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                                                                    Exhibit 4.41

THE  SECURITIES  TO  WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT  OF  1933,  AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE  SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE OFFERED OR SOLD WITHOUT
REGISTRATION  UNDER  THE  SECURITIES  ACT,  AND  AS REQUIRED BY BLUE SKY LAWS IN
EFFECT  AS  TO  SUCH  TRANSFER, UNLESS AN EXEMPTION FROM SUCH REGISTRATION UNDER
STATE  AND  FEDERAL  LAW  IS  AVAILABLE.


                     C O N V E R S I O N   A G R E E M E N T

                              E.DIGITAL CORPORATION


E.DIGITAL  CORPORATION
13114  Evening  Creek  Drive  South
San  Diego,  California  92128                 ___________________,  2002
                                                 (Must  be  dated)
Attention:
Mr. Fred Falk, Chief Executive Officer       $____________________________
                                             (Amount  of  Notes  Converted)

Gentlemen:

1.     CONVERSION.  I,  the  undersigned  individual  or  entity ("NOTEHOLDER"),
hereby  irrevocably converts as of the above date the above stated dollar amount
of  __%  Promissory  Notes  due  __________,  200_  (individually  a  "NOTE" and
collectively,  the  "NOTES")  of  E.DIGITAL  CORPORATION, a Delaware corporation
("COMPANY") into ___________ shares of Series D Preferred Stock, $.001 par value
(the  "SERIES  D  PREFERRED STOCK").  This Conversion is made in accordance
with and  is subject to (i) the terms of this Conversion Agreement and (ii) the
Company's  Certificate  of  Incorporation  and  Bylaws, each as amended to date.

2.     ACCEPTANCE  OF CONVERSION.  This Conversion Agreement does not constitute
an  offer  by  the Company to sell any shares of Series D Preferred Stock to me,
nor  a solicitation of any offer from me to buy any shares of Series D Preferred
Stock, and shall be deemed accepted by the Company only when countersigned by an
executive  officer  of  the Company.  The Company may reject this Conversion, in
whole  or  in  part,  for  any  reason in its sole discretion.  I understand the
Company has agreed to accept or reject this Conversion within 15 days of receipt
by  the  Company  of  this  duly executed Conversion Agreement together with the
original  Note. After such 15 days, if not accepted by the Company, I may revoke
this  Conversion  Agreement  by  notice  in  writing.

3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.  The  Company  hereby
represents  and  warrants  to  each Noteholder as of the date of this Conversion
Agreement  as  follows:

     (A)  ORGANIZATION,  GOOD  STANDING  AND  QUALIFICATION.  The  Company  is a
corporation duly organized, validly existing and in good standing under the laws
of  the  State  of  Delaware.  The Company has all requisite corporate power and
authority  to  own and operate its properties and assets, to execute and deliver
this  Conversion  Agreement and to issue and sell the Securities, as hereinafter
defined,  and  to  carry  out the provisions of this Conversion Agreement and to
carry  on  its  business  as presently conducted and as presently proposed to be
conducted. The Company is duly qualified and is authorized to do business and is
in  good  standing  as  a  foreign corporation in all jurisdictions in which the
nature  of  its  activities  and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do  so  would not have a material adverse effect on the Company or its business.

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     (B) SUBSIDIARIES. The Company operates through its wholly-owned subsidiary,
e.Digital  Corporation  (a California corporation) and has no ownership in other
companies. The Company is not a participant in any joint venture, partnership or
similar  arrangement.


     (C)  CAPITALIZATION;  VOTING  RIGHTS.  The  authorized capital stock of the
Company  consists  of  200,000,000  shares  of Common Stock, par value $.001 per
share ("COMMON STOCK"), and 5,000,000 shares of preferred stock, par value $.001
per share ("PREFERRED STOCK"). As of December 23, 2002 the Company had no shares
of  preferred  stock  outstanding.  As  of  December  23,  2002, the Company had
141,951,795  shares  of Common Stock outstanding. An additional 7,098,663 shares
of  Common  Stock  are  reserved  for  future issuance under the Company's stock
option  grants  and  pursuant  to  certain  convertible  securities, options and
warrants.  Accordingly,  the  Company  has  either  outstanding  or  reserved an
aggregate  of  149,050,458 of the 200,000,000 authorized shares of Common Stock.

     All  issued  and  outstanding shares of the Company's Common Stock (a) have
been  duly  authorized  and  validly  issued,  and  (b)  are  fully  paid  and
nonassessable.  When issued in compliance with the provisions of this Conversion
Agreement,  the  Series  D  Preferred  Stock  and  the  Conversion  Shares,  as
hereinafter  defined,  will be validly issued, fully paid and nonassessable, and
will  be free of any liens or encumbrances; provided, however, that the Series D
Preferred  Stock  and  the  Conversion  Shares may be subject to restrictions on
transfer  under  state  and/or federal securities laws as set forth herein or as
otherwise  required  by  such  laws  at  the  time  a  transfer  is  proposed.

     (D)  RESERVATION  OF SHARES. The Conversion Shares issuable upon conversion
of  the  Series  D  Preferred  Stock  have been duly authorized and reserved for
future  issuance.


