Manufacturing And Services Agreement

WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS
ARE DENOTED BY AN ASTERISK*), SUCH CONFIDENTIAL INFORMATION HAS BEEN
SUBMITTED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.


The Gem City Engineering Co. / iRobot Corporation
Manufacturing and Services Agreement


TABLE OF CONTENTS


1.0 Definitions 2.0 Order fulfillment and forecasting 3.0 Term and termination 4.0 Pricing 5.0 Payments and acceptance 6.0 Warranties 7.0 Delivery 8.0 Intellectual Property 9.0 Indemnification 10.0 Limitation of liability 11.0 Supplier and supplier personnel 12.0 Insurance 13.0 General 14.0 Confidential Information


* Confidential Treatment Requested.


The Gem City Engineering Co. / iRobot Corporation
Manufacturing and Services Agreement


This Agreement is dated as of July 27, 2004 ("EFFECTIVE DATE"), between iRobot Corporation, a Delaware corporation with a principal place of business at 63 South Avenue, Burlington, MA 01803 ("BUYER", "CUSTOMER" OR "IROBOT") and The Gem City Engineering Co. ("SUPPLIER", "SUPPLIER" OR "GCE"), a Ohio corporation with a principal place of business at 401 Leo St., Dayton, OH, 45404 establishes the basis for a procurement relationship under which Supplier will provide Buyer the Products and Services in Statements of Work and/or Purchase Orders issued under this Agreement.


1.0 DEFINITIONS


a) AGREEMENT: this Agreement and any relevant Statements of Work ("SOW"),
Purchase Order ("PO"), and other attachments or appendices
specifically referenced in this Agreement.


b) BUYER: iRobot Corporation.


c) BUYER PERSONNEL: agents, employees, or contractors engaged by Buyer.


d) CONFIGURATION: means specific arrangement of sub-assemblies as defined
in the SOW as it pertains to Deliverables.


e) DELIVERABLES: items that Supplier prepares for or provides to Buyer as
described in a SOW.


f) DEVELOPED WORKS: Deliverables including their Externals, developed in
the performance of this Agreement that the parties agree that Buyer
will own, and does not include Preexisting Materials, Tools, or items
specifically excluded in a SOW.


g) ECO: Engineering Change Order -- a method of submitting and
controlling engineering changes to the configuration of
products, while in production.


h) EXTERNALS: any pictorial, graphic, or audiovisual works generated by
execution of code and any programming interfaces, languages or
protocols implemented in code to enable interaction with other
computer programs or end users. Externals do no include the code that
implements them.


i) FORECAST: means the quantity and configuration of Products or Services
that Buyer plans to purchase during a specific time.


j) INVENTORY: all work in process for items subject to a valid Purchase
Order including all items of Standard Inventory and Long Lead Time
Inventory.


k) LONG LEAD TIME INVENTORY: items of inventory that need to be ordered
more than sixty (60) days in advance to assure timely delivery.


l) PREEXISTING MATERIALS: items including their Externals, contained
within a Deliverable, in which the copyrights are owned by a third
party or that Supplier prepared or had prepared outside the scope of
the Agreement. Preexisting Materials exclude Tools, but may include
material that is created by the use of Tools.


m) PRICES: the agreed upon payment and currency for Deliverables and
Services, including all applicable fees, payments and taxes, as
specified in the relevant SOW.


n) PURCHASE ORDER ("PO"): Customer may order Products by issuing purchase
orders to Supplier. Such purchase orders are subject to Suppliers
acceptance. Purchase orders may be delivered to Supplier by any
reasonable means, including but not limited to postal delivery,
courier delivery, facsimile transmission, and electronic mail.


* Confidential Treatment Requested.


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The Gem City Engineering Co. / iRobot Corporation
Manufacturing and Services Agreement


o) SCHEDULE: Buyers written delivery requirements as defined in the
Forecast, POs and SOW.


p) SERVICES: contract manufacturing, warranty and/or spare parts services
that Supplier provides the Buyer pursuant to the Purchase Order.


q) STANDARD INVENTORY: inventory identified in the PO.


r) STATEMENT OF WORK OR "SOW": any document attached to or included in
this Agreement by the mutual agreement of Buyer and Supplier, which
describes the Deliverables and Services, including any requirements,
specifications, or schedules.


s) SUPPLIER: The Gem City Engineering Co. (GCE)


t) SUPPLIER PERSONNEL: means agents, employees or subcontractors engaged
by Supplier.


u) TMI: Temporary Manufacturing Instruction. Formal instructions to
deviate from released documentation. Supplied by Buyer.


