Exhibit10.4

FORBEARANCE AGREEMENT

This ForbearanceAgreement is entered into as of May 6, 2004 (the"Amendment"), by and between PACIFIC BUSINESSFUNDING, a division of Greater Bay Bank, N.A.("Purchaser") and HOME DIRECTOR, INC.("Seller").

RECITALS

A.   Seller and Purchaser are parties to that certain FactoringAgreement dated as of March 23, 2004, as amended (the"Agreement").

B.   An Event ofDefault has occurred under the Agreement by virtue of Seller'sfailure to comply with Section 5(V)(iv) set forth in #6 of Schedule 1to the Agreement (the "Existing Default").The Existing Default entitles Purchaser immediately to enforce all theremedies set forth in the Agreement. Seller has asked Purchaser toforbear from exercising those remedies as a result of the ExistingDefault, and Purchaser has agreed, provided Seller enters into thisAgreement.

NOW, THEREFORE, the parties agree as follows:

1.   Seller acknowledges that there is an existing and uncuredEvent of Default under the Agreement. Seller further acknowledges andagrees that, except as set forth below, Purchaser is not in any wayagreeing to waive such Event of Default as a result of this Forbearanceor the performance by the parties of their respective obligations underthe Agreement. Subject to the conditions contained herein andperformance by Seller of all of the terms of this Forbearance and theAgreement after the date hereof Purchaser shall, until July 1, 2004,forbear from exercising any remedies that it may have against Seller asa result of the occurrence of the Existing Default. Such forbearancedoes not apply to any other Event of Default or any other failure bySeller to perform in accordance with the Agreement or this Forbearance.This forbearance shall not be deemed a continuing waiver or forbearancewith respect to any Event of Default of a similar nature that may occurafter the date of this Forbearance. If, on or before July 1, 2004,Seller receives new cash proceeds from the sale and issuance of itsequity securities of at least Two Million Dollars ($2,0000,000), then,as of such date, the Existing Default shall be automatically waived.Such waiver shall not apply to any other failure by Seller to performits Obligations under the Agreement, and Purchaser does not waive anyother obligations Seller may have under the Agreement. The waiver shallnot be a continuing waiver with respect to any failure to perform anyObligation after July 1, 2004.

2.   Unless otherwise defined,all initially capitalized terms in this Forbearance shall be as definedin the Agreement. The Agreement, as amended hereby, shall be and remainin full force and effect in accordance with its respective terms andhereby is ratified and confirmed in all respects. Except as expresslyset forth herein, the execution, delivery, and performance of thisForbearance shall not operate as a waiver of, or as an amendment of,any right, power, or remedy of Purchaser under the Agreement, as ineffect prior to the date hereof. Seller ratifies and reaffirms thecontinuing effectiveness of the Agreement and all instruments,documents and agreements entered into in connection with theAgreement.

3.   Seller represents and warrants that therepresentations and warranties contained in the Agreement are true andcorrect as of the date of this Forbearance, and that no Event ofDefault has occurred and is continuing.

4.   This Forbearancemay be executed in two or more counterparts, each of which shall bedeemed an original, but all of which together shall constitute oneinstrument.

5.   As a condition to the effectiveness of thisForbearance, Purchaser shall have received, in form and substancesatisfactory to Purchaser, the following:

(a)   this Forbearance, duly executed bySeller;

(b)   an amount equal to all fees andexpenses owing by Seller to Purchaser; and

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(c)   such otherdocuments, and completion of such other matters, as Purchaser mayreasonably deem necessary or appropriate.

IN WITNESS WHEREOF,the undersigned have executed this Forbearance as of the first dateabove written.

|  | HOME DIRECTOR,INC. |
|--|--------------------|

|  | By:   ____________________________ |
|--|---------------------------------------------------|

|  | Title:   __________________________ |
|--|----------------------------------------------------|

|  | PACIFICBUSINESS FUNDING, a division ofGreater Bay Bank,N.A. |
|--|-------------------------------------------------------------|

|  | By:   ____________________________ |
|--|---------------------------------------------------|

|  | Title:   __________________________ |
|--|----------------------------------------------------|

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