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                                                                   EXHIBIT 10.7

                           PLACEMENT AGENCY AGREEMENT

                                                                 April 10, 2002

Spencer Trask Ventures, Incorporated
535 Madison Avenue
18th Floor
New York, New York 10022

Ladies and Gentlemen:

Home Director, Inc., a Delaware corporation (the "COMPANY"), hereby confirms its
agreement  (the  "AGREEMENT")  with  Spencer  Trask  Ventures,  Incorporated,  a
Delaware  corporation  (the "PLACEMENT  AGENT"),  as follows (unless the context
otherwise requires, as used herein, the "COMPANY" refers to Home Director,  Inc.
and Digital Interiors, Inc., a California Corporation):

1. OFFERING.

(a) The Company  will offer (the  "OFFERING")  for sale  through  the  Placement
Agent, as exclusive agent for the Company,  and its selected dealers,  a minimum
of 40 units and a maximum of 100 units (the "UNITS").  Each Unit will consist of
a $100,000  convertible note of the Company (each, a "NOTE"),  which Notes shall
be  convertible  into the common stock of the Company at a  conversion  price of
$.10 per share  (subject  to  adjustment)  and shall have such other  rights and
privileges as shall be described in the  Memorandum  (as defined in Section 1(d)
hereof) under the heading "Description of the Notes and the Security Agreement."

(b)  Placement  of the  Units  by the  Placement  Agent  will  be made on a best
efforts,  "all-or  none" basis with respect to the first 40 Units (the  "MINIMUM
AMOUNT") and on a best efforts basis as to the remaining 60 Units (together with
the Minimum Amount,  the "MAXIMUM AMOUNT").  The minimum  subscription for Units
shall be one Unit;  however,  the Placement  Agent and the Company may, in their
discretion, offer fractional Units and, during the first twenty (20) days of the
Offering (the "RIGHTS OFFERING PERIOD") subscriptions will be accepted only from
current investors in the Company who have preemptive  investment rights for that
number  of Units  to  which  they are  entitled  pursuant  to the  terms of such
preemptive  investment  rights.  Following the Rights Offering Period, the Units
will be  offered to  potential  subscribers,  which may  include  affiliates  or
related  persons of the Placement Agent or the Company,  or investment  vehicles
formed by the Placement  Agent or its  affiliates,  for another 70 days,  unless
extended by the  Placement  Agent and the Company for an  additional  90 days or
terminated earlier as provided herein (the "OFFERING PERIOD"). The date on which
the Offering shall terminate shall be referred to as the "TERMINATION DATE."

(c) Subject to Section 4(e) hereof  subscriptions for the Units will be accepted
by the Company at a price of $100,000 per Unit (the "OFFERING PRICE"); provided,
however that the Placement Agent shall not tender to the Company and the Company
shall not accept  subscriptions  from, or sell Units to, any persons or entities
that do not  qualify  as (or  are not  reasonably  believed  to be)  "accredited
investors,"  as such term is defined  in Rule 501 of  Regulation  D  promulgated
under Section 4(2) of the Securities Act of 1933, as amended (the "ACT").


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(d) The offering of the Units will be made by the  Placement  Agent on behalf of
the Company  solely  pursuant to the  Memorandum,  which at all times will be in
form and substance  reasonably  acceptable to the Placement Agent and it counsel
and contain such legends and other  information  as the Placement  Agent and its
counsel may,  from time to time,  deem  necessary  and desirable to be set forth
therein,  including  with  regard  to that  certain  contemplated  merger of the
Company with a subsidiary of Netword, Inc. (the "MERGER").  "MEMORANDUM" as used
in this Agreement means the Company's Confidential Private Placement Memorandum,
inclusive  of  all  exhibits,  and  any  and  all  amendments,  supplements  and
appendices  thereto that the Placement Agent may use on the Company's  behalf to
sell the Units. Unless otherwise defined,  each term used in this Agreement will
have the same meaning as shall be set forth in the Memorandum.

2.  Representations and Warranties The Company hereby represents and warrants to
the Placement  Agent that each of the following shall be true in all respects as
of the date hereof and, as  applicable,  on and as of the date of the Memorandum
as if made on and as of the date hereof:

(a) The  Memorandum  will be,  and as of the date of the  Memorandum  has  been,
diligently  prepared by the Company,  at its sole cost, in  conformity  with all
applicable  laws,  and  will in all  material  respects  be in  compliance  with
Regulation D as promulgated  under Section 4(2) of the Act ("REGULATION D"), the
Act and the requirements of all other rules and regulations (the  "REGULATIONS")
of the Securities and Exchange  Commission  (the "SEC") relating to offerings of
the type  contemplated by the Offering,  and the applicable  securities laws and
the rules and  regulations  of those  jurisdictions  wherein the Units are to be
offered and sold, excluding foreign jurisdictions. The Units will be offered and
sold pursuant to the registration exemption provided by Regulation D and Section
4(2) and/or  Section  4(6) of the Act as a  transaction  not  involving a public
offering and the  requirements of any other applicable state securities laws and
the  respective  rules  and  regulations   thereunder  in  those  United  States
jurisdictions  in which the Placement  Agent notifies the Company that the Units
are being offered for sale. The Memorandum  will describe all material  aspects,
including attendant risks, of an investment in the Company.  The Company has not
taken  nor will it take any  action  that  conflicts  with  the  conditions  and
requirements  of, or that would make  unavailable  with respect to the Offering,
the exemption(s) from registration available pursuant to Regulation D or Section
4(2)  and/or  Section  4(6) of the Act  and  knows  of no  reason  why any  such
exemption  would be  otherwise  unavailable  to it.  Neither the Company nor its
affiliates  has been  subject to any order,  judgment  or decree of any court or
governmental authority of competent jurisdiction  temporarily,  preliminarily or
permanently  enjoining  such person for  failing to comply  with  Section 503 of
Regulation D.

(b) The  Memorandum  will not,  and as of the date of the  Memorandum  does not,
include any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances  under which they were made, not misleading.  None
of the statements,  documents,  certificates or other items prepared or supplied
by the Company with respect to the transactions  contemplated hereby contains or
will  contain an untrue  statement of a material  fact or omits a material  fact
necessary to make the statements  contained therein not misleading.  There is no
fact that the Company has not disclosed to the  Placement  Agent and its counsel
in  writing  and of which the  Company is aware that  materially  and  adversely
affects  or could  materially  and  adversely  affect the  business,  prospects,
financial condition,  operations, assets or affairs of the Company or any of its
subsidiaries.



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(c) The Company is a corporation  duly organized,  validly  existing and in good
standing under the laws of Delaware.  The Company has no  subsidiaries  and does
not have an equity interest in any other firm, partnership, association or other
entity other than Digital Interiors, Inc., a California corporation wholly-owned
by the Company.  The Company is duly qualified to transact business as a foreign
corporation  and is in good standing under the laws of each  jurisdiction  where
the  location  of its  properties  or the  conduct  of its  business  makes such
qualification  necessary,  except where the failure to be so qualified would not
have a material adverse effect on the Company or its business.

(d) The Company has all requisite  power and authority  (corporate and other) to
conduct its  business as  presently  conducted  and as proposed to be  conducted
(described in the Memorandum),  to enter into arid perform its obligations under
this  Agreement  and  the  other  agreements  contemplated  hereby  and  by  the
Memorandum  (including pursuant to the Merger)  (collectively,  the "TRANSACTION
DOCUMENTS")  and to issue,  sell and  deliver  the  Notes and the  shares of the
Company's common stock, par value $.001 per share (the "COMMON STOCK"), issuable
upon  conversion  of the Notes (the  "CONVERSION  SHARES").  The  execution  and
delivery of each of the  Transaction  Documents has been, or prior to completion
of the Offering will be, duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered and constitutes,  and each of the
other Transaction Documents,  upon due execution and delivery,  will constitute,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective  terms,  subject to any applicable  bankruptcy,
insolvency  or other laws  affecting  the rights of creditors  generally  and to
general equitable principles and the availability of specific performance.

(e) None of the execution and delivery of, or  performance by the Company under,
any of the Transaction  Documents or the consummation of the transactions herein
or  therein  contemplated  conflicts  with or  violates,  or will  result in the
creation or  imposition  of (other than the security  interest in respect of the
Units), any material lien, charge or other encumbrance upon any of the assets of
the Company  under any  agreement or other  instrument to which the Company is a
party or by which  the  Company  or its  assets  may be  bound,  any term of the
charter or by-laws of the Company,  or any license,  permit,  judgment,  decree,
order,  statute,  rule or  regulation  applicable  to the  Company or any of its
assets.

