Document:

Exhibit 4.53

                 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

      THIS CONVERTIBLE  PREFERRED STOCK PURCHASE  AGREEMENT (this  "AGREEMENT"),
dated  as of  November  18,  2004,  is  entered  into  by  and  among  e.Digital
Corporation, a Delaware corporation (the "COMPANY"), and the investors signatory
hereto  (each  such  investor  is a  "PURCHASER"  and all  such  investors  are,
collectively, the "PURCHASERS").

      WHEREAS,  subject to the terms and  conditions set forth in this Agreement
and  pursuant to Section  4(2) of the  Securities  Act of 1933 (the  "SECURITIES
ACT"),  as amended,  the Company desires to issue and sell to the Purchasers and
the Purchasers,  severally and not jointly,  desire to purchase from the Company
(i) shares of the Company's 8% Series EE Convertible  Preferred Stock, par value
$.001 per share (the "PREFERRED  STOCK"),  which are convertible  into shares of
the Company's common stock, par value $.001 per share (the "COMMON STOCK"),  and
(ii) certain  other  securities  of the Company as more fully  described in this
Agreement.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy of which are hereby acknowledged,  the Company and the Purchasers agree
as follows:

                                    ARTICLE I
                                PURCHASE AND SALE

      1.1   The Closing.

            (a) The Closing (i) Subject to the terms and conditions set forth in
this  Agreement  the  Company  shall  issue and sell to the  Purchasers  and the
Purchasers  shall,  severally  and not  jointly,  purchase an aggregate of up to
20,000 shares of Preferred  Stock  ("SHARES")  and certain Common Stock purchase
warrants as described  below in this Section for an aggregate  purchase price of
up to $2,000,000.  The purchase and sale of such securities  shall take place at
one or more  closings  (collectively,  the  "CLOSING") at the offices of Higham,
McConnell  & Dunning LLP  ("HM&D"),  15,  Enterprise,  Suite 360,  Aliso  Viejo,
California 92656,  immediately following the execution hereof or such later date
as the parties shall agree.  The date of the Closing is hereinafter  referred to
as the "CLOSING DATE."

            (ii) At the Closing,  the parties shall deliver or shall cause to be
delivered the  following:  (A) the Company shall deliver to each Purchaser (1) a
stock  certificate  registered  in the name of such  Purchaser,  representing  a
number of Shares equal to the quotient  obtained by dividing the purchase  price
indicated below such Purchaser's name on the signature page to this Agreement by
100, (2) a Common Stock purchase  warrant,  in the form of Exhibit C, registered
in the name of such  Purchaser,  pursuant to which such Purchaser shall have the
right to  acquire  the  number of Warrant  Shares  (as  defined in the  Warrant)
indicated  below such  Purchaser's  name on the signature page to this Agreement
(collectively,  the  "WARRANTS"),  (3) an executed copy of this Agreement and an
executed  Registration Rights Agreement,  dated as of the date hereof, among the
Company and the Purchasers,  in the form of Exhibit B (the "REGISTRATION  RIGHTS
AGREEMENT")  and (4)  Transfer  Agent  Instructions,  in the form of  Exhibit E,

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executed by the Company  and  delivered  to and  acknowledged  by the  Company's
transfer agent (the "TRANSFER AGENT INSTRUCTIONS"); and (B) each Purchaser shall
deliver (1) the purchase  price  indicated  below such  Purchaser's  name on the
signature  page to this  Agreement  in  United  States  dollars  in  immediately
available  funds by wire  transfer  to an account  designated  in writing by the
Company for such purpose or, with the consent of the Company, through conversion
of  outstanding  indebtedness,  and (2) an executed  copy of this  Agreement and
Registration Rights Agreement.

      1.2 Terms of Preferred  Stock.  The Preferred  Stock shall have the rights
preferences  and  privileges  set forth in Exhibit A, and shall be  incorporated
into a Certificate of Designation (the "CERTIFICATE OF DESIGNATION") to be filed
prior to the Closing by the Company with the Secretary of State of Delaware,  in
form and substance mutually agreed to by the parties.

      1.3 Certain Defined Terms. For purposes of this Agreement, "ORIGINAL ISSUE
DATE" and  "TRADING  DAY"  shall  have the  meanings  set forth in Exhibit A and
"BUSINESS  DAY"  shall mean any day  except  Saturday,  Sunday and any day which
shall be a federal legal holiday or a day on which banking  institutions  in the
State of  California  are  authorized  or required by law or other  governmental
action to close.  A "PERSON"  means an individual or  corporation,  partnership,
trust,  incorporated  or  unincorporated  association,  joint  venture,  limited
liability company, joint stock company,  government (or an agency or subdivision
thereof) or other entity of any kind.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

      2.1  Representations  and  Warranties of the Company.  The Company  hereby
makes the following representations and warranties to the Purchasers:

            (a)  Organization  and  Qualification.  The Company is a corporation
duly  incorporated,  validly existing and in good standing under the laws of the
State of Delaware,  with the requisite  corporate power and authority to own and
use its  properties  and  assets  and to  carry  on its  business  as  currently
conducted.  The Company has no subsidiaries  other than as set forth in Schedule
2.1(a)  (collectively,  the  "SUBSIDIARIES").  Each  of the  Subsidiaries  is an
entity, duly incorporated or otherwise  organized,  validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as  applicable),  with the  requisite  power and  authority  to own and use its
properties and assets and to carry on its business as currently conducted.  Each
of the Company and the  Subsidiaries  is duly qualified to do business and is in
good standing as a foreign  corporation or other entity in each  jurisdiction in
which the nature of the business  conducted  or property  owned by it makes such
qualification necessary,  except where the failure to be so qualified or in good
standing, as the case may be, could not,  individually or in the aggregate,  (x)
adversely affect the legality,  validity or enforceability of the Securities (as

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defined below) or any of this Agreement,  the Registration Rights Agreement, the
Certificate  of  Designation,  the Transfer Agent  Instructions  or the Warrants
(collectively,  the "TRANSACTION  DOCUMENTS"),  (y) have or result in a material
adverse effect on the results of  operations,  assets,  prospects,  or condition
(financial or otherwise) of the Company and the Subsidiaries,  taken as a whole,
or (z) adversely impair the Company's ability to perform fully on a timely basis
its obligations under any of the Transaction  Documents (any of (x), (y) or (z),
a "MATERIAL ADVERSE EFFECT").

