Document:

SECURITIES PURCHASE AGREEMENT made as of this [__] day of May, 2004 (this
"Agreement") between Home Director, Inc., a Delaware corporation with its
principal offices at 2525 Collier Canyon Road, Livermore, California 94551 (the
"Company") and the investors signatory hereto (each, a "Subscriber" and
together, the "Subscribers").

                  ARTICLE I - SUBSCRIPTION AND REPRESENTATIONS
                         BY AND COVENANTS OF SUBSCRIBER

     1.1 The Company hereby agrees to issue and sell to each Subscriber
signatory hereto and, subject to all of the terms and conditions hereof and in
reliance on the representations and warranties, terms and conditions hereinafter
set forth, each Subscriber severally agrees to purchase from the Company its 8%
Convertible Notes due 2004 (in the form attached hereto as Exhibit A) (the
"Notes") in an amount equal to such Subscriber's subscription amount set forth
below such Subscriber's name on the signature page hereto (the "Purchase Price")
and warrants (in the form attached hereto as Exhibit B) (the "Warrants"), to
purchase shares of common stock of the Company, par value $0.01 per share
("Common Stock") in an amount equal to 100% of such Subscriber's subscription
amount divided by $1.00. The Company agrees to sell such Notes and Warrants to
the Subscribers for said Purchase Price. The purchase price is payable by
certified or bank check made payable to, or by wire transfer of funds to Home
Director, Inc. contemporaneously with the execution and delivery of this
Agreement. The maximum aggregate purchase price for all Notes and Warrants sold
hereunder shall be equal to $1,000,000.

     1.2 At such time as there are persons purchasing $500,000 of Notes and
Warrants (the "First Investors"), there shall be a closing for the purchase and
sale of such Notes and Warrants (the "First Closing") at the offices of counsel
to the Company, at such time and date as is mutually agreed upon by the Company
and the First Investors, or at such other place as is mutually agreed upon by
the Company and the First Investors. Subsequent to the First Closing, there
shall be one or more subsequent closings for the purchase and sale of any
additional Notes and Warrants (each a "Subsequent Closing"; and collectively
with the First Closing, the "Closings") at such time, date and location as is
mutually agreed upon by the Company and the Subscribers purchasing Notes and
Warrants at each Subsequent Closing. The date and time of the First Closing and
each Subsequent Closing are referred to herein as a "Closing Date."

     Each Subscriber represents and warrants, severally and not jointly, to the
Company as follows (each of which representations and warranties are true as of
the date hereof and shall be true as of the Closing in which such Subscriber
participates):

     1.3 Each Subscriber recognizes that the purchase of the Notes and Warrants
involves a high degree of risk in that (i) the Company will need additional
capital but has no assurance of additional necessary capital; (ii) an investment
in the Company is highly speculative and only investors who can afford the loss
of their entire investment should consider investing in the Notes and Warrants;
(iii) an investor may not be able to liquidate his investment; (iv)
transferability of the Notes and Warrants and the securities issuable upon
exchange or exercise thereof is extremely limited; and (v) an investor could
sustain the loss of his/its entire investment.

     1.4 Each Subscriber represents that he/it is able to bear the economic risk
of an investment in the Notes and Warrants.

     1.5 Each Subscriber acknowledges that he/it has prior investment
experience, including investment in non-listed and non-registered securities, or
he/it has employed the services of an investment advisor, attorney or accountant
to read all of the documents furnished or made available by the Company to him
and to evaluate the merits and risks of such an investment on his behalf, and
that he/it recognizes the highly speculative nature of this investment.

     1.6 Each Subscriber hereby represents that he/it has been furnished by the
Company during the course of this transaction with all information regarding the
Company which he/it had requested or desired to know; that all documents which
could be reasonably provided have been made available for his/its inspection and
review; and that he/it has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the
Company concerning the terms and conditions of the offering and any additional
information which he/it had requested.

     1.7 Each Subscriber acknowledges that this offering of Notes and Warrants
may involve tax consequences, and that he/it must retain his own professional
advisors to evaluate the tax consequences of an investment in the Notes and
Warrants.

     1.8 Each Subscriber acknowledges that this offering of Notes and Warrants
has not been reviewed by the Securities and Exchange Commission ("SEC") because
of the Company's representations that this is intended to be a non-public
offering pursuant to Sections 4(2) or 3(b) of the Securities Act of 1933, as
amended (the "Act"). Each Subscriber represents that the Notes and Warrants are
being purchased for his/its own account, for investment and not for distribution
or resale to others. Each Subscriber agrees that he/it will not sell or
otherwise transfer the Notes or Warrants or underlying securities unless they
are registered under the Act or unless an exemption from such registration is
available. Each Subscriber represents and warrants that he/it is an "accredited
investor" as such term is defined in Rule 501 of Regulation D under the Act.

