
      utility service upgrades, sub-meters, air handlers or cooling units), and
      all such additional usage (except to the extent prohibited by law),
      installation and maintenance thereof shall be paid for by Tenant, as
      additional rent, upon Landlord's demand.

      It is understood that the electrical generated service to the Premises may
      be furnished by one or more generators of electrical power and that the
      cost of electricity may be billed as a single charge or divided into and
      billed in a variety of categories, such as distribution charges,
      transmission charges, generation charges, congestion charges, public good
      charges, and other similar categories, and may also include a fee,
      commission or other charge by a broker, aggregator or other intermediary
      for obtaining or arranging the supply of generated electricity. Landlord
      shall have the right to select the generator of electricity to the
      Premises and to purchase generated electricity for the Premises through a
      broker, aggregator or other intermediary and/or buyers group or other
      group and to change the generator of electricity and/or manner of
      purchasing electricity from time to time.

      If Landlord undertakes activities for the purpose of reducing Tenant's
      operating costs (such as negotiating an agreement with a utility or
      another energy generator or engaging an energy consultant or undertaking
      conservation or other energy efficient measures that may require capital
      expenditures), Tenant shall pay its proportionate share of all costs and
      expenses associated with such actions (including, but not limited to,
      brokers' commissions, legal fees and capital expenditures), as additional
      rent, if, as and when payment is made by Landlord.

                                       20



      As used herein, the term "generator of electricity" shall mean one or more
      companies (including, but not limited to, an electric utility, generator,
      independent or non-regulated company) that provides generated power to the
      Premises or to the Landlord to be provided to the Premises, as the case
      may be.

X.    OTHER UTILITIES.

      Tenant shall be responsible for the payment of all other utilities
      consumed by Tenant in the Premises, including telephone, cable, other
      communications, and gas (if applicable). Tenant shall pay for such
      consumption directly to the provider of such utilities.

                                       21



                                   EXHIBIT "J"
                              RIGHT OF FIRST OFFER

      In no event shall Landlord, during the initial Term of the Lease, decide
to lease space, agree to lease or offer to lease space that becomes available in
the Building, unless Landlord first affords Tenant an opportunity to lease such
area in accordance with the provisions of this Exhibit "J" and only after
written notice to Tenant. Upon receipt of such notice from Landlord, and
provided further that there does not then exist an uncured, continuing Event of
Default under this Lease, then Tenant shall have the one-time right to lease any
such space, on an "as is" basis, by giving notice to Landlord to such effect
within sixty (60) days after Tenant's receipt of Landlord's notice of such
availability. If such notice is not so timely given by Tenant, then Landlord
shall be free to lease the subject space on whatever terms and conditions as
Landlord desires at any time after the expiration of said sixty (60) day period.
The non-exercise by Tenant of its rights under this Exhibit "J" as to any one
offer, shall be deemed to waive Tenant's rights of first offer as to any offers
or space availability within the Building, as the parties acknowledge and agree
that this is a one-time right of first offer only.

      In the event that Tenant exercises its right of first offer to lease such
rentable space in the Building when it becomes available, then Landlord and
Tenant hereby agree that they shall enter into a mutually acceptable amendment
to this Lease, specifying that such rentable area is a part of the Premises
under this Lease and demising said premises to Tenant pursuant to the same terms
and conditions contained in this Lease, with the exception that as part of such
amendment, and as a condition of Tenant's right to exercise its right of first
offer for any such space Tenant shall agree to and such amendment shall reflect
(i) that the Rent for such space shall be as set forth in Section 1.1 of this
Lease, as amended by this Amendment, specifically excluding the $ 18.50 per
square foot Fixed Rent from the Expansion Date to September 30, 2007 (the
Expansion Space as defined in this Amendment) including the current tax and
operating base of $7.37 per square foot included within said Rent, and (ii) that
Tenant's right to lease such new rentable space shall be for the then remaining
Term under the Lease. Such amendment shall also contain other appropriate terms
and provisions relating to the addition of such rentable space to this Lease,
and as mutually agreed upon by the parties, and shall be signed by Tenant within
thirty (30) days of receipt of the proposed amendment from the Landlord in the
form as hereinabove required.

      Notwithstanding anything to the contrary in this Exhibit "J", if Tenant
notifies Landlord of its election to lease such available rentable space in the
Building which was the subject of Landlord's notice and then fails to execute
and deliver the required amendment to this Lease once the same has been mutually
agreed upon by Landlord and Tenant in accordance with this Exhibit "J", then (i)
Tenant shall be deemed to have waived its rights under this Exhibit "J", (ii)
Landlord shall have the unrestricted right to lease such space to any third
party upon any terms as it desires, and (iii) Tenant's right of first offer
hereunder shall automatically terminate and be of no further and effect. The
recording by the Landlord of an affidavit to such effect shall be conclusive
evidence of the termination or waiver of Tenant's right of first offer option
hereunder. Otherwise, if the Landlord and Tenant, each acting reasonably and in
good faith, fail to agree on a mutually agreeable form of amendment to this
Lease within said thirty (30) day period upon

                                       22



receipt of Landlord's proposed form of amendment, unless such date is extended
by mutual agreement of both parties hereto, then such failure shall be treated
as a non-exercise by Tenant of its right of first offer in accordance with the
first paragraph of this Exhibit "J".

