Document:

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                                    EXHIBIT E

                          REGISTRATION RIGHTS AGREEMENT

      This Registration Rights Agreement (this "Agreement") is made and entered
into as of______________, 2003, among Home Director, Inc., a Delaware
corporation (the "Company"), and the purchasers signatory hereto (each such
purchaser is a "Purchaser" and all such purchasers are, collectively, the
"Purchasers").

      This Agreement is made pursuant to the Subscription Agreement(s), dated as
of the date hereof among the Company and each of the Purchasers (the
"Subscription Agreement(s)").

      The Company and the Purchasers hereby agree as follows

1.    Certain Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Subscription Agreements shall have the meanings
given such terms in the Subscription Agreements. As used in this Agreement, the
following terms shall have the following respective meanings:

            "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

            "Holders" shall mean the Purchaser and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred.

            "Registrable Securities" shall mean (i) shares of Common Stock
issued in the Offering held by the Holders, (ii) the Warrant Shares, (iii) the
Common Stock issuable upon conversion or exercise of warrants held by Spencer
Trask Ventures, Inc. or its assigns or designees, issued to Spencer Trask
Ventures, Inc. (or its assigns or designees) in connection with the Offering or
in connection with the Company's financing transactions in 2000 and 2002 or (iv)
any Common Stock issued as a dividend or other distribution with respect to or
in exchange for or in replacement of the stock referenced in (i), (ii) or (iii)
above.

            The terms "register", "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

            "Registration Expenses" shall mean all expenses incurred by the
Company in compliance with the registration obligation of the Company,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company.

            "Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 3 hereof.

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            "Selling Expenses" shall mean all underwriting discounts, selling
commissions and expense allowances applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for any Holder.

2.    Restrictions on Transferability. The Securities and any other securities
issued in respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall not be
transferred except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. Any transferee of such securities shall take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.

3.    Restrictive Legend. Each certificate representing the Securities, the
shares of Common Stock underlying the Securities and any other securities issued
in respect of the Securities as a result of any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted) be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
      INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY
      NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
      OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
      REGISTRATION IS NOT REQUIRED UNDER THE ACT.

            The Company acknowledges and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin agreement or grant a
      security interest in some or all of the Registrable Securities and, if
      required under the terms of such arrangement, such Purchaser may transfer
      pledged or secured Registrable Securities to the pledgees or secured
      parties. If required by the Company's transfer agent in order to effect a
      pledge, the Purchaser shall cause its counsel to issue an opinion of
      counsel to the Company's transfer agent. Further, no notice shall be
      required of such pledge. At the appropriate Purchaser's expense, the
      Company will execute and deliver such reasonable documentation as a
      pledgee or secured party of Securities may reasonably request in
      connection with a pledge or transfer of the Registrable Securities,
      including the preparation and filing of any required prospectus supplement
      under Rule 424(b)(3) of the Securities Act or other applicable provision
      of the Securities Act to appropriately amend the list of selling
      stockholders thereunder.

            Certificates evidencing shares of Common Stock (including shares
      underlying the Warrants) shall not contain any legend (i) following any
      sale of such shares pursuant to Rule 144 under the Securities Act, or (ii)
      if such shares are eligible for sale under Rule 144(k) under the
      Securities Act, or (iii) if such legend is not required under applicable
      requirements of the Securities Act (including judicial interpretations and
      pronouncements issued by the staff of the Commission). If all or any
      portion of a Warrant is converted or exercised at a time when such
      underlying shares of Common Stock may be sold under Rule 144 under the
      Securities Act or if such legend is not otherwise required under
      applicable

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      requirements of the Securities Act (including judicial interpretations
      thereof) then such underlying shares shall be issued free of all legends.
      The Company agrees that (y) following the effective date of the
      registration statement required to be filed hereunder and a sale of shares
      of Common Stock pursuant to such registration statement or (z) at such
      time as such legend is no longer required, it will, no later than three
      trading days following the delivery by a Purchaser to the Company or the
      Company's transfer agent of a certificate representing shares of Common
      Stock issued with a restrictive legend, deliver or cause to be delivered
      to such Purchaser a certificate representing such shares that is free from
      all restrictive and other legends. The Company may not make any notation
      on its records or give instructions to any transfer agent of the Company
      that enlarge the restrictions on transfer set forth in this Section unless
      required by applicable law.