     1.9 Each Subscriber consents that the Company may, if it desires, permit
the transfer of the Notes or Warrants or underlying securities out of his/its
name only when his request for transfer is accompanied by an opinion of counsel
reasonably satisfactory to the Company that the proposed transfer does not
result in a violation of the Act or any applicable state blue sky laws
(collectively, the "Securities Laws").

     1.10 Each Subscriber consents to the placement of one or more legends on
any certificate or other document evidencing his/its Notes and Warrants or
underlying securities stating that they have not been registered under the Act
and setting forth or referring to the restrictions on transferability and sale
thereof.

     1.11 Each Subscriber hereby represents that the address furnished by him at
the end of this Agreement is his principal residence if he is an individual or
its principal business address if it is a corporation or other entity.

     1.12 Each Subscriber hereby represents that, except as set forth herein, no
representations or warranties have been made to such Subscriber by the Company
or any agent, employee or affiliate of the Company, and in entering into this
transaction such Subscriber is not relying on any information other than that
obtained as the result of independent investigation by such Subscriber.

     1.13 If the undersigned Subscriber is a partnership, corporation, trust or
other entity, such partnership, corporation, trust or other entity further
represents and warrants that: (i) it was not formed for the specific purpose of
investing in the Company; (ii) it is authorized and otherwise duly qualified to
purchase and

                                       2

hold the Notes and Warrants; and (iii) this Agreement has been duly and validly
authorized, executed and delivered, and it constitutes the legal, binding and
enforceable obligation of the undersigned.

                   ARTICLE II - REPRESENTATIONS BY THE COMPANY

     Except as set forth under the corresponding section of the disclosure
schedules delivered to the Subscribers concurrently herewith (the "Disclosure
Schedules") which Disclosure Schedules shall be deemed a part hereof, the
Company hereby makes the representations and warranties set forth below to each
Subscriber:

     2.1 The Company has no direct or indirect subsidiaries (each a
"Subsidiary," and collectively, "Subsidiaries") except as described in the SEC
Reports (as defined below). All of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights, and the Company owns all of the
issued and outstanding shares of capital stock of each Subsidiary, except as
described in the SEC Reports. Each of the Company and the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.

     2.2 All actions required to authorize and effect the offer and sale of the
Notes and Warrants and underlying securities by the Company have been duly taken
and approved. The Company has all requisite power and full legal right to
execute and deliver this Agreement and the Notes and Warrants, and to perform
all of its obligations hereunder and thereunder in accordance with the
respective terms hereof and thereof. This Agreement has been duly executed and
delivered by the Company and constitutes, and each of the Notes and Warrants,
when executed and delivered by the Company at the Closings, will constitute, a
legal, valid, and binding obligation of the Company, enforceable against it in
accordance with its respective terms, except to the extent that the same may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other laws in effect relating to creditors' rights generally or by
general principles of equity whether asserted in an action at law or in equity.

     2.3 The Notes and Warrants have been duly authorized and when duly
executed, issued and delivered upon payment therefor will be validly issued and
outstanding and will constitute legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
to the extent that the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws in effect
relating to creditors' rights generally or by general principles of equity
whether asserted in an action at law or in equity. The shares of Common Stock of
the Company issuable upon exercise of the Warrants have been reserved for
issuance upon the exercise of the Warrants and when issued in accordance with
the terms of the Warrants will be duly authorized, validly issued, fully paid
and nonassessable.

     2.4 The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of the
Company's or any Subsidiary's certificate or articles of incorporation, bylaws
or

                                       3

other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority as currently in effect to which the Company
or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not, individually or in the aggregate (a) adversely affect the
legality, validity or enforceability of the Offering, (b) have or result in or
be reasonably likely to have or result in a material adverse effect on the
results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (c)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under this Agreement (any of (a), (b) or (c), a "Material Adverse
Effect").

     2.5 The number of shares and type of all authorized, issued and outstanding
capital stock of the Company is set forth in the Disclosure Schedules attached
hereto. No securities of the Company are entitled to preemptive or similar
rights, and no person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated hereby. Except as set forth in the SEC Reports and as a result of
the purchase and sale of the Notes and Warrants, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issuance and sale
of the Notes and Warrants will not obligate the Company to issue shares of
Common Stock or other securities to any person (other than the Subscribers) and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder,
the Board of Directors of the Company or others is required for the issuance and
sale of the Notes and Warrants. Except as disclosed in the SEC Reports, there
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Company's capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the Company's
stockholders.

