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                                                                EXHIBIT 4.31

                  WARRANT  AGREEMENT  (this  "Agreement").  dated  as of July 6,
2000,  by  and  between  HOME  DIRECTOR,   INC.,  a  Delaware  corporation  (the
"Company"), and SPENCER TRASK SECURITIES, INCORPORATED (the "Agent").

                               W I T N E S S E T H

                  WHEREAS,   in  connection   with  its  role  in  arranging  an
investment in the Company from Cisco Systems,  Inc. the Company proposes to sell
to the Agent and/or its designees  warrants  ("Warrants") to purchase  2,000,000
shares of Series C Convertible  Preferred  Stock,  par value $.00l per share, of
the Company ("Preferred Stock").

                  NOW, THEREFORE,  in consideration of the premises, the payment
by the Agent to the Company of ONE DOLLAR,  the agreements  herein set forth and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                  1. GRANT.  The Holders (as defined  below) are hereby  granted
the right to  purchase,  at any time from the date hereof  until 5:30 p.m.,  New
York time, on the earlier of(a) the tenth anniversary of the date hereof and (b)
the third  anniversary of the closing date of the initial public offering of the
Company's  Common Stock  occurring  within such  ten-year  period (the  "Warrant
Exercise  Term"),  2,000,000  shares of Preferred Stock at the initial  exercise
price (subject to adjustment as provided in Section 8 hereof) of $1.00 per share
of Preferred Stock, subject to the terms and conditions of this Agreement.

                  2.  WARRANT  CERTIFICATES.  The  Warrant  certificate(s)  (the
"Warrant Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth in  Exhibit  A  attached  hereto  and made a part
hereof, with such appropriate insertions,  omissions,  substitutions,  and other
variations as required or permitted by this Agreement.

                  3. EXERCISE OF WARRANT.

                  3.1 METHOD OF EXERCISE. The Warrants are initially exercisable
at an initial  exercise  price  (subject to  adjustment as provided in Section 8
hereof) per share of  Preferred  Stock set forth in Section 5 hereof  payable by
certified or official  bank check in New York Clearing  House funds,  subject to
adjustment  as  provided  in  Section  8  hereof.  Upon  surrender  of a Warrant
Certificate  with the  annexed  Form of  Election  to  Purchase  duly  executed,
together  with payment of the Exercise  Price (as  hereinafter  defined) for the
shares of Preferred  Stock  issuable upon exercise of the Warrants (the "Warrant
Shares") at the Company's principal offices,  currently at 991 Aviation Parkway,
Suite 800,  Momsville,  North Carolina 27560, the registered holder of a Warrant
Certificate  ("Holder" or "Holders")  shall be entitled to receive a certificate
or  certificates  for the shares of Preferred  Stock so purchased.  The purchase
rights represented by each Warrant  Certificate are exercisable at the option of
the Holder thereof,  in whole or in part (but not as to fractional shares of the
Preferred Stock underlying the Warrants).  Warrants may be exercised to purchase
all or part of the shares of Preferred Stock represented thereby. In the case of
purchase of less than all the shares of Preferred  Stock  purchasable  under any
Warrant Certificate,  the Company shall cancel said Warrant Certificate upon the
surrender  thereof and

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shall  execute  and  deliver a new  Warrant  Certificate  of like  tenor for the
balance of the shares of Preferred Stock.

                  3.2  EXERCISE  BY  SURRENDER  OF  WARRANT.  In addition to the
method of  payment  set  forth in  Section  3.1 and in lieu of any cash  payment
required  thereunder,  the  Holder(s) of the Warrant shall have the right at any
time and from  time to  time,  provided  that the  Preferred  Stock  and/or  the
Company's Common Stock, par value $.OO1 per share ("Common  Stock"),  underlying
the  Preferred  Stock   (collectively  the  "Stock")  is  registered  under  the
Securities  Exchange Act of 1934 (the "Exchange  Act"), to exercise the Warrants
in full,  or in part by  surrendering  the  Warrant  Certificate  in the  manner
specified in Section 3.1 in exchange for the number of shares of Preferred Stock
equal to the  product of (x) the number of shares as to which the  Warrants  are
being  exercised  multiplied  by (y) a fraction,  the  numerator of which is the
Market  Price (as  defined  in  Section  8.1 (vi)  hereof) of the Stock less the
Exercise Price and the denominator of which is such Market Price.

                  Solely for the  purposes of this  Section  3.2,  Market  Price
shall be calculated either (i) on the date on which the annexed Form of Election
is deemed  to have  been  sent to the  Company  pursuant  to  Section  13 hereof
("Notice  Date") or (ii) as the average of the Market Price for each of the five
(5) trading days preceding the Notice Date, whichever of (i) or (ii) is greater.

                  4.  ISSUANCE  OF  CERTIFICATES.   Upon  the  exercise  of  the
Warrants,  certificates  for  shares  of  Preferred  Stock or other  securities,
properties or rights underlying such Warrants, shall be issued forthwith (and in
any event such issuance  shall be made within five business days) without charge
to the  Holder  thereof  including,  without  limitation,  any tax  which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the  provisions  of  Section 5  hereof)  be issued in the name of, or in such
names as may be directed  by, the Holder  thereof;  provided,  however  that the
Company  shall not be required to pay any tax which may be payable in respect to
any transfer involved in the issuance and delivery of any such certificates in a
name  other than that of the Holder and the  Company  shall not be  required  to
issue or  deliver  such  certificates  unless  or until  the  person  or  people
requesting  the  issuance  thereof  shall have paid to the Company the amount of
such tax or it shall be established to the satisfaction of the Company that such
tax has been paid.

                  The Warrant Certificates and the certificates representing the
shares of Preferred Stock (and/or other securities,  property or rights issuable
upon exercise of the Warrants) shall be executed on behalf of the Company by the
manual or facsimile  signature of the then present  Chairman or Vice Chairman of
the Board of Directors or President or Vice  President of the Company  under its
corporate  seal  reproduced  thereon,  attested  to by the  manual or  facsimile
signature of the then present  Secretary or Assistant  Secretary of the Company.
Warrant  Certificates  shall be dated the date of  execution by the Company upon
initial issuance, division, exchange, substitution or transfer.

                  5. EXERCISE PRICE.

                  5.1 INITIAL AND ADJUSTED  EXERCISE PRICE.  Except as otherwise
provided in Section 8 hereof,  the  Warrants  shall be  exercisable  to purchase
Preferred Stock at a price of l .00 per share. The adjusted exercise price shall
be the price which shall  result from time to time from

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any and all  adjustments of the initial  exercise  price in accordance  with the
provisions of Section 8 hereof.

                  5.2 EXERCISE PRICE. The term "Exercise Price herein shall mean
the initial  exercise price or the adjusted  exercise price,  depending upon the
context.

                  6. REGISTRATION RIGHTS.

                  6.1 REGISTRATION. Under the Securities Act of 1933 Neither the
Warrants,  the  Warrant  Shares nor the shares of Common  Stock  underlying  the
Warrant Shares  (collectively,  the "Warrant  Securities")  have been registered
under the Securities  Act of 1933 (the "Act") for public  resale.  The Warrants,
and any  securities  issuable  upon  exercise  of the  Warrants  shall  bear the
following legends:

                  The Securities  represented by this  certificate have not been
registered  under the Securities Act of 1933 (the "Act") and may not be offered,
sold,  pledged or  otherwise  transferred  except  pursuant to (i) an  effective
registration statement under the Act, or (ii) to the extent applicable, Rule 144
under the Act (or any similar rule under the Act relating to the  disposition of
securities),  provided that the issuer of this  certificate  is provided with an
opinion of counsel reasonably satisfactory to the issuer, that an exemption from
registration under such Act is available.

                  The transfer or exchange of the securities represented by this
certificate is restricted in accordance with the warrant  agreement  referred to
herein.

                  6.2 PIGGYBACK  REGISTRATION.  If, at any time commencing after
the date hereof until the  expiration of the Warrant  Exercise Term, the Company
proposes  to  register  any of its  securities  under the Act on a  registration
statement that may be used for the registration of the Warrant Securities (other
than in  connection  with a  merger,  pursuant  to Form S-8,  S-4 or  comparable
registration  statement, in connection with a registration requested pursuant to
Section 6.3 hereof or in  connection  with an  exchange  offer or an offering of
securities solely to the Company's  existing  stockholders) it will give written
notice by  registered  mail,  at least  thirty (30)  business  days prior to the
filing  of each  such  registration  statement,  to the  Agent  and to all other
Holders of the Warrant  Securities  of its  intention  to do so. If the Agent or
other Holders of the Warrant  Securities  notify the Company  within twenty (20)
days after  receipt  of any such  notice of its or their  desire to include  any
Warrant Securities in such proposed  registration  statement,  the Company shall
afford the Agent and such Holders of the Warrant  Securities the  opportunity to
have any such Warrant Securities registered under such registration statement.