            (b)  Authorization;  Enforcement.  The  Company  has  the  requisite
corporate  power and authority to enter into and to consummate the  transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations  thereunder.  The execution and delivery of each of the  Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated  thereby have been duly  authorized by all necessary  action on the
part of the Company and no further  action is required by the  Company.  Each of
the  Transaction  Documents  has been duly  executed  by the Company  and,  when
delivered (or filed,  as the case may be) in  accordance  with the terms hereof,
will  constitute  the valid and binding  obligation  of the Company  enforceable
against the Company in  accordance  with its terms.  Neither the Company nor any
Subsidiary  is  in  violation  of  any  of  the  provisions  of  its  respective
certificate or articles of  incorporation,  by-laws or other  organizational  or
charter documents.

            (c) Capitalization. The number of authorized, issued and outstanding
capital  stock  of the  Company  is set  forth in  Schedule  2.1(c).  Except  as
disclosed in Schedule 2.1(c),  the Company owns all of the capital stock of each
Subsidiary.  No shares of Common  Stock are  entitled to  preemptive  or similar
rights,  nor is any holder of the  securities  of the Company or any  Subsidiary
entitled  to  preemptive  or similar  rights  arising  out of any  agreement  or
understanding  with  the  Company  or any  Subsidiary  by  virtue  of any of the
Transaction Documents. Except as a result of the purchase and sale of the Shares
and the  Warrants  and except as  disclosed  in  Schedule  2.1(c),  there are no
outstanding  options,   warrants,  script  rights  to  subscribe  to,  calls  or
commitments of any character  whatsoever  relating to, or securities,  rights or
obligations convertible into or exchangeable for, or giving any Person any right
to  subscribe  for or  acquire,  any  shares  of  Common  Stock,  or  contracts,
commitments,  understandings,  or  arrangements  by  which  the  Company  or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights  convertible or  exchangeable  into shares of Common Stock.
The issue and sale of the Shares,  Warrants or Underlying Shares (as hereinafter
defined)  will not obligate the Company to issue shares of Common Stock or other
securities to any Person other than the Purchaser and will not result in a right
of any holder of Company's  securities  to adjust the exercise or  conversion or
reset price under such securities.

            (d)  Issuance  of the  Shares and the  Warrants.  The Shares and the
Warrants are duly  authorized  and, when issued and paid for in accordance  with
the terms hereof, will be duly and validly issued, fully paid and nonassessable,
free and clear of all liens,  encumbrances  and  rights of first  refusal of any
kind  (collectively,  "LIENS").  The Company has on the date hereof and will, at
all times  while the  Shares  and the  Warrants  are  outstanding,  maintain  an
adequate  reserve  of duly  authorized  shares of  Common  Stock,  reserved  for
issuance to the holders of the Shares and the Warrants,  to enable it to perform
its  conversion,  exercise  and other  obligations  under  this  Agreement,  the
Certificate of Designation and the Warrants.  As of the date hereof, the Company
has reserved for issuance  the sum of  _________  Warrant  Shares and  _________

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shares of Common Stock for  issuance  upon  conversion  of Shares and payment of
dividends  thereon in shares of Common Stock (the "INITIAL  MINIMUM").  All such
authorized  shares of Common  Stock shall be duly  reserved  for issuance to the
holders of the Shares and the Warrants. The shares of Common Stock issuable upon
conversion  of the Shares and upon  exercise of the  Warrants  are  collectively
referred to herein as the "UNDERLYING  SHARES." The Shares, the Warrants and the
Underlying Shares are collectively referred to herein as, the "SECURITIES." When
issued in accordance with the  Certificate of Designation and the Warrants,  the
Underlying  Shares  will be duly  authorized,  validly  issued,  fully  paid and
nonassessable, free and clear of all Liens.

            (e) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated  thereby  do not and  will not (i)  conflict  with or
violate any  provision  of the  Company's  or any  Subsidiary's  certificate  or
articles of  incorporation,  bylaws or other charter  documents (each as amended
through the date hereof),  or (ii) subject to obtaining  the Required  Approvals
(as defined  below),  conflict  with, or constitute a default (or an event which
with notice or lapse of time or both would become a default)  under,  or give to
others any rights of termination,  amendment, acceleration or cancellation (with
or without notice,  lapse of time or both) of, any agreement,  credit  facility,
debt or other  instrument  or other  understanding  to which the  Company or any
Subsidiary  is a party or by which any  property  or asset of the Company or any
Subsidiary  is bound or  affected,  or (iii)  result in a violation  of any law,
rule, regulation,  order, judgment,  injunction,  decree or other restriction of
any court or  governmental  authority  to which the Company or a  Subsidiary  is
subject  (including  federal and state securities laws and  regulations),  or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), as could not, individually
or in the aggregate,  have or result in a Material Adverse Effect.  The business
of the Company is not being  conducted  in  violation  of any law,  ordinance or
regulation  of  any  governmental   authority,   except  for  violations  which,
individually or in the aggregate, could not have or result in a Material Adverse
Effect.

            (f)  Filings,  Consents and  Approvals.  Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration  with, any court or other
federal,  state,  local or other  governmental  authority  or  other  Person  in
connection  with the execution,  delivery and  performance by the Company of the
Transaction  Documents,  other  than  (i)  the  filing  of  the  Certificate  of
Designation  with the Secretary of State of Delaware,  (ii) the filings required
pursuant to Section  3.9,  (iii) the filing  with the  Securities  and  Exchange
Commission  (the   "COMMISSION")  of  a  registration   statement   meeting  the
requirements  set forth in the  Registration  Rights  Agreement and covering the
resale  of the  Underlying  Shares by the  Purchasers  (the  "UNDERLYING  SHARES
REGISTRATION STATEMENT"), (iv) applicable Blue Sky filings, and (v) in all other
cases where the failure to obtain such consent, waiver,  authorization or order,
or to give such  notice or make such  filing or  registration  could not have or
result  in,  individually  or  in  the  aggregate,  a  Material  Adverse  Effect
(collectively, the "REQUIRED APPROVALS").

