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Delaware		8731		77-0259 335
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Mark T. Bettencourt, Esq. Edward A. King, Esq. Goodwin Procter LLP Exchange Place Boston, Massachusetts 02109 (617) 570-1000		Mark G. Borden, Esq. Omar White, Esq. Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 (617) 526-6000

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The information contained in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

	4,300,000 Shares

Underwriting

Proceeds to

Proceeds to

Price to

Discounts and

iRobot

Selling

Public

Commissions

Corporation

Stockholders

Per Share

$

$

$

$

Total

$

$

$

$

MORGAN STANLEY	JPMORGAN

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		Page
Prospectus Summary			1
Risk Factors			6
Forward-Looking Statements			24
Use of Proceeds			25
Dividend Policy			25
Capitalization			26
Dilution			27
Selected Consolidated Financial Data			28
Management’s Discussion and Analysis of Financial Condition and Results of Operations			30
Business			49
Management			68
Certain Relationships and Related Party Transactions			79
Principal and Selling Stockholders			81
Description of Capital Stock			86
Shares Eligible for Future Sale			90
Underwriters			92
Legal Matters			96
Experts			96
Where You Can Find More Information			96
Index to Consolidated Financial Statements			F-1
Ex-1.1 Form of Underwriting Agreement
Ex-4.1 Specimen Stock Certificate
Ex-4.2 Form of Shareholder Rights Agreement
Ex-5.1 Opinion of Goodwin Procter LLP
Ex-10.20 Non-Employee Directors' Deferred Compensation Program
Ex-23.2 Consent of PricewaterhouseCoopers LLP

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This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors” beginning on page 6, and the consolidated financial statements and notes to those consolidated financial statements, before making an investment decision.

iRobot provides robots that enable people to complete complex tasks in a better way. Founded in 1990 by roboticists who performed research at the Massachusetts Institute of Technology, 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 recently announced Scooba floor washing robot perform time-consuming domestic chores, and our PackBot tactical military robots perform battlefield reconnaissance and bomb disposal. In addition, we are developing the Small Unmanned Ground Vehicle reconnaissance robot for the U.S. Army’s transformational Future Combat Systems program and, in conjunction with Deere & Company, the R-Gator unmanned ground vehicle. We sell our robots to consumers through a variety of distribution channels, including over 7,000 retail locations and our on-line store, and to the U.S. military and other government agencies worldwide.
As of October 1, 2005, we had 258 full-time employees, of whom over 120 are engineers specializing in the design of robots. We have developed expertise in all 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 three years, we sold more than 1.5 million of our Roomba floor vacuuming robots. We also sold to the U.S. military during that time more than 300 of our PackBot tactical military robots, most of which have been deployed on missions in Afghanistan and Iraq.

Over the past several decades, the desire to continue to improve productivity and quality of life has led to the development of robots. Historical attempts at producing robots have had limited success due to the inherent complexities in integrating multiple technologies to deliver truly functional robots at affordable prices. Behavior-based robots, which represent a new generation of robots, can effectively deal with dynamic and changing environments, and are particularly well suited for consumer, military and industrial tasks that are repetitive, physically demanding or dangerous. The need for robots has increased in parallel with the evolution of robot technology.
We believe that the demand for robots that can complete domestic chores is developing rapidly due to demographic trends, including the aging population, increasing prevalence of dual-income households, declining birth rates and ongoing reduction in people’s “free” time. According to the 2004 United Nations Economic Commission for Europe in cooperation with the International Federation of Robotics, there will be approximately $2.6 billion spent worldwide on household robots from 2004 through 2007.

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	•	Deliver Great Products and Continue to Expand Our Existing Markets. Our strategy is to deliver innovative products rapidly at economical price points and continue to extend our consumer and military product offerings.
	•	Innovate to Penetrate New Markets. Our culture of innovation and experience enables us to rapidly develop robots for use in a broad range of applications and to penetrate new market segments globally.
	•	Complement Our Core Competencies With Strategic Alliances. We rely on strategic alliances to provide complementary competencies and enhance our ability to enter and compete in new markets.
	•	Leverage Our Research and Development Efforts Across Different Products and Markets. By using our research and development across all our products and markets, our strategy is to develop cost-effective robots and rapidly bring them to market.
	•	Build a Community of Third-Party Developers Around Our Platforms. Our extendable product platforms with open interfaces allow us to foster a community of third-party developers that we believe will enable us to expand our footprint while maintaining market leadership.
	•	Continue to Strengthen Our Brand. To strengthen our brand, we will reinforce our message of innovation, reliability, safety and value through continued investment in our marketing programs.
	•	Continue to Invest Aggressively in Our Business and Our People. We will maximize long-term profitability by continuing to invest significant resources over the next several years in our product development and sales efforts, and in training highly-qualified personnel.

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	•	we have incurred significant losses since inception, including net losses of $10.8 million and $7.4 million in the years ended December 31, 2002 and 2003, respectively, resulting in an accumulated deficit of $24.3 million at October 1, 2005, and our future profitability is uncertain;
	•	we operate in an emerging market, which makes it difficult to evaluate our business and future prospects;
	•	we have generated, and expect to continue to generate, more than half of our revenue from our Roomba line of floor vacuuming robots; and
	•	we depend on the U.S. federal government for a significant portion of our revenue.

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	•	generate sufficient revenue 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 roboticists 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.

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	•	seasonality in the sales of our consumer products;
	•	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;
	•	costs of labor and raw materials;
	•	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;
	•	the amount of government funding and the political, budgetary and purchasing constraints of our government agency customers; and
	•	cancellations, delays or contract amendments by government agency customers.

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	•	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.

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	•	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; and
	•	risks associated with international commerce with China, 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.

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	•	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.

	•	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.

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	•	developers of robotic floor care products such as AB Electrolux, Alfred Kärcher GmbH & Co., Samsung Electronics Co., Ltd., LG Electronics Inc., Koolatron Corp. 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, BAE Systems, Inc. and General Dynamics Corporation.

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

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

	•	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; 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.

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	•	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.

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	•	hire additional roboticists and other personnel;
	•	develop new or enhance existing robots and robot accessories;
	•	enhance our operating infrastructure;
	•	acquire complementary businesses or technologies; or

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	•	otherwise respond to competitive pressures.

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

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	•	fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
	•	changes in estimates of our financial results or recommendations by securities analysts;
	•	failure of any of our products to achieve or maintain market acceptance;
	•	changes in market valuations of similar companies;
	•	success of competitive products;

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	•	changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
	•	announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances;
	•	regulatory developments in the United States, foreign countries or both;
	•	litigation involving our company, our general industry or both;
	•	additions or departures of key personnel;
	•	investors’ general perception of us; and
	•	changes in general economic, industry and market conditions.

				% of Total
Number of Shares				Outstanding				Date Available for Sale Into Public Market
	260,840				1.1	%		On the date of this prospectus
	131,048				0.6	%		90 days after the date of this prospectus
	18,465,908				79.3	%		180 days after the date of this prospectus, subject to extension in specified instances, due to lock-up agreements between the holders of these shares and the underwriters. However, Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. can waive the provisions of these lock-up agreements and allow these stockholders to sell their shares at any time
	95,172				0.4	%		180 days after the date of this prospectus, subject to extension in specified instances, due to a lock-up agreement between the holders of these shares and us. However, with the underwriters’ consent, we can waive the provisions of these lock-up agreements and allow these stockholders to sell their shares at any time
	32,720				0.1	%		Between 181 and 365 days after the date of this prospectus, depending on the requirements of the federal securities laws

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	•	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.

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	•	on an actual basis; and
	•	on an as adjusted basis to give effect to the conversion of our convertible preferred stock, the issuance of 47,406 shares of common stock upon the exercise of outstanding options at a weighted average exercise price of $0.39 per share to be sold by selling stockholders in this offering, and to reflect the sale of 3,260,870 shares of common stock that we are offering at an assumed initial public offering price of $22.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

			As of October 1, 2005
			Actual				As Adjusted
			(unaudited)
			(in thousands)
Preferred stock, $.01 par value, 9,557 shares authorized and issued, actual; 5,000 shares authorized, no shares issued, as adjusted:			$	37,506				—
Stockholders’ equity (deficit):
	Common stock, $.01 par value: 35,000 shares authorized; 10,420 shares issued, actual; 100,000 shares authorized, 23,286 shares issued, as adjusted			104				233
	Additional paid-in capital			6,503				108,616
	Deferred stock-based compensation			(3,145	)			(3,145	)
	Accumulated deficit			(24,291	)			(24,291	)
Total stockholders’ equity (deficit)				(20,829	)			81,413
Total capitalization			$	16,677				81,413

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Assumed initial public offering price per share							$	22.00
	Net tangible book value as of October 1, 2005		$	0.83
	Increase attributable to this offering			2.67
Adjusted net tangible book value per share after this offering								3.50
Dilution in net tangible book value per share to new investors							$	18.50

			Shares Purchased								Total Consideration
																			Average Price
			Number				Percent				Amount				Percent				Per Share
Existing stockholders				20,024,818				86	%		$	39,241				35	%		$	1.96
New investors				3,260,870				14	%			71,739				65	%		$	22.00
	Total			23,285,688				100	%		$	110,980				100	%

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																								Nine Months Ended
				Year Ended December 31,
																								September 30,				October 1,
				2000				2001				2002				2003				2004				2004				2005
																								(unaudited)
				(in thousands, except per share data)
Consolidated Statement of Operations:
Revenue
	Product revenue(1)			$	1,904			$	1,408			$	6,955			$	45,896			$	82,147			$	48,589			$	83,039
	Contract revenue				8,846				12,077				7,223				7,661				12,365				8,500				12,375
	Royalty revenue				—				27				639				759				531				469				62
		Total revenue			10,750				13,512				14,817				54,316				95,043				57,558				95,476
Cost of Revenue
	Cost of product revenue				1,506				1,148				4,896				31,194				59,321				35,032				55,320
	Cost of contract revenue				6,607				8,566				11,861				6,143				8,371				5,446				8,924
		Total cost of revenue			8,113				9,714				16,757				37,337				67,692				40,478				64,244
Gross Profit (Loss)(1)					2,637				3,798				(1,940	)			16,979				27,351				17,080				31,232
Operating Expenses
	Research and development				3,225				1,846				1,736				3,848				5,504				3,769				8,276
	Selling, general and administrative				3,038				4,669				7,128				20,521				21,404				13,327				20,328
	Stock-based compensation(2)				—				—				—				—				—				—				212
		Total operating expenses			6,263				6,515				8,864				24,369				26,908				17,096				28,816
Operating Income (Loss)					(3,626	)			(2,717	)			(10,804	)			(7,390	)			443				(16	)			2,416
Other Income (Expense), Net					171				101				45				15				(80	)			(48	)			271
Income (Loss) Before Income Taxes					(3,455	)			(2,616	)			(10,759	)			(7,375	)			363				(64	)			2,687
Income Tax Expense					8				16				15				36				144				125				92
Net Income (Loss)				$	(3,463	)		$	(2,632	)		$	(10,774	)		$	(7,411	)		$	219			$	(189	)		$	2,595
Net Income (Loss) Attributable to Common Stockholders				$	(3,463	)		$	(2,632	)		$	(10,774	)		$	(7,411	)		$	118			$	(189	)		$	1,332
Net Income (Loss) Per Common Share
		Basic		$	(0.66	)		$	(0.50	)		$	(2.00	)		$	(0.79	)		$	0.01			$	(0.02	)		$	0.13
		Diluted		$	(0.66	)		$	(0.50	)		$	(2.00	)		$	(0.79	)		$	0.01			$	(0.02	)		$	0.11
Shares Used in Per Common Share Calculations
		Basic			5,231				5,312				5,391				9,352				9,660				9,605				10,080
		Diluted			5,231				5,312				5,391				9,352				19,183				9,605				12,268
Pro Forma Net Income Data(3):
	Pro Forma Net Income Per Common Share
		Basic																		$	0.01							$	0.13
		Diluted																		$	0.01							$	0.12
	Shares Used in Pro Forma Per Common Share Calculations
		Basic																			18,002								19,637
		Diluted																			19,183								21,825

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(1)	Beginning in the first quarter of 2004, we converted from recognizing revenue from U.S. consumer product sales on a “sell-through” basis (when retail stores sold our robots) to a “sell-in” basis (when our robots are shipped to retail stores). As a result of this conversion, our revenue and gross profit in the first quarter of 2004 included $5.7 million and $2.5 million, respectively, from robots shipped prior to 2004.
(2)	Stock-based compensation recorded in 2005 breaks down by expense classification as follows:

			Nine Months Ended
			October 1, 2005
			(unaudited)
			(in thousands)
Cost of product revenue			$	18
Cost of contract revenue				29
Research and development				59
Selling, general and administrative				106
	Total stock-based compensation		$	212

(3)	We have computed the pro forma net income per common share and the pro forma weighted-average shares outstanding included in the statement of operations data as we describe in Note 2 of the notes to our consolidated financial statements.

		As of December 31,																				As of
																						October 1,
		2000				2001				2002				2003				2004				2005
																						(unaudited)
		(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents		$	806			$	7,179			$	3,014			$	4,620			$	19,441			$	9,217
Total assets			5,241				10,580				8,705				27,827				45,137				59,967
Total liabilities			2,015				3,182				12,049				25,624				31,920				43,290
Total redeemable convertible preferred stock			7,873				14,639				14,639				27,562				37,506				37,506
Total stockholders’ equity (deficit)			(4,646	)			(7,241	)			(17,983	)			(25,359	)			(24,289	)			(20,829	)

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	Cost of Revenue

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	Gross Profit

	Research and Development Expenses

	•	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.

	Selling, General and Administrative Expenses

	•	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;
	•	professional services costs;
	•	information systems and infrastructure costs;
	•	travel and related costs; and
	•	occupancy and other overhead costs.

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	Stock-Based Compensation Expenses

	Fiscal Periods

	Revenue Recognition

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	Accounting for Stock-Based Awards

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	Accounting for Income Taxes

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	Warranty

	Inventory Valuation

																	Nine Months Ended
					Fiscal Year Ended December 31,
																	September 30,				October 1,
					2002				2003				2004				2004				2005
																	(unaudited)
					(in thousands)
Revenue
	Product revenue(1)				$	6,955			$	45,896			$	82,147			$	48,589			$	83,039
	Contract revenue					7,223				7,661				12,365				8,500				12,375
	Royalty revenue					639				759				531				469				62
			Total revenue			14,817				54,316				95,043				57,558				95,476
Cost of Revenue
	Cost of product revenue					4,896				31,194				59,321				35,032				55,320
	Cost of contract revenue					11,861				6,143				8,371				5,446				8,924
			Total cost of revenue			16,757				37,337				67,692				40,478				64,244
		Gross profit (loss)(1)				(1,940	)			16,979				27,351				17,080				31,232
Operating Expenses
	Research and development					1,736				3,848				5,504				3,769				8,276
	Selling, general and administrative					7,128				20,521				21,404				13,327				20,328
	Stock-based compensation(2)					—				—				—				—				212
			Total operating expenses			8,864				24,369				26,908				17,096				28,816
Operating Income (Loss)						(10,804	)			(7,390	)			443				(16	)			2,416
Other Income (Expense), Net						45				15				(80	)			(48	)			271
Income (Loss) Before Income Taxes						(10,759	)			(7,375	)			363				(64	)			2,687
Income Tax Expense						15				36				144				125				92
Net Income (Loss)					$	(10,774	)		$	(7,411	)		$	219			$	(189	)		$	2,595

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(1)	Beginning in the first quarter of 2004, we converted from recognizing revenue from U.S. consumer product sales on a “sell-through” basis (when retail stores sold our robots) to a “sell-in” basis (when our robots are shipped to retail stores). As a result of this conversion, our revenue and gross profit in the first quarter of 2004 included $5.7 million and $2.5 million, respectively, from robots shipped prior to 2004.
(2)	Stock-based compensation recorded in 2005 breaks down by expense classification as follows:

			Nine Months Ended
			October 1, 2005
			(unaudited)
			(in thousands)
Cost of product revenue			$	18
Cost of contract revenue				29
Research and development				59
Selling, general and administrative				106
	Total stock-based compensation		$	212

					Fiscal Year Ended												Nine Months Ended
					December 31,
																	September 30,				October 1,
					2002				2003				2004				2004				2005
Revenue
	Product revenue					47.0	%			84.5	%			86.4	%			84.4	%			87.0	%
	Contract revenue					48.7				14.1				13.0				14.8				13.0
	Royalty revenue					4.3				1.4				0.6				0.8				0.0
			Total revenue			100.0				100.0				100.0				100.0				100.0
Cost of Revenue
	Cost of product revenue					33.0				57.4				62.4				60.8				57.9
	Cost of contract revenue					80.1				11.3				8.8				9.5				9.3
			Total cost of revenue			113.1				68.7				71.2				70.3				67.3
		Gross profit (loss)				(13.1	)			31.3				28.8				29.7				32.7
Operating Expenses
	Research and development					11.7				7.1				5.8				6.5				8.7
	Selling, general and administrative					48.1				37.8				22.5				23.2				21.3
	Stock-based compensation					—				—				—				—				0.2
			Total operating expenses			59.8				44.9				28.3				29.7				30.2
Operating Income (Loss)						(72.9	)			(13.6	)			0.5				0.0				2.5
Other Income (Expense), Net						0.3				—				(0.1	)			(0.1	)			0.3
Income (Loss) Before Income Taxes						(72.6	)			(13.6	)			0.4				(0.1	)			2.8
Income Tax Expense						0.1				—				0.2				0.2				0.1
Net Income (Loss)						(72.7	)%			(13.6	)%			0.2	%			(0.3	)%			2.7	%

	Comparison of Nine Months Ended October 1, 2005 to Nine Months Ended September 30, 2004

	Revenue

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	Cost of Revenue

	Gross Profit

	Research and Development

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	Selling, General and Administrative

	Other Income (Expense), Net

	Income Tax Provision

	Comparison of Years Ended December 31, 2004 and 2003

	Revenue

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	Cost of Revenue

	Gross Profit

	Research and Development

	Selling, General and Administrative

	Other Income (Expense), Net

	Income Tax Provision

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	Comparison of Years Ended December 31, 2003 and 2002

	Revenue

	Cost of Revenue

	Gross Profit

	Research and Development

	Selling, General and Administrative

	Other Income (Expense), Net

	Income Tax Provision

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					Fiscal Quarter Ended
					March 31,				June 30,				September 30,				December 31,				March 31,				July 2,				October 1,
					2004				2004				2004				2004				2005				2005				2005
					(unaudited)
					(in thousands)
Revenue
	Product revenue(1)				$	15,812			$	7,275			$	25,502			$	33,558			$	12,531			$	22,193			$	48,315
	Contract revenue					2,221				2,818				3,461				3,865				4,539				3,693				4,143
	Royalty revenue					465				18				(15	)			62				62				—				—
			Total revenue			18,498				10,111				28,948				37,485				17,132				25,886				52,458
Cost of Revenue
	Cost of product revenue					10,417				6,053				18,560				24,290				9,834				16,917				28,569
	Cost of contract revenue					1,352				1,994				2,101				2,924				3,124				2,645				3,155
			Total cost of revenue			11,769				8,047				20,661				27,214				12,958				19,562				31,724
		Gross profit(1)				6,729				2,064				8,287				10,271				4,174				6,324				20,734
Operating Expenses
	Research and development					1,422				1,141				1,206				1,735				3,048				2,665				2,563
	Selling, general and administrative					4,790				4,399				4,139				8,077				5,295				6,766				8,267
	Stock-based compensation(2)					—				—				—				—				27				63				122
			Total operating expenses			6,212				5,540				5,345				9,812				8,370				9,494				10,952
		Operating income (loss)				517				(3,476	)			2,942				459				(4,196	)			(3,170	)			9,782
Other Income (Expense), Net						(35	)			(5	)			(7	)			(32	)			97				114				60
Income (Loss) Before Income Taxes						482				(3,481	)			2,935				427				(4,099	)			(3,056	)			9,842
Income Tax Expense						1				—				124				19				2				—				90
Net Income (Loss)					$	481			$	(3,481	)		$	2,811			$	408			$	(4,101	)		$	(3,056	)		$	9,752

(1)	Beginning in the first quarter of 2004, we converted from recognizing revenue from U.S. consumer product sales on a “sell-through” basis (when retail stores sold our robots) to a “sell-in” basis (when our robots are shipped to retail stores). As a result of this conversion, our revenue and gross profit in the first quarter of 2004 included $5.7 million and $2.5 million, respectively, from robots shipped prior to 2004.
(2)	Stock-based compensation recorded in 2005 breaks down by expense classification as follows:

			Fiscal Quarter Ended
			March 31,				July 2,				October 1,
			2005				2005				2005
			(unaudited)
			(in thousands)
Cost of product revenue			$	3			$	6			$	9
Cost of contract revenue				4				7				18
Research and development				10				22				27
Selling, general and administrative				10				28				68
	Total stock-based compensation		$	27			$	63			$	122

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					Fiscal Quarter Ended
					March 31,				June 30,				September 30,				December 31,				March 31,				July 2,				October 1,
					2004				2004				2004				2004				2005				2005				2005
Revenue
	Product revenue					85.5	%			72.0	%			88.0	%			89.5	%			73.1	%			85.7	%			92.1	%
	Contract revenue					12.0				27.9				12.0				10.3				26.5				14.3				7.9
	Royalty revenue					2.5				0.1				—				0.2				0.4				—				—
			Total revenue			100.0				100.0				100.0				100.0				100.0				100.0				100.0
Cost of Revenue
	Cost of product revenue					56.3				59.9				64.1				64.8				57.4				65.4				54.5
	Cost of contract revenue					7.3				19.7				7.3				7.8				18.2				10.2				6.0
			Total cost of revenue			63.6				79.6				71.4				72.6				75.6				75.6				60.5
		Gross profit				36.4				20.4				28.6				27.4				24.4				24.4				39.5
Operating Expenses
	Research and development					7.7				11.3				4.2				4.6				17.8				10.3				4.9
	Selling, general and administrative					25.9				43.5				14.3				21.6				30.9				26.1				15.8
	Stock-based compensation					—				—				—				—				0.2				0.2				0.2
			Total operating expenses			33.6				54.8				18.5				26.2				48.9				36.6				20.9
Operating Income (Loss)						2.8				(34.4	)			10.1				1.2				(24.5	)			(12.2	)			18.6
Other Income (Expense), Net						(0.2	)			—				—				(0.1	)			0.6				0.4				0.1
Income (Loss) Before Income Taxes						2.6				(34.4	)			10.1				1.1				(23.9	)			(11.8	)			18.7
Income Tax Expense						—				—				0.4				0.1				—				—				0.1
Net Income (Loss)						2.6	%			(34.4	)%			9.7	%			1.0	%			(23.9	)%			(11.8	)%			18.6	%

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	Discussion of Cash Flows

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	Working Capital Facility

	•	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; or
	•	consolidate or merge with other entities.

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	Working Capital and Capital Expenditure Needs

		Payments Due by Period
		Less Than				1 to				3 to
		1 Year				3 Years				5 Years				Total
		(in thousands)
Operating leases		$	328			$	3,935			$	94			$	4,357
Minimum contractual payments			875				2,625				875				4,375
Total		$	1,203			$	6,560			$	969			$	8,732

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	Foreign Currency Risk

	Interest Rate Sensitivity

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	iRobot Innovation Engine

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	Consumer Products

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	•	the ability to sense a “cliff” or drop-off point and to react by reversing course automatically;
	•	a non-marring bumper to clean up to obstacles without damaging furniture or walls;
	•	a wide cleaning path to clean an entire room on a single battery charge;
	•	an edging brush to clean along surface edges;
	•	dirt-sensing, which allows the Roomba robot to detect dirtier areas in the home and respond by increasing and extending the intensity of its cleaning efforts in that concentrated space; and
	•	improved cleaning and maintenance operations, enhancing the user friendliness of the Roomba robot.

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	Government and Industrial Products

	Contract Research and Development Projects

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	•	Route Reconnaissance. Move ahead of the soldier along a planned route of advance and return maps and video of what lies ahead.
	•	Perimeter Reconnaissance. Traverse the entire perimeter of a building complex and return with maps and video.
	•	Street-Based Reconnaissance. Navigate down city streets using street-following behaviors along with GPS/ INS and return maps and video of the urban terrain. The modular Wayfarer navigation payload connects to the standard PackBot payload interface and includes light detection and ranging, or LIDAR, stereo vision, forward-looking infrared, or FLIR, and inertial navigation system sensor hardware.