                  Notwithstanding  the  provisions  of this Section 6.2, (A) the
Company shall have the right any time after it shall have given  written  notice
pursuant to this  Section  6.2  (irrespective  of whether a written  request for
inclusion of any such  securities  shall have been made) to elect to postpone or
not to file any such proposed  registration  statement,  or to withdraw the same
after filing but prior to the effective date thereof and (B) if the  underwriter
or  underwriters,  if any, of any such proposed  public offering shall be of the
reasonable  opinion  that the  total  amount or kind of  securities  held by the
holders of Warrant  Securities and any other persons or entities  entitled to be
included  in such Public  Offering  would  adversely  affect the success of such
public offering,

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then the amount of  securities  to be  offered  for the  accounts  of holders of
Warrant  Securities  shall be reduced pro rata to the extent necessary to reduce
the total  amount of  securities  to be included in such public  offering to the
amount  reasonably  recommended  by the  underwriter  or  underwriters  thereof,
whereupon the Company  shall only be obligated to register such limited  portion
(which may be none) of the Warrant  Securities with respect to which such holder
has provided  notice pursuant to this Section 6.2. In no event shall the Company
be required  pursuant to this Section 6.2 to reduce the amount of  securities to
be registered by it.

                  6.3 DEMAND REGISTRATION.

                  (a) So long as the  Company  shall have any of its  securities
registered  under the Act or the Exchange Act, at any time commencing  after the
date hereof until  expiration of the Warrant  Exercise  Term, the Holders of the
Warrant  Securities  representing a "Majority" (as hereinafter  defined) of such
Warrant  Securities  (assuming  the  exercise  of all of  the  then  outstanding
Warrants)  shall have the right (which right is in addition to the  registration
rights under Section 6.2 hereof),  exercisable by written notice to the Company,
to have the Company prepare and file with the Securities and Exchange Commission
(the  "Commission"),  on two (2) occasions,  a  registration  statement and such
other documents,  including a prospectus,  as may be necessary in the opinion of
both counsel for the Company and the counsel for the Agent and Holders, in order
to comply with the provisions of the Act, so as to permit a public  offering and
sale of their respective  Warrant Securities for no less than one hundred twenty
(120) days by such Holder and any other  Holders of the Warrant  Securities  who
notify the Company within ten (10) days after receiving  notice from the Company
of such request.

                  (b) The Company covenants and agrees to give written notice of
any registration  request under this Section 6.3 by any Holder or Holders to all
other registered Holders of the Warrant Securities within fifteen (15) days from
the date of the  receipt of any such  registration  request;  provided  that the
Company  shall have the right to delay the  effectiveness  of such  registration
request (A) for such  reasonable  period of time until the  Company  receives or
prepares financial statements for the fiscal period most recently ended prior to
such  written  request,  if  necessary  to  avoid  the  use of  stale  financial
statements,  or (B) if  the  Company  would  be  required  to  divulge  in  such
registration statement the existence of any fact relating to a material business
situation,  transaction or negotiation not otherwise required to be disclosed or
(C) if the Board of Directors of the Company shall  determine in good faith that
the  registration  to be  effected  would  not be in the  best  interest  of the
Company, in which case the Company shall have the right to delay such filing for
a period of no longer than one hundred (120) days.

                  (c)  All  expenses  (other  than  underwriting  discounts  and
commissions) incurred in connection with registration,  filings or qualification
pursuant to the first  registration  request made pursuant to the subsection (a)
of this Section 6.3, including,  without limitation, all registration,  listing,
filing and  qualification  fees,  printers and accounting  fees and the fees and
disbursements  of counsel for the Holders shall be borne by the Company.  Upon a
second registration  request pursuant to subsection (a) of this Section 6.3, the
Holders  requesting  registration shall bear such costs on a pro-rata basis with
respect to the  Warrant  Securities  in  respect  of which  they are  requesting
registration.

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                  (d) Notwithstanding anything to the contrary contained herein,
if the Company  shall not have filed a  registration  statement  for the Warrant
Securities  within the time period  specified in Section 6.3 (b) hereof pursuant
to the written notice  specified in Section 6.3 (a) of a Majority of the Holders
of the Warrants  and/or  Warrant  Securities,  the Company  agrees that upon the
written  notice of election of a Majority of the Holders of the Warrants  and/or
Warrant Securities it shall repurchase (i) any and all Warrant Securities at the
higher of the Market Price as defined in Section 8.1, (vi) per share of Stock on
(x)  the  date  of the  notice  sent  pursuant  to  Section  6.3  (a) or (y) the
expiration of the  one-hundred-twenty-day  (120-day) period specified in Section
6.3 (b) and (ii) any and all  Warrants  at such Market  Price less the  exercise
price of such Warrant.  Such repurchase shall be in immediately  available funds
and shall close within two (2) days after the later of(i) the  expiration of the
period  specified in Section 6.3 (b) or (ii) the delivery of the written  notice
of election specified in this Section 6.3 (d).

                  6.4 Covenants of the Company with Respect to  Registration  in
connection with any registration  under Sections 6.2 or 6.3 hereof,  the Company
covenants and agrees as follows:

                  (a)  The  Company  shall  use  its  best  efforts  to  file  a
registration  statement as soon as practicable and shall use its best efforts to
have any  registration  statement  declared  effective at the earliest  possible
time,  and shall furnish each Holder  desiring to sell Warrant  Securities  such
number of prospectuses as shall reasonably be requested.

                  (b) Except as provided in Section  6.3(c)  above,  the Company
shall pay all costs  (excluding fees and expenses of Holder(s)'  counsel and any
underwriting or selling commissions or other charges of any broker-dealer acting
on behalf of Holder(s)),  fees and expenses in connection with all  registration
statements filed pursuant to Section 6.2 and 6.3 (a) hereof  including,  without
limitation, the Company's legal and accounting fees, printing expenses, blue sky
fees and  expenses.  The  Holders(s)  will pay all costs,  fees and  expenses in
connection with any registration statement filed pursuant to the second sentence
of Section 6.3 (c).

                  (c) The Company  will take all  necessary  action which may be
required in qualifying or  registering  the Warrant  Securities  included in the
registration  statement  for offering and sale under the  securities or blue sky
laws of such states as  reasonably  are  requested by the  Holder(s) in writing,
provided  that the Company  shall not be  obligated to qualify to do business in
any  jurisdiction  where it is not then so  qualified or to take any action that
would  subject  it to general  service of process  where it is not so subject or
would subject the Company to any tax in any jurisdiction where it is not then so
subject.

                  (d) The Company  shall  indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any,  who controls  such Holders  within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim,  damage,  expense or
liability   (including  all  expenses   reasonably  incurred  in  investigating,
preparing or defending  against any claim  whatsoever)  to which any of them may
become  subject to the same  extent and with the same  effect as the  provisions
pursuant to which the Company has agreed to  indemnify  the Agent  contained  in
Section 7 of that  certain  Placement

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Agency Agreement,  dated April 10, 2000,  between the Agent and the Company (the
"Placement Agency Agreement").

                  (e)  The  Holder(s)  of  the  Warrant  Securities  to be  sold
pursuant to a registration  statement,  and their successors and assigns,  shall
severally,  and not jointly,  indemnify the Company,  its officers and directors
and each person,  if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 (a) of the Exchange  Act,  against all loss,  claim,
damage or expense or liability  (including all expenses  reasonably  incurred in
investigating,  preparing or defending  against any claim  whatsoever)  to which
they may become  subject under the Act, the Exchange Act or  otherwise,  arising
from information  furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such a registration  statement to the same
extent and with the same effect as the  provision  contained in Section 7 of the
Placement Agency  Agreement  pursuant to which the Agent has agreed to indemnify
the Company.

                  (f) Nothing  contained in this Agreement shall be construed as
requiring the Holder(s) to exercise  their  Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.