4.    Notice of Proposed Transfers. The holder of each certificate representing
Restricted Securities by acceptance thereof agrees to comply in all respects
with the provisions of this Section 4. Prior to any proposed transfer of any
Restricted Securities, the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by either (i) if required, a written
opinion of legal counsel to the holder who shall be reasonably satisfactory to
the Company, addressed to the Company, to the effect that the proposed transfer
of the Restricted Securities may be effected without registration under the
Securities Act or (ii) a "no-action" letter from the Commission to the effect
that the proposed transfer of such securities without registration will not
result in a recommendation by the staff of the Commission that action be taken
with respect thereto, whereupon the holder of such Restricted Securities shall
be entitled to transfer such Restricted Securities in accordance with the terms
of the notice delivered by such holder to the Company. The Company will not
require such a legal opinion or "no action" letter (x) in any transaction in
compliance with Rule 144 promulgated under the Securities Act, (y) in any
transaction in which the Purchaser distributes Restricted Securities solely to
its stockholders on a pro rata basis for no consideration or (z) in any
transaction in which a holder which is a partnership or limited liability
company distributes Restricted Securities solely to its partners or members, as
applicable, for no consideration; provided that any transaction described in
clause (y) or (z) shall be in compliance with applicable securities laws and
further provided that each transferee in any of the foregoing transactions
agrees in writing to be subject to the terms of this Section 4. Each certificate
evidencing the Restricted Securities transferred as above provided shall bear
the restrictive legend set forth in Section 3 above.

5.    Registration.

                  (i) The Company shall file a registration statement on Form
SB-2 or other appropriate registration document under the Securities Act for
resale of the Registrable Securities and shall use its best efforts to maintain
such registration effective for a period of 24 months (or so long as a Holder is
subject to the volume limitations of Rule 144(e) under the Securities Act) (the
"Effectiveness Period"). The Company shall file such Registration Statement as
soon as practicable following the last closing of the Offering, but in any event
no later than forty-five (45) days after the last closing date of the Offering,
and shall use its reasonable best efforts to cause such Registration Statement
to become effective within ninety (90) days after the date of filing.

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                  (ii) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5 in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act.

                  (iii) In the event that the Company fails to file the
registration statement pursuant to this Section 5 within forty-five (45) days
after the last closing date or if such registration statement has not been
declared effective within the earlier of (i) one hundred thirty-five (135) days
from the last closing date or (ii) ninety (90) days following the date of
filing, the Company shall pay to each Purchaser, as liquidated damages and not
as a penalty, an amount equal to one half of one percent (.5%) of the aggregate
purchase price paid by such Purchaser pursuant to the Subscription Agreement(s)
in respect of each seven day period (or partial period thereof) of
noncompliance. The Company shall make such payments to the Holders within 10
days after the first 30 days that such payments accrue and at the end of each 30
days thereafter until the applicable date when such registration statement is
filed or becomes effective. Notwithstanding the foregoing payments by the
Company, in the event that the registration statement is not filed or declared
effective as required by this Section 5 (iii), each Purchaser may seek any other
remedies available by law. If the Company fails to pay any liquidated damages
pursuant to this Section 5 (iii) in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law) to
the Holder, accruing daily from the date such liquidated damages are due until
such amounts, plus all such interest thereon, are paid in full. The liquidated
damages pursuant to the terms hereof shall apply on a pro-rata basis for any
portion of a month prior to the cure of any default. Notwithstanding the
foregoing, the Company may delay filing of, withdraw, suspend or revoke the
effectiveness of a registration statement in the event that the Board of
Directors of the Company determines, in good faith, that the Company possesses
material information not appropriate for disclosure, and that continued
effectiveness of such registration statement would be seriously detrimental to
the Company or its stockholders, in which case the Company's obligation to file
or maintain effectiveness of a registration statement shall be deferred for a
one time period not to exceed sixty (60) days (during such one time period of up
to 60 days, the liquidated damages pursuant to this Section 5(iii) shall not
accrue).

6.    Expenses of Registration. The Company shall bear all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Agreement and all underwriting discounts, selling commissions
and expense allowances applicable to the sale of any securities by the Company
for its own account in any registration. All Selling Expenses shall be borne by
the Holders whose securities are included in such registration pro rata on the
basis of the number of their Registrable Securities so registered.