                                       23


                            THIRD AMENDMENT TO LEASE

      This Third Amendment to Lease (this "Amendment") is made as of the 26th
day of April, 2007, between Burlington Crossing Office LLC, a Massachusetts
limited liability company, having its offices at c/o The Gutierrez Company, One
Wall Street, Burlington, Massachusetts 01803 (hereinafter referred to as
"Landlord") and iRobot Corporation, a Delaware corporation, having its offices
located at 63 South Avenue, Burlington, Massachusetts 01803 (hereinafter
referred to as the "Tenant").

                                WITNESSETH THAT:

      WHEREAS, by instrument dated October 29, 2002, as amended by a First
Amendment to Lease dated April 23, 2003 and by a Second Amendment to Lease dated
February 22, 2005 (collectively, the "Lease") Landlord demised to Tenant certain
premises consisting of 58,334 rentable square feet of tenant space (the
"Premises"), located at 63 South Avenue, Burlington, Massachusetts, and as more
particularly described in the Lease (the "Building"); and

      WHEREAS, Landlord and Tenant desire to amend the Lease to expand the
Premises to (i) include second floor space consisting of 24,019 square feet
currently subleased from Lahey Clinic Hospital, Inc., and (ii) to address
certain other matters as set forth herein.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and the mutual covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:

      1. Initial capitalized terms used herein, but not defined herein, shall
have the meanings ascribed to them in the Lease.

      2. Effective as of October 1, 2007, Section 1.1 of the Lease shall be, and
hereby is, amended in order to adjust the square footage of space leased by
Tenant by 24,019 rentable square feet located on the second floor of the
Building currently occupied by Tenant (the "Expansion Space"). Accordingly,
effective October 1, 2007, the term "Premises" and/or "Tenant's Space" as set
forth in the Lease shall refer to "82,353 rentable square feet". All references
in the Lease to "Premises" shall, effective October 1, 2007, refer to the entire
rentable square footage in the Building, or "82,353 rental square feet." The
Expansion Space shall be leased to Tenant on said October 1, 2007 in "As Is"
condition.

      3. Section 1.1 of the Lease is hereby amended by deleting "the Total
Rentable Floor Area of the Building" definition of "82,685 square feet" and by
replacing the same with "82,353 rentable square feet".

      4. Section 1.1 is hereby further amended by deleting in the definition of
"Fixed Rent", the "Monthly" rental figures set forth therein, leaving the dates
and amounts per rentable



square feet left unchanged. The Fixed Rent amounts set forth in Section 1.1 of
the Lease shall apply to the Premises (including the Expansion Space, as
applicable).

      5. Effective October 1, 2007, Section 1.1 of the Lease shall be, and
hereby is, amended by adding in the definition of "Term Expiration Date," the
following: "As to Expansion Space only - December 31, 2007." Landlord and Tenant
further agree that the existing Term Expiration Date of December 31, 2008 shall
apply to the remaining Premises as set forth in the Lease, expressly excluding
the Expansion Space.

      6. Landlord and Tenant hereby further agree that Tenant shall have an
option to extend with respect to the Expansion Space only, as more particularly
set forth as follows:

      The Tenant has the option to extend this Lease with respect to the
      Expansion Premises only for one (1) successive four (4) month term
      beginning on January 1, 2008 and ending on April 30, 2008 ("Extended
      Term"), the exercise of which shall automatically extend the Term of this
      Lease with respect to the Expansion Space without the necessity of
      additional documentation. So long as there does not exist any continuing,
      uncured Event of Default hereunder at such time of exercise, the option to
      extend shall be deemed to have been exercised by Tenant's notification to
      Landlord that it elects to exercise its option to extend by December 1,
      2007. The Extended Term shall be upon the same terms and conditions as are
      set forth in this Lease, including, without limitation, the Tenant's
      obligations to pay Operating Cost Escalation as set forth in Section 4.2,
      except that there shall be no additional option to extend after the
      termination of the Extended Term or the failure to exercise the option,
      whichever shall first occur.

      7. Landlord and Tenant each represent and warrant that is has dealt with
no broker other than Richards Barry Joyce & Partners, LLC, in connection with
this Amendment and agree to defend, indemnify and save the other party harmless
from and against any and all claims for a commission arising out of this Lease
made by any broker. No commission shall be due to Richards Barry Joyce &
Partners, LLC.

      8. Except as modified by this Amendment, the Lease is hereby ratified and
confirmed.

      9. This Amendment may be signed in any number of counterparts and each
thereof shall be deemed to be an original, and all such counterparts shall be
but one and the same agreement.

      10. Landlord's obligations to perform hereunder are subject to the
condition precedent that Landlord's mortgagee approves of this Amendment by
executing and delivering to Landlord the Mortgagee's Consent form attached
hereto as Exhibit A, unless Landlord gives

                                       2



Tenant written notice within thirty (30) days after the date hereof that
Landlord's mortgagee disapproves this Amendment, then this condition shall be
deemed to have been satisfied or waived, and the provisions of this Section 10
shall be of no further force or effect. If Landlord's mortgagee provides such
notice of disapproval to Landlord, then all of Landlord's and Tenant's
obligations hereunder shall be deemed terminated, and this Amendment shall
terminate without recourse to the parties hereto.