(f) The Company will have the authorized and outstanding capital stock set forth
under the heading "Capitalization" in the Memorandum, after giving effect to the
Reverse Stock Split (as defined in Section 2(t) hereof).  Except as set forth in
the Memorandum,  all outstanding shares of capital stock of the company are duly
authorized, validly issued and outstanding, fully paid and nonassessable. Except
as set forth in the  Memorandum:  (i) there are no  outstanding  options,  stock
subscription  agreements,  warrants or other rights  permitting or requiring the
Company or others to purchase or acquire any shares of capital  stock,  or other
equity  securities  of the  Company,  or to pay any  dividend  or make any other
distribution  in  respect  thereof;  (ii)  there  are no  securities  issued  or
outstanding  that are convertible  into or exchangeable for any of the foregoing
and there are no contracts,  commitments  or  understandings,  whether or not in
writing,  to issue or grant any such option,  warrant,  right or  convertible or
exchangeable  security;  (iii) no  shares  of stock or other  securities  of the
Company are reserved for issuance for any purpose;  and (iv) there are no voting
trusts  or  other  contracts,  commitments,   understandings,   arrangements  or
restrictions  of any kind with respect to the  ownership,  voting or transfer of


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shares  of  stock  or  other  securities  of  the  Company,   including  without
limitation,  any preemptive rights, rights of first refusal,  proxies or similar
rights.  The  issued and  outstanding  shares of  capital  stock of the  Company
conform to all  statements in relation  thereto  contained in the Memorandum and
the Memorandum  describes all material terms and conditions thereof. To the best
of the Company's knowledge,  all issuances by the Company of its securities were
at the time of their  issuance  exempt from  registration  under the Act and any
applicable state securities laws.

(g) The Notes,  the  Conversion  Shares and the  Agent's  Shares (as  defined in
Section 3(e) hereof) have been duly  authorized  and,  when issued and delivered
against  payment  therefore as provided in the  Transaction  Documents,  will be
validly issued,  fully paid and  nonassessable and will be free and clear of all
liens, charges, restrictions,  claims and encumbrances imposed by or through the
Company other than as provided in the Transaction Documents. No holder of any of
the Notes,  the  Conversion  Shares or the  Agent's  Securities  (as  defined in
Section 3(e) hereof) will be subject to personal  liability  solely by reason of
being  such a holder  and,  except as set forth in the  Memorandum,  none of the
Notes, the Conversion Shares or the Agent's  Securities is subject to preemptive
or similar rights of any security holder of the Company.  After giving effect to
the Reverse Stock Split, a sufficient  number of authorized but unissued  shares
of Common Stock have been reserved for issuance upon the conversion of the Notes
and the exercise of the Agent's Warrants (as defined in Section 3(e) hereof).

(h) No  consent,  authorization  or filing of or with any court or  governmental
authority  is  required  in  connection  with the  issuance  of the  Notes,  the
Conversion  Shares  or  the  Agent's  Securities  or  the  consummation  of  the
transactions  contemplated herein or in the other Transaction Documents,  except
for required  filings with the SEC, if any, and  applicable  "blue sky" or state
securities  commissions relating specifically to the Offering (all of which will
be duly made on a timely basis).

(i) Except as set forth in the Memorandum,  the financial  statements,  together
with the related notes  thereto,  of the Company  included in the Memorandum are
true and complete and present fairly,  in all material  respects,  the financial
position of the Company as of the respective  dates specified and the results of
its  operations  and changes in financial  position for the  respective  periods
covered  thereby.  Such financial  statements and related notes were prepared in
accordance with U.S. generally accepted  accounting  principles ("GAAP") applied
on a  consistent  basis  throughout  the  periods  indicated  except  as  may be
disclosed  in the  notes  thereto,  and  except  that  the  unaudited  financial
statements omit full notes, and except for normal year-end  adjustments.  Except
as set forth in such financial statements or in the Memorandum,  the Company has
no material  liabilities of any kind, whether accrued,  absolute,  contingent or
otherwise or entered into any material  transactions or  commitments.  The other
financial and  statistical  information  with respect to the Company and any pro
forma  information  and related notes included in the Memorandum  present fairly
the  information  shown  therein  on  a  basis  consistent  with  the  financial
statements of the Company included in the Memorandum.  The Company does not know
of any facts,  circumstances or conditions (or any state of facts, circumstances
or conditions  which  management  of the Company has  concluded  could give rise
thereto)  that  could  materially  adversely  affect its  business,  operations,
earnings or prospects that have not been fully disclosed in the Memorandum.



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(j) The  conduct of  business by the  Company as  presently  and  proposed to be
conducted is not subject to  continuing  oversight,  supervision,  regulation or
examination  by any  governmental  official or body of the United  States or any
other  jurisdiction  wherein  the Company  conducts or proposes to conduct  such
business,  except as described in the Memorandum or except such regulation as is
applicable to  commercial  enterprises  generally.  The Company has obtained all
requisite licenses,  permits and other governmental  authorization  necessary to
conduct its business as presently, and as proposed to be, conducted.

(k) Except as disclosed in the Memorandum,  no default by the Company or, to the
best  knowledge  of the Company,  any other party exists in the due  performance
under any material  agreement to which the Company is a party or to which any of
its assets is subject  (collectively,  the  "COMPANY  AGREEMENTS").  The Company
Agreements,  disclosed in the  Memorandum  are the only  material  agreements to
which the Company is bound or by which its assets are  subject,  are  accurately
and  fairly  described  in the  Memorandum  and are in full  force and effect in
accordance with their respective terms.

(l) Except as set forth in the  Memorandum,  there are no actions,  proceedings,
claims or investigations,  before or by any court or governmental  authority (or
any state of facts which management of the Company has concluded could give rise
thereto) pending or, to the best knowledge of the Company,  threatened,  against
the  Company,  or  involving  its assets or, to the  knowledge  of the  Company,
involving any of its officers or directors which, if determined adversely to the
Company or such officer or director, could result in any material adverse change
in the  condition  (financial  or  otherwise)  or  prospects  of the  Company or
adversely  affect the  transactions  contemplated by this Agreement or the other
Transaction Documents or the enforceability thereof

(m) The Company is not in  violation  of: (i) its  charter or by-laws;  (ii) any
indenture,  mortgage, deed of trust, note (except for certain notes which are in
default and which will be repaid from the  proceeds  of the  Offering)  or other
agreement or instrument to which the Company is a party or by which it is or may
be bound or to which any of its assets may be subject;  (iii) any statute,  rule
or regulation currently applicable to the Company; or (iv) any judgment,  decree
or order applicable to the Company, which violation or violations  individually,
or in  the  aggregate,  would  result  in any  material  adverse  change  in the
condition (financial or otherwise) or prospects of the Company.

(n) The Company  does not own any real  property in fee simple,  and the Company
has  good  and  marketable  title  to  all  property  (personal,   tangible  and
intangible)  owned by it, free and clear of all  security  interests,  liens and
encumbrances,  except for (i) such as described in the Memorandum and (ii) liens
incurred in the  ordinary  course of  business  which in the  aggregate  are not
material.

(o) The Company owns all right, title and interest in, or possesses adequate and
enforceable rights to use, all patents, patent applications,  trademarks,  trade
names, service marks, copyrights,  rights, licenses,  franchises, trade secrets,
confidential  information,  processes,  formulations,  software  and  source and
object codes  reasonably  necessary for the conduct of its  business,  except as
otherwise described in the Memorandum (collectively, the "Intangibles").  Except
as set forth in the  Memorandum,  it has not infringed upon the rights of others
with respect to the Intangibles; the Company has not received notice that it has


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or may have infringed or is infringing upon the rights of others with respect to
the  Intangibles,  or any notice of conflict with the asserted  rights of others
with respect to the  Intangibles  that could,  individually or in the aggregate,
materially and adversely affect the business, condition (financial or otherwise)
or prospects of the Company. Except as set forth in the Memorandum,  to the best
knowledge of the Company,  no others have infringed or are  infringing  upon the
Intangibles.

(p) Except as set forth in the Memorandum  and as may otherwise be  contemplated
therein,  since January 1, 2001 the Company has operated its business diligently
and only in the ordinary course as theretofore  conducted and there has been no:
(i) material adverse change in the business  condition  (financial or otherwise)
or prospects of the Company;  (ii)  transaction  otherwise  than in the ordinary
course of business;  (iii)  issuance of any  securities  (debt or equity) or any
rights to acquire any such securities; (iv) damage, loss or destruction, whether
or not  covered  by  insurance,  with  respect to any asset or  property  of the
Company; or (v) agreement to permit any of the foregoing.