     (E) AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part of
the  Company,  its  officers,  directors  and  stockholders  necessary  for  the
authorization  of  this Conversion Agreement, the performance of all obligations
of  the  Company  hereunder  and  thereunder  at the Closing or Closings and the
authorization, sale, issuance and delivery of the Securities pursuant hereto and
the  Conversion  Shares  on  conversion of the Series D Preferred Stock has been
taken  or  will  be  taken  prior  to the Closing. The Conversion Agreement when
executed  and  delivered,  will  be valid and binding obligations of the Company
enforceable  in  accordance  with its terms, except (a) as limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or  other laws of general
application  affecting  enforcement  of  creditors'  rights;  and  (b)  general
principles  of  equity that restrict the availability of equitable remedies. The
sale  of  the Series D Preferred Stock and the subsequent conversion thereof are
not  and will not be subject to any preemptive rights or rights of first refusal
that  have  not  been  properly  waived  or  complied  with.

     (F)  SEC  REPORTS  AND  FILINGS.  The Company has delivered to Noteholder a
complete  and  accurate copy (excluding copies of exhibits) of its Annual Report
on  Form  10-KSB  for the fiscal year ended March 31, 2002, the latest Quarterly
Report on Form 10-Q for the period ended September 30, 2002 and definitive proxy
statement  filed by the Company on September 22, 2002 (the "SEC DOCUMENTS"). The
SEC  Documents (i) complied with the requirements of the Securities Act of 1933,
as  amended  (the  "SECURITIES  ACT") or the Securities Exchange Act of 1934, as
amended  (the  "EXCHANGE  ACT"), as the case may be, at and as of the times they
were  filed  (or, if amended or superseded by a filing prior to the date of this
Conversion  Agreement, then on the date of such filing) in all material respects
and  (ii)  did  not  at  and  as  of the time they were filed (or, if amended or
superseded  by  a filing prior to the date of this Conversion Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to  state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading.

     (G)  CHANGES.  Since  the  date of the last of the SEC Documents, there has
been  no  material  adverse  change  in  the  business,  operations or financial
condition  of  the  Company.

     (H)  TITLE  TO  PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and
marketable  title  to  its  properties  and assets, including the properties and
assets reflected in the most recent balance sheet included in the SEC Documents,
and  good  title  to its leasehold estates, in each case subject to no mortgage,
pledge,  lien, lease, encumbrance or charge, other than (a) those resulting from
taxes  which  have  not  yet become delinquent, (b) minor liens and encumbrances
which  do  not materially detract from the value of the property subject thereto

                                        2

<PAGE>

or  materially  impair  the  operations  of the Company, and (c) those that have
otherwise  arisen in the ordinary course of business. All facilities, machinery,
equipment,  fixtures, vehicles and other properties owned, leased or used by the
Company  are  in  good operating condition and repair and are reasonably fit and
usable  for  the  purposes  for  which  they  are  being  used.

     (I)  COMPLIANCE  WITH OTHER INSTRUMENTS. The Company is not in violation or
default  of  any  term  of its Certificate of Incorporation or Bylaws, or of any
provision  of  any  mortgage,  indenture,  contract,  agreement,  instrument  or
contract  to  which  it  is  party  or  by which it is bound or of any judgment,
decree,  order,  writ  or,  to  its  knowledge,  any statute, rule or regulation
applicable  to  the  Company  which  would  materially  and adversely affect the
business, assets, liabilities, financial condition or operations of the Company.
The  execution, delivery, and performance of and compliance with this Conversion
Agreement  and  the issuance of the Series D Preferred Stock pursuant hereto and
of  the  Conversion  Shares,  will  not,  with or without the passage of time or
giving  of notice, result in any such material violation, or be in conflict with
or  constitute  a  default under any such term, or result in the creation of any
mortgage,  pledge,  lien,  encumbrance  or  charge upon any of the properties or
assets  of  the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal  of  any  permit license, authorization or approval applicable to the
Company,  its  business  or  operations  or  any  of  its  assets or properties.

     (J)  LITIGATION.  There  is  no  action,  suit, proceeding or investigation
pending  or  to  the Company's knowledge currently threatened in writing against
the  Company  that  questions  the  validity of this Conversion Agreement or the
right  of  the Company to enter into any of such agreement, or to consummate the
transactions  contemplated  hereby  or  thereby,  or  which might result, either
individually  or in the aggregate, in any material adverse change in the assets,
condition  or affairs of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware that there
is  any  basis  for  the  foregoing.

     (K) EMPLOYEES. The Company has no collective bargaining agreements with any
of its employees. There is no labor union organizing activity pending or, to the
Company's  knowledge,  threatened  with  respect  to  the  Company.

     (L)  COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not in
violation  of  any applicable statute, rule, regulation, order or restriction of
any  domestic  or foreign government or any instrumentality or agency thereof in
respect  of the conduct of its business or the ownership of its properties which
violation  would  materially  and  adversely  affect  the  business,  assets,
liabilities,  financial  condition or operations of the Company. No governmental
orders,  permissions,  consents,  approvals or authorizations are required to be
obtained  and  no  registrations  or  declarations  are  required to be filed in
connection  with the execution and delivery of this Conversion Agreement and the
issuance  of  the  Series  D  Preferred  Stock, except such as has been duly and
validly  obtained  or  filed,  or  with respect to any filings that must be made
after  the  Closing,  as  will  be filed in a timely manner. The Company has all
franchises,  permits,  licenses  and  any  similar  authority  necessary for the
conduct  of  its  business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects or financial
condition  of  the  Company  and believes it can obtain, without undue burden or
expense,  any similar authority for the conduct of its business as planned to be
conducted.