     2.6 The Company has filed all reports required to be filed by it under the
Securities Act of 1933 as amended, (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law to file such material)
(the foregoing materials being collectively referred to herein as the "SEC
Reports") on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances

                                       4

under which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the SEC with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"), except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

     2.7 Except as contemplated hereby, since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports: (i) there has been no event, occurrence or
development that has had a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting or
the identity of its auditors, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders except in
the ordinary course of business consistent with prior practice, or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock except consistent with prior practice or pursuant to existing Company
stock option or similar plans, and (v) the Company has not issued any equity
securities to any officer, director or affiliate, except pursuant to existing
Company stock option or similar plans.

     2.8 Except as set forth in the SEC Reports, there is no action, suit,
inquiry, notice of violation, proceeding or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which:
(i) adversely affects or challenges the legality, validity or enforceability of
this Subscription Agreement or the Offering or (ii) would, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. Except as disclosed in the SEC
Reports, neither the Company nor any Subsidiary is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the SEC involving the
Company. The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

     2.9 The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to possess such
permits would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect ("Material Permits"), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.

     2.10 The Company has not, in the 12 months preceding the date hereof,
received notice from the principal trading market for the Common Stock to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such market. The Company is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements.

                                       5

     2.11 The Company is in material compliance with the requirements of the
Sarbanes-Oxley Act of 2002 applicable to it as of the date hereof. The Company
and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosures controls and procedures to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the
certifying officers by others within those entities. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures as of the last day of the reporting period for its most recently
filed periodic report (such date, the "Evaluation Date"). The Company presented
in its most recently filed periodic report the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls over
financial reporting (as such term is defined under the Exchange Act).

     2.12 The Company confirms that neither the Company nor any other person
acting on its behalf has provided any Subscriber or its agents or counsel with
any information that constitutes or could reasonably be deemed to constitute
material, non-public information. The Company understands and confirms that each
Subscriber will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. The disclosure provided to each
Subscriber regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company, including all of the SEC
Reports, does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
Company acknowledges and agrees that each Subscriber makes or has made no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Agreement.

     2.13 The Company has filed all Tax (as hereinafter defined) reports and
returns that it was required to file. All such reports and returns were correct
and complete in all material respects. All Taxes owed by the Company (whether or
not shown on any report or return) have been paid or, if not yet due,
appropriate accruals therefor as required under GAAP have been made on the
Company's financial records and on the financial statements described in Section
2.6. No claim has been made by a taxing authority in a jurisdiction where the
Company does not pay Tax or file tax returns that the Company is or may be
subject to Taxes assessed by such jurisdiction. There are no liens for Taxes
(other than current Taxes not yet due and payable) on the assets of the Company.
There is no action, suit, investigation, liability, taxing authority proceeding,
or audit with respect to any Tax now in progress, pending or, to the Company's
knowledge, threatened, against or with respect to the Company, whether in
respect of any Tax reports and returns that were not filed in a timely manner or
for any other reason. No deficiency or proposed adjustment in respect of Taxes
that has not been settled or otherwise resolved has been asserted or assessed by
any taxing authority against the Company which is not accrued on the most recent
balance sheet of the Company filed with its SEC Reports. The Company has not
consented to extend the time in which any Tax may be assessed or collected by
any taxing authority. As used in this Section 2.13, the terms "Taxes" and "Tax"
mean all federal, state, local and foreign taxes, including, without limitation,
income, unemployment, withholding, payroll, social security, real property,
personal property, excise, sales, use and franchise taxes, levies, assessments,
duties, licenses and registration

                                       6

fees and charges of any nature whatsoever, including interest, penalties and
additions with respect thereto and any interest in respect of such additions and
penalties.

     2.14 (a) All patents, patent applications, trademarks, trade names, service
marks, logos and copyrights and other intellectual property used in or material
to the Company's business as now being conducted or as proposed to be conducted
(collectively, and together with any technology, know-how, trade secrets,
processes, formulas, and techniques used in or material to the Company's
business, "Proprietary Information") are either owned or licensed by the
Company.

         (b) To the Company's knowledge, none of the Proprietary Information is
being infringed by others, or is subject to any outstanding order, decree,
judgment, or stipulation. No litigation (or other proceedings in or before any
court or other governmental, adjudicatory, arbitral, or administrative body)
relating to the Proprietary Information is pending or, to the Company's
knowledge, threatened, nor, to the Company's knowledge, is there any basis for
any such litigation or proceeding.