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            (g)  Litigation;  Proceedings.  There is no action,  suit,  inquiry,
notice of violation, proceeding or investigation pending or, to the knowledge of
the  Company,  threatened  against  or  affecting  the  Company  or  any  of its
Subsidiaries  or any of their  respective  properties  before  or by any  court,
arbitrator,  governmental  or  administrative  agency  or  regulatory  authority
(federal, state, county, local or foreign) (collectively, an "ACTION") which (i)
adversely affects or challenges the legality,  validity or enforceability of any
of the  Transaction  Documents or the Securities or (ii) could, if there were an
unfavorable  decision,  individually  or in the  aggregate,  have or result in a
Material Adverse Effect.  Except as described in the SEC Documents,  (i) neither
the Company nor any Subsidiary,  nor any director or officer thereof,  is or has
been  the  subject  of any  Action  involving  (A) a claim  of  violation  of or
liability  under  federal or state  securities  laws or (B) a claim of breach of
fiduciary duty; (ii) the Company does not have pending before the Commission any
request  for  confidential  treatment  of  information  and the  Company  has no
knowledge  of any  expected  such  request  that  would  be  made  prior  to the
Effectiveness Date (as defined in the Registration Rights Agreement);  and (iii)
there  has not been,  and to the best of the  Company's  knowledge  there is not
pending or  contemplated,  any  investigation  by the  Commission  involving the
Company or any current or former director or officer of the Company.

            (h) No Default or Violation.  Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred  which has
not been waived which,  with notice or lapse of time or both,  would result in a
default by the  Company or any  Subsidiary  under),  nor has the  Company or any
Subsidiary  received notice of a claim that it is in default under or that it is
in violation of, any indenture,  loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its  properties is
bound,  (ii)  is  in  violation  of  any  order  of  any  court,  arbitrator  or
governmental  body, or (iii) is in violation of any statute,  rule or regulation
of any governmental authority, in each case of clauses (i), (ii) or (iii) above,
except  as could  not  individually  or in the  aggregate,  have or  result in a
Material Adverse Effect.

            (i) Private Offering.  Assuming the accuracy of the  representations
and warranties of the Purchasers  set forth in Sections  2.2(b)-(g),  the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby are
exempt from the  registration  requirements of the Securities  Act.  Neither the
Company nor, to its  knowledge,  any Person acting on its behalf has taken or is
contemplating  taking any action which could subject the  offering,  issuance or
sale of the Securities to the  registration  requirements  of the Securities Act
including  soliciting  any offer to buy or sell the  Securities  by means of any
form of general solicitation or advertising.

            (j) SEC Documents;  Financial Statements.  The Company has filed all
reports required to be filed by it under the Securities Exchange Act of 1934, as
amended  (the  "EXCHANGE  ACT"),  including  pursuant to Section  13(a) or 15(d)
thereof,  for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing  materials
being collectively  referred to herein as the "SEC DOCUMENTS" and, together with
the Schedules to this Agreement,  the "DISCLOSURE  MATERIALS") on a timely basis
or has received a valid  extension of such time of filing and has filed any such
SEC  Documents  prior  to the  expiration  of any  such  extension.  As of their
respective  dates, the SEC Documents  complied in all material respects with the
requirements  of the  Securities  Act and the  Exchange  Act and the  rules  and
regulations  of the  Commission  promulgated  thereunder,  and  none  of the SEC
Documents, when filed, contained any untrue statement of a material fact or

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omitted to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading.  All material agreements to which the Company is
a party or to which the  property or assets of the Company are subject have been
filed as exhibits to the SEC  Documents as required  under the Exchange Act. The
financial  statements of the Company included in the SEC Documents comply in all
material  respects with  applicable  accounting  requirements  and the rules and
regulations of the Commission  with respect  thereto as in effect at the time of
filing.  Such  financial  statements  have  been  prepared  in  accordance  with
generally  accepted  accounting  principles applied on a consistent basis during
the periods  involved  ("GAAP"),  except as may be  otherwise  specified in such
financial  statements or the notes  thereto,  and fairly present in all material
respects the financial position of the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial,  year-end audit  adjustments.  Since  September 30, 2004,  except as
specifically  disclosed  in the SEC  Documents,  (a)  there  has been no  event,
occurrence or  development  that has or that could result in a Material  Adverse
Effect,  (b) the  Company  has  not  incurred  any  liabilities  (contingent  or
otherwise)  other  than (x)  liabilities  incurred  in the  ordinary  course  of
business  consistent  with past practice and (y)  liabilities not required to be
reflected in the Company's  financial  statements  pursuant to GAAP or otherwise
required to be disclosed in filings  made with the  Commission,  (c) the Company
has not altered its method of accounting or the identity of its auditors and (d)
the Company has not  declared  or made any  payment or  distribution  of cash or
other  property to its  stockholders  or officers  or  directors  (other than in
compliance with existing Company stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem) any
shares of its capital stock.

            (k) Investment Company.  The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities  Act) of, an  "investment  company"
within the meaning of the Investment Company Act of 1940, as amended.

            (l)  Certain  Fees.  No fees or  commissions  will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other similar Person with respect to the transactions
contemplated  by this  Agreement.  The Purchasers  shall have no obligation with
respect to any fees or with  respect to any claims made by or on behalf of other
Persons  for  fees of a type  contemplated  in this  Section  that may be due in
connection with the  transactions  contemplated  by this Agreement.  The Company

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shall indemnify and hold harmless the  Purchasers,  their  employees,  officers,
directors,  agents,  and partners,  and their  respective  Affiliates,  from and
against all claims,  losses,  damages, costs (including the costs of preparation
and  attorney's  fees) and  expenses  suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.

            (m) Form S-3  Eligibility.  The  Company  is  eligible  to  register
securities for resale with the Commission  under Form S-3 promulgated  under the
Securities  Act.  The  "Public  Float"  of the  Common  Stock  is  approximately
165,960,545 shares on the date hereof.

            (n)  Seniority.   Except  for  the  Series  D  Preferred  Stock,  no
outstanding class of equity securities of the Company is senior to the Shares in
right of payment, whether upon liquidation or dissolution, or otherwise.