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	Deere & Company. We have entered into a strategic business agreement with the commercial and consumer equipment division of Deere & Company to explore and potentially collaborate on multiple projects involving technology and product development and commercialization efforts. We have collaborated with Deere & Company on the development of the R-Gator unmanned ground vehicle. Deere & Company has provided funded research and development, access to its M-Gator military utility vehicle platform and certain other technology, and we have provided robot technologies, including our AWARE Robot Intelligence Systems. Technology jointly developed under the agreement will be owned by both Deere & Company and us, and technology independently developed by either Deere & Company or us will be owned by the developing party. We and Deere & Company are currently in the process of producing a limited number of R-Gator prototypes for evaluation by potential government contractors. Net proceeds from sales of the R-Gator generally will be shared equally between us and Deere & Company, subject to recoupment of each party’s respective contribution to the project.
	To facilitate management of the R-Gator project and additional collaborative activities, we and Deere & Company have established a joint management committee to develop proposals for projects, oversee and report on the progress and fulfillment of projects, and seek opportunities to further the goals of the strategic business relationship through joint demonstration of technology and products at trade shows, industry days and internal management reviews. We believe that our strategic alliance with Deere & Company will lead to technologies, and later products, that are directly applicable to serving markets such as agricultural and construction equipment, in which we believe autonomous vehicles can play a significant role. Under the agreement, we have agreed not to work with any third party on projects competitive with certain Deere & Company products if Deere & Company makes annual payments to us under the agreement of at least $2.0 million.
	The Clorox Company. We have entered into a joint development and license agreement with The Clorox Company, whereby Clorox is the exclusive provider of the cleaning solution for the Scooba floor washing robot. Our alliance with The Clorox Company allows us to integrate their cleaning technology and know-how into our floor washing robot, improves consumer perception and awareness of our brand by association and through joint marketing, and provides a necessary product component at an affordable price.

	Consumer

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• Amazon.com		• Kohl’s
• Bed Bath & Beyond		• Linens ’n Things
• Best Buy		• Mitsui & Co.
• Brookstone		• M. Block & Sons
• BJ’s Wholesale Club		• Sears
• Hammacher Schlemmer		• The Sharper Image
• The Home Depot		• Target
• Home Shopping Network

	Government and Industrial

Research Support Agencies		Military Customers
• U.S. Defense Advanced Research Projects Agency (DARPA)		• U.S. Army
• U.S. Space and Warfare Command (SPAWAR)		• U.S. Marine Corps
• U.S. Army Tank-automotive and Armaments Command (TACOM)		• U.S. Navy
• Technology Support Working Group (TSWG)

	Customer Service and Support

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	Team Organization

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	Global Engineering

	Spiral Development

	Leveraged Model

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	•	developers of robotic floor care products such as AB Electrolux, Alfred Kärcher GmbH & Co., Samsung Electronics Co., Ltd., LG Electronics Inc., Koolatron Corp. 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, BAE Systems, Inc. and General Dynamics Corporation.

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	•	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 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.

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Name		Age				Position
Helen Greiner			37			Chairman of the Board
Colin Angle			38			Chief Executive Officer and Director
Rodney Brooks, Ph.D.			50			Chief Technology Officer and Director
Geoffrey P. Clear			55			Senior Vice President, Chief Financial Officer and Treasurer
Joseph W. Dyer			58			Executive Vice President and General Manager
Gregory F. White			41			Executive Vice President and General Manager
Glen D. Weinstein			35			Senior Vice President, General Counsel and Secretary
Gerald C. Kent, Jr.			40			Vice President and Controller
Ronald Chwang(1)			57			Director
Jacques S. Gansler(2)			70			Director
Andrea Geisser(3)			62			Director
George McNamee(1)(2)(3)			58			Director
Peter Meekin(1)(2)(3)			56			Director

(1)	Member of the compensation committee.
(2)	Member of the nominating and corporate governance committee.
(3)	Member of the audit committee.

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	•	appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;
	•	pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
	•	reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
	•	coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;
	•	establishing policies and procedures for the receipt and retention of accounting related complaints and concerns; and

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	•	preparing the audit committee report required by Securities and Exchange Commission rules to be included in our annual proxy statement.

	•	annually reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer;
	•	evaluating the performance of our chief executive officer in light of such corporate goals and objectives and determining the compensation of our chief executive officer;
	•	reviewing and approving the compensation of our other executive officers;
	•	overseeing and administering our compensation, welfare, benefit and pension plans and similar plans; and
	•	reviewing and making recommendations to the board with respect to director compensation.

	•	developing and recommending to the board criteria for board and committee membership;
	•	establishing procedures for identifying and evaluating director candidates including nominees recommended by stockholders;
	•	identifying individuals qualified to become board members;
	•	recommending to the board the persons to be nominated for election as directors and to each of the board’s committees;
	•	developing and recommending to the board a code of business conduct and ethics and a set of corporate governance guidelines; and
	•	overseeing the evaluation of the board and management.

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	Compensation Earned

											Long-Term
			Annual Compensation								Compensation
											Awards
											Restricted				Securities
											Stock				Underlying				All Other
Name and Principal Position			Salary				Bonus				Awards				Options				Compensation(1)(2)
Colin Angle			$	234,520			$	151,914			$	71,741				—			$	6,150
	Chief Executive Officer
Helen Greiner				234,512				135,804				71,741				—				6,150
	Chairman of the Board
Geoffrey P. Clear				240,757				67,237				24,169				—				6,150
	Senior Vice President, Chief Financial Officer and Treasurer
Gregory F. White				260,467				131,705				443,280				—				6,150
	Executive Vice President and General Manager
Joseph W. Dyer				239,701				104,547				41,251				420,000				6,150
	Executive Vice President and General Manager

(1)	Excludes medical, group life insurance and certain other benefits received by the named executive officers that are available generally to all of our salaried employees and certain perquisites and other personal benefits received by the named executive officers which do not exceed the lesser of $50,000 or 10% of any such named executive officer’s total annual compensation reported in this table.
(2)	Represent 401(k) matching contributions.

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	Option Grants in Last Fiscal Year

		Individual Grants
																		Potential Realizable Value at
		Number of				% of Total												Assumed Annual Rates of
		Securities				Options												Stock Price Appreciation for
		Underlying				Granted to				Exercise								Option Term
		Options				Employees in				Price Per				Expiration
Name		Granted				2004				Share				Date				5%				10%
Colin Angle			—				—				—				—				—				—
Helen Greiner			—				—				—				—				—				—
Geoffrey P. Clear			—				—				—				—				—				—
Gregory F. White			—				—				—				—				—				—
Joseph W. Dyer			300,000				26.1%			$	2.33				2/18/14			$	10,051,705			$	16,419,700
			120,000				10.4%			$	2.78				9/17/14			$	3,966,682			$	6,513,880

	Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

										Number of Securities
										Underlying Unexercised								Value of Unexercised
		Number of								Options at								In-the-Money Options at
		Shares								December 31, 2004								December 31, 2004
		Acquired				Value
Name		on Exercise				Realized				Exercisable				Unexercisable				Exercisable				Unexercisable
Colin Angle			—				—				347,710				—			$	7,649,550				—
Helen Greiner			—				—				—				—				—				—
Geoffrey P. Clear			53,440			$	119,172				—				80,160				—			$	1,719,432
Gregory F. White			46,601			$	20,971				42,393				210,586			$	833,870			$	4,142,226
Joseph W. Dyer			—				—				75,000				345,000			$	1,475,250			$	6,732,150

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	Amended and Restated 1994 Stock Plan

	Amended and Restated 2001 Special Stock Option Plan

	Amended and Restated 2004 Stock Option and Incentive Plan

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	2005 Stock Option and Incentive Plan

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	401(k) Plan

	Employment and Severance Arrangements

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	•	any breach of the director’s duty of loyalty to us or our stockholders;
	•	any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
	•	any unlawful payments related to dividends or unlawful stock repurchases, redemptions or other distributions; or
	•	any transaction from which the director derived an improper personal benefit.

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	•	we will indemnify our directors, officers and, in the discretion of our board of directors, certain employees to the fullest extent permitted by the Delaware General Corporation Law; and
	•	we will advance expenses, including attorneys’ fees, to our directors and, in the discretion of our board of directors, to our officers and certain employees, in connection with legal proceedings, subject to limited exceptions.

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Total Common

Aggregate

Purchaser(1)

Stock Equivalents

Consideration Paid

Investment Participation

Stockholders Associated with Directors

Trident Capital(2)

2,194,680

$

10,604,858

Series E and F

Acer Technology Ventures(3)

2,603,699

7,209,635

Series A, C, D, E and F

First Albany Entities(4)

1,418,165

4,241,126

Series B, C, D, E and F

Fenway Partners(5)

1,339,920

5,464,717

Series D, E and F

(1)	See “Principal and Selling Stockholders” for more detail on shares held by these purchasers.
(2)	Trident Capital includes Trident Capital Fund-V, L.P., Trident Capital Fund-V Affiliates Fund, L.P., Trident Capital Fund-V Affiliates Fund (Q), L.P., Trident Capital Fund-V Principals Fund, L.P. and Trident Capital Parallel Fund-V, C.V. Consideration paid to us by Trident Capital for our convertible preferred stock in 2003 and 2004 was $9,500,002 and $1,104,855, respectively. Mr. Meekin, who is one of our directors, is a Managing Director of Trident Capital Management-V, L.L.C., the sole general partner of Trident Capital Fund-V, L.P., Trident Capital Fund-V Affiliates Fund, L.P., Trident Capital Fund-V Affiliates Fund (Q), L.P., and Trident Capital Fund-V Principals Fund, L.P. and the sole investment general partner of Trident Capital Parallel Fund-V, C.V.
(3)	Acer Technology Ventures includes Acer Technology Venture Fund L.P., IP Fund One, L.P. and iD6 Fund, L.P. Consideration paid to us by Acer Technology Ventures for our convertible preferred stock in 1998, 2000, 2001, 2003 and 2004 was $1,550,189, $1,500,001, $1,107,390, $1,900,003 and $1,152,051, respectively. Dr. Chwang, who is one of our directors, is a General Partner of the management company for each of Acer Technology Venture Fund L.P., IP Fund One, L.P. and iD6 Fund, L.P.

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(4)	First Albany Entities includes First Albany Companies Inc., First Albany Private Fund 1999, LLC, First Albany Private Fund 2003, LLC, FA Technology Ventures, L.P., and First Albany Private Fund 2004, LLC. Consideration paid to us by First Albany Entities for our convertible preferred stock in 1999, 2000, 2001, 2003 and 2004 was $1,000,006, $1,574,999, $568,861, $300,001 and $797,258, respectively. Mr. McNamee, who is our one our directors, is the Chairman of First Albany Companies Inc.
(5)	Fenway Partners includes FPIP Trust, LLC, FPIP, LLC and Fenway Partners Capital Fund II, L.P. Mr. Geisser, who is one of our directors, is a Managing Director of Fenway Partners, Inc., the Managing Member of FPIP Trust, LLC and FPIP, LLC. Consideration paid to us by Fenway Partners for our convertible preferred stock in 2001, 2003 and 2004 was $4,000,000, $871,844 and $592,872, respectively. Mr. Geisser is also a Managing Director of Fenway Partners II, LLC, the sole General Partner of Fenway Partners Capital Fund II, L.P.

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	•	each person known to us to be the beneficial owner of more than 5% of our common stock;
	•	each named executive officer;
	•	each of our directors;
	•	all of our executive officers and directors as a group; and
	•	each selling stockholder.

			Shares Beneficially												Shares Beneficially
			Owned Prior												Owned After the
			to the Offering								Shares				Offering
											Offered
Beneficial Owner			Number				Percent				(30)				Number				Percent
5% Stockholders:
Acer Technology Ventures(1)				2,603,699				13.0%				125,094				2,478,605				10.6%
	5201 Great America Parkway Suite 270 Santa Clara, CA 95054
Trident Capital(2)				2,194,680				11.0%				105,443				2,089,237				9.0%
	325 Riverside Avenue Westport, CT 06880
Grinnell More(3)				1,455,954				7.3%				42,622				1,413,332				6.1%
First Albany Entities(4)				1,418,165				7.1%				68,136				1,350,029				5.8%
	677 Broadway Albany, NY 12207
Fenway Partners(5)				1,339,920				6.7%				64,376				1,275,544				5.5%
	152 West 57th Street 59th Floor New York, NY 10019

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		Shares Beneficially												Shares Beneficially
		Owned Prior												Owned After the
		to the Offering								Shares				Offering
										Offered
Beneficial Owner		Number				Percent				(30)				Number				Percent
Directors and Named Executive Officers:
Helen Greiner			1,699,619				8.5%				81,658				1,617,961				6.9%
Colin Angle(6)			2,252,424				11.1%				96,090				2,156,334				9.1%
Rodney Brooks, Ph.D.(7)			2,389,695				12.0%				105,008				2,284,687				9.8%
Geoffrey P. Clear(8)			132,285				*				3,603				128,682				*
Joseph W. Dyer(9)			188,892				*				—				188,892				*
Gregory F. White(10)			457,412				2.3%				7,826				449,586				1.9%
Ronald Chwang(1)			2,603,699				13.0%				—				2,478,605				10.6%
Jacques S. Gansler(11)			16,667				*				—				16,667				*
Andrea Geisser(5)			1,339,920				6.7%				—				1,275,544				5.5%
George McNamee(12)			180,901				*				—				180,901				*
Peter Meekin(2)			2,194,680				11.0%				—				2,089,237				9.0%
Executive officers and directors as a group (13 persons)(13)			13,520,596				65.8%				590,075				12,930,521				54.2%
Other Selling Stockholders:
M. David Adler and Bella G. Adler (JTWROS)			415,000				2.1%				19,939				395,061				1.7%
James R. Allard(14)			55,700				*				2,642				53,058				*
David S. Barrett and Ann H. Barrett (JTWROS)			75,000				*				2,402				72,598				*
Michael R. Bassett(15)			23,500				*				1,129				22,371				*
Boeckh Capital Co. Ltd.			68,334				*				32,831				35,503				*
Robert Campbell			16,876				*				4,804				12,072				*
Chris Casey and Giovanna Casey (JTWROS)			31,000				*				1,489				29,511				*
Mark Chiappetta(16)			25,800				*				1,201				24,599				*
Dale W. Church(17)			66,820				*				32,104				34,716				*
Mike Ciholas(18)			25,000				*				12,011				12,989				*
Michael F. Cronin			16,746				*				4,804				11,942				*
FBF, LLLP			68,344				*				9,609				58,735				*
Walter Fiederowicz(19)			1,464,644				7.3%				2,231				1,394,277				6.0%
Alan Goldberg(20)			1,503,342				7.5%				4,804				1,430,402				6.1%
Hugh Johnson(21)			33,862				*				15,788				18,074				*
Joseph L. Jones and Sue E. Stewart (JTWROS) (22)			96,085				*				4,525				91,560				*
Daniel Kilmurray			30,469				*				7,207				23,262				*
Jonathan Tarter Klein and Ellen Elisabeth Petri (JTWROS)			40,000				*				9,609				30,391				*
Lindalee A. Lawrence			3,844				*				1,847				1,997				*
Michael R. Lindburg			33,748				*				9,609				24,139				*
Kenneth Mabbs			26,827				*				2,883				23,944				*
David P. Miller			114,505				*				6,969				107,536				*
Scott Nielsen Miller and Lisa Anne Cosimi (JTWROS)(23)			76,000				*				4,041				71,959				*
Ullas J. Naik			14,266				*				3,427				10,839				*
Timothy R. Ohm(24)			42,700				*				2,094				40,606				*
Painter Hill Venture Fund I, L.P.			64,405				*				3,123				61,282				*

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		Shares Beneficially												Shares Beneficially
		Owned Prior												Owned After the
		to the Offering								Shares				Offering
										Offered
Beneficial Owner		Number				Percent				(30)				Number				Percent
Matthew R. Palma and Kelly S. Palma (JTWROS) (25)			25,000				*				2,162				22,838				*
Erik Pedersen			198,435				1.0%				48,045				150,390				*
Polly K. Pook(26)			66,500				*				7,927				58,573				*
Rosario Robert and William Robert (JTWROS)			105,000				*				4,804				100,196				*
Pavlo Rudakevych(27)			152,500				*				4,804				147,696				*
Beno Sternlicht			28,616				*				9,609				19,007				*
Paul J. Tavalone(28)			47,000				*				2,883				44,117				*
Glen Weinstein(29)			64,402				*				977				63,425				*
Steve Weston			200,000				1.0%				48,045				151,955				*
Stephen P. Wink			7,864				*				3,773				4,091				*
Chikyung Won and Laetitia G. Won (JTWROS)			65,000				*				3,123				61,877				*

(1)	Consists of 1,737,279 shares held by Acer Technology Venture Fund L.P., 818,420 shares held by IP Fund One, L.P. and 48,000 shares held by iD6 Fund, L.P. Dr. Chwang is a General Partner of the management company for each of Acer Technology Venture Fund L.P., IP Fund One, L.P. and iD6 Fund, L.P., and may be deemed to share voting and investment power with respect to all shares held by those entities. Dr. Chwang disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any. Mr. Chwang is not offering any shares for sale in the offering.
(2)	Consists of 1,966,075 shares held by Trident Capital Fund-V, L.P., 11,427 shares held by Trident Capital Fund-V Affiliates Fund, L.P., 10,904 shares held by Trident Capital Fund-V Affiliates Fund (Q), L.P., 56,905 shared held by Trident Capital Fund-V Principals Fund, L.P. and 149,369 shares held by Trident Capital Parallel Fund-V, C.V. Mr. Meekin is one of six Managing Directors of Trident Capital Management-V, L.L.C., the sole general partner of Trident Capital Fund-V, L.P., Trident Capital Fund-V Affiliates Fund, L.P., Trident Capital Fund-V Affiliates Fund (Q), L.P., and Trident Capital Fund-V Principals Fund, L.P. and the sole investment general partner of Trident Capital Parallel Fund-V, C.V., and may be deemed to share voting and investment power with respect to all shares held by those entities. Mr. Meekin disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any. Mr. Meekin is not offering any shares for sale in the offering.
(3)	Includes 1,029,738 shares held by Real World Interface, Inc. Trust. Mr. More is a trustee of the Real World Interface, Inc. Trust and may be deemed to share voting and investment power with respect to such shares. Mr. More disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any.
(4)	Consists of 1,218,336 shares held by First Albany Companies Inc., 22,844 shares held by First Albany Private Fund 1999, LLC, 64,378 shares held by First Albany Private Fund 2003, LLC, 94,658 shares held by FA Technology Ventures, L.P. and 17,949 shares held by First Albany Private Fund 2004, LLC. Through a Special Committee of its Board of Directors, consisting of Alan Goldberg and Walter Fiederowicz, First Albany Companies Inc. exercises sole voting and investment power with respect to all shares held by First Albany Companies Inc., First Albany Private Fund 1999, LLC, First Albany Private Fund 2003, LLC and First Albany Private Fund 2004, LLC. Each of the First Albany Entities is an affiliate of First Albany Capital Inc., a broker-dealer and subsidiary of First Albany Companies Inc.
(5)	Consists of 5,053 shares held by FPIP Trust, LLC, 3,665 shares held by FPIP, LLC and 1,331,202 shares held by Fenway Partners Capital Fund II, L.P. Mr. Geisser is a Managing Director of Fenway Partners, Inc., the Managing Member of FPIP Trust, LLC and FPIP, LLC. Mr. Geisser is also a Managing Director of Fenway Partners II, LLC, the sole General Partner of Fenway Partners Capital Fund II, L.P., and may be deemed to share voting and investment power with respect to all shares held by those entities. Mr. Geisser disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any. Mr. Geisser is not offering any shares for sale in the offering.
(6)	Includes 347,710 shares issuable to Mr. Angle upon exercise of stock options. Also includes 200,000 shares held in a trust for the benefit of certain of his family members.
(7)	Includes 252,000 shares held in a trust for the benefit of certain of his family members. Also includes 204,090 shares held by Robotic Ventures Fund I, L.P., of which Dr. Brooks is a General Partner. Dr. Brooks disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any.
(8)	Includes 123,560 shares held by Geoffrey P. Clear and Marjorie P. Clear (JTWROS), over which Mr. Clear and Mrs. Clear share voting and investment power.
(9)	Includes 148,249 shares issuable to Mr. Dyer upon exercise of stock options.

(10)	Includes 8,505 shares issuable to Mr. White upon exercise of stock options. Includes 86,539 shares held by Gregory F. White and Dana B. White (JTWROS), over which Mr. White and Mrs. White share voting and investment power and also includes 199,720 shares held by Vision 2005 Investment Partners L.P., of which Mr. White and Mrs. White are General Partners.
(11)	Consists of shares issuable to Dr. Gansler upon exercise of stock options.

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(12)	Includes 94,658 shares held by FA Technology Ventures, L.P. and 3,495 shares held by FA Technology Managers, LLC. Mr. McNamee is a Partner of the General Partner of FA Technology Ventures, L.P. and may be deemed to share voting and investment power with respect to all shares held thereby. Mr. McNamee is a Manager of FA Technology Managers, LLC and may be deemed to share voting and investment power with respect to all shares held thereby. Mr. McNamee disclaims beneficial ownership of the shares held by FA Technology Ventures, L.P. and FA Technology Managers, LLC except to the extent of his pecuniary interest, if any.
(13)	Includes an aggregate of 563,131 shares issuable upon exercise of stock options held by five executive officers and directors.
(14)	Includes 35,700 shares issuable to Mr. Allard upon exercise of stock options.
(15)	Consists of 23,500 shares issuable to Mr. Bassett upon exercise of stock options. The 1,129 shares offered for sale by Mr. Bassett are being issued upon the exercise of stock options, at an exercise price of $1.87 per share, in connection with this offering.
(16)	Includes 23,300 shares issuable to Mr. Chiappetta upon exercise of stock options.
(17)	Consists of 66,820 shares issuable to Mr. Church upon exercise of stock options. The 32,104 shares offered for sale by Mr. Church are being issued upon the exercise of stock options, at an exercise price of $0.24 per share, in connection with this offering.
(18)	Consists of 25,000 shares issuable to Mr. Ciholas upon exercise of stock options. The 12,011 shares offered for sale by Mr. Ciholas are being issued upon the exercise of stock options, at an exercise price of $0.24 per share, in connection with this offering.
(19)	Includes 1,218,336 shares held by First Albany Companies Inc., 22,844 shares held by First Albany Private Fund 1999, LLC, 64,378 shares held by First Albany Private Fund 2003, LLC, 94,658 shares held by FA Technology Ventures, L.P. and 17,949 shares held by First Albany Private Fund 2004, LLC. Through a Special Committee of its Board of Directors, consisting of Mr. Fiederowicz and Alan Goldberg, First Albany Companies Inc. exercises sole voting and investment power with respect to all shares held by First Albany Companies Inc., First Albany Private Fund 1999, LLC, First Albany Private Fund 2003, LLC and First Albany Private Fund 2004, LLC. Mr. Fiederowicz disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any. Mr. Fiederowicz is an affiliate of First Albany Capital Inc., a broker-dealer and subsidiary of First Albany Companies Inc.
(20)	Includes 1,218,336 shares held by First Albany Companies Inc., 22,844 shares held by First Albany Private Fund 1999, LLC, 64,378 shares held by First Albany Private Fund 2003, LLC, 94,658 shares held by FA Technology Ventures, L.P. and 17,949 shares held by First Albany Private Fund 2004, LLC. Through a Special Committee of its Board of Directors, consisting of Mr. Goldberg and Walter Fiederowicz, First Albany Companies Inc. exercises sole voting and investment power with respect to all shares held by First Albany Companies Inc., First Albany Private Fund 1999, LLC, First Albany Private Fund 2003, LLC and First Albany Private Fund 2004, LLC. Mr. Goldberg disclaims beneficial ownership of such shares except to the extent of his pecuniary interest, if any. Mr. Goldberg is an affiliate of First Albany Capital, Inc., a broker-dealer and subsidiary of First Albany Companies Inc. Also includes shares held by FCC as Custodian Alan Goldberg Keough M/P/P.

(21)	Mr. Johnson is a director of First Albany Companies Inc. and an affiliate of First Albany Capital Inc., a broker-dealer.