         (c) To the Company's knowledge, it is not infringing on or making
unlawful use of any intellectual property or any proprietary or confidential
information of any person. No litigation (or other proceedings in or before any
court or other governmental, adjudicatory, arbitral, or administrative body)
charging the Company with infringement or unlawful use of any patent, trademark,
copyright, or other proprietary right is pending or, to the Company's knowledge,
threatened; nor, to the Company's knowledge, is there any basis for any such
litigation or proceeding.

     2.15 The Company maintains policies of insurance with, to the knowledge of
the Company, financially sound and reputable insurance companies, funds, or
underwriters, which are of the kinds and which cover such risks, and are in such
amounts and with such deductibles and exclusions, as are consistent with prudent
business practice for similarly situated businesses in the Company's business.
All such policies are in full force and effect, are sufficient for compliance in
all respects by the Company with all requirements of law and of all agreements
to which it is a party and will not terminate or lapse or otherwise be affected
in any way by reason of the transactions contemplated hereby.

     2.16 The Company is not an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended, and will not be an investment
company under such Act upon consummation of the transactions contemplated hereby
or after giving effect to the use of proceeds from the purchase of the Notes and
Warrants.

     2.17 The offer, sale and issuance of the Notes and Warrants without
registration (assuming the accuracy of the representations and warranties made
by the Subscribers in Article 1 hereof) will not violate the Securities Act, or
any applicable state securities or "blue sky" laws or other applicable laws.
None of the Company, its affiliates or any person acting on its behalf has
engaged in any form of general solicitation or advertising (as defined in Rule
502(c) of the Securities Act) or engaged in any action that would require the
registration under the Securities Act of the offering and sale of the Notes and
Warrants pursuant to this Agreement.

     2.18 There are no claims for investment banking fees, brokerage
commissions, finder's fees or similar compensation (exclusive of professional
fees to attorneys and accountants) in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Company or any of its affiliates. The Company agrees that the
Subscribers shall have no obligation with

                                       7

respect to any fees or with respect to any claims made by or on behalf of any
person for fees of the type contemplated by this Section with the transactions
contemplated by this Agreement.

     2.19 As of the Closing Date, no indebtedness of the Company is senior to
the Notes in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise, other than indebtedness secured by
purchase money security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior only as to the
property covered thereby).

     2.20 The Company shall use the net proceeds from the sale of the Notes and
Warrants hereunder for working capital purposes and not for the satisfaction of
any portion of the Company's debt (other than payment of trade payables, capital
lease obligations and accrued expenses in the ordinary course of the Company's
business and prior practices), to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation.

                         ARTICLE III - CERTAIN COVENANTS

     3.1 Each party hereto shall execute and deliver, or cause to be executed
and delivered, all such additional instruments and other documents and shall
take such further actions as the other party may reasonably require to
effectuate, carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby and thereby.

     3.2 The Company will at all times reserve the appropriate number of shares
of Common Stock solely for the purpose of issuance upon exercise of the Warrants
and conversion of the Notes. The Company will file within the required time
periods all filings, notices and other documents required by applicable federal
and state securities laws in connection with the transactions contemplated by
this Agreement.

     3.3 The Company covenants and agrees that neither it nor any other person
acting on its behalf will provide any Subscriber or its agents or counsel with
any information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands and confirms that each Subscriber shall be relying on the foregoing
covenant in effecting transactions in securities of the Company.

     3.4 The obligation of the Subscribers to consummate the transactions
contemplated hereby is subject to satisfaction or waiver of each of the
following conditions at or prior to the First Closing and the Second Closing:
(i) the Company shall have delivered to each Investor certificates evidencing
the Warrant and the Note acquired by such Subscriber pursuant to the terms
hereof, each duly executed by the appropriate Company officers; (ii) all
representations and warranties of the Company contained herein shall remain true
and correct as of the Closing Date and all covenants of the Company shall have
been performed if due prior to such date; and (iii) the Subscribers shall have
received at the Closings from Kronish Lieb Weiner & Hellman LLP, counsel to the
Company, a written opinion dated as of the applicable Closing Date, which shall
be in the form attached hereto as Exhibit C hereto.