            (o) Listing and Maintenance Requirements. Except as set forth in the
SEC Documents,  the Company has not, in the two years  preceding the date hereof
received notice  (written or oral) from the OTC, any stock  exchange,  market or
trading facility on which the Common Stock is or has been listed (or on which it
has been  quoted) to the effect that the Company is not in  compliance  with the
listing  or  maintenance  requirements  of  such  exchange,  market  or  trading
facility.  The Company is, and has no reason to believe  that it will not in the
foreseeable  future  continue  to be, in  compliance  with all such  listing and
maintenance requirements.

            (p) Patents and Trademarks.  The Company and its Subsidiaries  have,
or have rights to use, all patents, patent applications,  trademarks,  trademark
applications,  service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective businesses
as described in the SEC  Documents and which the failure to so have would have a
Material Adverse Effect (collectively,  the "INTELLECTUAL  PROPERTY RIGHTS"). To
the best  knowledge of the Company,  neither the Company nor any  Subsidiary has
received a written  notice  that the  Intellectual  Property  Rights used by the
Company or its Subsidiaries violates or infringes upon the rights of any Person.
Except as specified in Schedule  2.1(p),  to the best  knowledge of the Company,
all such  Intellectual  Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.

            (q)  Registration  Rights;   Rights  of  Participation.   Except  as
disclosed in Section 6(c) of the Registration Rights Agreement,  the Company has
not granted or agreed to grant to any Person any rights (including  "piggy-back"
registration  rights) to have any securities of the Company  registered with the
Commission or any other governmental authority which have not been satisfied. No
Person,   has  any  right  of  first  refusal,   preemptive   right,   right  of
participation,   or  any  similar  right  to  participate  in  the  transactions
contemplated by the Transaction Documents.

            (r) Regulatory Permits. The Company and its Subsidiaries possess all
certificates,  authorizations  and permits  issued by the  appropriate  federal,
state or foreign  regulatory  authorities  necessary to conduct their respective
businesses  as  described  in the SEC  Documents,  except  where the  failure to
possess such permits could not, individually or in the aggregate, have or result

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in a Material Adverse Effect ("MATERIAL  PERMITS"),  and neither the Company nor
any such  Subsidiary  has  received  any notice of  proceedings  relating to the
revocation or modification of any Material Permit.

            (s) Title. The Company and the Subsidiaries have good and marketable
title to all personal  property  owned by them which is material to the business
of the Company and its  Subsidiaries,  in each case free and clear of all Liens,
except for Liens as do not  materially  affect the value of such property and do
not interfere  with the use made and proposed to be made of such property by the
Company and its Subsidiaries.  Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable  leases of which the Company and its  Subsidiaries are in compliance
and do not interfere  with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.

            (t) Labor  Relations.  No material  labor problem  exists or, to the
knowledge of the Company,  is imminent  with respect to any of the  employees of
the Company.

            (u)  Shareholders  Rights  Plan.  Neither  the  consummation  of the
transactions  contemplated hereby nor the issuance of the Underlying Shares will
cause the  Purchasers to be deemed an  "Acquiring  Person" under any existing or
hereafter adopted shareholders rights plan or similar arrangement.

            (v) Disclosure.  The Company  confirms that neither it nor any other
Person acting on its behalf has provided any of the  Purchasers or its agents or
counsel with any  information  that  constitutes  or might  constitute  material
non-public information. The Company understands and confirms that the Purchasers
shall be relying on the foregoing  representations in effecting  transactions in
securities of the Company.  All disclosure provided to the Purchasers  regarding
the Company, its business and the transactions  contemplated  hereby,  including
the  Schedules to this  Agreement,  furnished by or on behalf of the Company are
true and correct and do not contain any untrue  statement of a material  fact or
omit to state any material fact necessary in order to make the  statements  made
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

      2.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby for itself and for no other  Purchaser  represents  and  warrants  to the
Company as follows:

            (a)  Organization;  Authority.  Such  Purchaser  is an  entity  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of its  organization  with the requisite  corporate or partnership
power  and  authority  to  enter  into  and  to  consummate   the   transactions
contemplated  by the  Transaction  Documents  and  otherwise  to  carry  out its
obligations  thereunder.  The  purchase  by  such  Purchaser  of the  Securities
hereunder has been duly  authorized by all necessary  action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been

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duly  executed  by such  Purchaser,  and when  delivered  by such  Purchaser  in
accordance with the terms hereof,  will constitute the valid and legally binding
obligation of such  Purchaser,  enforceable  against it in  accordance  with its
terms.

            (b) Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for  investment  purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement,  the Registration Rights Agreement and the Warrants,  at all times to
sell or otherwise  dispose of all or any part of such Securities  pursuant to an
effective  registration statement under the Securities Act or under an exemption
from such  registration  and in  compliance  with  applicable  federal and state
securities laws.  Nothing  contained herein shall be deemed a representation  or
warranty  by such  Purchaser  to hold  Securities  for any period of time.  Such
Purchaser is acquiring the  Securities  hereunder in the ordinary  course of its
business. Such Purchaser does not have any agreement or understanding,  directly
or indirectly, with any Person to distribute the Securities.

            (c)  Purchaser  Status.  At the time such  Purchaser was offered the
Securities,  it was,  and at the date  hereof it is, and at each  exercise  date
under its respective Warrants,  it will be, an "ACCREDITED  INVESTOR" as defined
in Rule 501(a) under the Securities Act.

            (d) Experience of such Purchaser.  Such  Purchaser,  either alone or
together  with its  representatives,  has  such  knowledge,  sophistication  and
experience in business and  financial  matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

            (e)  Ability  of such  Purchaser  to Bear Risk of  Investment.  Such
Purchaser is able to bear the economic risk of an  investment in the  Securities
and, at the present time, is able to afford a complete loss of such investment.

            (f) Access to Information.  Such Purchaser  acknowledges that it has
reviewed the Disclosure  Materials and has been afforded (i) the  opportunity to
ask such questions as it has deemed  necessary of, and to receive  answers from,
representatives  of the  Company  concerning  the  terms and  conditions  of the
offering  of the  Securities  and the  merits  and  risks  of  investing  in the
Securities;  (ii) access to  information  about the  Company  and the  Company's
financial condition, results of operations, business, properties, management and
prospects  sufficient  to enable it to evaluate  its  investment;  and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without  unreasonable effort or expense that is necessary to make an
informed  investment  decision with respect to the  investment and to verify the
accuracy  and  completeness  of the  information  contained  in  the  Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its  representatives or counsel shall modify,  amend
or affect such Purchaser's right to rely on the truth, accuracy and completeness
of the  Disclosure  Materials and the Company's  representations  and warranties
contained in the Transaction Documents.

