Document:

HOME DIRECTOR, INC.
                            2525 COLLIER CANYON ROAD
                           LIVERMORE, CALIFORNIA 94551

1445 Morninglory Dr.
Petaluma, CA 94954

                                                              January 14, 2004

                 RE: CONFIDENTIALITY AND WORK PRODUCTS AGREEMENT
                     -------------------------------------------

Dear Mr. Steckling:

         It is with great pleasure and enthusiasm that we welcome you to the
team of Home Director, Inc. (the "Company"). In the course of your employment
with the Company, you may have access to certain of the Company's non-public
confidential information, trade secrets, inventions and the like. To ensure the
full cooperation of all valued personnel in protecting the confidential
information and other property of the Company, it is the Company's policy to
require all of its employees and consultants to agree to abide by the following
provisions. After carefully reading this letter, please sign and return one copy
to me (keeping the other copy for your reference). Once signed and returned by
you, this letter will constitute a binding agreement on your part.

         As a condition of your employment with the Company, and in
consideration of such employment and the compensation to be received by you from
the Company, you hereby agree that:

1. During the term of your employment with the Company and at all times
thereafter, you shall not disclose to any person, or use, except as necessary in
connection with the performance of your duties in the course of your employment
with the Company, any non-public information pertaining to the Company or its
business ("Confidential Information"), including but not limited to, (i)
information relating to any Work Products (as defined below), trade secrets,
inventions, patents, patent applications, discoveries, copyrights, trademarks,
service marks and other proprietary rights, (ii) existing and proposed products,
prices, pricing and marketing plans, business projections and forecasts,
policies and strategies, operations methods, current and potential customers and
suppliers, financial data and any other matters relating to the business of the
Company that are not publicly known, and (iii) any information the disclosure of
which may adversely affect the good name, reputation or image of the Company or
its business.

2. If pursuant to applicable law, regulation or legal process, you are requested
or required to disclose any Confidential Information, you will provide the
Company with prompt notice of such request(s) or requirement(s) to enable the
Company to seek an appropriate protective order or other appropriate remedy
and/or waive compliance with the provisions of this letter agreement. If such
protective order or other remedy is not obtained or the Company waives
compliance with

the provisions of this letter agreement, you shall (a) furnish only that portion
of the Confidential Information which is legally required to be furnished and
(b) use your best efforts to obtain a protective order or other assurance that
confidential treatment will be accorded such Confidential Information.

3. If at any time during your employment with the Company, you shall (either
alone or with others) make, conceive, create, discover, reduce to practice or
become possessed of any Work Product, such Work Product and the benefits thereof
shall be a "work made for hire" within the meaning of United States copyright
law and shall immediately become the sole and absolute property of the Company.
You shall promptly disclose to the Company (or any persons designated by it)
each such Work Product and, to the extent any such Work Product or any part
thereof is not deemed to be a "work made for hire," you hereby assign your
entire right, title and interest in such Work Product and the benefits and/or
rights resulting therefrom, including without limitation, all patent, copyright
and trademark rights therein, to the Company without any additional
compensation. You hereby acknowledge that the salary you receive from the
Company in connection with your employment is compensation in full for all
services performed by you for the Company and all Work Products and that this
letter agreement is a material condition of your employment with the Company.
For purposes of this letter agreement, the term "Work Product" means and
includes any information, writing, material, software, product, concept,
invention, modification, discovery, design, development, improvement, process,
formula, data, technique, know-how, secret or intellectual property right
whatsoever or any interest therein (whether or not patentable or registrable
under copyright or similar statutes or subject to analogous protection) that
relates to the business of the Company or any of the products or services being
developed, manufactured, marketed, sold or otherwise provided by the Company,
including without limitation, any computer-related or on-line services, products
or applications, or which may conveniently be used in relation therewith, or
results from tasks assigned to you by the Company or results from the use of
premises owned, leased or contracted for by the Company.

4. (a) You hereby assign your entire right, title and interest in and to the
information, writings, materials, software, products, concepts, inventions,
modifications, discoveries, designs, developments, improvements, processes,
formulae, data, techniques, know-how, secrets or intellectual property rights
whatsoever (whether or not patentable or registrable under copyright or similar
statutes or subject to analogous protection) listed on Schedule A hereto (the
"Previous Work Products") and the benefits and/or rights resulting therefrom,
including without limitation, all copyright, patent and trademark rights
therein, to the Company without any additional consideration or compensation,
except as set forth in this Section 4(a). You hereby acknowledge that (i) any
equity compensation you receive from the Company as listed on Schedule B hereto,
and (ii) any cash payments you receive from the Company as listed on Schedule B
hereto are compensation and consideration in full for the assignment of the
Previous Work Products and the benefits and/or rights resulting therefrom. You
hereby agree and acknowledge that in the event and to the extent that any equity
compensation listed on Schedule B, including without limitation options to
purchase common stock, par value $0.01 per share, of the Company (the "Common
Stock"), was granted to you prior to the date hereof in accordance with
employment arrangements between you and the Company, the listing of such equity
compensation on Schedule B does not represent the right to receive additional
equity compensation.

