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                                                                   EXHIBIT 4.19

                  WARRANT AGREEMENT (this "Agreement"), dated as of May 8, 2002,
by and between HOME DIRECTOR, INC., a Delaware corporation (the "Company"),  and
DIOGUARDI FAMILY TRUST, DTD 4/14/00, MICHAEL RUBINO TTEE (the "Warrant Holder").

                               W I T N E S S E T H

                  WHEREAS,  in  consideration  of the loan provided  pursuant to
that certain Demand Promissory Note, dated May 3, 2002 (the "Note"), the Company
proposes  to  sell  to  the  Warrant   Holder  and/or  its  designees   warrants
("Warrants") to purchase  shares of common stock,  par value $.001 per share, of
the Company ("Common Stock").

                  NOW, THEREFORE,  in consideration of the premises, the payment
by the Warrant Holder 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 Warrant  Holder is hereby  granted the right to
purchase,  at any time from the date of this  Agreement (the  "Effective  Date")
until 5:30 p.m., New York time, on the earlier of (a) the seventh anniversary of
the Effective  Date and (b) the fifth  anniversary of the earlier of the closing
date of (1) the initial public offering of the Company's  Common Stock occurring
within such  seven-year  period or (2) the Merger (as defined in the Memorandum)
(the  "Warrant  Exercise  Term"),  162,500  shares of Common  Stock  (subject to
adjustment  as  provided  in Section 8 hereof) at the  initial  exercise  price,
subject to  adjustment  in certain  events,  of $0.10 per share of Common 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  Common  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 Common Stock  issuable  upon  exercise of the Warrants  (the  "Warrant
Shares") at the  Company's  principal  offices,  currently  at 7132 Santa Teresa
Blvd.,  San  Jose,   California  95139,  the  registered  holder  of  a  Warrant
Certificate  ("Holder" or "Holders")  shall be entitled to receive a certificate
or certificates for the shares of Common 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
Common Stock underlying the Warrants). Warrants may be exercised to purchase all
or part of the  shares  of  Common  Stock  represented  thereby.  In the case of
purchase  of less  than all the  shares of Common  Stock  purchasable  under any

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Warrant Certificate,  the Company shall cancel said Warrant Certificate upon the
surrender  thereof and shall  execute and deliver a new Warrant  Certificate  of
like tenor for the balance of the shares of Common 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  Common  Stock  (or any  equity
security  into  which  the  Common  Stock  may be  exchanged  or  converted)  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
Common  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 Common
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  Common  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 Common 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
Common Stock at a price of $0.10 per share. The adjusted exercise price shall be

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the price which shall result from time to time from 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 nor 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
(or any  successor  company  into which the Company  may be merged)  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 Warrant Holder and to all other Holders of
the Warrant Securities of its intention to do so. If the Warrant Holder 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
Warrant  Holder 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, then the amount of securities to be offered for the accounts of

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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. INTENTIONALLY LEFT BLANK

                  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  Warrant  Holder
contained in Section 7 of the Note.

                  (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

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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  Note pursuant to which the Warrant Holder 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  (PROVIDED,  HOWEVER,  if such registration
includes  an  underwritten  public  offering,  an opinion  dated the date of the
closing under the underwriting agreement and not the effective date), 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 closing 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 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.

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                  (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,  provided that
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 Warrant Holder and
any affiliate of the Warrant  Holder),  officer,  creditor,  employee or Warrant
Holder 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 (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

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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 by (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 of Stock
outstanding immediately after such issuance or sale; PROVIDED,  HOWEVER, that in
no 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 Common 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 any expenses 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,  earnout 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 be deemed to be the value of
such  consideration as determined in good faith by the Board of Directors of the
Company.

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

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                  (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. In case the Company shall at
any time  subdivide  or combine the  outstanding  shares of Stock,  the Exercise
Price shall forthwith be 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 full 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 A Preferred  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 any other class of stock or equity  security or (ii) any other
class  of  stock  or  equity  security  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 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

                                       9
<PAGE>

and amount of shares of stock and 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 Stock) 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.

