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                                                                    EXHIBIT 10.3

                           COLOR KINETICS INCORPORATED

                            2004 STOCK INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

         The name of the plan is the Color Kinetics Incorporated 2004 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
officers and employees of, and other persons providing services to, Color
Kinetics Incorporated (the "Company") and its Affiliates to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company and its
shareholders, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.

         The following terms shall be defined as set forth below:

         "Affiliate" means a parent corporation, if any, and each subsidiary
corporation of the Company, as those terms are defined in Section 424 of the
Code.

         "Award" or "Awards", except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Statutory Stock
Options, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Stock Appreciation Rights. Awards shall be evidenced by a written
agreement (which may be in electronic form and may be electronically
acknowledged and accepted by the recipient) containing such terms and conditions
not inconsistent with the provisions of this Plan as the Committee shall
determine.

         "Board" means the Board of Directors of the Company.

         "Cause" shall mean, with respect to any Award holder, a determination
by the Company (including the Board) or any Affiliate that the Holder's
employment or other relationship with the Company or any such Affiliate should
be terminated as a result of (i) a material breach by the Award holder of any
agreement to which the Award holder and the Company (or any such Affiliate) are
parties, (ii) any act (other than retirement) or omission to act by the Award
holder that may have a material and adverse effect on the business of the
Company, such Affiliate or any other Affiliate or on the Award holder's ability
to perform services for the Company or any such Affiliate, including, without
limitation, the proven or admitted commission of any crime (other than an
ordinary traffic violation), or (iii) any material misconduct or material
neglect of duties by the Award holder in connection with the business or affairs
of the Company or any such Affiliate.

         "Change of Control" shall have the meaning set forth in Section 15.

         "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

         "Committee" shall have the meaning set forth in Section 2.

         "Disability" means disability as set forth in Section 22(e)(3) of the
Code.

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         "Effective Date" means the date on which the Plan is approved by the
Board of Directors as set forth in Section 17.

         "Eligible Person" shall have the meaning set forth in Section 4.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Fair Market Value" on any given date means the closing price per share
of the Stock on such date as reported by such registered national securities
exchange on which the Stock is listed, or, if the Stock is not listed on such an
exchange, as quoted on NASDAQ; provided, that, if there is no trading on such
date, Fair Market Value shall be deemed to be the closing price per share on the
last preceding date on which the Stock was traded. If the Stock is not listed on
any registered national securities exchange or quoted on NASDAQ, the Fair Market
Value of the Stock shall be determined in good faith by the Committee.

         "Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.

         "Independent Director" means any director who meets the independence
requirement of NASDAQ Marketplace Rule 4200(a)(15).

         "Non-Employee Director" means any director who: (i) is not currently an
officer of the Company or an Affiliate, or otherwise currently employed by the
Company or an Affiliate, (ii) does not receive compensation, either directly or
indirectly, from the Company or an Affiliate, for services rendered as a
consultant or in any capacity other than as a director, except for an amount
that does not exceed the dollar amount for which disclosure would be required
pursuant to Rule 404(a) of Regulation S-K promulgated by the SEC, (iii) does not
possess an interest in any other transaction for which disclosure would be
required pursuant to Rule 404(a) of Regulation S-K, and (iv) is not engaged in a
business relationship for which disclosure would be required pursuant to Rule
404(b) of Regulation S-K.

         "Non-Statutory Stock Option" means any Stock Option that is not an
Incentive Stock Option.

         "Normal Retirement" means retirement in good standing from active
employment with the Company and its Affiliates in accordance with the retirement
policies of the Company and its Affiliates then in effect.

         "Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.

         "Outside Director" means any director who (i) is not an employee of the
Company or of any "affiliated group," as such term is defined in Section 1504(a)
of the Code, which includes the Company (an "Affiliated Group Member"), (ii) is
not a former employee of the Company or any Affiliated Group Member who is
receiving compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the Company's or any Affiliated Group
Member's taxable year, (iii) has not been an officer of the Company or any
Affiliated Group Member and (iv) does not receive remuneration from the Company
or any Affiliated Group Member, either directly or indirectly, in any capacity
other than as a director. "Outside Director" shall be determined in accordance
with Section 162(m) of the Code and the Treasury regulations issued thereunder.

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         "Performance Share Award" means an Award pursuant to Section 8.

         "Restricted Stock Award" means an Award granted pursuant to Section 6.

         "SEC" means the Securities and Exchange Commission or any successor
authority.

         "Stock" means the common stock, $.001 par value per share, of the
Company, subject to adjustments pursuant to Section 3.

         "Stock Appreciation Right" means an Award granted pursuant to Section
9.

         "Unrestricted Stock Award" means Awards granted pursuant to Section 7.

SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
           AND DETERMINE AWARDS.

         (a)      Committee. The Plan shall be administered by a committee of
the Board (the "Committee") consisting of not less than two (2) persons each of
whom qualifies as an Independent Director, an Outside Director and a
Non-Employee Director, but the authority and validity of any act taken or not
taken by the Committee shall not be affected if any person administering the
Plan is not an Independent Director, an Outside Director or a Non-Employee
Director. Except as specifically reserved to the Board under the terms of the
Plan, the Committee shall have full and final authority to operate, manage and
administer the Plan on behalf of the Company.

         (b)      Powers of Committee. The Committee shall have the power and
authority to grant and modify Awards consistent with the terms of the Plan,
including the power and authority:

                  (i)      to select the persons to whom Awards may from time to
time be granted;

                  (ii)     to determine the time or times of grant, and the
extent, if any, of Incentive Stock Options, Non-Statutory Stock Options,
Restricted Stock, Unrestricted Stock, Performance Shares and Stock Appreciation
Rights, or any combination of the foregoing, granted to any one or more
participants;

                  (iii)    to determine the number of shares to be covered by
any Award;

                  (iv)     to determine and modify the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards; provided, however, that no such action shall adversely affect rights
under any outstanding Award without the participant's consent;

                  (v)      to accelerate the exercisability or vesting of all or
any portion of any Award;

                  (vi)     to extend the period in which any outstanding Stock
Option or Stock Appreciation Right may be exercised; and

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                  (vii)    to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

         All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants. No member or former
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan.

SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.

         (a)      Shares Issuable. The maximum number of shares of Stock which
may be issued in respect of Awards (including Stock Appreciation Rights) granted
under the Plan, subject to adjustment upon changes in capitalization of the
Company as provided in this Section 3, shall be 2,000,000 shares which number
shall increase on each of the first five (5) anniversaries of the effective date
of this Plan by an amount, if any, equal to the lesser of: (i) 300,000 shares of
Stock or (ii) an amount determined by the Board. Notwithstanding the foregoing,
the maximum cumulative number of shares of Stock with respect to which Awards
may be granted under the Plan is 3,500,000 shares subject to adjustment upon
changes in capitalization of the Company as provided in this Section 3. For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, cancelled, reacquired by the Company or otherwise terminated (other
than by exercise), shares that are tendered in payment of the exercise price of
any Award and shares that are tendered or withheld for tax withholding
obligations shall be added back to the shares of Stock with respect to which
Awards may be granted under the Plan. Shares issued under the Plan may be
authorized but unissued shares or shares reacquired by the Company.

         (b)      Limitation on Awards. In no event may any Plan participant be
granted Awards (including Stock Appreciation Rights) with respect to more than
500,000 shares of Stock in any calendar year. The number of shares of Stock
relating to an Award granted to a Plan participant in a calendar year that is
subsequently forfeited, cancelled or otherwise terminated shall continue to
count toward the foregoing limitation in such calendar year. In addition, if the
exercise price of an Award is subsequently reduced, the transaction shall be
deemed a cancellation of the original Award and the grant of a new one so that
both transactions shall count toward the maximum shares issuable in the calendar
year of each respective transaction.

         (c)      Stock Dividends, Mergers, etc. In the event that after
approval of the Plan by the stockholders of the Company in accordance with
Section 17, the Company effects a stock dividend, stock split or similar change
in capitalization affecting the Stock, the Committee shall make appropriate
adjustments in (i) the number and kind of shares of stock or securities with
respect to which Awards may thereafter be granted (including without limitation
the limitations set forth in Sections 3(a) and (b) above), (ii) the number and
kind of shares remaining subject to outstanding Awards, and (iii) the option or
purchase price in respect of such shares. In the event

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of any merger, consolidation, dissolution or liquidation of the Company, the
Committee in its sole discretion may, as to any outstanding Awards, make such
substitution or adjustment in the aggregate number of shares reserved for
issuance under the Plan and in the number and purchase price (if any) of shares
subject to such Awards as it may determine and as may be permitted by the terms
of such transaction, or accelerate, amend or terminate such Awards upon such
terms and conditions as it shall provide (which, in the case of the termination
of the vested portion of any Award, shall require payment or other consideration
which the Committee deems equitable in the circumstances), subject, however, to
the provisions of Section 15.

         (d)      Substitute Awards. The Committee may grant Awards under the
Plan in substitution for stock and stock based awards held by employees of
another corporation who concurrently become employees of the Company or an
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or an Affiliate or the acquisition by the Company
or an Affiliate of property or stock of the employing corporation. The Committee
may direct that the substitute awards be granted on such terms and conditions as
the Committee considers appropriate in the circumstances.

SECTION 4. ELIGIBILITY.

         Awards may be granted to officers, directors and employees of, and
consultants and advisers to, the Company or its Affiliates ("Eligible Persons").

SECTION 5. STOCK OPTIONS.

         The Committee may grant to Eligible Persons options to purchase stock.

         Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.

         Stock Options granted under the Plan may be either Incentive Stock
Options (subject to compliance with applicable law) or Non-Statutory Stock
Options. Unless otherwise so designated, an Option shall be a Non-Statutory
Stock Option. To the extent that any option does not qualify as an Incentive
Stock Option, it shall constitute a Non-Statutory Stock Option.

         No Incentive Stock Option shall be granted under the Plan after the
tenth anniversary of the date of adoption of the Plan by the Board.

         The Committee in its discretion may determine the effective date of
Stock Options, provided, however, that grants of Incentive Stock Options shall
be made only to persons who are, on the effective date of the grant, employees
of the Company or an Affiliate. Stock Options granted pursuant to this Section 5
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable.

         (a)      Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5 shall be determined
by the Committee at the time of grant but shall be, in the case of incentive
stock options, not less than one hundred percent (100%) of Fair Market Value on
the date of grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than ten

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percent (10%) of the combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation and an Incentive Stock Option is
granted to such employee, the option price shall be not less than one hundred
ten percent (110%) of Fair Market Value on the date of grant.