                  (g) The  Company  shall  prepare  and  file  with the SEC such
amendments and post-effective amendments to the registration statement as may be
necessary to keep the Registration  effective until all such Warrant  Securities
are sold; cause the prospectus to be.  supplemented by. any required  prospectus
supplement,  and as so  supplemented  to be filed pursuant to Rule 424 under the
Securities  Act;  and comply  with the  provisions  of the  Securities  Act with
respect  to the  disposition  of all  securities  covered  by such  registration
statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof as set forth in such registration
statement or supplement to the prospectus

                  (h) The Company shall furnish to each Holder  participating in
an offering including Warrant Securities pursuant to Sections 6.2 or 6.3 hereof,
and to each underwriter, if any, a signed counterpart,  addressed to such Holder
or underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such  registration  statement  (and,  if such  registration  includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting  agreement),  and (ii) a "cold comfort"  letter dated the effective
date of such  registration  statement  (and,  if such  registration  includes an
underwritten  public offering,  a letter dated the date of the clo6ing under the
underwriting  agreement) signed by the independent  public  accountants who have
issued  a  report  on  the  Company's  financial  statements  included  in  such
registration  statement,  in each case covering  substantially  the same matters
with  respect  to such  registration  statement  (and  the  prospectus  included
therein) and, in the case of such  accountants'  letter,  with respect to events
subsequent to the date of such financial statements,  as are customarily covered
in  opinions  of  issuer's  counsel and in  accountants'  letters  delivered  to
underwriters in underwritten public offerings of securities.

                  (i)  The  Company  shall,  as soon as  practicable  after  the
effective date of a registration  statement  relating to any Warrant  Securities
pursuant to Section  6.2 or 6.3 hereof,  and in any event  within  fifteen  (15)
months thereafter,  use its reasonable  efforts to make "generally  available to
its security holders" (within the meaning of Rule 158 under the Act) an

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earnings  statement (which need not be audited)  complying with Section 11(a) of
the Act and  covering  a  period  of at least  twelve  (12)  consecutive  months
beginning after the effective date of the registration statement.

                  (j)  The  Company  shall  deliver   promptly  to  each  Holder
participating  in an  offering  including  any  Warrant  Securities  pursuant to
Sections  6.2 or 6.3  hereof who so  requests  and to the  managing  underwriter
copies of all correspondence between the Commission and the Company, its counsel
or auditors and all memoranda relating to discussions with the Commission or its
staff  with  respect  to the  registration  statement,  and  shall  permit  each
underwriter to do such  investigation,  upon  reasonable  advance  notice,  with
respect to information  contained in or omitted from the registration  statement
as it deems  reasonably  necessary to comply with applicable  securities laws or
rules of the National  Association of Securities  Dealers,  Inc. ("NASD").  Such
investigation  shall  include  access  to  books,  records  and  properties  and
opportunities  to discuss  the  business of the Company  with its  officers  and
independent auditors, all to such reasonable extent and at such reasonable times
and as  often as any  such  underwriter  shall  reasonably  request  as it deems
necessary to comply with applicable securities laws and NASD rules.

                  (k) With  respect to a  registration  pursuant  to Section 6.3
hereof, the Company shall enter into an underwriting agreement with the managing
underwriter  selected for such underwriting by Holders holding a Majority of the
Warrant Securities requested to be included in such underwriting.  Such managing
underwriter(s)  shall be  satisfactory  to the  Company and each Holder and such
agreement  shall be  satisfactory  in form and  substance to the  Company,  each
Holder and such managing  underwriters,  and shall contain such representations,
warranties and covenants by the Company and such other terms as are  customarily
contained  in  agreements  of that type used by the  managing  underwriter.  The
Holders  shall  be  parties  to  any  underwriting   agreement  relating  to  an
underwritten sale of their Warrant Securities and may, at their option,  require
that any or all the representations,  warranties and covenants of the Company to
or for  the  benefit  of  such  underwriters  shall  also be made to and for the
benefit  of such  Holders.  Such  Holders  shall  not be  required  to make  any
representations  or  warranties  to  or  agreements  with  the  Company  or  the
underwriters  except as they may  relate  to such  Holders  and  their  intended
methods of distribution.

                  (l) For purposes of this  Agreement,  the term  "Majority"  in
reference to the Holders of Warrants or Warrant Securities, shall mean in excess
of fifty percent (50%) of the  outstanding  Warrants or Warrant  Securities that
(i) are not held by the  Company,  an  affiliate  (excluding  the  Agent and any
affiliate of the Agent), officer, creditor,  employee or agent thereof or any of
their respective affiliates, members of their family, persons acting as nominees
or in conjunction  therewith or (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under the Act.

                  7. INTENTIONALLY DELETED.

                  8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.

                  8.1  COMPUTATION  OF  ADJUSTED   EXERCISE  PRICE.   Except  as
hereinafter  provided,  in case the  Company  shall at any time  after  the date
hereof issue or sell any shares of its Stock

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(as defined in Section  8.5),  other than the  issuance or sales  referred to in
Section 8.6 hereof,  including shares held in the Company's  treasury and shares
of Stock  issued  upon the  exercise  of any  options,  rights or  warrants,  to
subscribe  for shares of Stock issued upon the direct or indirect  conversion or
exchange of securities for shares of Stock,  for a consideration  per share less
than the Exercise Price in effect  immediately  prior to the issuance or sale of
such shares or the  "Market  Price," as defined in Section  8.1(vi),  hereof per
share of Stock on the date  immediately  prior to the  issuance  or sale of such
shares, or without consideration, then forthwith upon such issuance or sale, the
Exercise  Price shall (until  another  such  issuance or sale) be reduced to the
price  (calculated  to the nearest full cent) equal to the  quotient  derived by
dividing  (A) an amount  equal to the sum of (X) the product of (a) the lower of
(i) the Exercise Price in effect  immediately prior to such issuance or sale and
(ii) the Market  Price per share of Stock on the date  immediately  prior to the
issuance or sale of such shares, in either event,  reduced,  but not to a number
which is below .001, by the positive difference,  if any, between the (u) Market
Price per share of Stock on the date  immediately  prior to the issuance or sale
and (v) the amount per share received in connection  with such issuance or sale,
multiplied b the total number of shares of Stock  outstanding  immediately prior
to  such  issuance  or  sale,  plus  (Y)  the  aggregate  of the  amount  of all
consideration,  if any,  received by the Company upon such  issuance or sale, by
(B) the total number of shares Stock outstanding immediately after such issuance
or sale; provided, however, that into event shall the Exercise Price be adjusted
pursuant to this  computation  to an amount in excess of the  Exercise  Price in
effect  immediately  prior  to  such  computation,  except  in  the  case  of  a
combination of outstanding shares of Stock, as provided by Section 8.3 hereof.

                  For the  purposes of this  Section 8 the term  Exercise  Price
shall mean the Exercise Price per share of Preferred  Stock set forth in Section
5 hereof,  as  adjusted  from time to time  pursuant to the  provisions  of this
Section 8.

                  For purposes of any  computation to be made in accordance with
this Section 8.1, the following provisions shall be applicable:

                  (i) In case of the  issuance  or sale of shares of Stock for a
consideration  part or all of  which  shall  be  cash,  the  amount  of the cash
consideration,  shall be deemed to be the amount of cash received by the Company
for such  shares  (or,  if  shares  of Stock  are  offered  by the  Company  for
subscription,  the subscription price, or, if either of such securities shall be
sold to  underwriters  or dealers  for public  offering  without a  subscription
price, the public offering price,  before  deducting  therefrom any compensation
paid or  discount  allowed  in the sale,  underwriting  or  purchase  thereof by
underwriters  or  dealers  or  other  persons  or  entities  performing  similar
services),  Or joy expense incurred in connection therewith and less any amounts
payable  to  security  holders  or any  affiliate  thereof,  including,  without
limitation, any employment agreement,  royalty,  consulting agreement,  covenant
not to compete,  earn out or contingent  payment  right or similar  arrangement,
agreement or understanding,  whether oral or written;  all such amounts shall be
valued at the  aggregate  amount  payable  thereunder  whether such payments are
absolute or contingent and irrespective of the period or uncertainty of payment,
the rate of interest, if any, or the contingent nature thereof.

                  (ii) In  case of the  issuance  or sale  (otherwise  than as a
dividend or other  distribution  on any stock of the Company) of shares of Stock
for a consideration part or all of which shall be other than cash, the amount of
the  consideration  therefore other than cash shall

                                       8
<PAGE>

be deemed to be the value of such  consideration  as determined in good faith by
the Board of Directors of the Company.

                  (iii)  Shares of Stock  issuable  by way of  dividend or other
distribution  on any capital  stock of the Company  shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of stockholders  entitled to receive such dividend or
other   distribution   and  shall  be  deemed  to  have  been   issued   without
consideration.