                  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

                                       10
<PAGE>

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 Common
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 Common Stock

                  11.  RESERVATION AND LISTING OF SECURITIES.  The Company shall
at all times reserve and keep available out of its  authorized  shares of Common
Stock,  solely for the purpose of issuance  upon the  exercise of 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 Common  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 Common 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 Common 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  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 Common
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

                                       11
<PAGE>

                  (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;

                  (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
Warrant Holder and the Holders, with a copy to:

                                    Kronish Lieb Weiner & Hellman LLP
                                    1114 Avenue of the Americas
                                    New York, New York 10036
                                    Attn:  Russell S. Berman, Esq.

                  (c) If to the Warrant Holder, to:

                                    DIOGUARDI FAMILY TRUST, DTD 4/14/00, MICHAEL
                                    RUBINO TTEE
                                    c/o Spencer Trask Ventures
                                    535 Madison Ave., 18th Floor
                                    New York, NY  10022

or to such other  address as the Warrant  Holder may  designate by notice to the
Company and the Holders, with a copy to:

                  (Intentionally Left Blank)

                  14.  SUPPLEMENTS AND  AMENDMENTS.  The Company and the Warrant
Holder may from time to time  supplement  or amend this  Agreement  without  the
approval of any holders of Warrant  Certificates (other than the Warrant Holder)
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

                                       12
<PAGE>

which the Company and the Warrant  Holder may deem  necessary or  desirable  and
which the  Company and the Warrant  Holder 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 permitted 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 Warrant  Holder 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 Warrant Holder 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 Warrant Holder 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 Warrant Holder
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  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  against  whom  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.

                                       13
<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  Warrant  Holder  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 Warrant Holder 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 counterparts shall together constitute but one and the
same instrument.

                                       14
<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:
                                         ------------------------------------
                                        Name: Daryl Stemm
                                        Title: Director of Finance and
                                                  Corporate Secretary

                                  DIOGUARDI FAMILY TRUST, DTD
                                  4/14/00, MICHAEL RUBINO TTEE

                                  By:
                                         ------------------------------------

                                       15
<PAGE>

                                    EXHIBIT A

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

WCS-9                                                          162,500 Warrants

                               WARRANT CERTIFICATE

         This Warrant  Certificate  certifies that DIOGUARDI  FAMILY TRUST,  DTD
4/14/00,  MICHAEL RUBINO TTEE (the "Warrant Holder"), or its registered assigns,
is the registered holder of 162,500 Warrants to purchase initially,  at any time
after the Effective Date of the Agreement  until 5:30 p.m. New York time on date
(the  "Expiration  Date") that is the earlier of (a) the seventh  anniversary of
the Effective  Date and (b) the fifth  anniversary of the earlier of the closing
date of (1) the initial  public  offering of the Common Stock (as defined below)
of Home Director,  Inc. (the "Company")  occurring within such seven-year period
or (2) the Merger (as defined in the Memorandum) (the "Warrant  Exercise Term"),
up to 162,500 fully paid and  non-assessable  shares of common stock,  par value
$0.001 per share ("Common Stock") of the Company, at the initial exercise price,
subject to adjustment in certain  events (the "Exercise  Price"),  of $0.10 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 that certain Warrant Agreement dated as of May 8, 2002 between the
Warrant  Holder  and the  Company  (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 or such other method as
is set forth in the Warrant Agreement.

         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

                                       16
<PAGE>

instrument  and to which  reference  is  hereby  made for a  description  of the
rights, limitations of rights, obligations,  duties and 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's
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 of 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.

                                       17
<PAGE>

         IN WITNESS WHEREOF,  the Company has caused this Warrant Certificate to
be duly executed.

Dated as of May 8, 2002
                                    HOME DIRECTOR, INC.

                                    By:
                                           -----------------------------------
                                            Name: Daryl Stemm
                                            Title: Director of Finance and
                                                   Corporate Secretary

-----------------------------------

                                       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
Common Stock.

         In  accordance  with the terms of Section 3.2 of the Warrant  Agreement
dated as of May 8, 2002 between HOME DIRECTOR,  INC. and DIOGUARDI FAMILY TRUST,
DTD 4/14/00,  MICHAEL RUBINO TTEE, 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:

                                    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]

             (To be executed by the registered 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:

                                    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 4.20

                  WARRANT AGREEMENT (this "Agreement"), dated as of May 8, 2002,
by and between HOME DIRECTOR, INC., a Delaware corporation (the "Company"),  and
DON WITMER (the "Warrant Holder").

