EXHIBIT 4.4.6

                              E.DIGITAL CORPORATION

         12% SUBORDINATED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT






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                              E.DIGITAL CORPORATION

         12% SUBORDINATED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

      This 12% SUBORDINATED  PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT (the
"AGREEMENT")  is entered  into by and among  e.Digital  Corporation,  a Delaware
corporation (the "COMPANY"),  and each of those persons and entities,  severally
and not  jointly,  whose  names  are set  forth on the  Schedule  of  Purchasers
attached  hereto as  Exhibit  A (which  persons  and  entities  are  hereinafter
collectively   referred  to  as   "PURCHASERS"   and  each   individually  as  a
"PURCHASER").

                                    RECITALS

      Whereas,  the Company has authorized the sale and issuance of an aggregate
of up to One Million Dollars  ($1,000,000) of 12% Subordinated  Promissory Notes
(the  "NOTES")  and  warrants  to  purchase  an  aggregate  of up to two million
(2,000,000)  shares of its Common Stock (the  "WARRANTS,"  and together with the
Notes, the "Securities");

      Whereas,  Purchasers  desire to purchase the  Securities  on the terms and
conditions set forth herein; and

      Whereas,  the  Company  desires  to  issue  and  sell  the  Securities  to
Purchasers on the terms and conditions set forth herein.

      NOW, THEREFORE,  in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:

      1. AGREEMENT TO SELL AND PURCHASE

            1.1. AUTHORIZATION OF SHARES. On or prior to the Closing (as defined
in Section 2 below), the Company shall have authorized (i) the sale and issuance
to Purchasers of the  Securities  and (ii) the issuance of such shares of Common
Stock to be issued upon  exercise of the Warrants (the  "WARRANT  SHARES").  The
Securities and the Warrant Shares shall have the rights, preferences, privileges
and  restrictions  set  forth in the  respective  documents,  herein  and in the
Company's Certificate of Incorporation and Bylaws.

            1.2. SALE AND PURCHASE.  Subject to the terms and conditions hereof,
at the Closing or Closings (as hereinafter defined) the Company hereby agrees to
issue and sell to each Purchaser,  severally and not jointly, and each Purchaser
agrees to purchase from the Company,  severally and not jointly,  a Note, in the
form  attached  hereto as  Exhibit  B, in the  amount  set forth  opposite  such
Purchaser's  name on Exhibit A, and a Warrant,  in the form  attached  hereto as
Exhibit C, to purchase the number of shares of Common  Stock set forth  opposite
such Purchaser's name on Exhibit A.

      2. CLOSING, DELIVERY AND PAYMENT

            2.1. CLOSING. The closing of the sale and purchase of the Securities
under this Agreement (the  "CLOSING")  shall take place at 2:00 p.m. on the date
hereof,  at the offices of the Company at 13114 Evening  Creek Drive South,  San
Diego,  California  92128 or at such  other  time or place  as the  Company  and
Purchasers  may  mutually  agree  (such date is  hereinafter  referred to as the
"CLOSING DATE").

            2.2. DELIVERY.

                  2.2.1.  Each  Purchaser  shall pay the purchase  price for the
Securities  as set forth  next to such  Purchaser's  name on Exhibit A hereto by
delivering  immediately available funds in United States Dollars to the Company.
Promptly following  execution of this Agreement by each party and payment by the
Purchaser to the Company of the purchase  price for the  Securities as set forth
next to such  Purchaser's  name on  Exhibit  A, but in no event  later than five
business days after such payment, the Company shall deliver a duly executed Note
and Warrant,  registered in the name of such  Purchaser,  to the Purchaser.  The
Notes and  Warrants  shall be dated as of the date the Company is credited  with
readily  available  funds accepted by the Company,  irrespective  of the Closing
Date. The Company may reject and return any funds received  within five business
days,  in whole or in part,  for any  reason in its sole  discretion  and in the
event of  over-subscription  for the  Securities  may  prorate  the Notes  among
subscribers  in any manner the Company  deems  necessary  or  advisable.