         (b)      Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more than ten
(10) years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more than ten percent (10%) of the combined voting power of all classes of stock
of the Company or any subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the term of such option shall be no more
than five (5) years from the date of grant.

         (c)      Exercisability; Rights of a Shareholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee. The Committee may at any
time accelerate the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a shareholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.

         (d)      Method of Exercise. Stock Options may be exercised in whole or
in part, by delivering written notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made by
delivery of cash or bank check or other instrument acceptable to the Committee
in an amount equal to the exercise price of such Options, or, to the extent
provided in the applicable Option Agreement, by one or more of the following
methods:

                  (i)      by delivery to the Company of shares of Common Stock
of the Company that either have been purchased by the optionee on the open
market, or have been beneficially owned by the optionee for a period of at least
six months and are not then subject to restriction under any Company plan
("mature shares"); such surrendered shares shall have a fair market value equal
in amount to the exercise price of the Options being exercised; or

                  (ii)     a personal recourse note issued by the optionee to
the Company in a principal amount equal to such aggregate exercise price and
with such other terms, including interest rate and maturity, as the Company may
determine in its discretion; provided, however, that the interest rate borne by
such note shall not be less than the lowest applicable federal rate, as defined
in Section 1274(d) of the Code; or

                  (iii)    if the class of Common Stock is registered under the
Securities Exchange Act of 1934 at such time, by delivery to the Company of a
properly executed exercise notice along with irrevocable instructions to a
broker to deliver promptly to the Company cash or a check payable and acceptable
to the Company for the purchase price; provided that in the event that the
optionee chooses to pay the purchase price as so provided, the optionee and the
broker shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a condition
of such payment procedure (including, in the case of an optionee who is an
executive officer of the Company, such procedures and agreements as the
Committee deems appropriate in order to avoid any extension

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of credit in the form of a personal loan to such officer). The Company need not
act upon such exercise notice until the Company receives full payment of the
exercise price; or

                  (iv)     by reducing the number of Option shares otherwise
issuable to the optionee upon exercise of the Option by a number of shares of
Common Stock having a fair market value equal to such aggregate exercise price;
provided, however, that the optionee otherwise holds an equal number of mature
shares; or

                  (v)      by any combination of such methods of payment.

         The delivery of certificates representing shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be contingent upon
receipt from the Optionee (or a purchaser acting in his stead in accordance with
the provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in the
Stock Option or imposed by applicable law.

         (e)      Non-transferability of Options. Except as the Committee may
provide with respect to a Non-Statutory Stock Option, no Stock Option shall be
transferable other than by will or by the laws of descent and distribution and
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee.

         (f)      Annual Limit on Incentive Stock Options. To the extent
required for "incentive stock option" treatment under Section 422 of the Code,
the aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted under this Plan and
any other plan of the Company or its Affiliates become exercisable for the first
time by an optionee during any calendar year shall not exceed $100,000.

         (g)      Lockup Agreement. Each Option shall provide that the optionee
shall agree for a period of time (not to exceed 180 days) from the effective
date of any registration of securities of the Company (upon request of the
Company or the underwriters managing any underwritten offering of the Company's
securities) not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of, any shares issued pursuant to the exercise
of such Option, without the prior written consent of the Company or such
underwriters, as the case may be.

SECTION 6. RESTRICTED STOCK AWARDS.

         (a)      Nature of Restricted Stock Award. The Committee in its
discretion may grant Restricted Stock Awards to any Eligible Person, entitling
the recipient to acquire, for such purchase price, if any, as may be determined
by the Committee, shares of Stock subject to such restrictions and conditions as
the Committee may determine at the time of grant ("Restricted Stock"), including
continued employment and/or achievement of pre-established performance goals and
objectives.

         (b)      Acceptance of Award. A participant who is granted a Restricted
Stock Award shall have no rights with respect to such Award unless the
participant shall have accepted the Award within sixty (60) days (or such
shorter date as the Committee may specify) following the award date by making
payment to the Company of the specified purchase price, if any, of the

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shares covered by the Award and by executing and delivering to the Company a
written instrument that sets forth the terms and conditions applicable to the
Restricted Stock in such form as the Committee shall determine.

         (c)      Rights as a Shareholder. Upon complying with Section 6(b)
above, a participant shall have all the rights of a shareholder with respect to
the Restricted Stock, including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Restricted Award. Unless the Committee
shall otherwise determine, certificates evidencing shares of Restricted Stock
shall remain in the possession of the Company until such shares are vested as
provided in Section 6(e) below.

         (d)      Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Affiliates for any reason (including death, Disability, Normal
Retirement and for Cause), the Company shall have the right, at the discretion
of the Committee, to repurchase shares of Restricted Stock which have not then
vested at their purchase price, or to require forfeiture of such shares to the
Company if acquired at no cost, from the participant or the participant's legal
representative. The Company must exercise such right of repurchase or forfeiture
within ninety (90) days following such termination of employment (unless
otherwise specified in the written instrument evidencing the Restricted Stock
Award).

         (e)      Vesting of Restricted Stock. The Committee at the time of
grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." The Committee at any time may
accelerate such date or dates and otherwise waive or, subject to Section 13,
amend any conditions of the Award.

         (f)      Waiver, Deferral and Reinvestment of Dividends. The written
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.

SECTION 7. UNRESTRICTED STOCK AWARDS.

         (a)      Grant or Sale of Unrestricted Stock. The Committee in its
discretion may grant or sell to any Eligible Person shares of Stock free of any
restrictions under the Plan ("Unrestricted Stock") at a purchase price
determined by the Committee. Shares of Unrestricted Stock may be granted or sold
as described in the preceding sentence in respect of past services or other
valid consideration.

         (b)      Restrictions on Transfers. The right to receive unrestricted
Stock may not be sold, assigned, transferred, pledged or otherwise encumbered,
other than by will or the laws of descent and distribution.

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SECTION 8.  PERFORMANCE SHARE AWARDS.

     A Performance Share Award is an award entitling the recipient to acquire
shares of Stock upon the attainment of specified performance goals. The
Committee may make Performance Share Awards independent of or in connection
with the granting of any other Award under the Plan. Performance Share Awards
may be granted under the Plan to any Eligible Person. The Committee in its
discretion shall determine whether and to whom Performance Share Awards shall
be made, the performance goals applicable under each such Award (which may
include, without limitation, continued employment by the recipient or a
specified achievement by the recipient, the Company or any business unit of the
Company), the periods during which performance is to be measured, and all other
limitations and conditions applicable to the Award or the Stock issuable
thereunder.

SECTION 9.  STOCK APPRECIATION RIGHTS.

     The Committee in its discretion may grant Stock Appreciation Rights to any
Eligible Person (i) alone, or (ii) simultaneously with the grant of a Stock
Option and in conjunction therewith or in the alternative thereto. A Stock
Appreciation Right shall entitle the participant upon exercise thereof to
receive from the Company, upon written request to the Company at its principal
offices (the "Request"), a number of shares of Stock (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Committee in its sole discretion), an amount of cash, or any
combination of Stock and cash, as specified in the Request (but subject to the
approval of the Committee in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash payment), having an
aggregate Fair Market Value equal to the product of (a) the excess of Fair
Market Value, on the date of such Request, over the exercise price per share of
Stock specified in such Stock Appreciation Right or its related Option (which
exercise price shall be not less than one hundred percent (100%) of Fair Market
Value on the date of grant), multiplied by (b) the number of shares of Stock
for which such Stock Appreciation Right shall be exercised. Notwithstanding the
foregoing, the Committee may specify at the time of grant of any Stock
Appreciation Right that such Stock Appreciation Right may be exercisable solely
for cash and not for Stock.

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SECTION 10. TERMINATION OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.

         (a)      Incentive Stock Options:

                  (i)      Termination by Death. If any participant's employment
by the Company and its Affiliates terminates by reason of death, any Incentive
Stock Option owned by such participant may thereafter be exercised to the extent
exercisable at the date of death, by the legal representative or legatee of the
participant, for a period of one hundred eighty (180) days (or such longer
period as the Committee shall specify at any time) from the date of death, or
until the expiration of the stated term of the Incentive Stock Option, if
earlier.

                  (ii)     Termination by Reason of Disability or Normal
Retirement.

                  (A)      Any Incentive Stock Option held by a participant
whose employment by the Company and its Affiliates has terminated by reason of
Disability may thereafter be exercised, to the extent it was exercisable at the
time of such termination, for a period of ninety (90) days (or such longer
period as the Committee shall specify at any time) from the date of such
termination of employment, or until the expiration of the stated term of the
Option, if earlier.

                  (B)      Any Incentive Stock Option held by a participant
whose employment by the Company and its Affiliates has terminated by reason of
Normal Retirement may thereafter be exercised, to the extent it was exercisable
at the time of such termination, for a period of ninety (90) days (or such
longer period as the Committee shall specify at any time) from the date of such
termination of employment, or until the expiration of the stated term of the
Option, if earlier.

                  (C)      The Committee shall have sole authority and
discretion to determine whether a participant's employment has been terminated
by reason of Disability or Normal Retirement.

                  (iii)    Termination for Cause. If any participant's
employment by the Company and its Affiliates has been terminated for Cause, any
Incentive Stock Option held by such participant shall immediately terminate and
be of no further force and effect; provided, however, that the Committee may, in
its sole discretion, provide that such Option can be exercised for a period of
up to thirty (30) days from the date of termination of employment or until the
expiration of the stated term of the Option, if earlier.

                  (iv)     Other Termination. Unless otherwise determined by the
Committee, if a participant's employment by the Company and its Affiliates
terminates for any reason other than death, Disability, Normal Retirement or for
Cause, any Incentive Stock Option held by such participant may thereafter be
exercised, to the extent it was exercisable on the date of termination of
employment, for thirty (30) days (or such other period as the Committee shall
specify) from the date of termination of employment or until the expiration of
the stated term of the Option, if earlier.

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         (b)      Non-Statutory Stock Options and Stock Appreciation Rights. Any
Non-Statutory Stock Option or Stock Appreciation Right granted under the Plan
shall contain such terms and conditions with respect to its termination as the
Committee, in its discretion, may from time to time determine.

SECTION 11. TAX WITHHOLDING.

         (a)      Payment by Participant. Each participant shall, no later than
the date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includable in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of any Federal,
state, local and/or payroll taxes of any kind required by law to be withheld
with respect to such income. The Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant.

         (b)      Payment in Shares. A Participant may elect, with the consent
of the Committee, to have such tax withholding obligation satisfied, in whole or
in part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to an Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
minimum withholding amount due with respect to such Award, or (ii) delivering to
the Company a number of mature shares of Stock with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
minimum withholding amount due.