                   Remainder of Page Intentionally Left Blank

                            Signature Page to Follow

                                       3



EXECUTED as an instrument under seal as of the date first written above.
                                              
TENANT:                                          LANDLORD:

iRobot Corporation                               Burlington Crossing Office LLC
                                                 A Massachusetts limited liability company
                                                 By:    The Gutierrez Company,
                                                        Managing Member

By:   /s/ Geoffrey P. Clear                      By:    /s/ Arthur J. Gutierrez
      ---------------------------------                 ------------------------
Name: Geoffrey P. Clear                                 Arthur J. Gutierrez, Jr.
                                                        President
Title: SENIOR VP, CFO



                                       4



                                    EXHIBIT A

                              CONSENT OF MORTGAGEE



The undersigned Mortgagee hereby consents and approves the terms and provisions
set forth in this Third Amendment to Lease dated as of April 26, 2007, by and
between Burlington Crossing Office LLC ("Landlord") and iRobot Corporation
("Tenant").

                                              

                                                 MORTGAGEE:

                                                 BANK OF AMERICA, N.A.

/s/ [ILLEGIBLE]                                  By:    /s/ Kristin C Bearden
- -------------------------------                         ------------------------
Witness                                          Name:  Kristin C Bearden
                                                 Title: SVP
                                                 Date:  4/30/07



                                       5



                            FOURTH AMENDMENT TO LEASE

      This Fourth Amendment to Lease (this "Amendment") is made as of the 28th
day of April, 2008, between Burlington Crossing Office LLC, a Massachusetts
limited liability company, having its offices at c/o The Gutierrez Company, One
Wall Street, Burlington, Massachusetts 01803 (hereinafter referred to as
"Landlord") and iRobot Corporation, a Delaware corporation, having its offices
located at 63 South Avenue, Burlington, Massachusetts 01803 (hereinafter
referred to as the "Tenant").

                                WITNESSETH THAT:

      WHEREAS, by instrument dated October 29, 2002, as amended by a First
Amendment to Lease dated April 23, 2003, by a Second Amendment to Lease dated
February 22, 2005 and by a Third Amendment to Lease dated April 26, 2007
(collectively, the "Lease") Landlord demised to Tenant certain premises
consisting of 82,353 rentable square feet of tenant space (the "Premises"),
located at 63 South Avenue, Burlington, Massachusetts, and as more particularly
described in the Lease (the "Building"); and

      WHEREAS, Landlord and Tenant desire to amend the Lease to (i) extend the
Expansion Space (as defined in said Third Amendment to Lease, i.e. the 24,019
square feet located on the second floor of the Building) until May 31, 2008,
and (ii) to address certain other matters as set forth herein.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and the mutual covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:

      1. Initial capitalized terms used herein, but not defined herein, shall
have the meanings ascribed to them in the Lease.

      2. Section 1.1 of the Lease shall be, and hereby is, amended by replacing
the current definition of "Term Expiration Date" with respect to the Expansion
Premises only with the following: "As to Expansion Space only - May 31, 2008."
Landlord and Tenant further agree that the existing Term Expiration Date of
December 31, 2008 shall apply to the remaining Premises (expressly including the
Temporary Space leased at 33 South Avenue pursuant to said Second Amendment to
Lease) as set forth in the Lease, expressly excluding the Expansion Space.

      3. Landlord and Tenant hereby further agree that Tenant shall have an
option to extend with respect to the Expansion Space only, as more particularly
set forth as follows:

      The Tenant has the option to extend this Lease with respect to the
      Expansion Premises only for one (1) successive month term



      beginning on June 1, 2008 and ending on June 30, 2008 ("Extended Term"),
      the exercise of which shall automatically extend the Term of this Lease
      with respect to the Expansion Space without the necessity of additional
      documentation. So long as there does not exist any continuing, uncured
      Event of Default hereunder at such time of exercise, the option to extend
      shall be deemed to have been exercised by Tenant's notification to
      Landlord that it elects to exercise its option to extend by May 23, 2008.
      The Extended Term shall be upon the same terms and conditions as are set
      forth in this Lease, including, without limitation, the Tenant's
      obligations to pay Operating Cost Escalation as set forth in Section 4.2,
      except that there shall be no additional option to extend after the
      termination of the Extended Term or the failure to exercise the option,
      whichever shall first occur.

      4. Except as modified by this Amendment, the Lease is hereby ratified and
confirmed.

      5. This Amendment may be signed in any number of counterparts and each
thereof shall be deemed to be an original, and all such counterparts shall be
but one and the same agreement. The parties agree that facsimile copies of this
Amendment, bearing their respective signatures, shall be enforceable as
originals.

      6. Landlord's obligations to perform hereunder are subject to the
condition precedent that Landlord's mortgagee approves of this Amendment by
executing and delivering to Landlord the Mortgagee's Consent form attached
hereto as Exhibit A, unless Landlord gives Tenant written notice within ten (10)
days after the date hereof that Landlord's mortgagee disapproves this Amendment,
then this condition shall be deemed to have been satisfied or waived, and the
provisions of this Section 7 shall be of no further force or effect. If
Landlord's mortgagee provides such notice of disapproval to Landlord, then all
of Landlord's and Tenant's obligations hereunder shall be deemed terminated, and
this Amendment shall terminate without recourse to the parties hereto.