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                  2.2.2.  METHOD OF PAYMENT.  Payment of the purchase  price for
the  Securities  shall  be made  by  check  payable  to the  Company,  in a form
acceptable to the Company, or by wire transfer of funds to:

                               First National Bank
                              1004 Rosecrans Street
                           San Diego, California 92106
                             ABA # 1 2 2 2 3 8 9 3 8
                      For Account of: e.Digital Corporation
                            Account # 8 2 2 1 3 4 5 5

            2.3.  SUBSEQUENT  SALES OF SECURITIES.  Pursuant to the terms of the
offering,  the Company need not sell any minimum  amount of Securities  prior to
Closing  and the Company may have  multiple  closings.  At any time on or before
June 30, 2004,  the Company may sell up to the balance of the  authorized  Notes
and  Warrants  not sold at prior  Closings to such persons as may be approved by
the Board of Directors of the Company.  The Company at its discretion may extend
the final Closing by ten days if necessary.  All such sales shall be made on the
terms and conditions set forth in this Agreement, including, without limitation,
the  representations and warranties by such Purchasers as set forth in Section 4
and  agreements  provided in Section 7. Any Notes  pursuant to this  Section 2.3
shall be deemed  to be  "Notes"  for all  purposes  under  this  Agreement,  any
Warrants  sold pursuant to this Section 2.3 shall be deemed  "Warrants"  for all
purposes under this Agreement,  and any purchasers thereof shall be deemed to be
"Purchasers"  for all purposes under this  Agreement.  For  subsequent  sales of
Notes and  Warrants,  they shall be dated as of the date the Company is credited
with  readily  available  funds  accepted by the  Company,  irrespective  of the
subsequent  Closing Date.  The Company may reject and return any funds  received
within  five  business  days,  in whole or in part,  for any  reason in its sole
discretion and in the event of over-subscription  for the Securities may prorate
the Notes  among  subscribers  in any  manner the  Company  deems  necessary  or
advisable.

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            The Company  hereby  represents and warrants to each Purchaser as of
the date of this Agreement as follows:

            3.1. 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  Agreement and the Notes and Warrants and to issue and sell the  Securities
and the Warrant  Shares and to carry out the provisions of this  Agreement,  the
Notes and the Warrants 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.

            3.2.  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.

            3.3. CAPITALIZATION;  VOTING RIGHTS. The authorized capital stock of
the Company consists of 200,000,000  shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of preferred stock, par value $.001 per share. As of
June 7, 2004 the Company  had 145,000  shares of  convertible  voting  preferred
stock outstanding  designated as Series D Preferred Stock and 8,620.50 shares of
convertible voting preferred stock outstanding  designated as Series E Preferred
Stock. As of June 15, 2004, the Company had  162,914,541  shares of Common Stock
outstanding.  An  additional  7,569,632  shares of Common Stock are reserved for
future  issuance  under the  Company's  stock  option  grants  and  pursuant  to
convertible securities, options and warrants as summarized below:


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                                                            Authorized Common
                                                             Shares Reserved
                                                           For Future Issuance

         Outstanding Stock Option Grants                         4,136,665
         Stock Purchase Warrants                                 1,452,355
         Series D & E Preferred Stock                           10,713,912
         Total Unissued but Reserved for Issuance               16,302,932

      Accordingly,  the Company has either  outstanding or reserved an aggregate
of 179,217,473 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 Agreement,
the  Notes  and the  Warrant  Shares  will be  validly  issued,  fully  paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Notes,  Warrants and the Warrant 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.

            3.4.  RESERVATION  OF  SHARES.  The  Warrant  Shares  issuable  upon
exercise of the  Warrants  have been duly  authorized  and  reserved  for future
issuance.

            3.5. AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers,  directors and stockholders necessary for the
authorization of this Agreement and the Notes and the Warrants,  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 Warrant  Shares on exercise  of the  Warrants  has been
taken or will be taken prior to the Closing. The Agreement and the Notes and the
Warrants, when executed and delivered,  will be valid and binding obligations of
the Company enforceable in accordance with their 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 Securities and the subsequent  exercise of the Warrants into Warrant
Shares  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.

            3.6. SEC REPORTS AND FILINGS. The Company has delivered to Purchaser
a complete and accurate copy (excluding copies of exhibits) of its Annual Report
on Form 10-K for the fiscal  year ended  March 31,  2003,  the latest  Quarterly
Report on Form 10-Q for the period ended December 31, 2004 and definitive  proxy
statement  filed by the Company on October 23, 2003 (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
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  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.

            3.7. 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.


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            3.8.  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 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.  The
Company is in compliance  with all material terms of each lease to which it is a
party or is otherwise bound.