         (c)      Notice of Disqualifying Disposition. Each holder of an
Incentive Option shall agree to notify the Company in writing immediately after
making a disqualifying disposition (as defined in Section 421(b) of the Code) of
any Stock purchased upon exercise of an Incentive Stock Option.

SECTION 12. TRANSFER AND LEAVE OF ABSENCE.

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a)      a transfer to the employment of the Company from an Affiliate
or from the Company to an Affiliate, or from one Affiliate to another;

         (b)      an approved leave of absence for military service or sickness,
or for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.

SECTION 13. AMENDMENTS AND TERMINATION.

         The Board may at any time amend or discontinue the Plan and the
Committee may at any time amend or cancel any outstanding Award (or provide
substitute Awards at the same or reduced exercise or purchase price or with no
exercise or purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended Award if it were
then initially granted under this Plan) for the purpose of satisfying changes in
law or for any

                                      -11-
<PAGE>

other lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder's consent.

         This Plan shall terminate as of the tenth anniversary of its effective
date. The Board may terminate this Plan at any earlier time for any reason. No
Award may be granted after the Plan has been terminated. No Award granted while
this Plan is in effect shall be altered or impaired by termination of this Plan,
except upon the consent of the holder of such Award. The power of the Committee
to construe and interpret this Plan and the Awards granted prior to the
termination of this Plan shall continue after such termination.

SECTION 14. STATUS OF PLAN.

         With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.

SECTION 15. CHANGE OF CONTROL PROVISIONS.

         (a)      Upon the occurrence of a Change of Control as defined in this
Section 15:

                  (i)      subject to the provisions of clause (iii) below,
after the effective date of such Change of Control, each holder of an
outstanding Stock Option, Restricted Stock Award, Performance Share Award or
Stock Appreciation Right shall be entitled, upon exercise of such Award, to
receive, in lieu of shares of Stock (or consideration based upon the Fair Market
Value of Stock), shares of such stock or other securities, cash or property (or
consideration based upon shares of such stock or other securities, cash or
property) as the holders of shares of Stock received in connection with the
Change of Control;

                  (ii)     the Committee may accelerate, fully or in part, the
time for exercise of, and waive any or all conditions and restrictions on, each
unexercised and unexpired Stock Option, Restricted Stock Award, Performance
Share Award and Stock Appreciation Right, effective upon a date prior or
subsequent to the effective date of such Change of Control, as specified by the
Committee; or

                  (iii)    each outstanding Stock Option, Restricted Stock
Award, Performance Share Award and Stock Appreciation Right may be cancelled by
the Committee as of the effective date of any such Change of Control provided
that (x) prior written notice of such cancellation shall be given to each holder
of such an Award and (y) each holder of such an Award shall have the right to
exercise such Award to the extent that the same is then exercisable or, in full,
if the Committee shall have accelerated the time for exercise of all such
unexercised and unexpired Awards, during the thirty (30) day period preceding
the effective date of such Change of Control.

         (b)      "Change of Control" shall mean the occurrence of any one of
the following events:

                                      -12-
<PAGE>

                  (i)      any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) becomes, after the Effective Date of this
Plan, a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
securities; or

                  (ii)     the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or other entity, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or

                  (iii)    the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.

SECTION 16. GENERAL PROVISIONS.

         (a)      No Distribution; Compliance with Legal Requirements. The
Committee may require each person acquiring shares pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

         No shares of Stock shall be issued pursuant to an Award until all
applicable securities laws and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.

         (b)      Delivery of Stock Certificates. Delivery of stock certificates
to participants under this Plan shall be deemed effected for all purposes when
the Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.

         (c)      Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan or any
Award under the Plan does not confer upon any employee any right to continued
employment with the Company or any Affiliate.

                                      -13-
<PAGE>

SECTION 17. EFFECTIVE DATE OF PLAN.

         This Plan shall become effective upon (i) its adoption by the Company's
Board of Directors and (ii) its approval by the shareholders of the Company
within twelve months following the adoption of this Plan by the Board. If such
shareholder approval is not obtained within twelve months after the Board's
adoption of this Plan, this Plan shall terminate and be of no force or effect.

SECTION 18. GOVERNING LAW.

         This Plan shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws.

                                      * * *

                                      -14-<PAGE>
                                                                   Exhibit 10.20

                                                                  EXECUTION COPY

                             JOINT VENTURE AGREEMENT

/s/ O.K.

         This Joint Venture Agreement is dated as of April 2, 2001, by and among
Color Kinetics Incorporated, a Delaware corporation having its principal place
of business at 10 Milk Street, 11th Floor, Boston, Massachusetts 02108, U.S.A.
("Color Kinetics"), Yamagiwa Corporation, a Japanese corporation having its
principal place of business at 4-1-1 Sotokanda, Chiyoda-ku, Tokyo 101-0021,
Japan ("Yamagiwa"), ALS Incorporated, a Japanese corporation and a majority
owned subsidiary of Yamagiwa, having its principal place of business at 12-5
Gobancho, Chiyoda-ku, Tokyo 102-0076, Japan ("ALS"), and Color Kinetics Japan
Incorporated, a Japanese corporation having its principal place of business at
12-5 Gobancho, Chiyoda-ku, Tokyo 102-0076, Japan ("CKJ").

/s/ K.O.

         WHEREAS, Color Kinetics develops, manufacture and distributes digital
lighting products; and

         WHEREAS, prior to the Effective Date, ALS has been the distributor of
Color Kinetics' products in Japan; and

/s/ K.O.

         WHEREAS, Color Kinetics and ALS have mutually agreed to pursue
continued marketing, distribution and support of the Products in Japan through a
joint venture between them rather than by ALS acting as Color Kinetics'
distributor, and Color Kinetics and ALS have formed CKJ as a joint stock
corporation under the laws of Japan, for the purpose of marketing, distributing
and supporting the Products in Japan, developing, designing, marketing,
distributing and supporting localized Products in Japan, and if Color Kinetics,
in its sole discretion, so approves in accordance with Section 7 hereof and the
JV Distributorship Agreement, the manufacturing of localized Products and
marketing, distributing and supporting such localized Products in markets other
than the Japanese market;

/s/ G.M.

         NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledge, the Parties agree as
follows:

                                      -1-
<PAGE>

 /s/ Tetsu Konagaya /s/ Kiyoshi Otsuki /s/ Kiyoshi Otsuki /s/ George G. Mueller

1.       Definitions. For the purposes of this Agreement, the following terms
         shall have the following meanings:

         "Applicable Law" means, with respect to a Party, any domestic or
foreign, federal, state or local statue, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority applicable to such Party or
to its properties, business or assets.

         "Articles of Association" means the Articles of Association of CKJ
written in the Japanese language and attached hereto as EXHIBIT A-1, as amended
from time to time. For the convenience of the parties an English translation of
the Articles of Association is attached hereto as EXHIBIT A-2.

         "Board" means the board of directors of CKJ as from time to time
constituted.

         "Business Plan" means the [three (3)] year business plan of CKJ, which
includes a budget and managerial plan, attached hereto as EXHIBIT B, as from
time to time amended:

         "Change in Control" means (a)(i) the issuance of stock by a Party or by
any entity controlling a Party (for purposes of this definition "Controlling
Entity"); (ii) the sale or transfer of the stock of a Party or by a Controlling
Entity; (iii) the reorganization, merger or other combination of a Party or a
Controlling Entity with or into another entity; the result of any of which is
that the shareholders of the Party or the Controlling Entity immediately prior
to the stock issuance or consummation of the sale, transfer, reorganization,
merger or other combination, cease to own more than 50% of the voting stock of
the Party or the Controlling Entity as the case may be, or do not own more than
50% of the voting stock of the surviving entity, after the stock issuance or
consummation of the sale, transfer, reorganization, merger or other combination,
or (b) the sale of all or substantially all of the assets of a Party or a
Controlling Entity.

         "CKJ" has the meaning given it in the preamble to this Agreement.

         "Confidential Information" means any business and product plans,
product specifications, strategies, trade secrets, financial projections,
customer lists, and related documentation, intellectual property or other
information, tangible or intangible, of an individual or entity which is
maintained as confidential by such individual or entity or which enables such
individual or entity to maintain a competitive advantage over competitors who do
not have access to such information.

         "Effective Date" means the date of this Agreement.

         "Governmental Approvals" means all approvals, consents, authorizations,
and similar actions from all Governmental Authorities that are required in order
to consummate the transactions contemplated hereunder or under any of the
Related Agreements.

                                      -2-
<PAGE>

         "Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, government or self-regulatory organization, commission,
tribunal, or any regulatory, administrative or other governmental agency, or
subdivision, department or branch of any of the foregoing.

         "Independent Accounting Firm" means an internationally recognized, or
an affiliate of an internationally recognized, audit firm qualified under the
Japanese Certified Public Accountants Act, Law No. 103, 194B, as amended.

         "Distributorship Agreement" has the meaning given it in Section 5.1.

         "JV Share(s)" means share(s) of common stock of CKJ.

         "Party(ies)" means any or all of Color Kinetics, ALS, Yamagiwa and CKJ
and any transferee of their respective interests in CKJ and this Agreement as
permitted by this Agreement.

         "Percentage Interest" means, with respect to a Party, the percentage
issued and outstanding JV Shares held by such party.

         "Product(s)" has the meaning given it in the JV Distributorship
Agreement.

         "Shareholders" means Color Kinetics and ALS.

2.       Incorporation.

         2.1 Formation of CKJ. Prior to the Effective Date, the Parties have
caused the formation of CKJ for the purposes of marketing, distributing and
supporting the Products in Japan.

         2.2 The Name of CKJ. The name of CKJ shall be "Color Kinetics Japan
K.K." and shall be set forth in the Articles of Association. Use by CKJ of the
mark "Color Kinetics" shall be subject to the provisions of the JV
Distributorship Agreement.

         2.3 Articles of Association. The Articles of Association of CKJ are
hereby incorporated herein and made a part hereof. In the event of any ambiguity
or conflict arising between the terms and conditions of this Agreement and those
of the Articles of Association, to the extent legally permissible under
Applicable Law, the terms and conditions of this Agreement shall prevail.

2.4      Capital Contributions.

                  (a) The authorized capital of CKJ is Y40,000,000 represented
by 800 shares of JV Shares with a par value of Y50,000 per share. As of the
Effective Date, the ownership of JV Shares is as follows:

<TABLE>
<CAPTION>
PARTY                                    NUMBER OF SHARES         CONSIDERATION
<S>                                      <C>                      <C>
Color Kinetics                                     400            Y20,000,000
</TABLE>

                                      -3-
<PAGE>
<TABLE>
<S>                                      <C>            <C>

ALS                                          400            Y20,000,000
</TABLE>

                  (b) CKJ may, at any time and from time to time, borrow
additional funds from ALS in accordance with CKJ's capital needs as set forth in
the Business Plan and as determined by the Board. Any such outstanding loan
shall bear interest at the prevailing market rate determined among city banks in
Japan for a comparable loan from time to time. Any such loan must be repaid in
full prior to any distribution by CKJ to the Shareholders of profits or capital.