4.     REPRESENTATIONS  AND  WARRANTIES OF NOTEHOLDER.  With full knowledge that
the  Company and its officers, directors and controlling persons will be relying
upon  the  following, among other things, in determining that a sale of Series D
Preferred  Stock  to me will be exempt from the registration requirements of the
Securities Act, and applicable state securities laws, I represent and warrant to
the  Company  that:

     (A)  COMPANY  INFORMATION.  I  have received and carefully reviewed the SEC
Documents  in  their entirety provided to me by the Company. I understand that I
and  my  adviser(s)  have  had  a reasonable opportunity to ask questions of and
receive  answers  from the Company, or a person or persons acting on its behalf,
concerning  my  election  to convert the principal amount of the Notes set forth
above  into the shares of Series D Preferred Stock as set forth hereinabove, and
all  such  questions  have  been  answered  to  my or their full satisfaction. I
acknowledge and agree that I have been provided with, or offered complete access
to,  information  concerning  the Company, its business, financial condition and
prospects,  and the offering of the Series D Preferred Stock, equivalent to such
information  as  would  have  been  contained  in a registration of the Series D
Preferred  Stock  under  the  Securities Act. I have not been furnished with any
other  oral or written information concerning the Company or offering other than
the  SEC Documents or as described in this paragraph and I have relied solely on

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<PAGE>
the  foregoing in connection with my decision to convert the principal amount of
the  Notes  set  forth  above  into  the  shares  of Series D Preferred Stock. I
acknowledge  that  no  representations or warranties have been made to me by the
Company  or  persons  acting  on  behalf  of  the  Company,  other  than  the
representations set forth in this Conversion Agreement and in the SEC Documents.

     (B) PREFERRED STOCK; LIMITATIONS. I acknowledge that the shares of Series D
Preferred  Stock  are subject to the limitations set forth in the Certificate of
Designation  of  Preferences, Rights and Limitations filed with the Secretary of
State  for the State of Delaware on or about December 24, 2002 (the "CERTIFICATE
OF DESIGNATION"). I also acknowledge that the shares of Series D Preferred Stock
are  convertible  at  my  election and at the election of the Company in certain
instances  into fully paid and nonassessable shares of Common Stock, such shares
issued  on  conversion  being  the  "CONVERSION  SHARES."

     (C)  RESTRICTED SECURITIES. I acknowledge that the Series D Preferred Stock
and  Conversion Shares (collectively, the "SECURITIES") have not been registered
under  the  Securities  Act,  in  reliance  upon the exemption from registration
provided  by  Rule  506  of Regulation D under the Securities Act, and under the
securities or blue sky laws of any state or any rules or regulations promulgated
thereunder, on the grounds that the offer and sale of such securities to me is a
transaction  not  involving  any  public  offering. The Series D Preferred Stock
which  I  am  acquiring hereby is, and the Conversion Shares on issuance thereof
will  be,  "restricted securities," as that term is defined in Rule 144(a) under
the  Securities  Act.  I  acknowledge  and  understand  that  the Securities are
unregistered  and  must be held by me indefinitely, unless they are subsequently
registered  under  the  Securities Act or an exemption from such registration is
available  for  their  resale.  I  understand  and  agree that the prior written
consent  of  the  Company  will  be  necessary  for  any  transfer  by me of the
Securities, in whole or in part, unless the Securities have been duly registered
under  the  Securities  Act  or the transfer is made in accordance with Rule 144
under  the  Securities  Act.

     (D) LEGEND. I understand and agree that the Series D Preferred Stock shall,
unless  and  until  removed  in accordance with applicable law, contain a legend
substantially  in  the  following form, which I have read and understand:

          "These securities have not been registered under the Securities Act of
          1933,  as amended (the "Act"), or under any state securities laws, and
          are  "restricted  securities"  as  defined  in Rule 144 under the Act.
          These  securities  may  not  be offered, sold, transferred, pledged or
          hypothecated in the absence of an effective registration statement for
          such securities under the Act or an opinion of counsel satisfactory to
          the  Company  that  an exemption from such registration is available."


     I  understand that the certificate representing the Conversion Shares shall
contain  a  similar  restrictive  legend.

     (E)  REGISTRATION.  I  understand  that  only  the  Company  can  file  a
registration  statement under the Securities Act covering the Conversion Shares.

     (F)  NOTEHOLDER  CAN  BEAR  ECONOMIC  RISK.  I represent and warrant to the
Company  in connection with my conversion of the Note and the acquisition of the
Series  D  Preferred  Stock  that  (i) I have adequate means of providing for my
current  needs and possible personal contingencies, and this investment will not
necessitate any change in my standard of living, (ii) I have no present need for
liquidity  in  this  investment,  (iii)  I am able to bear the economic risks of
investment  in  the  Note  for an indefinite period, and (iv) at this time could
afford  a  complete  loss  of  this  investment.

     (G)  INVESTMENT HAS SUBSTANTIAL RISK. I recognize that an investment in the
Series  D  Preferred  Stock is speculative and involves a high degree of risk. I
have  considered  among  other risks those risks described in the SEC Documents.