(b) Notwithstanding the provisions of paragraph (a) of this Section 4, the
Company hereby agrees that in the event the closing bid price of the Common
Stock on the principal securities market on which the Common Stock is at any
time quoted or listed for trading shall at any time after December 31, 2004 and
prior to December 31, 2006, fail to equal or exceed $.50 per share for any
reason (including as a result of any cessation or suspension of trading) for a
period of at least 30 consecutive trading days (a "Material Price Decline"),
then and thereafter, until the earlier of December 31, 2006 and the day, if
ever, when such price shall equal or exceed $30 per share on any five
consecutive trading days, you shall have the right, by and upon giving written
notice to the Company, to terminate your employment with the Company and, upon
the giving of such notice, to receive from the Company an assignment of all of
the Company's remaining right, title and interest in and to the Previous Work
Products. Such assignment (the "Return of Your IP") shall be effective on and as
of the 30th day following the giving of such notice, provided that the Company
shall retain, and the Return of Your IP shall be subject to, a non-exclusive,
fully-paid, irrevocable license to the Company, subject to sublicense, to use
the Previous Work Products for a term of 12 months from the effective date of
the Return of Your IP. Nothing in this paragraph (b) shall be deemed to limit or
restrict the Company's right to grant licenses or assignments of the Previous
Work Products or any of them, subject to your rights to the Return of Your IP as
described in this paragraph (b). Any termination of your employment prior to the
occurrence of a Material Price Decline shall not affect your right to request
and receive the Return of Your IP in the event of a subsequent Material Price
Decline, nor shall any such termination accelerate or otherwise entitle you to
the Return of Your IP in the absence of a Material Price Decline.

5. You shall promptly communicate, without publishing the same, all available
information relating to any Work Product and Previous Work Product (with all
necessary plans and models) to the Company. You agree that upon the request of
the Company, and without any additional consideration or compensation to you,
you will take such action and execute such documents as the Company may request
to evidence and perfect the Company's ownership of the Work Products and the
Previous Work Products.

         You will also promptly disclose to the Company, and the Company hereby
agrees to receive all such disclosures in confidence, any other invention,
modification, discovery, design, development, improvement, process, formula,
data, technique, know-how, secret or intellectual property right whatsoever or
any interest therein (whether or not patentable or registrable under copyright
or similar statutes or subject to analogous protection) made, conceived,
discovered, reduced to practice or possessed by you (either alone or with
others) at any time during your employment with, or the time you are providing
services to, the Company for the purpose of determining whether they constitute
"Work Product" or Previous Work Products as defined or described herein.

6. Upon disclosure of each Work Product and Previous Work Product to the Company
pursuant hereto, you will, at the request and cost of the Company, sign,
execute, make and do all such deeds, documents, acts and things as the Company
and its duly authorized agents may deem necessary or desirable:

(a) to apply for, obtain and vest in the name of the Company alone letters
patent, copyrights, trademark registrations or other analogous protection in any
country throughout the world and when so obtained or vested to renew, extend and
restore the same; and

(b) to defend any opposition proceedings in respect of such applications and any
opposition proceedings or petitions or applications for revocation or
cancellation of such letters patent, copyright, trademark registration or other
analogous protection.

         In the event that the Company is unable, after reasonable effort, to
secure your signature on any application, assignment, or other document or
instrument relating to letters patent, copyright, trademark or other analogous
protection relating to a Work Product or Previous Work Product, whether because
of your physical or mental incapacity or for any other reason whatsoever, you
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents as your agents and attorneys-in-fact, to act for and on your
behalf and stead to execute and file any such application or applications and to
do all other lawfully permitted acts to further the prosecution and issuance of
letters patent, copyright, trademark or other analogous protection thereon with
the same legal force and effect as if executed by you.

7. You acknowledge and agree that any breach of this letter agreement by you may
cause the Company to suffer irreparable harm. Consequently, you agree that
without prejudice to any other rights or remedies available to the Company, the
Company shall be entitled to equitable relief by way of injunction if you breach
or threaten to breach any of the provisions of this letter agreement, without
the necessity of proving irreparable harm or posting a bond or other security.

         Of course, you understand that nothing contained in this letter
agreement guarantees you any particular term of employment. You will be employed
at will, which means that the Company may terminate your employment al any time
with or without cause and you may at any time end your employment with the
Company.

         Please acknowledge your agreement to abide by the provisions contained
in this letter agreement by signing below and returning one signed copy of this
letter to me.