(22)	Includes 1,900 shares issuable to Mr. Jones upon exercise of stock options.
(23)	Includes 44,000 shares issuable to Mr. Miller upon exercise of stock options.
(24)	Includes 17,700 shares issuable to Mr. Ohm upon exercise of stock options.
(25)	Includes 15,000 shares issuable to Mr. Palma upon exercise of stock options. The 2,162 shares offered for sale by Mr. Palma are being issued upon the exercise of stock options, at an exercise price of $2.78 per share, in connection with this offering.
(26)	Includes 25,000 shares held by Polly K. Pook and Barbara S. Pook (JTWROS), over which Polly K. Pook and Barbara S. Pook share voting and investment power.
(27)	Includes 2,500 shares issuable to Mr. Rudakevych upon exercise of stock options.
(28)	Includes 12,000 shares issuable to Mr. Tavalone upon exercise of stock options.
(29)	Includes 16,000 shares held by Glen Weinstein and Elisa D’Andrea (JTWROS), over which Mr. Weinstein and Ms. D’Andrea share voting and investment power, and 42,000 shares issuable to Mr. Weinstein upon exercise of stock options.
(30)	If the underwriters’ overallotment option is exercised in full, the additional shares sold would be allocated among the selling stockholders as follows:

		Shares Subject to the
		Overallotment
Selling Stockholders		Option
Acer Technology Ventures			80,969
M. David Adler and Bella G. Adler (JTWROS)			12,905
James R. Allard			1,710
Colin Angle			62,195
David S. Barrett and Ann. H. Barrett (JTWROS)			1,555
Michael R. Bassett			731
Boeckh Capital Co. Ltd			21,250
Rodney Brooks, Ph.D.			67,966
Robert Campbell			3,110
Chris Casey and Giovanna Casey (JTWROS)			964
Mark Chiappetta			777
Dale W. Church			20,779
Mike Ciholas			7,774
Geoffrey P. Clear			2,332

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		Shares Subject to the
		Overallotment
Selling Stockholders		Option
Michael F. Cronin			3,110
FBF, LLLP			6,220
Fenway Partners			41,668
Walter Fiederowicz			1,444
First Albany Entities			44,102
Alan Goldberg			3,110
Helen Greiner			52,854
Hugh Johnson			10,219
Joseph L. Jones and Sue E. Stewart (JTWROS)			2,929
Daniel Kilmurray			4,665
Jonathan Tarter Klein and Ellen Elisabeth Petri (JTWROS)			6,220
Lindalee A. Lawrence			1,195
Michael R. Lindburg			6,220
Kenneth Mabbs			1,866
David P. Miller			4,511
Scott Nielsen Miller and Lisa Anne Cosimi (JTWROS)			2,615
Ullas J. Naik			2,218
Timothy R. Ohm			1,355
Painter Hill Venture Fund I, L.P			2,021
Matthew R. Palma and Kelly S. Palma (JTWROS)			1,399
Erik Pedersen			31,098
Polly K. Pook			5,131
Rosario and William Robert (JTWROS)			3,110
Pavlo Rudakevych			3,110
Beno Sternlicht			6,220
Paul J. Tavalone			1,866
Trident Capital			68,249
Glen Weinstein			632
Steve Weston			31,098
Gregory F. White			5,065
Stephen P. Wink			2,442
Chikyung Won and Laetitia G. Won (JTWROS)			2,021

	If the underwriters’ overallotment option is exercised in part, the additional shares sold would be allocated pro rata based upon the share amounts set forth in the preceding table.

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	•	the close of business of the tenth calendar day following the first public announcement that a person or group of affiliated or associated persons, referred to as an “acquiring person,” has acquired beneficial ownership of 15% or more of the outstanding shares of common stocks; or

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	•	the close of business on the tenth business day (or such later calendar day as our board of directors may determine) following the commencement of a tender offer or exchange offer by any person or group (other than certain exempt persons) that could result upon its completion in such person or group becoming the beneficial owner of 15% or more of the outstanding shares of common stock.

	•	before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
	•	upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or
	•	at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

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		Shares Eligible
Days After Date of this Prospectus		for Sale				Comment
Upon Effectiveness			4,300,000			Shares sold in the offering
Upon Effectiveness			260,840			Freely tradable shares saleable under Rule 144(k) that are not subject to the lock-up
90 Days			131,048			Shares saleable under Rules 144 and 701 that are not subject to a lock-up
180 Days			18,561,080			Lock-ups released, subject to extension; shares saleable under Rules 144 and 701
Thereafter			32,720			Restricted securities held for one year or less

	•	offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock; or
	•	enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock,

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	•	1% of the number of shares of our common stock then outstanding, which will equal approximately 232,857 shares immediately after this offering; or
	•	the average weekly trading volume in our common stock on the NASDAQ National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

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Name		Number of Shares
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
First Albany Capital Inc.
Needham & Company, LLC
Adams Harkness, Inc.
Total			4,300,000

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	•	offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock; or
	•	enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock,

	•	the sale of shares to the underwriters;
	•	the issuance by us of shares of our common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing;
	•	transactions by anyone other than us relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares;
	•	the grant of options to purchase common stock or shares of our common stock to our officers, directors, advisors or consultants pursuant to equity plans disclosed in this prospectus;
	•	the issuance by us of up to 2,000,000 shares of common stock, in connection with any acquisition, collaboration or other similar strategic transaction;
	•	transfers of shares or any security convertible into our common stock as a bona fide gift; or
	•	distributions by a selling stockholder of shares or any security convertible into our common stock to limited partners or stockholders of the selling stockholder,

	•	during the last 17 days of the 180-day period, we issue an earnings release or material news or a material event relating to us occurs; or
	•	prior to the expiration of the 180-day period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

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Paid by Selling

Paid by Us

Stockholders

Total

No Exercise

Full Exercise

No Exercise

Full Exercise

No Exercise

Full Exercise

Per share

$

$

$

$

$

$

Total

$

$

$

$

$

$

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		Page
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets			F-3
Consolidated Statements of Operations			F-4
Consolidated Statements of Stockholders’ Equity (Deficit)			F-5
Consolidated Statements of Cash Flows			F-6
Notes to Consolidated Financial Statements			F-7

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				December 31,												October 1,
												October 1,				2005
				2003				2004				2005				(Pro Forma)
												(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	4,619,937			$	19,440,843			$	9,217,294			$	9,217,294
	Accounts receivable, net of allowance of $247,921 at December 31, 2003, $50,000 at December 31, 2004 and $49,486 at October 1, 2005				8,137,517				13,259,478				27,796,420				27,796,420
	Unbilled revenue				1,142,784				774,025				961,139				961,139
	Inventory, net				11,419,611				7,668,934				14,321,756				14,321,756
	Other current assets				798,045				399,702				1,653,387				1,653,387
		Total current assets			26,117,894				41,542,982				53,949,996				53,949,996
Property and equipment, net					1,605,033				3,512,510				6,016,576				6,016,576
Other assets					103,719				82,000				—				—
		Total assets		$	27,826,646			$	45,137,492			$	59,966,572			$	59,966,572
LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Accounts payable			$	6,781,412			$	19,581,065			$	28,390,762			$	28,390,762
	Revolving line of credit				1,338,980				—				—				—
	Accrued expenses				2,802,666				2,643,146				3,174,478				3,174,478
	Accrued compensation				2,032,299				3,150,761				4,149,635				4,149,635
	Provision for contract settlements				5,333,619				5,190,798				5,232,701				5,232,701
	Deferred revenue				7,201,339				1,287,935				2,341,949				2,341,949
		Total current liabilities			25,490,315				31,853,705				43,289,525				43,289,525
Long-term liabilities					133,200				66,600				—				—
Commitments and contingencies (Note 13):
Redeemable convertible preferred stock (Note 8)					27,561,869				37,506,236				37,506,236				—
Common stock, $0.01 par value, 18,500,000, 35,000,000 and 35,000,000 shares authorized and 9,360,750, 10,129,457, 10,420,166 and 19,977,412 shares issued and outstanding at December 31, 2003 and 2004, October 1, 2005 and pro forma, respectively					93,608				101,294				104,201				199,773
Additional paid-in capital					1,695,966				2,925,496				6,502,422				43,913,086
Note receivable from stockholder					(43,000	)			(43,000	)			—				—
Deferred compensation					—				(386,587	)			(3,144,730	)			(3,144,730	)
Accumulated deficit					(27,105,312	)			(26,886,252	)			(24,291,082	)			(24,291,082	)
		Total stockholders’ equity (deficit)			(25,358,738	)			(24,289,049	)			(20,829,189	)			16,677,047
		Total liabilities, redeemable convertible preferred stock and stockholders’ equity		$	27,826,646			$	45,137,492			$	59,966,572			$	59,966,572

F-3

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Table of Contents

				Fiscal Year Ended												Nine Months Ended
				December 31,				December 31,				December 31,				September 30,				October 1,
				2002				2003				2004				2004				2005
																(unaudited)
Revenue:
Product revenue				$	6,955,215			$	45,896,313			$	82,147,080			$	48,589,066			$	83,039,064
Contract revenue					7,222,589				7,661,244				12,365,114				8,500,029				12,375,093
Royalty revenue					638,704				758,595				530,955				468,872				62,037
	Total revenue				14,816,508				54,316,152				95,043,149				57,557,967				95,476,194
Cost of revenue:
Cost of product revenue					4,896,025				31,193,513				59,321,238				35,031,556				55,319,975
Cost of contract revenue					11,860,610				6,143,347				8,370,487				5,446,402				8,924,460
	Total cost of revenue				16,756,635				37,336,860				67,691,725				40,477,958				64,244,435
Gross profit (loss)					(1,940,127	)			16,979,292				27,351,424				17,080,009				31,231,759
Operating expenses:
Research and development					1,735,831				3,848,010				5,504,321				3,769,329				8,275,308
Selling, general and administrative					7,128,105				20,521,298				21,404,106				13,326,556				20,328,112
Stock-based compensation(1)					—				—				—				—				212,226
	Total operating expenses				8,863,936				24,369,308				26,908,427				17,095,885				28,815,646
Operating income (loss)					(10,804,063	)			(7,390,016	)			442,997				(15,876	)			2,416,113
Other (expense) income, net					44,764				15,282				(79,762	)			(47,883	)			271,081
Income (loss) before income taxes					(10,759,299	)			(7,374,734	)			363,235				(63,759	)			2,687,194
Income tax expense					14,695				36,227				144,175				125,135				92,024
Net income (loss)				$	(10,773,994	)		$	(7,410,961	)		$	219,060			$	(188,894	)		$	2,595,170
Net income (loss) attributable to common stockholders				$	(10,773,994	)		$	(7,410,961	)		$	117,553			$	(188,894	)		$	1,332,113
Net income (loss) per share
		Basic		$	(2.00	)		$	(0.79	)		$	0.01			$	(0.02	)		$	0.13
		Diluted		$	(2.00	)		$	(0.79	)		$	0.01			$	(0.02	)		$	0.11
Number of shares used in per share calculations
		Basic			5,390,679				9,351,880				9,659,993				9,604,576				10,079,770
		Diluted			5,390,679				9,351,880				19,182,595				9,604,576				12,267,972

(1)	Stock-based compensation recorded in 2005 breaks down by expense classification as follows:

			Nine Months Ended
			October 1, 2005
			(unaudited)
Cost of product revenue			$	17,790
Cost of contract revenue				28,740
Research and development				59,401
Selling, general and administrative				106,295
	Total stock-based compensation		$	212,226

F-4

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Table of Contents

														Note
		Common Stock								Additional				Receivable
										Paid-In				from				Deferred				Accumulated
		Shares				Value				Capital				Stockholder				Compensation				Deficit				Total
Balance at December 31, 2002			9,291,760			$	92,918			$	1,661,896			$	(43,000	)		$	—			$	(19,694,351	)		$	(17,982,537	)
Issuance of common stock warrants related to debt financing											22,312																22,312
Issuance of common stock for exercise of stock options			68,990				690				11,758																12,448
Net loss																							(7,410,961	)			(7,410,961	)
Balance at December 31, 2003			9,360,750				93,608				1,695,966				(43,000	)			—				(27,105,312	)			(25,358,738	)
Issuance of restricted stock			397,584				3,976				967,217								(669,912	)							301,281
Amortization of deferred compensation relating to restricted stock																			283,325								283,325
Issuance of common stock for exercise of stock options			371,123				3,710				262,313																266,023
Net income																							219,060				219,060
Balance at December 31, 2004			10,129,457				101,294				2,925,496				(43,000	)			(386,587	)			(26,886,252	)			(24,289,049	)
Amortization of deferred compensation relating to restricted stock																			150,511								150,511
Issuance of Common Stock for exercise of stock options			290,709				2,907				456,046																458,953
Repayment of note receivable from stockholder															43,000												43,000
Deferred compensation relating to issuance of stock options											3,120,880								(3,120,880	)							—
Amortization of deferred compensation relating to stock options																			212,226								212,226
Net income																							2,595,170				2,595,170
Balance at October 1, 2005 (unaudited)			10,420,166			$	104,201			$	6,502,422			$	—			$	(3,144,730	)		$	(24,291,082	)		$	(20,829,189	)

F-5

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Table of Contents

				Fiscal Year Ended												Nine Months Ended
				December 31,				December 31,				December 31,				September 30,				October 1,
				2002				2003				2004				2004				2005
																(unaudited)
Cash flows from operating activities:
Net income (loss)				$	(10,773,994	)		$	(7,410,961	)		$	219,060			$	(188,894	)		$	2,595,170
Adjustments to reconcile net loss to net cash used in operating activities
	Depreciation and amortization				511,335				735,170				1,313,705				824,288				1,422,939
	Loss on disposal of fixed assets				—				29,384				1,265				—				—
	Interest expense relating to issuance of warrants				—				22,312				—				—				—
	Amortization of deferred compensation				—				—				283,325				221,842				362,737
	Changes in working capital—(use) source
		Accounts receivable and related party trade receivables			237,164				(7,481,472	)			(5,121,961	)			(10,933,180	)			(14,536,942	)
		Unbilled revenue			(325,371	)			(526,573	)			368,759				269,237				(187,114	)
		Inventory			(1,829,773	)			(8,795,412	)			3,750,677				3,620,268				(6,652,822	)
		Other current assets			(434,970	)			(146,481	)			420,061				551,163				(1,171,685	)
		Accounts payable			3,869,832				1,908,212				12,799,653				13,810,222				8,809,697
		Accrued expenses			219,778				2,582,888				(159,519	)			(1,136,653	)			531,332
		Accrued compensation			679,609				295,001				1,118,462				448,663				998,874
		Provision for contract settlement			2,361,055				1,377,835				(142,821	)			(89,863	)			41,903
		Deferred revenue			1,787,035				5,952,843				(5,913,405	)			(4,552,148	)			1,054,014
		Change in long-term liabilities			—				133,200				(66,600	)			(66,600	)			(66,600	)
Net cash provided by (used in) operating activities					(3,698,300	)			(11,324,054	)			8,870,661				2,778,345				(6,798,497	)
Cash flows from investing activities:
Purchase of property and equipment					(448,412	)			(1,329,913	)			(3,222,446	)			(2,259,513	)			(3,927,005	)
Cash flows from financing activities:
Principal payments on capital lease obligations					(51,009	)			(14,102	)			—				—				—
Borrowings under revolving line of credit, net					—				1,338,980				(1,338,980	)			606,930				—
Repayment of note receivable from stockholder					—				—				—				—				43,000
Proceeds from stock option exercises					32,894				12,448				266,024				258,405				458,953
Proceeds from issuance of restricted stock					—				—				301,281				301,281				—
Net proceeds from sale of preferred stock					—				12,922,735				9,944,366				(270	)			—
Net cash provided by financing activities					(18,115	)			14,260,061				9,172,691				1,166,346				501,953
Net increase in cash and cash equivalents					(4,164,827	)			1,606,094				14,820,906				1,685,178				(10,223,549	)
Cash and cash equivalents, at beginning of period					7,178,670				3,013,843				4,619,937				4,619,937				19,440,843
Cash and cash equivalents, at end of period				$	3,013,843			$	4,619,937			$	19,440,843			$	6,305,115			$	9,217,294
Supplemental disclosure of cash flow information
Cash paid for interest				$	8,621			$	28,572			$	142,367			$	85,350			$	9,412
Cash paid for income taxes					14,756				14,206				123,941				122,521				10,740
Supplemental disclosure of noncash investing and financing activities
During 2004, 2003 and 2002, the Company transferred $186,011, $16,960 and $115,595, respectively, of inventory to fixed assets.
During the first nine months of 2005 and 2004, the Company transferred $258,858 and $185,291, respectively, of inventory to fixed assets.

F-6

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Table of Contents

1.	Nature of the Business

	Liquidity and Operations

2.	Summary of Significant Accounting Policies

	Unaudited Interim Financial Statements

	Unaudited Pro Forma Presentation

F-7

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Table of Contents

	Fiscal Year-End

	Cash and Cash Equivalents

	Revenue Recognition

F-8

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Table of Contents

	Allowance for Doubtful Accounts

Balance at December 31, 2001			$	—
	Provision			30,000
	Deduction
Balance at December 31, 2002				30,000
	Provision			237,329
	Deduction			(19,408	)
Balance at December 31, 2003				247,921
	Provision			(64,835	)
	Deduction			(133,086	)
Balance at December 31, 2004				50,000
	Provision			—
	Deduction			(514	)
Balance at October 1, 2005			$	49,486

F-9

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Table of Contents

	Inventory

Balance at December 31, 2001			$	385,900
	Provision			174,686
	Deduction			(224,810	)
Balance at December 31, 2002				335,776
	Provision			2,214,656
	Deduction			(181,878	)
Balance at December 31, 2003				2,368,554
	Provision			—
	Deduction			(465,637	)
Balance at December 31, 2004				1,902,917
	Provision			60,472
	Deduction			(516,622	)
Balance at October 1, 2005			$	1,446,767

	Property and Equipment

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

	Impairment of Long-Lived Assets

F-10

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Table of Contents

	Research and Development

	Internal Use Software

	Use of Estimates

	Reclassification

	Concentration of Credit Risk and Significant Customers

F-11

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Table of Contents

	Investment in Affiliates

	Stock-Based Compensation

F-12

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Table of Contents

			Fiscal Year Ended												Nine Months Ended
			December 31,				December 31,				December 31,				September 30,				October 1,
			2002				2003				2004				2004				2005
															(unaudited)
Net income (loss)
As reported			$	(10,773,994	)		$	(7,410,961	)		$	219,060			$	(188,894	)		$	2,595,170
Add back: Stock-based employee compensation expense reported in net income (loss)				—				—				283,325				221,842				362,737
Less: Stock-based employee compensation expense determined under fair-value method for all awards				(28,917	)			(52,863	)			(394,102	)			(296,325	)			(703,113	)
Pro forma income (loss)			$	(10,802,911	)		$	(7,463,824	)		$	108,283			$	(263,377	)		$	2,254,794
Pro forma income (loss) attributable to common stockholders			$	(10,802,911	)		$	(7,463,824	)		$	58,107			$	(263,377	)		$	1,157,396
Net income (loss) per share, as reported
	Basic			$(2.00	)			$(0.79	)			$0.01				$(0.02	)			$0.13
	Diluted			$(2.00	)			$(0.79	)			$0.01				$(0.02	)			$0.11
Pro forma net income (loss) per share
	Basic			$(2.00	)			$(0.80	)			$0.01				$(0.03	)			$0.11
	Diluted			$(2.00	)			$(0.80	)			$0.01				$(0.03	)			$0.09
Number of shares used in per share calculations
	Basic			5,390,679				9,351,880				9,659,993				9,604,576				10,079,770
	Diluted			5,390,679				9,351,880				19,182,595				9,604,576				12,267,972

		2002				2003				2004
Risk-free interest rate			2.8%				3.0%				3.4%
Expected dividend yield			—				—				—
Expected life			5 years				5  years				5  years
Expected volatility			—				—				—

	Earnings Per Share

F-13

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Table of Contents

	Advertising Expense

	Income Taxes

	Lease Termination Costs

	Comprehensive Income (Loss)

	Recent Accounting Pronouncements

F-14

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Table of Contents

3.	Inventory

		December 31,
										October 1,
		2003				2004				2005
										(unaudited)
Raw materials		$	1,510,995			$	427,181			$	968,551
Work in process			145,919				—				—
Finished goods			9,762,697				7,241,753				13,353,205
		$	11,419,611			$	7,668,934			$	14,321,756

4.	Property and Equipment

		December 31,
										October 1,
		2003				2004				2005
										(unaudited)
Computer and equipment		$	1,682,876			$	2,826,932			$	5,611,906
Furniture			59,954				160,942				429,628
Machinery			935,820				2,544,330				2,751,699
Leasehold improvements			194,700				272,107				713,362
Software purchased for internal use			630,323				919,636				1,144,356
Leased equipment			144,682				144,682				144,682
			3,648,355				6,868,629				10,795,633
Less: accumulated depreciation and amortization			2,043,322				3,356,119				4,779,057
		$	1,605,033			$	3,512,510			$	6,016,576

5.	Accrued Expenses

		December 31,
										October 1,
		2003				2004				2005
										(unaudited)
Accrued warranty		$	1,522,228			$	1,398,382			$	2,094,746
Accrued lease termination costs			326,324				37,879				—
Accrued rent			389,687				339,172				323,312
Accrued sales commissions			200,375				554,919				386,297
Accrued accounting fees			171,000				161,000				139,532
Accrued other			193,052				151,794				230,591
		$	2,802,666			$	2,643,146			$	3,174,478

F-15

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Table of Contents

6.	Revolving Line of Credit

7.	Common Stock

8.	Redeemable Convertible Preferred Stock

		December 31,
		2003				2004
Series F; 1,412,430 shares authorized, issued and outstanding at December 31, 2004, net of issuance costs (liquidation preference $10,000,004)		$	—			$	9,944,637
Series E; 2,799,353 shares authorized, issued and outstanding at December 31, 2004 and 3,002,069 shares authorized, 2,799,353 issued and outstanding at December 31, 2003, net of issuance costs (liquidation preference $13,044,985)			12,922,735				12,922,465
Series D; 1,870,908 and 2,500,000 shares authorized, 1,870,908 issued and outstanding at December 31, 2004 and 2003, net of issuance costs (liquidation preference $7,000,002)			6,766,550				6,766,550
Series C; 1,470,000 shares authorized, issued and outstanding at December 31, 2004 and 2003, net of issuance costs (liquidation preference $5,500,005)			5,478,244				5,478,244
Series B; 668,185 shares authorized, issued and outstanding at December 31, 2004 and 2003, net of issuance costs (liquidation preference $1,000,006)			966,761				966,761
Series A; 1,336,370 shares authorized, issued and outstanding at December 31, 2004 and 2003, net of issuance costs (liquidation preference $1,550,189)			1,427,579				1,427,579
		$	27,561,869			$	37,506,236

F-16

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Table of Contents

	Conversion Rights

	Redemption Rights

	Dividend Rights

	Voting Rights

	Liquidation Rights

F-17

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Table of Contents

	Change in Control

9.	Note Receivable from Stockholder

10.	Stock Option Plan

F-18

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Table of Contents

		Number of				Weighted Average
		Shares				Exercise Price
Outstanding at December 31, 2002			1,579,708			$	0.584
Granted			494,455				2.294
Exercised			(68,990	)			0.171
Canceled			(21,715	)			1.034
Outstanding at December 31, 2003			1,983,458				1.019
Granted			1,544,959				2.170
Exercised			(768,707	)			0.737
Canceled			(154,710	)			1.790
Outstanding at December 31, 2004			2,605,000				1.770
Weighted average fair value of options granted during 2004						$	0.416
Options available for future grant at December 31, 2004			290,973

F-19

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Table of Contents

						Options
						Outstanding								Options Exercisable
						Weighted
						Average				Weighted								Weighted
						Remaining				Average								Average
		Number				Contractual				Exercise				Number				Exercise
Exercise Price		Outstanding				Life				Price				Exercisable				Price
$0.0002			378,710				2.52	years		$	0.0002				378,710			$	0.0002
0.24			191,380				4.25				0.24				191,380				0.24
0.50			7,940				4.93				0.50				7,940				0.50
0.55			247,038				7.97				0.55				58,018				0.55
1.87			219,028				5.96				1.87				166,278				1.87
2.33			901,654				8.96				2.33				201,333				2.33
2.78			614,675				9.55				2.78				2,050				2.78
4.60			44,575				9.92				4.60				—				—
$0.0002-$4.60			2,605,000				7.48			$	1.770				1,005,709			$	0.863

F-20

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Table of Contents

F-21

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Table of Contents

										Weighted				Weighted
										Average				Average								Deferred Stock
						# of Shares				Exercise				Reassessed				Intrinsic				Based
Grant Dates		Period				Granted				Price				Fair Value				Value				Compensation
7/1/04-9/30/04			Q3-04				306,675			$	2.7800	0		$	2.78000			$	0.00000			$	0
10/1/04-12/31/04			Q4-04				125,325			$	3.4273	3		$	3.42733			$	0.00000			$	0
1/1/05-3/31/05			Q1-05				555,625			$	4.8810	5		$	6.98110			$	2.10005			$	1,166,842
4/1/05-7/2/05			Q2-05				22,650			$	4.9754	5		$	10.09786			$	5.12241			$	116,023
7/3/05-10/1/05			Q3-05				295,475			$	10.6885	5		$	16.94882			$	6.26027			$	1,849,754
							1,305,750															$	3,132,619