                  (c) Unless otherwise agreed by the Shareholders, each of Color
Kinetics and ALS shall hold fifty percent (50%) of the issued and outstanding JV
Shares. In the event that CKJ issues new JV Shares or other securities of CKJ,
each of the Shareholders shall have the right to purchase such shares or other
securities with cash or other consideration as the Board may determine in an
amount that is proportionate to its respective Percentage Interest.

         2.5 Stock Certificates. The JV Shares shall be evidenced by a stock
certificate issued by CKJ. Such stock certificates shall bear a legend
disclosing that such JV Shares are subject to certain restrictions on transfer.

3.       Management of CKJ.

         3.1      Meetings and Resolutions of Shareholders.

                  (a) Meetings of the shareholders of CKJ may be held in person
in Tokyo, Japan or at such other place as the Shareholders may agree and, to the
extent permitted under Applicable Law, by any other means determined by the
Board. Ordinary general meetings of shareholders shall be held within three (3)
months of the fiscal year end. The notice of ordinary meetings shall be provided
in English at least thirty (30) days prior to the scheduled date of the meeting.
The Board, Color Kinetics and ALS shall each have the right from time to time to
call an extraordinary general meeting of shareholders. The notice of
extraordinary meetings shall be provided in both Japanese and English at least
fourteen (14) days prior to the scheduled date of the meeting.

                  (b) All meetings of the shareholders shall be conducted in
both English and Japanese, and CKJ shall provide, and bear all costs in
connection with providing, a professional translator to assist in conducting the
meetings. In principle, all meetings of shareholders shall be held where the
head office of CKJ is located. Shareholders may discuss the agenda for any
shareholders' meeting in advance through one or more televised conferences and
the discussions and tentative decisions made at such conferences shall be
resolved at shareholders' meetings.

                  (c) The quorum required for a shareholders meeting shall be
shareholders representing in person or by proxy, not less than two-thirds (2/3)
of the total number of issued and outstanding JV Shares.

                  (d) Unless otherwise required by the laws of Japan or
otherwise provided herein, no shareholders' resolutions shall be effective
unless adopted by the affirmative vote of

                                      -4-
<PAGE>

shareholders holding more than seventy-five percent (75%) of JV Shares present,
in person or by proxy, at a meeting of shareholders.

                  (e) Notwithstanding anything to the contrary in this Agreement
or in the Articles of Association, but subject to compliance with Applicable Law
and without derogating from any provision of this Agreement or the Articles of
Association that requires a greater majority vote (including unanimous vote or
agreement), resolutions with respect to the following matters may be adopted
only by the affirmative vote of shareholders representing, in person or by
proxy, not less than seventy five percent (75%) of the total number of JV Shares
outstanding:

                  (i)      Any change in the capitalization of CKJ;

                  (ii)     Any amendment to the Articles of Association;

                  (iii)    Any merger consolidation, spin-off or any other
                           similar transaction involving CKJ, or a sale of all
                           or substantially all of the assets of CKJ;

                  (iv)     Any increase or reduction of capital;

                  (v)      Determination of compensation of directors and
                           auditors;

                  (vi)     Any distribution to the shareholders, including the
                           declaration or distribution of dividends and stock
                           dividends;

                  (vii)    Issuance of any JV Shares or any other security of
                           CKJ;

                  (viii)   Granting to any person other than the Shareholders of
                           CKJ the right to purchase JV Shares or any other
                           security of CKJ, except for stock options to
                           employees of CKJ;

                  (ix)     Any borrowing in excess of an aggregate principal
                           amount of Y100,000,000;

                  (x)      Any change to the Business Plan, and approval of new
                           business plans and operating budgets;

                  (xi)     Appointment of any representative director and the
                           Chief Financial Officer;

                  (xii)    Dissolution or liquidation of CKJ.

            3.2 Election of Directors and Statutory Auditors.

                  (a) Unless otherwise mutually agreed upon by the Shareholders,
CKJ shall be managed by a Board of Directors composed of four (4) directors, and
each Shareholder shall have the right to nominate two (2) directors. Each
Shareholder may, at any time and from time to time, with or without cause,
remove from office any director nominated by such Shareholder and nominate a new
director in his/her place. Color Kinetics initially nominates George G. Mueller
and Bruce A. Beck as the directors nominated by Color Kinetics, and ALS
initially nominates

                                      -5-
<PAGE>

Kiyoshi Otsuki and Tetsu Konagaya as the directors nominated by ALS. By January
1, 2003 the Board shall appoint an individual with experience and expertise in
the Japanese market in the area of CKJ's business, to attend Board meetings in
an advisory, non-voting capacity.

                  (b) If a vacancy occurs on the Board for any reason, a new
director shall be nominated by the Shareholder that nominated the director whose
office has been vacated, and an election to fill the vacancy shall be held at a
shareholders' meeting to be called without delay. A director may be removed,
with or without cause, at any time by the Party that nominated him.

                  (c) The Chairman of the Board (the "Chairman") shall be
elected each year by the Board from among the directors then in office. The
Chairman for fiscal years 2001 and 2002 shall be nominated by ALS, and for
fiscal year 2003 by Color Kinetics, in its discretion. Beginning with fiscal
year 2004, ALS shall nominate the Chairman for every even fiscal year (including
2004) and Color Kinetics shall nominate the Chairman for every odd year
(beginning with 2005).

                  (d) CKJ shall have one (1) statutory auditor who shall be
jointly nominated and elected by the Shareholders.

                  (e) Each Shareholder agrees to exercise its voting rights as
shareholder of CKJ and take all required action as to ensure the immediate
election or removal, as the case may be, of the directors nominated or removal,
as the case maybe, by the other Shareholder as provided in this Section 3.2.
Each Shareholder shall and agrees to cause the election of George G. Mueller and
Bruce A. Beck as the directors initially nominated by Color Kinetics, and
Kiyoshi Otsuki and Tetsu Konagaya as the directors initially nominated by ALS.

                  (f) Except as set forth in Section 3.3 with respect to Kiyoshi
Otsuki, during the first year of CKJ's operation, the directors and the
statutory auditor shall not be entitled to any compensation in connection with
their membership on the Board or the services rendered by them to CKJ; provided,
however, that CKJ shall reimburse each director and the statutory auditor for
all reasonable out-of-pocket expenses in connection with attendance at and
participation in Board meetings, including, without limitation, any expenses for
travel, accommodation and meals. Beginning with the second year of CKJ's
operation, the Board shall determine the appropriate compensation for the
directors and for the statutory auditor and shall submit it to the shareholders'
approval.

            3.3 Representative Director and Officers. Kiyoshi Otsuki shall serve
as the representative director and the President of CKJ. Concurrently with the
execution hereof, CKJ and Kiyoshi Otsuki are entering into an Directorship
Agreement in the form attached hereto as EXHIBIT C pursuant to which Kiyoshi
Otsuki will be employed by CKJ as its President for a period of one (1) year
following the Effective Date. After the first year in office, Kiyoshi Otsuki
shall continue to serve as a representative director of CKJ until the Board
replaces him with another representative director.

            3.4 Meetings and Resolutions of the Board.

                  (a) Meetings of the Board shall be held in person, and, to the
extent permitted under Applicable Law, by televised conference or any other
means determined by the Board.

                                      -6-
<PAGE>

Televised conference means a conference through the usage of a telecommunication
device which enables instantaneous conveyance of voice and images of each
shareholder present at a meeting and precise and simultaneous communication
between or among the users. Board meetings shall be conducted in both English
and Japanese, and CKJ shall provide, and bear all costs in connection with
providing, a professional translator to assist in conducting the meetings.

                  (b) Unless otherwise determined by a unanimous vote of the
Board, a regular meeting of the Board shall be held at least once every fiscal
quarter, at a date and time determined by the Board. In the first two (2) years
of CKJ's operation, two (2) regular Board meetings shall be held in person in
Tokyo, Japan and two regular Board meetings shall be held by televised
conference or any other means determined by the Board in accordance with Section
3.4(a). Notice of each meeting shall be provided in English at least fourteen
(14) days prior to the scheduled date of the meeting.

                  (c) A special meeting of the Board may be held, at any time
and from time to time, when called by any director. Notice of each meeting shall
be provided in both Japanese and English at least fourteen (14) days prior to
the scheduled date of the meeting.

                  (d) The quorum required for a meeting of the Board shall be
three (3) members of the Board.

                  (e) Except as provided in Section 3.4(g) below, when a quorum
is present at a meeting, resolutions and actions of the Board shall require the
affirmative vote of a majority of the members of the Board then in office.

                  (f) When any issue cannot be resolved by the Board at two (2)
consecutive meetings, the chief executive officers of Color Kinetics and ALS
shall consult between themselves in a good faith attempt to resolve such issue.
Except as provided in Section 3.4(g), if the chief executive officers of Color
Kinetics and ALS can not resolve such issue within thirty (30) days, the
Chairman shall have the casting vote.

                  (g) Notwithstanding anything to the contrary in this Agreement
or in the Articles of Association, but subject to compliance with any Applicable
Law and without derogating from any provision of this Agreement or the Articles
of Association that requires a greater majority vote (including unanimous vote
or agreement), resolutions with respect to the matters set forth in Section 3.1
(e) shall require the unanimous affirmative vote of the Board.

            3.5 Location of Offices. Yamagiwa will lease to CKJ an appropriate
office space at a reasonable rent, which will be agreed upon by the parties
through good faith consideration, within the Yamagiwa Building at 12-5 Gobancho,
Chiyoda-ku, Tokyo. However, at any time after December 31, 2001 the Board may
determine that CKJ shall move its offices to another location in Tokyo.

            3.6 Statement of Policy.

                  (a) The business affairs of CKJ shall be carried on and
conducted in a sound, prudent and constructive manner for the purpose of
building a successful corporation.

                                      -7-
<PAGE>

                  (b) Unless otherwise agreed by the Shareholders, CKJ's
business activity shall be limited to (i) marketing, distribution and support of
the Products in the Territory, (ii) manufacturing of power supply products for
the Products, (iii) developing, designing, marketing, distributing and
supporting localized Products in the Territory, and (iv) if Color Kinetics, in
its sole discretion, so approves in accordance with Section 7 hereof and the JV
Distributorship Agreement, the manufacturing of localized Products and
marketing, distributing and supporting such localized Products in markets
outside the Territory.