7.    Indemnification.

                  (i) The Company will indemnify each Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, with respect to each registration, qualification or compliance
effected pursuant to this Agreement, and each

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underwriter, if any, and each person who controls any underwriter, and their
respective counsel against all claims, losses, damages and liabilities (or
actions, proceedings or settlements in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document prepared by the
Company (including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers,
directors, agents, employees and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses as they are reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises primarily and directly out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omissions) based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein.

                  (ii) Each Holder whose Registrable Securities are included in
any registration, qualification or compliance effected pursuant to this
Agreement will indemnify the Company, each of its directors and officers and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act and the rules and regulations
thereunder, each other such Holder and each of their officers, directors and
partners, and each person controlling such Holder, and their respective counsel
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising primarily and directly out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and such Holders, directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses as
they are reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of such Holders hereunder shall be limited to an amount equal to the
net proceeds to each such Holder sold under such registration statement,
prospectus, offering circular or other document as contemplated herein.

                  (iii) Each party entitled to indemnification under this
Section 7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying

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Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; and provided further that if any Indemnified
Party reasonably concludes that there may be one or more legal defenses
available to it that are not available to the Indemnifying Party, or that such
claim or litigation involves or could have an effect on matters beyond the scope
of this Agreement, then the Indemnified Party may retain its own counsel at the
expense of the Indemnifying Party; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless and only to
the extent that such failure to give notice results in material prejudice to the
Indemnifying Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.

                  (iv) If the indemnification provided for in this Section 7 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

8.    Transfer or Assignment of Rights. The benefits to the Holder hereunder may
be transferred or assigned by a Holder to a transferee or assignee of any of the
Restricted Securities, provided that the Company is given written notice prior
to the time that such right is exercised, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned; provided further that the
transferee or assignee of such rights assumes in writing the obligations of the
Holder under this Agreement.

9.    Registration Procedures. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will keep each Holder who is
entitled to registration benefits hereunder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will:

                  (i) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement

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as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of securities covered by such registration statement;

                  (ii) Respond as promptly as reasonably possible, and in any
event within 30 days, to any comments received from the Commission with respect
to a registration statement or any amendment thereto.

                  (iii) Notify the Holders as promptly as reasonably possible
and (if requested by any such person) confirm such notice in writing no later
than one trading day following the day (A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a registration statement is proposed
to be filed and (B) with respect to a registration statement or any
post-effective amendment, when the same has become effective;

                  (iv) Furnish such number of prospectuses and other documents
incident thereto, including supplements and amendments, as a Holder may
reasonably request;

                  (v) Furnish to each selling Holder, upon request, a copy of
all documents filed with and all correspondence from or to the Commission in
connection with any such registration statement other than nonsubstantive cover
letters and the like;

                  (vi) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (A) any order suspending the effectiveness of a
registration statement, or (B) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment, provided, however, that the
Company may delay the filing of, withdraw, suspend or revoke the effectiveness
of a registration statement in the event that the Board of Directors of the
Company determines, in good faith, that the Company possesses material
information not appropriate for disclosure, and that continued effectiveness of
such registration statement would be seriously detrimental to the Company or its
stockholders, in which case the Company's obligation to file or maintain
effectiveness of a registration statement shall be deferred for a one time
period not to exceed sixty (60) days (during such one time period of up to 60
days, the liquidated damages pursuant to Section 5(iii) shall not accrue);

                  (vii) Comply with all applicable rules and regulations of the
Commission;

                  (viii) The Company may require each selling Holder to furnish
to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by applicable securities
laws, the controlling person thereof.

10.   Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:

                  (i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act; and

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                  (ii) Use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act.

11.   Reporting Under the Exchange Act. The Company agrees to take no action
designed to, or with the effect of, causing the Company to cease to be subject
to the reporting requirements of the Exchange Act for so long as a registration
statement under this Agreement is required to be filed or caused to be
effective, or shall be required to be or remain effective.

12.   Miscellaneous.

      (i) Except as set forth in the Memorandum, the Company shall not after the
date hereof enter into any agreement providing any of its security holders the
right to have securities of the Company included in the registration statement
to be filed hereunder. The Company shall not file any other registration
statement until the initial registration statement required hereunder is
declared effective by the Commission.

      (ii) Compliance. Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the registration
statement required hereunder.

      (iii) Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective registration statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within ten days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, that, the Company shall not be
required to register any Registrable Securities pursuant to this Section that
are eligible for resale pursuant to Rule 144 promulgated under the Securities
Act or under Rule 144 without any limitation as to volume.