     (H)  ACQUISITION  FOR OWN ACCOUNT; ABLE TO PROTECT OWN INTEREST. The shares
of  Series  D  Preferred Stock are being acquired solely for my own account, for
investment,  and  not  for  the  account  of  any  other person and not with any
intention to make any distribution or public offering of such securities. I (and

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if  I  am  an  entity, then the individual making this investment decision on my
behalf),  alone  or  together  with  my  adviser(s),  have  such  knowledge  and
experience in financial, tax and business matters as to enable me to utilize the
information  made  available  to me in order to evaluate the merits and risks of
the  prospective  investment in the Series D Preferred Stock to make an informed
investment  decision  with  respect  thereto.

     (I)  AUTHORITY; RESIDENCE. I, if a corporation, partnership, trust or other
entity,  have  full power and authority to execute this Conversion Agreement, to
make  all  representations,  warranties  and  covenants  set forth herein and to
acquire  and  hold the Series D Preferred Stock, and have my principal office as
set  forth on the signature page hereof; and this entity has not been formed for
the  specific  purpose  of  acquiring  the  Series  D  Preferred Stock. I, if an
individual,  am at least 21 years of age, and I reside at the place set forth on
the  signature  page  hereof.

     (J)  RELIANCE  BY  COMPANY.  All  information  which I have provided to the
Company is correct and complete as of the date set forth above and may be relied
upon  by  the  Company  in  determining  the  availability  of an exemption from
registration  under  federal  and  state  securities laws in connection with the
offering  of  securities as described herein and, if there should be any adverse
change  in such information prior to this Conversion Agreement being accepted, I
will  immediately  provide  the  Company  with  such  information.

     (K)  NO  GENERAL  SOLICITATION OR ADVERTISING. I have not been solicited by
the  Company  or  anyone  on  its  behalf by any form of general solicitation or
general  advertising,  including  but  not  limited  to  (i)  any advertisement,
article,  notice  or other communication published in any newspaper, magazine or
similar  media  or  broadcast  over  television or radio, or made available over
telephone lines by any information service, or (ii) any seminar or meeting whose
attendees  had  been  invited  by  any  means of general solicitation or general
advertising.

     (L)  INVESTMENT  INTENT. The Series D Preferred Stock is being acquired for
long-term investment only for my own account and not with a view to, or for sale
in  connection  with,  any  distribution  of the Series D Preferred Stock or any
Conversion  Shares.  I  do  not  have  any  present intention of distributing or
selling  any  of  the  Series  D  Preferred  Stock  or  any  interest  therein.

5.  INDEMNIFICATION.  I  agree  to indemnify and hold the Company, its officers,
directors  and  every  person  who  "CONTROLS" the Company within the meaning of
Section  15  of  the  Securities  Act  ("CONTROLLING PERSONS") harmless from and
against all damages, losses, costs and expenses (including reasonable attorneys'
fees) which they or any one of them may incur by reason of my failure to fulfill
or  my breach of any of the terms or conditions of this Conversion Agreement, or
by  reason  of  any  breach  of  or  the  falsity, inaccuracy, or failure of any
representation  or  warranty made by me herein, made in any document provided by
me  to  the  Company in connection with this Conversion, or otherwise made by me
orally  or  in  writing  to  the  Company.

6.  REGISTRATION  RIGHTS On or before June 30, 2003, the Company shall undertake
to  file  a  registration statement for the resale of the Conversion Shares with
the  Securities and Exchange Commission ("SEC") on Form S-3 or other appropriate
form, and will utilize commercially reasonable efforts to make such registration
statement  effective  as  soon  as  possible  thereafter.  In the event that the
foregoing registration statement is not declared effective, the Noteholder shall
have the following additional registration rights with respect to the Conversion
Shares:

     (a)  If,  at  any  time  from  issuance to December 31, 2007 (the "EXERCISE
PERIOD"),  the  Company proposes to prepare and file any registration statements
covering  its  Common  Stock  (in  either  case, other than in connection with a
merger  or  acquisition, pursuant to Form S-8 or any successor form, or pursuant
to  any  other  form or type of registration in which Registrable Securities (as
defined  below)  cannot  be  appropriately  included)  (collectively,  the
"REGISTRATION  STATEMENTS"),  it  will give written notice as provided herein at
least  thirty  (30) days prior to the filing of each such Registration Statement
to  the  then  holders  of the Series D Preferred Stock and/or Conversion Shares
("HOLDER")  of  its intention to do so. If the Holders of the Series D Preferred
Stock  and/or Conversion Shares notify the Company within twenty (20) days after
receipt  of  any  such  notice  of its or their desire to include the Conversion
Shares  (collectively,  the  "REGISTRABLE  SECURITIES")  in  such  proposed
registration  statement,  the  Company  shall afford the Holders of the Series D
Preferred  Stock  and/or  Conversion  Shares  the  opportunity  to have any such
Registrable  Securities  registered  under  such  registration  statement at the
Company's  sole  cost  and  expense.

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     (b) Notwithstanding the provisions hereof, the Company shall have the right
at  any  time  after  it  shall  have  given  written  notice  pursuant  hereto
(irrespective  of whether a written request for inclusion of any such securities
shall  have  been  made)  to  elect  not  to file any such proposed registration
statement,  or  to withdraw the same after the filing but prior to the effective
date  thereof.