                  (iv) The  reclassification  of securities of the Company other
than shares of Stock into securities  including  shares of Stock shall be deemed
to involve the  issuance of such  shares of Stock for  consideration  other than
cash  immediately  prior to the  close of  business  on the date  fixed  for the
determination of security holders entitled to receive such shares, and the value
of the  consideration  allocable to such shares of Stock shall be  determined as
provided in subsection (ii) of this Section 8.1.

                  (v) The number of shares of Stock at any one time  outstanding
shall  include the  aggregate  number of shares  issued or issuable  (subject to
readjustment  upon  the  actual  issuance  thereof)  upon the  exercise  of then
outstanding  options,  rights,  warrants and upon the  conversion or exchange of
then outstanding convertible or exchangeable securities.

                  (vi) As used herein,  the phrase 9 Price" at any date shall be
deemed to be the last  reported  sale price,  or, in case no such  reported sale
takes place on such day,  the average of the last  reported  sale prices for the
last three (3)  trading  days,  in either  case as  officially  reported  by the
principal  securities  exchange  on which the Stock is  listed  or  admitted  to
trading,  or, if the Stock is not listed or admitted to trading on any  national
securities  exchange,  the average  closing bid price as  furnished  by the NASD
through NASDAQ or similar , organization  if NASDAQ is no longer  reporting such
information,  or if the Stock is not quoted on  NASDAQ,  as  determined  in good
faith by resolution of the Board of Directors of the Company,  based on the best
information available to it.

                  8.2 OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE
SECURITIES.

                  In case the  Company  shall at any time after the date  hereof
issue options, rights or warrants to subscribe for shares of Stock, or issue any
securities  convertible  into  or  exchangeable  for  shares  of  Stock,  for  a
consideration  per share  less than the  Exercise  Price in effect or the Market
Price  immediately  prior to the issuance of such options,  rights,  warrants or
such  convertible or  exchangeable  securities,  or without  consideration,  the
Exercise  Price in effect  immediately  prior to the  issuance of such  options,
rights, warrants or such convertible or exchangeable securities, as the case may
be, shall be reduced to a price determined by making a computation in accordance
with the provisions of Section 8.1 hereof; provided that:

                  (a) The aggregate  maximum  number of shares of Stock,  as the
case may be, issuable under such options,  rights or warrants shall be deemed to
be issued and  outstanding  at the time such  options,  rights or warrants  were
issued,  for a  consideration  equal to the  minimum  purchase  price  per share
provided for in such options,  rights or warrants at the time of issuance,  plus
the  consideration  (determined in the same manner as consideration  received on
the issue

                                       9
<PAGE>

or sale of  shares  in  accordance  with  the  terms of the  Warrants),  if any,
received by the Company for such options, rights or warrants.

                  (b) The aggregate  maximum  number of shares of Stock issuable
upon conversion or exchange of any convertible or exchangeable  securities shall
be  deemed  to be  issued  and  outstanding  at the  time  of  issuance  of such
securities,  and for a consideration  equal to the consideration  (determined in
the same  manner  as  consideration  received  on the issue or sale of shares of
Stock in accordance with the terms of the Warrants)  received by the Company for
such  securities,  plus the minimum  consideration,  if any,  receivable  by the
Company upon the conversion or exchange thereof.

                  (c) If any change shall occur in the price, per share provided
for in any of the options,  rights or warrants  referred to in subsection (a) of
this Section 8.2, or in the price per share at which the securities  referred to
in subsection  (b) of this Section 8.2 are  convertible  or  exchangeable,  such
options,  rights or warrants or conversion or exchange  rights,  as the case may
be,  shall be deemed to have expired or  terminated  on the date when such price
change became effective in respect to shares not theretofore  issued pursuant to
the exercise or conversion or exchange thereof,  and the Company shall be deemed
to have issued upon such date new options,  rights or warrants or convertible or
exchangeable  securities  at the new price in  respect  of the  number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.

                  8.3 SUBDIVISION AND COMBINATION CASE. The Company shall at any
time  combine  the  proportionately  decreased  in the  case of  subdivision  or
increased in the case of combination.

                  8.4 ADJUSTMENT IN NUMBER OF SECURITIES.  Upon each  adjustment
of the Exercise  Price  pursuant to the provisions of this Section 8, the number
of  securities  issuable  upon the exercise of each Warrant shall be adjusted to
the nearest fill amount by  multiplying a number equal to the Exercise  Price in
effect  immediately prior to such adjustment by the number of Warrant Securities
issuable upon exercise of the Warrants  immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.

                  8.5  DEFINITION OF STOCK.  For the purpose of this  Agreement,
the term "Stock"  shall mean (i) the class of stock  designated as Common Stock,
Series B  Preferred  Stock or Series C  Preferred  Stock in any  Certificate  of
Designations of the Company as may be amended as of the date hereof, or (ii) any
other class of stock resulting from successive changes or  reclassifications  of
such Stock  consisting  solely of changes in par value,  or from par value to no
par  value,  or from no par value to par value.  In the event  that the  Company
shall after the date hereof issue  securities  with  greater or superior  voting
rights than the shares of Stock outstanding as of the date hereof,  the Holders,
at their  option,  may receive upon  exercise of any Warrants  either  shares of
Stock or a like  number of such  securities  with  greater  or  superior  voting
rights.

                  8.6 MERGER OR  CONSOLIDATION.  In case of any consolidation of
the Company  with, or merger of the Company with, or merger of the Company into,
another  corporation (other than a consolidation or merger which does not result
in any  reclassification  or change of the outstanding  Stock),  the corporation
formed by such consolidation or merger shall execute and

                                       10
<PAGE>

deliver to the Holder a supplemental warrant agreement providing that the holder
of each  Warrant  then  outstanding  or to be  outstanding  shall have the right
thereafter  (until the expiration of such Warrant) to receive,  upon exercise of
such  warrant,  the kind and amount of shares of stock of other  securities  and
property receivable upon such consolidation or merger, by a holder of the number
of shares  of Stock of the  Company  for  which  such  warrant  might  have been
exercised  immediately prior to such  consolidation,  merger,  sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments  provided in Section 8. The above provision of this
Subsection shall similarly apply to successive consolidations or mergers.

                  8.7 NO  ADJUSTMENT  OF  EXERCISE  PRICE IN CERTAIN  CASES.  No
adjustment of the Exercise Price shall be made:

                  (a) Upon  issuance  or sale of the  Warrants  or the shares of
Stock issuable upon the exercise of the Warrants.

                  (b) Upon  conversion  of  Preferred  Stock  or other  options,
warrants  and  convertible  securities  outstanding  as of the date  hereof into
shares of Common Stock.

                  (c)  Upon  issuance  of  options,  and  Common  Stock  granted
thereunder,  granted. to employees of the Company issued under one or more stock
options plans that have an exercise  price equal to the fair market value of the
Common Stock as determined in good faith by the Board of Directors.

                  (d) Upon issuance of shares of Common Stock as a result of the
antidilution  rights  attributable  to the  Series  B or  Series  C  Convertible
Preferred Stock.

                  (e) If the  amount of said  adjustment  shall be less than two
cents ($0.02) per security  issuable  upon  exercise of the Warrants,  provided,
however that in such case any adjustment  that would  otherwise be required then
to be made  shall  be  carried  forward  and  shall  be made at the  time of and
together with the next subsequent adjustment which, together with any adjustment
so carried  forward,  shall  amount to at least two cents  ($0.02) per  security
issuable upon exercise of the Warrants.

                  8.8 DIVIDENDS AND OTHER  DISTRIBUTIONS.  In the event that the
Company  shall at any time  prior to the  exercise  of all  Warrants  declare  a
dividend  (other  than a  dividend  consisting  solely  of  shares  of  Stocl or
otherwise  distribute  to  its  stockholders  any  assets,  properties,  rights,
evidence of  indebtedness,  securities  (other  than  shares of Stock),  whether
issued by the Company or by another, or any other thing of value, the Holders of
the unexercised Warrants shall thereafter be entitled, in addition to the shares
of Stock or other securities and property  receivable upon the exercise thereof,
to receive,  upon the  exercise of such  Warrants,  the same  property,  assets,
rights,  evidences of indebtedness,  securities or any other thing of value that
they  would  have been  entitled  to  receive  at the time of such  dividend  or
distribution  as if the Warrants had been  exercised  immediately  prior to such
dividend or distribution. At the time of any such dividend or distribution,  the
Company shall make appropriate  reserves to ensure the timely performance of the
provisions of this Subsection 8.8.

                                       11
<PAGE>

                  9.  EXCHANGE AND  REPLACEMENT  OF WARRANT  CERTIFICATES.  Each
Warrant Certificate is exchangeable without expense,  upon the surrender thereof
by the  registered  Holder at the  principal  office of the  Company,  for a new
Warrant  Certificate of like form, tenor and date  representing in the aggregate
the right to purchase the same number of  securities  in such  denominations  as
shall be designated by the Holder thereof at the time of such surrender.