      (iv) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Subscription Agreement(s).

      (v) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the persons as permitted
under the Subscription Agreement(s).

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      (vi) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

      (vii) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.

      (viii) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

      (ix) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

      (x) Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

                              ********************

      The terms and conditions of this Registration Rights Agreement have been
incorporated by reference into the Subscription Agreement, a complete copy of
which is attached to this Memorandum as Exhibit A. Execution of a Subscription
Agreement by any Purchaser shall be deemed to constitute execution by such
Purchaser of this Registration Rights Agreement as of the even date therewith.

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

                                    HOME DIRECTOR, INC.

                                    By: ____________________________________
                                           Name:
                                           Title:

                                      E-10<PAGE>

                              EMPLOYMENT AGREEMENT

      AGREEMENT made as of December 31, 2003 between Home Director, Inc,
(Company), a Delaware corporation, with an office at 2525 Collier Canyon Road,
Livermore, CA 94550 and Michael Liddle (Employee), with an office at 20 North
Santa Cruz Ave., Suite C-1, Los Gatos, CA 95030.

                                    RECITALS

      Company wishes to employ Employee as Chief Executive Officer (CEO); and

      Employee is willing to accept that employment upon the terms and
conditions described herein.

      NOW, THEREFORE in consideration of the Recital and the terms and
conditions described herein, the parties agree as follows:

      1. Employee's Duties, Obligations and Authority.

            1.1 General. Company hereby employs Employee as its CEO and Employee
hereby accepts that employment upon the terms and conditions described herein.

            1.2 Company's Board of Directors. Company shall nominate Employee to
its Board of Directors (the Board) and, if elected or appointed to the Board,
Employee shall serve as a member.

            1.3 Employee's Responsibilities

                  a) Employee's responsibilities, duties and authority shall be
consistent with his position as CEO and he shall have such additional
responsibilities, duties and authority as may, from time to time, be assigned to
him by the Board.

                  b) Employee shall serve Company faithfully to the best of his
abilities, and devote such business time and effort to Company's and any
subsidiaries' and affiliates' business and affairs and the promotion of their
interests and such other activities as the Board may designate from time to
time. The foregoing provisions shall not be construed as preventing Employee
from (i) investing his assets in such form or manner that will not require any
services on his part; or (ii) performing a reasonable amount of charitable
services.

                  c) Company hereby understands and acknowledges that during the
Term, Employee will also be permitted to engage in other activities provided
that such activities individually or in the aggregate do not materially
interfere with the proper performance of Employee's duties and responsibilities
hereunder and, in the good faith

<PAGE>

judgment of the Board, does not conflict with Employee's fiduciary duties to
Company or create any appearance thereof.

                  d) Company shall furnish Employee with reasonable office
facilities and secretarial services commensurate with his position hereunder
that are adequate to allow him to perform the service required of him hereunder.

      2. The Term. The term (Term) of this Agreement shall commence on the date
and year first set forth above and continue through December 31, 2006.
Thereafter, unless this Agreement is terminated in accordance with Section 3
below, the Term shall be automatically extended for successive and additional
one-year periods.

      3. Termination of Employment. The Board may terminate Employee's
employment with the Company at any time, with or without Cause (as defined
below). If Company terminates Employee's employment with Company for Cause,
Employee shall not be entitled to any Severance (as defined below). If
Employee's employment is terminated by Company without Cause, Employee will be
paid severance (Severance) of an amount equal to his Base (as defined below)
that has been paid to him over the 12-month period preceding such termination,
or such lesser period, if his employment is terminated before the end of the
initial 12 months of the Term (the applicable period is referred to herein as
the Severance Period). In addition, as part of his Severance, Employee shall be
entitled to any unpaid Bonus earned with respect to a calendar year prior to the
calendar year during which his employment is terminated without Cause. If during
the calendar year of any such termination, Employee was actively employed with
Company for at least six months and the targets for the Objective Portion of the
Bonus (as defined below) for such calendar year are met, he shall be entitled to
pro rata share of the Objective Portion of the Bonus for such year determined by
multiplying the amount of the Objective Portion of the Bonus by a fraction, the
numerator of which is the number of months (including a partial months of at
least 10 working days) during such year prior to the termination of employment
and the denominator of which is 12.