                                                Very truly yours,

                                                HOME DIRECTOR, INC.

                                                By:   /s/    Michael Liddle
                                                     ------------------------
                                                      Michael D. Liddle

                                                      Title:

I HAVE READ, UNDERSTAND AND AGREE TO ABIDE
BY THE TERMS OF THE FOREGOING CONFIDENTIALITY AND
WORK PRODUCTS AGREEMENT

Signature: /s/ Jerry Steckling
           ----------------------------

Print Name:       Jerome D. Steckling
            -----------------------------

Date:  05-03-2004
       ----------]

                                   SCHEDULE A

         EMPLOYEE'S PRIOR INVENTIONS AND EXISTING BUSINESS ASSOCIATIONS
                               ASSIGNED TO COMPANY

         o    Pioneer/TAD professional and theatre contracts and relationship;

         o    ADI (AB Amplifier) relationship and business opportunities;

         o    Presidio, Lucas Films, Skywalker, Pixar, AMPAS, and other custom
              development projects:

         o    JSX audio technology products and potential patents; and

         o    The items listed below:

1.       4 microphone small room measurement system and software

2.       Long acoustic wavelength vector measurement method using predictive
         waveshape analysis.

3.       Adding and subtracting of impulse response generated from program
         material for base line differenced data

4.       Unique method for the display of small room acoustic data on standard
         computer and small PDA monitors

5.       Method for the integration of sound measurement microphones,
         accelerometers, and transducers in loudspeakers

6.       Method for the integration of sound measuring systems from the
         electrical inputs to loudspeakers

7.       Stored error correction lookup tables for latency compensation in DSP
         processors Exhibit A

8.       Measurement and reverse error correction applications of impedance vs.
         time

9.       Integrating sound measuring and sound treatment in a chip set.

10.      Universal protocol for output of sound measuring data

11.      Sound measurement protocol to standard spreadsheet format for sound
         system control

12.      Extended audio analyzing for hi-directional networking system of
         acoustic and transfer function error data

13.      The collection of aggregate sound system data from direct
         hi-directional measurement of system and sound field

                                   1

14.      Linear filter tapped digital signal process for the subtraction of
         loudspeaker and acoustic errors.

15.      Forward sending of uncompressed unprocessed audio program material in
         low data rate sub codes for the purpose of comparing actual program
         material events, where comparison data is used for error correction and
         aggregate tally and system health information

16.      Quantity distribution of pulse code modulation data in digital to
         analog converters for the purposes of ballistic error correction in
         loudspeakers

17.      Non-moving helper coil and method of electronic excitement for
         ballistic control of loudspeakers

18.      Wall dampening method for diffraction horn lenses

19.      Apparatus for audio compression driver throat diffraction and aiming
         for variable diffraction polar patterns

Signature:
          ----------------------------------------------------

Print Name:
           ---------------------------------------------------

Date:
     -------------------------------

                                     2

                                   SCHEDULE B

       EMPLOYEE COMPENSATION FOR ASSIGNMENT OF ITEMS LISTED IN SCHEDULE A

In accordance with this agreement, employee shall receive the following
compensation from the company:

         o    119,500 Options to purchase Common Stock assigned to Jerry
              Steckling as Described in Section 4 of this Agreement

         o    14,500 Options to purchase Common Stock assigned to The Mission
              Trust c/o Bruce Howard, EIN# 61630439 as Described in Section 4
              of this Agreement

         o    6,000 Options to purchase Common Stock assigned to Paul C. Pavelka
              as Described in Section 4 of this Agreement

Signature:
          ----------------------------------------------------

Print Name:
           ---------------------------------------------------

Date:
     -------------------------------AGREEMENT

         AGREEMENT, dated as of July 1, 2004 (this "Agreement"), between HOME
DIRECTOR, INC., a Delaware corporation (the "Company"), and MICHAEL LIDDLE,
DARYL STEMM, KENT M. KLINEMAN, EZRA P. MAGER, STEPHEN B. STE. MARIE and MICHAEL
L. WISE (each, an "Affiliate" and collectively, the "Affiliates").

                                    RECITALS:

         The Company does not have a sufficient number of authorized shares of
common stock ("Common Stock") to permit exercise of all of its outstanding
options and warrants to purchase Common Stock, including those that may be
issued in the Company's current private offering of equity units.

         Each Affiliate is an officer and/or a director of the Company and the
registered holder of options to purchase Common Stock (the "Options") and
warrants to purchase Common Stock (the "Warrants") as set forth opposite such
Affiliate's name on Schedule A to this Agreement.