                   Remainder of Page Intentionally Left Blank

                            Signature Page to Follow

                                       2



EXECUTED as an instrument under seal as of the date first written above.

                                              
TENANT:                                          LANDLORD:

iRobot Corporation                               Burlington Crossing Office LLC
                                                 A Massachusetts limited liability company
                                                 By:    The Gutierrez Company,
                                                        Managing Member

By:   /s/ Geoffrey P. Clear                      By:    /s/ Arthur J. Gutierrez
      ----------------------------------                ------------------------
Name: Geoffrey P. Clear                                 Arthur J. Gutierrez, Jr.
                                                        President
Title: SENIOR VP/CFO



                                       3



                            FIFTH AMENDMENT TO LEASE

      This Fifth Amendment to Lease (this "Amendment") is made as of the 29th
day of May, 2008, between Burlington Crossing Office LLC, a Massachusetts
limited liability company, having its offices at c/o The Gutierrez Company, One
Wall Street, Burlington, Massachusetts 01803 (hereinafter referred to as
"Landlord") and iRobot Corporation, a Delaware corporation, having its offices
located at 63 South Avenue, Burlington, Massachusetts 01803 (hereinafter
referred to as the "Tenant").

                                WITNESSETH THAT:

      WHEREAS, by instrument dated October 29, 2002, as amended by a First
Amendment to Lease dated April 23, 2003, by a Second Amendment to Lease dated
February 22, 2005, by a Third Amendment to Lease dated April 26, 2007, and by a
Fourth Amendment to Lease dated April 28, 2008 (collectively, the "Lease")
Landlord demised to Tenant certain premises consisting of 82,353 rentable square
feet of tenant space (the "Premises"), located at 63 South Avenue, Burlington,
Massachusetts, and as more particularly described in the Lease (the "Building");
and

      WHEREAS, Landlord and Tenant desire to amend the Lease to (i) extend the
term for the Expansion Space (as defined in said Third Amendment to Lease, i.e.
the 24,019 square feet located on the second floor of the Building) until June
30, 2008, and (ii) to address certain other matters as set forth herein.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and the mutual covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:

      1. Initial capitalized terms used herein, but not defined herein, shall
have the meanings ascribed to them in the Lease.

      2. Section 1.1 of the Lease shall be, and hereby is, amended by replacing
the current definition of "Term Expiration Date" with respect to the Expansion
Premises only with the following: "As to Expansion Space only - June 30, 2008."

      3. Landlord and Tenant hereby further agree that Tenant shall have an
option to extend with respect to the Expansion Space only, as more particularly
set forth as follows:

      The Tenant has the option to extend this Lease with respect to the
      Expansion Premises only for one (1) successive month term beginning on
      July 1, 2008 and ending on July 31, 2008 ("Extended Term"), the exercise
      of which shall automatically extend the Term of this Lease with respect to
      the Expansion Space without the



      necessity of additional documentation. So long as there does not exist any
      continuing, uncured Event of Default hereunder at such time of exercise,
      the option to extend shall be deemed to have been exercised by Tenant's
      notification to Landlord that it elects to exercise its option to extend
      by July 23, 2008. The Extended Term shall be upon the same terms and
      conditions as are set forth in this Lease, including, without limitation,
      the Tenant's obligations to pay Operating Cost Escalation as set forth in
      Section 4.2, except that there shall be no additional option to extend
      after the termination of the Extended Term or the failure to exercise the
      option, whichever shall first occur.

      4. Except as modified by this Amendment, the Lease is hereby ratified and
confirmed.

      5. This Amendment may be signed in any number of counterparts and each
thereof shall be deemed to be an original, and all such counterparts shall be
but one and the same agreement. The parties agree that facsimile copies of this
Amendment, bearing their respective signatures, shall be enforceable as
originals.

                   Remainder of Page Intentionally Left Blank

                            Signature Page to Follow

                                       2



EXECUTED as an instrument under seal as of the date first written above.

                                              
TENANT:                                          LANDLORD:

iRobot Corporation                               Burlington Crossing Office LLC
                                                 A Massachusetts limited liability company
                                                 By:    The Gutierrez Company,
                                                        Managing Member

By:   /s/ Geoffrey P. Clear                      By:    /s/ Arthur J. Gutierrez
      ----------------------------------                ------------------------
Name: Geoffrey P. Clear                                 Arthur J. Gutierrez, Jr.
                                                        President
Title: SVP & CFO
       6-6-08



                                       3



                              TERMINATION OF LEASE
                          (15,000 RSF of the Premises)

      This TERMINATION OF LEASE ("this Agreement") is made as of the 28th day of
July, 2008, by and between Burlington Crossing Office LLC, a Massachusetts
limited liability company ("Landlord"), and iRobot Corporation, a Delaware
corporation ("Tenant").

                                    RECITALS

      A.    Tenant and Landlord entered into a lease agreement dated October 29,
            2002, as amended (hereafter referred to as the "Lease"), for 82,353
            rentable square feet (the "Premises"), at 63 South Avenue,
            Burlington, Massachusetts, and as more particularly described in the
            Lease (the "Property");

      B.    Landlord has obtained a tenant to occupy approximately 15,000
            rentable square feet at the Property, more specifically described on
            Exhibit "A" attached hereto (the "Release Premises") scheduled to
            commence upon Tenant's vacancy of the Release Premises that
            comprises a portion of the Premises (the "New Lease").