(q) The Company has filed,  on a timely basis,  each Federal,  state,  local and
foreign  tax return  which is required  to be filed by it, or has  requested  an
extension therefor and has paid all taxes and all related assessments, penalties
and interest to the extent that the same have become due.

(r) The Company is not  obligated to pay, and has not  obligated  the  Placement
Agent to pay, a finder's or origination  fee in connection with the Offering and
agrees to indemnify  the  Placement  Agent from any such claim made by any other
person. The Company has not offered for sale or solicited offers to purchase the
Units  except  for  negotiations  with the  Placement  Agent and the sale of the
Interim  Notes (as defined in Section  4(d)  below).  Except as set forth in the
Memorandum,  as of the  commencement  of the  Offering,  no other person has any
right  to  participate  in any  offer,  sale or  distribution  of the  Company's
securities to which the Placement Agent's rights, described herein, shall apply.

(s) The  Company  has and  will  maintain  appropriate  casualty  and  liability
insurance  coverage,  in scope and amounts  reasonable and customary for similar
businesses.

(t) The Company  shall  effectuate a 10 for 1 reverse  stock split (the "REVERSE
STOCK  SPLIT")  as soon as  practicable  after the date  hereof and prior to the
First Closing. The Reverse Stock Split and any documents or instruments executed
in connection therewith shall be effectuated or executed, as the case may be, in
accordance with all applicable legal  requirements,  including federal and state
securities   laws,  and  in  accordance   with  the  Company's   certificate  of
incorporation  and by-laws and any  material  agreement or other  obligation  to
which the Company is a party or by which it is bound.

3. PLACEMENT AGENT APPOINTMENT AND COMPENSATION.

(a) In  accordance  with the terms  hereof,  the  Company  hereby  appoints  the
Placement Agent and its selected  dealers,  as its exclusive agent in connection
with the Offering.  The Company  acknowledges  that the Placement  Agent may use
selected  dealers and sub agents to fulfill its agency  hereunder  provided that
such  dealers  and sub agents are  compensated  solely by the  Placement  Agent.
Except as expressly  stated  herein,  the Company has not and will not make,  or


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permit to be made,  any  offers or sales of the Units  other  than  through  the
Placement  Agent  without the  Placement  Agent's  prior  written  consent.  The
Placement  Agent has no obligation  to purchase any of the Units.  The agency of
the  Placement   Agent  hereunder  shall  continue  until  the  earlier  of  the
Termination Date or the Final Closing (as defined in Section 4(c) hereof).

(b) The Company will cause to be delivered to the Placement  Agent copies of the
Memorandum and has consented, and hereby consents, to the use of such copies for
the purposes  permitted by the Act and  applicable  securities  laws, and hereby
authorizes the Placement Agent and its agents, employees and selected dealers to
use  the  Memorandum  in  connection  with  the  sale  of the  Units  until  the
Termination Date, and no other person or entity is or will be authorized to give
any  information or make any  representations  other than those contained in the
Memorandum or to use any offering  materials  other than those  contained in the
Memorandum in connection with the sale of the Units. The Company will provide at
its own expense  such  quantities  of the  Memorandum  and other  documents  and
instruments  relating to the  Offering  as the  Placement  Agent may  reasonably
request.

(c) The Company will cooperate with the Placement  Agent by making  available to
its representatives  such information as may be requested in making a reasonable
investigation  of the Company and its affairs and shall  provide  access to such
employees as shall be reasonably requested.

(d) The Company  shall pay to the  Placement  Agent a placement fee equal to ten
percent  (10%) of the gross  Offering  Price paid per Unit by each investor (the
"PLACEMENT  AGENT'S FEE").  In addition,  the Company shall pay all expenses set
forth in Section 5 hereof.  The Placement Agent's Fee and the expenses set forth
in Section 5 hereof will be deducted  from the gross  proceeds of the Units sold
at each Closing,  as set forth in Section 4 hereof.  The  Placement  Agent shall
direct all such amounts to be paid directly from the escrow account  established
pursuant to Section 4(b) hereof.

(e) As additional  compensation  hereunder,  at each closing,  the Company shall
sell  to the  Placement  Agent  or its  designees,  for  nominal  consideration,
warrants to  purchase,  at an exercise  price of $0.10 per share,  the number of
shares of Common Stock equal to twenty  percent  (20%) of the gross  proceeds of
the  Units  sold at  such  Closing  divided  by $. 10 per  share  (the  "AGENT'S
WARRANTS").  If the Merger is effected,  the Agent's Warrants will be assumed by
the successor entity of the Merger (the "SUCCESSOR ENTITY") and adjusted, in the
same manner as other Company  warrants  assumed by the Successor  Entity,  to be
exercisable  for shares of common stock received by  shareholders of the Company
pursuant to the Merger (the  "SUCCESSOR  STOCK").  The shares of Common Stock or
Successor  Stock, as the case may be,  underlying the Agent's  Warrants shall be
referred to collectively  herein as the "Agent's Shares" and,  together with the
Agent's  Warrants,  as the "Agent's  Securities".  The Agent's Warrants shall be
exercisable  until the earlier of the date seven (7) years after the date of the
Final  Closing or the date which is five (5) years after the closing date of the
earlier of the Merger or an initial public offering (the "IPO") of the Company's
securities.  The  holders of the  Agent's  Securities  shall,  to the extent the
Merger is not  consummated,  have demand and  "piggy-back"  registration  rights
equivalent  to those granted to the  Placement  Agent in the Company's  Series B
Convertible  Preferred Stock issuance.  Prior to the First Closing,  the Company
and  Placement  Agent  shall  enter  into  a  warrant  agreement  (the  "WARRANT
AGREEMENT"),  which  shall  contain  such terms and other  customary  provisions


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including cashless exercise and customary  anti-dilution  provisions  (including
value related  anti-dilution) in form and substance  reasonably  satisfactory to
the Placement Agent and the Company.

(f) The Company shall also pay  compensation to the Placement Agent in an amount
to be negotiated in good faith with respect to, and based on, any  investment by
any party (or related party thereof) that is contacted by the Placement Agent in
connection with the Offering and provided with a Private Placement Memorandum in
connection with the Offering that invests in the Company or its successor at any
time within  twelve (12)  months of the later of the  Termination  Date or Final
Closing (the  "POST-CLOSING  INVESTOR").  If the Company and the Placement Agent
cannot agree on the amount of such compensation, the Company will not accept any
such investment.

(g) In addition to any other  compensation  received by the  Placement  Agent in
this  Agreement,  to the extent the Merger is  consummated,  the Placement Agent
shall receive an additional fee of $250,000 for its services in connection  with
the Merger, which fee shall be due and payable upon closing of the Merger.

4. SUBSCRIPTION AND CLOSING PROCEDURES.

(a) Each  prospective  purchaser  will be required  to complete  and execute one
original  signature page for the  Subscription  Agreement in the form annexed to
the  Memorandum  (the  "Subscription  Agreement"),  which will be  forwarded  or
delivered to the Placement Agent at the Placement Agent's offices at the address
set forth in Section 11 hereof,  together  with the  subscriber's  check or good
funds in the full amount of the Offering  Price for the number of Units  desired
to be purchased.

8

(b) All funds for  subscriptions  received  from the  Offering  will be promptly
forwarded  by the  Placement  Agent or the  Company,  if  received by it, to and
deposited  in an escrow  account  (the  "ESCROW  ACCOUNT")  with an escrow agent
established  for the  purpose of holding  subscription  funds prior to a Closing
(the  "ESCROW  AGENT").  Upon each  Closing,  the net Closing  proceeds  will be
applied to the purchase of Notes. All such funds for subscriptions  will be held
in the Escrow Account pursuant to the terms of the escrow agreement with respect
thereto among the Company, the Placement Agent and the Escrow Agent (the "ESCROW
AGREEMENT").  The Company  will pay all fees  related to the  establishment  and
maintenance of the Escrow Account,  regardless of whether a Closing occurs.  Any
interest  accruing on funds in the Escrow  Account  shall be  utilized  first to
reimburse the Company for such fees, and the balance shall be distributed to the
Placement Agent.  Subject to the receipt of such  subscriptions  for the Minimum
Amount, the Company will either accept or reject the Subscription Agreement in a
timely fashion and at the Closing will  countersign the  Subscription  Agreement
and  provide  duplicate  copies of such  agreement  to the  Placement  Agent for
distribution  to the  subscribers.  The Company will give written  notice to the
Placement  Agent  of its  acceptance  or  rejection  of each  subscription.  The
Company, or the Placement Agent on the Company's behalf, will promptly return to
subscribers incomplete,  improperly completed,  improperly executed and rejected
subscriptions  and give written notice thereof to the Placement  Agent upon such
return.