11.	Warrants

F-22

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Table of Contents

12.	Income Taxes

			2002				2003				2004
Current
	Federal		$	—			$	33,285			$	89,794
	State			14,695				2,942				54,381
			$	14,695			$	36,227			$	144,175

				2003				2004
Deferred tax asset
	Net operating loss carryforwards			$	4,997,578			$	5,184,200
	Tax credits				735,387				1,019,900
	Reserves and accruals				5,313,241				5,228,000
		Total deferred tax asset			11,046,206				11,432,100
Valuation allowance					(11,046,206	)			(11,432,100	)
		Net deferred tax asset		$	—			$	—

F-23

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Table of Contents

		2002				2003				2004
Expected federal income tax		$	(3,770,898	)		$	(2,521,382	)		$	123,531
Permanent items			5,914				21,874				45,112
State taxes			(551,993	)			(411,920	)			(302,183	)
Credits			75,011				(165,387	)			(165,600	)
Other			—				—				57,488
Increase in valuation allowance			4,256,661				3,113,042				385,827
		$	14,695			$	36,227			$	144,175

13.	Commitments and Contingencies

	Legal

	Lease Obligations

			Operating Leases
2005			$	929,180
2006				771,989
2007				746,630
2008				766,394
2009				—
Thereafter				—
	Total minimum lease payments		$	3,214,193

F-24

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Table of Contents

	Guarantees and Indemnification Obligations

	Warranty

Balance, December 31, 2002		$	8,063
Provisions			1,514,165
Warranty settlements			—
Balance, December 31, 2003			1,522,228
Provisions			1,277,811
Warranty settlements			(1,401,657	)
Balance, December 31, 2004			1,398,382
Provisions			2,992,915
Warranty settlements			(2,296,551	)
Balance, October 1, 2005 (unaudited)		$	2,094,746

	Restricted Cash

14.	Employee Benefits

F-25

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Table of Contents

15.	Related Party Transactions

16.	Business Segment Information

	Consumer

	Government and Industrial

	Other

F-26

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Table of Contents

				Fiscal Year Ended												Nine Months Ended
				December 31,				December 31,				December 31,				September 30,				October 1,
				2002				2003				2004				2004				2005
																(unaudited)
Revenue:
	Consumer			$	—			$	43,073,149			$	71,332,584			$	43,034,195			$	59,944,448
	Government & Industrial				—				11,243,003				23,231,496				14,106,786				35,469,709
	Other				14,816,508				—				479,069				416,986				62,037
		Total revenue			14,816,508				54,316,152				95,043,149				57,557,967				95,476,194
Cost of revenue:
	Consumer				—				27,386,629				48,281,833				28,755,704				36,986,833
	Government & Industrial				—				9,950,231				19,307,902				11,722,254				27,257,406
	Other				16,756,635				—				101,990				—				196
		Total cost of revenue			16,756,635				37,336,860				67,691,725				40,477,958				64,244,435
Gross profit (loss):
	Consumer				—				15,686,520				23,050,751				14,278,491				22,957,615
	Government & Industrial				—				1,292,772				3,923,594				2,384,532				8,212,303
	Other				(1,940,127	)			—				377,079				416,986				61,841
		Total gross profit			(1,940,127	)			16,979,292				27,351,424				17,080,009				31,231,759
Research and development
	Other				1,735,831				3,848,010				5,504,321				3,769,329				8,275,308
Selling, general and administrative
	Other				7,128,105				20,521,298				21,404,106				13,326,556				20,328,112
Stock-based compensation
	Other				—				—				—				—				212,226
Other (expense) income, net
	Other				44,764				15,282				(79,762	)			(47,883	)			271,081
Income (loss) before income taxes
	Other			$	(10,759,299	)		$	(7,374,734	)		$	363,235			$	(63,759	)		$	2,687,194

17.	Subsequent Event

F-27

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Item 13.	Other Expenses of Issuance and Distribution.

SEC registration fee			$	13,536
NASD filing fee				12,000
NASDAQ National Market listing fee				100,000
Printing and engraving expenses				150,000
Legal fees and expenses				975,000
Accounting fees and expenses				625,000
Blue Sky fees and expenses (including legal fees)				5,000
Transfer agent and registrar fees and expenses				25,000
Miscellaneous				94,464
	Total		$	2,000,000

Item 14.	Indemnification of Directors and Officers.

II-1

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II-2

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Item 15.	Recent Sales of Unregistered Securities.

(a)	Issuances of Capital Stock.

(b)	Grants and Exercises of Stock Options; Awards of Restricted Stock.

(c)	Issuance of Warrant.

Item 16.	Exhibits.

II-3

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Item 17.	Undertakings.

	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
	(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

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	iROBOT CORPORATION

	By:	/s/ Colin M. Angle

	Colin M. Angle
	Chief Executive Officer and Director

Signature				Title(s)
/s/ Helen Greiner   Helen Greiner				Chairman of the Board
/s/ Colin M. Angle   Colin M. Angle				Chief Executive Officer and Director (Principal Executive Officer)
/s/ Geoffrey P. Clear   Geoffrey P. Clear				Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
/s/ Gerald C. Kent, Jr.   Gerald C. Kent, Jr.				Vice President and Controller (Principal Accounting Officer)
*   Ronald Chwang				Director
*   Jacques S. Gansler				Director
*   Rodney A. Brooks				Director
*   Andrea Geisser				Director

II-5

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Signature				Title(s)
*   George C. McNamee				Director
*   Peter Meekin				Director
*By:		/s/ Gerald C. Kent, Jr.   Gerald C. Kent, Jr. Attorney-in-fact

II-6

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Number				Description
	1	.1		Form of Underwriting Agreement
	3	.1**		Form of Amended and Restated Certificate of Incorporation of the Registrant
	3	.2**		Form of Second Amended and Restated Certificate of Incorporation of the Registrant (to be effective upon the completion of the offering)
	3	.3**		Amended and Restated By-laws of the Registrant
	4	.1		Specimen Stock Certificate for shares of the Registrant’s Common Stock
	4	.2		Form of Shareholder Rights Agreement between the Registrant and Computershare Trust Company, Inc., as the Rights Agent
	5	.1		Opinion of Goodwin Procter LLP
	10	.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†**		Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers
	10	.3†**		Registrant’s 2005 Incentive Compensation Plan
	10	.4†**		Amended and Restated 1994 Stock Plan and forms of agreements thereunder
	10	.5†**		Amended and Restated 2001 Special Stock Option Plan and form of agreement thereunder
	10	.6†**		Amended and Restated 2004 Stock Option and Incentive Plan and forms of agreements thereunder
	10	.7**		Lease Agreement between the Registrant and Burlington Crossing Office LLC for the premises located at 63 South Avenue, Burlington, Massachusetts, dated as of October 29, 2002, as amended
	10	.8**		Warrant to Purchase Common Stock of the Registrant issued to Silicon Valley Bank, dated as of January 30, 2003
	10	.9**		Loan and Security Agreement between the Registrant and Fleet National Bank, dated as of May 26, 2005
	10	.10†**		Employment Agreement between the Registrant and Colin Angle, dated as of January 1, 1997
	10	.11†**		Employment Agreement between the Registrant and Helen Greiner, dated as of January 1, 1997
	10	.12†**		Employment Agreement between the Registrant and Geoffrey P. Clear, dated as of March 28, 2003
	10	.13†**		Employment Agreement between the Registrant and Joseph W. Dyer, dated as of February 18, 2004
	10	.14†**		Employment Agreement between the Registrant and Gregory F. White, dated as of February 18, 2004
	10	.15†**		Independent Contractor Agreement between the Registrant and Rodney Brooks, dated as of December 30, 2002
	10	.16**		Government Contract DAAE07-03-9-F001 (Small Unmanned Ground Vehicle)
	10	.17**		Government Contract N00174-03-D-0003 (Man Transportable Robotic System)
	10	.18†**		2005 Stock Option and Incentive Plan and forms of agreements thereunder
	10	.19#**		Manufacturing and Services Agreement between the Registrant and Gem City Engineering Corporation, dated as of July 27, 2004
	10	.20†		Non-Employee Directors’ Deferred Compensation Program
	23	.1		Consent of Goodwin Procter LLP (included in Exhibit 5.1)
	23	.2		Consent of PricewaterhouseCoopers LLP
	24	.1**		Power of Attorney (included in page II-5)

**	Previously filed.
†	Indicates a management contract or any compensatory plan, contract or arrangement.

#	Confidential treatment requested for portions of this document.

                                                                     Exhibit 1.1

                             _______________ SHARES


                               IROBOT CORPORATION

                     COMMON STOCK, $0.01 PAR VALUE PER SHARE





                             UNDERWRITING AGREEMENT












__________, 2005








                                                             _____________, 2005




Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
First Albany Capital Inc.
Needham & Company, LLC
Adams Harkness, Inc.

c/o  Morgan Stanley & Co. Incorporated
     1585 Broadway
     New York, New York 10036

and

c/o  J.P. Morgan Securities Inc.
     277 Park Avenue, Floor 20
     New York, New York 10172

Dear Sirs and Mesdames:

         iRobot Corporation, a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS"), and certain stockholders of the Company (the "SELLING
STOCKHOLDERS") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of _______________ shares of the Common
Stock, $0.01 par value per share, of the Company (the "FIRM SHARES"), of which
_____________ shares are to be issued and sold by the Company and _____________
shares are to be sold by the Selling Stockholders, each Selling Stockholder
selling the amount set forth opposite such Selling Stockholder's name in the
column titled "Firm Shares" in Schedule I hereto.

         Certain Selling Stockholders also severally propose to sell to the
several Underwriters not more than an additional ______________ shares of the
Common Stock, $0.01 par value per share, of the Company (the "ADDITIONAL
SHARES"), each Selling Stockholder selling up to the amount set forth opposite
such Selling Stockholder's name in the column titled "Additional Shares" in
Schedule I hereto, if and to the extent that you, as managers of the offering,
shall have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 3
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "SHARES." The shares of Common Stock, $0.01 par value per
share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK." The
Company and the Selling Stockholders are hereinafter sometimes collectively
referred to as the "SELLERS."

         The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-1 (File No. 333-126907),
including a



prospectus, relating to the Shares. The registration statement as amended at the
time it becomes effective, including the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "REGISTRATION STATEMENT"; the prospectus in the
form first used to confirm sales of Shares is hereinafter referred to as the
"PROSPECTUS." If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462 Registration Statement.

         Morgan Stanley & Co. Incorporated ("MORGAN STANLEY") has agreed to
reserve a portion of the Shares to be purchased by it under this Agreement for
sale to the Company's directors, officers, employees and business associates and
other parties related to the Company (collectively, "PARTICIPANTS"), as set
forth in the Prospectus under the heading "Underwriters" (the "DIRECTED SHARE
PROGRAM"). The Shares to be sold by Morgan Stanley and its affiliates pursuant
to the Directed Share Program are referred to hereinafter as the "DIRECTED
SHARES." Any Directed Shares not orally confirmed for purchase by any
Participant by the end of the business day on which this Agreement is executed
will be offered to the public by the Underwriters as set forth in the
Prospectus.

         1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:

         (a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the Company's knowledge,
threatened by the Commission.

         (b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.

         (c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the state of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and is in
good standing in each


                                       2


jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.

         (d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing (or, if in a foreign
jurisdiction, enjoys the equivalent status under the laws of the jurisdiction of
organization outside of the United States) under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and, except as disclosed in the Prospectus,
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.

         (e) This Agreement has been duly authorized, executed and delivered by
the Company.

         (f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.

         (g) The shares of Common Stock (including the Shares to be sold by the
Selling Stockholders) outstanding prior to the issuance of the Shares to be sold
by the Company have been duly authorized and are validly issued, fully paid and
non-assessable.

         (h) The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.

         (i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the certificate of incorporation or by-laws of
the Company or any agreement or other instrument binding upon the Company or any
of its subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws and regulations of the various states in connection with the offer and
sale of the Shares.

         (j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise,


                                       3


or in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement).

         (k) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.

         (l) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, and delivered by the Underwriters
to prospective purchasers of the Shares complied when so filed in all material
respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder.

         (m) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus will not be, required to register as an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.

         (n) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.

         (o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) that would, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

         (p) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered pursuant to
the Registration Statement.

                                       4


         (q) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) the Company and its
subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction; (ii) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the Company
and its subsidiaries, except in each case as described in the Prospectus.

         (r) The Company and its subsidiaries do not own any material real
property. The Company and its subsidiaries have good and marketable title to all
personal property owned by them that is material to the business of the Company
and its subsidiaries, taken as a whole, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries, in each case except as described
in the Prospectus.

         (s) The Company and its subsidiaries own, possess, have the right to
use or can acquire on reasonable terms ownership of or rights to use, all
material patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business now
operated by them, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing that, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

         (t) No material labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in the Prospectus, or, to the
knowledge of the Company, is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that would reasonably be
expected to have a material adverse effect on the Company and its subsidiaries,
taken as a whole.

         (u) The Company and its subsidiaries, taken as a whole, are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any of its subsidiaries has been refused
any insurance coverage sought or applied for; and the Company, together with its
subsidiaries, has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business.

                                       5


         (v) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit that, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, in each case except as
described in the Prospectus.

         (w) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

         (x) Except as described in the Registration Statement or Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), the Company has not sold, issued or distributed any shares of
Common Stock during the six-month period preceding the date hereof, including
any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities
Act, other than shares issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.

         (y) The statistical and market-related data contained in the
Registration Statement and Prospectus are based on or derived from sources which
the Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived.

         (z) The Registration Statement, the Prospectus and any preliminary
prospectus delivered by the Underwriters to prospective purchasers of the Shares
comply, and any amendments or supplements thereto will comply, with any
applicable laws or regulations of foreign jurisdictions in which the Prospectus
or any preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program.

         (aa) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered, except such as may be required by the
securities or Blue Sky laws and regulations of the various states in connection
with the offer and sale of the Shares.

         (bb) The Company has not offered, or caused Morgan Stanley to offer,
Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or

                                       6


supplier's level or type of business with the Company or (ii) a trade journalist
or publication to write or publish favorable information about the Company or
its products.

         2. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder represents and warrants to and agrees with each of the
Underwriters that:

         (a) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder.

         (b) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Stockholder and the
Company, as Custodian, relating to the deposit of the Shares to be sold by such
Selling Stockholder (the "CUSTODY AGREEMENT") and the Power of Attorney
appointing certain individuals as such Selling Stockholder's attorneys-in-fact
to the extent set forth therein, relating to the transactions contemplated
hereby and by the Registration Statement (the "POWER OF ATTORNEY") will not
contravene any provision of applicable law, or the certificate of incorporation
or by-laws of such Selling Stockholder (if such Selling Stockholder is a
corporation), or any agreement or other instrument binding upon such Selling
Stockholder or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by such Selling Stockholder of
its obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Stockholder, except such as may be required by the
securities or Blue Sky laws and regulations of the various states in connection
with the offer and sale of the Shares.

         (c) Such Selling Stockholder has, and on the Closing Date will have,
valid title to, or a valid "security entitlement" within the meaning of Section
8-501 of the New York Uniform Commercial Code in respect of, the Shares to be
sold by such Selling Stockholder free and clear of all security interests,
claims, liens, equities or other encumbrances and the legal right and power, and
all authorization and approval required by law, to enter into this Agreement,
the Custody Agreement and the Power of Attorney and to sell, transfer and
deliver the Shares to be sold by such Selling Stockholder or a security
entitlement in respect of such Shares.

         (d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Stockholder and are valid and
binding agreements of such Selling Stockholder.

         (e) Upon payment for the Shares to be sold by such Selling Stockholder
pursuant to this Agreement, delivery of the Shares to be sold by such Selling
Stockholder will pass valid title to such Shares, free and clear of any adverse
claim within the meaning of Section 8-102 of the New York Uniform Commercial
Code, to each Underwriter who has purchased such Shares without notice of an
adverse claim.

         (f) Such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 are not
true and correct. Such Selling Stockholder is not prompted by any material
non-public historical



                                       7


information concerning the Company or its subsidiaries that is not set forth in
the Prospectus to sell its Shares pursuant to this Agreement.

         (g) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 2(g) do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein; provided further that
with respect to each Selling Stockholder the representations and warranties set
forth in this paragraph 2(g) are limited to statements and omissions made in
reliance upon information relating to such Selling Stockholder furnished to the
Company in writing by such Selling Stockholder expressly for use in the
Registration Statement, the Prospectus or any amendments or supplements thereto.

         3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $______ a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.

         On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, certain of the Selling
Stockholders agree, severally and not jointly, to sell to the Underwriters the
Additional Shares, and the Underwriters shall have the right to purchase,
severally and not jointly, up to _______________ Additional Shares at the
Purchase Price. Morgan Stanley and J.P. Morgan Securities Inc. ("JPMORGAN") may
exercise this right on behalf of the Underwriters in whole or from time to time
in part by giving written notice executed by each of Morgan Stanley and JPMorgan
not later than 30 days after the date of this Agreement. Any exercise notice
shall specify the number of Additional Shares to be purchased by the
Underwriters and the date on which such shares are to be purchased. Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Shares nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 5 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. On each
day, if any, that Additional Shares are to be purchased (an "OPTION CLOSING
DATE"), each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased on such Option Closing Date as the


                                       8


number of Firm Shares set forth in Schedule II hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.

         Each Seller hereby agrees that, without the prior written consent of
each of Morgan Stanley and JPMorgan on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise or (iii) in the case of the Company file
any registration statement with the Commission relating to the offering of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (other than on Form S-8 or a successor form).


         The restrictions contained in the preceding paragraph shall not apply
to (a) the Shares to be sold hereunder, (b) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and disclosed in the
Prospectus or of which the Underwriters have been advised in writing, (c) the
grant of options to purchase Common Stock or the issuance of shares of Common
Stock by the Company to employees, officers, directors, advisors or consultants
of the Company or any of its subsidiaries pursuant to equity plans disclosed in
the Prospectus, provided that each recipient of any such grant or issuance that
could result in such recipient beneficially owning more than 25,000 shares of
Common Stock prior to the expiration of 180-day restricted period be bound by a
lock-up agreement in the form entered into by the Selling Stockholders in
accordance with Section 6(h) hereof, (d) the issuance by the Company of up to
2,000,000 shares of Common Stock, in connection with any acquisition,
collaboration or other similar strategic transaction involving the Company or
any of its subsidiaries, provided that the recipients thereof execute a lock-up
agreement in the form entered into by the Selling Stockholders in accordance
with Section 6(h) hereof, (e) transactions by a Selling Stockholder relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the offering of the Shares, provided that no filing
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), shall be required or shall be voluntarily made in connection
with subsequent sales of Common Stock or other securities acquired in such open
market transactions, (f) transfers by a Selling Stockholder of shares of Common
Stock or any security convertible into Common Stock as a bona fide gift, or (g)
distributions by a Selling Stockholder of shares of Common Stock or any security
convertible into Common Stock to limited partners, members or stockholders of
the Selling Stockholder; provided that in the case of any transfer or
distribution pursuant to clause (f) or (g), (i) each donee or distributee shall
enter into a written agreement accepting the restrictions set forth in the
preceding paragraph and this paragraph as if it were a Selling Stockholder and
(ii) no filing under Section 16(a) of the Exchange Act, reporting a reduction in
beneficial ownership of shares of Common Stock, shall be required or shall be
voluntarily made in respect of the transfer or distribution during the




                                       9


180-day restricted period. In addition, each Selling Stockholder, agrees that,
without the prior written consent of Morgan Stanley and JPMorgan on behalf of
the Underwriters, it will not, during the period ending 180 days after the date
of the Prospectus, make any demand for, or exercise any right with respect to,
the registration of any shares of Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock. Each Selling Stockholder
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of any Shares held by such Selling
Stockholder except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day
restricted period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the 180-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
180-day period, the restrictions imposed by this agreement shall continue
(subject, with respect to each Seller (including the Company), to earlier
termination in the circumstances described in the proviso to the third paragraph
of the lock-up agreements entered into by each of the Selling Stockholders in
accordance with Section 6(h) hereof) to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence of
the material news or material event. The Company shall promptly notify Morgan
Stanley and JPMorgan of any earnings release, news or event that may give rise
to an extension of the initial 180-day restricted period. In addition, if during
the three-day period following any such earnings release or material news or
event the Company learns of any research report or public appearance concerning
the Company that has been or is to be published or made by one of the
representatives of the Underwriters (other than Morgan Stanley or JPMorgan)
during such three-day period, then the Company shall notify Morgan Stanley and
JPMorgan of such report or appearance promptly, and in any event by no later
than the end of such three-day period, in accordance with the provisions of
Section 17.

         4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at $___
a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at
a price that represents a concession not in excess of $____ a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $___ a share, to any Underwriter or to
certain other dealers.

         5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on ____________, 2005, or at such other time on the same or such other
date, not later than _________, 2005, as shall be designated in writing by both
of Morgan Stanley and JPMorgan on behalf of the Underwriters. The time and date
of such payment are hereinafter referred to as the "CLOSING DATE."

         Payment for any Additional Shares to be sold by each Seller shall be
made to such Seller in Federal or other funds immediately available in New York
City against



                                       10


delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 3 or at such other time on the same or
on such other date, in any event not later than _______, 2005, as shall be
designated in writing by both of Morgan Stanley and JPMorgan on behalf of the
Underwriters.

         The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.

         6. Conditions to the Underwriters' Obligations. The several obligations
of the Sellers to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than __________, New York City time, on the date
hereof.

         The several obligations of the Underwriters are subject to the
following further conditions:

         (a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

                  (i) there shall not have occurred any downgrading, nor shall
         any notice have been given of any intended or potential downgrading or
         of any review for a possible change that does not indicate the
         direction of the possible change, in the rating accorded any of the
         securities of the Company or any of its subsidiaries by any "nationally
         recognized statistical rating organization," as such term is defined
         for purposes of Rule 436(g)(2) under the Securities Act; and

                  (ii) there shall not have occurred any change, or any
         development involving a prospective change, in the condition, financial
         or otherwise, or in the earnings, business or operations of the Company
         or any of its subsidiaries, taken as a whole, from that set forth in
         the Prospectus (exclusive of any amendments or supplements thereto
         subsequent to the date of this Agreement) that, in your judgment, is
         material and adverse and that makes it, in your judgment, impracticable
         to market the Shares on the terms and in the manner contemplated in the
         Prospectus.

         (b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 6(a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied,
in all material respects, with all of the agreements



                                       11


and satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.

         The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.

         (c) The Underwriters shall have received on the Closing Date an opinion
of Goodwin Procter LLP, outside counsel for the Company, dated the Closing Date,
in the form attached as Exhibit A hereto.

         (d) The Underwriters shall have received on the Closing Date an opinion
of Goodwin Procter LLP, counsel for the Selling Stockholders, in the form
attached as Exhibit B hereto.

         (e) The Underwriters shall have received on the Closing Date opinions
of Fish & Richardson P.C. and Gesmer Updegrove LLP, outside patent counsels for
the Company, dated the Closing Date, in the forms attached as Exhibit C-1 and
Exhibit C-2 hereto.

         (f) The Underwriters shall have received on the Closing Date an opinion
of Wilmer Cutler Pickering Hale and Dorr LLP, counsel for the Underwriters,
dated the Closing Date, covering the following matters:

                  (i) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar rights;

                  (ii) this Agreement has been duly authorized, executed and
delivered by the Company;

                  (iii) the statements relating to legal matters, documents or
proceedings included in the Prospectus under the captions "Description of
Capital Stock" and "Underwriters", in each case fairly summarize in all material
respects such matters, documents or proceedings;

                  (iv) (A) in the opinion of such counsel, the Registration
Statement and the Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to which
such counsel need not express any belief) appear on their face to be
appropriately responsive in all material respects to the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder, and (B) nothing has come to the attention of such counsel that
causes such counsel to believe that (i) the Registration Statement or the
prospectus included therein (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to which
such counsel need not express any belief) at the time the Registration Statement
became effective contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Prospectus (except for the
financial statements and financial schedules and other financial and statistical
data



                                       12


included therein, as to which such counsel need not express any belief) as of
its date or as of the Closing Date contained or contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

         With respect to Goodwin Procter LLP's negative assurance letter and
Section 6(f)(iv) above, Goodwin Procter LLP and Wilmer Cutler Pickering Hale and
Dorr LLP, respectively, may state that their opinions and beliefs are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification,
except as specified. With respect to Section 6(d) above, Goodwin Procter LLP may
rely upon an opinion or opinions of counsel for any Selling Stockholders and,
with respect to factual matters and to the extent such counsel deems
appropriate, upon the representations of each Selling Stockholder contained
herein and in the Custody Agreement and Power of Attorney of such Selling
Stockholder and in other documents and instruments; provided that (A) each such
counsel for the Selling Stockholders is satisfactory to your counsel, (B) a copy
of each opinion so relied upon is delivered to you and is in form and substance
satisfactory to your counsel, (C) copies of such Custody Agreements and Powers
of Attorney and of any such other documents and instruments shall be delivered
to you and shall be in form and substance satisfactory to your counsel and (D)
Goodwin Procter LLP shall state in their opinion that they are justified in
relying on each such other opinion.