                                       9
<PAGE>

            (g) General  Solicitation.  Such  Purchaser  is not  purchasing  the
Securities as a result of or subsequent to any advertisement, article, notice or
other  communication  regarding  the  Securities  published  in  any  newspaper,
magazine or similar media or broadcast over  television or radio or presented at
any seminar or any other general solicitation or general advertisement.

            (h) Reliance.  Such Purchaser  understands and acknowledges that (i)
the Securities are being offered and sold to it without  registration  under the
Securities  Act in a  private  placement  that is exempt  from the  registration
provisions of the Securities Act and (ii) the  availability  of such  exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing  representations  and such Purchaser  hereby  consents to such
reliance.

            The Company  acknowledges  and agrees that no Purchaser makes or has
made  any  representations  or  warranties  with  respect  to  the  transactions
contemplated hereby other than those specifically set forth in this Section 2.2.

                                   ARTICLE III
                         OTHER AGREEMENTS OF THE PARTIES

      3.1 Transfer Restrictions. (a) Securities may only be disposed of pursuant
to an effective  registration statement under the Securities Act, to the Company
or pursuant to an available  exemption  from or in a transaction  not subject to
the registration  requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer of
Securities other than pursuant to an effective  registration statement or to the
Company,  except as  otherwise  set forth  herein,  the  Company may require the
transferor  thereof to provide to the Company an opinion of counsel  selected by
the  transferor,  the form and  substance of which  opinion  shall be reasonably
satisfactory  to the Company,  to the effect that such transfer does not require
registration of such  transferred  Securities under the Securities Act. Any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser  under this Agreement and the  Registration
Rights Agreement.

            (b) The Purchasers  agree to the imprinting,  so long as is required
by this Section 3.1(b), of the following legend on the Securities:

            NEITHER  THESE  SECURITIES  [NOR THE  SECURITIES  INTO  WHICH  THESE
      SECURITIES ARE [CONVERTIBLE]  [EXERCISABLE]  HAVE BEEN REGISTERED WITH THE
      SECURITIES  AND EXCHANGE  COMMISSION OR THE  SECURITIES  COMMISSION OF ANY
      STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
      ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT
      BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION STATEMENT

                                       10
<PAGE>

      UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
      A  TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

            The  Company  shall  cause its  counsel  to issue the legal  opinion
included in the Transfer Agent  Instructions to the Company's  transfer agent on
the day that the Underlying Shares Registration  Statement is declared effective
by the Commission.

      3.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Underlying  Shares upon (i)  conversion of the Shares in accordance  with
the terms of the Certificate of  Designation,  and (ii) exercise of the Warrants
in  accordance  with their  terms,  will result in  dilution of the  outstanding
shares of Common Stock,  which dilution may be substantial  under certain market
conditions.  The  Company  further  acknowledges  that its  obligation  to issue
Underlying Shares upon (x) conversion of the Shares in accordance with the terms
of  the  Certificate  of  Designation,  and  (y)  exercise  of the  Warrants  in
accordance  with their terms,  is  unconditional  and  absolute,  subject to the
limitations  set forth herein,  in the Certificate of Designation or pursuant to
the Warrants, regardless of the effect of any such dilution.

      3.3 Furnishing of  Information.  As long as the Purchasers own Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the  Company  after the date hereof  pursuant  to Section  13(a) or 15(d) of the
Exchange Act. As long as the  Purchasers own  Securities,  if the Company is not
required to file reports pursuant to such sections,  it will prepare and furnish
to the  Purchasers  and make publicly  available in accordance  with Rule 144(c)
promulgated  under the  Securities  Act such  information as is required for the
Purchasers  to  sell  the  Securities  under  Rule  144  promulgated  under  the
Securities  Act. The Company  further  covenants  that it will take such further
action as any holder of Securities  may  reasonably  request,  all to the extent
required  from time to time to enable  such  Person  to sell  Underlying  Shares
without  registration  under the  Securities  Act within the  limitation  of the
exemptions  provided by Rule 144 promulgated under the Securities Act, including
causing its attorneys to render and deliver any legal opinion  required in order
to permit a  Purchaser  to receive  Underlying  Shares  free of all  restrictive
legends and to subsequently  sell Underlying  Shares under Rule 144 upon receipt
of a notice of an  intention  to sell or other  form of notice  having a similar
effect.  Upon the request of any such Person,  the Company shall deliver to such
Person a written certification of a duly authorized officer as to whether it has
complied with such requirements.

      3.4 Integration.  The Company shall not, and shall use its best efforts to
ensure that, no Affiliate of the Company shall,  sell, offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities Act of the sale of the Securities to the Purchasers.

                                       11
<PAGE>

      3.5 Increase in Authorized Shares. If on any date the Company would be, if
a notice of  conversion or exercise (as the case may be) were to be delivered on
such date,  precluded from issuing (a) the number of Underlying  Shares as would
then be issuable upon a conversion in full of the Shares,  and (b) of the number
of  Underlying  Shares as would then be issuable  upon  exercise of the Warrants
(the "CURRENT REQUIRED MINIMUM"), in either case, due to the unavailability of a
sufficient number of authorized but unissued or reserved shares of Common Stock,
then the Board of Directors of the Company  shall  promptly  prepare and mail to
the  stockholders of the Company proxy  materials  requesting  authorization  to
amend the Company's  certificate  or articles of  incorporation  to increase the
number of shares of Common Stock which the Company is  authorized to issue to at
least such number of shares as reasonably  requested by the  Purchasers in order
to provide for such number of authorized and unissued  shares of Common Stock to
enable  the  Company  to comply  with its  issuance,  conversion,  exercise  and
reservation  of  shares  obligations  as  set  forth  in  this  Agreement,   the
Certificate of Designation and the Warrants (the sum of (x) the number of shares
of Common Stock then  outstanding  plus all shares of Common Stock issuable upon
exercise of all outstanding options,  warrants and convertible instruments,  and
(y) the Current Required Minimum,  shall be a reasonable  number). In connection
therewith, the Board of Directors shall (a) adopt proper resolutions authorizing
such  increase,  (b) recommend to and otherwise use its best efforts to promptly
and duly obtain  stockholder  approval to carry out such resolutions (and hold a
special  meeting of the  stockholders  no later than the earlier to occur of the
60th day after delivery of the proxy materials  relating to such meeting and the
90th day  after  request  by a holder  of  Securities  to issue  the  number  of
Underlying  Shares in  accordance  with the terms  hereof)  and (c) within  five
Business Days of obtaining such stockholder  authorization,  file an appropriate
amendment to the Company's  certificate or articles of incorporation to evidence
such increase.