            3.7 Day to Day Operation. The day-to-day operations of CKJ shall be
managed by the representative director and officers nominated and elected in
accordance with Sections 3.3. Such operations shall be conducted in accordance
with the Articles of Association, this Agreement, the Distributorship Agreement,
the Business Plan and the operating and capital budgets approved by the Board.

            3.8 Budgeting, Accounting and Reporting Obligations.

                  (a) CKJ's initial operating budget (for fiscal 2001 through
2003) is included in the Business Plan attached as EXHIBIT B. Each year the
Board shall approve the budget for the succeeding year prior to the commencement
of the succeeding year.

                  (b) CKJ's fiscal year shall initially be the twelve (12) month
period ending December 31.

                  (c) In addition to any reports to be prepared and provided to
the shareholders pursuant to any Applicable Law or the Articles of Association,
CKJ shall provide each Shareholder with the following reports and statements to
the parties in English within the time periods set forth below or an interim
version of any such report or statement to any of them within thirty (30) days
of receipt of request:

                    (i) Within ten (10) days after the closing of each month,
balance sheet, profit and loss statement and cash flow statement. Each such
document shall be provided in a form and format acceptable to the receiving
Shareholder.

                    (ii) Within fourteen (14) days after the closing of each
quarter, balance sheet, profit and loss statement and cash flow statement. Each
such document shall be provided in a form and format acceptable to the receiving
Shareholder.

                    (iii) Within forty-five (45) days after the end of each
fiscal year, balance sheet, profit and loss statement and cash flow statement.
Each such document shall be provided in a form and format acceptable to the
receiving Shareholder.

                  (d) The Board shall designate an Independent Accounting Firm
to audit the financial statements of CKJ on an annual basis. The annual
accounting report of CKJ shall be audited at the expense of CKJ by its
Independent Accounting Firm in accordance with the laws of Japan.

                                      -8-
<PAGE>

                  (e) Each Shareholder shall, upon reasonable written notice to
CKJ, have access to CKJ's books, records, procedures, employees and similar
sources of data and information concerning CKJ's business and financial
operations.

                  (f) CKJ shall provide to each Shareholder full access to the
books and records of CKJ, and shall provide to each Shareholder the accounting
information such Shareholder required to comply with its own financial reporting
requirements.

                  (g) CKJ shall designate Ueno Branch of Daiwa Bank as the bank
at which CKJ maintains its bank accounts or such other bank as the Board may
otherwise designate.

            3.9 Confidentiality Obligation. CKJ shall require each employee,
independent contractor, consultant and any other person who will have access to
Confidential Information of CKJ or of any Party, to enter into a confidentiality
agreement in substantially the form attached hereto as EXHIBIT D, or such other
form as may be approved from time to time by the Board.

            3.10 Dividends. Unless duly determined by the Board and permitted by
Japanese laws, CKJ shall not pay dividends but shall reinvest its profits in its
business.

            3.11 Employment.

                  (a) The Parties agree that CKJ's employees shall consist of
employees to be seconded from Yamagiwa, employees recruited and directly hired
by CKJ, and employees permanently transferred from Yamagiwa to CKJ in accordance
with Section 3.11(b).

                  (b) As soon as practicable after CKJ commences operations,
Yamagiwa will second to CKJ the Yamagiwa employees listed on Schedule 3.11(a)
hereto (the "Seconded Employees"). Each Seconded Employee shall be employed by
CKJ pursuant to and in accordance with a secondment agreement among CKJ,
Yamagiwa and the Seconded Employee, in a form approved by the Board. During the
period until December 21, 2003, the Seconded Employees shall be entitled to
receive from CKJ substantially the same salaries and benefits they received from
Yamagiwa prior to their secondment to CKJ. Yamagiwa shall remain fully
responsible and liable for any and all salaries and benefits, and any and all
payments required by any Applicable Law, in connection with the Seconded
Employees' employment with Yamagiwa and the termination thereof. Yamagiwa agrees
to indemnify, defend, and hold harmless CKJ and Color Kinetics, and their
respective directors, officers, employees, agents, successors and assigns from,
against and with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense (including, without limitation,
reasonable attorneys' and accountants' fees) of any kind or character, arising
out of or in any manner incident, relating or attributable to the employment by
Yamagiwa of the Seconded Employees and the termination thereof. By six (6)
months prior to the end of 2003, CKJ, Yamagiwa and each Seconded Employee may
determine, through mutual consultation among them, whether the Seconded Employee
will be transferred to CKJ and become a permanent employee of CKJ.

                  (c) The Parties agree that CKJ will adopt a stock option plan
pursuant to Japanese law, to allow CKJ to provide its employees, officers,
directors and consultants incentives by affording them an opportunity to acquire
or increase their proprietary interest in CKJ. The option plan shall be adopted
and administered by the Board, which shall have the

                                      -9-
<PAGE>

authority, among other things and without limitation, to determine the number of
options granted to each optionee, to set the exercise price and determine the
duration of the option. The Parties agree that of CKJ's employee, only full-time
employees originally recruited and hired by CKJ and the employees permanently
transferred from Yamagiwa to CKJ as of such transfer shall be entitled to
receive stock options in CKJ, and that the Seconded Employees shall not be
granted stock options in CKJ. The Parties further agree that unless otherwise
determined by a unanimous vote of the Board, any stock options granted by CKJ
shall vest over a period of four (4) years (as to 25% on the first anniversary
and thereafter in 12 equal quarterly increments of 6.25% each). The inception of
the stock option program shall be in compliance with the Japanese laws, and each
Shareholder shall cooperate in providing information necessary for such
inception.

4. Rights and Obligations of the Parties.

         4.1 Financing. There shall be no obligation of any of the Parties to
provide additional capital contributions to CKJ, in the form of equity or
otherwise, except for the additional funding in the form of the loans from ALS
as specified in Section 2.4. Unless the Shareholders otherwise agree, any
additional equity contributions that the Shareholders make shall be made pro
rata by each Shareholder on the basis of their initial equity investment in CKJ.

         4.2 Other Contributions of the Parties.

                  (a) As more specifically provided for in the JV
Distributorship Agreement, Color Kinetics shall provide CKJ certain
technological and business information and know-how in order to assist CKJ in
the marketing, distribution and support of Products in Japan.

                  (b) ALS will provide CKJ with relevant information on market
needs, support the CKJ's marketing efforts, will assist CKJ in locating
potential strategic and OEM partners and establishing and developing business
with them, and will assist CKJ in implementing strategic sales activities.

                  (c) Yamagiwa will assert its control over ALS, its majority
owned subsidiary, to assure that ALS complies with its rights and obligations
under this Agreement, including, without limitation, the obligation to provide
CKJ additional financing as provided in Section 2.4.

         4.3 Non-transferability of Shares.

                  (a) No Shareholder may sell, assign, transfer, exchange, gift,
devise, pledge, hypothecate, encumber or otherwise alienate or dispose of, with
consideration or otherwise, any JV Shares or other security of CKJ, to any third
party ("Transfer"), except in accordance with this Agreement. Any such purported
transfer in violation of any provision of this Agreement and all actions by the
purported transferor and transferee in connection therewith shall be of no force
or effect and CKJ shall not recognize such purported transfer for any purpose,
including without limitation for purposes of dividend and voting rights.

                  (b) Except as set forth in Section 4.3(c), no Shareholder
shall Transfer any JV Shares or any other security of CKJ without the prior
written consent of the other Shareholder, which consent shall not be
unreasonably withheld or delayed.

                                      -10-
<PAGE>

                  (c) The restrictions on Transfer set forth in this Section 4.3
shall not apply to a Transfer by a Shareholder (i) to any person or entity who
holds not less than seventy five percent (75%) of the voting stock of such
Shareholder (for purposes of this Section 4.3, a "Controlling Entity"), (ii) to
any entity which not less than seventy five percent (75%) of its voting stock is
held by a Controlling Entity, or (iii) to any person or entity in connection
with the sale of all or substantially all of the assets of such Shareholder to
such person or entity (each of the transferees under this Section 4.3(c), a
"Permitted Transferee"); provided, however, that in any such event the JV Shares
or other security of CKJ so transferred in the hands of each such Permitted
Transferee shall remain subject to this Agreement, and each such Permitted
Transferee shall so acknowledge in writing and agree to be bound by all of the
terms and conditions hereof and assume the obligations of the selling
Shareholder hereunder as a condition precedent to the effectiveness of such
transfer.

         4.4 Confidentiality.

                  (a) Each Party understands that in the course of administering
the joint venture, each Party may have access to other Parties' Confidential
Information and/or Confidential Information of third parties for which another
Party is responsible for maintaining confidentiality. All Confidential
Information provided by a Party (the "Disclosing Party") to the other Party
(the "Receiving Party") or to CKJ or to which the Receiving Party or CKJ gains
access pursuant to this Agreement shall be deemed Confidential Information and
shall be maintained as confidential by the Receiving Party and CKJ. The
Receiving Party agrees to take reasonable precautions to guard the
confidentiality of such Confidential Information and to limit access to the
materials and Confidential Information to those Receiving Party's employees who
need such access to administer CKJ. Each Party hereby confirms that it has
contractual agreements with its employees which obligates all such employees to
respect and protect the Confidential Information of its business associates. The
Receiving Party further agrees to immediately return all written Confidential
Information of the Disclosing Party upon termination of this Agreement or
immediately upon request by the Disclosing Party. The Parties shall not disclose
any of the Confidential Information of CKJ or of any Disclosing Party to any
third party or otherwise other than for the purpose of performing this Agreement
without the prior written consent of CKJ or such Disclosing Party, as the case
may be. The Receiving Party shall not disclose or use any of the Confidential
Information of the Disclosing Party in connection with doing business with or
providing any services to any third party without the prior written consent of
the Disclosing Party. In the event of a breach of any of the foregoing
provisions, the Receiving Party agrees that the harm suffered by the Disclosing
Party would not be compensable by monetary damages alone and, accordingly, that
the disclosing Party shall, in addition to other available legal or equitable
remedies, be entitled to an injunction against such breach.

                  (b) The obligations of the Receiving Party specified in
Section 4.4(a) shall not apply, and the Receiving Party shall have no further
obligations, with respect to any Confidential Information to the extent that:

                    (i) such Confidential Information is generally known to the
public at the time of disclosure to the Receiving Party or becomes generally
known through no wrongful act on the part of the Receiving Party;

                                      -11-
<PAGE>

                    (ii) is in the Receiving Party's possession at the time of
disclosure free of restrictions on disclosure otherwise than as a result of
Receiving Party's breach of any legal obligation;

                    (iii) becomes known to the Receiving Party through
disclosure by sources other than the Disclosing Party having the legal right to
disclose such Confidential Information;

                    (iv) is independently developed by the Receiving Party
without reference to or reliance upon the Confidential Information;

                    (v) is required to be disclosed by the Receiving Party to
comply with the Applicable Laws or governmental regulations, provided that the
Receiving Party provides prior written notice of such disclosure to the
Disclosing Party and takes reasonable and lawful actions to avoid and/or
minimize the extent of such disclosure.