            3.9.  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 Agreement,
the Notes and the Warrants, and the issuance and sale of the Securities pursuant
hereto and of the Warrant 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.

            3.10.   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 Agreement or the
Warrants or the right of the Company to enter into any of such agreements, 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.  Notwithstanding the foregoing,
in April 2004,  the Company filed a demand for  arbitration  against  Eclipse by
Fujitsu Ten for  numerous  breaches  of the  contract  signed by Eclipse.  These
breaches include  cancellation of the initial  non-cancelable  order,  breach of
implied  covenant of good faith and fair dealing,  and  misappropriation  of our
intellectual property,  confidential,  proprietary and trade secret information.
As of the date hereof, the arbitration remains pending.

            3.11. 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.

            3.12.  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  Agreement and the
issuance of the Securities or the Warrant  Shares,  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 THE PURCHASERS.

      Each Purchaser hereby represents and warrants to the Company as follows:


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            4.1.  REQUISITE  POWER AND  AUTHORITY.  Purchaser  has all necessary
power and  authority  under all  applicable  provisions  of law to  execute  and
deliver  this  Agreement  and  to  carry  out  its  provisions.  All  action  on
Purchaser's  part  required  for  the  lawful  execution  and  delivery  of this
Agreement has been or will be effectively  taken prior to the Closing.  Upon its
execution and delivery, this Agreement will be a valid and binding obligation of
Purchaser,  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.

            4.2. INVESTMENT REPRESENTATIONS.  Purchaser understands that neither
the Securities nor the Warrant Shares have been registered  under the Securities
Act.  Purchaser also  understands that the Securities are being offered and sold
pursuant to an exemption from registration contained in the Securities Act based
in part upon Purchaser's  representations contained in the Agreement.  Purchaser
hereby represents and warrants as follows:

                  4.2.1.   PURCHASER   BEARS   ECONOMIC   RISK.   Purchaser  has
substantial   experience  in  evaluating  and  investing  in  private  placement
transactions  of  securities  in companies  similar to the Company so that it is
capable of evaluating  the merits and risks of its investment in the Company and
has the capacity to protect its own interests.  Purchaser must bear the economic
risk of this  investment  indefinitely  unless the  Securities  (or the  Warrant
Shares) are  registered  pursuant to the  Securities  Act, or an exemption  from
registration is available. Purchaser understands that other than pursuant to the
terms of this Agreement the Company has no present  intention of registering the
Securities, the Warrant Shares or any shares of its Common Stock. Purchaser also
understands  that there is no assurance  that any  exemption  from  registration
under the  Securities  Act will be available and that,  even if available,  such
exemption  may  not  allow  Purchaser  to  transfer  all or any  portion  of the
Securities or the Warrant Shares under the  circumstances,  in the amounts or at
the times Purchaser might propose.

                  4.2.2. ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Securities  and the Warrant  Shares for  Purchaser's  own account for investment
only, and not with a view towards their distribution.

                  4.2.3.   PURCHASER   CAN  PROTECT  ITS   INTEREST.   Purchaser
represents that by reason of its, or of its management's,  business or financial
experience,  Purchaser  has  the  capacity  to  protect  its  own  interests  in
connection  with  the  transactions  contemplated  in this  Agreement.  Further,
Purchaser  is aware of no  publication  of any  advertisement  or other  general
solicitation in connection with the transactions contemplated in the Agreement.

                  4.2.4. ACCREDITED INVESTOR. Purchaser represents that it is an
accredited  investor  within the meaning of Section 501(a) of the Securities Act
or not a U.S.  Person within the definition set forth in Regulation S and not an
affiliate of the Company.

                  4.2.5.  COMPANY  INFORMATION.  Purchaser has received and read
the SEC Documents and has had an opportunity to discuss the Company's  business,
management and financial affairs with directors,  officers and management of the
Company  and has had the  opportunity  to review the  Company's  operations  and
facilities.  Purchaser  has also had the  opportunity  to ask  questions  of and
receive  answers from,  the Company and its  management  regarding the terms and
conditions of this investment.