         The opinions of Goodwin Procter LLP, Fish & Richardson P.C., and Gesmer
Updegrove LLP, described in Sections 6(c), 6(d) and 6(e) above (and any opinions
of counsel for any Selling Stockholder referred to in the immediately preceding
paragraph) shall be rendered to the Underwriters at the request of the Company
or one or more of the Selling Stockholders, as the case may be, and shall so
state therein.

         (g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters and
PricewaterhouseCoopers LLP, from PricewaterhouseCoopers LLP, independent
registered public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date hereof.

         (h) The "lock-up" agreements, in the form provided to the Company by
the Underwriters, between you and certain stockholders, officers and directors
of the Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.

         The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
due authorization and issuance of the Additional Shares to be sold on such
Option Closing Date and other matters related to the issuance of such Additional
Shares.

                                       13


         7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

         (a) To furnish to you, without charge, six copies of the signed
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City, without charge, prior
to 10:00 a.m., New York City time, on the business day next succeeding the date
of this Agreement and during the period mentioned in Section 7(c) below, as many
copies of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.

         (b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.

         (c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the Prospectus
is required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been sold by
you on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.

         (d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided that in no event shall the Company or any of its subsidiaries
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action that would subject it to service of process
in suits, other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject or to subject itself to taxation
in excess of a nominal amount in respect of doing business in any jurisdiction.

         (e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-month
period ending ________, 2006 that satisfies the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder.



                                       14


         (f) To comply with all applicable securities and other laws, rules and
regulations in each jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.

         8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and counsel for the
Selling Stockholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., including any counsel fees incurred on behalf of or
disbursements by Morgan Stanley in its capacity as a "qualified independent
underwriter, (v) all fees and expenses in connection with the preparation and
filing of the registration statement on Form 8-A relating to the Common Stock
and all costs and expenses incident to listing the Shares on the Nasdaq National
Market, (vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the production
of road show slides and graphics, the fees and expenses of any consultants
engaged in connection with the road show presentations with the prior approval
of the Company, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and one-half of the cost of any
aircraft chartered and any ground transportation used by the representatives of
the Underwriters and the Company in connection with the road show, (ix) the
document production charges and expenses associated with printing this
Agreement, (x) all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program and (xi) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 9 entitled "Indemnity
and Contribution", Section 10 entitled "Directed Share Program Indemnification"
and the last paragraph of Section 12 below, the Underwriters will pay all of
their costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares



                                       15


by them and any advertising expenses connected with any offers they may make,
and all lodging expenses of the representatives of the Underwriters in
connection with the road show. It being understood, however, that the fees and
disbursements of counsel for the Underwriters that the Company may be required
to pay pursuant to clauses (iii), (iv) and (x) of this Section 8 shall not
exceed $25,000 in the aggregate.

         The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.

         9. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
or any amendment or supplement thereto, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 7(a) hereof. The Company also agrees
to indemnify and hold harmless Morgan Stanley and each person, if any, who
controls Morgan Stanley within the meaning of either Section 15 of the
Securities Act, or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and judgments incurred solely as a result
of Morgan Stanley's participation as a "qualified independent underwriter"
within the meaning of Rule 2720 of the National Association of Securities
Dealers' Conduct Rules in connection with the offering of the Shares of Common
Stock, except for any losses, claims, damages, liabilities, and judgments that
are finally judicially determined to have resulted from Morgan Stanley's, or
such controlling person's bad faith or gross negligence.

         (b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the



                                       16


Exchange Act, and each affiliate of any Underwriter within the meaning of Rule
405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Selling Stockholder furnished in writing by or on behalf of
such Selling Stockholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 7(a)
hereof. The liability of each Selling Stockholder under the indemnity agreement
contained in this paragraph shall be limited to an amount equal to the aggregate
Public Offering Price of the Shares, minus the related underwriting discounts
and commissions, sold by such Selling Stockholder under this Agreement.

         (c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.

         (d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain



                                       17


counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonably incurred fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act or who are affiliates of any Underwriter within the meaning of Rule 405
under the Securities Act, (ii) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Selling Stockholders and all persons, if any, who control any
Selling Stockholder within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for the Underwriters and such control persons and affiliates
of any Underwriters, such firm shall be designated in writing by both of Morgan
Stanley and JPMorgan. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholders and such control persons of any Selling Stockholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Stockholders under the Powers of Attorney. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding. Notwithstanding
anything contained herein to the contrary, if indemnity may be sought pursuant
to the last sentence of Section 9(a) hereof in respect of such action or



                                       18


proceeding, then in addition to such separate firm for the indemnified parties,
the indemnifying party shall be liable for the reasonable fees and expenses of
not more than one separate firm (in addition to any local counsel) for Morgan
Stanley in its capacity as a "qualified independent underwriter" and all
persons, if any, who control Morgan Stanley within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act; provided, that, the
retention of such counsel meets the conditions set forth in clauses (i) or (ii)
of the second sentence of this Section 9(c).

         (e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint. The
liability of each Selling Stockholder under the contribution agreement contained
in this paragraph shall be limited to an amount equal to the aggregate Public
Offering Price of the Shares, minus the related underwriting discounts and
commissions, sold by such Selling Stockholder under this Agreement.

         (f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions



                                       19


of this Section 9, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 9 are not exclusive and shall not limit any rights
or remedies that may otherwise be available to any indemnified party at law or
in equity.

         (g) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company and
the Selling Stockholders contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, any Selling
Stockholder or any person controlling any Selling Stockholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.

         10. Directed Share Program Indemnification. (a) The Company agrees to
indemnify and hold harmless Morgan Stanley, each person, if any, who controls
Morgan Stanley within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and each affiliate of Morgan Stanley within the
meaning of Rule 405 of the Securities Act ("MORGAN STANLEY ENTITIES") from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (i) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant agreed to purchase; or (iii) related to,
arising out of, or in connection with the Directed Share Program, other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Morgan Stanley Entities.

         (b) In case any proceeding (including any governmental investigation)
shall be instituted involving any Morgan Stanley Entity in respect of which
indemnity may be sought pursuant to Section 10(a), the Morgan Stanley Entity
seeking indemnity, shall promptly notify the Company in writing and the Company,
upon request of the Morgan Stanley Entity, shall retain counsel reasonably
satisfactory to the Morgan Stanley Entity to represent the Morgan Stanley Entity
and any others the Company may designate in such proceeding and shall pay the
reasonably incurred fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Morgan Stanley Entity shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Morgan Stanley Entity unless (i) the Company shall
have agreed to the retention of such counsel or (ii) the named parties to any
such proceeding



                                       20


(including any impleaded parties) include both the Company and the Morgan
Stanley Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not, in respect of the legal expenses of the Morgan Stanley
Entities in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Morgan Stanley Entities. Any such
separate firm for the Morgan Stanley Entities shall be designated in writing by
Morgan Stanley. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Company agrees to
indemnify the Morgan Stanley Entities from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time a Morgan Stanley Entity shall have requested the Company to
reimburse it for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the Company agrees that it shall be liable
for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by the Company
of the aforesaid request and (ii) the Company shall not have reimbursed the
Morgan Stanley Entity in accordance with such request prior to the date of such
settlement. The Company shall not, without the prior written consent of Morgan
Stanley, effect any settlement of any pending or threatened proceeding in
respect of which any Morgan Stanley Entity is or could have been a party and
indemnity could have been sought hereunder by such Morgan Stanley Entity, unless
such settlement includes an unconditional release of the Morgan Stanley Entities
from all liability on claims that are the subject matter of such proceeding.

         (c) To the extent the indemnification provided for in Section 10(a) is
unavailable to a Morgan Stanley Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company in lieu of
indemnifying the Morgan Stanley Entity thereunder, shall contribute to the
amount paid or payable by the Morgan Stanley Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Morgan Stanley Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 10(c)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 10(c)(i) above but also the
relative fault of the Company on the one hand and of the Morgan Stanley Entities
on the other hand in connection with any statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Morgan Stanley Entities on the other hand in connection with
the offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the Morgan Stanley Entities for the Directed Shares, bear to the
aggregate Public Offering Price of the Directed Shares. If the loss, claim,
damage or liability is caused by an untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact, the
relative fault of the Company on the one hand and the Morgan Stanley Entities on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement or the omission or alleged omission
relates to information supplied by the Company or by the Morgan



                                       21


Stanley Entities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

         (d) The Company and the Morgan Stanley Entities agree that it would not
be just or equitable if contribution pursuant to this Section 10 were determined
by pro rata allocation (even if the Morgan Stanley Entities were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 10(c). The amount
paid or payable by the Morgan Stanley Entities as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by the Morgan Stanley
Entities in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10, no Morgan Stanley Entity
shall be required to contribute any amount in excess of the amount by which the
total price at which the Directed Shares distributed to the public were offered
to the public exceeds the amount of any damages that such Morgan Stanley Entity
has otherwise been required to pay. The remedies provided for in this Section 10
are not exclusive and shall not limit any rights or remedies that may otherwise
be available to any indemnified party at law or in equity.

         (e) The indemnity and contribution provisions contained in this Section
10 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Morgan Stanley Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Directed Shares.

         11. Termination. Morgan Stanley and JPMorgan on behalf of the
Underwriters may terminate this Agreement by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on, or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market, the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred, (iv) any
moratorium on commercial banking activities shall have been declared by Federal
or New York State authorities or (v) there shall have occurred any outbreak or
escalation of hostilities, or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse and that, singly or
together with any other event specified in this clause (v), makes it, in your
judgment, impracticable or inadvisable to proceed with the offer, sale or
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.

         12. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

         If, on the Closing Date or an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares that such


                                       22


defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of the Shares to be purchased
on such date, the other Underwriters shall be obligated severally in the
proportions that the number of Firm Shares set forth opposite their respective
names in Schedule II bears to the aggregate number of Firm Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as you may specify, to purchase the Shares that such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 12 by an amount in excess of one-ninth of such number of Shares without
the written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the
aggregate number of Firm Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Shares to be purchased on
such date, and arrangements satisfactory to you, the Company and the Selling
Stockholders for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter, the Company or the Selling Stockholders. In
any such case either you or the relevant Sellers shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on an
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased on such Option Closing Date, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option
Closing Date or (ii) purchase not less than the number of Additional Shares that
such non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.

         If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

         13. Entire Agreement. (a) This Agreement, together with any
contemporaneous written agreements and any prior written agreements (to the
extent not superseded by this Agreement) that relate to the offering of the
Shares, represents the entire agreement between the Company and the Underwriters
with respect to the preparation of the Prospectus, the conduct of the offering,
and the purchase and sale of the Shares.

                                       23


         (b) The Company acknowledges that in connection with the offering of
the Shares: (i) the Underwriters have acted at arms length, are not agents of,
and owe no fiduciary duties to, the Company or any other person, (ii) the
Underwriters owe the Company only those duties and obligations set forth in this
Agreement and (iii) the Underwriters may have interests that differ from those
of the Company. The Company waives to the full extent permitted by applicable
law any claims it may have against the Underwriters arising from an alleged
breach of fiduciary duty in connection with the offering of the Shares.

         14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.

         16. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

         17. Notices. All communications hereunder shall be in writing and
effective only upon receipt and if to the Underwriters shall be delivered,
mailed or sent to you in care of Morgan Stanley & Co. Incorporated, at 1585
Broadway, New York, New York 10036, Attention: Equity Markets Syndicate Desk and
to J.P. Morgan Securities Inc. at 277 Park Avenue, Floor 9, New York, New York
10172, Attention: Syndicate Desk; if to the Company shall be delivered, mailed
or via facsimile to iRobot Corporation at 63 South Avenue, Massachusetts 01803
and if to the Selling Stockholders shall be delivered, mailed or sent to
___________________.

                                      Very truly yours,
                                      IROBOT CORPORATION

                                      By:
                                         --------------------------------------
                                         Name:
                                         Title:




                                       24




                                      The Selling Stockholders named in Schedule
                                          I hereto, acting severally

                                      By:
                                          -------------------------------------
                                          Attorney-in Fact

Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
First Albany Capital Inc.
Needham & Company, LLC
Adams Harkness, Inc.

Acting severally on behalf of themselves and the
     several Underwriters named in Schedule II
     hereto

By:           Morgan Stanley & Co. Incorporated

By:
              -----------------------------------------
              Name:
              Title:


By:           J.P. Morgan Securities Inc.

By:
              -----------------------------------------
              Name:
              Title:






                                       25





                                                                      SCHEDULE I



 SELLING STOCKHOLDER            FIRM SHARES                ADDITIONAL SHARES
 -------------------            -----------                -----------------






                              ----------------             -----------------
Total:...............
                              ================             =================



                                      I-1



                                                                     SCHEDULE II


                                                    NUMBER OF FIRM SHARES TO BE
                         UNDERWRITER                         PURCHASED
                         -----------                ---------------------------

Morgan Stanley & Co. Incorporated.............
J.P. Morgan Securities Inc....................
First Albany Capital Inc......................
Needham & Company, LLC........................
Adams Harkness, Inc...........................



                                                    ---------------------------
    Total:....................................
                                                    ===========================

                                      II-1

                                                                     Exhibit 4.1

                  [SPECIMEN OF IROBOT COMMON STOCK CERTIFICATE]

                                   [SPECIMEN]

                               IROBOT CORPORATION

                 TRANSFER FEE: $25.00 PER NEW CERTIFICATE ISSUED

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:


                                                          
TEN COM -as tenants in common                                UNIF GIFT MIN ACT- ..............Custodian ............
                                                                               (Cust)                    (Minor)
TEN ENT -as tenants by the entireties                                        under Uniform Gifts to Minors Act ............
                                                                                                                   (State)
JT TEN  -as joint tenants with right of survivorship         UNIF TRF MIN ACT ...............Custodian (until age...)...........
         and not as tenants in common                                          (Cust)                                  (Minor)
                                                                             under Uniform Transfers to Minors Act.........
                                                                                                                   (State)
         Additional abbreviations may also be used though not in the above list.



For value received, ______________________ hereby sell, assign and transfer unto


PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER     [                  ]
OF ASSIGNEE


________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________.  Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.


                                                                   
Dated: ________________________ 20___________                         Signature: _________________________________________________




                                                                   
Signature(s) Guaranteed:                                              Signature: _________________________________________________
BY: ____________________                                                         Notice: THE SIGNATURE TO THIS ASSIGNMENT MUST
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR                           CORRESPOND WITH THE NAME AS WRITTEN UPON
INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and                      THE FACE OF THE CERTIFICATE, IN EVERY
Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE                        PARTICULAR WITHOUT ALTERATION OR
MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.                                      ENLARGEMENT, OR ANY CHANGE WHATEVER.



SECURITY INSTRUCTIONS

THIS IS WATERMARKED PAPER, DO NOT ACCEPT WITHOUT
NOTING WATERMARK. HOLD TO LIGHT TO VERIFY WATERMARK.  [GRAPHIC OF NORTH AMERICA]

                                                                     Exhibit 4.2
                               IROBOT CORPORATION

                                      AND

                       COMPUTERSHARE TRUST COMPANY, INC.

                                AS RIGHTS AGENT

                          SHAREHOLDER RIGHTS AGREEMENT

                        DATED AS OF [___________], 2005

                                TABLE OF CONTENTS



Section                                                                     Page
- -------                                                                     ----
                                                                         
SECTION 1. CERTAIN DEFINITIONS.................................................1

SECTION 2. APPOINTMENT OF RIGHTS AGENT.........................................6

SECTION 3. ISSUE OF RIGHT CERTIFICATES.........................................7

SECTION 4. FORM OF RIGHT CERTIFICATES..........................................8

SECTION 5. COUNTERSIGNATURE AND REGISTRATION...................................9

SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
           CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
           CERTIFICATES.......................................................10

SECTION 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF RIGHTS......11

SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.................13

SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK....................13

SECTION 10. PREFERRED STOCK RECORD DATE.......................................14

SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF SHARES OR
            NUMBER OF RIGHTS..................................................15

SECTION 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES........23

SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
            POWER.............................................................23

SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES...........................26

SECTION 15. RIGHTS OF ACTION..................................................26

SECTION 16. AGREEMENT OF RIGHT HOLDERS........................................27

SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.................27

SECTION 18. CONCERNING THE RIGHTS AGENT.......................................28

SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.........28

SECTION 20. DUTIES OF RIGHTS AGENT............................................29

SECTION 21. CHANGE OF RIGHTS AGENT............................................31


                                       -i-


                                                                         
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES................................32

SECTION 23. REDEMPTION........................................................32

SECTION 24. EXCHANGE..........................................................33

SECTION 25. NOTICE OF CERTAIN EVENTS..........................................35

SECTION 26. NOTICES...........................................................36

SECTION 27. SUPPLEMENTS AND AMENDMENTS........................................36

SECTION 28. SUCCESSORS........................................................37

SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS..............37

SECTION 30. BENEFITS OF THIS AGREEMENT........................................37

SECTION 31. SEVERABILITY......................................................38

SECTION 32. GOVERNING LAW.....................................................38

SECTION 33. COUNTERPARTS......................................................38

SECTION 34. DESCRIPTIVE HEADINGS..............................................38

SECTION 35. FORCE MAJEURE.....................................................38


Exhibit A --  Certificate of Designations of
              Series A-1 Junior Participating
              Cumulative Preferred Stock

Exhibit B --  Form of Right Certificate

                                      -ii-

                          SHAREHOLDER RIGHTS AGREEMENT

      Agreement, dated as of [November ___ ], 2005, between iRobot Corporation,
a Delaware corporation (the "Company"), and Computershare Trust Company, Inc., a
limited purpose trust company (the "Rights Agent").

                               W I T N E S S E T H

      WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and

      WHEREAS, effective [PRICING DATE], the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as such term is
hereinafter defined) for each outstanding share of Common Stock, par value $.01
per share, of the Company (the "Common Stock") outstanding as of the close of
business on [CLOSING DATE] (the "Record Date"), and authorized the issuance of
one Right for each share of Common Stock of the Company issued between the
Record Date and the earlier of the Distribution Date or the Expiration Date (as
such terms are hereinafter defined), each Right initially representing the right
to purchase one ten-thousandth of a share of Series A-1 Junior Participating
Cumulative Preferred Stock of the Company having the rights, powers and
preferences set forth on Exhibit A hereto, upon the terms and subject to the
conditions hereinafter set forth (the "Rights"); and

      WHEREAS, the Company desires to appoint the Rights Agent to act as rights
agent hereunder, in accordance with the terms and conditions hereof.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

      Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:

            (a)   "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or compensation arrangement of the
Company or any Subsidiary of the Company or (iv) any Person holding shares of
Common Stock of the Company organized, appointed or established by the Company
or any Subsidiary of the Company for or pursuant to the terms of any such
employee benefit plan or compensation arrangement (the Persons described in
clauses (i) through (iv) above are referred to herein as "Exempt Persons").

      Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition by the Company of Common Stock of the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares Beneficially Owned by such Person to 15% or more
of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional shares of Common Stock of the
Company and immediately thereafter be the Beneficial Owner of 15% or more of the
shares of Common Stock of the Company then outstanding, then such Person shall
be deemed to be an "Acquiring Person."

      In addition, notwithstanding the foregoing, and notwithstanding anything
to the contrary provided in the Agreement including, without limitation, in
Sections 1(oo), 3(a) or 27, a Person shall not be an "Acquiring Person" if the
Board of Directors of the Company determines at any time that a Person who would
otherwise be an "Acquiring Person," has become such without intending to become
an "Acquiring Person," and such Person divests as promptly as practicable (or
within such period of time as the Board of Directors of the Company determines
is reasonable) a sufficient number of shares of Common Stock of the Company so
that such Person would no longer be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this Section 1(a).

            (b)   "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.

            (c)   "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations (the
"Rules") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement; provided, however, that no
Person who is a director or officer of the Company shall be deemed an Affiliate
or an Associate of any other director or officer of the Company solely as a
result of his or her position as director or officer of the Company.

            (d)   A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "Beneficially Own" and have "Beneficial Ownership" of, any
securities:

                  (i)   which such Person or any of such Person's Affiliates or
      Associates, directly or indirectly, Beneficially Owns (as determined
      pursuant to Rule 13d-3 of the Rules under the Exchange Act, as in effect
      on the date of this Agreement);

                  (ii)  which such Person or any of such Person's Affiliates or
      Associates, directly or indirectly, has:

                        (A)   the right to acquire (whether or not such right is
            exercisable immediately or only after the passage of time or upon
            the satisfaction of any conditions or both) pursuant to any
            agreement, arrangement or understanding (whether or not in writing)
            (other than customary agreements with and between underwriters and
            selling group members with respect to a bona fide public offering of
            securities) or upon the exercise of conversion rights, exchange
            rights,

                                       2

            rights (other than the Rights), warrants or options, or otherwise;
            provided, however, that a Person shall not be deemed the "Beneficial
            Owner" of, or to "Beneficially Own" or have "Beneficial Ownership"
            of, (1) securities tendered pursuant to a tender or exchange offer
            made by or on behalf of such Person or any of such Person's
            Affiliates or Associates until such tendered securities are accepted
            for purchase or exchange; (2) securities issuable upon exercise of
            Rights at any time prior to the occurrence of a Triggering Event; or
            (3) securities issuable upon exercise of Rights from and after the
            occurrence of a Triggering Event, which Rights were acquired by such
            Person or any of such Person's Affiliates or Associates prior to the
            Distribution Date or pursuant to Sections 3(a), 11(i) or 22 hereof;
            or

                        (B)   the right to vote pursuant to any agreement,
            arrangement or understanding (whether or not in writing); provided,
            however, that a Person shall not be deemed the "Beneficial Owner"
            of, or to "Beneficially Own" or have "Beneficial Ownership" of, any
            security under this clause (B) if the agreement, arrangement or
            understanding to vote such security (1) arises solely from a
            revocable proxy or consent given in response to a public proxy or
            consent solicitation made pursuant to a written proxy or consent
            solicitation statement filed with the Securities and Exchange
            Commission in accordance with the Rules of the Exchange Act and (2)
            is not also then reportable by such person on Schedule 13D under the
            Exchange Act (or any comparable or successor report); or

                        (C)   the right to dispose of pursuant to any agreement,
            arrangement or understanding (whether or not in writing) (other than
            customary arrangements with and between underwriters and selling
            group members with respect to a bona fide public offering of
            securities); or

                  (iii) which are Beneficially Owned, directly or indirectly, by
      any other Person (or any Affiliate or Associate thereof) with which such
      Person or any of such Person's Affiliates or Associates has any agreement,
      arrangement or understanding (whether or not in writing) (other than
      customary agreements with and between underwriters and selling group
      members with respect to a bona fide public offering of securities) for the
      purpose of acquiring, holding, voting (except pursuant to a revocable
      proxy or consent as described in clause (B) of Section 1(d)(ii) hereof) or
      disposing of any securities of the Company;

provided, however, that (1) no Person engaged in business as an underwriter of
securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of forty (40) days after the date
of such acquisition, and (2) no Person who is a director or an officer of the
Company shall be deemed, as a result of his or her position as director or
officer of the Company, the Beneficial Owner of any securities of the Company
that are Beneficially Owned by any other director or officer of the Company.

                                       3

      For all purposes of this Agreement, the phrase "then outstanding," when
used with reference to the percentage of the then outstanding securities
Beneficially Owned by a Person, shall mean the number of securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to Beneficially Own
hereunder.

            (e)   "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.

            (f)   "Certificate of Incorporation" when used in reference to the
Company shall mean the Second Restated Certificate of Incorporation, as may be
amended from time to time, of the Company.

            (g)   "Close of Business" on any given date shall mean 5:00 p.m.,
Boston, Massachusetts time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 p.m., Boston, Massachusetts time, on
the next succeeding Business Day.

            (h)   "Common Stock" when used in reference to the Company shall
mean the common stock, par value $0.01 per share, of the Company or any other
shares of capital stock of the Company into which such stock shall be
reclassified or changed. "Common Stock" when used with reference to any Person
other than the Company organized in corporate form shall mean (i) the capital
stock or other equity interest of such Person with the greatest voting power,
(ii) the equity securities or other equity interest having power to control or
direct the management of such Person or (iii) if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person and which have issued any such outstanding capital stock,
equity securities or equity interest. "Common Stock" when used with reference to
any Person not organized in corporate form shall mean units of beneficial
interest which (x) shall represent the right to participate generally in the
profits and losses of such Person (including without limitation any flow-through
tax benefits resulting from an ownership interest in such Person) and (y) shall
be entitled to exercise the greatest voting power of such Person or, in the case
of a limited partnership, shall have the power to remove or otherwise replace
the general partner or partners.