      The portion of Employee's Severance based on his Base shall be paid to
Employee at the same intervals that his regular Base is paid, reduced by such
amounts that Employee has earned (whether paid or deferred and whether in cash
or in other property) from third parties over the Severance Period. Any Bonus
due to Employee under this Section 3 shall be paid to him at the time such Bonus
would otherwise be due to Employee pursuant to Section 4.3 hereof.

      After the termination of his employment without Cause, Employee shall have
a duty to seek other employment and shall inform the Company regarding his
success in obtaining such employment and the terms of such employment when
obtained. Company shall have the right to review Employee's tax returns and the
supporting documentation for the periods that include the Severance Period.
Company's obligation to provide Severance to Employee (and the continuation of
Benefits, as well as, the acceleration of the vesting of options and the
continued exercisability of options pursuant to Section 4.6 hereof) shall be
subject to Employee's execution of a general

                                       2
<PAGE>

release acceptable to Company which releases it and certain other parties from
any claims Employee may then have against Company and such other parties. During
the Severance Period, Employee shall continue to be entitled to the Benefits he
received immediately prior to the termination of his employment; provided,
however, any health insurance he is entitled to shall terminate upon his
achieving eligibility to health insurance coverage from another employer or
under his spouse's coverage.

      4. Compensation and Benefits.

            4.1 Salary. Employee shall receive a base salary (Base) from Company
at an annual rate of $216,000, or such increased rate as the Board, in its sole
discretion, may hereafter from time to time determine, payable in accordance
with Company's regular payroll practices, subject to all applicable federal and
state deductions and withholdings.

            4.2 Increase in the Base. The Base shall be increased to $300,000
after the conclusion of Company's second consecutive profitable quarter (the
Standard). As used herein, the Standard shall mean a minimum net income of at
least 5% of Company's net revenues in the first of two consecutive profitable
quarters and a minimum net income of at least 10% of Company's net revenues in
the second of the said two consecutive profitable quarters. For purposes of this
Section 4, net income and net revenues shall mean such amounts as reflected on
Company's financials include in its periodic reports filed with the U. S.
Securities and Exchange Commission.

            4.3 Incentive Compensation. Employee shall be eligible to receive
annual incentive compensation (Bonus) from Company for each calendar year
(starting in 2004) up to 50% of Base, contingent upon the achievement of certain
Company targets and his performance during the year. Seventy-five percent (75%)
of the Bonus (the Objective Portion of the Bonus) shall be subject to Company's
net revenues and net income for such year being at least 75% of the net revenues
and net income set forth in a Board approved annual plan (the Plan) for that
year. The balance of the said Bonus, or 25%, shall be based on Company's
Compensation Committee's subjective analysis of Employee's performance for that
year. The Bonus with respect to a calendar year shall be paid within 30 days
after the Board receives and approves Company's audited financial report for
such calendar year. Except as otherwise provided herein, Employee shall not be
entitled to a Bonus with respect to a calendar year unless he is a Company
employee on the date the Bonus is paid or to be paid.

            4.4 Expenses. Company shall pay or reimburse Employee for his
reasonable and necessary Company business expenses, including, but not limited
to, travel, lodging and all other reasonable out-of-pocket expenses incurred by
him in performing his services hereunder. Company shall also pay Employee an
automobile allowance of $750 per month. All such payments or reimbursements
shall be made under Company's current expense account and reimbursement
policies, provided that Employee submits the required documentation of such
expenses to Company's CFO.

                                       3
<PAGE>

            4.5 Other Benefits. Company shall pay Employee all health and
welfare benefits (Benefits) that it currently provides to its senior management
team, subject to the terms of its applicable plans and other arrangements.

            4.6 Options.

                  a) Company shall grant Employee a ten year option (Initial
Option) to acquire that number of shares of Company stock (Company Stock) equal
to 3% of the sum of the outstanding Company Stock and Company Stock subject to
in-the-money warrants as of the later of (i) December 31, 2003 or (ii) the
consummation of the current Spencer Trask private offering (the Offering). The
Initial Option shall vest and become exercisable to the extent of 1/36th of the
shares subject to such option on the last day of the month in which the Initial
Option is granted and to the extent of an additional 1/36th of the shares
subject to such option on the last day of each subsequent month until the option
is 100% vested and exercisable.

                  b) If Company meets Plan for the first calendar year of the
Term, Company shall grant Employee an additional ten year option (Second Year
Option) to acquire that number of shares of Company Stock equal to1% of
Company's outstanding Common Stock as of December 31, 2004. The Second Year
Option shall vest and become exercisable to the extent of 1/36th of the shares
subject to such option on the last day of the month in which the Second Year
Option is granted and to the extent of an additional 1/36th of the shares
subject to such option on the last day of each subsequent month until the option
is 100% vested and exercisable.