                  4.2.6.  RULE 144.  Purchaser  acknowledges and agrees that the
Securities,  and, if issued, the Warrant Shares must be held indefinitely unless
they are  subsequently  registered under the Securities Act or an exemption from
such  registration  is available.  Purchaser has been advised or is aware of the
provisions of Rule 144  promulgated  under the  Securities Act as in effect from
time to time,  which  permits  limited  resale of shares  purchased in a private
placement subject to the satisfaction of certain  conditions,  including,  among
other things:  the availability of certain current public  information about the
Company,  the resale occurring  following the required holding period under Rule
144 and the  number of shares  being  sold  during  any  three-month  period not
exceeding specified limitations.


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                  4.2.7. RESIDENCE. If the Purchaser is an individual,  then the
Purchaser resides in the country, state or province identified in the address of
the  Purchaser  set  forth on  Exhibit  A; if the  Purchaser  is a  partnership,
corporation,  limited  liability  company  or other  entity,  then the office or
offices of the Purchaser in which its investment decision was made is located at
the address or addresses of the Purchaser set forth on Exhibit A.

      5. CONDITIONS TO CLOSING.

            5.1.   CONDITIONS  TO   PURCHASERS'   OBLIGATIONS  AT  THE  CLOSING.
Purchasers' obligations to purchase the Securities at the Closing are subject to
the satisfaction, at or prior to the Closing Date, of the following conditions:

                  5.1.1.  REPRESENTATIONS  AND WARRANTIES  TRUE;  PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of the Closing  Date,
and the Company  shall have  performed all  obligations  and  conditions  herein
required to be performed or observed by it on or prior to the Closing.

                  5.1.2.  LEGAL  INVESTMENT.  On the Closing Date,  the sale and
issuance of the Securities and the proposed issuance of the Warrant Shares shall
be legally  permitted by all laws and  regulations  to which  Purchasers and the
Company are subject.

                  5.1.3. CONSENTS,  PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents,  permits and waivers necessary or appropriate for
consummation of the transactions  contemplated by the Agreement (except for such
as may be properly obtained subsequent to the Closing).

                  5.1.4.  RESERVATION  OF WARRANT  SHARES.  The  Warrant  Shares
issuable upon exercise of the Warrants shall be duly authorized and reserved for
issuance upon such exercise.

            5.2.  CONDITIONS  TO  OBLIGATIONS  OF  THE  COMPANY.  The  Company's
obligation  to issue and sell the  Securities  at the  Closing is subject to the
satisfaction,  on or prior to such Closing, of the following conditions:

                  5.2.1.    REPRESENTATIONS    AND    WARRANTIES    TRUE.    The
representations and warranties made by those Purchasers  acquiring Securities in
Section 4 hereof shall be true and correct in all material  respects at the date
of the  Closing,  with the same force and effect as if they had been made on and
as of said date.

                  5.2.2. PERFORMANCE OF OBLIGATIONS.  Such Purchasers shall have
performed and complied with all agreements and conditions  herein required to be
performed or complied with by such Purchasers on or before the Closing.

                  5.2.3. CONSENTS,  PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents,  permits and waivers necessary or appropriate for
consummation of the transactions  contemplated by the Agreement (except for such
as may be properly obtained subsequent to the Closing).

                  5.2.4.  PAYMENT.  The Company  shall have  obtained  collected
funds for the amount of the Notes purchased by the Purchaser.


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      6. REGISTRATION RIGHTS AND PUBLIC OFFERING LOCKUP

            6.1.  REGISTRATION  RIGHTS.  The Company is providing  the following
registration rights to the Purchasers in connection with the Warrant Shares:

                  6.1.1.  If, at any time from  issuance  to June 30,  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 Warrants  ("HOLDER")  and/or Warrant Shares
of its intention to do so. If the Holders of the Warrants  and/or Warrant Shares
notify the Company  within  twenty (20) days after receipt of any such notice of
its or their desire to include the shares of Common Stock issuable upon exercise
of  the  Warrant  or  the  Warrant  Shares   (collectively,   the   "REGISTRABLE
SECURITIES") in such proposed registration  statement,  the Company shall afford
the Holders of the Warrant  and/or  Warrant  Shares the  opportunity to have any
such Registrable  Securities registered under such registration statement at the
Company's sole cost and expense.

                  6.1.2.  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.

                  6.1.3.  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.

                  6.1.4.  Each Holder of Warrants and Warrant  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).

            6.2.  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 this
Warrant,  any of the  shares of Common  Stock  issuable  upon  exercise  of this
Warrant   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  shares  issued  upon
exercise of this  Warrant  shall bear an  appropriate  legend  referencing  this
lock-up provision.