            (i)   "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.

            (j)   "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.

            (k)   "Delaware Courts" shall have the meaning set forth in Section
32 hereof.

            (l)   "Depositary Agent" shall have the meaning set forth in Section
7(c) hereof.

            (m)   "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.

                                       4

            (n)   "Exchange Date" shall have the meaning set forth in Section
7(a) hereof.

            (o)   "Exempt Person" shall have the meaning set forth in the
definition of "Acquiring Person."

            (p)   "Exercise Price" shall have the meaning set forth in Section
4(a) hereof.

            (q)   "Expiration Date" and "Final Expiration Date" shall have the
meanings set forth in Section 7(a) hereof.

            (r)   "Fair Market Value" of any securities or other property shall
be as determined in accordance with Section 11(d) hereof.

            (s)   "Force Majeure Condition" shall have the meaning set forth in
Section 35 hereof.

            (t)   "Group" shall have the meaning set forth in clause (b) of the
definition of "Person."

            (u)   "NASDAQ" shall have the meaning set forth in Section 9(b)
hereof.

            (v)   "Person" shall mean (a) an individual, a corporation, a
partnership, a limited liability company, an association, a joint stock company,
a trust, a business trust, a government or political subdivision, any
unincorporated organization, or any other association or entity including any
successor (by merger or otherwise) thereof or thereto, and (b) a "group" as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.

            (w)   "Preferred Stock" shall mean shares of Series A-1 Junior
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company having the rights and preferences set forth in the form of Certificate
of Designations attached hereto as Exhibit A.

            (x)   "Preferred Stock Equivalents" shall have the meaning set forth
in Section 11(b) hereof.

            (y)   "Principal Party" shall have the meaning set forth in Section
13(b) hereof.

            (z)   "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.

            (aa)  "Redemption Price" shall have the meaning set forth in Section
23 hereof.

            (bb)  "Registered Common Stock" shall have the meaning set forth in
Section 13(b) hereof.

            (cc)  "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.

            (dd)  "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.

                                       5

            (ee)  "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.

            (ff)  "Section 13 Event" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.

            (gg)  "Section 24(a)(i) Exchange Ratio" shall have the meaning set
forth in Section 24(a)(i) hereof.

            (hh)  "Section 24(a)(ii) Exchange Ratio" shall have the meaning set
forth in Section 24(a)(ii) hereof.

            (ii)  "Securities Act" shall have the meaning set forth in Section
9(c) hereof.

            (jj)  "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.

            (kk)  "Stock Acquisition Date" shall mean the date of the first
public announcement (which for purposes of this definition shall include,
without limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) by the Company, acting pursuant to
a resolution adopted by the Board of Directors of the Company, or by an
Acquiring Person, subject in each case to the last paragraph of Section 1(a),
that an Acquiring Person has become such.

            (ll)  "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions of such corporation or other entity are at the time directly or
indirectly Beneficially Owned or otherwise controlled by such Person either
alone or together with one or more Affiliates of such Person.

            (mm)  "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.

            (nn)  "Trading Day" shall have the meaning set forth in Section
11(d)(i).

            (oo)  "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.

      Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall
be as the Company shall determine. The Company shall give ten (10) days' prior
written notice to the Rights Agent of the appointment of one or more Co-Rights
Agents and the respective duties of

                                       6

the Rights Agent and any such Co-Rights Agents. The Rights Agent shall have no
duty to supervise, and shall in no event be liable for, the acts or omissions of
any such Co-Rights Agent.

      Section 3. Issue of Right Certificates.

            (a)   From the date hereof until the earlier of (i) the Close of
Business on the tenth calendar day after the Stock Acquisition Date or (ii) the
Close of Business on the tenth Business Day (or such later calendar day, if any,
as the Board of Directors of the Company may determine in its sole discretion)
after the date a tender or exchange offer by any Person, other than an Exempt
Person, is first published or sent or given within the meaning of Rule 14d-4(a)
of the Exchange Act, or any successor rule, if, upon consummation thereof, such
Person could become the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights) (the
earliest of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for the Common Stock of the Company registered in the names
of the holders of the Common Stock of the Company (which certificates for Common
Stock of the Company shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock of the
Company. As soon as practicable after the Distribution Date, the Rights Agent
will, at the Company's expense send, by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock of the Company as of the Close
of Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form of
Exhibit B hereto (the "Right Certificates"), evidencing one Right for each share
of Common Stock of the Company so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock of the Company has been made pursuant to Section 11(o) hereof, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) at the time of distribution of the Right
Certificates, so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Close of Business on the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.

            (b)   With respect to certificates for the Common Stock of the
Company issued prior to the Close of Business on the Record Date, the Rights
will be evidenced by such certificates for the Common Stock of the Company on or
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), and the registered holders of the Common Stock of
the Company also shall be the registered holders of the associated Rights. Until
the Distribution Date (or the earlier redemption, expiration or termination of
the Rights), the transfer of any of the certificates for the Common Stock of the
Company outstanding prior to the date of this Agreement shall also constitute
the transfer of the Rights associated with the Common Stock of the Company
represented by such certificate.

            (c)   Certificates for the Common Stock of the Company issued after
the Record Date, but prior to the earliest of the Distribution Date, Redemption
Date, Exchange Date or Final Expiration Date, shall be deemed also to be
certificates for Rights, and shall bear a legend, substantially in the form set
forth below:

                                       7

            This certificate also evidences and entitles the holder
            hereof to certain Rights as set forth in a Shareholder
            Rights Agreement between iRobot Corporation and
            Computershare Trust Company, Inc. (or any successor
            thereto), as Rights Agent, dated as of [___________,
            2005] as amended, restated, renewed, supplemented or
            extended from time to time (the "Rights Agreement"), the
            terms of which are hereby incorporated herein by
            reference and a copy of which is on file at the
            principal offices of iRobot Corporation and the stock
            transfer administration office of the Rights Agent.
            Under certain circumstances, as set forth in the Rights
            Agreement, such Rights will be evidenced by separate
            certificates and will no longer be evidenced by this
            certificate. iRobot Corporation may redeem the Rights at
            a redemption price of $0.0001 per Right, subject to
            adjustment, under the terms of the Rights Agreement.
            iRobot Corporation will mail to the holder of this
            certificate a copy of the Rights Agreement, as in effect
            on the date of mailing, without charge promptly after
            receipt of a written request therefor. Under certain
            circumstances, Rights issued to or held by Acquiring
            Persons or any Affiliates or Associates thereof (as
            defined in the Rights Agreement), and any subsequent
            holder of such Rights, may become null and void. The
            Rights shall not be exercisable, and shall be void so
            long as held, by a holder in any jurisdiction where the
            requisite qualification, if any, to the issuance to such
            holder, or the exercise by such holder, of the Rights in
            such jurisdiction shall not have been obtained or be
            obtainable.

      With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock of the Company represented by such
certificates shall be evidenced by such certificates alone until the earliest of
the Distribution Date, Redemption Date, Exchange Date or Final Expiration Date,
and the transfer of any of such certificates shall also constitute the transfer
of the Rights associated with the Common Stock of the Company represented by
such certificates. In the event that the Company purchases or acquires any
shares of Common Stock of the Company after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock of the Company
shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the shares of Common Stock of the Company
which are no longer outstanding. The failure to print the foregoing legend on
any such certificate representing Common Stock of the Company or any defect
therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.

Section 4.  Form of Right Certificates.

            (a)   The Right Certificates (and the forms of election to purchase
shares and of assignment and certificate to be printed on the reverse thereof)
shall each be substantially in the form of Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply

                                       8

with any applicable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to customary usage. The Right Certificates shall be in a machine
printable format and in a form reasonably satisfactory to the Rights Agent.
Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, shall
show the date of countersignature, and on their face shall entitle the holders
thereof to purchase such number of one ten-thousandths (0.0001) of a share of
Preferred Stock as shall be set forth therein at the price set forth therein
(the "Exercise Price"), but the number of such shares and the Exercise Price
shall be subject to adjustment as provided herein.

            (b)   Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights Beneficially Owned by (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights, the shares of Common Stock of the Company
associated with such Rights or the Company or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e) hereof, and any Right Certificate issued pursuant to Section 6, Section 11
or Section 22 upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the existing legend on such Right Certificate and in
substitution therefor shall contain the following legend:

            The Rights represented by this Right Certificate are or
            were Beneficially Owned by a Person who was or became an
            Acquiring Person or an Affiliate or an Associate of an
            Acquiring Person (as such terms are defined in the
            Rights Agreement). This Right Certificate and the Rights
            represented hereby may become null and void under
            certain circumstances as specified in Section 7(e) of
            the Rights Agreement.

      The Company shall give notice to the Rights Agent promptly after it
becomes aware of the existence and identity of any Acquiring Person or any
Associate or Affiliate thereof. The Company shall instruct the Rights Agent in
writing of the Rights which should be so legended. The failure to print the
foregoing legend on any such Right Certificate or any defect therein shall not
affect in any manner whatsoever the application or interpretation of the
provisions of Section 7(e) hereof.

      Section 5. Countersignature and Registration.

            (a)   The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors, or its President or any Vice
President and by its Treasurer or

                                       9

any Assistant Treasurer, or by its Secretary or any Assistant Secretary, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested to by the Secretary or any
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by an authorized
signatory of the Rights Agent and shall not be valid for any purpose unless so
countersigned, and such countersignature upon any Right Certificate shall be
conclusive evidence, and the only evidence, that such Right Certificate has been
duly countersigned as required hereunder. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by an authorized signatory of the Rights Agent, and issued and
delivered by the Company with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the Company;
and any Right Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.

            (b)   Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices designated as the appropriate place for
surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

      Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

            (a)   Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the Expiration Date, any Right
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Certificates, entitling the registered holder
to purchase a like number of one ten-thousandths (0.0001) of a share of
Preferred Stock (or following a Triggering Event, Common Stock of the Company,
cash, property, debt securities, Preferred Stock or any combination thereof,
including any such securities, cash or property following a Section 13 Event) as
the Right Certificate or Certificates surrendered then entitled such holder to
purchase and at the same Exercise Price. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Certificates to be transferred, split up, combined or exchanged,
with the form of assignment and certificate duly executed, at the office or
offices of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Right

                                       10

Certificate or Certificates, as the case may be, as so requested. The Company
may require payment by the registered holder of a Right Certificate, of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

            (b)   Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate, if mutilated, the
Company will execute and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.

      Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.

            (a)   Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Exercise Price for the total number of
one ten-thousandths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercised, at or prior to the earlier of (i) the Close of Business on the tenth
anniversary of the Record Date (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date") or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof (the "Exchange Date") (the earliest of (i), (ii) or (iii)
being herein referred to as the "Expiration Date"). Except as set forth in
Section 7(e) hereof and notwithstanding any other provision of this Agreement,
any Person who prior to the Distribution Date becomes a record holder of shares
of Common Stock of the Company may exercise all of the rights of a registered
holder of a Right Certificate with respect to the Rights associated with such
shares of Common Stock of the Company in accordance with the provisions of this
Agreement, as of the date such Person becomes a record holder of shares of
Common Stock of the Company.


            (b)   The Exercise Price for each one ten-thousandth (0.0001) of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
One Hundred Twenty United States Dollars (U.S. $120.00), shall be subject
to adjustment from time to time as provided in Section 11 and Section 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with Section 7(c) below.


            (c)   As promptly as practicable following the Distribution Date,
the Company shall deposit with a corporation, trust, bank or similar institution
in good standing organized under the laws of the United States or any State of
the United States, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by a
federal or state authority (such institution is hereinafter referred to as the
"Depositary Agent"), certificates representing the shares of Preferred Stock
that may be acquired

                                       11

upon exercise of the Rights and the Company shall cause such Depositary Agent to
enter into an agreement pursuant to which the Depositary Agent shall issue
receipts representing interests in the shares of Preferred Stock so deposited.
Upon receipt of a Right Certificate representing exercisable Rights, with the
form of election to purchase and the certificate on the reverse side thereof
duly executed, accompanied by payment of the Exercise Price for the shares to be
purchased and an amount equal to any applicable transfer tax (as determined by
the Rights Agent) by certified check or bank draft payable to the order of the
Company or by money order, the Rights Agent shall, subject to Section 20(k) and
Section 14(b) hereof, thereupon promptly (i) requisition from the Depositary
Agent (or make available, if the Rights Agent is the Depositary Agent)
depositary receipts or certificates for the number of one ten-thousandths
(0.0001) of a share of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes the Depositary Agent to comply with all such requests,
(ii) when appropriate, requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt of each
certificate or depositary receipts promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event that the
Company is obligated to issue other securities (including Common Stock of the
Company) of the Company, pay cash or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash or other property are available for distribution by
the Rights Agent, if and when appropriate. The payment of the Exercise Price may
be made by certified or bank check payable to the order of the Company, or by
money order or wire transfer of immediately available funds to the account of
the Company (provided that notice of such wire transfer shall be given by the
holder of the related Right to the Rights Agent).

            (d)   In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.

            (e)   Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event or Section 13
Event, any Rights Beneficially Owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Associate or Affiliate of an Acquiring Person) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, the shares of Common Stock of the Company associated with such Rights or
the Company, or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall be null and
void without any further action and no holder of

                                       12

such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) hereof are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any Affiliates or
Associates of an Acquiring Person or any transferee of any of them hereunder.

            (f)   Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.

      Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company.

      Section 9. Reservation and Availability of Preferred Stock.

            (a)   The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding and exercisable Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock issuable upon exercise of all outstanding Rights in
excess of the number then reserved, the Company shall make appropriate increases
in the number of shares so reserved.

            (b)   The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance to be listed, upon official notice of issuance,
upon the principal national securities exchange, if any, upon which the Common
Stock of the Company is listed or, if the principal market for the Common Stock
of the Company is not on any national securities exchange, to be eligible for
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any successor thereto or other comparable quotation system.

            (c)   The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined

                                       13

in accordance with Section 11(a)(iii) hereof, or as soon as required by law
following the Distribution Date, as the case may be, a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing and (iii) cause such registration
statement to remain effective (with a prospectus that at all times meets the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, and which will ensure compliance with, the securities or "blue sky" laws
of the various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days after the date determined in accordance with the provisions of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect, in
each case with prompt written notice to the Rights Agent. Notwithstanding any
such provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.

            (d)   The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of the
certificates or depositary receipts for such shares (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.

            (e)   The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any certificates for shares of Preferred Stock and/or other property upon
the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates or the issuance or delivery of other securities or property
to a person other than, or in respect of the issuance or delivery of securities
or other property in a name other than that of, the registered holder of the
Right Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for securities or other property in a name other than
that of the registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.

      Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock or other securities (including any fraction of a
share of Preferred Stock or such other securities) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the shares of Preferred Stock or such other securities represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the transfer
books of the Company for the Preferred Stock or such

                                       14

other securities, as applicable, are closed, such person shall be deemed to have
become the record holder of such shares of Preferred Stock or such other
securities on, and such certificate shall be dated, the next succeeding Business
Day on which the transfer books of the Company are open; and provided, further,
however, that if delivery of shares of Preferred Stock or such other securities
is delayed pursuant to Section 9(c), such Person shall be deemed to have become
the record holder of such shares of Preferred Stock or such other securities
only when such shares or such other securities first become deliverable. Prior
to the exercise of the Right evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

      Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.

            (a)   (i)   In the event the Company shall at any time after the
      date of this Agreement (A) declare a dividend on the Preferred Stock
      payable in shares of Preferred Stock, (B) subdivide the outstanding
      Preferred Stock, (C) combine the outstanding Preferred Stock into a
      smaller number of shares or (D) issue, change or alter any shares of its
      capital stock in a reclassification or recapitalization of the Preferred
      Stock (including any such reclassification or recapitalization in
      connection with a consolidation or merger in which the Company is the
      continuing or surviving Person), except as otherwise provided in this
      Section 11(a) and Section 7(e) hereof, the Exercise Price in effect at the
      time of the record date for such dividend or the effective time of such
      subdivision, combination, reclassification or recapitalization, and the
      number and kind of shares of capital stock issuable on such date or at
      such time, shall be proportionately adjusted so that the holder of any
      Right exercised after such time shall be entitled to receive the aggregate
      number and kind of shares of capital stock which, if such Right had been
      exercised immediately prior to such date and at a time when the Preferred
      Stock transfer books of the Company were open, such holder would have
      owned upon such exercise and been entitled to receive by virtue of such
      dividend, subdivision, combination, reclassification or recapitalization;
      provided, however, that in no event shall the consideration to be paid
      upon the exercise of a Right be less than the aggregate par value of the
      shares of capital stock of the Company issuable upon exercise of a Right.
      If an event occurs which would require an adjustment under both Section
      11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
      Section 11(a)(i) shall be in addition to, and shall be made prior to, any
      adjustment required pursuant to Section 11(a)(ii) hereof.

                  (ii)  Subject to the provisions of Section 24 hereof, in the
      event any Person, alone or together with its Affiliates and Associates,
      shall become an Acquiring Person, then, promptly following any such
      occurrence (a "Section 11(a)(ii) Event"), proper provision shall be made
      so that each holder of a Right, except as provided in Section 7(e) hereof,
      shall thereafter have a right to receive, upon exercise thereof at the

                                       15

      then current Exercise Price in accordance with the terms of this
      Agreement, in lieu of a number of one ten-thousandths (0.0001) of a share
      of Preferred Stock, such number of shares of Common Stock of the Company
      as shall equal the result obtained by (x) multiplying the then current
      Exercise Price by the then number of one ten-thousandths (0.0001) of a
      share of Preferred Stock for which a Right was exercisable immediately
      prior to the first occurrence of a Section 11(a)(ii) Event, whether or not
      such Right was then exercisable, and dividing that product by (y) 50% of
      the Fair Market Value per share of Common Stock of the Company (determined
      pursuant to Section 11(d)) on the date of the occurrence of a Section
      11(a)(ii) Event (such number of shares being referred to as the
      "Adjustment Shares").

                  (iii) In lieu of issuing any shares of Common Stock of the
      Company in accordance with Section 11(a)(ii) hereof, the Company, acting
      by or pursuant to a resolution of the Board of Directors of the Company,
      may, and in the event that the number of shares of Common Stock of the
      Company which are authorized by the Company's Certificate of Incorporation
      but not outstanding or reserved for issuance for purposes other than upon
      exercise of the Rights is not sufficient to permit the exercise in full of
      the Rights in accordance with the foregoing subparagraph (ii) of this
      Section 11(a), the Company, acting by or pursuant to a resolution of the
      Board of Directors of the Company, shall: (A) determine the excess of (X)
      the Fair Market Value of the Adjustment Shares issuable upon the exercise
      of a Right (the "Current Value") over (Y) the Exercise Price attributable
      to each Right (such excess being referred to as the "Spread") and (B) with
      respect to all or a portion of each Right (subject to Section 7(e)
      hereof), make adequate provision to substitute for the Adjustment Shares,
      upon payment of the applicable Exercise Price, (1) Common Stock of the
      Company or equity securities, if any, of the Company other than Common
      Stock of the Company (including without limitation shares, or units of
      shares, of Preferred Stock that the Board of Directors of the Company has
      determined to have the same value as shares of Common Stock of the Company
      (such shares of Preferred Stock being referred to herein as "Common Stock
      Equivalents")), (2) cash, (3) a reduction in the Exercise Price, (4)
      Preferred Stock Equivalents which the Board of Directors of the Company
      has deemed to have the same value as shares of Common Stock of the
      Company, (5) debt securities of the Company, (6) other assets or
      securities of the Company or (7) any combination of the foregoing, having
      an aggregate value equal to the Current Value, where such aggregate value
      has been determined by the Board of Directors of the Company after
      receiving the advice of a nationally recognized investment banking firm
      selected by the Board of Directors of the Company; provided, however, that
      if the Company shall not have made adequate provision to deliver value
      pursuant to clause (B) above within thirty (30) days following the later
      of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date
      on which the Company's right of redemption pursuant to Section 23(a)
      expires (the later of (x) and (y) being referred to herein as the "Section
      11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver,
      upon the surrender for exercise of a Right and without requiring payment
      of the Exercise Price, shares of Common Stock of the Company (to the
      extent available) and then, if necessary, cash, which shares and/or cash
      have an aggregate value equal to the Spread. If the Board of Directors of
      the Company shall determine in good faith that it is likely that
      sufficient additional shares of Common Stock of the Company could be
      authorized for issuance upon exercise in full of the Rights, the

                                       16

      30-day period set forth above may be extended to the extent necessary, but
      not more than ninety (90) days after the Section 11(a)(ii) Trigger Date,
      in order that the Company may seek shareholder approval for the
      authorization of such additional shares (such period, as it may be
      extended, being referred to herein as the "Substitution Period"). To the
      extent that the Company determines that some action need be taken pursuant
      to the first and/or second sentences of this Section 11(a)(iii), the
      Company (x) shall provide, subject to Section 7(e) hereof, that such
      action shall apply uniformly to all outstanding Rights and (y) may suspend
      the exercisability of the Rights until the expiration of the Substitution
      Period in order to seek any authorization of additional shares and/or to
      decide the appropriate form of distribution to be made pursuant to such
      first sentence and to determine the value thereof. In the event of any
      such suspension, the Company shall issue a public announcement stating
      that the exercisability of the Rights has been temporarily suspended and a
      public announcement at such time as the suspension is no longer in effect.
      For purposes of this Section 11(a)(iii), the value of the Common Stock of
      the Company and of the Preferred Stock shall be the Fair Market Value (as
      determined pursuant to Section 11(d) hereof) per share of the Common Stock
      of the Company and the Preferred Stock, respectively, on the Section
      11(a)(ii) Trigger Date, the value of any Common Stock Equivalent shall be
      deemed to have the same value as the Common Stock of the Company on such
      date and the value of any Preferred Stock Equivalent shall be deemed to
      have the same value as the Preferred Stock on such date.

            (b)   If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Preferred Stock (or securities having the
same or more favorable rights, privileges and preferences as the shares of
Preferred Stock ("Preferred Stock Equivalents")) or securities convertible into
Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred
Stock or per share of Preferred Stock Equivalents (or having a conversion price
per share, if a security convertible into Preferred Stock or Preferred Stock
Equivalents) less than the Fair Market Value (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record date, the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Preferred Stock Equivalents to be offered (and the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and Preferred
Stock Equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of a Right be less than the aggregate par value of the shares of stock of the
Company issuable upon exercise of a Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be the Fair Market Value thereof
determined in accordance with Section 11(d) hereof. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
rights or

                                       17

warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.

            (c)   If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(b)), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one ten-thousandth (0.0001) of a share of Preferred Stock on such record
date, less the Fair Market Value (as determined pursuant to Section 11(d)
hereof) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such convertible securities, subscription rights or warrants
applicable to one ten-thousandth (0.0001) of a share of Preferred Stock and the
denominator of which shall be the Fair Market Value (as determined pursuant to
Section 11(d) hereof) per one ten-thousandth (0.0001) of a share of Preferred
Stock; provided, however, that in no event shall the consideration to be paid
upon the exercise of a Right be less than the aggregate par value of the shares
of stock of the Company issuable upon exercise of a Right. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Exercise Price shall again be
adjusted to be the Exercise Price which would be in effect if such record date
had not been fixed.

            (d)   For the purpose of this Agreement, the "Fair Market Value" of
any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property shall be determined as provided in this
Section 11(d).

                  (i)   In the case of a publicly-traded stock or other
      security, the Fair Market Value on any date shall be deemed to be the
      average of the daily closing prices per share of such stock or per unit of
      such other security for the 30 consecutive Trading Days (as such term is
      hereinafter defined) immediately prior to such date; provided, however,
      that in the event that the Fair Market Value per share of any share of
      stock is determined during a period following the announcement by the
      issuer of such stock of (x) a dividend or distribution on such stock
      payable in shares of such stock or securities convertible into shares of
      such stock or (y) any subdivision, combination or reclassification of such
      stock, and prior to the expiration of the 30 Trading Day period after the
      ex-dividend date for such dividend or distribution, or the record date for
      such subdivision, combination or reclassification, then, and in each such
      case, the Fair Market Value shall be properly adjusted to take into
      account ex-dividend trading. The closing price for each day shall be the
      last sale price, regular way, or, in case no such sale takes place on such
      day, the average of the closing bid and asked prices, regular way, in
      either case as reported in the principal consolidated transaction
      reporting system with respect to

                                       18

      securities listed or admitted to trading on the New York Stock Exchange
      or, if the securities are not listed or admitted to trading on the New
      York Stock Exchange, as reported in the principal consolidated transaction
      reporting system with respect to securities listed on the principal
      national securities exchange on which such security is listed or admitted
      to trading; or, if not listed or admitted to trading on any national
      securities exchange, the last quoted price (or, if not so quoted, the
      average of the last quoted high bid and low asked prices) in the
      over-the-counter market, as reported by NASDAQ or such other system then
      in use; or, if on any such date no bids for such security are quoted by
      any such organization, the average of the closing bid and asked prices as
      furnished by a professional market maker making a market in such security
      selected by the Board of Directors of the Company. If on any such date no
      market maker is making a market in such security, the Fair Market Value of
      such security on such date shall be determined reasonably and with utmost
      good faith to the holders of the Rights by the Board of Directors of the
      Company, provided, however, that if at the time of such determination
      there is an Acquiring Person, the Fair Market Value of such security on
      such date shall be determined by a nationally recognized investment
      banking firm selected by the Board of Directors of the Company, which
      determination shall be described in a statement filed with the Rights
      Agent and shall be binding on the Rights Agent and the holders of the
      Rights. The term "Trading Day" shall mean a day on which the principal
      national securities exchange on which such security is listed or admitted
      to trading is open for the transaction of business or, if such security is
      not listed or admitted to trading on any national securities exchange, a
      Business Day.