     (c)  Notwithstanding  any  other  provision  of  this  Section  6,  if  the
underwriter  managing  such  registration  notifies  the Holders in writing that
market  or  economic  conditions  limit  the  amount  of  securities  which  may
reasonably  be  expected  to be sold, the Holders of such Registrable Securities
will  be  allowed to register their Registrable Securities pro rata based on the
number  of  shares of Registrable Securities held by such Holders, respectively.
No  Registrable  Securities  excluded  from  the  underwriting  by reason of the
underwriter's  marketing  limitation  shall  be  included  in such registration.

     (d)  Each  Holder  of  Conversion  Shares  to  be  sold  pursuant  to  any
Registration  Statement (each, a "DISTRIBUTING HOLDER") shall severally, and not
jointly,  indemnify  and  hold harmless the Company, its officers and directors,
each  underwriter  and  each  person,  if any, who controls the Company and such
underwriter,  against  any  loss,  claim, damage, expense or liability, joint or
several,  as  incurred,  to  which  any  of  them  may  become subject under the
Securities  Act  or  any other statute or at common law, in so far as such loss,
claim,  damage,  expense or liability (or actions in respect thereof) arises out
of  or  is  based  upon  any untrue statement or alleged untrue statement of any
material  fact  contained  in  any  such Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto,  or  any  omission or alleged omission to state therein a material fact
required  to  be  stated therein or necessary to make the statements therein, in
light  of  the circumstances under which they were made, not misleading, in each
case  to  the  extent,  but  only  to  the extent, that such untrue statement or
alleged  untrue  statement  or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Distributing Holder specifically for use therein. Such Distributing Holder shall
reimburse  the  Company,  such  underwriter  and  each such officer, director or
controlling person for any legal or other expenses reasonably incurred by any of
them  in  connection  with  investigating  or  defending  any such liability, as
incurred.  Notwithstanding  the  foregoing,  such indemnity with respect to such
preliminary  prospectus  or such final prospectus shall not inure to the benefit
of  the  Company,  its  officers  or  directors,  or  such  underwriter (or such
controlling  person  of  the Company or the underwriter) if the person asserting
any such loss, claim, damage, expense or liability purchased the securities that
are  the  subject thereof and did not receive a copy of the final prospectus (or
the  final  prospectus  as then amended, revised or supplemented) at or prior to
the time such furnishing is required by the Securities Act in any case where any
such  untrue  statement  or  omission  of  a  material  fact  contained  in  the
preliminary  prospectus  was corrected in the final prospectus (or, if contained
in  the  final  prospectus, was subsequently corrected by amendment, revision or
supplement).

7.  PUBLIC  OFFERING LOCK-UP. In connection with any public registration of this
Company's securities, the Holder (and any transferee of Holder) agrees, upon the
request  of  the  Company  or  the  underwriter(s) managing such offering of the
Company's  securities,  not  to  sell,  make  any short sale of, loan, grant any
option  for  the  purchase  of,  or  otherwise  dispose of the Conversion Shares
without the prior written consent of the Company and such underwriter(s), as the
case  may  be,  for  a period of time not to exceed on hundred eighty (180) days
from the effective date of the registration. Upon request by the Company, Holder
(and  any  transferee  of  Holder) agrees to enter into any further agreement in
writing  in  a  form  reasonably  satisfactory  to  the  Company  and/or  such
underwriter(s).  The  Company may impose stop-transfer instructions with respect
to  the  securities  subject to the foregoing restrictions until the end of said
180-day  period.  Any  Conversion  Shares  shall  bear  an  appropriate  legend
referencing  this  lock-up  provision.

8.  PROCEEDINGS.  In  the  event  that  any  cause  of action, litigation, legal
proceeding  or  arbitration  proceeding arises out of or in any way results from
this  Conversion  Agreement  for  or  acquisition of Series D Preferred Stock or
Conversion  Shares  (collectively, the "PROCEEDING") in which the undersigned is
an  adverse  party to the Company or any director, officer or controlling person
thereof,  the  undersigned  agrees  that:

                                        6

<PAGE>

     (a)  he  will  produce, upon the Company's request such statements, returns
and  purchase  and sale information as are directly relevant and material to his
investment  sophistication,  knowledge  and experience in business and financial
matters,  ability  to evaluate the risks and merits of investing in the Series D
Preferred  Stock  and  his  status  as  an  accredited  investor;  and  that

     (b)  the  party  or parties not prevailing in such Proceeding shall pay all
costs  whatever,  including reasonable attorney fees, incurred in the defense or
prosecution  of  any such Proceeding by the party or parties therein prevailing,
it  being  further agreed that the undersigned will pay all costs and reasonable
attorney  fees  incurred  by  any officer, director or controlling person of the
Company  who or which prevails in the defense of any Proceeding initiated by the
undersigned.  The  undersigned  further admits and agrees that the documents and
records  to  be produced pursuant to subparagraph (a) of this Section 8 will not
pose  an  undue burden upon him nor unduly intrude upon his right of privacy and
are necessary to the defense of the Proceeding by the Company and any directors,
officers  or  controlling  persons  thereof  involved  in  the  Proceeding.