      7. INTERCREDITOR AGREEMENT

      Each Note issued to a Purchaser is one of a duly authorized issue of Notes
of the Company  designated as its 12%  Subordinated  Promissory Notes limited in
aggregate principal amount to $1,000,000.  Each Purchaser understands and agrees
that a default is not an Event of  Default  (as  defined in the Note)  until the
holders  of at  least  25% in  aggregate  principal  amount  of the  Notes  then
outstanding  notify the Company of such default and the Company does not cure it
within  sixty (60) days after  receipt of such  notice,  which must  specify the
default,  demand that it be remedied and state that it is a "NOTICE OF DEFAULT."
If an Event of Default occurs and is continuing,  the Noteholder(s) by notice to
the Company,  may declare the principal of and accrued  interest on the Notes to
be due and payable immediately;  provided, however, that the holders of at least
51% in  aggregate  principal  amount of the Notes then  outstanding,  by written
notice  to  the  Company,  may  rescind  and  annul  such  declaration  and  its
consequences.

      The  Company  shall  only make  principal  reductions  pro rata  among the
Noteholders.  Likewise any Noteholder who receives any payments or proceeds from
any enforcement of a security  interest or any distribution in connection with a
bankruptcy,  liquidation,  reorganization,  dissolution,  winding-up  or similar
proceedings,  shall be  obligated  to pro rate  such  amounts  among  the  other
Noteholders of the series.

      8. MISCELLANEOUS.

            8.1. GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of  California  as such laws are applied to  agreements
between California residents entered into and performed entirely in California.

            8.2.  SURVIVAL.  The  representations,   warranties,  covenants  and
agreements made herein shall survive any investigation made by any Purchaser and
the  closing of the  transactions  contemplated  hereby.  All  statements  as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company  pursuant  hereto in connection  with the  transactions
contemplated  hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

            8.3. SUCCESSORS AND ASSIGNS.  Except as otherwise expressly provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties  hereto and shall  inure to the  benefit of and be  enforceable  by each
person who shall be a holder of the Securities from time to time.

            8.4. ENTIRE  AGREEMENT.  This Agreement,  the Note, the Exhibits and
Schedules hereto, the Warrants and the other documents delivered pursuant hereto
constitute the full and entire  understanding  and agreement between the parties
with regard to the subjects  hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.


                                       7
<PAGE>

            8.5.  SEVERABILITY.  In case any provision of the Agreement shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

            8.6. AMENDMENT AND WAIVER.

                  8.6.1. This Agreement may be amended or modified only upon the
written consent of the Company and holders of at least  fifty-one  percent (51%)
in the aggregate principal amount of the Notes outstanding.

                  8.6.2.  The  obligations  of the Company and the rights of the
holders of the Notes,  the Warrants and the Warrant  Shares under the  Agreement
may be waived only with the written consent of the holders of at least fifty-one
percent (51%) in the aggregate principal amount of the Notes outstanding.

            8.7. DELAYS OR OMISSIONS.  It is agreed that no delay or omission to
exercise  any right,  power or remedy  accruing  to any party,  upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right,  power or remedy,  nor shall it be  construed  to be a waiver of any
such breach, default or noncompliance,  or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver,  permit, consent or approval of any kind or character on
any  Purchaser's  part  of any  breach,  default  or  noncompliance  under  this
Agreement or any waiver on such party's part of any  provisions or conditions of
the  Agreement  must be in  writing  and shall be  effective  only to the extent
specifically  set  forth  in such  writing.  All  remedies,  either  under  this
Agreement,  or  otherwise  afforded to any party,  shall be  cumulative  and not
alternative.

            8.8. NOTICES.  All notices required or permitted  hereunder shall be
in writing and shall be deemed  effectively given: (a) upon personal delivery to
the party to be  notified;  (b) when sent by  facsimile  if sent  during  normal
business hours of the recipient, if not, then on the next business day; (c) five
(5) days after having been sent by registered or certified mail,  return receipt
requested,  postage prepaid;  or (d) one (1) day after deposit with a nationally
recognized  overnight  courier,  specifying  next  day  delivery,  with  written
verification of receipt.  All communications shall be sent to the Company at the
address  as set forth on the  signature  page  hereof  and to  Purchaser  at the
address set forth on Exhibit A attached  hereto or at such other  address as the
Company or Purchaser  may designate by ten (10) days advance  written  notice to
the other parties hereto.

