Exhibit 4.40




	




Exhibit 4.40  



(ALL AMOUNTS IN U.S.
DOLLARS) 



E.DIGITAL CORPORATION 



PROMISSORY NOTE 










	Note Date: September 11, 2002
San
Diego, California	US $750,000 






	


FOR VALUE RECEIVED, e.Digital
Corporation, the undersigned Delaware corporation (together with all successors, the
“Company”), hereby promises to pay to Davric Corporation, or order
(“Noteholder”) at 980 American Pacific Drive, Suite #111 Henderson, NV 89014, or
at such other address as Noteholder may subsequently designate in writing to the Company,
the principal sum of Seven Hundred Fifty Thousand Dollars ($750,000.00), together with
interest on unpaid principal as provided below. 



        The
following is a statement of the rights of the Noteholder and the conditions to which this
Note is subject, and to which the Noteholder, by the acceptance of this Note, agrees: 



         1.       
          The unpaid principal balance of this Note outstanding from time to time shall
          bear interest from the date hereof until paid at a rate equal to the lower of
          (a) fifteen percent (15%) per annum; or (b) the maximum legal rate permitted
          under applicable law. Notwithstanding the foregoing, however, during any period
          during which there is an uncured Event of Default, as defined below, the unpaid
          principal balance of this Note outstanding from time to time during that period
          shall bear interest at a rate equal to the lower of (i) eighteen percent (18%)
          per annum; or (b) the maximum legal rate permitted under applicable law.
          Interest shall be computed on a 360 day year and 30 day months. 



         2.       
          Principal and interest on this Note shall be paid in sixteen (16) equal monthly
          installments of Fifty Thousand Dollars ($50,000) each, commencing on October 11,
          2002 and continuing on the same day of each calendar month thereafter to and
          including January 11, 2004, and a final payment of Thirty-Five Thousand Eight
          Hundred Dollars and Ninety-Six Cents ($35,800.96) on February 11, 2004;
          provided, however, that if any of the foregoing dates for any monthly
          installment falls on a weekend or national holiday, the due date for that
          installment shall be the following business day. Any payment shall be deemed
          timely made if received by Noteholder within fifteen (15) calendar days of the
          due date. All payments made on this Note shall be applied first to accrued
          interest, and the balance of such payment, if any, shall be applied to
          principal, and interest shall thereupon cease upon the principal so credited. 



         3.       
          An “Event of Default” shall occur if (a) the Company does not make any
          monthly installment on this Note when the same becomes due and payable and such
          default shall continue for a period of fifteen (15) calendar days; or (b)
          pursuant to or within the meaning of any Bankruptcy Law (as hereinafter
          defined), the Company: (i) commences a voluntary case; (ii) consents to the
          entry of an order for relief against it in an involuntary case; (iii) consents
          to the appointment of a Custodian (as hereinafter defined) of it or for all or
          substantially all of its property; (iv) makes a general assignment for the
          benefit of its creditors; or (v) a court of competent jurisdiction enters an
          order or decree under any Bankruptcy Law that: (A) is for relief against the
          Company in an involuntary case; (B) appoints a Custodian of the Company or for
          all or substantially all of its property; or (C) orders the liquidation of the
          Company, and any such order or decree remains unstayed and in effect for a
          period of sixty (60) days. As used herein, the term “Bankruptcy Law”
          means Title 11 of the United States Code or any similar federal or state law for
          the relief of debtors. The term “Custodian” means any receiver,
          trustee, assignee, liquidator or similar official under any Bankruptcy Law. 






















	





         4.       
          If an Event of Default occurs and is continuing, the Noteholder, by written
          notice to the Company, may declare the principal of and accrued interest on this
          Note to be due and payable immediately. 



         5.       
          The Company may prepay this Note at any time and from time to time, in whole or
          in part, without premium or penalty. Upon payment in full of the principal
          amount of this Note and interest thereon, the Noteholder shall surrender this
          Note for cancellation. 



         6.       
          If the indebtedness represented by this Note or any part thereof is collected in
          bankruptcy, receivership or other judicial proceedings or if this Note is placed
          in the hands of attorneys for collection after an Event of Default, the Company
          agrees to pay, in addition to the principal and interest payable hereunder,
          reasonable attorneys’ fees and costs incurred by the Noteholder. 



         7.       
          Any notice, demand, consent or other communication hereunder shall be in writing
          addressed to the Company at its principal office or, in the case of the
          Noteholder, at the Noteholder’s address appearing above, or to such other
          address as such party shall have theretofore furnished by like notice, and
          either served personally, sent by express, registered or certified first class
          mail, postage prepaid, sent by facsimile transmission, or delivered by reputable
          commercial courier. Such notice shall be deemed given (a) when so personally
          delivered, or (b) if mailed as aforesaid, five (5) days after the same shall
          have been posted, or (c) if sent by facsimile transmission, as soon as the
          sender receives written or telephonic confirmation that the message has been
          received and such facsimile is followed the same day by mailing by prepaid first
          class mail, or (d) if delivered by commercial courier, upon receipt. 



         8.       
          The Company hereby waives presentment, demand for performance, notice of
          non-performance, protest, notice of protest and notice of dishonor. No delay on
          the part of Noteholder in exercising any right hereunder shall operate as a
          waiver of such right or any other right. 



         9.       
          This Note shall be governed by and construed 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. 



         10.       
          Each provision of this Note shall be interpreted in such manner as to be
          effective and valid under applicable law, but if any provision of this Note is
          held to be prohibited by or invalid under applicable law, such provision shall
          be ineffective only to the extent of such prohibition or invalidity, without
          invalidating the remainder of this Note. 



        IN
WITNESS WHEREOF, the Company has executed this Note and has affixed hereto
its corporate seal. 










			E.DIGITAL CORPORATION,
a Delaware corporation







			By:

       Alfred H. Falk

       Chief Executive Officer 	






	




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