9.     ACCREDITED  INVESTOR  STATUS.  The  following  categories set forth below
indicate  my  accreditation  status. I have indicated my accreditation status by
initialing  all  applicable  blanks:

     TO  BE  COMPLETED  BY  U.S.  PERSONS  ONLY
     ------------------------------------------
A  AND  B  ARE  APPLICABLE  TO  INDIVIDUALS  (Please INITIAL applicable blanks):

<TABLE>
<CAPTION>
<S>              <C>

A.    ____  The  undersigned  is  a  natural  person and has a net worth, either
            alone  or  with  the  undersigned's  spouse,  of  more  than $1,000,000, and the
            undersigned's  investment  does not exceed ten percent (10%) of his net worth or
            joint  net  worth  with  the  undersigned's  spouse.

B.    ____  The  undersigned  is  a  natural  person and had income in excess of
            $200,000  ($300,000  including income of spouse) during each of the previous two
            years and reasonably expects to have income in excess of such amounts during the
            current year, and the undersigned's investment does not exceed ten percent (10%)
            of  his  net  worth  or  joint  net  worth  with  the  undersigned's  spouse.

     C  THROUGH  K  ARE APPLICABLE TO NON-INDIVIDUALS (Please INITIAL applicable
blanks):

C.  ____   The  undersigned  is  a  bank  as  defined  in Section 3(a)(2) of the
           Securities  Act.


D.  ____   The  undersigned  is  a  savings  and  loan  association  or  other
           institution  as  defined  in  Section  3(a)(5)(A) of the Securities Act, whether
           acting  in  its  individual  or  fiduciary  capacity.

E.  ____   The  undersigned is an insurance company as defined in Section 2(13)
           of  the  Securities  Act.

F.  ____   The  undersigned  is  an  investment  company  registered  under the
           Investment  Company  Act of 1940 or a business development company as defined in
           Section  2(a)(48)  of  the  Investment  Company  Act  of  1940.

G.  ____   The  undersigned  is a Small Business Investment Company licensed by
           the  U.S. Small Business Administration under Section 301(c) or (d) of the Small
           Business  Investment  Act  of  1958.

H.  ____   The  undersigned  is  an employee benefit plan within the meaning of
           the  Employee  Retirement  Income Security Act of 1974 ("ERISA") that either (i)
           has  its  investment  decisions  made by a plan fiduciary, as defined by Section
           3(21)  of ERISA, which is either a bank, savings and loan association, insurance
           company  or registered investment adviser, or (ii) has total assets in excess of
           $5,000,000,  or  (iii)  is  a self-directed plan, with investment decisions made
           solely  by  persons  that  are  accredited  investors  as  described  herein.

I.  ____   The undersigned is a private business development company as defined
           by  Section  202(a)(22)  of  the  Investment  Advisors  Act  of  1940.

                                        7

<PAGE>

J.  ____   The undersigned is an organization described in Section 501(c)(3) of
           the  Internal Revenue Code, not formed for the specific purpose of acquiring the
           Stock,  with  total  assets  in  excess  of  $5,000,000.

K.  ____   The  undersigned  is an entity in which all of the equity owners are
           accredited  investors  within  categories  A  through  J  above.

</TABLE>
           I AM NOT AN ACCREDITED INVESTOR (none of the above apply):

                    ______  I AM NOT an accredited investor.

 NON U.S. PERSONS.  Noteholder, if purchasing in reliance upon Regulation  S:

(a)     Is  not  a  U.S.  Person  (as  defined  in  Regulation  S) and is not an
affiliate  of  the  Company.

(b)     Is  located  outside the United States, its territories and possessions.

(c)     Will  not,  during  the  period  commencing  on  the closing date of the
conversion  and  ending on the day one year (1) year thereafter (the "RESTRICTED
PERIOD"), offer or sell the Series D Preferred Stock or the Conversion Shares in
the  United  States,  its territories or possessions, or to a U.S. Person or for
the account or benefit of a U.S. Person (other than distributors), other than in
accordance  with  Rule  903  or  904  of  Regulation  S.

(d)     Will, after the expiration of the Restricted Period, offer, sell, pledge
or  otherwise transfer the Series D Preferred Stock and/or the Conversion Shares
only pursuant to registration under the Securities Act or an available exemption
therefrom  and,  in  any  case,  in accordance with applicable state and foreign
securities  laws.

(e)     None of the Noteholder, its affiliates or any person acting on behalf of
the  Noteholder  or  any  such  affiliate  has  engaged,  or will engage, in any
Directed Selling Efforts with respect to the Series D Preferred Stock and/or the
Conversion Shares or any distribution, as that term is used in the definition of
Distributor  in  Rule  902  of  Regulation  S,  with  respect  thereto.

(f)     The transactions contemplated herein (a) have not been pre-arranged with
a purchaser located in the United States, its territories or possessions, or who
is  a  U.S.  Person  and  (b)  are  not  a part of a plan or scheme to evade the
registration  provisions  of  the  Securities  Act.

(g)     The  Noteholder  is  acquiring  the  Series D Preferred Stock and/or the
Conversion  Shares for its own account for the purpose of investment and not (a)
with  a view to, or for sale in connection with, any distribution thereof or (b)
for  the  account  or  on  behalf  of  any  U.S.  Person.

(h)     The Noteholder is not a corporation that has been formed principally for
the  purpose of investing in securities not registered under the Securities Act.