      3.6 Reservation and Listing of Underlying  Shares.  (a) If, after the date
hereof,  the  Company  shall list the Common  Stock on any of the New York Stock
Exchange,  American Stock  Exchange,  NASDAQ  National Market or NASDAQ SmallCap
Market  (each,  a "SUBSEQUENT  MARKET"),  then the Company shall include in such
listing for the benefit of the  Purchasers  for  issuance  upon  exercise of the
Warrants and  conversion  of the Shares a number of shares of Common Stock equal
to not less than the then Current Required Minimum.  If the number of Underlying
Shares  issuable upon  conversion  in full of the then  outstanding  Shares,  as
payment of dividends thereon,  and upon exercise of the then unexercised portion
of the Warrants  exceed the number of  Underlying  Shares  previously  listed on
account  thereof  with a  Subsequent  Market,  then the  Company  shall take the
necessary actions to immediately list a number of Underlying Shares as equals no
less than the then Current Required Minimum.

            (b) The Company  shall  maintain a reserve of shares of Common Stock
for issuance upon  conversion of the Shares in full and upon exercise in full of
the Warrants in accordance with this  Agreement,  the Certificate of Designation
and the Warrants, respectively, in such amount as may be required to fulfill its
obligations in full under the Transaction  Documents,  which reserve shall equal
no less than the then Current Required Minimum.

                                       12
<PAGE>

      3.7 Conversion and Exercise Obligations and Procedures.  The Company shall
honor  conversion  of the Shares and exercise of the Warrants and shall  deliver
Underlying Shares in accordance with the respective  terms,  conditions and time
periods set forth in the Certificate of Designation  and Warrants.  The Transfer
Agent  Instructions,  Conversion  Notice  (as  defined  in  the  Certificate  of
Designation) and Notice of Exercise under the Warrants set forth the totality of
the procedures  with respect to the conversion of the Shares and exercise of the
Warrants,  including  the form of legal  opinion,  if  necessary,  that shall be
rendered  to the  Company's  transfer  agent  and  such  other  information  and
instructions as may be reasonably  necessary to enable the Purchasers to convert
their Shares and exercise their Warrants as  contemplated  in the Certificate of
Designation and the Warrants (as applicable).

      3.8 Certain Securities Laws Disclosures; Publicity. The Company shall: (i)
on the  Closing  Date  issue  a  press  release  acceptable  to  the  Purchasers
disclosing the transactions contemplated hereby, (ii) file with the Commission a
Report on Form 8-K disclosing the transactions  contemplated  hereby within four
Business Days after the Closing Date,  and (iii) timely file with the Commission
a Form D promulgated  under the Securities  Act. The Company shall, no less than
two Business Days prior to the filing of any disclosure required by clauses (ii)
and (iii) above,  provide a copy thereof to the Purchasers.  The Company and the
Purchasers  shall consult with each other in issuing any other press releases or
otherwise making public statements or filings and other  communications with the
Commission  or any  regulatory  agency or stock market or trading  facility with
respect to the  transactions  contemplated  hereby and neither party shall issue
any such press release or otherwise make any such public  statement,  filings or
other  communications  without the prior written consent of the other, except if
such  disclosure  is  required  by law  or  stock  market  or  trading  facility
regulation,  in which such case the disclosing  party shall promptly provide the
other  party  with  prior  notice  of such  public  statement,  filing  or other
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the names of the Purchasers,  or include the names of the Purchasers in
any filing with the Commission or any  regulatory  agency,  trading  facility or
stock market without the prior written consent of the Purchasers,  except to the
extent such disclosure is required by law or stock market regulations,  in which
case the  Company  shall  provide  the  Purchasers  with  prior  notice  of such
disclosure.

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

      3.10 Transfer of Intellectual  Property Rights.  Except in connection with
the sale of all or  substantially  all of the assets of the Company or licensing
arrangements in the ordinary course of the Company's business, the Company shall
not transfer,  sell or otherwise dispose of any Intellectual Property Rights, or
allow any of the Intellectual Property Rights to become subject to any Liens, or
fail to renew  such  Intellectual  Property  Rights (if  renewable  and it would
otherwise  lapse if not  renewed),  without  the prior  written  consent  of the
Purchasers.

                                       13
<PAGE>

      3.11  Exclusivity.  The Company shall not issue and sell the Shares to any
Person other than to the Purchasers.

      3.12  Shareholder  Rights  Plan.  No claim will be made or enforced by the
Company or any other Person that any  Purchaser is an  "ACQUIRING  PERSON" under
any  shareholders  rights  plan or  similar  plan or  arrangement  in  effect or
hereafter  adopted  by the  Company,  or that any  Purchaser  could be deemed to
trigger the provisions of any such plan or  arrangement,  by virtue of receiving
Securities or shares of Common Stock under the Transaction Documents.

      3.13 Trading Restrictions. At no time during the 15 days immediately prior
to the date  hereof has such  Purchaser  engaged in or  effected,  in any manner
whatsoever, directly or indirectly, in any "Short Sale" (as defined herein. Each
Purchaser  further  agrees that as long as such  Purchaser  holds  Shares,  such
Purchaser  will not enter into any Short Sales.  For purposes  hereof,  a "SHORT
SALE" by a Purchaser  shall mean a marked  "short  sale" of Common Stock by such
Purchaser  that is made at a time when there is no  equivalent  offsetting  long
position in the Common Stock held by such Purchaser. For purposes of determining
whether there is an equivalent offsetting long position in the Common Stock held
by a Purchaser,  Underlying  Shares issuable upon exercises of Warrants and upon
delivered Conversion Notices under the Shares shall be deemed to be held long by
such Purchaser.