         In order to permit the Company to raise equity capital through the sale
of additional equity units, the parties desire to amend the Options and Warrants
to suspend any rights of the holders to exercise the Options and Warrants until
such time, if ever, as the Company shall have amended its certificate of
incorporation to increase its authorized and available shares of Common Stock to
a number sufficient to enable the Affiliates and all other holders of
outstanding options, warrants and conversion and other rights to acquire Common
Stock to receive authorized shares of Common Stock upon exercise of such rights
(the "Charter Amendment").

         NOW, THEREFORE, the parties agree as follows:

         1. Suspension of Exercise. Each Affiliate agrees that the Options
and/or Warrants held by such Affiliate as set forth opposite his name on
Schedule A shall not be exercisable until the effective time of the Charter
Amendment. Each Affiliate further covenants and agrees that (i) the foregoing
restriction shall be deemed incorporated in and made a part of each of the
Options and Warrants as fully as though it were set forth at length in the
documents evidencing such Options and Warrants, and (ii) he will not cause or
permit any transfer or assignment of any of such Options and Warrants unless the
transferee or assignee shall have been informed of the foregoing restriction and
shall have agreed to be subject to the same as fully as though it were set forth
at length in all of the documents evidencing such Options and Warrants to be
transferred or assigned.

         2. Charter Amendment. The Company covenants and agrees that it will (i)
endeavor to hold its 2005 annual meeting of stockholders (the "2005 Annual
Meeting") as soon as practicable after the end of its 2004 fiscal year, (ii)
propose approval of the Charter Amendment at the 2005 Annual Meeting and (iii)
use its best efforts (including appropriate measures for

                            SCHEDULE A
                            -----------

solicitation of proxies) to obtain stockholder approval of the Charter Amendment
at the 2005 Annual Meeting.

         3. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                                     HOME DIRECTOR, INC.

                                                     By: /s/  Michael Liddle
                                                        ----------------------
                                                           Michael Liddle
                                                           President

AFFILIATES:

   /s/ Michael Liddle                                 /s/  Daryl Stemm
----------------------                              --------------------
Michael Liddle                                      Daryl Stemm

  /s/  Kent M. Klineman                               /s/  Ezra P. Mager
-----------------------                             --------------------
Kent M. Klineman                                    Ezra P. Mager

 /s/ Stephen B. Ste. Marie                            /s/  Michael L. Wise
--------------------------                          ----------------------
Stephen B. Ste. Marie                               Michael L. Wise

                                     SCHEDULE A
                                     ----------

                                             SHARES     PRICE     EXERCISED   VESTED    CANCELLED  UNVESTED         OUTSTANDING

Klineman, Kent         1/17/03  01/16/13     12,500     $3.75           0    12,500          0           0             12,500

Klineman, Kent          6/7/04  06/06/14     12,500     $0.74           0     6,250          0       6,250             12,500

Klineman, Kent                               50,000     $1.00           0    50,000          0           0             50,000

Klineman, Kent                               84,746     $1.00           0    84,746          0           0             84,746

Mager, Ezra            4/16/03  04/16/13     12,500     $2.50           0    12,500          0           0             12,500

Mager, Ezra             6/7/04  06/06/14     12,500     $0.74           0     6,250          0       6,250             12,500

Mager, Ezra                                 250,000     $1.00           0   250,000          0           0             250,000

Mager, Ezra                                 423,729     $1.00           0   423,729          0           0             423,729

Ste. Marie,
Stephen B              1/17/03  01/16/13     12,500     $3.75           0    12,500          0           0              12,500
Ste. Marie,
Stephen B               1/31/01                 827   $362.84           0       827          0           0                 827
Ste. Marie,
Stephen B               6/7/04  06/06/14     12,500     $0.74           0     6,250          0       6,250              12,500

Wise, Mike             1/17/03  01/16/13     12,500     $3.75           0    12,500          0           0              12,500
Wise, Mike              6/7/04  06/06/14     12,500     $0.74           0     6,250          0       6,250              12,500

Liddle, Michael        1/12/04  01/11/14    420,464     $1.30           0    81,757          0     338,707              420,464

Liddle, Michael                              50,000     $1.00           0    50,000          0           0              50,000

Liddle, Michael                              84,746     $1.00           0    84,746          0           0              84,746

Stemm, Daryl            4/5/02                4,134     $3.63           0     3,215          0         919              4,134
Stemm, Daryl           1/17/03  01/16/13     15,000     $3.75           0     7,500          0       7,500              15,000
Stemm, Daryl           1/25/01                  187   $362.84           0       187          0           0              187
Stemm, Daryl           2/26/01                  138   $362.84           0       138          0           0              138
Stemm, Daryl            6/7/04  06/06/14     75,000     $0.74           0     2,083          0      72,917              75,000

Stemm, Daryl                                 15,000     $1.00           0    15,000          0           0              15,000

Stemm, Daryl                                 25,424     $1.00           0    25,424          0           0              25,424

                                          1,599,394

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