                                       8
<PAGE>

(c) If subscriptions for at least the Minimum Amount have been accepted prior to
the Termination Date, the funds therefor have been collected by the Escrow Agent
and all of the conditions set forth elsewhere in this Agreement are fulfilled, a
closing  shall be held  promptly  with  respect  to the Units  sold (the  "FIRST
CLOSING").  Thereafter, the remaining Units will continue to be offered and sold
until the Termination Date.  Additional  closings  ("CLOSINGS") may from time to
time be conducted at times mutually  agreeable with respect to additional  Units
sold,  with the final  closing  ("FINAL  CLOSING") to occur within ten (10) days
from the  earlier  of the  Termination  Date or the sale of all  Units  offered.
Delivery of payment for the accepted subscriptions for Units from the funds held
in the Escrow  Account  will be made at each  Closing at the  Placement  Agent's
offices against delivery of the Notes underlying the Units by the Company at the
address  set  forth in  Section  11  hereof  (or at such  other  place as may be
mutually agreed upon between the Company and the Placement  Agent),  net amounts
due to the Placement Agent and Blue Sky counsel  pursuant to Section 5(j) hereof
as of such  Closing.  Executed  notes  representing  the Notes  and the  Agent's
Warrants will be in such  authorized  denominations  and issued in such names as
the Placement  Agent may request on or before the second full business day prior
to the date of each Closing ("CLOSING DATE"),  and will be made available to the
Placement  Agent for review and  packaging at the  Placement  Agent's  office at
least one full business day prior thereto.

(d) At the First Closing, each of those certain senior secured convertible notes
issued by the Company on February 6, 2002 in the aggregate  principal  amount of
$705,000  (the  "INTERIM  NOTES")  shall,  in  accordance  with their terms,  be
automatically  exchanged for an equal principal  amount of Notes.  The principal
amount of the Interim Notes to be so exchanged at the First Closing shall not be
included in the calculation of the Minimum Amount or Maximum Amount.

(e) If Subscription Agreements for the Minimum Amount have not been received and
accepted by the Company on or before the  Termination  Date for any reason,  the
Offering will be  terminated,  no Units will be sold, and the Escrow Agent will,
at  the  request  of  the  Placement  Agent,  cause  all  monies  received  from
subscribers for the Units to be promptly  returned to such  subscribers  without
interest, penalty, expense or deduction.

5. FURTHER COVENANTS. The Company hereby covenants and agrees that:

(a) Except with the prior written  consent of the Placement  Agent,  the Company
shall not,  at any time prior to the Final  Closing,  take any action that would
cause any of the representations and warranties made by it in this Agreement not
to be complete  and correct on and as of each  Closing  Date with the same force
and effect as if such  representations and warranties had been made on and as of
each such date.

(b) If, at any time prior to the Final Closing,  any event shall occur that does
or may  materially  affect the  Company or as a result of which it might  become
necessary to amend or supplement the Memorandum so that the  representations and
warranties herein remain true, or in case it shall, in the reasonable opinion of
counsel  to the  Placement  Agent,  be  necessary  to  amend or  supplement  the
Memorandum to comply with Regulation D or any other  applicable  securities laws
or regulations,  the Company will promptly notify the Placement Agent and shall,
at its  sole  cost,  prepare  and  furnish  to the  Placement  Agent  copies  of
appropriate  amendments  and/or  supplements in such quantities as the Placement
Agent may reasonably  request.  The Company will not at any time, whether before


                                       9
<PAGE>

or after the Final  Closing,  prepare or use any  amendment or supplement to the
Memorandum of which the Placement  Agent will not  previously  have been advised
and furnished  with a copy, or to which the Placement  Agent or its counsel will
have objected in writing or orally  (confirmed in writing  within 24 hours),  or
which is not in compliance with the Act, the  Regulations  and other  applicable
securities  laws.  As soon as the Company is advised  thereof,  the Company will
advise the Placement  Agent and its counsel,  and confirm the advice in writing,
of any  order  preventing  or  suspending  the  use of  the  Memorandum,  or the
suspension of the qualification or registration of the Units for offering or the
suspension of any exemption for such  qualification or registration of the Units
for  offering  in  any  jurisdiction,   or  of  the  institution  or  threatened
institution of any  proceedings  for any of such purposes,  and the Company will
use its best  efforts to prevent the  issuance  of any such  order,  judgment or
decree,  and, if issued,  to obtain as soon as  reasonably  possible the lifting
thereof.

(c) The Company shall comply with the Act, the  Regulations,  the Securities and
Exchange Act of 1934, as amended (the "1934 ACT"), and the rules and regulations
thereunder,  all applicable  state securities laws and the rules and regulations
thereunder  in the states in which the  Placement  Agent's  Blue Sky counsel has
advised the Placement  Agent that the Units are qualified or registered for sale
or  exempt  from  such  qualification  or  registration,  so  as to  permit  the
continuance  of the sales of the  Units,  and will file with the SEC,  and shall
promptly  thereafter forward to the Placement Agent, any and all reports on Form
D as are required.

(d) The Company shall use its  reasonable  best efforts to qualify the Units for
sale  (or  seek  exemption   therefrom)   under  the  securities  laws  of  such
jurisdictions in the United States as the Placement Agent shall  designate,  and
the Company will (through Blue Sky counsel) make such  applications  and furnish
information as may be required for such purposes. The Company will, from time to
time,  prepare and file such statements and reports as are or may be required to
continue  such  qualifications  in effect for so long a period as the  Placement
Agent may reasonably request. The Company shall not, however, in either case, be
required  to file any  general  consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so  qualified  or to  subject  itself to  taxation  in  respect  of doing
business in any jurisdiction in which it is not otherwise so subject.

(e) The Company shall place a legend on the certificates  representing the Notes
and the  Conversion  Shares issued to  subscribers  stating that the  securities
evidenced  thereby have not been  registered  under the Act or applicable  state
securities  laws,  setting forth or referring to the applicable  restrictions on
transferability  and sale of such securities  under the Act and applicable state
laws.

(f) The Company  shall apply the net proceeds from the sale of the Units to fund
its  working  capital  requirements  and/or for such other  purposes as shall be
specifically described under "USE OF PROCEEDS" in the Memorandum.

(g) During the Offering  Period,  the Company shall make available for review by
prospective  purchasers  of  the  Units  during  normal  business  hours  at the
Company's offices,  upon their request,  copies of the Company Agreements to the
extent that such disclosure  shall not violate any obligation on the part of the
Company  to  maintain  the   confidentiality   thereof  and  shall  afford  each
prospective  purchaser of Units the  opportunity to ask questions of and receive
answers from an officer of the Company  concerning  the terms and  conditions of


                                       10
<PAGE>

the Offering and the  opportunity  to obtain such other  additional  information
necessary  to verify the accuracy of the  Memorandum  to the extent it possesses
such information or can acquire it without unreasonable expense.

(h) Except with the prior written consent of the Placement Agent or as set forth
in the Memorandum with respect to the Merger, the Company shall not, at any time
prior to the earlier of the Final Closing or the Termination  Date, engage in or
commit to engage in any  transaction  outside the  ordinary  course of business,
including,   without  limitation,   the  incurrence  of  material  indebtedness,
materially  change its  business  or  operations  as shall be  described  in the
Memorandum,  or issue,  agree to issue or set aside for issuance any  securities
(debt or  equity)  or any right to acquire  such  securities  except as shall be
contemplated by the Memorandum.

(i) Until the earlier of (A) the five-year  anniversary  of the Final Closing or
(B) a Liquidity Event (as defined below),  the Company shall,  unless  otherwise
required by applicable  securities  laws, (i) deliver to the Placement Agent and
the Company's  stockholders  annual  audited  financial  statements  prepared in
accordance with GAAP setting forth fairly the financial position of the Company,
(ii) deliver to the Placement Agent semi-annual  unaudited financial  statements
including  both a balance sheet and  statement of income  prepared in accordance
with GAAP applied on a consistent basis throughout the periods  indicated except
as may be  disclosed  in the  notes  thereto,  and  except  that  the  unaudited
financial   statements  omit  full  notes,   and  except  for  normal  year  end
adjustments,  (iii) deliver to the Company's  stockholders  a quarterly  report,
reviewed by the Placement  Agent,  of the progress and status of the Company and
an annual report  setting  forth clearly the financial  position of the Company,
(iv) deliver to the Placement Agent a copy of a list of its  stockholders as and
when so requested,  to extent the Company has such  information  is available or
otherwise  will  take  such  action as is  necessary  to make  such  information
available,  and (v) deliver to the Placement Agent such  additional  information
and documents concerning the business and financial condition and outlook of the
Company as the Placement Agent may from time to time reasonably request.