                                   ARTICLE IV
                                  MISCELLANEOUS

      4.1 Fees and Expenses.  Except as otherwise set forth in the  Registration
Rights  Agreement,  each party shall pay the fees and expenses of its  advisers,
counsel,  accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation,  preparation, execution, delivery and
performance of this  Agreement.  The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities.

      4.2 Entire Agreement; Amendments. The Transaction Documents, together with
the Exhibits and Schedules thereto and the Transfer Agent  Instructions  contain
the entire  understanding  of the parties  with  respect to the  subject  matter
hereof and supersede all prior agreements and  understandings,  oral or written,
with respect to such  matters,  which the parties  acknowledge  have been merged
into such documents, exhibits and schedules.

      4.3 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone number specified in this Section prior to 6:30 p.m.  (Pacific Time) on
a Business  Day, (ii) the Business Day after the date of  transmission,  if such

                                       14
<PAGE>

notice or  communication  is delivered via facsimile at the facsimile  telephone
number  specified in this Agreement  later than 6:30 p.m.  (Pacific Time) on any
date and earlier than 11:59 p.m. (Pacific Time) on such date, (iii) the Business
Day following the date of mailing,  if sent by nationally  recognized  overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and  communications  shall be
as follows:

         If to the Company:                 e.Digital Corporation
                                            13114 Evening Creek Drive South
                                            San Diego, California 92128
                                            Facsimile No.: (858) 486-3922
                                            Attn:  Chief Executive Officer

         With copies to:                    Higham, McConnell& Dunning LLP
                                            15 Enterprise, Suite 360
                                            Aliso Viejo, California 92656
                                            Facsimile No.: (949) 900-4401
                                            Attn: Curt C. Barwick, Esq.

         If to a Purchaser:                 To the  address set forth under such
                                            Purchaser's  name  on the  signature
                                            pages hereto.

or such other  address as may be designated  in writing  hereafter,  in the same
manner, by such Person.

      4.4 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision,  condition or requirement of this Agreement shall
be  deemed  to be a  continuing  waiver  in the  future or a waiver of any other
provision,  condition or requirement  hereof, nor shall any delay or omission of
either party to exercise any right  hereunder in any manner  impair the exercise
of any such right accruing to it thereafter.

      4.5  Headings.  The  headings  herein  are for  convenience  only,  do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

      4.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without  the prior  written  consent of the  Purchasers.  Except as set forth in
Section  3.1(a),  the  Purchasers  may not assign this  Agreement  or any of the

                                       15
<PAGE>

rights or  obligations  hereunder  without  the  consent  of the  Company.  This
provision  shall not limit  any  Purchaser's  right to  transfer  securities  or
transfer or assign rights under the Registration Rights Agreement.

      4.7 No  Third-Party  Beneficiaries.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person.

      4.8 Governing Law. All questions  concerning the  construction,  validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by and
construed  and enforced in  accordance  with the  internal  laws of the State of
California,  without regard to the principles of conflicts of law thereof.  Each
party hereby irrevocably submits to the exclusive  jurisdiction of the state and
federal courts sitting in the City and County of San Diego, for the adjudication
of any dispute  hereunder  or in  connection  herewith  or with any  transaction
contemplated   hereby  or  discussed  herein  (including  with  respect  to  the
enforcement of the Transaction  Documents),  and hereby irrevocably  waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service
of process and  consents  to process  being  served in any such suit,  action or
proceeding  by  mailing a copy  thereof  via  registered  or  certified  mail or
overnight  delivery  (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient  service of process and notice  thereof.  Nothing
contained  herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

      4.9 Survival.  The representations,  warranties,  agreements and covenants
contained  herein shall  survive the Closing and the delivery and  conversion or
exercise  (as the case may be) of the Shares and of the Warrants for a period of
one year.

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

      4.11  Severability.  In case  any one or  more of the  provisions  of this
Agreement  shall be invalid or  unenforceable  in any respect,  the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be  affecting  or impaired  thereby and the parties  will  attempt to
agree  upon a valid  and  enforceable  provision  which  shall  be a  reasonable
substitute  therefor,  and upon so agreeing,  shall  incorporate such substitute
provision in this Agreement.

                                       16
<PAGE>

      4.12  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company  will be entitled  to specific  performance  of each
other's  obligations  under the  Transaction  Documents.  The parties agree that
monetary  damages  may not be  adequate  compensation  for any loss  incurred by
reason of any breach of  obligations  described  in the  foregoing  sentence and
hereby  agree  to waive  in any  action  for  specific  performance  of any such
obligation the defense that a remedy at law would be adequate.

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]

                                       17
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Convertible
Preferred  Stock  Purchase  Agreement  to be duly  executed by their  respective
authorized signatories as of the date first indicated above.

                                    E.DIGITAL CORPORATION

                                    By:_____________________________________
                                        Name:
                                        Title:

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGES OF PURCHASERS FOLLOW]

                                       18
<PAGE>

                                    [NAME OF PURCHASER]

                                    By:_____________________________________
                                       Name:
                                       Title:

                                    Purchase Price:           $  [    ]

                                    Number of Warrants:   [    ]

                                    Address for Notice:

                                    [NAME OF PURCHASER]
                                    [ADDRESS OF PURCHASER]

                                    With copies to:

                                    [NAME OF COUNSEL FOR PURCHASER]
                                    [ADDRESS OF COUNSEL FOR PURCHASER]

<PAGE>

                 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

                                      AMONG

                              E.DIGITAL CORPORATION

                                       AND

                         THE INVESTORS SIGNATORY HERETO

                          DATED AS OF NOVEMBER 18, 2004

<PAGE>

                           Convertible Preferred Stock
                               Purchase Agreement
                                 Schedule 2.1(c)

CAPITALIZATION TABLE

Outstanding as of November 1, 2004:
                                                          Issued and
                                          Authorized     Outstanding

Common Stock                             200,000,000     165,139,512

Preferred Stock
Series D                                   5,000,000        ________

Warrants to purchase common stock                  -        ________
   (see schedule 6(c) to Registration
   Rights Agreement)

Stock options on common stock             14,000,000        ________
  1994 ISO/NSO PlanEXHIBIT 4.54

                                                                       EXHIBIT B

                          REGISTRATION RIGHTS AGREEMENT

            THIS  REGISTRATION  RIGHTS AGREEMENT (this  "AGREEMENT") is made and
entered into as of November 18, 2004,  among e.Digital  Corporation,  a Delaware
corporation (the "COMPANY"),  and the investors  signatory hereto on the date of
this Agreement  (each such investor is a "PURCHASER" and all such investors are,
collectively, the "PURCHASERS").