      D.    Landlord and Tenant now desire to terminate and cancel the Lease
            effective on August 1, 2008 with respect to the Release Premises
            only.

                                    AGREEMENT

      Now, therefore, for good and valuable consideration including payment
equal to $76,000.00 (the "Termination Fee") less the rent collected in error
($47,363.47) for a total of $28,636.53, the receipt and sufficiency of which is
hereby acknowledged, Landlord and Tenant agree as follows:

      1.    Subject to the terms and conditions contained herein, including
            Landlord's receipt of the Termination Fee, Landlord and Tenant
            hereby terminate and cancel the Lease effective as of August 1,
            2008 (hereinafter the "Termination Date"), with the same force and
            effect as though such date had originally been specified in the
            Lease as the Term Expiration Date, with respect to the Release
            Premises only.

      2.    Tenant agrees to vacate and relinquish possession and control of the
            Release Premises to Landlord on or before the Termination Date and
            surrender the Release Premises in compliance with all of the terms
            and conditions as set forth in the Lease, including but not limited
            to, Section 6.1.2 of the Lease. Notwithstanding the foregoing,
            Tenant shall not be required to remove the existing furniture,
            cubicles, etc. in the Release Premises and shall have no obligation
            whatsoever to remove or pay for the cost of removal of the same at
            the expiration of the Term.

      3.    Notwithstanding the termination and cancellation of the Lease with
            respect to the Release Premises, Tenant shall continue to be
            responsible for the payment of Fixed Rent and additional rent and
            other monies due and payable to Landlord per the terms and
            provisions of the Lease, through and including the Termination Date,
            with respect to the Release Premises; and shall continue to be
            responsible for any and all obligations of Tenant under the Lease
            with respect to the remaining Premises, the terms of which shall
            remain and continue as set



      IN WITNESS WHEREOF, the undersigned have set their hands and seals,
this ---- day of July, 2008.

                                              
TENANT:                                          LANDLORD:

IROBOT CORPORATION                               BURLINGTON CROSSING OFFICE LLC
A DELAWARE CORPORATION                           A MASSACHUSETTS LIMITED LIABILITY COMPANY

                                                 By:    The Gutierrez Company,
                                                        Its General Partner

By:   /s/ Geoffrey P. Clear                      By:    /s/ Arthur J. Gutierrez
      ----------------------------------                ------------------------
Name: Geoffrey P. Clear                          Name:  Arthur J. Gutierrez, Jr.
Title: SR. FINANCIAL ADVISOR TO CEO              Title: President
Date: 7-28-08                                    Date:  7/29/08



                                       3




[EXHIBIT "A" MAP]


                            SIXTH AMENDMENT TO LEASE

      This Sixth Amendment to Lease (this "Amendment") is made as of the 12th
day of September, 2008, between Burlington Crossing LLC and Burlington Crossing
Office LLC, both a Massachusetts limited liability company, having its offices
at c/o The Gutierrez Company, One Wall Street, Burlington, Massachusetts 01803
(hereinafter collectively referred to as "Landlord") and iRobot Corporation, a
Delaware corporation, having its offices located at 63 South Avenue, Burlington,
Massachusetts 01803 (hereinafter referred to as the "Tenant").

                                WITNESSETH THAT:

      WHEREAS, by instrument dated October 29, 2002, as amended by a First
Amendment to Lease dated April 23, 2003, by a Second Amendment to Lease dated
February 22, 2005, by a Third Amendment to Lease dated April 26, 2007, by a
Fourth Amendment to Lease dated April 28, 2008, by a Fifth Amendment to Lease
dated May 29, 2008, and as affected by a Termination of Lease (collectively, the
"Lease") Landlord demised to Tenant certain premises consisting of 43,334
rentable square feet of tenant space (the "Original Premises"), located at 63
South Avenue, Burlington, Massachusetts, and as more particularly described in
the Lease (the "Building"); and

      WHEREAS, Landlord and Tenant desire to amend the Lease to provide for
Tenant's use of certain premises known as 33 South Avenue, Burlington, MA (the
"Additional Space") on an "at will" basis, and to address certain other matters
as set forth herein as a result thereof.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and the mutual covenants and agreements herein
contained, Landlord and Tenant hereby agree as follows:

      1. Initial capitalized terms used herein, but not defined herein, shall
have the meanings ascribed to them in the Lease.

      2. Section 1.1 of the Lease shall be, and hereby is, amended by (i)
replacing the term "Total Rentable Floor Area of Tenant's Space" with
approximately 43,334 square feet located at 63 South Avenue and approximately
6,150 square feet located at the Additional Space", and (ii) adding to the
current definition of "Term Expiration Date" the following: "As to the
Additional Space only - September 30, 2009, unless the parties agree to continue
to allow Tenant to use the Additional Space, on an "at will" basis, in which
event the Term Expiration Date applicable to the Additional Space only shall be
such later date set forth in a written notice to the other which such notice
shall specify a Term Expiration Date of at least ninety (90) days following the
date of such notice and in no event shall such notice be given by any party
earlier than June 30, 2009." The term "Premises" shall, for all purposes set
forth in the Lease, hereafter include the Additional Space, except as otherwise
expressly provided (i.e. 49,484 square feet, in the aggregate).