                  c) If Company meets Plan for the second calendar year of the
Term, Company shall grant Employee an additional ten year option (Third Year
Option) to acquire that number of shares of Company Stock equal to1% of
Company's outstanding Common Stock as of December 31, 2005. The Third Year
Option shall vest and become exercisable to the extent of 1/36th of the shares
subject to such option on the last day of the month in which the Third Year
Option is granted and to the extent of an additional 1/36th of the shares
subject to such option on the last day of each subsequent month until the option
is 100% vested and exercisable.

                  d) If Company exceeds Plan by at least 25% for the first
calendar year of the Term, the number of shares subject to the Second Year
Option shall increase from 1% to 1.75% of the outstanding Company Stock on
December 31, 2004.

                  e) If Company exceeds Plan by at least 25% for the second
calendar year of the Term, the number of shares subject to the Third Year Option
shall increase from 1% to 1.75% of the outstanding Company Stock on December 31,
2005.

                  f) All options granted pursuant to this Section 4.6 shall be
subject to the terms and provisions of the Company stock option plan (Stock
Option Plan) and the stock option agreements reflecting the terms of such
grants. The parties

                                       4
<PAGE>

hereto acknowledge that the Stock Option Plan does not currently have sufficient
shares of Company Stock available for grant of the options contemplated in this
Section 4.6 and any grant of such options in excess of shares available shall be
subject to shareholder approval of an amendment to the Stock Option Plan
increasing the number of shares available under the plan.

                  g) Each option granted pursuant to this Section 4.6 shall have
an option exercise price equal to the fair market value of a share of Company
Stock on the date of its grant.

                  h) If Employee's employment is terminated by Company without
Cause, all outstanding options granted to Employee pursuant to this Section 4.6
shall immediately vest and become exercisable and such options shall remain
exercisable for their remaining original term.

            4.7 Vacation. Employee shall be entitled to four (4) weeks of
vacation during each calendar year of the Term and his Base shall be paid for
holidays given by Company to its employees generally. Any unused vacation days
for any calendar year of the Term may be used by him in a subsequent calendar
year of the Term. Upon termination of Employee's employment, Employee shall be
paid an amount equivalent to all accrued and unused vacation as of his
termination date.

            4.8 Key-man Life Insurance. Employee understands and acknowledges
that Company may wish to purchase key-man life insurance on him. In that event,
Employee shall take all action requested of him, including submitting to a
physical examination, to facilitate the Company obtaining such policy.

      5. Termination of Employment.

            5.1 Events of Termination. Employee's employment hereunder shall
terminate prior to the expiration of the Term, upon the occurrence of any one or
more of the following events:

                  a) Death. In the event of his death, Employee's employment
hereunder shall terminate on the date of death. If Employee's employment
hereunder is terminated as a result of his death, Company shall pay his estate
Base through the date of death, any unpaid Bonus earned with respect to a
calendar year prior to the year of his death and reimbursement for any expenses
incurred by him to the date of death.

                  b) Disability. In the event of his disability, Employee's
employment hereunder shall terminate on the date of such disability. Disability
shall mean Employee's inability, due to physical or mental incapacity, to
substantially perform his duties and responsibilities under this Agreement for a
period of 90 consecutive days or for 90 days in a 356-day period. If Employee's
employment hereunder is terminated as a result of his disability, Company shall
pay him Base through the date of the termination of his employment, any unpaid
Bonus earned with respect to a calendar

                                       5
<PAGE>

year prior to the year of such termination and reimbursement for any expenses
incurred by him to the date of termination.

                  c) Termination by the Company for Cause. Company may terminate
Employee's employment for Cause upon written notice to Employee and such
employment shall terminate on the date on which such notice is given. As used
herein, Cause shall include Employee's (i) conviction of, or guilty plea or a
plea of nolo contrendere to, a felony; (ii) commission of fraudulent, illegal or
dishonest acts, as determined by the Board; (iii) willful misconduct or gross
negligence which reasonably could be expected to be materially injurious to the
business or operations of the Company (monetarily or otherwise); or (iv)
material failure to perform his duties hereunder, or any other material breach
hereof, as reasonably determined by the Board if Employee fails to cure any such
failure or other material breach within thirty (30) days following receipt of
written notice thereof. If Employee's employment is terminated for Cause,
Employee shall be entitled to only the Base earned by him up to and including
the effective date of such termination plus any of his expenses that have not
been reimbursed.

                  d) Termination by Employee. Employee may terminate his
employment hereunder for any reason whatsoever by giving the Board at least
thirty (30) days prior written notice. If Employee's employment is terminated by
the Employee under this provision, Employee shall be entitled to only the Base
earned by him up to and including the effective date of such termination plus
any of his expenses that have not been reimbursed.