                  (ii)  If a security is not publicly held or not so listed or
      traded, "Fair Market Value" shall mean the fair value per share of stock
      or per other unit of such security, determined reasonably and in good
      faith to the holders of the Rights by the Board of Directors of the
      Company; provided, however, that if at the time of such determination
      there is an Acquiring Person, the Fair Market Value of such security on
      such date shall be determined by a nationally recognized investment
      banking firm selected by the Board of Directors of the Company, which
      determination shall be described in a statement filed with the Rights
      Agent and shall be binding on the Rights Agent and the holders of the
      Rights; provided, however, that for the purposes of making any adjustment
      provided for by Section 11(a)(ii) hereof, the Fair Market Value of a share
      of Preferred Stock shall not be less than the product of the then Fair
      Market Value of a share of Common Stock multiplied by the higher of the
      then Dividend Multiple or Vote Multiple (as both of such terms are defined
      in the Certificate of Designations attached as Exhibit A hereto)
      applicable to the Preferred Stock and shall not exceed 105% of the product
      of the then Fair Market Value of a share of Common Stock multiplied by the
      higher of the then Dividend Multiple or Vote Multiple applicable to the
      Preferred Stock.

                  (iii) In the case of property other than securities, the Fair
      Market Value thereof shall be determined reasonably and in good faith to
      the holders of Rights by the Board of Directors of the Company; provided,
      however, that if at the time of such determination there is an Acquiring
      Person, the Fair Market Value of such property on such date shall be
      determined by a nationally recognized investment banking firm selected by
      the Board of Directors of the Company, which determination shall be
      described in a statement filed with the Rights Agent and shall be binding
      upon the Rights Agent and the holders of the Rights.

                                       19

            (e)   Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Exercise Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one-millionth of a share of Common Stock of the Company
or hundred-millionth of a share of Preferred Stock, as the case may be, or to
such other figure as the Board of Directors of the Company may deem appropriate.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Expiration Date.

            (f)   If as a result of any provision of Section 11(a) or Section
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Section 11(a), (b), (c), (d), (e), (g) through (k)
and (m), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to any such other
shares.

            (g)   All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one ten-thousandths
(0.0001) of a share of Preferred Stock (or other securities or amount of cash or
combination thereof) purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.

            (h)   Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of one
ten-thousandths (0.0001) of a share of Preferred Stock (calculated to the
nearest hundred-millionth) as the Board of Directors of the Company determines
is appropriate to preserve the economic value of the Rights, including, by way
of example, that number obtained by (i) multiplying (x) the number of one
ten-thousandths (0.0001) of a share of Preferred Stock for which a Right may be
exercisable immediately prior to this adjustment by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect immediately
after such adjustment of the Exercise Price.

            (i)   The Company may elect on or after the date of any adjustment
of the Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one ten-thousandths
(0.0001) of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-millionth)

                                       20

obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.

            (j)   Irrespective of any adjustment or change in the Exercise Price
or the number of one ten-thousandths (0.0001) of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder without prejudice to any adjustment or change.

            (k)   Before taking any action that would cause an adjustment
reducing the Exercise Price below the then stated value, if any, of the number
of one ten-thousandths (0.0001) of a share of Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred Stock
at such adjusted Exercise Price.

            (l)   In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of one ten-thousandths (0.0001) of a share of Preferred Stock or
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one ten-thousandths (0.0001) of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.

            (m)   Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the

                                       21

Board of Directors of the Company shall determine to be advisable in order that
any consolidation or subdivision of the Preferred Stock, issuance wholly for
cash of any shares of Preferred Stock at less than the Fair Market Value,
issuance wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred Stock,
stock dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders of its
Preferred Stock, shall not be taxable to such shareholders.

            (n)   The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with (other than a Subsidiary of the Company in a
transaction that complies with the proviso at the end of this sentence), (ii)
merge with or into, or (iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction or a series of related transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries taken as a whole, to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with the proviso at the end of this
sentence) if (x) at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments outstanding or
agreements or arrangements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale the shareholders of a Person who constitutes, or would constitute, the
"Principal Party" for the purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates; provided, however, that, subject to the following sentence, this
Section 11(n) shall not affect the ability of any Subsidiary of the Company to
consolidate with, or merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company. The Company further covenants and
agrees that after the Distribution Date it will not, except as permitted by
Section 23 or Section 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that
such action will substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.

            (o)   Notwithstanding anything in this Agreement to the contrary, in
the event the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare or pay any dividend on the
outstanding Common Stock of the Company payable in shares of Common Stock of the
Company or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in shares of Common Stock of the Company)
into a greater or lesser number of shares of Common Stock of the Company, then
in any such case (A) the number of one ten-thousandths (0.0001) of a share of
Preferred Stock purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one ten-thousandths (0.0001) of
a share of Preferred Stock so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of shares of Common Stock of the
Company outstanding immediately prior to such event and the denominator of which
is the number of shares of Common Stock of the Company outstanding immediately
after such event, and (B) each share of Common Stock of the Company outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock of the Company outstanding immediately
prior to such event had issued with respect to it. The

                                       22

adjustments provided for in this Section 11(o) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.

            (p)   The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and neither such exercise nor any exchange of Rights pursuant to Section 24
shall otherwise affect the rights of holders of Right Certificates under this
Rights Agreement, including rights to purchase securities of the Principal Party
following a Section 13 Event which has occurred or may thereafter occur, as set
forth in Section 13 hereof. Upon exercise of a Right Certificate under Section
11(a)(ii), the Rights Agent shall return such Right Certificate duly marked to
indicate that such exercise has occurred.

      Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock of the Company a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate (or,
if prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock of the Company) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.

      Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.

            (a)   In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11(n) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a transaction
which is not prohibited by the proviso at the end of the first sentence of
Section 11(n) hereof) shall consolidate with the Company, or merge with and into
the Company and the Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the shares of
Common Stock of the Company shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (z) the
Company shall sell, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or
a series of related transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions, each of which is not
prohibited by the proviso at the end of the first sentence of Section 11(n)
hereof), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
have the right to receive, upon the exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid and nonassessable shares of freely
tradable Common Stock of the Principal Party (as hereinafter defined in Section
13(b)), free and clear of rights of call or first refusal, liens, encumbrances,
transfer restrictions or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Exercise Price by the number of one
ten-thousandths

                                       23

of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof),
and dividing that product by (2) 50% of the Fair Market Value (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such consolidation, merger, sale
or transfer; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale, mortgage or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock to permit exercise of all outstanding Rights in accordance
with this Section 13(a) and the making of payments in cash and/or other
securities in accordance with Section 11(a)(iii) hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights.

            (b)   "Principal Party" shall mean

                  (i)   in the case of any transaction described in clause (x)
      or (y) of the first sentence of Section 13(a), the Person that is the
      issuer of any securities into which shares of Common Stock of the Company
      are converted in such merger or consolidation, or, if there is more than
      one such issuer, the issuer of Common Stock that has the highest aggregate
      Fair Market Value (determined pursuant to Section 11(d)), and if no
      securities are so issued, the Person that is the other party to the merger
      or consolidation, or, if there is more than one such Person, the Person
      the Common Stock of which has the highest aggregate Fair Market Value
      (determined pursuant to Section 11(d)); and

                  (ii)  in the case of any transaction described in clause (z)
      of the first sentence of Section 13(a), the Person that is the party
      receiving the greatest portion of the assets or earning power transferred
      pursuant to such transaction or transactions, or, if each Person that is a
      party to such transaction or transactions receives the same portion of the
      assets or earning power transferred pursuant to such transaction or
      transactions or if the Person receiving the largest portion of the assets
      or earning power cannot be determined, whichever Person the Common Stock
      of which has the highest aggregate Fair Market Value (determined pursuant
      to Section 11(d));

provided, however, that in any such case described in clauses (i) or (ii) of
Section 13(b) hereof, (1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act ("Registered Common Stock") or such Person
is not a corporation, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person who has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if the Common Stock of
such Person is not Registered Common Stock or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another Person but is not
a direct or indirect Subsidiary of another Person which has Registered Common
Stock outstanding, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person; (3) if the Common Stock of such Person is not

                                       24

Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the Registered
Common Stock having the highest aggregate Fair Market Value (determined pursuant
to Section 11(d)); and (4) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other Persons
has Registered Common Stock outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the corporation having the greatest
shareholders' equity or, if no such ultimate parent entity is a corporation,
"Principal Party" shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.

            (c)   The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto (x) the Principal Party shall have
a sufficient number of authorized shares of its Common Stock, which have not
been issued or reserved for issuance, to permit the exercise in full of the
Rights in accordance with this Section 13, and (y) the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in Section 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a), the Principal Party at its own expense will:

                  (i)   prepare and file a registration statement under the
      Securities Act with respect to the Rights and the securities purchasable
      upon exercise of the Rights on an appropriate form, cause such
      registration statement to become effective as soon as practicable after
      such filing and cause such registration statement to remain effective
      (with a prospectus that at all times meets the requirements of the
      Securities Act) until the Expiration Date;

                  (ii)  qualify or register the Rights and the securities
      purchasable upon exercise of the Rights under the blue sky laws of such
      jurisdictions as may be necessary or appropriate;

                  (iii) list (or continue the listing of) the Rights and the
      securities purchasable upon exercise of the Rights on a national
      securities exchange or to meet the eligibility requirements for quotation
      on NASDAQ; and

                  (iv)  deliver to holders of the Rights historical financial
      statements for the Principal Party and each of its Affiliates which comply
      in all respects with the requirements for registration on Form 10 under
      the Exchange Act.

            (d)   In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its certificate of incorporation or By-laws or other
instrument governing its affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock of such Principal Party at less than the

                                       25

then current Fair Market Value (determined pursuant to Section 11(d)) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such Fair Market Value, or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of this Section 13,
then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.

      The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.

      Section 14. Fractional Rights and Fractional Shares.

            (a)   The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(o)
hereof, or to distribute Right Certificates which evidence fractional Rights. If
the Company elects not to issue such fractional Rights, the Company shall pay,
in lieu of such fractional Rights, to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Fair Market Value
of a whole Right, as determined pursuant to Section 11(d) hereof.

            (b)   The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
ten-thousandth (0.0001) of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
ten-thousandth of a share of Preferred Stock). In lieu of fractional shares of
Preferred Stock that are not integral multiples of one ten-thousandth (0.0001)
of a share of Preferred Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the Fair Market Value of one
ten-thousandth (0.0001) of a share of Preferred Stock. For purposes of this
Section 14(b), the Fair Market Value of one ten-thousandth of a share of
Preferred Stock shall be determined pursuant to Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise.

            (c)   The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.

      Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock of the Company); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock of
the Company), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior

                                       26

to the Distribution Date, of the Common Stock of the Company), may, in such
registered holder's own behalf and for such registered holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Right evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.

      Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

            (a)   prior to the Distribution Date, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock of the Company;

            (b)   after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;

            (c)   subject to Sections 6(a) and 7(f), the Company and the Rights
Agent may deem and treat the person in whose name a Right Certificate (or, prior
to the Distribution Date, the associated certificate representing Common Stock
of the Company) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated certificate representing Common Stock of
the Company made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and, subject to the last sentence of Section 7(e), neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and

            (d)   notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as the result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.

      Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right

                                       27

Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.

      Section 18. Concerning the Rights Agent.

            (a)   The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly. The provisions of this Section 18(a) shall survive the expiration
of the Rights and the termination of this Agreement.

            (b)   The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate representing Common Stock of the Company, Preferred
Stock, or other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it in good faith
and without negligence to be genuine and to be signed and executed by the proper
Person or Persons.

            (c)   The Rights Agent shall not be liable for consequential damages
under any provision of this Agreement or for any consequential damages arising
out of any act or failure to act hereunder.

      Section 19. Merger or Consolidation or Change of Name of Rights Agent.

            (a)   Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right

                                       28

Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

            (b)   In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

      Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:

            (a)   The Rights Agent may consult with legal counsel selected by it
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.

            (b)   Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Fair Market Value") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof shall be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by a
person believed by the Rights Agent to be the Chairman of the Board of
Directors, a Vice Chairman of the Board of Directors, the President, a Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company and delivered to the Rights Agent. Any such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.

            (c)   The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.

            (d)   The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.

            (e)   The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its

                                       29

countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 7(e) hereof)
or any adjustment required under the provisions of Sections 11, 13 or 23(c)
hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate describing any such adjustment
furnished in accordance with Section 12 hereof), nor shall it be responsible for
any determination by the Board of Directors of the Company of the Fair Market
Value of the Rights or Preferred Stock pursuant to the provisions of Section 14
hereof; nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
of the Company or Preferred Stock to be issued pursuant to this Agreement or any
Right Certificate or as to whether or not any shares of Common Stock of the
Company or Preferred Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.

            (f)   The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

            (g)   The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board of Directors, any Vice
Chairman of the Board of Directors, the President, a Vice President, the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.

            (h)   The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.

                                       30

            (i)   The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents.

            (j)   No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.

            (k)   If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause (1) or clause (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

      Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company by first class
mail, provided, however, that in the event the transfer agency relationship in
effect between the Company and the Rights Agent with respect to the Common Stock
of the Company terminates, the Rights Agent will be deemed to have resigned
automatically on the effective date of such termination. The Company may remove
the Rights Agent or any successor Rights Agent (with or without cause),
effective immediately or on a specified date, by written notice given to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock of the Company and Preferred Stock, and by giving
notice to the holders of the Right Certificates by any means reasonably
determined by the Company to inform such holders of such removal (including
without limitation, by including such information in one or more of the
Company's reports to shareholders or reports or filings with the Securities and
Exchange Commission). If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States, the State of Delaware or the State
of New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of Delaware or the State of New York), in good standing, which is authorized
under such laws to exercise stock transfer or corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $10,000,000 or (b) an Affiliate of a Person described in
clause (a) of this sentence. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights

                                       31

Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock of
the Company and the Preferred Stock, and give notice to the holders of the Right
Certificates by any means reasonably determined by the Company to inform such
holders of such appointment (including without limitation, by including such
information in one or more of the Company's reports to shareholders or reports
or filings with the Securities and Exchange Commission). Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

      Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by the Board of Directors of the Company to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock of
the Company following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock of the Company so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustments
shall otherwise have been made in lieu of the issuance thereof.

      Section 23. Redemption.

            (a)   The Board of Directors of the Company may, at its option,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.0001 per Right, appropriately adjusted to reflect any stock dividend
declared or paid, any subdivision or combination of the outstanding shares of
Common Stock of the Company or any similar event occurring after the date of
this Agreement (such redemption price, as adjusted from time to time, being
hereinafter referred to as the "Redemption Price"). The Rights may be redeemed
only until the earlier to occur of (i) the time at which any Person becomes an
Acquiring Person or (ii) the Final Expiration Date.

            (b)   Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights in accordance with Section 23
hereof, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors of the Company ordering the

                                       32

redemption of the Rights in accordance with Section 23 hereof, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock of the Company. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or Section 24 hereof or in connection with the purchase of
shares of Common Stock of the Company prior to the Distribution Date.

            (c)   The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock of the Company (based on the Fair Market Value of
the Common Stock of the Company as of the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors of the Company.

      Section 24. Exchange.

            (a)   (i)   The Board of Directors of the Company may, at its
option, at any time on or after the occurrence of a Section 11(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for shares of Common Stock of the Company at an exchange ratio of
one (1) share of Common Stock of the Company per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Section 24(a)(i) Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Stock of the Company.


                  (ii)  Notwithstanding the foregoing, the Board of Directors of
      the Company may, at its option, at any time on or after the occurrence of
      a Section 11(a)(ii) Event, exchange all or part of the then outstanding
      and exercisable Rights (which shall not include Rights that have become
      null and void pursuant to the provisions of Section 7(e) hereof) for
      shares of Common Stock of the Company at an exchange ratio specified in
      Section 24(a)(i), as appropriately adjusted to reflect any stock split,
      stock dividend or similar transaction occurring after the date of this
      Agreement. Subject to the adjustment described in the foregoing sentence,
      each Right may be exchanged for that number of shares of Common Stock of
      the Company obtained by dividing the Spread (as defined in Section
      11(a)(iii)) by the then Fair Market Value per one ten-thousandth (0.0001)
      of a share of Preferred Stock on the earlier of (x) the date on which any
      person becomes an Acquiring Person or (y) the date on which a tender or
      exchange offer by any Person (other than an Exempt Person) is first
      published or sent or given within the meaning of


                                       33

      Rule 14d-4(a) of the Exchange Act or any successor rule, if upon
      consummation thereof such Person could become an Acquiring Person (such
      exchange ratio being referred to herein as the "Section 24(a)(ii) Exchange
      Ratio"). Notwithstanding the foregoing, the Board of Directors of the
      Company shall not be empowered to effect such exchange at any time after
      any Person (other than an Exempt Person), together with all Affiliates and
      Associates of such Person, becomes the Beneficial Owner of 50% or more of
      the Common Stock of the Company.

            (b)   Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights pursuant to Section 11(a)(ii) shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that number of
shares of Common Stock of the Company equal to the number of such Rights held by
such holder multiplied by the Section 24(a)(i) Exchange Ratio or the Section
24(a)(ii) Exchange Ratio, as applicable; provided, however, that the holder of a
Right exchanged pursuant to this Section 24 shall continue to have the right to
purchase securities or other property of the Principal Party following a Section
13 Event that has occurred or may thereafter occur. The Company shall promptly
give notice of any such exchange in accordance with Section 26 hereof and shall
promptly mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights
Agent; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the shares of Common Stock of the Company for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.

            (c)   In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock (or Preferred Stock Equivalent, as
such term is defined in Section 11(b) hereof) for Common Stock of the Company
exchangeable for Rights, at the initial rate of one ten-thousandth of a share of
Preferred Stock (or Preferred Stock Equivalent) for each share of Common Stock
of the Company, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock of the Company shall have the same voting rights as one share of Common
Stock of the Company.

            (d)   In the event that there shall not be sufficient shares of
Common Stock of the Company or Preferred Stock (or Preferred Stock Equivalents)
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock of the Company or Preferred Stock (or Preferred Stock Equivalent)
for issuance upon exchange of the Rights.

            (e)   The Company shall not be required to issue fractions of Common
Stock of the Company or to distribute certificates which evidence fractional
shares of Common Stock of

                                       34

the Company. If the Company elects not to issue such fractional shares of Common
Stock of the Company, the Company shall pay, in lieu of such fractional shares
of Common Stock of the Company, to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock of the
Company would otherwise be issuable, an amount in cash equal to the same
fraction of the Fair Market Value of a whole share of Common Stock of the
Company. For the purposes of this paragraph (e), the Fair Market Value of a
whole share of Common Stock of the Company shall be the closing price of a share
of Common Stock of the Company (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.

      Section 25. Notice of Certain Events.

            (a)   In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with, or to effect any sale, mortgage or other transfer (or to
permit one or more of its Subsidiaries to effect any sale, mortgage or other
transfer), in one transaction or a series of related transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person (other than a Subsidiary of the Company in one
or more transactions each of which is not prohibited by the proviso at the end
of the first sentence of Section 11(n) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Stock of the Company payable in Common Stock of the
Company or to effect a subdivision, combination or consolidation of the Common
Stock of the Company (by reclassification or otherwise than by payment of
dividends in Common Stock of the Company) then in each such case, the Company
shall give to each holder of a Right Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Common
Stock of the Company and/or Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock of the
Company and/or Preferred Stock, whichever shall be the earlier; provided,
however, no such notice shall be required pursuant to this Section 25 as a
result of any Subsidiary of the Company effecting a consolidation or merger with
or into, or effecting a sale or other transfer of assets or earnings power to,
any other Subsidiary of the Company in a manner not inconsistent with the
provisions of this Agreement.

                                       35

            (b)   In case any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.

      Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, by facsimile transmission or by nationally-recognized
overnight courier addressed (until another address is filed in writing with the
Rights Agent) as follows:

            iRobot Corporation
            63 South Avenue
            Burlington, MA 01803
            Facsimile No.: (781) 345-0201
            Attention: Chief Executive Officer

      Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, by facsimile transmission or by
nationally-recognized overnight courier addressed (until another address is
filed in writing with the Company) as follows:

            Computershare Trust Company, Inc.
            350 Indiana Street, Suite 800
            Golden, CO 80401
            Facsimile No.: 303-262-0700
            [Attention:                          ]
                        ------------------------

      Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock of the Company) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.

      Section 27. Supplements and Amendments. Prior to the occurrence of a
Section 11(a)(ii) Event, the Company and the Rights Agent shall, if the Board of
Directors of the Company so directs, supplement or amend any provision of this
Agreement as the Board of Directors of the Company may deem necessary or
desirable without the approval of any holders of certificates representing
shares of Common Stock of the Company. From and after the occurrence of a
Section 11(a)(ii) Event, the Company and the Rights Agent shall, if the Board of
Directors of the Company so directs, supplement or amend this Agreement without
the approval of any holder of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereof in any manner which the Board of Directors of the Company
may deem necessary or

                                       36

desirable and which shall not adversely affect the interests of the holders of
Right Certificates (other than an Acquiring Person or any Affiliate or Associate
of an Acquiring Person); provided, however, that from and after the occurrence
of a Section 11(a)(ii) Event this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and the benefits
to, the holders of Rights (other than an Acquiring Person or any Affiliate or
Associate of an Acquiring Person). Without limiting the foregoing, the Company
may at any time prior to the occurrence of a Section 11(a)(ii) Event amend this
Agreement to lower the threshold set forth in Section 1(a) to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Stock of the Company then known by the Company to be Beneficially Owned
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
entity holding Common Stock of the Company for or pursuant to the terms of any
such plan) and (ii) 10%. Upon the delivery of such certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment, and any failure of the Rights Agent
to so execute such supplement or amendment shall not affect the validity of the
actions taken by the Board of Directors of the Company pursuant to this Section
27. Prior to the occurrence of a Section 11(a)(ii) Event, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock of the Company. Notwithstanding any other provision hereof, the
Rights Agent's consent must be obtained regarding any amendment or supplement
pursuant to this Section 27 which alters the Rights Agent's rights or duties.

      Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.

      Section 29. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including without limitation,
the right and power to (i) interpret the provisions of this Agreement and (ii)
make all determinations and computations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject any member of the Board of Directors to any liability to the
holders of the Rights or to any other person.

      Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this

                                       37

Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock of the Company).

      Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from the Agreement would adversely affect the purpose or effect
of the Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.

      Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State. The courts of the State
of Delaware and of the United States of America located in the State of Delaware
(the "Delaware Courts") shall have exclusive jurisdiction over any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby, and any Person commencing or otherwise involved in any such litigation
shall waive any objection to the laying of venue of such litigation in the
Delaware Courts and shall not plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum.

      Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

      Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

      Section 35. Force Majeure. Notwithstanding anything to the contrary
contained herein, neither the Company nor the Rights Agent shall be liable for
any delay or failure in performance resulting directly from any act or event
beyond its reasonable control and without the fault or gross negligence of the
delayed or non-performing party that causes a sudden, substantial or widespread
disruption in business activities, including, without limitation, fire, flood,
natural disaster or act of God, strike or other industrial disturbance, war
(declared or undeclared), embargo, blockade, legal restriction, riot,
insurrection, act of terrorism, disruption in transportation, communications,
electric power or other utilities, or other vital infrastructure or any means of
disrupting or damaging internet or other computer networks or facilities (each,
a "Force Majeure Condition"); provided, that such delayed or non-performing
party shall use reasonable commercial efforts to resume performance as soon as
practicable. If any Force Majeure Condition occurs, the party delayed or unable
to perform shall give immediate written

                                       38

notice to the other party, stating the nature of the Force Majeure Condition and
any action being taken to avoid or minimize its effect.