                  Upon   receipt   by  the   Company  of   evidence   reasonably
satisfactory to it of the loss, theft,  destruction or mutilation of any Warrant
Certificate,  and,  in case of  loss,  theft or  destruction,  of  indemnity  or
security reasonably  satisfactory to it, and reimbursement to the Company of all
reasonable expenses  incidental thereto,  and upon surrender and cancellation of
the  Warrants,  if  mutilated,  the Company  will make and deliver a new Warrant
Certificate of like form and tenor in lieu thereof.

                  10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not
be required to issue certificates  representing fractions of shares of Preferred
Stock upon the  exercise  of the  Warrants,  nor shall it be  required  to issue
script or pay cash in lieu of fractional  interests,  it being the intent of the
parties  that all  fractional  interests  shall be  eliminated  by rounding  any
fraction up to the nearest whole number or shares of Preferred Stock

                  11.  RESERVATION AND LISTING OF SECURITIES.  The Company shall
at all  times  reserve  and  keep  available  out of its  authorized  shares  of
Preferred  Stock,  solely for the purpose of issuance  upon the  exercise of the
Warrants,  such  number  of  shares  of  Preferred  Stock or  other  securities,
properties or rights as shall be issuable upon the exercise thereof. The Company
shall at times reserve and keep available out of its authorized shares of Common
Stock,  solely for the purpose of issuance upon the  conversion of the Preferred
Stock  underlying  the Warrants,  such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants and payment
of the  Exercise  Price  therefore,  all  shares  of  Preferred  Stock and other
securities  issuable upon such exercise shall be duly and validly issued,  fully
paid,   non-assessable   and  not  subject  to  the  preemptive  rights  of  any
stockholder.  As long as the Warrants shall be outstanding and the Company shall
have a class of its  securities  registered  under the Act or the' Exchange Act,
the  Company  shall use its best  efforts to cause all shares of Stock  issuable
upon the  exercise of the Warrants to be listed  (subject to official  notice of
issuance) on all security  exchanges on which the Preferred  Stock issued to the
public in connection herewith may then be listed and/or quoted.

                  12.  NOTICES TO WARRANT  HOLDERS.  Nothing  contained  in this
Agreement  shall be constructed as conferring upon the Holders the right to vote
or to consent or to receive notice to stockholders in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights  whatsoever as a stockholder  of the Company.  If,  however,  at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:

                  (a) the  Company  shall  take a record of the  holders  of its
shares of  Preferred  Stock  for the  purpose  of  entitling  them to  receive a
dividend or distribution  payable  otherwise than in cash, or a cash dividend or
distribution  payable  otherwise  than out of current or retained

                                       12
<PAGE>

earnings,  as  indicated  by  the  accounting  treatment  of  such  dividend  or
distribution on the books of the Company; or

                  (b)  the  Company  shall  offer  to  all  the  holders  of its
Preferred  Stock  any  additional  shares of  capital  stock of the  Company  or
securities  convertible  into or exchangeable for shares of capital stock of the
Company, or any option right or warrant to subscribe therefore; or

                  (c) a  dissolution,  liquidation  or winding up of the Company
(other than in connection  with a  consolidation  or merger) or a sale of all or
substantially  all of its property,  assets and business as an entirety shall be
proposed;  then,  in any one or more of said  events,  the  Company  shall  give
written  notice of such event at least fifteen (15) days prior to the date fixed
as a record date for the dividend or the date of closing the transfer  books for
the determination of the issuance of any convertible or exchangeable  securities
or  subscription  rights,  options or warrants or for the  determination  of the
persons or entitled to vote on such proposed dissolution,  liquidation,  winding
up or sale.  Such notice  shall  specify such record date or the date of closing
the  transfer  books,  as the case may be.  Failure  to give such  notice or any
defect  therein  shall not affect the validity of any action taken in connection
with the  declaration  or payment of any such  dividend,  or the issuance of any
convertible  or  exchangeable  securities  or  subscription  rights,  options or
warrants, or any proposed dissolution, liquidation winding up or sale.

                  13.  Notices  All  notices,   requests,   consents  and  other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly made when  delivered,  or mailed by  registered or certified  mail,  return
receipt requested:

                  (a) If to  the  registered  Holder  of  the  Warrants,  to the
address of such Holder as shown on the books of the Company; or

                  (b) If to the  Company,  to the address set forth in Section 3
hereof or to such other  address as the Company may  designate  by notice to the
Holders.

With a copy to:

                  Kirkpatrick & Lockhart, LLP
                  1251 Avenue of the Americas, 45th Floor
                  New York, New York 10020
                  Attn: Stephen R. Connoni, Esq.

                  (c) if to the Agent,  to the last  known  address of the Agent
set forth in the  Placement  Agency  Agreement  or to such other  address as the
Agent may designate by notice to the Company and the Holders.

                  14. SUPPLEMENTS AND AMENDMENTS.  The Company and the Agent may
from time to time supplement or amend this Agreement without the approval of any
holders  of  Warrant  Certificates  (other  than the Agent) in order to cure any
ambiguity,  to correct or supplement any provision contained herein which may be
defective  or  inconsistent  with any  provision  herein,  or to make any  other
provisions in regard to matters or questions arising hereunder which the Company
and the Agent may deem  necessary  or  desirable  and which the

                                       13
<PAGE>

Company  and the Agent deem shall not  adversely  affect  the  interests  of the
Holders of Warrant Certificates.  Other amendments to this Agreement may be made
only with the  written  consent of the  Holders of the  Majority  of the Warrant
Securities.

                  15.  SUCCESSORS.  All the  covenants  and  provisions  of this
Agreement  shall be binding  upon and inure to the benefit of the  Company,  the
Holders and their respective successors and assigns hereunder.

                  16.  TERMINATION.  This Agreement shall terminate at the close
of business on the seventh anniversary of the Final Closing. Notwithstanding the
foregoing,  the  indemnification  provisions  of  Section 6 shall  survive  such
termination  until the close of  business on the tenth  anniversary  of the date
hereof.

                  17. GOVERNING LAW: SUBMISSION TO JURISDICTION.  This Agreement
and each Warrant  Certificate  issued hereunder shall be deemed to be a contract
made  under  the laws of the  State of New  York and for all  purposes  shall be
construed in accordance with the laws of said State without giving effect to the
rules of said State governing conflicts of laws.

                  The Company,  the Agent and the Holders  hereby agree that any
action,  proceeding  or claim  against it arising out of, or relating in any way
to, this  Agreement  shall be brought and enforced in the courts of the State of
New York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive.  The Company,  the Agent and the Holders hereby  irrevocably waive
any objection to such exclusive  jurisdiction  or inconvenient  forum.  Any such
process  or  summons  to be served  upon any of the  Company,  the Agent and the
Holders (at the option of the party  bringing such action,  proceeding or claim)
may be served by  transmitting a copy thereof,  by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address as set
forth in Section 13 hereof.  Such mailing shall be deemed  personal  service and
shall be legal and binding upon the party so served in any action, proceeding or
claim.  The  Company,  the  Agent  and the  Holders  agree  that the  prevailing
party(ies)  in any such action or  proceeding  shall be entitled to recover from
the other  party(ies)  all of  its/their  reasonable  legal  costs and  expenses
relating to such action or proceeding  and/or  incurred in  connection  with the
preparation therefore.

                  18. ENTIRE AGREEMENT;  MODIFICATION. This Agreement (including
the Placement  Agency  Agreement to the extent portions  thereof are referred to
herein)  contains  the entire  understanding  between  the  parties  hereto with
respect to the subject  matter hereof and may not be modified or amended  except
by  a  writing  duly  signed  by  the  party  againsrwhom   enforcement  of  the
modification. or amendment is sought.

                  19. SEVERABILITY.  If any provision of this Agreement shall be
held to be invalid and unenforceable,  such invalidity or unenforceability shall
not affect any other provision of this Agreement.

                  20.  CAPTIONS.  The caption  headings of the  Sections of this
Agreement are for convenience of reference only and are not intended, nor should
they be construed, as a part of this Agreement and shall be given no substantive
effect.

                                       14
<PAGE>

                  21.  BENEFITS  OF THIS  AGREEMENT.  Nothing in this  Agreement
shall be construed to give to any person,  entity or corporation  other than the
Company  and the  Agent  and any  other  registered  Holders(s)  of the  Warrant
Certificates or Warrant Securities any legal or equitable right, remedy or claim
under this  Agreement;  and this  Agreement  shall be for the sole and exclusive
benefit of the  Company  and the Agent and any other  Holder(s)  of the  Warrant
Certificates or Warrant Securities.