      3. Landlord and Tenant hereby further agree to amend Section 1.1 of the
Lease by adding in the "Fixed Rent" definition, the following: "Additional Space
- - $10.00/RSF, on a triple net basis (i.e. Tenant shall be solely responsible to
pay for all electricity, utilities, water, sewer, taxes and other operating
expenses incurred in maintaining the Additional Space, the parties hereby
agreeing that Tenant shall be solely responsible to maintain and repair the
Additional Space, such that such space shall remain in good and operating
condition, substantially similar to the condition as existed at the commencement
of use thereof."

      Further, in addition to the Fixed Rent payable under this Lease as set
forth above, Tenant shall pay an additional $5,545.00 per month as Fixed Rent,
reflecting the amortization on the tenant improvement work outlined in Sections
2.1.1A and 2.1.1 of said Second Amendment to Lease, as hereafter provided in
Paragraph 4 of this Amendment.

      4. Notwithstanding any language to the contrary set forth in this
Amendment or Lease, Landlord and Tenant hereby acknowledge and agree that
Tenant's obligations set forth in Sections 2.1.1A and 2.1.1 of the Second
Amendment to Lease, relating to reimbursement associated with the Additional
Space, shall survive and continue as more particularly set forth therein. In the
event that the lease for the Additional Space, including occupancy on an "at
will" basis as aforesaid, is terminated prior to May 31, 2010, then Tenant shall
pay to Landlord a lump sum equal to the then unamortized balance of the tenant
improvement for 33 South Ave, as originally contemplated in said Sections.

      5. Except as modified by this Amendment, the Lease is hereby ratified and
confirmed.

      6. This Amendment may be signed in any number of counterparts and each
thereof shall be deemed to be an original, and all such counterparts shall be
but one and the same agreement. The parties agree that facsimile copies of this
Amendment, bearing their respective signatures, shall be enforceable as
originals.

                   Remainder of Page Intentionally Left Blank

                            Signature Page to Follow

                                       2



EXECUTED as an instrument under seal as of the date first written above.

                                              
TENANT:                                          LANDLORD:

iRobot Corporation                               Burlington Crossing LLC
                                                 Burlington Crossing Office LLC

                                                 By:    The Gutierrez Company,
                                                        Managing Member

By:   /s/ John J. Leahy                          By:    /s/ Arthur J. Gutierrez
      ----------------------------------                ------------------------
Name: John J. Leahy                                     Arthur J. Gutierrez, Jr.
                                                        President
Title: EVP & CFO



                                       3

EX-10.30

Exhibit 10.30

THIRD AMENDMENT TO CREDIT AGREEMENT

     This Third Amendment to Credit Agreement (the “Third Amendment”) is made as of the 12 day of February, 2010 by and between Bank of America, N.A. (the “Lender”), a national banking association with offices at 100 Federal Street, Boston, Massachusetts 02110 and iRobot Corporation, a Delaware corporation with its principal place of business at 8 Crosby Drive, Bedford, Massachusetts 01730 (the “Borrower”) in consideration of the mutual covenants contained herein and benefits to be derived herefrom:

W I T N E S S E T H

     WHEREAS, the Lender and the Borrower, have entered into a certain loan arrangement, which loan arrangement is evidenced by, among other documents and instruments, a certain Credit Agreement dated June 5, 2007 (as amended, the “Agreement”);

     WHEREAS, Borrower and the Lender have agreed to amend certain terms and provisions of the Agreement all as set forth herein.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lender and the Borrower hereby agree as follows:

     1. All capitalized terms not otherwise defined herein shall have the same meaning as defined in the Agreement.

     2. The following definitions in Section 1.01 of the Agreement are hereby deleted in their entirety and replaced as indicated below:

          ““Applicable Rate” means a per annum rate equal to:

               (a) with respect to Base Rate Loans, 0%;

               (b) with respect to Libor Rate Loans and Letters of Credit, 2.0%.

     “Base Rate” means for any day a fluctuating rate per annum equal to the greater of the BBA LIBOR Daily Floating Rate or the Prime Rate of Lender plus fifty (50) basis points per annum. Interest shall be computed for the actual number of days which have elapsed, on the basis of a 360-day year. If the BBA LIBOR Daily Floating Rate is not available for any reason, then the rate will be determined by such alternate method as reasonably selected by Lender. If Lender determines that no adequate basis exists for determining the BBA LIBOR Daily Floating Rate or that the BBA LIBOR Daily Floating Rate will not adequately and fairly reflect the cost to Lender of funding the Loan, or that

-1-

any applicable Law or regulation or compliance therewith by Lender prohibits or restricts or makes impossible the charging of interest based on the BBA LIBOR Daily Floating Rate and Lender so notifies Borrower, then until Lender notifies Borrower that the circumstances giving rise to such suspension no longer exist, interest shall accrue and be payable on the unpaid principal balance of the Loan from the date Lender so notifies Borrower until the Maturity Date (whether by acceleration, declaration, extension or otherwise) at a fluctuating rate of interest per annum equal to the Prime Rate of Lender plus fifty (50) basis points per annum. If Lender ceases to exist or to establish a prime rate from which the Prime Rate is then determined, the applicable variable rate from which the Prime Rate is then determined thereafter shall be instead the prime rate reported in The Wall Street Journal (or the average prime rate if a high and a low prime rate are therein reported), and the Prime Rate shall change without notice with each change in such prime rate as of the date such change is reported.