(j) Whether or not the transactions contemplated hereby are consummated, or this
Agreement is terminated,  the Company  hereby agrees to pay all fees,  costs and
expenses  incident hereto and to the Offering,  including,  without  limitation,
those in connection with (i) preparing,  distributing and binding the Memorandum
and any and all amendments and/or  supplements  thereto,  fees for bound volumes
and any and all  agreements,  contracts and other  documents  related hereto and
thereto; (ii) the authorization,  issuance,  transfer and delivery of the Notes,
the Conversion Shares,  the Agent's Shares and the Agent's Warrants,  including,
without limitation,  fees and expenses of any transfer agent or registrar; (iii)
the fees and expenses of the Escrow Agent (subject to Section 4(b) hereof); (iv)
all fees and expenses of legal,  accounting  and other  advisers to the Company;
(v) all reasonable  filing fees,  costs and legal fees and expenses for Blue Sky
services  and  related   filings  with  respect  to  Blue  Sky   exemptions  and
qualifications,  $12,500 of which shall be paid to the Placement Agent's counsel
upon execution of this  Agreement  (for legal fees in connection  with obtaining
Blue Sky exemptions (the "BLUE SKY FEES"); and (vi) subject to Section 9 hereof,
a nonaccountable  expense allowance ("PLACEMENT AGENT EXPENSES") incurred by the
Placement Agent in connection with the Offering,  including, without limitation,
travel and related expenses and fees and expenses of legal, accounting and other


                                       11
<PAGE>

advisers to the Company  equal to three (3%) percent of the gross  proceeds from
the subscriptions for Units sold.

(k) Until the  Termination  Date,  neither  the Company nor any person or entity
acting on its behalf will  negotiate or enter into any agreement  with any other
placement  agent or underwriter  with respect to a private or public offering of
the Company's or any subsidiary's debt or equity securities.  The Company agrees
that any such  offering  of the  Company's  securities,  other than  through the
Placement  Agent, in accordance with the terms and provisions of this Agreement,
will terminate  immediately upon the  commencement of the Offering.  Neither the
Company  nor  anyone  acting on its behalf  will,  until the  Termination  Date,
without the prior written consent of the Placement Agent,  offer for sale to, or
solicit  offers to subscribe for Units or other  securities of the Company from,
or otherwise approach or negotiate in respect thereof with, any other person.

(l) Until the  earlier  of the  second  anniversary  of the Final  Closing  or a
Liquidity  Event (as defined  below),  except for the  Company's  option plan in
effect  as of the date  hereof,  the  Company  will not issue or sell any of its
securities  or grant  any  warrants,  options  or other  rights to  acquire  its
securities  (except  pursuant to any existing  options,  warrants and rights and
option and similar plans as shall be described in the  Memorandum)  to any other
person or entity  without the Placement  Agent's prior  written  consent,  which
shall not be  unreasonably  withheld.  For the  purposes  of this  Agreement,  a
"Liquidity  Event" shall mean (A) the consummation of the IPO, (B) the Merger or
(C) the consummation of any merger, consolidation or business combination of the
Company with any other entity other than an Affiliate  and pursuant to which (1)
the  Company is not the  surviving  entity or the  shareholders  of the  Company
immediately before such transaction own less than 50% of the voting power of the
Company  immediately  after such transaction and (2) the shares of the surviving
entity are publicly traded.

(m) The Board of  Directors of the Company  shall  consist of not less than five
(5) and not more than ten (10) members.  Until the earlier of one year after the
Merger or the IPO, the Placement Agent shall have the right to designate one (1)
person reasonably acceptable to the Company to be, at the Placement Agent's sole
discretion, either a nominee for director of the Company or advisor to the Board
of Directors of the  Company.  In the event such person is  designated a nominee
for  director,  the Company  shall use its best efforts  (which  shall  include,
without  limitation,  the  solicitation of proxies on behalf of such nominee) to
elect such nominee to the Board of  Directors.  The Company  agrees to indemnify
and hold the  Placement  Agent and its  designated  nominee or advisor  harmless
against any and all claims,  actions,  damages, awards and judgments arising out
of the attendance and  participation,  at any such meeting  described herein. In
the event the Company maintains a liability  insurance policy affording coverage
for  the  acts  of its  officers  and  directors,  it  agrees,  if  commercially
reasonable,  to include the  Placement  Agent's  designated  observer as insured
under such policy.

(n) The Company hereby agrees that,  until the earlier of the third  anniversary
of the Final  Closing  or the  occurrence  of a  Liquidity  Event,  it shall not
conduct  or  authorize  a private  offering  of or resell  any of the  Company's
securities other than through the Placement Agent.

(o) The Company  shall use its best  efforts to effect the  Merger.  The Company
covenants and agrees that the agreement and plan of merger pursuant to which the
Merger shall be effected (the "MERGER  AGREEMENT"),  a form of which is attached


                                       12
<PAGE>

as Exhibit D to the Memorandum, shall provide that (i) to the extent the Agent's
Warrants  have not  been  exercised  prior to the  closing  of the  Merger,  the
Successor Entity shall assume the Agent's Warrants and shall issue the Successor
Stock upon the post-Merger exercise of the Agent's Warrants, as provided herein,
and a sufficient  number of authorized  but unissued  shares of Successor  Stock
shall  have been  reserved  for  issuance  upon the  conversion  of the  Agent's
Warrants, and (ii) the Successor Stock shall have been duly authorized and, when
issued and  delivered  against  payment  therefore as provided  herein,  will be
validly issued,  fully paid and  nonassessable and will be free and clear of all
liens, charges  restrictions,  claims and encumbrances imposed by or through the
Successor Entity other than as provided in the Merger Agreement.

(p) As soon as practicable after the date hereof and prior to the First Closing,
the Company shall effectuate the Reverse Stock Split.

(q) The Company and the Placement Agent agree that, upon the consummation of the
Merger,  that certain  finder's fee letter  agreement  dated as of May 11, 2000,
between the Company and the Placement Agent shall be terminated.

6. CONDITIONS OF PLACEMENT AGENT'S OBLIGATIONS. The obligations of the Placement
Agent hereunder are subject to the  fulfillment,  at or before each Closing,  of
the following additional conditions:

(a) Each of the  representations and warranties of the Company shall be true and
correct  when  made on the date  hereof  and on and as of each  Closing  Date as
though made on and as of each Closing Date.

(b) The Company shall have performed and complied with all agreements, covenants
and  conditions  required  to be  performed  and  complied  with by it under the
Transaction Documents at or before each Closing.

(c) No order  suspending  the use of the Memorandum or enjoining the offering or
sale of the Units shall have been issued, and no proceedings for that purpose or
a similar  purpose shall have been initiated or pending,  or, to the best of the
Company's knowledge, are contemplated or threatened.

(d) As of the First Closing, after giving effect to the Reverse Stock Split, the
Company  will have an  authorized  capitalization  of at least  (i)  150,000,000
shares of Common Stock authorized, of which 1,123,372 shares shall be issued and
outstanding, (ii) 35,000,000 shares of Series A Convertible Preferred Stock, par
value $.001 per share, authorized,  of which 3,333,333 shares will be issued and
outstanding;  (iii) 100,000,000 shares of Series B Convertible  Preferred Stock,
par value $.001 per share, authorized, of which 4,495,925 shares shall be issued
and outstanding; (iv) 12,000,000 shares of Series C Convertible Preferred Stock,
of which 1,000,000 shares are issued and outstanding;  and (v) 5,062,356 options
and warrants shall be granted.

(e) The  Placement  Agent  shall have  received  certificates  of the CEO of the
Company,  dated as of each Closing Date, certifying on behalf of the Company, in
such detail as Placement Agent may reasonably  request, as to the fulfillment of
the conditions set forth in subparagraphs (a), (b), (c) and (d) above.



                                       13
<PAGE>

(f) The Company  shall have  delivered  to the  Placement  Agent (i) a currently
dated good standing certificate from the Secretary of State of Delaware and each
jurisdiction  in which the  Company is  qualified  to do  business  as a foreign
corporation,  and (ii) certified resolutions of the Company's Board of Directors
approving  this  Agreement  and  the  other  Transaction   Documents,   and  the
transactions  and  agreements  contemplated  by this  Agreement  and  the  other
Transaction Documents.

(g) On or prior to the date hereof and at each  Closing,  the CEO of the Company
shall have provided a certificate to the Placement Agent confirming on behalf of
the Company that there have been no undisclosed  material and adverse changes in
the business condition (financial or otherwise) or prospects of the Company from
the date of the latest  financial  statements  included in the  Memorandum,  the
absence of  undisclosed  liabilities  and such  other  matters  relating  to the
financial  condition and  prospects of the Company that the Placement  Agent may
reasonably request.