                  22. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterpart shall for all purposes be deemed to
be an original,  and such count shall  together  constitute but one and the same
instrument.

                                       15
<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed as of the day and year first written.

                                                     HOME DIRECTOR, INC.

                                                     By:

                                                     SPENCER TRASK SECURITIES,
                                  INCORPORATED

                                                     By:

                                       16
<PAGE>

                                                     WARRANT CERTIFICATE
THE WARRANT  REPRESENTED BY THIS CERTIFICATE AND THE OTHER  SECURITIES  ISSUABLE
UPON.  EXERCISE  THEREOF HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF
1933, AS. AMENDED (THE "ACT"); AND MAY NOT BE OFFERED SOLD, PLEDGED OR OTHERWISE
TRANSFERRED  EXCEPT  PURSUANT TO (i) AN EFFECTIVE  REGISTRATION  STATEMENT UNDER
THE, ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), PROVIDED THAT THE
ISSUER OF THIS  CERTIFICATE  IS PROVIDED  WTTH AN OPINION OF COUNSEL  REASONABLY
SATISFACTORY TO THE ISSUER,  THAT AN EXEMPTION FROM REGISTRATION  UNDER SUCH ACT
IS AVAILABLE.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

No. W-PB5                                                    2,000,000 Warrants

                               WARRANT CERTIFICATE

                  This  Warrant   Certificate   certifies   that  SPENCER  TRASK
SECURITIES,  or its registered  assigns,  is the registered  holder of 2,000,000
Warrants to  purchase  initially,  at any time after the date hereof  until 5:30
p.m.  New York time on date (the  "Expiration  Date") that is the earlier of (a)
the tenth  anniversary of the Final Closing (as defined in the Placement  Agency
Agreement between HOME DIRECTOR,  INC., a Delaware  corporation (the "Company"),
and  Spencer  Trask  Securities,  Incorporated  ("Agent"))  and  (b)  the  third
anniversary of the closing date of the initial public  offering of the Company's
Common Stock occurring  within such ten-year period (the "Warrant Ex Term"),  up
to  2,000,000  fully  paid and  non-assessable  shares of  Series C  Convertible
Preferred Stock, par value $0.001 per share ("Preferred  Stock") of the Company,
at the initial.  exercise  price,  subject to adjustment in certain  events (the
"Exercise  Price"),  of $1.00 upon  surrender  of this Warrant  Certificate  and
payment  of the  Exercise  Price at an office or  agency of the  Company,  or by
surrender of this Warrant  Certificate  in lieu of cash payment,  but subject to
the conditions  and  adjustments  set forth herein and in the Warrant  Agreement
dated as of July 6,  2000  between  the  Company  and the  Agent  (the  "Warrant
Agreement").  Payment  of the  Exercise  Price  shall  be made by  certified  or
official bank check in New York Clearing House funds payable to the order of the
Company.

                  No Warrant may be exercised after 5:30 p.m., New York time, on
the  Expiration  Date,  at which  time all  Warrants  evidenced  hereby,  unless
exercised prior thereto, shall thereafter be void.

                  The Warrants evidenced by this Warrant Certificate are part of
a duly authorized  issue of' Warrants issued pursuant to the Warrant  Agreement,
which Warrant  Agreement is hereby  incorporated by reference in and made a part
of this  instrument  and to which  reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and

                                       17
<PAGE>

immunities  thereunder  of the Company and the holders  (the words  "holders" or
"holder" meaning the registered holder or registered holders) of the Warrants.

                  The Warrant  Agreement  provides-that,  upon the occurrence of
certain  events,  the Exercise  Price and the type and/or  number of the Company
securities issuable upon their exercise may, subject to certain  conditions,  be
adjusted. In such event, the Company will, at the request of the holder, issue a
new Warrant Certificate evidencing the adjustment in. the Exercise Price and the
number  and/or type of  securities  issuable  upon the exercise of the Warrants;
provided,  however,  that the  failure of the  Company to issue such new Warrant
Certificates  shall not in any way change,  alter or otherwise impair the rights
of the holder as set forth in the Warrant Agreement.

                  Upon due  presentment  for  registration  of  transfer of this
Warrant  Certificate  and the executed form of assignment  attached hereto at an
office  or  agency  of  the  Company,  a  new  Warrant  Certificate  or  Warrant
Certificates  of like form and  tenor and  evidencing  in the  aggregate  a like
number of Warrants  shall be issued to the  transferee(s)  in exchange  for this
Warrant  Certificate,  subject  to the  limitations  provided  herein and in the
Warrant  Agreement,  without any charge except for any tax or other governmental
charge imposed in connection with such transfer.

                  Upon the exercise of less than all of the  Warrants  evidenced
by this  Certificate,  the Company shall  forthwith issue to the holder hereof a
new Warrant Certificate representing such number unexercised Warrants.

                  The Company may deem and treat the registered holder(s) hereof
as the  absolute  owner(s)  of this  Warrant  Certificate  (notwithstanding  any
notation of ownership or other writing  hereon made by anyone),  for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other  purposes,  and the Company shall not be affected by any notice to the
contrary.

                  All terms used in this Warrant  Certificate  which are defined
in the  Warrant  Agreement  shall-  have the  meanings  assigned  to them in the
Warrant Agreement.

                  IN WITNESS WHEREOF, the has caused this Warrant Certificate to
be duly executed under its corporate seal.

Dated as of July 6, 2000

                                     HOME DIRECTOR, INC.

                                     By_______________________
                                              Mary E. Walker, President

                                       18
<PAGE>

             [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]

                  The  undersigned  hereby  irrevocably  elects to exercise  the
right, represented; by this Warrant Certificate, to purchase ____________ shares
of Preferred. Stock.

                  In  accordance  with the terms of  Section  3.2of the  Warrant
Agreement dated as of May 11, 2000 between HOME DIRECTOR, INC. and Spencer Trask
Securities,  Incorporated,  the undersigned requests that a certificate for such
securities be registered in the name of ______________________  whose address is
______________________________   and  that  such  Certificate  be  delivered  to
_______________________whose address is
___________________________________.

Dated:                     , 2000

                       Signature ________________________________
                       (Signature must conform in all respects to name of
                       holder as specified on the face of the Warrant
                       Certificate)

             (Insert Social Security or Other Identifying Number of
                                     Holder)

                                       19
<PAGE>

                              [FORM OF ASSIGNMENT]

                (TOT BE EXECUTED BY THE RE HOLDER IF SUCH. HOLDER
                  DESIRES TO TRANSFER THE WARRANT CERTIFICATE)

                  FOR VALUE RECEIVED_______________________hereby sells, assigns
and transfers unto _________________________________________

                  (PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)

this Warrant  Certificate,  together with all right, title and interest therein,
and does  hereby  irrevocably  constitute  and  appoint_____________Attorney  to
transfer  the  within  Warrant  Certificate  on the  books  of the  within-named
Company, with full power of substitution.

Dated:                     , 2000

                    Signature ________________________________
                    (Signature must conform in all respects to name of holder as
                    specified on the face of the Warrant Certificate)

             (Insert Social Security or Other Identifying Number of
                                     Holder)

                                       20
<PAGE><PAGE>
                                                                    EXHIBIT 4.32

                              AMENDED AND RESTATED

                                STOCK OPTION PLAN

                             OF HOME DIRECTOR, INC.

1. Purposes.

          This Stock  Option Plan (the "Plan") is intended to attract and retain
the best available  personnel with Home Director,  Inc. or any of its subsidiary
corporations (collectively,  the "Company"), and to provide additional incentive
to such  employees and others to exert their maximum  efforts toward the success
of the  Company.  The above aims will be  effectuated  through  the  granting of
certain stock options.  Options may be granted under the Plan which are intended
to qualify as Incentive Stock Options ("ISOs") under Section 422 of the Internal
Revenue  Code of 1986 (the  "Code")  or which are not  intended  to  qualify  as
Incentive Stock Options ("Non-ISOs").  The term "subsidiary  corporation" shall,
for purposes of the Plan,  be defined in the same manner as such term is defined
in Section 424(f) of the Code and shall include a subsidiary of any subsidiary.