                  (c) Within fifteen (15) days after expiration or termination
of this Agreement, each Receiving Party shall promptly (i) return to the
Disclosing Party all such Disclosing Party's Confidential Information, and (ii)
to the extent any such Confidential Information or other materials cannot be
returned, erase or destroy all copies of such Confidential Information. In
addition, an authorized representative of the Receiving Party shall certify in
writing to the Disclosing Party that the Receiving Party has complied with the
requirements of this Section 4.4(c).

                  (d) The obligations under this Section 4.4 shall survive
termination or expiration of this Agreement.

5. Distribution Agreements.

         5.1 JV Distributorship Agreement. Concurrently with the execution
hereof, Color Kinetics and CKJ are entering into an Distributorship Agreement,
pursuant to which Color Kinetics is granting to CKJ exclusive distribution
rights in Japan for the Products in substantially the form of EXHIBIT E (the "JV
Distributorship Agreement").

         5.2 Termination of Current Distributorship Agreement. Upon execution of
the JV Distributorship Agreement, the Color Kinetics Incorporated
Distributorship Agreement dated February 2, 2000 between Color Kinetics and ALS
will automatically terminate; provided, however, that the provisions of Sections
4, 7, 8, 9, 10, 11, 14, 17.3, 17.4, 18 and 19 such Distributorship Agreement
shall survive the termination thereof.

6. Training and Support.

         6.1 It is the parties' intention that CKJ will design and develop
localized Products for the Japanese market, as more fully described and provided
for in Section 7 hereof and the JV Distribution Agreement. For that purpose and
in order to assist CKJ to better understand the design and technical aspects of
the Products, CKJ will send qualified technical personnel to attend training at
Color Kinetics' facilities in Massachusetts. CKJ and Color Kinetics will agree
on the timing of such training, the technical personnel to attend such training
and the required

                                      -12-
<PAGE>

training period. Color Kinetics shall provide the training free of charge and
shall also bear all reasonable out-of-pocket costs and expenses associated with
accommodation and meals of such technical personnel while in training with Color
Kinetics.

         6.2 CKJ shall, from time to time, at its own expense, attend training
sessions generally provided by Color Kinetics for its distributors and resellers
as requested by Color Kinetics. CKJ will use commercially reasonable efforts to
ensure that all appropriate personnel attend and actively participate in such
training sessions. If, at CKJ's request, training sessions are held otherwise
than at Color Kinetics' main facilities in the USA, CKJ shall reimburse Color
Kinetics for all additional costs and expenses associated with provision of the
training outside of Color Kinetics' Massachusetts facility.

         6.3 Upon request of CKJ, Color Kinetics shall assist CKJ in its support
of the Products. In no event will Color Kinetics be obligated to provide
installation, training or support services directly to sub-distributors or
customers.

7. Intellectual Property.

         7.1 Intellectual Property Rights. Except as expressly set forth in this
Section 7 and without derogating from any other provision of this Agreement or
the JV Distributorship Agreement, Color Kinetics and its licensors shall retain
all right, title and interest in the intellectual property embedded in and
pertaining to the Products throughout the world, including without limitation,
patent, copyright, trademark and trade secret rights. Except as expressly set
forth in the JV Distributorship Agreement, neither this Agreement, nor any
license of Products hereunder shall be construed as granting to CKJ any license
or other right in or to any patent, copyright, trademark, trade secret or other
proprietary right of Color Kinetics or its licensors.

         7.2 Development by CKJ. Without derogating from any other provision of
this Agreement or the JV Distributorship Agreement, so long as the JV
Distributorship Agreement is in effect and CKJ complies with all of CKJ's
obligations thereunder, in the event CKJ or any of its directors, officers,
employees or consultants, develops any idea, improvement, invention, innovation,
development, specification, application, technology, product or any other
intellectual property right ("Development") that in any way is derived from,
based upon, or related or pertaining to any Product or any of Color Kinetics'
technology or intellectual property rights, Color Kinetics will be the sole and
exclusive owner of any such Development and the provisions of Section 7.1 shall
apply to any such Development. If Color Kinetics, in its sole discretion, wishes
to pursue such Development, the parties shall conduct good faith negotiations to
reach an agreement between them as to the manufacturing, marketing,
distribution, sale and support by CKJ in the Territory of each product developed
based on such Development, and appropriate royalties to be paid for the sale of
such product outside the Territory.

         7.3 Development with Third Parties. Without derogating from any other
provision of this Agreement or the JV Distributorship Agreement, so long as the
JV Distributorship Agreement is in effect and CKJ complies with all of CKJ's
obligations thereunder, in the event that CKJ wishes to develop or pursue any
Development with any third party, then CKJ shall provide Color Kinetics with a
proposal which includes the identity of such third party, a description, as
detailed as possible, of the suggested Development, and any other information

                                      -13-
<PAGE>

related to such Development deems relevant to Color Kinetics. If Color Kinetics,
in its sole discretion, wishes to pursue such Development, the parties and such
third party shall conduct good faith negotiations to reach an agreement among
them as to the ownership of such Development, and the manufacturing, marketing,
distribution, sale and support in the Territory and outside the Territory of
each product developed based on such Development, and appropriate royalties to
be paid for the sale of such product in the Territory and outside the Territory.

         7.4 Use of Marks. So long as this Agreement is in effect, and CKJ
complies with all of CKJ's obligations hereunder, CKJ shall have the right to
use Color Kinetics' trademarks listed on Exhibit C of the JV Distributorship
Agreement (each a "Mark" and together the "Marks") in the Territory in
connection with the marketing, distribution, sale and support of the Products.
CKJ shall not use any Mark other than as specifically permitted by the
immediately preceding sentence, shall not remove the Marks from any Product
furnished by Color Kinetics and shall not make any use of any Marks in
connection with any goods or services other than the Products. So long as the JV
Distributorship Agreement is in effect and thereafter, CKJ shall not adopt,
register or make any use of any trademark or brand name that is confusingly
similar to any Mark. All rights in the Marks shall, at all times during the term
of the JV Distributorship Agreement and thereafter, be and remain the sole
property of Color Kinetics, and all goodwill and other benefits associated
therewith are hereby assigned to, and shall inure to, Color Kinetics. CKJ agrees
to assist in the registration of the Marks in the Territory in the name of Color
Kinetics, in renewal and maintenance of such registration and in such recording
of CKJ as a registered user as Color Kinetics may reasonably request. Any costs
incurred by CKJ and approved in advance by Color Kinetics in connection with
such registration, maintenance and recording shall be at Color Kinetics'
expense. CKJ also agrees to comply with any guidelines covering the use of Color
Kinetics' corporate name, logo(s), or trademarks that Color Kinetics provides to
its distributors. The most recent guidelines are provided as Exhibit D to the JV
Distributorship Agreement.

8. Representations and Warranties.

         8.1 Representations and Warranties of Color Kinetics. Color Kinetics
hereby represents and warrants to ALS and Yamagiwa, as follows:

                  (a) Corporate Organization, Etc. Color Kinetics is a
corporation duly organized and validly existing under the laws of the State of
Delaware.

                  (b) Authorization, Etc. Color Kinetics has full corporate
power and authority to enter into this Agreement and the JV Distributorship
Agreement and to carry out the transactions contemplated hereby and thereby.
Color Kinetics has taken all action required by law, its Certificate of
Incorporation or otherwise to authorize the execution, delivery and performance
of this Agreement and the JV Distributorship Agreement. Each of this Agreement
and the JV Distributorship Agreement is the valid and binding obligation of
Color Kinetics, subject to receipt of necessary Governmental Approvals,
enforceable against it in accordance with its respective terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditor's rights,
and the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.

                                      -14-
<PAGE>

                  (c) No Violation. Neither the execution and delivery by Color
Kinetics of this Agreement and the JV Distributorship Agreement nor the
consummation of the transactions contemplated hereby and thereby, will (i)
conflict with or result in a breach of any provision of the Certificate of
Incorporation or By-laws of Color Kinetics, (ii) conflict with or result in a
breach of any term, condition, or provision of, or constitute a default under,
or give rise to any right of termination, cancellation or acceleration with
respect to, or result in the creation of any lien, charge or encumbrance upon
any property or assets of Color Kinetics pursuant to, or otherwise require the
consent of any person under, any agreement or obligation to which Color Kinetics
is a party or by which any of its properties or assets may be bound, or (iii)
violate or conflict with any Applicable Law applicable to Color Kinetics or any
of its properties or assets, subject to obtaining the requisite Governmental
Approvals.

                  (d) Consents and Approvals of Governmental Authorities. Except
for the Governmental Approvals listed in EXHIBIT F, no consent, approval or
authorization of, or declaration, registration with, any Governmental Authority
is required to be obtained by Color Kinetics in connection with the execution,
delivery, and performance of this Agreement and the JV Distributorship
Agreement, and the consummation of the transactions contemplated hereby and
thereby.

                  (e) Regulatory Applications. The information provided by Color
Kinetics for use in the applications for the Governmental Approvals will not
contain any untrue statement of a material fact of omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.

         8.2 Representations and Warranties of ALS and Yamagiwa. ALS and
Yamagiwa hereby, jointly and severally, represent and warrant to Color Kinetics,
as follows:

                  (a) Corporate Organization, Etc. Each of ALS and Yamagiwa is a
corporation duly organized and validly existing under the laws of Japan.

                  (b) Authorization, Etc. Each of ALS and Yamagiwa has full
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. Each of ALS and Yamagiwa has taken all action
required by law, its Articles of Association or otherwise to authorize the
execution, delivery and performance of this Agreement. This Agreement is the
valid and binding obligation of each of ALS and Yamagiwa, enforceable in
accordance with its terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights, and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

                  (c) No Violation. Neither the execution and delivery by either
ALS or Yamagiwa of this Agreement nor the consummation of the transactions
contemplated hereby by either ALS or Yamagiwa, will (i) conflict with or result
in a breach of any provision of the Articles of Association of either ALS or
Yamagiwa, (ii) conflict with or result in a breach of any term, condition, or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien,

                                      -15-
<PAGE>

charge or encumbrance upon any property or assets of ALS or Yamagiwa pursuant
to, or otherwise require the consent of any person under, any agreement or
obligation to which ALS or Yamagiwa is a party or by which any of their
respective properties or assets may be bound, or (iii) violate or conflict with
any Applicable Law applicable to ALS or Yamagiwa or any of their respective
properties or assets.