     “Commitment” means the obligation of the Lender to make Loans and L/C Credit Extensions hereunder in an aggregate principal amount at any one time not to exceed Forty Million ($40,000,000) Dollars, as such amount may be adjusted from time to time in accordance with this Agreement.

     “Interest Period” means, as to each Libor Rate Loan, the period commencing on the date such Libor Rate Loan is disbursed or converted to or continued as a Libor Rate Loan and ending on the date one, two or three months thereafter, as selected by the Borrower in its Loan Notice; provided that:

     (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

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

     (iii) no Interest Period shall extend beyond the Maturity Date.

“Maturity Date” means June 5, 2012.”

     3. The following definitions are added to Section 1.01 of the Agreement in alphabetical order:

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     ““Adjusted EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Net Income for such period plus (a) the following to the extent deducted in calculating such Net Income: (i) interest charges for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for such period, (iii) depreciation and amortization expense, (iv) any extraordinary losses,including asset impairment charges and non-cash restructuring charges (v) non-cash charges related to compensation expense,including stock based compensation, and (vi) all expenses associated with merger and acquisition transactions completed within the applicable peroid up to a maximum of $500,000 of expenses per transaction minus (b) the following: (i) any extraordinary gains to the extent increasing Net Income and (ii) all non-cash items increasing Net Income for such period.

     “BBA LIBOR Daily Floating Rate” shall mean a fluctuating rate of interest per annum equal to the BBA LIBOR, as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by Lender from time to time) as determined for each Business Day at approximately 11:00 a.m. London time two (2) London Banking Days prior to the date in question, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a one month term, as adjusted from time to time in Lender’s sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs.

     “EBIT” means earnings before interest and taxes all as determined in accordance with GAAP, consistently applied.

     “Interest Coverage” means the ratio of EBIT to interest expense.

     “Libor Rate” means for any Interest Period with respect to any Libor Rate Loan, a rate per annum determined by the Lender equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Lender from time to time) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the interest period, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by the Lender.

     “Libor Rate Loan” means a Loan that bears interest based on the Libor Rate.

     “London Banking Day” is a day on which banks in London are open for business and dealing in offshore dollars.

-3-

“Net Income” shall mean net income as determined in accordance with GAAP.

     “Prime Rate” shall mean, on any day, the rate of interest per annum then most recently established by Lender as its “prime rate.” Any such rate is a general reference rate of interest, may not be related to any other rate, and may not be the lowest or best rate actually charged by Lender to any customer or a favored rate and may not correspond with future increases or decreases in interest rates charged by other lenders or market rates in general, and Lender may make various business or other loans at rates of interest having no relationship to such rate.”

     4. Section 2.01 of the Agreement is hereby deleted in its entirety and replaced with the following:

     “2.01 Loans. Subject to the terms and conditions set forth herein, the Lender agrees to make loans (each such loan, a “Loan”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of the Commitment; provided, however, that after giving effect to any borrowing, the Total Outstandings shall not exceed the Commitment. Within the limits of the Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. A Loan may be a Base Rate Loan or a Libor Rate Loan, as further provided herein.”

     5. Section 2.08 of the Agreement is hereby deleted in its entirety and replaced with the following:

     “2.08 Fees. In addition to certain fees described in subsections (h) and (i) of Section 2.03 Borrower shall maintain on deposit with the Lender collected funds equal to the greater of: (a) fifty percent (50%) of total cash or cash equivalents of the Borrower available for investment up to a maximum of Forty Million ($40,000,000.00) Dollars; or (b) Ten Million ($10,000,000.00) Dollars (the “Compensating Balances”). If the Borrower fails to maintain the Compensating Balances, the Lender reserves the right to adjust the Applicable Rate to compensate the Lender for its loss of its required rate of return.”

     6. Section 2.09 of the Agreement is hereby deleted in its entirety and replaced with the following:

     “2.09 Computation of Interest and Fees. All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any

-4-

portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day.”

     7. Section 7.11 of the Agreement is hereby deleted in its entirety and replaced with the following:

“7.11 Financial Covenants.

     (a) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at any time to be less than Ninety-Five Million ($95,000,000.00) Dollars.

     (b) Adjusted EBITDA. Commencing with the quarter ending March 31, 2010 permit Adjusted EBITDA to be less than Eight Million ($8,000,000.00) Dollars to be measured quarterly, on a trailing four quarters basis.

     (c) Interest Coverage. Commencing with the quarter ending March 31, 2010 permit the Interest Coverage ratio to be less than 2.5:1.0 measured quarterly, on a trailing four quarters basis.”

     8. Exhibit B of the Agreement is amended by the Second Amendment to Note of even date executed by the Borrower.

     9. The Borrower shall maintain the Lender as the Borrower’s primary depository institution.

     10. Any and all references in the Agreement to Eurodollar Base Rate, Eurodollar Rate or Eurodollar Rate Loans shall now be deemed to refer to Libor Rate or Libor Rate Loans.