2.0 ORDER FULFILLMENT AND FORECASTING


2.1 STATEMENT OF WORK


Supplier will provide the Deliverables and Services as specified in the SOW and Purchase Order. Buyer may request changes to a SOW and Supplier will submit to Buyer the impact of such changes, if any, on both price and schedule, pursuant to Section 2.3. Changes accepted by Buyer will be specified in an amended SOW, ECO or TMI accepted by both parties.


2.2 INSPECTION AND QUALITY CONTROLS


(a) The Deliverables will be manufactured by the Supplier with services
performed with the best workmanship practices in accordance with IPC-A
610 requirements for qualified, careful, trained and efficient
workers, and in conformity with the best standard manufacturing
practices.


(b) Buyer has the right to dispatch at its own expense, a Quality Control
Engineer to assist the Supplier's Quality Control Engineers for
purposes of inspection and supervision of the product being delivered
by the Supplier. The Supplier will allow the Buyer unrestricted access
to portions of Supplier's plant and facilities in accordance with
Supplier visitation guidelines where the Deliverables are
manufactured, and shall have the right to exercise quality control
with respect to the material and workmanship of the Deliverables. In
addition, Buyer shall have the right, during the term of this
Agreement, to send its engineers at its own cost and expense to
inspect the plant and facilities of the Supplier and to make
recommendations to the Supplier regarding Quality Control
issues/finding of there process and procedures. Any finding or issues
will be documented on the Suppliers Corrective Action Form and
disposition through the CAR process. Any recommendations will not be
unreasonably rejected by the Supplier without the Buyers concurrence.


(c) Accurate Quality Control documentation, including all test
data/reports will be issued


* Confidential Treatment Requested.


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The Gem City Engineering Co. / iRobot Corporation
Manufacturing and Services Agreement


by the Supplier in accordance with this agreement. Reports in the form
agreed to by the parties will be sent to Buyer concurrent with each
shipment of Deliverables by the Supplier.


2.3 ENGINEERING CHANGE PROCESS


Engineering Change Order (ECO) can be initiated and prepared by the Supplier and Buyer. Once an ECO request is received from the Buyer, Supplier must submit to Buyer within five (5) business days all cost and delivery impacts associated with the proposed ECO change. Prior to implementation of the proposed change by the Supplier, NO changes of any type are allowed without Buyers written authorization in the form of an ECO or Temporary Manufacturing Instruction (TMI) Written authorization may be transmitted as a facsimile or electronically. The Supplier may only accept authorization from the Buyers Purchasing Dept.


All effected changes (documentation, Purchase Orders) by the Supplier must be changed/approved and implemented prior to shipment.


2.4 FORECAST


Buyer will supply a rolling twelve-month forecast, and issue a PO covering the first ninety (90) days of the forecast. The PO will have the flexibility as described in TABLE (1). The rolling Forecast will be updated at least once per month. Forecast reductions will be negotiated with Supplier if orders have been placed based on a previous forecast.


Table (1)


Forecast Suppliers Movement (Pushout)
-------- ---------------------------- 0 to 30 days No change in schedule or configuration 31 to 60 days *% of forecasted units can change in schedule only 61 to 90 days *% of forecasted units can change in schedule and configuration


* When changing a configuration from "Scout" to an "EOD" leadtimes will be
based upon current inventory levels availability of long lead items.


Buyer may make Configuration and Schedule changes as defined in Table (1) with a maximum pushout of 30 days, all relevant charges to rescheduling and reconfiguring will revert to termination charges described in Section 3.3.


Supplier agrees to support Forecast and demand increases, at a minimum, to the following levels: *% increase over the baseline Forecast with twelve (12) weeks notice from Buyer; *% increase over the baseline Forecast with sixteen (16) weeks notice from Buyer. Increase of demand above the *% level is to be negotiated on an as needed basis. Prices set forth on SOW are based upon Forecast. To the extent the Forecast is accelerated, the prices may be subject to adjustment as outlined in Section 4.


All Forecasts and revisions thereto will be transmitted by Buyer.


* Confidential Treatment Requested.