     3.5 The Company acknowledges each of the following: The obligations of each
Subscriber participating in this transaction are several and not joint with the
obligations of any other Investor, and no Subscriber shall be responsible in any
way for the performance of the obligations of any other Subscriber. Nothing
contained herein or in any other agreement, and no action taken by any Investor
pursuant thereto, shall be deemed to constitute the Subscribers as a
partnership, an association, a joint venture or any

                                       8

other kind of entity, or create a presumption that the Subscriber are in any way
acting in concert or as a "group" (within the meaning of Sections 13 and 16 of
the Exchange Act and any rules promulgated thereunder), in each case with
respect to such obligations or the transactions contemplated hereunder. Each
Subscriber shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other agreements relating to this transaction, and it shall not be necessary
for any other Subscriber to be joined as an additional party in any proceeding
for such purpose. Each Subscriber has been represented by its own separate legal
counsel (or has chosen not to be represented by legal counsel) in its review and
negotiation of this agreement and the related transaction documents. The Company
has elected to provide various Subscribers with the same terms and agreements
for the convenience of the Company and not because it was required or requested
to do so by the Subscribers.

     3.6 The Company hereby agrees that if the Minimum Offering is completed on
the terms set forth in the Home Director Summary Term Sheet (the "Term Sheet"),
the shares of common stock underlying the Warrants shall have the same
registration rights provided for in the Term Sheet. The Subscriber hereby agrees
that, on the Conversion Date (as defined in the Note), he/it will execute and
deliver to the Company any documents reasonably requested by the Company in
connection with the Offering, including, without limitation, a subscription
agreement, accredited investor certification and registration rights agreement.

     3.7 The Company and the Subscriber hereby agree that if the Minimum
Offering is not completed on the terms set forth in the Term Sheet, the shares
of common stock underlying the Warrants shall only have customary "piggyback"
registration rights (subject to customary limitations and holdbacks and the
requirements of existing contracts) so long as such shares are not otherwise
saleable pursuant to Rule 144(k) under the Securities Act.

                           ARTICLE IV - MISCELLANEOUS

     4.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at its principal office as set
forth above and to the Subscriber at his address indicated on the signature page
of this Agreement. Notices shall be deemed to have been given on the date of
mailing, except notices of change of address, which shall be deemed to have been
given when received.

     4.2 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.

     4.3 Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed in accordance with and governed by the laws
of the State of New York. The parties hereby agree that any dispute which may
arise between them arising out of or in connection with this Agreement shall be
adjudicated before a court located in New York City and they hereby submit to
the exclusive jurisdiction of the courts of the State of New York located in New
York, New York and or the federal courts in the Southern District of New York
with respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, relating to or arising out of
this Agreement or any acts or

                                       9

omissions relating to the sale of the securities hereunder, and consent to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth
below or such other address as the undersigned shall furnish in writing to the
other.

     4.4 This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) such document with the same force and effect as if such facsimile
signature page were an original thereof. Upon the execution and delivery of this
Agreement by a Subscriber and payment of its purchase price this Agreement shall
become a binding obligation of the Subscriber with respect to the purchase of
Notes and Warrants as herein provided.

     4.5 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.

     4.6 It is agreed that a waiver by either party of a breach of any provision
of this Agreement shall not operate, or be construed, as a waiver of any
subsequent breach by that same party.

     4.7 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

                                       10

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.

                                         HOME DIRECTOR, INC.

                                         By:
                                            ------------------------------------
                                         Daryl Stemm, Chief Financial Officer

                                         SUBSCRIBER:

                       If an individual:

                                         ---------------------------------------
                                         Name of Subscriber

                       If an entity:

                              Name of Entity:
                                             -----------------------------------

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

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

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

                                         ---------------------------------------
                                         Address of Subscriber

                       Subscription Amount:
                                           -------------

                                       11<PAGE>
                                                                    EXHIBIT 10.1

                                ROYALTY CONTRACT

      This contract ("Agreement") is made by and between PLANET POLYMER
TECHNOLOGIES, INC., a California corporation ("Planet"), and RYER, INC., a
California corporation ("Ryer") and is effective forthwith upon the execution
hereof by the parties.

                                    RECITALS

      WHEREAS,

            A. Ryer has contracted to acquire all of the assets of RYER
ENTERPRISES LLC, a Nevada limited liability company ("Ryer Enterprises"), and in
connection therewith has agreed to accept an assignment of the rights and
assumption of the duties of Ryer Enterprises under a certain Purchase, Sale and
License Agreement with Planet, dated May 1, 2003 as amended pursuant to a First
Amendment dated January 31, 2004 ("Purchase Agreement"), including but not
limited to a Secured Promissory Note and Security Agreement executed concurrent
therewith.

            B. PLANET is willing to accept Ryer as assignee of such Purchase
Agreement and Ryer agrees to assume and discharge all of the obligations
thereunder upon all of the following terms and conditions.