2. Administration of the Plan.

         (a) The Plan shall be  administered  by the Board of  Directors  of the
Company (the "Board of  Directors"),  as the Board of Directors  may be composed
from time to time,  except as provided in subparagraph  (b) of this Paragraph 2.
The  determinations of the Board of Directors under the Plan,  including without
limitation  as to  the  matters  referred  to in  this  Paragraph  2,  shall  be
conclusive.  Any  determination  by a  majority  of the  members of the Board of
Directors at any meeting,  or by written consent in lieu of a meeting,  shall be
deemed to have been made by the whole Board of  Directors.  Within the limits of
the  express  provisions  of the Plan,  the Board of  Directors  shall  have the
authority, in its discretion, to take the following actions under the Plan:

                  (i) to  determine  the  individuals  to whom,  and the time or
times at which, ISOs to purchase the Company's shares of Common Stock, par value
$.01 per share  ("Common  Shares"),  shall be granted,  and the number of Common
Shares to be subject to each ISO,

                  (ii) to determine  the  individuals  to whom,  and the time or
times at which,  Non-ISOs to purchase  the  Company's  Common  Shares,  shall be
granted, and the number of Common Shares to be subject to each Non-ISO,

                  (iii) to determine the terms and  provisions of the respective
stock option  agreements or certificates  granting ISOs and Non-ISOs (which need
not be identical),

                  (iv) to accelerate the exercisability of any ISO or Non-ISO;

                  (v) to interpret the Plan,

<PAGE>

                  (vi) to  prescribe,  amend and rescind  rules and  regulations
relating to the Plan, and

                  (vii)  to make all  other  determinations  and take all  other
actions  necessary or advisable  for the  administration  of the Plan. In making
such determinations,  the Board of Directors may take into account the nature of
the  services  rendered  by  such  individuals,   their  present  and  potential
contributions  to the  Company's  success and such other factors as the Board of
Directors,  in its  discretion,  shall deem  relevant.  An individual to whom an
option has been granted under the Plan is referred to herein as an "Optionee."

         (b)  Notwithstanding  anything to the contrary  contained  herein,  the
Board of Directors  may at any time,  or from time to time,  appoint a committee
(the  "Committee")  of at least  two  members  of the  Board of  Directors,  and
delegate to Committee the authority of the Board of Directors to administer  the
Plan. Upon such  appointment  and  delegation,  the Committee shall have all the
powers,  privileges  and  duties  of  the  Board  of  Directors,  and  shall  be
substituted  for the  Board of  Directors,  in the  administration  of the Plan,
except  that the power to appoint  members of the  Committee  and to  terminate,
modify or amend the Plan shall be retained by the Board of Directors.  The Board
of  Directors  may  from  time to  time  appoint  members  of the  Committee  in
substitution  for or in  addition  to  members  previously  appointed,  may fill
vacancies in the Committee and may  discharge the  Committee.  A majority of the
Committee shall  constitute a quorum and all  determinations  shall be made by a
majority of its members.  Any  determination  reduced to writing and signed by a
majority of the members  shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held.  Members of the Committee shall
not be eligible to receive  Options  under this Plan unless the issuance of such
Options has been previously approved by the Board of Directors.

3. Shares Subject to the Plan.

         The total  number of Common  Shares  which shall be subject to ISOs and
Non-ISOs  granted under the Plan  (collectively,  "Options") shall be 600,000 in
the  aggregate,  subject to  adjustment  as provided in Paragraph 8. The Company
shall at all times  while  the Plan is in force  reserve  such  number of Common
Shares as will be sufficient to satisfy the requirements of outstanding Options.
The Common  Shares to be issued upon  exercise  of Options  shall in whole or in
part be authorized  and unissued or reacquired  Common Shares.  The  unexercised
portion of any expired,  terminated or canceled  Option shall again be available
for the grant of Options under the Plan.

4. Eligibility.

         (a) ISOs and Non-ISOs  may be granted to  employees  of the Company.  A
director or officer of the  Company who is not also an employee of the  Company,
consultants of the Company and other persons at the Board's discretion, shall be
eligible to receive Non-ISOs but shall not be eligible to receive ISOs.

         (b) An ISO may be granted, consistent with the other terms of the Plan,
to an employee who owns (within the meaning of Sections  422(b)(6) and 424(d) of
the Code),  more than ten (10%)  percent of the total  combined  voting power or
value of all classes of stock of the Company or a  subsidiary  corporation  (any
such  person,  a  "Principal  Shareholder")  only if,  at the  time  such ISO is
granted, the purchase price of the Common Shares subject to the ISO is an amount

<PAGE>

which equals or exceeds one hundred ten percent  (110%) of the fair market value
of such Common Shares,  and such ISO by its terms is not  exercisable  more than
five (5) years after it is granted.

          (c)  Nothing  contained  in the Plan shall be  construed  to limit the
right of the Company to grant options  otherwise  than under the Plan for proper
corporate purposes.

         (d) Nothing contained in the Plan shall be construed to limit the right
of the Board of  Directors  to grant an ISO and a Non-ISO  concurrently  under a
single stock option agreement so long as each Option is clearly identified as to
its  status.  Furthermore,  if an  Option  has  been  granted  under  the  Plan,
additional Options may be granted from time to time to the Optionee holding such
Options,  and Options may be granted from time to time to one or more employees,
officers, or directors who have not previously been granted Options.

         (e) To the extent that the grant of an Option  results in the aggregate
fair market  value  (determined  at the time of grant) of the Common  Shares (or
other  capital  stock of the Company or any  subsidiary)  with  respect to which
Incentive Stock Options are exercisable for the first time by an Optionee during
any calendar year (under all plans of the Company and  subsidiary  corporations)
to exceed $100,000,  such Option shall be treated as an Non-ISO.  The provisions
of this  subparagraph  (e) of  Paragraph  4 shall be  construed  and  applied in
accordance  with  Section  422(d)  of the  Code  and  the  regulations,  if any,
promulgated thereunder.

5. Terms of Options.

         The terms of each Option  granted under the Plan shall be determined by
the Board of Directors consistent with the provisions of the Plan, including the
following:

                  (a) The purchase  price of the Common  Shares  subject to each
ISO shall not be less than the fair market value (or in the case of the grant of
an ISO to a Principal  Shareholder,  not less than 110% of fair market value) of
such Common  Shares at the time such Option is granted.  Such fair market  value
shall be  determined  by the Board of Directors  after it evaluates all relevant
factors  and  information  available  to it,  including  but not  limited to the
current  bid and asked  prices of the Common  Shares and the extent of  relevant
market activity.

                  (b) The purchase  price of the Common  Shares  subject to each
Non-ISO shall be fixed by the Board of Directors, in its discretion, at the time
such Option is granted.

                  (c) The dates on which each Option (or portion  thereof) shall
be exercisable and the conditions  precedent to such exercise,  if any, shall be
fixed by the Board of Directors,  in its discretion,  at the time such Option is
granted.

                  (d) The  expiration of each Option shall be fixed by the Board
of Directors,  in its discretion,  at the time such Option is granted;  however,
unless  otherwise  determined  by the Board of  Directors,  an  Option  shall be
exercisable  for ten (10) years after the Grant Date  unless the  Optionee of an
ISO is a Principal Shareholder,  in which case the said ISO shall be exercisable
for 5 years  after the Grant  Date.  Each  Option  shall be  subject  to earlier
termination as expressly  provided in Paragraph 6 hereof or as determined by the
Board of Directors, in its discretion, at the date such Option is granted.
<PAGE>

                  (e) Options shall be exercised by the delivery by the Optionee
thereof to the Company at its principal  office, or at such other address as may
be  established  by the Board of Directors,  of written  notice of the number of
Common Shares with respect to which the Option is being exercised accompanied by
payment in full of the purchase  price of such Common  Shares.  Payment for such
Common Shares may be made (as determined by the Board of Directors) (i) in cash,
(ii) by  certified  check or bank  cashier's  check  payable to the order of the
Company in the amount of such purchase price,  (iii) by a promissory note issued
by the  Optionee  in favor of the  Company in an amount  equal to such  purchase
price and payable on terms prescribed by the Board of Directors,  which provides
for the payment of interest at a fair market rate, as determined by the Board of
Directors, (iv) by delivery of capital stock to the Company having a fair market
value  (determined on the date of exercise in accordance  with the provisions of
subparagraph  (a) of this Paragraph 5) equal to said purchase price,  (v) by any
combination  of the methods of payment  described in (i) through (iv) above,  or
(vi) by such other methods as the Board of Directors may deem appropriate.

                  (f)  An  Optionee  shall  not  have  any of  the  rights  of a
shareholder  with respect to the Common Shares  subject to his Option until such
shares are issued to him upon the exercise of his Option as provided herein.