            8.9.  EXPENSES.  Each party shall pay all costs and expenses that it
incurs with respect to the negotiation,  execution,  delivery and performance of
this Agreement,  the Notes and the Warrants.

            8.10.  ATTORNEYS'  FEES.  In the event  that any  dispute  among the
parties to this Agreement  should result in litigation,  the prevailing party in
such dispute shall be entitled to recover from the losing party all fees,  costs
and  expenses  of  enforcing  any right of such  prevailing  party under or with
respect to this Agreement,  including without  limitation,  such reasonable fees
and  expenses  of  attorneys  and  accountants,  which  shall  include,  without
limitation, all fees, costs and expenses of appeals.

            8.11.  TITLES  AND  SUBTITLES.   The  titles  of  the  sections  and
subsections  of the Agreement are for  convenience of reference only and are not
to be considered in construing this Agreement.

            8.12. COUNTERPARTS.  This Agreement may be executed at various dates
by the  Purchasers  through  June 30,  2004 in any  number of  counterparts,  by
facsimile,  or  both,  each of  which  shall  be an  original,  but all of which
together  shall  constitute  one  instrument.  Subsequent  sales  after  a first
Closing,  as  provided  in  Section  2.3,  shall be added to this  agreement  to
constitute one instrument binding on all parties thereto.


                                       8
<PAGE>

            8.13. BROKER'S FEES. No agent, broker,  investment banker, person or
firm acting on behalf of or under the  authority of such party hereto is or will
be entitled to any broker's or finder's fee or any other commission  directly or
indirectly in connection with the transactions  contemplated  herein. Each party
hereto further  agrees to indemnify  each other party for any claims,  losses or
expenses incurred by such other party as a result of the  representation in this
Section 8.13 being untrue.

            8.14. EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm, or corporation,  other than the Company
and its officers and  directors,  in making its investment or decision to invest
in the  Company.  Each  Purchaser  agrees that no Purchaser  nor the  respective
controlling persons, officers, directors,  partners, agents, or employees of any
Purchaser  shall be liable  for any  action  heretofore  or  hereafter  taken or
omitted to be taken by any of them in connection with the Securities,  Notes and
Warrant  Shares.  8.15.  PRONOUNS.   All  pronouns  contained  herein,  and  any
variations  thereof,  shall be deemed  to refer to the  masculine,  feminine  or
neutral,  singular  or plural,  as to the  identity  of the  parties  hereto may
require. 8.16. ARBITRATION.  Any controversy or claim relating to this Agreement
or investment in the Notes,  Warrants or Warrant Shares 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.

               (THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;
                      INDIVIDUAL SIGNATURE PAGE(S) FOLLOW)


                                       9
<PAGE>

                              EDIGITAL CORPORATION
                      SIGNATURE PAGE TO PURCHASE AGREEMENT

In Witness Whereof, the parties hereto have executed the 12% Subordinated
Promissory Note and Warrant Purchase Agreement as of June __, 2004.

COMPANY:                                           PURCHASER:

E.DIGITAL CORPORATION                              _____________________________
13114 Evening Creek Drive South                    Name
San Diego, California  92128

By: ____________________________                   By: _________________________
    Alfred H. Falk
    President and CEO                              Title: ______________________

                                                   Street Address: _____________

                                                   _____________________________

                                                   Phone #: ____________________

                                                   E-mail: _____________________

                                                   SS #:  ______________________

                                                   SUBSCRIPTION AMOUNT

                                                   $:___________________________

                              EDIGITAL CORPORATION
                      SIGNATURE PAGE TO PURCHASE AGREEMENT


                                       10
<PAGE>

                                LIST OF EXHIBITS

Schedule of Purchasers                                       Exhibit A

12% Subordinated Promissory Note                             Exhibit B

Warrant Agreement                                            Exhibit C


                                        i
<PAGE>


         12% SUBORDINATED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

                                    EXHIBIT A

                             SCHEDULE OF PURCHASERS

Name and Address                    Aggregate               Shares of Common
                              Purchase Price and Note       Stock Underlying
                                    Principal                    Warrant

                                [TO BE SUPPLIED]

Total:                            $___________                   __________


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