COLOR KINETICS
INCORPORATED
2005 DIRECTORS’
DEFERRED
COMPENSATION PLAN
1.1
Establishment of Plan. Color Kinetics Incorporated (the
“Company”) hereby establishes the Color Kinetics
Incorporated 2005 Directors’ Deferred Compensation Plan (the
“Plan”), effective as of July 27, 2005, to allow
each member of the Company’s Board of Directors who is not
also an officer or employee of the Company to defer receipt of all
or a portion of the cash compensation payable to him or her as a
director of the Company until his or her separation from service as
a director or, subject to requirements set forth in
Section 3.1, such other date as may be specified by him or
her.
1.2 No Right to
Corporate Assets. This Plan is unfunded and the Company will
not be required to set aside, segregate, or deposit any funds or
assets of any kind to meet its obligations hereunder. Nothing in
this Plan will give a Participant, a Participant’s
beneficiary or any other person any equity or other interest in the
assets of the Company, or create a trust of any kind or a fiduciary
relationship of any kind between the Company and any such person.
Any rights that a Participant, beneficiary or other person may have
under this plan will be solely those of a general unsecured
creditor of the Company.
1.3 Limitation
on Rights Created by Plan. Nothing in this Plan will give a
Participant any right to continue as a director of the
Company.
1.4
Nonalienation of Benefits. The rights and benefits of a
Participant in this Plan are personal to the Participant. No
interest, right or claim under this Plan and no distribution
therefrom will be assignable, transferable or subject to sale,
mortgage, pledge, hypothecation, anticipation, garnishment,
attachment, execution or levy, except by designation of
beneficiaries as provided in Section 3.6.
1.5 Binding
Effect of Plan. This Plan will be binding upon and inure to the
benefit of Participants and designated beneficiaries and their
heirs, executors and administrators, and to the benefit of the
Company and its assigns and successors in interest.
1.6
Administration. This Plan will be administered by the Chief
Financial Officer of the Company or other officer designated by the
Board of Directors (the “Administrator”) who will have
sole responsibility for its interpretation.
1.7
Interpretation. This plan will be construed, enforced and
administered according to the laws of the Commonwealth of
Massachusetts.
2.1 Deferral
Agreement . Any member of the Board of Directors of the Company
who is not an officer or employee of the Company or its
subsidiaries (an “outside director”) is eligible to
participate in this Plan. An outside director may participate in
the Plan by executing and filing with the Plan Administrator an
agreement before September 30 of any year prior to the
calendar year in which such agreement will take effect authorizing
the Company to defer all or a portion of his or her compensation as
director (the “deferral agreement”). Notwithstanding
the foregoing, with respect to the 2005 year during which the
Plan is first established, each outside director may participate in
the Plan by filing a deferral agreement within thirty
(30) days after the effective date of the Plan. Such election
shall apply only with respect to compensation to be earned for
services rendered subsequent to the election.
A deferral
agreement will remain in effect for each succeeding calendar year
unless the Participant files a written revocation or superseding
deferral agreement with the Administrator on or before
September 30 of the preceding year. A deferral agreement for
any particular year is irrevocable after the last day of the
immediately preceding calendar year.
2.2 Amount of
Deferral. Each Participant may elect in his or her deferral
agreement to defer a percentage of the total cash compensation
payable to the Participant as an outside director of the Company
and eligible for deferral under Section 2.1.
2.3 Deferral
Account. For bookkeeping purposes only, the Administrator will
establish and maintain an account (the “deferral
account”) for each Participant which documents the
compensation deferred by the Participant, earnings credited to the
account and payments from the account. The deferral account will
consist of a subaccount for amounts earning interest, which will be
denominated on a dollar basis (the “cash account”), and
a subaccount for amounts invested in hypothetical shares of Company
common stock, $0.01 par value, which will be denominated on a share
basis (the “stock account”).
2.4 Cash
Account. By the tenth business day of each calendar quarter,
the Administrator will credit to the Participant’s cash
account an amount equal to the amount of compensation otherwise
payable to the Participant in the current calendar quarter and
which the Participant had elected to defer and invest in the cash
account pursuant to Section 2.1. As of the last day of each
calendar year, the Administrator will credit interest on the
balance in the cash account on that date at the rate paid on
one-year Treasury bills hypothetically purchased on the first day
of such calendar year. For a Participant receiving installment
payments, interest will be credited on the balance from time to
time remaining in the cash account until the account has been
completely paid.
2.5 Stock
Account. By the tenth business day of each calendar quarter,
the Administrator will credit to the Participant’s stock
account a number of units representing shares of common stock equal
to the amount of compensation otherwise payable to the Participant,
which the Participant has elected to defer pursuant to
Section 2.1 and to invest in common stock, divided by the
applicable stock price for such common stock. The applicable stock
price shall mean the
- 2 -
closing price
for such common stock on the first business day of the quarter as
reported by the Nasdaq National Market or, if not then traded on
the Nasdaq National Market, as reported by a system or organization
selected by the Administrator. As of the date of payment of any
cash dividend on shares of common stock, the Administrator will
credit to the stock account a number of units representing shares
of the common stock equal to (i) the cash dividend per share
times the number of units representing shares credited to the stock
account as of the dividend record date divided by (ii) the
closing price for such shares of common stock on the date of
payment of the dividend. As of the date of payment of any stock
dividend on shares of common stock, the Administrator will credit
to the stock account a number of units representing shares equal to
the stock dividend declared times the number of units representing
shares of common stock upon which such dividend was declared
credited to the stock account as of the dividend record date. In
the event of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, spi
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