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The Gem City Engineering Co. / iRobot Corporation
Manufacturing and Services Agreement


Buyer may, at its option, require Supplier to "ship in place," Product scheduled for delivery within one (1) weeks, and shall pay Supplier per the standard payment terms of this Agreement, as if Product had been delivered. Any products shipped in place, Buyer will assume risk of ownership.


3. TERM AND TERMINATION


3.1 TERM


All SOW's and PO's with respect to Deliverables and Services acquired by Buyer on or after the Effective Date will be covered by this Agreement. This Agreement will remain in effect for two (2) calendar years. This Agreement may be renewed by a written amendment consented to by Supplier and Buyer, which written amendment shall specify the renewal period and the terms and conditions to be applicable during the renewal period.


3.2 TERMINATION OF THIS AGREEMENT


Either party may terminate this Agreement, without any cancellation charge, for (i) a material breach of this Agreement by the other party if such breach is not cured within thirty (30) days of receipt of written notice of such material breach or, (ii) if the other party becomes insolvent or files or has filed against it a petition in bankruptcy, to the extent permitted by law. Such termination will be effective at the end of a thirty (30) day written notice period if the petition in bankruptcy remains uncured or if Supplier has not provided an action plan acceptable to the Buyer.


3.3 TERMINATION OF A SOW OR PO


Buyer may terminate a SOW or a PO with cause effective immediately or without cause with ninety (90) days written notice. Upon termination, in accordance with Buyer's written direction, Supplier will immediately: (i) cease work; (ii) prepare and submit to Buyer an itemization of all completed and partially completed Deliverables and Services; (iii) deliver to Buyer, deliverables satisfactorily completed up to the date of termination at the agreed upon Prices in the relevant SOW; and (iv) deliver upon request any work in process. In the event Buyer terminates, Buyer will compensate Supplier for the actual and reasonable expenses incurred by Supplier for work in process up to and including the date of termination, including the value of all unused Standard Inventory and Long Lead Time Inventory.


4.0 PRICING


4.1 INITIAL PRICING. Prices for the Deliverables shall be as set forth in
EXHIBIT A and are priced based on the date of delivery pursuant to
Section 7. The prices for the Spares will be consistent with prices in
the costed BOM for the system; provided the spares are forecast and
ordered in conjunction with systems, Spares lists including prices for
spares ordered with system or separately are set forth in EXHIBIT C
and EXHIBIT D. Any discrepancy between the forecasted quantity and the
actual purchase quantity may


* Confidential Treatment Requested.


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The Gem City Engineering Co. / iRobot Corporation
Manufacturing and Services Agreement


constitute a price change. The Supplier in good faith will make all
attempts to minimize Buyers exposure. Additional pricing for
Deliverables described in any SOW or PO will be based on Buyers annual
Forecast. Prices quoted by the Supplier include testing as defined by
Buyer. All prices are in U.S. dollars and all invoices and payments
shall be calculated and paid in U.S. dollars.


4.2 PRICING. Beginning for orders to be delivered on or after January 2,
2005, the Buyer and Supplier will review prices every three (3)
months. Any approved change to prices shall be in writing and added to
EXHIBIT A.


4.3 NON-CANCELABLE/NON-RETURNABLE ITEMS. Buyer and Supplier will agree
upon a list of Non-Cancelable/Non-Returnable items listed in EXHIBIT
B, each with a corresponding minimum purchase quantity. Exhibit B will
be reviewed and revised on an as needed basis. On January 15th of each
year, Price will be consistent with the cost in the system's costed
BOM. Supplier may request in writing that Buyer address any
Non-Cancelable/Non-Returnable items. Within thirty (30) days after
receipt of notification, Buyer shall in good faith notify GCE when it
will prepare for disposition of the Deliverable(s) by negotiating
carrying costs with Supplier and making payment to Supplier. Supplier
shall provide evidence in written form and supporting documentation
and substance reasonably satisfactory to Buyer.


4.4 LONG LEAD ITEMS. To meet required lead times as defined in Buyers
forecast Supplier may be required to procure long lead items for
Standard Material.-. To minimize potential Buyer's exposure Supplier
should provide the required list for review and agreement between
Buyer and Supplier prior to Supplier procuring long lead items.


4.5 COST SAVINGS. Both Buyer and Supplier are committed to reducing the
costs of manufacturing the Deliverables, and thereby reducing the
prices for the Deliverables. These cost savings shall be pursued by
the parties individually and collectively and shall be handled as ...