(i)     Neither  the  Company  nor  any  person acting on its behalf made to the
Noteholder or any person acting on its behalf in the United States any statement
conveying  a  purpose  or intent to sell the Series D Preferred Stock and/or the
Conversion  Shares  to  the  Noteholder.  The  person  executing this Conversion
Agreement  on  behalf  of  the  Noteholder  was  outside  the United States, its
territories  and  possessions  at  the  time  of  such  execution.

(j)     Neither  the Noteholder, any affiliate of the Noteholder, nor any person
acting  on  their  behalf  has  undertaken  or  carried out any activity for the
purpose  of,  or  that  could  reasonably  be  expected  to  have the effect of,
conditioning  the  market  in the United States, its territories or possessions,
for  any  of  the  Series  D  Preferred  Stock  and/or  the  Conversion  Shares.

(k)     If  the  Noteholder offers and sells the Series D Preferred Stock and/or
the  Conversion Shares during the Restricted Period, then it will do so only; in

                                        8

<PAGE>
accordance with the provisions of Regulations S; pursuant to registration of the
Stock  under  the Securities Act; or pursuant to an available exemption from the
registration  requirements  of  the  Securities  Act.

11.     FINANCIAL SOPHISTICATION.  I have prior investment experience, including
investments  in non-registered securities, or have employed the services of
an  investment  advisor,  attorney  or  accountant  to read all of the documents
furnished  or made available by the Company and to evaluate the merits and risks
of  an  investment in the Series D Preferred Stock on my behalf. I recognize the
highly  speculative  nature  of this investment, and that I must be able to bear
and  am  able  to  bear  the  economic  risk  I  hereby  assume

12.     CITY  AND  STATE  INFORMATION.  This  Conversion  Agreement for Series D
Preferred  Stock  was  made  by  me  solely  in  the:

     CITY  of  (please  print)  _____________________________

     STATE  of (please  print)  _____________________________

13.     TYPE  OF  OWNERSHIP  (check  one):

_____  Individual                 ____ Estate  of  a  deceased  person
_____  Joint  Tenants  WROS       ____ Fiduciary  of  discretionary account
_____  Tenants  in  Common        ____ Corporation  (A.G.,  S.A.)
_____  Investment  Club          _____ Limited  Partnership
_____  Community  Property        ____ Limited  Liability  Partnership  (LLP)
_____  Trust                      ____ General  Partnership
_____  Foundation  (or  Stiftung) ____ Limited Liability Company (or GmbH, SARL)
_____  Bank,  Thrift, Sav. & Loan ____ Mutual Fund, Closed-End Fund, Unit Trust
_____  Other  (describe:____________________________________________ )

14.     ARBITRATION.  Any  controversy  or  claim  relating  to  this Conversion
Agreement  or  my  investment  in the Series D Preferred Stock shall be resolved
before  a  panel of three arbitrators selected pursuant to and run in accordance
with the rules then prevailing of the American Arbitration Association. Any such
arbitration shall be held in San Diego, California. The prevailing party in
the  arbitration  shall  be  entitled to an award of all expenses and reasonable
attorneys'  fees  incurred  in  bringing  or  defending  the  arbitration.

15.     BLUE  SKY  QUALIFICATION.  Undersigned's  right to purchase Shares under
this  Conversion  Agreement  are  expressly  conditioned upon the exemption from
qualification  of  the  offer and sale of the Shares from applicable Federal and
State  securities  laws.  The  Company  shall  not  be  required to qualify this
transaction  under  the  securities  laws  of  any  jurisdiction  and,  should
qualification  be  necessary,  the  Company  shall  be released from any and all
obligations  to  maintain its offer, and may rescind any sale contracted, in the
jurisdiction.

16.     USE  OF  PRONOUNS.  All  pronouns and any variations thereof used herein
shall  be deemed to refer to the masculine, feminine, neuter, singular or plural
as  the  identity  of  the  person  or  persons  referred  to  may  require.

17.     MISCELLANEOUS.

     (a)  I  agree  not  to transfer or assign this Conversion Agreement, or any
interest herein, and further agree that any transfer or assignment of the Series
D  Preferred  Stock  or  Conversion Shares shall be made only in accordance with
this  Conversion Agreement and all applicable laws. I agree that this conversion
is  irrevocable  and  that I may not cancel, terminate or revoke this Conversion
Agreement  or  any  agreement  made  by  me  hereunder.

     (b) Notwithstanding any of the representations, warranties, acknowledgments
or  agreements  made herein by me, I do not thereby or in any other manner waive
any rights granted to me under federal or state securities laws. I stipulate and
agree,  however, that the operation of this Conversion Agreement will not result
in  a  waiver  of  such  rights.  All representations, warranties, covenants and
undertakings made by me in this Conversion Agreement shall survive the Company's
acceptance  of  this  Conversion  Agreement and the issuance and delivery of the
Series  D  Preferred  Stock  and  Conversion  Shares.

                                        9

<PAGE>

     (c)  This  Conversion  Agreement constitutes the entire agreement among the
parties  hereto  with  respect  to  the  subject  matter  hereof  and, except as
otherwise  set forth in Section 17(i), may be amended only by a writing executed
by  both  parties.  This  Conversion  Agreement  shall be enforced, governed and
construed in all respects in accordance with the laws of the State of California
applicable  to  contracts between residents of such state entered into and to be
performed  entirely  within  such  state.