                  (d) Consents and Approvals of Governmental Authorities. Except
for the Governmental Approvals listed in EXHIBIT G, no consent, approval or
authorization of, or declaration, registration with, any Governmental Authority
is required to be obtained by ALS or Yamagiwa in connection with the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions contemplated hereby.

                  (e) Regulatory Applications. The information provided by ALS
and Yamagiwa for use in the applications for the Governmental Approvals will not
contain any untrue statement of a material fact of omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.

                  (f) Initial Business Plan. ALS and Yamagiwa prepared the
initial Business Plan and warrant that it was prepared in good faith using
reasonable assumptions and that ALS and Yamagiwa believe it accurately reflects
the costs to be associated with CKJ's business.

9. Adjustment to Relationship.

         9.1 Performance Targets. The performance targets for CKJ for fiscal
years 2001, 2002 and 2003 are as set forth on EXHIBIT H (the "Trial Period").
Six (6) months prior to the expiration of the Trial Period and each Additional
Period (as defined below), if any, the Shareholders shall commence good faith
negotiations to mutually agree on new performance targets for CKJ and on the
period during which such performance targets will apply (each such period, an
"Additional Period"). The performance targets for the Trial Period and for any
Additional Period, as such performance targets may from time to time be modified
by the Shareholders in accordance with the terms of this Agreement, are
hereinafter referred to as the "Performance Targets."

         9.2 If Performance Targets Are Not Met. Notwithstanding anything to the
contrary in this Agreement, if, with respect to any fiscal year of CKJ,
beginning with fiscal year 2002, CKJ does not meet one or more of the
Performance Targets for such fiscal year (each, a "Default Fiscal Year"), the
following shall apply:

                  (a) The Shareholders shall negotiate in good faith for a
period of thirty (30) days after the net revenue of CKJ for the Default Fiscal
Year is determined (the "Negotiation Period") in order to determine whether the
business of CKJ should be restructured and revised Performance Targets and
Minimum Purchases under the JV Distributorship Agreement for the fiscal year
immediately succeeding the Default Fiscal Year should be adopted.

                  (b) If the Shareholders reach an agreement in accordance with
Section 9.2(a) within the Negotiation Period, such agreement shall apply, and
the Performance Targets set forth herein and Minimum Purchases under the JV
Distributorship Agreement shall be deemed amended to the extent the Shareholders
so agree.

                                      -16-
<PAGE>

                  (c) If the Shareholders fail to reach an agreement in
accordance with Section 9.2(a) within the Negotiation Period, then:

                    (i) Color Kinetics shall have the option (the "CK Option"),
but not the obligation, to purchase all, but not less than all, of the JV Shares
or other securities of CKJ owned by ALS (the "ALS Holdings"), exercisable by a
written notice to ALS during a period of sixty (60) days after the end of the
Negotiation Period (the "CK Option Term"). The total aggregate purchase price
for all of ALS Holdings shall be equal to the amount invested by ALS in the
equity of CKJ plus interest thereon at a rate of twelve percent (12%) per annum,
accruing from the date each such equity investment was made. Following delivery
of the notice of exercise of the CK Option, Color Kinetics shall purchase and
ALS shall sell all of ALS Holdings at the purchase price determined in
accordance with the forgoing and on a date no later than ten (10) business days
after the date of such notice. On such date, payment of the purchase price shall
be made concurrently with the delivery by ALS to Color Kinetics of certificates
representing all of ALS Holdings and any other document or instrument of
transfer reasonably requested by Color Kinetics.

                    (ii) If Color Kinetics does not exercise the CK Option
within the CK Option Term, ALS shall have the option (the "ALS Option"), but not
the obligation, to purchase all, but not less than all, of the JV Shares or
other securities of CKJ owned by Color Kinetics (the "CK Holdings"), exercisable
by a written notice to Color Kinetics during a period of sixty (60) days after
the end of the CK Option Term (the "ALS Option Term"). The total aggregate
purchase price for all of CK Holdings shall be equal to the amount invested by
Color Kinetics in the equity of CKJ plus interest thereon at a rate of twelve
percent (12%) per annum, accruing from the date each such equity investment was
made. Following delivery of the notice of exercise of the ALS Option, ALS shall
purchase and Color Kinetics shall sell all of CK Holdings at the purchase price
determined in accordance with the forgoing and on a date no later than ten (10)
business days after the date of such notice. On such date, payment of the
purchase price shall be made concurrently with the delivery by Color Kinetics to
ALS of certificates representing all of CK Holdings and any other document or
instrument of transfer reasonably requested by ALS.

                    (iii) In the event that neither Color Kinetics nor ALS
exercise the respective options granted to them in this Section 9.2, the Parties
shall cause the dissolution and liquidation of CKJ.

         9.3 If Performance Targets Are Not Agreed Upon. If the Shareholders
fail to agree on the term of any Additional Period or on the Performance Targets
for such Additional Period at least four (4) months prior to the expiration of
the Trial Period or the then Additional Period, the provisions of Section 9.2(c)
shall apply; provided, however, that for purposes of this Section 7.3, the CK
Option Term shall be a period of two (2) months commencing four (4) months prior
to the expiration of the Trial Period or the then Additional Period, as the case
may be, and the ALS Option Term shall be a period of two (2) months commencing
upon expiration of the CK Option Term.

         9.4 Other Buyout Options.

                                      -17-
<PAGE>

                  (a) Without derogating from the provisions of Sections 9.1,
9.2 and 9.3 or from any right or remedy to which Color Kinetics may be entitled
under this Agreement, the JV Distributorship Agreement or Applicable Law, if ALS
or Yamagiwa is in material breach of this Agreement (including, without
limitation, if ALS or an Affiliate violates the non-competition provisions in
Section 10) or the JV Distributorship Agreement, or if CKJ is in material
breach, caused indirectly by ALS or Yamagiwa, of the JV Distributorship
Agreement, and such breach is not cured within thirty (30) days after ALS or
Yamagiwa, as the case may be, receives written notice thereof from Color
Kinetics, or if ALS or Yamagiwa has made a material misrepresentation with
respect to any material condition, warranty, representation or agreement
contained in this Agreement or the JV Distributorship Agreement, then Color
Kinetics shall have the option, but not the obligation, to purchase all, but not
less then all, of the ALS Holdings, exercisable by a written notice to ALS,
during a period of ninety (90) days following the later of (A) when Color
Kinetics first learns about such breach, if the breach is not curable, or (B)
the expiration of the thirty (30) days notice period referred to above, if the
breach is curable.

                  (b) Without derogating from the provisions of Sections 9.1,
9.2 and 9.3, if Color Kinetics is in material breach of this Agreement or the JV
Distributorship Agreement, and such breach is not cured within thirty (30) days
after Color Kinetics receives written notice thereof from ALS, or if Color
Kinetics has made a material misrepresentation with respect to any material
condition, warranty, representation or agreement contained in this Agreement or
the JV Distributorship Agreement, then ALS shall have the option, but not the
obligation, to purchase all, but not less then all, of the CK Holdings,
exercisable by a written notice to Color Kinetics, during a period of ninety
(90) days following the later of (A) when ALS first learns about such breach, if
the breach is not curable, or (B) the expiration of the thirty (30) days notice
period referred to above, if the breach is curable.

                  (c) The total aggregate purchase price for all of the CK
Holdings or ALS Holdings, as the case may be, for purposes of this Section 9.4,
shall be equal to the respective amount invested by Color Kinetics or ALS, as
the case may be, in the equity of CKJ, with no interest thereon. Following
delivery of the notice of exercise of the option, the Shareholder exercising the
option shall purchase and the other Shareholder shall sell all of the CK
Holdings or ALS Holdings, as the case may be, at the purchase price determined
in accordance with the forgoing and on a date no later than ten (10) business
days after the date of such notice. On such date, payment of the purchase price
shall be made concurrently with the delivery by the selling Shareholder to the
purchasing Shareholder of certificates representing all of the CK Holdings or
ALS Holdings, as the case may be, and any other document or instrument of
transfer reasonably requested by the purchasing Shareholder.

10. Non-competition and by ALS, Yamagiwa or any Affiliate. Without derogating
from the provisions of any Applicable Law (including, without limitation, any
law relating to the protection of patent rights or intellectual property), as
long as ALS or any Affiliate (as defined herein) of ALS or Yamagiwa holds any
shares or other securities of CKJ, and for a period of one (1) year after ALS or
any such Permitted Transferee no longer holds any shares or other securities of
CKJ, neither ALS, nor Yamagiwa nor any Affiliate of ALS or Yamagiwa shall,
directly or indirectly, participate as owner, stockholder, manager, agent or
consultant in any business, firm or corporation which is in competition with CKJ
or Color Kinetics, or which intends at any time to compete with CKJ or Color
Kinetics, or which otherwise develops,

                                      -18-
<PAGE>

manufactures, markets, distributes or sells any products that Color Kinetics in
its reasonable discretion considers to be a competitive product to any products
of Color Kinetics. For purposes of this Section 10, an "Affiliate" means an
individual or an entity controlling, under common control with, or controlled
by, ALS or Yamagiwa.

11. Term and Termination. This Agreement shall commence on the Effective Date
and shall remain in full force and effect as long as Color Kinetics and ALS, or
any of their respective Permitted Transferees, own any JV Shares. In the event
that Color Kinetics or ALS acquires all the issued and outstanding JV Shares
pursuant to the terms of Section 9, this Agreement shall terminate automatically
at that point; provided, however, that the expiration or termination of this
Agreement shall not release any Party from any liability, duty, or obligation
which at the time of expiration or termination has already accrued to the other
Party or which thereafter may accrue in respect of any act or omission prior to
such expiration or termination.

12.      Miscellaneous.

         12.1 Force Majeure. No Party shall be liable for failure to perform,
whether in whole or in part, its obligation under this Agreement if such failure
is caused by any event or condition not existing as of the date of this
Agreement and not reasonably within the control of the affected Party,
including, without limitation, by fire, flood, typhoon, earthquake, explosion
strikes, unavoidable accidents, war (declared or undeclared), acts of terrorism,
sabotage, embargoes, acts of Governmental Authorities, or any cause beyond the
reasonable control of the effected Party; provided that the affected Party
promptly notifies the other Parties of the occurrence of the event of force
majeure and takes all reasonable steps necessary to resume performance of its
obligations so interfered with.