(h) At each Closing,  the Company shall have (i) paid to the Placement Agent the
Placement  Agent's Fee in respect of all Units sold at such  Closing,  (ii) paid
all fees,  costs  and  expenses  set forth in  Section  5(j)  hereof,  and (iii)
executed and delivered to the Placement Agent the Agent's  Warrants in an amount
proportional to the Units sold at such Closing.

(i) There shall have been  delivered to the Placement  Agent a signed opinion of
counsel to the Company  ("COMPANY  COUNSEL"),  dated as of each Closing Date, in
substantially the form attached hereto as Exhibit A.

(j) All  proceedings  taken at or prior to each Closing in  connection  with the
authorization,  issuance and sale of the Units and the Agent's  Warrants will be
reasonably  satisfactory  in form and substance to the  Placement  Agent and its
counsel,  and such counsel shall have been  furnished  with all such  documents,
certificates  and opinions as they may reasonably  request upon reasonable prior
notice in connection with the transactions contemplated hereby.

7. INDEMNIFICATION.

(a) The Company will (i) indemnify and hold  harmless the Placement  Agent,  its
selected dealers and their respective  officers,  directors,  employees and each
person,  if any, who controls the Placement  Agent within the meaning of the Act
and such selected dealers (each an "INDEMNITEE")  against,  and pay or reimburse
each  Indemnitee  for,  any and all  losses,  claims,  damages,  liabilities  or
expenses  whatsoever  (or actions or proceedings  or  investigations  in respect
thereof),  joint or several  (which will,  for all  purposes of this  Agreement,
include,   but  not  be  limited  to,  all  reasonable   costs  of  defense  and
investigation and all reasonable  attorneys' fees, including appeals),  to which
any Indemnitee  may become  subject,  under the Act or otherwise,  in connection
with the offer and sale of the Units,  whether  such  losses,  claims,  damages,
liabilities  or expenses  shall result from any claim of any  Indemnitee  or any
third party;  and (ii) reimburse each Indemnitee for any legal or other expenses
reasonably  incurred in connection with  investigating or defending  against any
such loss, claim, action,  proceeding or investigation;  provided,  however that
the  Company  will not be liable in any such  case to the  extent  that any such
claim,  damage or  liability  results  from (A) an untrue  statement  or alleged
untrue  statement of a material fact made in the  Memorandum,  or an omission or


                                       14
<PAGE>

alleged  omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in reliance upon and
in conformity with written information furnished to the Company by the Placement
Agent or any such  controlling  persons  specifically for use in the preparation
thereof,  or (B) any  violations  by the  Placement  Agent  of the Act or  state
securities  laws  which  does not result  from a  violation  thereof or a breach
hereafter by the Company or any of its affiliates.  In addition to the foregoing
agreement to  indemnify  and  reimburse,  the Company  will  indemnify  and hold
harmless  each  Indemnitee  against  any  and  all  losses,   claims,   damages,
liabilities or expenses  whatsoever (or actions or proceedings or investigations
in respect  thereof),  joint or several  (which  shall for all  purposes of this
Agreement,   include,   but  not  be  limited  to,  all  costs  of  defense  and
investigation and all reasonable  attorneys' fees,  including  appeals) to which
any  Indemnitee  may become  subject  insofar as such costs,  expenses,  losses,
claims,  damages or liabilities  arise out of or are based upon the claim of any
person or entity that he or it is entitled to broker's or finder's fees from any
Indemnitee in connection with the Offering.

(b) The  Placement  Agent will  indemnify  and hold  harmless the  Company,  its
officers, directors, employees and each person, if any, who controls the Company
within the meaning of the Act against, and pay or reimburse any such person for,
any and all losses,  claims,  damages or liabilities or expenses  whatsoever (or
actions,  proceedings or investigations in respect thereof) to which the Company
or any such person may become  subject under the Act or otherwise,  whether such
losses,  claims,  damages,  liabilities or expenses (or actions,  proceedings or
investigations  in respect  thereof) shall result from any claim of the Company,
any of its officers,  directors,  employees, agents, any person who controls the
Company  within  the  meaning  of the Act or any third  party,  insofar  as such
losses,  claims,  damages or liabilities are based upon any untrue  statement or
alleged  untrue  statement of any material fact  contained in the Memorandum but
only with reference to information  contained in the Memorandum  relating to the
Placement  Agent, or an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the  statements  therein
not  misleading,  if made or omitted in  reliance  upon and in  conformity  with
written information  furnished to the Company by the Placement Agent or any such
controlling  persons,  specifically  for  use in the  preparation  thereof.  The
Placement  Agent will  reimburse the Company or any such person for any legal or
other expenses reasonably incurred in connection with investigating or defending
against  any such  loss,  claim,  damage,  liability  or action,  proceeding  or
investigation to which such indemnity  obligation  applies.  Notwithstanding the
foregoing,  in no event shall the Placement Agent's  indemnification  obligation
hereunder exceed the amount of the Placement  Agent's Fees actually  received by
it.

(c)  Promptly  after  receipt by an  indemnified  party under this  Section 7 of
notice of the  commencement of any action,  claim,  proceeding or  investigation
("ACTION"),  such indemnified party, if a claim in respect thereof is to be made
against  the   indemnifying   party  under  this  Section  7,  will  notify  the
indemnifying  party of the commencement  thereof,  but the omission to so notify
the indemnifying  party will not relieve it from any liability which it may have
to any indemnified party under this Section 7 unless the indemnifying  party has
been substantially  prejudiced by such omission.  The indemnifying party will be
entitled to  participate  in, and, to the extent that it may wish,  jointly with
any other  indemnifying  party,  to assume the  defense  thereof  subject to the
provisions  herein  stated,   with  counsel  reasonably   satisfactory  to  such
indemnified  party. The indemnified party will have the right to employ separate
counsel in any such Action and to  participate in the defense  thereof,  but the
fees and expenses of such counsel will not be at the expense of the indemnifying
party if the  indemnifying  party has  assumed  the  defense of the Action  with


                                       15
<PAGE>

counsel reasonably satisfactory to the indemnified party; provided, however that
if the  indemnified  party  shall  be  requested  by the  indemnifying  party to
participate  in the defense  thereof or shall have  concluded  in good faith and
specifically  notified the indemnifying  party either that there may be specific
defenses  available  to it  which  are  different  from or  additional  to those
available to the indemnifying party or that such Action involves or could have a
material  adverse effect upon it with respect to matters beyond the scope of the
indemnity agreements contained in this Agreement,  then the counsel representing
it, to the  extent  made  necessary  by such  defenses,  shall have the right to
direct  such  defenses  of  such  Action  on its  behalf  and in such  case  the
reasonable  fees  and  expenses  of such  counsel  in  connection  with any such
participation or defenses shall be paid by the indemnifying party. No settlement
of any Action against an  indemnified  party will be made without the consent of
the  indemnifying  party and the indemnified  party,  which consent shall not be
unreasonably  withheld or delayed in light of all factors of  importance to such
party and no indemnifying  party shall be liable to indemnify any person for any
settlement of any such claim effected without such indemnifying party's consent.

8.  Contribution  To  provide  for just and  equitable  contribution,  if (i) an
indemnified party makes a claim for indemnification pursuant to Section 7 hereof
and it is finally  determined,  by a  judgment,  order or decree not  subject to
further appeal that such claims for  indemnification  may not be enforced,  even
though this Agreement  expressly  provides for  indemnification in such case; or
(ii) any indemnified or indemnifying party seeks contribution under the Act, the
1934 Act, or otherwise,  then each  indemnifying  party shall contribute to such
amount  paid or  payable  by such  indemnified  party in such  proportion  as is
appropriate  to reflect not only such  relative  benefits  but also the relative
fault of the  Company  on the one hand and the  Placement  Agent on the other in
connection  with the  statements  or  omissions  which  resulted in such losses,
claims,  damages,  liabilities or expenses (or actions in respect  thereof),  as
well as any other  relevant  equitable  considerations.  The  relative  benefits
received  by the  Company on the one hand and the  Placement  Agent on the other
shall be deemed to be in the same  proportion as the total net proceeds from the
Offering (before deducting  expenses)  received by the Company bear to the total
commissions and fees received by the Placement Agent. The relative fault, in the
case of an untrue  statement,  alleged  untrue  statement,  omission  or alleged
omission will be  determined  by, among other  things,  whether such  statement,
alleged statement,  omission or alleged omission relates to information supplied
by the Company or by the  Placement  Agent,  and the parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement, alleged statement,  omission or alleged omission. The Company and the
Placement  Agent agree that it would be unjust and inequitable if the respective
obligations  of the  Company  and the  Placement  Agent  for  contribution  were
determined by p rata allocation of the aggregate  losses,  liabilities,  claims,
damages and expenses or by any other method or allocation  that does not reflect
the equitable  considerations referred to in this Section 8. No person guilty of
a fraudulent  misrepresentation (within the meaning of Section 11(f) of the Act)
will be  entitled  to  contribution  from any  person  who is not guilty of such
fraudulent  misrepresentation.  For purposes of this Section 8, each person,  if
any, who controls  the  Placement  Agent within the meaning of the Act will have
the same rights to contribution as the Placement Agent, and each person, if any,
who controls the Company within the meaning of the Act will have the same rights
to contribution  as the Company,  subject in each case to the provisions of this
Section 8. Anything in this Section 8 to the contrary notwithstanding,  no party
will be liable for  contribution  with respect to the settlement of any claim or
action  effected  without its  written  consent.  This  Section 8 is intended to


                                       16
<PAGE>

supersede,  to the extent permitted by law, any right to contribution  under the
Act, the 1934 Act or otherwise available.