     11. Except as expressly amended hereby, the remaining terms and conditions of the Agreement and all documents and instruments executed in connection therewith are hereby expressly ratified and confirmed.

     12. The Borrower acknowledges and agrees that it has no claims, counterclaims, off-sets, defenses or causes of action against the Lender through the dae of this Third Amendment with respect to amounts outstanding under the Agreement. To the extent such claims, counterclaims, off-sets, defenses and/or causes of action should exist, whether known or unknown, at law or in equity, the Borrower hereby WAIVES same and RELEASES the Lender from any and all liability in connection therewith.

     13. Miscellaneous.

a. The Borrower shall execute and deliver to the Lender such additional documents, instruments, and agreements that the Lender

-5-

may reasonably require in order to give effect to, and implement the terms and conditions of this Third Amendment.

b.	This Third Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original and all of which together shall constitute one instrument.
c.	This Third Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provision hereof.
d.	The Borrower shall pay on demand all reasonable documented costs and expenses of the Lender including, without limitation, reasonable documented attorneys’ fees in connection with the preparation, negotiation, execution and delivery of the Third Amendment.

     14. It is intended that this Third Amendment take effect as an instrument under seal as of the date first written above.

Witnessed by:	iROBOT CORPORATION
/s/ Paul Tavalone
	By:	/s/ John Leahy Name: John Leahy
		Title: Chief Financial Officer

Signatures continued on next page

-6-

BANK OF AMERICA, N.A.
By:	/s/ Richard Macdonald
	Name:	Richard Macdonald
	Title:	Senior Vice President

-7-

EX-10.31

Exhibit 10.31

SECOND AMENDMENT TO NOTE

     This Second Amendment to Note (the “Second Amendment”) is made as of this 12 day of February, 2010 by and between Bank of America, N.A. (the “Bank”) having an office located at 100 Federal Street, Boston, Massachusetts 02110 and iRobot Corporation (the “Borrower”), a Delaware corporation having an office at 8 Crosby Drive, Bedford, Massachusetts 01730 to that certain Note dated June 5, 2007 executed by the Borrower in favor of the Bank (as amended, the “Note”). Any capitalized terms not otherwise defined herein shall have the same meanings designated in the Note.

W I T N E S S E T H:

     WHEREAS, the Borrower did on June 5, 2007 execute, seal and deliver to the Bank the Note; and

     WHEREAS, the Borrower has requested that the Bank decrease the maximum principal of the Note;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, receipt of whereof is hereby acknowledged, it is hereby agreed by and between the Borrower and the Bank as follows:

1.	The Note is hereby amended by replacing where applicable the references to “Forty Five Million Dollars” and “$45,000,000.00” with “Forty Million Dollars” and “$40,000,000.00”.
2.	The Note, as amended hereby, shall remain in full force and effect and all terms hereof are hereby ratified and confirmed by the Borrower. Except for specifically provided herein, all other terms and conditions of the Note shall remain in full force and effect.
3.	The Borrower by its execution of this Second Amendment in the space provided below, represents, warrants and agrees that the Borrower has no claims, defenses, counterclaims or offsets against the Bank through the date of this Second Amendment in connection with the Note or any of the other documents executed in connection therewith and, to the extent that any such claim, defense, counterclaim or offset may exist, the Borrower by its execution of this Second Amendment in the space provided below, hereby affirmatively WAIVES and RELEASES the Bank from same.
4.	This Second Amendment shall take effect as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first above written.
5.	Any and all references to the Note and any instrument previously and now hereafter executed by the Borrower shall be deemed to refer to the Note as amended by this

-1-

 Second Amendment and any future amendments hereafter entered into between the Borrower and the Bank.

     IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the date and year first above written as a sealed instrument.

WITNESS:	iROBOT CORPORATION
/s/ Paul Tavalone
	By:	/s/ John Leahy
	Title:	Chief Financial Officer
	BANK OF AMERICA, N.A.
	By:	/s/ Richard Macdonald
	Title:	Senior Vice President

-2-

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File Nos. 333-157306, 333-149373, 333-140707, 333-129576) of iRobot Corporation of our report dated February 19, 2010 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 19, 2010

EX-31.1

Exhibit 31.1

Certifications

I, Colin M. Angle, certify that:

1.	I have reviewed this Annual Report on Form 10-K of iRobot Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2010	/s/ Colin M. Angle
	Colin M. Angle
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications

I, John Leahy, certify that:

1.	I have reviewed this Annual Report on Form 10-K of iRobot Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2010	/s/ John Leahy
	John Leahy
	Chief Financial Officer

EX-32.1

Exhibit 32.1

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

     In connection with the Annual Report on Form 10-K of iRobot Corporation (the “Company”) for the year ended January 2, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Colin M. Angle, the Chief Executive Officer of the Company and John Leahy, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to our knowledge, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

     This certification is being provided pursuant to 18 U.S.C. 1350 and is not to be deemed a part of the Report, nor is it to be deemed to be “filed” for any purpose whatsoever.

Dated February 19, 2010	/s/ Colin M. Angle
	Colin M. Angle
	Chief Executive Officer
Dated February 19, 2010	/s/ John Leahy
	John Leahy
	Chief Financial Officer