         12.2 Assignment. Except as provided in Section 4.3, neither this
Agreement nor any of the rights and obligations created hereunder may be
assigned, transferred, pledged, or otherwise encumbered or disposed of, in whole
or in part, whether voluntary or by operation of law, or otherwise, by any Party
without the prior written consent of the other Party. No such unconsented
assignment shall relieve the assigning Party of any of its obligations
hereunder. This Agreement shall inure to the benefit of and be binding upon the
parties, permitted successors and assigns.

         12.3 Survival. The obligations of the parties with respect to Sections
4.4 (Confidentiality), 7.1 (Intellectual Property Rights), 10 (Noncompetition),
11.2 (Nonsolicitation), 12.3 (Survival), 12.4 (Notices), 12.6
(Non-solicitation), 12.7 (Dispute Resolution; Arbitration), 12.8 (Expenses),
12.9 (Entire Agreement), 12.10 (Modification), 12.12 (Severability; Validity),
12.13 (No Waiver), 12.14 (Governing Law), 12.15 (Language), 12.17 (Headings) and
12.18 (Construction and Reference) shall survive the termination of this
Agreement.

         12.4 Notices. All notices and communication required, made or permitted
hereunder shall be in writing and shall be delivered by hand or by an
internationally recognized courier service such as FedEx, UPS, DHL, addressed:

         If to Color
         Kinetics:                  Color Kinetics Incorporated

                                      -19-
<PAGE>
                                    10 Milk Street, 11th Floor
                                    Boston, MA 02108, U.S.A.
                                    Attn: Chief Executive Officer

         If to ALS:                 12-5 Gobancho
                                    Chiyoda-ku
                                    Tokyo 102-0076, JAPAN
                                    Attn: President

         If to Yamagiwa:            4-1-1 Sotokanda
                                    Chiyoda-ku
                                    Tokyo 101-0021, JAPAN
                                    Attn: President

         Each such notice or other communication shall for all purposes
hereunder be treated as effective or as having been given as follows: (i) if
delivered in person, when delivered, and (ii) if sent by a recognized courier
service, on the date shown in the written confirmation of delivery issued by
such delivery service. Either Party may change the addresses and/or addresses to
whom notice may be given by giving notice pursuant to this Section 12.4 and such
change of address shall become effective seven (7) days after such notice is
given.

         12.5 Export Control. Without in any way limiting the provisions of this
Agreement, each of the Parties agrees that no products procured from or
technical information disclosed by the other party or CKJ under this Agreement
are in tended to or shall be exported or re-exported, directly or indirectly, to
any destination restricted or prohibited by Applicable Law without necessary
authorization by the Governmental Authorities.

         12.6 Non-solicitation. During the term of this Agreement and for two
(2) years following the termination of this Agreement, neither Color Kinetics,
ALS nor Yamagiwa shall employ or solicit for employment any person employed by
CKJ, without the prior written consent of Color Kinetics (if ALS or Yamagiwa
wish to employ such employee) or Yamagiwa (if Color Kinetics wishes to employ
such employee).

         12.7 Dispute Resolution; Arbitration.

                  (a) Prior to pursuing arbitration with respect to any dispute
arising hereunder, the chief executive officers of the Parties (or a direct
report appointed by them) shall meet to seek an amicable resolution of such
dispute. No Party shall be entitled to make and bring a claim in arbitration
unless it has attempted for a period of thirty (30) days from written notice of
such dispute to reach such amicable solution.

                  (b) After expiration of the thirty (30) day period referred to
in Section 12.7(a), any and all disputes arising under or affecting this
Agreement shall be resolved exclusively by confidential arbitration pursuant to
(A) the Rules of International Arbitration of the American Arbitration
Association then in effect, in Boston, Massachusetts, if the arbitration is
initiated by ALS or Yamagiwa and (B) the rules of the Japan Commercial
Arbitration Association (Kokusai Shoji Chusai Kyokai) then in effect, in Tokyo,
Japan, if the arbitration is initiated by Color

                                      -20-
<PAGE>

Kinetics. Each of the Parties shall designate one (1) arbitrator and the two (2)
arbitrators so designated shall select the third arbitrator. Arbitration
proceedings shall be conducted in English. The award rendered by the arbitrator
shall include costs of arbitration, reasonable attorneys' fees, and reasonable
costs for expert and other witnesses. The judgment upon award of the arbitrators
shall be final and binding and may be enforced in any court of competent
jurisdiction, including any court of competent jurisdiction in the United States
or Japan, and each of the Parties hereto unconditionally submits to the
jurisdiction of such court for the purpose of any proceeding seeking such
enforcement. Nothing in this Agreement shall be deemed as preventing any Party
from seeking injunctive relief (or any provisional remedy) from any court having
jurisdiction over the Parties and the subject matter of the dispute as necessary
to protect any Party's name, proprietary information, trade secrets, know-how,
or any other proprietary rights. Subject only to the provisions of the
Applicable Law, the procedure described in this Section 12.7 shall be the
exclusive means of resolving disputes arising under or affecting this Agreement.

                  (c) All papers, documents or evidence, whether written or
oral, filed with or presented to the panel of arbitrators shall be deemed by the
Parties and by the arbitrators to be Confidential Information. Except as may be
required to comply with any Applicable Law, no Party or arbitrator shall
disclose in whole or in part to any other person any Confidential Information
submitted in connection with the arbitration proceedings, except to the extent
reasonably necessary to assist counsel in the arbitration or preparation for
arbitration of the dispute. Confidential information may be disclosed (i) to
attorneys, (ii) to Parties, and (iii) to outside experts requested by either
Party's counsel to furnish technical or expert services or to give testimony at
the arbitration proceedings, subject, in the case of such experts, to execution
of a legally binding written statement that such expert is fully familiar with
the terms of this Section, agrees to comply with the confidentiality terms of
this Section 12.7(c) and will not use any Confidential Information disclosed to
such expert for personal or business advantage.

            12.8 Expenses. Except as otherwise expressly provided hereunder,
each Party will pay its own expenses incident to the negotiation, preparation,
and performance of this Agreement and the transactions and documents
contemplated hereby, including but not limited to the fees and expenses of its
respective accountants and counsel. Each Party will indemnify and hold harmless
the other Party against any claims of any nature by any finders, consultants, or
other parties retained by it or claiming any such relationship.

            12.9 Entire Agreement. This Agreement and the JV Distributorship
Agreement embody the entire agreement and understanding between the Parties with
respect to the subject matter hereof, superseding, as of the Effective Date, all
previous and contemporaneous communications, representations, agreements and
understandings, whether written or oral, in existence on the date this Agreement
is executed, including, without limitation, that certain Term Sheet dated
January 17, 2001. Neither Party has relied upon any representation or warranty
of the other Party except as expressly set forth herein or in the JV
Distributorship Agreement.

            12.10 Modification. This Agreement may not be modified or amended,
in whole or in part, except by a writing executed by duly authorized
representatives of the Parties.

                                      -21-
<PAGE>

            12.11 Announcement. Neither Party shall announce the existence of
this Agreement or any relationship hereunder prior to a time mutually determined
by ALS and Color Kinetics. Neither Party shall unreasonably withhold its consent
to a time proposed by the other Party.

            12.12 Severability, Validity. In the event that any provision of
this Agreement shall be determined to be unenforceable by reason of its
extension for too great a period of time or over too large a geographic area or
over too great a range of activities, it shall be interpreted to extend only
over the maximum period of time, geographic area or range of activities as to
which it may be enforceable. If, after application of the preceding sentence,
any provision of this Agreement shall be determined to be invalid, illegal or
otherwise unenforceable by a court of competent jurisdiction, the validity,
legality and enforceability of the other provisions of this Agreement shall not
be affected thereby. Except as otherwise provided in this Section 12.12, any
invalid, illegal or unenforceable provision of this Agreement shall be
severable, and after any such severance, all other provisions hereof shall
remain in full force and effect, and shall be construed and interpreted in a
manner that corresponds as far as possible with the intentions of the Parties as
expressed in this Agreement.

            12.13 No Waiver. Except to the extent that a Party hereto may have
otherwise agreed in writing no waiver by that Party of any condition of this
Agreement or breach of any other condition or subsequent or prior breach of the
same or any other obligation or representation by any other Party, nor any
forbearance by the first Party to seek a remedy for noncompliance or breach by
any other Party shall be deemed to be a waiver by the first Party of its rights
and remedies with respect to such noncompliance or breach.

            12.14 Governing Law. The validity, construction, performance and
enforceability of this agreement shall be governed in all respects by the laws
of Japan applicable to agreements negotiated, executed and performed in Japan.

            12.15 Language. This Agreement, the JV Distributorship Agreement and
the Exhibits hereto and thereto, except the Articles of Association, are in the
English language, which language shall be the controlling language in all
respects. The Articles of Association are in the Japanese language, which
language shall be controlling in all respects. Any translation hereof in
Japanese language shall be for accommodation only, and shall not be binding upon
the Parties. All communications and notices to be made or given pursuant to this
Agreement shall be in the English language unless otherwise expressly provided
herein.

            12.16 No Agency. This Agreement shall not constitute an appointment
of either Party as the legal representative or agent of the other Party, nor
shall either Party have any right or authority to assume, create, or incur in
any manner any obligation or other liability of any kind, express or implied,
against, in the name or on behalf of, any other Party. Nothing herein or in the
transactions contemplated by this Agreement shall be construed as, or deemed to
be, the formation of a partnership by or among the Parties.

            12.17 Headings. The section and other headings contained in this
Agreement are for convenience of reference only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.

                                      -22-
<PAGE>

            12.18 Construction and Reference. Words used in this Agreement,
regardless of the name or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context may require.

            12.19 Governmental Approvals. Each of the parties shall use its best
efforts to obtain all Governmental Approvals and shall cooperate with any other
Party in good faith.

            12.20 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
be deemed to constitute one and the same instrument.

                    [REMAINDER OF PAGE INTENTIONALLY DELETED]

                                      -23-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized representatives on the date set forth above.

COLOR KINETICS INCORPORATED                   YAMAGIWA CORPORATION

By:           /s/ George G. Mueller           By:         /s/ Tetsu Konagaya
         -------------------------------            ----------------------------
Name:        George G. Mueller                Name:     Tetsu Konagaya
Title:       President & CEO                  Title:    President
Date:        April 5, 2001                    Date:     April 2, 2001

COLOR KINETICS JAPAN INCORPORATED             ALS INCORPORATED

By:           /s/ Kiyoshi Otsuki              By:       /s/ Kiyoshi Otsuki
         -------------------------------            ----------------------------
Name:        Kiyoshi Otsuki                   Name:     Kiyoshi Otsuki
Title:       President                        Title:    President
Date:        April 2, 2001                    Date:     April 2, 2001

                                      -24-

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