     (d)  I  acknowledge  that  this Conversion Agreement does not constitute an
offer  to  me  to  buy, an offer of sale, or solicitation of an offer to buy the
Series D Preferred Stock, and that I shall have no right whatever to Convert the
Notes  and  acquire any Series D Preferred Stock until this Conversion Agreement
affirmatively  is  accepted by the Company. Neither the mere passage of time nor
failure  of  the  Company  to  reject this Conversion Agreement shall constitute
acceptance  hereof.

     (e)  Wherever  the  pronouns  he,  his  or  him  appear  in this Conversion
Agreement,  they  shall  include  the feminine and neuter genders as well as the
masculine  and  apply  equally to individual and entity undersigneds, unless the
context  clearly  requires  otherwise.

     (f)  Notices  between the parties shall be effective only if in writing and
delivered: if to the Company, to the address on the first page hereof; and if to
me,  to  the  address on the signature page hereof; or to any subsequent address
provided  in  writing  by  either  party.

     (g)  This  Conversion  Agreement  shall  be  binding  upon and inure to the
benefit  of  the  parties and their respective heirs, administrators, executors,
legal  representatives,  successors  and  permitted  assigns.  By executing this
Conversion Agreement, I represent that I have carefully read it in its entirety.

     (h)  I  understand  and  acknowledge  that  this  conversion  for  Series D
Preferred  Stock  shall be irrevocable until accepted or rejected by the Company
(other than described in Paragraph 2), that it may not be canceled or revoked by
me and that upon the Company's acceptance of this Conversion Agreement I will be
legally  bound  to take the Series D Preferred Stock on the terms and conditions
set  forth  herein.

     (I)  NOTEHOLDER  ACKNOWLEDGES  THAT  THIS  CONVERSION  AGREEMENT  IS ONE OF
SEVERAL  AGREEMENTS  (COLLECTIVELY,  THE  "CONVERSION AGREEMENTS") BEING ENTERED
INTO  WITH  OTHER  NOTEHOLDERS  (COLLECTIVELY  TOGETHER  WITH  NOTEHOLDER,  THE
"NOTEHOLDERS")  WITH  RESPECT  TO  THE  CONVERSION BY THE COMPANY OF EACH OF THE
OUTSTANDING  NOTES  INTO  SERIES  D  PREFERRED  STOCK.  ACCORDINGLY,  NOTEHOLDER
EXPRESSLY  ACKNOWLEDGES  THAT  THE  COMPANY  HAS  MADE  CERTAIN  AGREEMENTS  AND
COMMITMENTS  HEREUNDER  THAT  ALSO  WERE  MADE  BY  THE  COMPANY  TO  THE  OTHER
NOTEHOLDERS AND, IN CONNECTION THEREWITH, EXPRESSLY AGREES THAT IT WILL AMEND OR
MODIFY  THIS  CONVERSION  AGREEMENT  AND/OR WAIVE THE OBLIGATIONS OF THE COMPANY
HEREUNDER  IN  ACCORDANCE WITH (AND AS DETERMINED BY) THE WRITTEN CONSENT OF THE
HOLDERS OF AT LEAST FIFTY-ONE PERCENT (51%) IN THE AGGREGATE PRINCIPAL AMOUNT OF
THE  NOTES  OUTSTANDING  AND THAT SUCH WRITTEN CONSENT SHALL CONSTITUTE A VALID,
BINDING  AND  ENFORCEABLE AMENDMENT, MODIFICATION OR WAIVER HEREUNDER WHETHER OR
NOT  NOTEHOLDER  ITSELF  ACTUALLY  CONSENTS  THERETO.

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

                                       10

<PAGE>

IN WITNESS WHEREOF, I the undersigned Noteholder, or a person duly authorized to
act  for me in the premises, has executed this Conversion Agreement by signature
on  the  following  Signature  Page  and initialed this and every preceding page
hereof  on  the  date  first  above  written,  in the City and State shown under
Section  12  of  this  Conversion  Agreement  above.

                             *** Signature Page ***

                          INDIVIDUAL NOTEHOLDERS ONLY:
           (Not Corporations, Partnerships, Trusts or other entities)


SIGNATURE               _____________________________________________

Print  Name of Noteholder          _____________________________________________

Residence  Address     _________________________________________________________

___________________________________________________________________________

Fax  No(          )-
       ____________________________________________________________________

Home  Telephone  No.  (          )            -
Work  Telephone  No.( _________________________________ )
Social  Security  Number     ___________________________________________
(First  listed  person's  number,  if  more  than  person  is  completing)

                    COMPANY OR OTHER ENTITY NOTEHOLDERS ONLY:


Print  Name  of  Noteholder  (Company/Entity  Name)   _____________________


AUTH.  PERSON'S  SIGNATURE                 ________________________________

Authorized  Person's  Name  &  Title  (Print) _____________________________

Address  of  Principal  Office ____________________________________________

Organized  under  laws  of  State  or  Country ____________________________

Telephone     (          )             -     Fax  No.  (     )           -

Federal  Tax  I.D.  Number   ________________________________

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

                    NOTEHOLDER: DO NOT WRITE BELOW THIS LINE

Accepted:  __________                         X _________________________
                                                  SIGNATURE

Rejected:  _______                         Name: ________________________

DATED,  _________________  2002__     Title:  ___________________________



                                       11

<PAGE>