      WHEREFORE, in consideration of the mutual terms and conditions herein set
forth, the parties agree as follows:

      1. Warranties of Planet. Planet warrants as follows:

            1.1. Planet is a corporation duly formed, existing and in good
standing under the laws of the State of California and duly authorized by its
board of directors to enter into and perform this Agreement and this Agreement
is effective against and binding upon Planet.

            1.2. All of the obligations of Planet and to the best of Planet's
knowledge all of the obligations of Ryer Enterprises under the Purchase
Agreement, including the Secured Promissory Note and Security Agreement, have
been fully performed to date and there are no claims asserted by either party
against the other for any breach of said agreement and there are no unperformed
obligations of either party thereunder.

            1.3. Planet is the owner of the intellectual rights, subject only to
the exclusive license of Ryer Enterprises under the Purchase Agreement, which
are set forth in Exhibit B to the Purchase Agreement.

                                       1
<PAGE>
            1.4. Except as set forth in the Purchase Agreement, Planet has not
assigned any of the intellectual rights to a third party.

            1.5. All of Planet's representations and warranties set forth in
paragraph 7 and its subparts of the Purchase Agreement are true and correct as
of the date they were made.

      2. Warranties of Ryer. Ryer warrants as follows:

            2.1. Ryer is a corporation duly formed, existing and in good
standing under the laws of the State of California and duly authorized by its
board of directors to enter into and perform this Agreement and this Agreement
is effective against and binding upon Ryer.

            2.2. Ryer has full power and authority, together with all licenses,
permits and certificates from public authorities as are necessary to own its
properties and to conduct its business where the same is now located and being
conducted, and has full power and authority to accomplish the transactions
contemplated hereby and carry out the provisions hereof.

            2.3. No broker or finder has been retained by Ryer in connection
with this transaction.

            2.4. As of the date hereof Ryer has unincumbered cash assets of
approximately $400,000 and its financial condition is reasonably adequate to
perform its obligations contemplated by this Agreement. Ryer shall have a net
worth of not less than $400,000 at the closing.

      3. Final Payment under Purchase Agreement. The parties agree that Ryer
shall pay to Planet and Planet shall accept from Ryer the cash sum of $161,000
as and for full satisfaction of all of the monetary obligations of the buyer
under the Purchase Agreement, Secured Promissory Note and Security Agreement,
other than the obligation to pay royalties as provided in paragraph 4, below.
Such payment shall be made as follows:

            3.1. The transaction whereby Ryer is acquiring the assets of Ryer
Enterprises is being handled through a Bulk Sale Escrow to be opened with New
Century Title Escrow. The escrow holder shall be instructed to furnish Planet,
through its attorney, a copy of the Bulk Sale Notice and Ryer shall submit a
demand for $161,000 together with the following:

                  3.1.1. Duly executed releases in recordable form of all liens
      and encumbrances against any and all of the assets subject to the Purchase
      Agreement;

                  3.1.2. Duly executed assignments in recordable form of all of
      the Aquamim technology, patent and other intellectual rights listed on
      Exhibit B of the Purchase Agreement, assigning all of such rights to Ryer.
      All of Planet's obligations to maintain or defend the patents shall be
      terminated at that time.

                  3.1.3. An instruction that the escrow holder shall deliver
      such documents to

                                       2
<PAGE>
      Ryer only when it holds for Planet's account the sum of $161,000 in
      unencumbered cash.

      4. Royalties payable from Ryer to Planet. All provisions as they relate to
royalties in the Purchase Agreement shall be deemed null and void upon the
execution hereof and the payment by Ryer of $161,000 cash to Planet, through
escrow as described in 3.1 of this Agreement. Such provisions shall be replaced
with the following provisions relating to the determination and payment of
royalties.

            4.1. Royalties. During the 8-year term commencing June 1,2004 and
ending May 31, 2012 (the "Term"), Ryer shall pay to Planet royalties
("Royalties") on feedstocks or sintered products manufactured and sold to third
parties using the Aquamim water debind method or solvent debind Tungsten-Carbide
technology (the "Products"). During the term, Royalties shall be payable on or
before the 15th day of each month for Products sold by Ryer and for which Ryer
received the purchase price (in whole or in part) from the third party buyer
during the preceding calendar month. The obligation for the payment of Royalties
shall terminate at the expiration of the Term, provided that payment shall be
made on all pending orders from customers actually received by Ryer during the
term. In the event that Ryer extends credit to a customer for a period longer
than 45 days from the date of invoice, the royalty shall be due and payable on
the entire invoice as if the purchase price was received 45 days after the date
of invoice.