9. TERMINATION.

(a) The Offering may be terminated  by the Placement  Agent at any time prior to
the  expiration  of  the  Offering  Period  in the  event  that  (i)  any of the
representations  or  warranties of the Company  contained  herein shall prove to
have been false or misleading in any material  respect when made or deemed made,
(ii) the Company  shall have failed to perform any of its  material  obligations
hereunder,  (iii) the  Company  shall  have  determined  for any  reason  not to
continue  with the Offering or (iv) the Placement  Agent shall  determine in its
sole discretion,  reasonably exercised, that it is reasonably likely that any of
the conditions to Closing set forth herein will not, or cannot, be satisfied. In
the  event  of  any  such  termination  occasioned  by or  arising  out of or in
connection with the matters set forth in clauses  (i)-(iii) above, or occasioned
by or arising  out of or in  connection  with a matter set forth in clause  (iv)
above due to any breach or failure  hereunder  on the part of the  Company,  the
Placement Agent shall be entitled to receive, an amount equal to the sum of: (A)
any Placement  Agent's Fees to which the Placement Agent is entitled pursuant to
Section 3(d) hereof earned through the Termination  Date, (B) an amount equal to
three  percent  (3%) of the  Offering  Price of all Units  sold in the  Offering
(deeming,  for this purpose,  all Units offered (other than Units  available for
over-subscriptions)  as having been sold), less any amounts  theretofore paid in
respect of  Placement  Agent  Expenses,  and all unpaid  Blue Sky Fees and other
expenses  set forth in Section  5(j) hereof and (C) all amounts  that may become
payable in respect of Post-Closing Investors pursuant to Section 3(1) hereof. In
addition to the sum of the amounts in clauses (A)-(C) in the previous  sentence,
in the event  that the  Company  is sold (in a stock or asset  sale),  merged or
otherwise  acquired or combined,  completes a public or private  offering of its
securities  or the Company  enters into a binding  letter of intent or agreement
with respect to the foregoing that results in a financing event, within one year
after  the  Offering  is  not  completed   because  the  Company   breaches  any
representation,  warranty or  covenant  made by it herein or  determines  not to
proceed with the Offering at the Agent option the Company shall pay to the Agent
either (x) an  investment  banking fee equal to five  percent  (5%) of the total
consideration received by the Company and or its stockholders in connection with
such sale, merger,  acquisition or sale of securities or (y) the Placement Agent
commissions,  fees and expenses and Agent's Warrants  described in Sections 3(d)
and 3(e) hereof as if the maximum number of Units had been sold. In the event of
any such  termination by the Placement  Agent as a result of any event described
in clause (iv) above,  or pursuant to Section 4(f) hereof,  not occasioned by or
arising  out of or in  connection  with any breach or failure  hereunder  by the
Company,  the  Placement  Agent  will  be  entitled  to  receive  the sum of the
Placement  Agent's Fee earned  through the  Termination  Date, the amount of the
Placement Agent Expenses accrued through the Termination Date and the amount set
forth in clause (C) of this Section  9(a),  only with respect to a  Post-Closing
investor introduced to the Company by the Placement Agent.

(b) This  Offering  may be  terminated  by the  Company at any time prior to the
Termination  Date in the event that (i) the Placement Agent shall have failed to
perform any of its material obligations  hereunder or (ii) there shall occur any
event described in Section 9(a)(iv) above not occasioned by or arising out of or
in connection  with any breach or failure  hereunder on the part of the Company.
In the event of any termination by the Company pursuant to clause (i) above, the
Placement  Agent  shall be  entitled to receive  all  Placement  Agent  Expenses


                                       17
<PAGE>

accrued through the Termination  Date, but shall be entitled to no other amounts
whatsoever  except as may be due under any indemnity or contribution  obligation
provided herein or any other Transaction Document, at law or otherwise.  On such
Termination  Date,  the  Company  shall  pay all  such  unpaid  Placement  Agent
Expenses, and all unpaid Blue Sky Fees and other expenses set forth in Section 5
hereof.

(c) Upon any such  termination,  the Escrow  Agent  will,  at the request of the
Placement Agent,  cause all money received in respect of subscriptions for Units
not accepted by the Company to be promptly returned to such subscribers  without
interest,  penalty,  expense or deduction.  Any interest earned thereon shall be
applied  first to the payment of amounts,  if any,  due to the Escrow  Agent and
next to the  payment of any amounts  payable to the  Placement  Agent  hereunder
which remain unpaid.

10. SURVIVAL.

(a) The  obligations of the parties to pay any costs and expenses  hereunder and
to provide indemnification and contribution as provided herein shall survive any
termination hereunder.

(b) The  respective  indemnities,  agreements,  representations,  warranties and
other  statements of the Company set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of, and regardless of any access to information by, the Company or the
Placement Agent, or any of their officers or directors or any controlling person
thereof, and will survive the sale of the Units.

11.  NOTICES.  All  communications  hereunder will be in writing and,  except as
otherwise expressly provided herein or after notice by one party to the other of
a change of address,  if sent to the Placement Agent, will be mailed,  delivered
or telefaxed and confirmed to Spencer Trask Ventures,  Incorporated, 535 Madison
Avenue, 18th Floor, New York, New York 10022,  Attention:  William P. Dioguardi,
President,  Telefax number (212) 829-4406, with a copy to Kirkpatrick & Lockhart
LLP, 1251 Avenue of the Americas,  45th Floor,  New York,  New York  10020-1104,
Attention: Stephen R. Conrioni, Esq., Telefax number (212) 536-3901, and if sent
to the Company,  will be mailed,  delivered or telefaxed  and  confirmed to Home
Director,  Inc., do Digital interiors,  Inc., 7132 Santa Teresa Blvd., San Jose,
CA 95139,  Attention:  Donald Witmer, Telefax number (408) 226-6299, with a copy
to Kronish Lieb Weiner & Hellman LLP, 1114 Avenue of the Americas, New York, New
York 10036, Attention: Russell Berman, Esq., Telefax number (212) 479-6275.

12.  APPLICABLE LAW, COSTS,  ETC. THIS AGREEMENT WILL BE GOVERNED BY,  CONSTRUED
AND ENFORCED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE. ALL  CONTROVERSIES,
WHICH  MAY  ARISE  BETWEEN  THE  PARTIES  CONCERNING  THIS  AGREEMENT,  SHALL BE
EXCLUSIVELY  DETERMINED BY ARBITRATION  PURSUANT TO THE RULES THEN PERTAINING TO
THE AMERICAN  ARBITRATION  ASSOCIATION (THE "AAA") IN NEW YORK COUNTY, NEW YORK.
HEARINGS WITH REGARD TO SUCH DISPUTE SHALL BE HELD EXCLUSIVELY AT THE OFFICES OF
THE AAA IN THE CITY OF NEW YORK AND JUDGMENT  UPON ANY AWARD  RENDERED  PURSUANT
THERETO  MAY BE ENTERED IN ANY COURT OF  COMPETENT  JURISDICTION.  ANY  DECISION
RENDERED BY THE AAA SHALL BE FINAL AND  BINDING.  SERVICE OF PROCESS MAY BE MADE


                                       18
<PAGE>

UPON THE COMPANY BY MAILING A COPY  THEREOF TO IT, BY  CERTIFIED  OR  REGISTERED
MAIL, AT ITS ADDRESS TO BE USED FOR THE GIVING OF NOTICES UNDER THIS  AGREEMENT.
THE COMPANY AND THE PLACEMENT AGENT EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING OUT OF THIS  AGREEMENT OR
ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

13.  CONFIDENTIALITY.  The  Company  hereby  agrees  to  hold  confidential  the
identities of the purchasers in the Offering arid shall not disclose their names
and addresses  without the prior written consent of the Placement Agent,  unless
required  by law or filing  with the SEC.  The  Company  hereby  consents to the
granting of an injunction  against it by any court of competent  jurisdiction to
enjoin it from violating the foregoing confidentiality  provisions.  The Company
hereby agrees that the Placement  Agent will not have an adequate  remedy at law
in  the  event  that  the  Company  breaches  these  confidentiality  provisions
contained herein,  and that the Placement Agent will suffer  irreparable  damage
and injury as a result of any such breach. Resort to such equitable relief shall
not, however,  be construed to be a waiver of any other rights or remedies which
the Placement Agent may have.