      6. Non-Interference; Noncompetition. During the Term and for two years
thereafter, Employee shall not:

                  a) interfere with any of Company's relationships with, or
endeavor to employ or entice away any person who at any time is or shall be a
Company employee of or interfere with or seek to alter Company's relationship
with any supplier, licensee or distributor; or

                  b) directly or indirectly, engage in or facilitate or support
others to engage in the production, sale or distribution of any products or
services competitive to Company's products or business, or directly or
indirectly, solicit or attempt to solicit for business any suppliers, clients or
customers with whom it shall have done business in a manner that reasonably be
expected to result in a detriment to Company; or

                  c) seek or obtain employment with or provide services to any
Company customer or client which employment or services could reasonably be
expected to result in a detriment to Company.

      7. Property Rights. With respect to information, inventions and
discoveries developed, made or conceived of by Employee, either alone or with
others, at any time during his employment by Company and whether or not within
working hours, arising

                                       6
<PAGE>

out of such employment or pertinent to any field of business or research in
which, during such employment, Company is engaged or (if such is known to or
ascertainable by Employee) is considering engaging, Employee understands and
acknowledges that:

                  a) all such information, inventions and discoveries, whether
or not patented or patentable, shall be and remain the exclusive property of
Company;

                  b) he shall promptly disclose to an authorized Company
representative all such information, inventions and discoveries and all
information in his possession as to possible applications and uses thereof;

                  c) he will not file any patent application relating to any
such invention or discovery, except with the prior written consent of an
authorized Company officer;

                  d) he hereby waives and releases any and all rights he may
have in and to such information, inventions and discoveries, and hereby assigns
to Company and/or its nominees all of his rights, titles and interests in them,
and all of his rights, titles and interests in any patent, patent application,
copyright or other property right based thereon. He hereby irrevocably
designates and appoints Company and each of its duly authorized officers and
agents as agent and attorney-in-fact to act for him and in his behalf and stead
to execute and file any document and to do all other lawfully permitted acts to
further the prosecution, issuance and enforcement of any such patent, patent
application, copyright or other property right with the same force and effect as
if executed and delivered by him; and

                  e) at the request of Company, and without expense to him, to
execute such documents and perform such other acts as Company deems necessary or
appropriate, to obtain patents on such inventions in a jurisdiction or
jurisdictions designated by Company, and to assign to it or its designee such
inventions and any and all patent applications and patents relating thereto.

      8. Confidentiality. With respect to the information, inventions and
discoveries referred to in Section 7 above, and also with respect to all other
information, whatever its nature and form and whether obtained orally, by
observation, from graphic materials or otherwise (except such as is generally
available through publication), obtained by Employee during or as a result of
his employment hereunder relating to any invention, improvement, enhancement,
product, know-how, formula, software, process, apparatus, design, concept or
other creation, or to any use of any of them, or to materials, tolerances,
specifications, costs (including, without limitation, manufacturing costs),
prices, suppliers, finances or to any plans or strategies of Company, or to any
other trade secret or proprietary information of Company Employee understands
and acknowledges that:

            a) he will hold all such information, inventions and discoveries
which have not otherwise become public knowledge in strict confidence and not
publish

                                       7
<PAGE>

or otherwise disclose any of them to any person or entity, other than Company,
except with the prior written consent of an authorized officer of Company or as
may be required by law;

                  b) he will take all reasonable precautions to assure that all
such information, inventions and discoveries are properly protected from access
by unauthorized persons;

                  c) he will not make use of or exploit in any way any such
information, invention or discovery except as required in the performance of his
employment duties for Company;

                  d) upon termination of his employment by Company, or at any
time upon its request he will deliver it all graphic materials and all
substances, models, software, prototypes and the like containing or relating to
any such information, invention or discovery, all of which graphic materials and
other things shall be and remain the exclusive property of Company; and

                  e) for purposes hereof, Graphic Materials includes, without
limitation, letters, memoranda, reports, notes, notebooks, books of account,
drawings, prints, specifications, formulae, software, data print-outs,
microfilms, magnetic tapes and disks and other documents and recordings,
together with all copies, excerpts and summaries thereof.