                  [Remainder of page intentionally left blank]

                                       39

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as an instrument under seal and attested, all as of the day and
year first above written.

ATTEST:                                     iRobot Corporation

By:                                         By:
   ---------------------------------            --------------------------------
                                                  Name:
                                                  Title:

ATTEST:                                     Computershare Trust Company, Inc.,
                                            as Rights Agent

By:                                         By:
    --------------------------------            --------------------------------
                                                  Name:
                                                  Title:

                                            By:
                                                --------------------------------
                                                  Name:
                                                  Title:

                                    EXHIBIT A


                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                            AND RIGHTS OF A SERIES OF
                                 PREFERRED STOCK

                                       OF

                               IROBOT CORPORATION

                                  -------------

IROBOT CORPORATION, a corporation organized and existing under the General
Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

      That, pursuant to authority conferred upon the Board of Directors by
the Second Amended and Restated Certificate of Incorporation, as amended, of
said corporation, and pursuant to the provisions of Section 151 of Title 8 of
the Delaware Code of 1953, said Board of Directors, at a meeting duly held on
October 21, 2005, adopted a resolution providing for the designations,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, of a Series of Preferred
Stock, which resolution is as follows:


                            See attached pages 2A-7A




                         VOTE OF DIRECTORS ESTABLISHING
                   SERIES A-1 JUNIOR PARTICIPATING CUMULATIVE
                                 PREFERRED STOCK
                                       OF
                               IROBOT CORPORATION

      Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:

      VOTED, that pursuant to authority conferred upon and vested in the Board
of Directors by the Second Restated Certificate of Incorporation, as amended
(the "Certificate of Incorporation"), of iRobot Corporation (the "Corporation"),
the Board of Directors hereby establishes and designates a series of Preferred
Stock of the Corporation, and hereby fixes and determines the relative rights
and preferences of the shares of such series, in addition to those set forth in
the Certificate of Incorporation, as follows:

      Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A-1 Junior Participating Cumulative Preferred Stock" (the
"Series A-1 Preferred Stock"), and the number of shares initially constituting
such series shall be 150,000; provided, however, that if more than a total of
150,000 shares of Series A-1 Preferred Stock shall be issuable upon the exercise
of Rights (the "Rights") issued pursuant to the Shareholder Rights Agreement
dated as of [____________], between the Corporation and Computershare Trust
Company, Inc., as Rights Agent (the "Rights Agreement"), the Board of Directors
of the Corporation, pursuant to Section 151(g) of the General Corporation Law of
the State of Delaware, may direct by resolution or resolutions that a
certificate be properly executed, acknowledged, filed and recorded, in
accordance with the provisions of Section 103 thereof, providing for the total
number of shares of Series A-1 Preferred Stock authorized to be issued to be
increased (to the extent that the Certificate of Incorporation then permits) to
the largest number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of such Rights.

      Section 2. Dividends and Distributions.

      (A) (i) Subject to the rights of the holders of any shares of any series
of preferred stock (or any similar stock) ranking prior and superior to the
Series A-1 Preferred Stock with respect to dividends, the holders of shares of
Series A-1 Preferred Stock, in preference to the holders of shares of common
stock and of any other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A-1 Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provisions for
adjustment hereinafter set forth, 10,000 times the aggregate per share amount of
all cash dividends, and 10,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions,


                                      2-A


other than a dividend payable in shares of common stock or a subdivision of the
outstanding shares of common stock (by reclassification or otherwise), declared
on the common stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A-1 Preferred
Stock. The multiple of cash and non-cash dividends declared on the common stock
to which holders of the Series A-1 Preferred Stock are entitled, which shall be
10,000 initially but which shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple." In the event
the Corporation shall at any time after [____________] (the "Rights Declaration
Date") (i) declare or pay any dividend on common stock payable in shares of
common stock, or (ii) effect a subdivision or combination or consolidation of
the outstanding shares of common stock (by reclassification or otherwise than by
payment of a dividend in shares of common stock) into a greater or lesser number
of shares of common stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of dividends which
holders of shares of Series A-1 Preferred Stock shall be entitled to receive
shall be the Dividend Multiple applicable immediately prior to such event
multiplied by a fraction, the numerator of which is the number of shares of
common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding immediately
prior to such event.

            (ii) Notwithstanding anything else contained in this paragraph (A),
the Corporation shall, out of funds legally available for that purpose, declare
a dividend or distribution on the Series A-1 Preferred Stock as provided in this
paragraph (A) immediately after it declares a dividend or distribution on the
common stock (other than a dividend payable in shares of common stock); provided
that, in the event no dividend or distribution shall have been declared on the
common stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series A-1 Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

      (B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A-1 Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A-1 Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A-1 Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A-1
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix in accordance with applicable law a record date for the
determination of holders of shares of Series A-1 Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than


                                      3-A


such number of days prior to the date fixed for the payment thereof as may be
allowed by applicable law.

      Section 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A-1 Preferred Stock shall have the
following voting rights:

      (A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A-1 Preferred Stock shall entitle the holder thereof to 10,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
The number of votes which a holder of a share of Series A-1 Preferred Stock is
entitled to cast, which shall initially be 10,000 but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on common stock payable in
shares of common stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by reclassification or
otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
Vote Multiple thereafter applicable to the determination of the number of votes
per share to which holders of shares of Series A-1 Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of common stock
outstanding immediately after such event and the denominator of which is the
number of shares of common stock that were outstanding immediately prior to such
event.

      (B) Except as otherwise provided herein or by law, the holders of shares
of Series A-1 Preferred Stock, the holders of shares of common stock and the
holders of shares of any other capital stock of this Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.

      (C) Except as otherwise required by applicable law or as set forth herein,
holders of Series A-1 Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of common stock as set forth herein) for taking any corporate
action.

      Section 4. Certain Restrictions.

      (A) Whenever dividends or distributions payable on the Series A-1
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A-1 Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:

            (i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A-1 Preferred Stock;

            (ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding


                                      4-A


up) with the Series A-1 Preferred Stock, except dividends paid ratably on the
Series A-1 Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;

            (iii) except as permitted in subsection 4(A)(iv) below, redeem,
purchase or otherwise acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A-1 Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A-1
Preferred Stock; or

            (iv) purchase or otherwise acquire for consideration any shares of
Series A-1 Preferred Stock, or any shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A-1 Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.

      (B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under subsection (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.

      Section 5. Reacquired Shares. Any shares of Series A-1 Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.

      Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (x) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A-1 Preferred Stock unless, prior thereto, the holders of shares of
Series A-1 Preferred Stock shall have received an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, plus an amount equal to the greater of (1) $10,000.00 per share
or (2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 10,000 times the aggregate amount to be
distributed per share to holders of common stock, or (y) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A-1 Preferred Stock, except distributions made
ratably on the Series A-1 Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall


                                      5-A


at any time after the Rights Declaration Date (i) declare or pay any dividend on
common stock payable in shares of common stock, or (ii) effect a subdivision or
combination or consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in shares of common
stock) into a greater or lesser number of shares of common stock, then in each
such case the aggregate amount per share to which holders of shares of Series
A-1 Preferred Stock were entitled immediately prior to such event under clause
(x) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of common stock
outstanding immediately after such event and the denominator of which is the
number of shares of common stock that were outstanding immediately prior to such
event.

      Neither the consolidation of nor merging of the Corporation with or into
any other corporation or corporations, nor the sale or other transfer of all or
substantially all of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 6.

      Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of common stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A-1 Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 10,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of common stock is changed or exchanged,
plus accrued and unpaid dividends, if any, payable with respect to the Series
A-1 Preferred Stock. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare or pay any dividend on common stock payable
in shares of common stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by reclassification or
otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A-1 Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding immediately
prior to such event.

      Section 8. Redemption. The shares of Series A-1 Preferred Stock shall not
be redeemable; provided, however, that the foregoing shall not limit the ability
of the Corporation to purchase or otherwise deal in such shares to the extent
otherwise permitted hereby and by law.

      Section 9. Ranking. Unless otherwise expressly provided in the Certificate
of Incorporation or a Certificate of Designations relating to any other series
of preferred stock of the Corporation, the Series A-1 Preferred Stock shall rank
junior to every other series of the Corporation's preferred stock previously or
hereafter authorized, as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up and shall rank senior to the
common stock.


                                      6-A


      Section 10. Amendment. The Certificate of Incorporation and this
Certificate of Designations shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A-1 Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Series A-1 Preferred Stock, voting separately as a class.

      Section 11. Fractional Shares. Series A-1 Preferred Stock may be issued in
whole shares or in any fraction of a share that is one ten-thousandth
(1/10,000th) of a share or any integral multiple of such fraction, which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A-1 Preferred Stock.
In lieu of fractional shares, the Corporation may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
ten-thousandth (1/10,000th) of a share or any integral multiple thereof.


                                      7-A



      I, __________________, _____________________, do make this certificate,
hereby declaring and certifying that this is my act and deed on behalf of the
Corporation this ___ of [_________] 2005.


                                            ________________________________
                                            By:
                                            Title:


                                    EXHIBIT B

                           [Form of Right Certificate]

Certificate No. R-______ Rights

      NOT EXERCISABLE AFTER [10 YEARS FOLLOWING RIGHTS AGREEMENT] OR EARLIER IF
NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF IROBOT CORPORATION, AT $0.0001 PER RIGHT, ON THE TERMS SET FORTH IN
THE SHAREHOLDER RIGHTS AGREEMENT BETWEEN IROBOT CORPORATION AND COMPUTERSHARE
TRUST COMPANY, INC., AS RIGHTS AGENT, DATED AS OF [______________] (THE "RIGHTS
AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

                                Right Certificate

                               IROBOT CORPORATION

      This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Shareholder Rights Agreement dated as of [_________________] (the "Rights
Agreement") between iRobot Corporation (the "Company") and Computershare Trust
Company, Inc., as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to the close of business on [10 YEARS FOLLOWING
RIGHTS AGREEMENT] at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one ten-thousandth of a fully
paid, non-assessable share of the Series A-1 Junior Participating Cumulative
Preferred Stock (the "Preferred Stock") of the Company, at a purchase price of
$120.00 per one ten-thousandth of a share (the "Exercise Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and the related Certificate duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Exercise Price per
share set forth above, are the number and Exercise Price as of _______, based on
the Preferred Stock as constituted at such date.

      Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person or Associate or Affiliate thereof, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a Person who, after such transfer, became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person, such Rights shall become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.



      As provided in the Rights Agreement, the Exercise Price and the number of
shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

      This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal office of the
Company and the designated office of the Rights Agent and are also available
upon written request to the Company or the Rights Agent.

      This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Right
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.

      Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange all
or any part of the Rights evidenced by this Certificate for shares of the
Company's Common Stock or Preferred Stock at an exchange ratio (subject to
adjustment) specified in the Rights Agreement.

      Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Board of Directors of the Company at its
option at a redemption price of $0.0001 per Right (payable in cash, Common Stock
or other consideration deemed appropriate by the Board of Directors).

      The Company is not obligated to issue fractional shares of stock upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one ten-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts). If
the Company elects not to issue such fractional shares, in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

      No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock, Common Stock or any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for


                                       2


the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

      This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.

      WITNESS the facsimile signature of the proper officers of the Company as a
document under corporate seal.


Attested:                                   IROBOT CORPORATION

By:___________________________              By: ____________________________
Secretary                                       Name: Helen Greiner
                                                Title: Chairman of the Board


Countersigned:

COMPUTERSHARE TRUST COMPANY, INC.

By:___________________________
     Name:
     Title:


                                       3



                   [FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]

                               FORM OF ASSIGNMENT
                (TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
               HOLDER DESIRES TO TRANSFER THE RIGHT CERTIFICATE.)


      FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto __________________________ (Please print name and address of
transferee) __________________________ this Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ___________________ Attorney, to transfer the within Right Certificate
on the books of the within-named Company, with full power of substitution.

      Dated: _________, _____              ___________________________________
                                           ___________________________________
                                           Signature

      Signature Guaranteed: ____________________________________________________

                                   CERTIFICATE

      The undersigned hereby certifies by checking the appropriate boxes that:

      (1)______the Rights evidenced by this Right Certificate ______ are ______
are not being transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement); and

      (2)______after due inquiry and to the best knowledge of the undersigned,
the undersigned ____ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.

      Dated: _________, _____              ___________________________________
                                           ___________________________________
                                           Signature





                                     NOTICE

      The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.





                          FORM OF ELECTION TO PURCHASE

                      (TO BE EXECUTED IF HOLDER DESIRES TO
                        EXERCISE THE RIGHT CERTIFICATE.)

To IROBOT CORPORATION:

      The undersigned hereby irrevocably elects to exercise _______ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:

Please insert social security or other identifying taxpayer number:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)

      If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of
such Rights shall be registered in the name of and delivered to:

Please insert social security or other identifying taxpayer number:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)

      Dated: _________, _____              ___________________________________
                                           ___________________________________
                                           Signature

Signature Guaranteed: __________________________________________________________






                                   CERTIFICATE

      The undersigned hereby certifies by checking the appropriate boxes that:

      (1)______the Rights evidenced by this Right Certificate ____ are ____ are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement); and

      (2)______after due inquiry and to the best knowledge of the undersigned,
the undersigned ____ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.

      Dated: _________, _____              ___________________________________
                                           ___________________________________
                                           Signature





                                     NOTICE

      The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.

                                                                     Exhibit 5.1

[GOODWIN PROCTER LOGO]

GOODWIN PROCTER LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MA 02109

T: 617.570.1000
F: 617.523.1231
GOODWINPROCTER.COM


October 24,2005
iRobot Corporation
63 South Avenue
Burlington, MA 01803


Ladies and Gentlemen:


      This opinion is delivered to you in our capacity as counsel for iRobot
Corporation, a Delaware corporation (the "Company"), in connection with the
Registration Statement on Form S-1 (File No. 333-126907) (as amended or
supplemented, the "Registration Statement") filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "ACT"), relating to the offering of up to 4,945,000 shares of
common stock, par value $0.01 per share, of the Company ("Common Stock"), which
includes up to 3,260,870 shares of Common Stock (the "Company Shares") to be
newly issued and sold by the Company and up to 1,684,130 shares of Common Stock
(the "Selling Stockholder Shares") to be sold by the selling stockholders listed
in the Registration Statement under "Principal and Selling Stockholders" (the
"Selling Stockholders"), including shares purchasable by the underwriters upon
their exercise of an over-allotment option granted to the underwriters by the
Selling Stockholders. The Company Shares and the Selling Stockholder Shares are
being sold to the several underwriters named in, and pursuant to, an
underwriting agreement among the Company and the underwriters named therein (the
"Underwriting Agreement").


      We have reviewed such documents and made such investigation of law as we
deemed appropriate to give the opinion expressed below. We have relied, without
independent verification, on certificates of public officials and, as to matters
of fact material to the opinions set forth below, on representations in
certificates and other inquiries of officers or representatives of the Company.

      The opinion expressed below is limited to the Delaware General Corporation
Law (which includes applicable provisions of the Delaware Constitution and
Delaware General Corporation Law and reported judicial decisions interpreting
those provisions).

      Based on the foregoing, we are of the opinion that the Company Shares,
when issued and delivered by the Company against payment therefor in accordance
with the terms of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable under the Delaware General Corporation Law, and that the
Selling Stockholder Shares have been validly issued and are fully paid and
non-assessable under the Delaware General Corporation Law.

      We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to the references to our firm under the caption
"Legal Matters" in the Registration Statement. In giving such consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations thereunder.

      This opinion may be used only in connection with the offer and sale of the
Shares while the Registration Statement is in effect.


                                          Very truly yours,

                                          /s/ Goodwin Procter LLP

                                          GOODWIN PROCTER LLP

                                                                   Exhibit 10.20
                               IROBOT CORPORATION

                             NON-EMPLOYEE DIRECTORS'
                          DEFERRED COMPENSATION PROGRAM

I. INTRODUCTION

      The iRobot Corporation Non-Employee Directors' Deferred Compensation
Program (the "Program"), effective January 1, 2006, is established pursuant to
the iRobot Corporation 2005 Stock Option and Incentive Plan (the "Plan") and
permits a Director who is not an employee of the Company (a "Non-Employee
Director") to defer receipt of all or any part of the compensation payable to
him under the Plan.

II. ADMINISTRATION

      The Program shall be administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee shall have
complete discretion and authority with respect to the Program and its
application, except as expressly limited by the Program.

III. ELIGIBILITY

      All Non-Employee Directors are eligible to participate in the Program.

IV. DEFERRAL OF RETAINER FEES

      A. Election to Defer. A Non-Employee Director may elect in advance to
defer the receipt of some or all of his retainer fees from the Company. To make
such an election, the Non-Employee Director must execute and deliver to the
Committee an election form specifying the percentage of his retainer fees he
wishes to defer. Except with respect to a newly elected or appointed
Non-Employee Director, any election under this paragraph shall apply only to
retainer fees that are earned with respect to services to be performed beginning
on or after the start of




the next calendar year after such receipt and acceptance. A newly elected or
appointed Non-Employee Director, may, within 30 days of becoming a Non-Employee
Director, file a deferral election which shall apply only to retainer fees that
are earned with respect to services to be performed subsequent to the election.
An election shall remain in effect from year to year, until a new election
becomes effective with respect to retainer fees payable in the next calendar
year. A Non-Employee Director may revoke his deferral election with respect to
retainer fees that are payable in the calendar year beginning after receipt and
acceptance by the Company of his written revocation.

      B. Deferred Account. As of the last day of each calendar quarter, a
Non-Employee Director's deferred account ("Account") shall be credited with a
number of whole and fractional stock units determined by dividing his deferred
retainer fees for the calendar quarter by the fair market value of a share of
common stock, par value $0.01 per share, of the Company ("Stock"). For purposes
of this Program, "fair market value" of a share of Stock on any given date shall
mean the last reported sale price at which Stock is traded on such date, or if
no Stock is traded on such date, the most recent date on which Stock was traded
on the NASDAQ National Market System, of if applicable, any other national stock
exchange on which Stock is traded.

      C. Dividend Equivalent Amounts. Whenever dividends (other than dividends
payable only in shares of Stock) are paid with respect to Stock, each Account
shall be credited with a number of whole and fractional stock units determined
by multiplying the dividend value per share by the stock unit balance of the
Account on the record date and dividing the result by the fair market value of a
share of Stock on the dividend payment date.

      D. Period of Deferral. Each Non-Employee Director making an election
pursuant to Paragraph IV.A shall specify the deferral period applicable to his
Account. Such period shall be


                                       2


either (i) a specified number of years after the date such specification is made
by the Non-Employee Director or (ii) until the Non-Employee Director's
termination of membership on the Board of Directors of the Company. A
Non-Employee Director may change his election with regard to a period of
deferral, but (a) the new election may not take effect until at least 12 months
after the date on which the new election is made, (b) the distribution must be
deferred for a period of not less than five years from the date of the
originally scheduled distribution, and (c) the new election must be made not
less than 12 months prior to the date of the originally scheduled distribution.

      E. Designation of Beneficiary. A Non-Employee Director may designate one
or more beneficiaries to receive payments from his Account in the event of his
death. A designation of beneficiary shall apply to a specified percentage of a
Non-Employee Director's entire interest in his Account. Such designation, or any
change therein, must be in writing and shall be effective upon receipt by the
Company. If there is no effective designation of beneficiary, or if no
beneficiary survives the Non-Employee Director, the estate of the Non-Employee
Director shall be deemed to be the beneficiary. All payments to a beneficiary or
estate shall be made in a lump sum in shares of Stock, with any fractional share
paid in cash.

      F. Payment. All amounts credited to a Non-Employee Director's Account
shall be paid in shares of Stock to the Non-Employee Director, or his designated
beneficiary (or beneficiaries) or estate, in a lump sum at the end of the
deferral period determined by the deferral election in effect for the Account;
provided, however, that fractional shares shall be paid in cash. Notwithstanding
the foregoing, in the event of a Change in Control Event (as defined in Section
12(c)(i) of the Plan), all Accounts under the Program shall become immediately
payable in a lump sum.


                                       3


V. ADJUSTMENTS

      In the event of a stock dividend, stock split or similar change in
capitalization affecting the Stock, the Committee shall make appropriate
adjustments in the number of stock units credited to Non-Employee Directors'
Accounts.

VI. AMENDMENT OR TERMINATION OF PROGRAM

      The Company reserves the right to amend or terminate the Program at any
time, by action of its Board of Directors, provided that no such action shall
adversely affect a Non-Employee Director's right to receive compensation earned
before the date of such action or his rights under the Program with respect to
amounts credited to his Account before the date of such action. In no event
shall the distribution of Accounts to Non-Employee Directors be accelerated by
virtue of any amendment or termination of the Program.

VII. MISCELLANEOUS PROVISIONS

      A. Notices. Any notice required or permitted to be given by the Company or
the Committee pursuant to the Program shall be deemed given when personally
delivered or deposited in the United States mail, registered or certified,
postage prepaid, addressed to the Non-Employee Director at the last address
shown for the Non-Employee Director on the records of the Company.

      B. Nontransferability of Rights. During a Non-Employee Director's
lifetime, any payment under the Program shall be made only to him. No sum or
other interest under the Program shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt by a Non-Employee Director or any beneficiary under the Program to do so
shall be void. No interest under the Program shall in any manner be liable for
or subject to the debts, contracts, liabilities, engagements or torts of a
Non-Employee Director or beneficiary entitled thereto.


                                       4


      C. Company's Obligations to Be Unfunded and Unsecured. The Accounts
maintained under the Program shall at all times be entirely unfunded, and no
provision shall at any time be made with respect to segregating assets of the
Company (including Stock) for payment of any amounts hereunder. No Non-Employee
Director or other person shall have any interest in any particular assets of the
Company (including Stock) by reason of the right to receive payment under the
Program, and any Non-Employee Director or other person shall have only the
rights of a general unsecured creditor of the Company with respect to any rights
under the Program.

      D. Governing Law. The terms of the Program shall be governed, construed,
administered and regulated in accordance with the laws of the Commonwealth of
Massachusetts. In the event any provision of this Program shall be determined to
be illegal or invalid for any reason, the other provisions shall continue in
full force and effect as if such illegal or invalid provision had never been
included herein.

      E. Effective Date of Program. The Program shall become effective as of
January 1, 2006.


                                       5


                               IROBOT CORPORATION

                             NON-EMPLOYEE DIRECTORS'
                                DEFERRAL ELECTION

      1. Pursuant to the iRobot Corporation 2005 Stock Option and Incentive Plan
(the "Plan") and the Deferred Compensation Program established thereunder (the
"Program"), I, the undersigned Director, hereby elect and instruct iRobot
Corporation (the "Company") to defer ______% of any cash retainer fees payable
to me by the Company. I hereby elect to defer receipt of my Directors' fees
until:

      [ ] _______ months from the date of this election.

      [ ] My termination of service as a Director of the Company.

      2. I understand that the amounts credited to my deferred account will be
paid in shares of common stock of the Company in a lump sum on the date
specified in Paragraph 1 above.

      3. I hereby designate the following as my beneficiary (or beneficiaries)
under the Program and hereby revoke any prior designation of beneficiary:



Beneficiary Name and Address      Relationship      Social Security No.      Share
- ----------------------------      ------------      -------------------      -----
                                                                    

- ----------------------------      ------------      -------------------      -----

- ----------------------------      ------------      -------------------      -----


If a beneficiary predeceases me, his share shall be paid to the other surviving
beneficiaries in equal shares. If no beneficiary survives me or if there is no
effective beneficiary designation, my deferred account shall be paid to my
estate.

      4. I understand that with respect to all amounts credited to my deferred
account, I have no greater rights than that of an unsecured creditor of the
Company.

      5. The election to defer under Paragraph 1 shall apply only to cash fees
that are earned beginning at or after the start of the next calendar year after
such receipt and acceptance, and shall remain in effect for all subsequent years
unless the Company accepts, pursuant to the Plan and the Program, a new
election. I acknowledge that the election to defer and to receive payment in
shares of common stock of the Company may be completely revoked in writing
prospectively with respect to cash fees payable in the calendar year beginning
after the date of revocation.




              Executed this __________ day of ______________, 2005.



                                          --------------------------------------
                                          Signature

                                          --------------------------------------
                                          Print Name

ACCEPTED:

iROBOT CORPORATION

By:
        ------------------------------

Title:
        ------------------------------

Date:
        ------------------------------


                                       2

                                                                    Exhibit 23.2



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We hereby consent to the use in this Amendment No. 4 to the Registration
Statement on Form S-1 of our report dated May 4, 2005, except for Note 17, as to
which the date is May 26, 2005 relating to the financial statements of iRobot
Corporation, which appears in such Registration Statement.  We also consent to
the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
October 24, 2005