                  (g) No  Option  shall be  transferable,  except by will or the
laws of descent and  distribution,  and any Option may be  exercised  during the
lifetime of the Optionee only by him. No Option  granted under the Plan shall be
subject to execution, attachment or other process.

6. Death or Termination of Employment.

         (a) If the  employment  or other  relationship  of an Optionee with the
Company shall be terminated  voluntarily by the employee and without the consent
of the Company or for "Cause" (as hereinafter  defined),  and immediately  after
such  termination  such Optionee shall not then be employed by the Company,  any
Options granted to such Optionee to the extent not  theretofore  exercised shall
expire  forthwith.  For  purposes  of the Plan,  "Cause"  shall mean  "Cause" as
defined in any employment  agreement  ("Employment  Agreement") between Optionee
and the  Company,  and,  in the  absence of an  Employment  Agreement  or in the
absence of a definition of "Cause" in such Employment  Agreement,  "Cause" shall
mean  (i)  any  continued  failure  by  the  Optionee  to  obey  the  reasonable
instructions  of the  President  or any member of the Board of  Directors,  (ii)
continued  neglect by the Optionee of his duties and  obligations as an employee
of the  Company,  or a failure to perform  such  duties and  obligations  to the
reasonable  satisfaction  of the  President  or the  Board of  Directors,  (iii)
willful misconduct of the Optionee or other actions in bad faith by the Optionee
which  are  to  the  detriment  of  the  Company  including  without  limitation
commission of a felony, embezzlement or misappropriation of funds and commission
of any act of fraud or (iv) a breach of any material provision of any Employment
Agreement not cured within 10 days after written notice thereof.

         (b) If such employment or other relationship shall terminate other than
(i) by reason of death, (ii) voluntarily by the employee and without the consent
of the Company,  or (iii) for Cause, and immediately after such termination such
Optionee shall not then be employed by the Company,  any Options granted to such
Optionee   may  be  exercised  at  any  time  within  three  months  after  such
termination,  subject to the provisions of subparagraph (d) of this Paragraph 6.
For the purposes of the Plan, the retirement of an Optionee either pursuant to a
pension or  retirement  plan adopted by the Company or on the normal  retirement
date  prescribed  from  time to  time by the  Company,  and the  termination  of
employment  as a result of a disability  (as defined in Section  22(e)(3) of the
Code) shall be deemed to be a termination of such  Optionee's  employment  other
than voluntarily by the Optionee or for Cause.
<PAGE>

         (c) If an Optionee dies (i) while employed by, or engaged in such other
relationship with, the Company or (ii) within three months after the termination
of his employment or other  relationship  other than voluntarily by the Optionee
and without the consent of the Company or for Cause, any Options granted to such
Optionee may be  exercised  at any time within six months after such  Optionee's
death, subject to the provisions of subparagraph (d) of this Paragraph 6.

         (d) An Option may not be exercised  pursuant to this Paragraph 6 except
to the extent that the  Optionee was entitled to exercise the Option at the time
of termination of employment or such other  relationship,  or death,  and in any
event may not be exercised  after the expiration of ten (10) years from the date
the Option was  granted,  or five (5) years from the date an ISO was  granted if
the Optionee was a Principal Shareholder at that date.

7. Leave of Absence.

         For  purposes  of the Plan,  an  individual  who is on military or sick
leave or other bona fide leave of absence  (such as temporary  employment by the
United States or any state  government)  shall be considered as remaining in the
employ of the Company for 90 days or such longer  period as shall be  determined
by the Board of Directors.

8. Adjustment upon Changes in Capitalization.

         (a) In the event  that the  outstanding  Common  Shares  are  hereafter
changed by reason of reorganization,  merger,  consolidation,  recapitalization,
reclassification,  stock  split-up,  combination  or  exchange of shares and the
like, or dividends payable in Common Shares, an appropriate  adjustment shall be
made by the Board of Directors in the aggregate number of shares available under
the Plan and in the number of shares and price per share subject to  outstanding
Options.  If the  Company  shall be  reorganized,  consolidated,  or merged with
another corporation, or if all or substantially all of the assets of the Company
shall be sold or  exchanged,  an  Optionee  shall at the time of issuance of the
stock under such a corporate  event, be entitled to receive upon the exercise of
his  Option the same  number  and kind of shares of stock or the same  amount of
property,  cash or securities as he would have been entitled to receive upon the
occurrence of any such corporate event as if he had been,  immediately  prior to
such event, the holder of the number of shares covered by his Option;  provided,
however, that if any of such events occur, the Board of Directors shall have the
discretionary  power to take any action necessary or appropriate to prevent ISOs
granted  hereunder  from being  disqualified  as Incentive  Stock  Options or to
accelerate their vesting date.

         (b) Any  adjustment  under  this  Paragraph  8 in the  number of Common
Shares subject to Options shall apply  proportionately  to only the  unexercised
portion of any Option  granted  hereunder.  If fractions of a share would result
from any such  adjustment,  the  adjustment  shall be  revised to the next lower
whole number of shares.
<PAGE>

9. Further Conditions of Exercise.

         (a)  Unless  prior to the  exercise  of an  Option  the  Common  Shares
issuable upon such exercise are the subject of a  registration  statement  filed
with the  Securities and Exchange  Commission  pursuant to the Securities Act of
1933,  as  amended  (the  "Securities  Act"),  and  there  is then in  effect  a
prospectus filed as part of such registration statement meeting the requirements
of Section  10(a)(3) of the Securities  Act, the notice of exercise with respect
to such Option  shall be  accompanied  by a  representation  or agreement of the
Optionee to the Company to the effect  that such shares are being  acquired  for
investment  only and not with a view to the resale or distribution  thereof,  or
such other  documentation  as may be required  by the  Company,  unless,  in the
opinion  of  counsel  to  the  Company,   such   representation,   agreement  or
documentation is not necessary to comply with the Securities Act.

         (b) Anything in the Plan to the contrary  notwithstanding,  the Company
shall not be obligated  to issue or sell any Common  Shares until they have been
listed on each securities exchange on which the Common Shares may then be listed
and until and unless, in the opinion of counsel to the Company,  the Company may
issue such  shares  pursuant to a  qualification  or an  effective  registration
statement, or an exemption from registration, under such state and federal laws,
rules or regulations as such counsel may deem applicable.

         (c) The Board of  Directors  may impose any such  additional  terms and
conditions  related  to the  exercise  of an  Option or upon the  Common  Shares
received  upon such exercise  which it deems  appropriate,  including  rights of
first  refusal  and rights to  purchase  Common  Shares  from an Optionee if the
Optionee's employment or other relationship with the Company is terminated.
<PAGE>

10. Termination, Modification and Amendment.

         (a) The Plan (but not Options  previously granted under the Plan) shall
terminate  ten (10) years from the  earlier of the date of its  adoption  by the
Board of Directors or the date on which the Plan is approved by the  affirmative
vote of the holders of a majority of the outstanding  shares of capital stock of
the  Company  entitled to vote  thereon,  and no Option  shall be granted  after
termination of the Plan.

         (b) The Plan may from time to time be  terminated,  modified or amended
by the affirmative  vote of the holders of a majority of the outstanding  shares
of the capital stock of the Company entitled to vote thereon.

         (c) The Board of Directors of the Company may at any time terminate the
Plan or from time to time make such  modifications  or amendments of the Plan as
it may deem advisable;  provided, however, that the Board of Directors shall not
(i)  modify or amend the Plan in any way that  would  disqualify  any ISO issued
pursuant to the Plan as an Incentive  Stock  Option or (ii) without  approval by
the affirmative  vote of the holders of a majority of the outstanding  shares of
the capital stock of the Company  entitled to vote thereon,  increase (except as
provided by Paragraph 8) the maximum number of Common Shares as to which Options
may be granted under the Plan or change the class of persons eligible to receive
Options under the Plan.

         (d) No termination, modification or amendment of the Plan may adversely
affect the rights  conferred by any Options  without the consent of the Optionee
thereof.
<PAGE>

11. Effectiveness of the Plan.

         The Plan shall become effective upon adoption by the Board of Directors
of the Company. The Plan shall be subject to approval by the affirmative vote of
the holders of a majority of the outstanding  shares of the capital stock of the
Company entitled to vote thereon within one year following  adoption of the Plan
by the Board of Directors,  and all Options granted prior to such approval shall
be subject  thereto.  In the event such  approval is withheld,  the Plan and all
Options which may have been granted thereunder shall become null and void.

12. Not a Contract of Employment.

         Nothing contained in the Plan or in any stock option agreement executed
pursuant  hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted  hereunder  any right to remain in the employ of, or retain
the relationship with, the Company.

<PAGE>

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