            4.2. Computation of Royalties. Royalties payable hereunder shall be
computed as follows:

                  4.2.1. The Royalties on any Water De-bound Feedstock or
Solvent De-bound Feedstock sold to a third party shall be computed by
multiplying the total purchase price received by Ryer for the feedstock
(excluding taxes, shipping, handling and similar charges not related to the
actual manufactured price of the feedstock) by 6% (.06). The price of feedstock
sold to Micromold, Inc., or any other affiliate of Ryer, shall be fair and not
less than the price offered to unaffiliated third parties for like feedstock in
like quantities.

                  4.2.2. The royalty on any Water De-bound Feedstock or Solvent
De-bound Tungsten-Carbide Feedstock manufactured into a finished product and
sold to a third party shall be computed by dividing the sintered shipped weight
(as that term is defined in Section 4.2.2.1 of this Agreement) by 94% (.94) and
then multiplying that sum by the lowest feedstock sales price offered to
unaffiliated third parties for similar quantities and then multiplying that sum
by 6% (.06), as follows:

     (Shipped Weight / .94) x Lowest Published Price x .06 =Royalty Payable

                  4.2.2.1. "Shipped weight" as used in this Agreement shall mean
the weight of the actual product less packaging materials, pallets, bags, cans
and/or similar materials used to package, transport or protect shipped products
("Shipped Weight").

                                       3
<PAGE>
                  4.2.3. The Shipped Weight of any sintered Products shall be
documented by the weighing of the Products and recordation on the invoice to the
buyer by line item. This weight shall be used for the calculation set forth in
Section 4.2.2 of this Agreement.

                  4.2.4. Royalties payable by Ryer to Planet under Section 4.1
of this Agreement shall be based on Products sold, delivered, invoiced and paid
for during the Term. Copies of the Invoices together with an accounting
of outstanding invoices (whether or not paid), orders received for Product and
in process and the payments received from the third party buyers thereon shall
accompany each monthly payment of royalties.

                  4.2.5. Planet shall have the right to conduct a compliance
audit at any time during the Term up to 60 days following its expiration. The
records will be stored at Micromold, Inc., 2100 Iowa Avenue, Riverside,
California 92507 (909) 684-7130 (or at such other place as may be designated in
writing by Ryer) and written notice of audit shall be directed to Ryer's CFO
(presently Brenda Michelsen) at least five work days in advance of the audit.

                  4.2.6. Royalties will be payable only on Products sold,
delivered and paid for by the buyer. No Royalties shall be paid or payable on
account of scrap, testing, samples, inventory shrink or loss of Product, or for
Product sold but not paid for in whole or in part. The Royalty shall become
payable only upon receipt by Ryer of the purchase price therefor.
Notwithstanding the foregoing, where the customer is Micromold, Inc., the right
to payment of the Royalty will accrue to Planet upon invoicing, whether or not
payment has been made thereon, provided, however, that no royalty shall be
payable on account of Ryer's reprocessing of green runners into pellets for
Micromold, Inc.

      5. Confidential Information. Both parties shall maintain in confidence all
proprietary information received or disclosed to the other in connection with
this Agreement. Neither party shall disclose any proprietary information for its
own use or for any other persons' benefit other than as is expressly permitted
by this Agreement without the prior written consent of the owner of the
proprietary information. Both parties shall abide by the reasonable
confidentiality restrictions imposed by the other party from time to time for
proprietary information.

      6. General provisions.

            6.1. Jurisdiction. Each party consents to the exclusive jurisdiction
of the state and federal courts sitting in either San Diego or Riverside County,
California in any action or claim arising out of or under this Agreement or the
transactions contemplated by this Agreement. Each party further agrees that
personal jurisdiction over it may be effected by service of process by
registered or certified mail addressed as provided in section 6.2 of this
Agreement, and that when so made shall be as if served upon it personally within
the State of California.

            6.2. Notices. All notices, requests, consents and other
communications between the parties required or permitted under this Agreement
shall be in writing and shall be personally

                                       4
<PAGE>
delivered or mailed by using first-class, registered or certified mail, postage
prepaid, to the following addresses or to such other address as the parties
hereto may designate in writing, or by facsimile to the numbers set forth below.

                  Planet:     H. M. Busby
                              Planet Polymer Technologies, Inc.
                              9985 Business Park Avenue
                              San Diego, CA 92131

                  W/copy to:  Blanchard, Krasner & Flinch, P.C.
                              800 Silverado Street, 2nd Floor
                              La Jolla, CA 92037
                              Attn: Robert W. Blanchard

                  Ryer:       Ryer, Inc.
                              2100 Iowa Avenue
                              Riverside, CA 92507-2413
                              Attn: Robert D. Aust

                  W/copy to:  Stephen R. Smith
                              Law Offices of Stephen R. Smith
                              41877 Enterprise Circle North, Ste 220
                              Temecula, CA 92590

All such notices, requests, consents and other communications shall be deemed to
be properly given if delivered personally, via facsimile or, if sent by mail,
three business days after the same has been deposited with the U.S. Mail,
addressed as above, postage prepaid.