                               W I T N E S S E T H

                  WHEREAS,  in  consideration  of the loan provided  pursuant to
that certain Demand Promissory Note, dated May 3, 2002 (the "Note"), the Company
proposes  to  sell  to  the  Warrant   Holder  and/or  its  designees   warrants
("Warrants") to purchase  shares of common stock,  par value $.001 per share, of
the Company ("Common Stock").

                  NOW, THEREFORE,  in consideration of the premises, the payment
by the Warrant Holder 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 Warrant  Holder is hereby  granted the right to
purchase,  at any time from the date of this  Agreement (the  "Effective  Date")
until 5:30 p.m., New York time, on the earlier of (a) the seventh anniversary of
the Effective  Date and (b) the fifth  anniversary of the earlier of the closing
date of (1) the initial public offering of the Company's  Common Stock occurring
within such  seven-year  period or (2) the Merger (as defined in the Memorandum)
(the  "Warrant  Exercise  Term"),  37,500  shares of Common  Stock  (subject  to
adjustment  as  provided in Section 8 hereof) at the  initial  exercise  price ,
subject to  adjustment  in certain  events,  of $0.10 per share of Common 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  Common  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 Common Stock  issuable  upon  exercise of the Warrants  (the  "Warrant
Shares") at the  Company's  principal  offices,  currently  at 7132 Santa Teresa
Blvd.,  San  Jose,   California  95139,  the  registered  holder  of  a  Warrant
Certificate  ("Holder" or "Holders")  shall be entitled to receive a certificate
or certificates for the shares of Common 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

                                       1
<PAGE>

Common Stock underlying the Warrants). Warrants may be exercised to purchase all
or part of the  shares  of  Common  Stock  represented  thereby.  In the case of
purchase  of less  than all the  shares of Common  Stock  purchasable  under any
Warrant Certificate,  the Company shall cancel said Warrant Certificate upon the
surrender  thereof and shall  execute and deliver a new Warrant  Certificate  of
like tenor for the balance of the shares of Common 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  Common  Stock  (or any  equity
security  into  which  the  Common  Stock  may be  exchanged  or  converted)  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
Common  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 Common
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  Common  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 Common 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
Common Stock at a price of $0.10 per share. The adjusted exercise price shall be
the price which shall result from time to time from any and all  adjustments  of

                                       2
<PAGE>

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 nor 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
(or any  successor  company  into which the Company  may be merged)  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 Warrant Holder and to all other Holders of
the Warrant Securities of its intention to do so. If the Warrant Holder 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
Warrant  Holder 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, then the amount of securities to be offered for the accounts of

                                       3
<PAGE>

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. INTENTIONALLY LEFT BLANK

                  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  Warrant  Holder
contained in Section 7 of the Note.

                  (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

                                       4
<PAGE>

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  Note pursuant to which the Warrant Holder 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  (PROVIDED,  HOWEVER,  if such registration
includes  an  underwritten  public  offering,  an opinion  dated the date of the
closing under the underwriting agreement and not the effective date), 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 closing 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 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.

                                       5
<PAGE>

                  (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,  provided that
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 Warrant Holder and
any affiliate of the Warrant  Holder),  officer,  creditor,  employee or Warrant
Holder 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 (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

                                       6
<PAGE>

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 by (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 of Stock
outstanding immediately after such issuance or sale; PROVIDED,  HOWEVER, that in
no 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 Common 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 any expenses 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,  earnout 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 be deemed to be the value of
such  consideration as determined in good faith by the Board of Directors of the
Company.

                                       7
<PAGE>

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

                                       8
<PAGE>

                  (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. In case the Company shall at
any time  subdivide  or combine the  outstanding  shares of Stock,  the Exercise
Price shall forthwith be 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 full 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 A Preferred  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 any other class of stock or equity  security or (ii) any other
class  of  stock  or  equity  security  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 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

                                       9
<PAGE>

and amount of shares of stock and 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 Stock) 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.