14.  MISCELLANEOUS.  No provision of this Agreement may be changed or terminated
except by a writing  signed by the party or  parties  to be  charged  therewith.
Unless expressly so provided,  no party to this Agreement will be liable for the
performance  of any other party's  obligations  hereunder.  Any party hereto may
waive  compliance by the other with any of the terms,  provisions and conditions
set forth  herein;  provided,  however  that any such waiver shall be in writing
specifically setting forth those provisions waived thereby. No such waiver shall
be  deemed  to  constitute  or imply  waiver of any  other  term,  provision  or
condition  of this  Agreement.  This  Agreement  contains  the entire  agreement
between  the  parties  hereto and is  intended  to  supersede  any and all prior
agreements  between  the  parties  relating  to the same  subject  matter.  This
Agreement  may be  executed  in  counterparts,  each of which shall be deemed an
original and all of which shall constitute a single agreement.

15. ENTIRE AGREEMENT.  This Agreement together with any other agreement referred
to herein is intended to supersede all prior agreements between the parties with
respect to the Units purchased hereunder and the subject matter hereof.

                            [SIGNATURE PAGE FOLLOWS]




                                       19
<PAGE>



         If the  foregoing  is in  accordance  with  your  understanding  of our
agreement,  kindly sign and return this  Agreement,  whereupon  it will become a
binding agreement between the Company and the Placement Agent in accordance with
its terms.

                                           Very truly yours,

                                           HOME DIRECTOR, INC.



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

                                           Accepted and agreed to this ___
                                           day of April, 2002.


                                           SPENCER TRASK VENTURES,
                                                  INCORPORATED


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


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<PAGE>



                                    EXHIBIT A

                              FORM OF LEGAL OPINION

The phrase "Transaction  Documents,"  whenever it is used in this letter,  means
(a) the Placement  Agency Agreement dated as of April 10, 2002 by and among Home
Director,  Inc. (the  "Company") and Spencer Trask Ventures,  Incorporated  (the
"Placement Agent") (such agreement,  the "Placement Agency Agreement"),  (b) the
Placement  Agent Warrant  Agreement dated as of April --, 2002, by and among the
Company and the Placement Agent (the "Placement Agent Warrant  Agreement"),  and
(c) the  Subscription  Agreement  by and among  the  Company  and each  investor
signatory  thereto (such  investors,  the "Investors"  and such  agreement,  the
"Subscription  Agreement").  All capitalized  terms used in this letter have the
respective meanings set forth in the Placement Agency Agreement unless otherwise
defined herein.

(i) The Company has been duly organized as a corporation and is validly existing
and in good standing under the laws of the State of Delaware, has full corporate
power and  authority to own,  lease and operate its  properties  and conduct its
business as  described  in the  Memorandum  and is duly  qualified  as a foreign
corporation  for the  transaction  of business  and is in good  standing in each
jurisdiction  where  the  conduct  of  its  business  makes  such  qualification
necessary,  except  where the  failure to so  qualify  would not have a material
adverse effect upon the business (as currently  conducted),  financial condition
or results of operation of the Company.

(ii) The  Company  has the full  corporate  power and  authority  to execute and
deliver the  Placement  Agency  Agreement,  the  Subscription  Agreement and the
Placement Agent Warrant  Agreement (the  "Transaction  Documents") and all other
documents and certificates  contemplated  thereby and to perform its obligations
thereunder.  The  execution,  delivery  and  performance  by the  Company of the
Transaction  Documents  have been duly  authorized  by all  necessary  corporate
action.  Each of the Transaction  Documents has been duly executed and delivered
on behalf of the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms.

(iii) To our knowledge, the Company has authorized and outstanding capital stock
as set forth in the  Memorandum and  outstanding  shares of capital stock of the
Company  have  been duly  authorized  and are  validly  issued,  fully  paid and
nonassessable. The Notes, the Conversion Shares and the Agent's Shares have been
duly  authorized,  and when duly and validly  delivered and paid for pursuant to
the terms of the Transaction  Documents will be validly  issued,  fully paid and
nonassessable. Except as set forth in the Memorandum, the issuance of the Notes,
the Conversion  Shares and the Agent's  Securities are not subject to statutory,
or to our knowledge,  contractual or other preemptive  rights of any stockholder
of the Company.  The Notes,  the  Conversion  Shares and the Agent's  Securities
conform in all material respects with the descriptions  thereof contained in the
Memorandum.

(iv) None of the  execution  and  delivery  of, and  performance  by the Company
under, any of the Transaction  Documents in accordance with the terms thereof or
the  consummation  by the  Company  of the  transactions  contemplated  thereby,
conflicts  with or violates  (a) any term of the  certificate  of  incorporation
(except with respect to the sufficiency of the Company's  authorized capital) or


                                       21
<PAGE>

by-laws of the Company,  (b) any statute,  rule or regulation or (c) any permit,
judgment, decree, or order known to us which is applicable to the Company or any
of its assets, properties or businesses.

(v) To our knowledge,  except as provided in the Transaction Documents,  none of
the execution and delivery of, or performance  by the Company under,  any of the
Transaction  Documents  or the  consummation  of the  transactions  contemplated
thereby,  conflicts  with or results in the creation or imposition of, any lien,
charge or other  encumbrance upon any of the properties or assets of the Company
pursuant to the terms of any material indenture,  mortgage, deed of trust, note,
material license, agreement or other instrument known to us to which the Company
is a party or by which the  Company  may be bound or to which any of its assets,
properties or businesses is or may be subject.

(vi) No consent, approval,  authorization,  order, registration or qualification
of or with any court or regulatory,  administrative or governmental agency, body
or  authority  of the  United  States of America  or any  political  subdivision
thereof is required in connection  with the issuance or sale of the Notes or the
Agent's Warrants except for required  filings with the United States  Securities
and  Exchange   Commission  and  applicable   "Blue  Sky"  or  state  securities
commissions relating specifically to the Offering.

(vii) To our  knowledge,  except  as set forth in the  Memorandum,  there are no
legal or regulatory,  administrative or governmental  charges,  actions,  suits,
proceedings,  claims,  hearings  or  investigations,  before  or by  any  court,
governmental  authority,  or  instrumentality  pending or threatened against the
Company,  or  involving  its  assets or  properties  or any of its  officers  or
directors which, if determined adversely to the Company,  could adversely affect
any  of  the  transactions  contemplated  by the  Transaction  Documents  or the
validity or enforceability thereof.

(viii) To our  knowledge,  the Company is not in violation or breach of: (i) its
certificate of  incorporation  or by-laws or (ii) any judgment,  decree or order
applicable to the Company which violation or violations individually,  or in the
aggregate,  might  result  in any  Material  Adverse  Effect  in  the  condition
(financial or otherwise) of the Company.

(ix)  We  have  participated  in  the  preparation  of  the  Memorandum  and  in
conferences with officers and other representatives of the Company, at which the
contents of the Memorandum and related  matters were  discussed,  and based only
upon our participation in those  conferences,  nothing has come to our attention
that  causes  us to  believe  that the  Memorandum  (other  than  the  financial
statements,  including the notes thereto,  and other  financial and  statistical
information  included in the  Memorandum)  contains  any untrue  statement  of a
material fact or omits to state a material  fact  necessary in order to make the
statements therein not misleading in light of the circumstances under which they
were made.

(x) Assuming that the Units have been sold only to  "accredited  investors"  (as
defined in Rule 501 of  Regulation  D) and each of the Company and the Placement
Agent has complied in all





                                       22
<PAGE>



material  respects with its obligations under the Placement Agency Agreement and
Regulation D, such sales were exempt from registration  under the Securities Act
pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D.

[Opinion may be rendered  subject to customary  assumptions and  qualifications.
These include limitation to Federal, New York and Delaware corporate law.]






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