            6.3. Counterparts. This Agreement may be executed in counterparts
and all counterparts so executed shall constitute one agreement which shall be
binding on all of the parties hereto, notwithstanding that all of the parties
are not signatory to the original or same counterpart.

            6.4. Entire Agreement. This Agreement shall constitute the entire
agreement of the parties and shall supersede all prior agreements, written or
oral, concerning the subject matter hereof This Agreement was drafted through
the joint efforts and participation of the parties and their attorneys, and
shall be construed neither in favor of, nor against, either party hereto, but in
accordance with the fair and reasonable meaning hereof. The parties further
agree that this Agreement will be construed to effectuate the normal and
reasonable expectations of a sophisticated buyer and seller.

                                       5
<PAGE>
            6.5. Waivers and amendments. No amendment, modification, supplement,
termination or waiver of any provision of this Agreement, and no consent to any
departure therefrom, may in any event be effective unless in writing and signed
by the party or parties affected thereby, and then only in the specific instance
and for the specific purpose given.

            6.6. Attorneys' fees. Each party to this Agreement shall bear its
own legal fees and any and all other expenses relating to the transactions
contemplated in this Agreement. If any party institutes any arbitration, action
or proceeding to enforce this Agreement or any provision hereof or for damages
by reason of any alleged breach of this Agreement or of any provision hereof or
for a declaration of rights hereunder, then the prevailing party in any such
arbitration, action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys' fees, incurred by
the prevailing party in connection with such action or proceeding.

            6.7. Headings. The headings of this Agreement are for convenience of
reference only and shall not affect the construction of any provision of this
Agreement.

            6.8. Successors and Assigns. This Agreement and the provisions
hereof shall be binding upon and inure to the benefit of each of the parties and
their successors and assigns. Either party may assign its rights under this
Agreement only with the written consent of the other, which consent shall not be
unreasonably withheld.

            6.9. Opportunity to Consult Counsel. Each party hereto acknowledges
that it has had a sufficient opportunity to consult independent legal counsel
and independent accountants concerning the provisions of this Agreement and
entered into this Agreement intending to be legally bound. The parties hereto
are relying solely upon the advice of their own independent counsel and
accountants and are not relying in any manner or way on the advice or counsel of
the other party's counsel, accountants, or other advisors.

            6.10. Time is of the Essence. All dates and times in this Agreement
are of the essence.

            6.11. Severability. If any provision of this Agreement or the
application of such provision to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held invalid shall not
be affected thereby.

            6.12. Contingency. This Agreement is contingent upon the close of
the New Century Title Escrow through which Ryer is acquiring the assets of Ryer
Enterprises, on or before June 30, 2004. In the event the close does not occur
within such period, then this contingency shall be satisfied if the said Escrow
closes thereafter and before either party has given a written notice of
termination of this Agreement to the other.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed

                                       6
<PAGE>
as of the date first set forth above.

                                     PLANET POLYMER TECHNOLOGIES, INC., a
                                     California corporation,

                                     By: /s/ H. M. Busby
                                        ----------------------------------------
                                         H. M. Busby, President

                                     RYER, INC., a California Corporation

                                     By: /s/ Robert D. Aust
                                        ----------------------------------------
                                         Robert D. Aust, Chief Executive Officer

                                    GUARANTY

Micromold, Inc., a California corporation, does hereby guarantee to Planet the
due and prompt performance of all of the obligations of Ryer, Inc. under the
foregoing agreement. Pursuant to California Civil Code Section 2856, Micromold,
Inc., as Guarantor, waives all rights and defenses that are or may become
available to Guarantor by reason of California Civil Code Sections 2787 to 2855,
inclusive, including without limitation, any rights or defenses arising out of
an election of remedies by Planet, This Guaranty and the provisions hereof shall
be binding upon and inure to the benefit of each of the parties and their
successors and assigns. Either party may assign its rights and benefits under
this Guaranty only upon the written approval of the other first had and
received, which approval shall not be unreasonably withheld.

                                     MICROMOLD, INC., a California corporation

                                     By: /s/ Robert D. Aust
                                        ----------------------------------------
                                         Robert D. Aust, President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]