                  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

                                       10
<PAGE>

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 Common
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 Common Stock

                  11.  RESERVATION AND LISTING OF SECURITIES.  The Company shall
at all times reserve and keep available out of its  authorized  shares of Common
Stock,  solely for the purpose of issuance  upon the  exercise of 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 Common  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 Common 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 Common 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  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 Common
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

                                       11
<PAGE>

                  (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;

                  (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
Warrant Holder and the Holders, with a copy to:

                                    Kronish Lieb Weiner & Hellman LLP
                                    1114 Avenue of the Americas
                                    New York, New York 10036
                                    Attn:  Russell S. Berman, Esq.

                  (c) If to the Warrant Holder, to:

                                    Don Witmer
                                    2006 Margot Place
                                    San Jose, CA 95125

or to such other  address as the Warrant  Holder may  designate by notice to the
Company and the Holders, with a copy to:

                  (Intentionally Left Blank)

                  14.  SUPPLEMENTS AND  AMENDMENTS.  The Company and the Warrant
Holder may from time to time  supplement  or amend this  Agreement  without  the
approval of any holders of Warrant  Certificates (other than the Warrant Holder)
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 Warrant  Holder may deem  necessary or  desirable  and
which the  Company and the Warrant  Holder deem shall not  adversely  affect the
interests  of the  Holders of Warrant  Certificates.  Other  amendments  to this

                                       12
<PAGE>

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 permitted 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 Warrant  Holder 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 Warrant Holder 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 Warrant Holder 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 Warrant Holder
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  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  against  whom  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.

                  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  Warrant  Holder  and any other  registered  Holders(s)  of the
Warrant  Certificates or Warrant Securities any legal or equitable right, remedy

                                       13
<PAGE>

or claim  under this  Agreement;  and this  Agreement  shall be for the sole and
exclusive  benefit of the Company and the Warrant Holder 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 counterparts shall together constitute but one and the
same instrument.

                                       14
<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:
                                           -----------------------------------
                                          Name: Daryl Stemm
                                          Title: Director of Finance and
                                                 Corporate Secretary

                                    DON WITMER

                                    By:
                                           -----------------------------------
                                        As an individual

                                       15
<PAGE>

                                    EXHIBIT A

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

WCS-10                                                          37,500 Warrants

                               WARRANT CERTIFICATE

         This  Warrant  Certificate  certifies  that DON  WITMER  (the  "Warrant
Holder"), or its registered assigns, is the registered holder of 37,500 Warrants
to purchase  initially,  at any time after the  Effective  Date of the Agreement
until  5:30  p.m.  New York  time on date (the  "Expiration  Date")  that is the
earlier of (a) the seventh  anniversary  of the Effective Date and (b) the fifth
anniversary  of the  earlier  of the  closing  date  of (1) the  initial  public
offering of the Common  Stock (as defined  below) of Home  Director,  Inc.  (the
"Company") occurring within such seven-year period or (2) the Merger (as defined
in the Memorandum) (the "Warrant  Exercise  Term"),  up to 37,500 fully paid and
non-assessable  shares of common  stock,  par value  $0.001  per share  ("Common
Stock") of the Company, at the initial exercise price,  subject to adjustment in
certain events (the "Exercise  Price"),  of $0.10 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 that
certain Warrant Agreement dated as of May 8, 2002 between the Warrant Holder and
the Company (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 or such other  method as is set forth in the
Warrant Agreement.

         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

                                       16
<PAGE>

instrument  and to which  reference  is  hereby  made for a  description  of the
rights, limitations of rights, obligations,  duties and 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's
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 of 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.

                                       17
<PAGE>

         IN WITNESS WHEREOF,  the Company has caused this Warrant Certificate to
be duly executed.

Dated as of May 8, 2002
                                      HOME DIRECTOR, INC.

                                      By:
                                             ----------------------------------
                                              Name: Daryl Stemm
                                              Title: Director of Finance and
                                                     Corporate Secretary

-----------------------------------

                                       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
Common Stock.

         In  accordance  with the terms of Section 3.2 of the Warrant  Agreement
dated  as of May 8,  2002  between  HOME  DIRECTOR,  INC.  and DON  WITMER,  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:

                                    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]

             (To be executed by the registered 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:

                                     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>

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