      9. No Conflicts. Employee covenants that his entering into this Agreement
and the performance of his obligations hereunder will not breach any other
agreement to which he is a party. Employee understands and acknowledges that his
employment hereunder does not and will not breach any agreement made by him to
keep in confidence information acquired by him prior to or outside of his
employment with Company. Employee shall comply with any and all valid
obligations which he may now have to prior employers or to others relating to
confidential information, inventions or discoveries which are the property of
those prior employers or others. Employee has supplied or shall promptly supply
to Company, upon request, a copy of each written agreement setting forth any
such obligation. Employee understands and acknowledges that he has not brought
and will not bring with him for use in the performance of his duties hereunder
any materials, documents or information of a former employer or any third party
that are not generally available to the public, unless he has express written
authorization from the owner thereof for possession and use or he has otherwise
undisputed proprietary rights to such material, documents or information.

      10. Specific Performance. Without intending to limit the remedies
available to Company hereunder, Employee understands and acknowledges that
damages at law would be an inadequate remedy to Company if he breaches or
attempts to breach this Agreement and, in that event, Company may apply for and,
without the posting of any bond or other security, obtain injunctive relief in
any court of competent jurisdiction to

                                       8
<PAGE>

restrain Employee's breach or threatened breach hereof, or otherwise to enforce
specifically, any of the covenants contained herein.

      11. Survival. The provisions of Sections 3, 4.6(h), 5, 6, 7, 8, 9, 10, 11,
12.1, 12.4, 12.5 and 12.7 shall, subject to any express provisions of such
Sections, survive any termination of this Agreement. Employee's obligations
under Sections 5, 6, and 7 hereof shall remain in effect throughout Employee's
employment by the Company and, subject to the express provisions of such
Sections, thereafter, unaffected by any transfer to a subsidiary or affiliate of
the Company, and without regard to the reason for termination of Employee's
employment.

      12. Miscellaneous.

            12.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
agreements made and entered into and performed in that state, without regard to
principles of conflict of laws.

            12.2 Entire Agreement; Amendment. This Agreement contains the
complete understanding and agreement between the parties with respect to the
subject matter hereof, and supersedes all prior understandings and agreements,
written or oral, between the parties.

            12.3 Assignment. This Agreement and the rights and obligations
hereunder may not be assignable or delegable by any party without the prior
written consent of the other party, except with respect to an assignment by
Company to any affiliate or pursuant to a merger or consolidation involving
Company or pursuant to the sale of all or substantially all of its assets.

            12.4 Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law and any such invalidity or unenforceability shall be
deemed replaced by a term or provision determined by the parties as coming
closest to expressing the intention of the invalid or unenforceable term or
provision.

            12.5 Notice. Any notice to be given hereunder shall be in writing
and either delivered in person, by facsimile, by nationally recognized overnight
courier, or by registered or certified first class mail, postage prepaid,
addressed the parties at the addresses first set forth above. Notices delivered
personally shall be deemed given as of actual receipt; notices sent via
facsimile transmission shall be deemed given as of one business day following
sender's receipt from sender's facsimile machine of written confirmation of
transmission thereof; notices sent by overnight courier shall be deemed

                                       9
<PAGE>

given as of one business day following sending; and notices mailed shall be
deemed given as of five business days after proper mailing. Any party may change
its address in a notice given to the other party in accordance with this
Section.

            12.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs, legal
representatives, successors (including, without limitation, any successor by
merger or sale of all or substantially all assets) and permitted assigns.

            12.7 Further Assurances. Employee shall execute and deliver all
instruments and other documents which are mutually and reasonably agreed to by
Employee and Company to be necessary or appropriate to carry out the terms
hereof.

            12.8 Headings. The Section headings in this Agreement are for
convenience of reference only and shall not affect its interpretation.

            12.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which when
together shall constitute one and the same agreement.

      IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.

                                          EMPLOYER:

                                          HOME DIRECTOR, INC.

                                          By:_________________________________

                                          Print Name__________________________

                                          Print Title ________________________

                                          EMPLOYEE:

                                          ____________________________________
                                          Michael Liddle

                                       10

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