            This Agreement is made pursuant to the  Convertible  Preferred Stock
Purchase  Agreement,  dated as of the date  hereof  among  the  Company  and the
Purchasers (the "PURCHASE AGREEMENT").

            The Company and the Purchasers hereby agree as follows:

      1.    Definitions

            Capitalized  terms used and not  otherwise  defined  herein that are
defined in the Purchase  Agreement  shall have the meanings  given such terms in
the Purchase  Agreement.  As used in this  Agreement,  the following terms shall
have the following meanings:

            "ADVICE" shall have meaning set forth in Section 6(f).

            "AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person.  For the  purposes of this  definition,  "CONTROL,"  when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the  direction  of the  management  and policies of such Person,
whether  through the ownership of voting  securities,  by contract or otherwise;
and the terms of  "AFFILIATED,"  "CONTROLLING"  and  "CONTROLLED"  have meanings
correlative to the foregoing.

            "BUSINESS  DAY"  means any day except  Saturday,  Sunday and any day
which shall be a legal  holiday or a day on which  banking  institutions  in the
state  of  California  generally  are  authorized  or  required  by law or other
government actions to close.

            "CLOSING  DATE" means November 18, 2004 or, in the event of multiple
closings, the last day following such date that the Preferred Stock is sold.

            "COMMISSION" means the Securities and Exchange Commission.

            "COMMON STOCK" means the Company's Common Stock, par value $.001 per
share, or such securities that such stock shall hereafter be reclassified into.

            "EFFECTIVENESS  DATE" means the day  following the Closing Date that
the Commission declares the Registration Statement effective.

            "EFFECTIVENESS  PERIOD"  shall have the meaning set forth in Section
2(a).

            "EXCHANGE  ACT"  means  the  Securities  Exchange  Act of  1934,  as
amended.

<PAGE>

            "FILING DATE" means the 30th day following the Closing Date.

            "HOLDER" or "HOLDERS"  means the holder or holders,  as the case may
be, from time to time of Registrable Securities.

            "INDEMNIFIED  PARTY"  shall  have the  meaning  set forth in Section
5(c).

            "INDEMNIFYING  PARTY"  shall have the  meaning  set forth in Section
5(c).

            "LOSSES" shall have the meaning set forth in Section 5(a).

            "PERSON" means an individual or a corporation,  partnership,  trust,
incorporated or  unincorporated  association,  joint venture,  limited liability
company, joint stock company,  government (or an agency or political subdivision
thereof) or other entity of any kind.

            "PREFERRED   STOCK"  means  the  Company's   Series  EE  Convertible
Preferred  Stock  issued  to the  Purchasers  in  accordance  with the  Purchase
Agreement.

            "PROCEEDING"  means  an  action,   claim,  suit,   investigation  or
proceeding   (including,   without  limitation,   an  investigation  or  partial
proceeding, such as a deposition), whether commenced or threatened.

            "PROSPECTUS"  means  the  prospectus  included  in the  Registration
Statement  (including,  without  limitation,  a  prospectus  that  includes  any
information  previously  omitted from a prospectus filed as part of an effective
registration  statement  in  reliance  upon  Rule  430A  promulgated  under  the
Securities Act), as amended or supplemented by any prospectus  supplement,  with
respect  to  the  terms  of  the  offering  of any  portion  of the  Registrable
Securities covered by the Registration  Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material  incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

            "REGISTRABLE  SECURITIES"  means the shares of Common Stock issuable
(i) upon  conversion in full of the Preferred  Stock,  and (ii) upon exercise of
the Warrants.

            "REGISTRATION  STATEMENT" means the  registration  statement and any
additional  registration  statements contemplated by Section 2(a), including (in
each case) the  Prospectus,  amendments  and  supplements  to such  registration
statement or  Prospectus,  including  pre- and  post-effective  amendments,  all
exhibits  thereto,  and all material  incorporated  by reference or deemed to be
incorporated by reference in such registration statement.

            "RULE 144" means Rule 144 promulgated by the Commission  pursuant to
the  Securities  Act,  as such Rule may be  amended  from  time to time,  or any
similar  rule  or  regulation   hereafter   adopted  by  the  Commission  having
substantially the same effect as such Rule.

                                      -2-
<PAGE>

                  "RULE  158"  means  Rule  158  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "RULE  415"  means  Rule  415  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "UNDERWRITTEN  REGISTRATION OR UNDERWRITTEN  OFFERING" means a
registration in connection  with which  securities of the Company are sold to an
underwriter for reoffering to the public  pursuant to an effective  registration
statement.

                  "WARRANTS" means the Common Stock purchase  warrants issued to
the Purchasers pursuant to the Purchase Agreement.

         2.       Shelf Registration

                  (a) On or prior to the Filing Date,  the Company shall prepare
and file with the Commission a shelf Registration  Statement covering the number
of  Registrable  Securities  contemplated  by Section 2(b) for an offering to be
made on a  continuous  basis  pursuant to Rule 415. The  Registration  Statement
shall be on Form  S-3 (or on  another  appropriate  form in the  event  that the
Company is not  eligible to file a  Registration  Statement  on Form S-3 for the
resale of the Registrable Securities). The Company shall use its best efforts to
cause the Registration  Statement to be declared  effective under the Securities
Act as promptly as possible after the filing thereof,  but in any event prior to
the Effectiveness Date, and shall use its best efforts to keep such Registration
Statement  continuously  effective under the Securities Act until the date which
is one  year  after  the date  that  such  Registration  Statement  is  declared
effective by the Commission or such earlier date when all Registrable Securities
covered by such  Registration  Statement  have been sold or may be sold  without
volume restrictions  pursuant to Rule 144(k) as determined by the counsel to the
Company  pursuant to a written  opinion  letter to such  effect,  addressed  and
acceptable  to the  Company's  transfer  agent  and the  affected  Holders  (the
"EFFECTIVENESS PERIOD").

                  (b) The initial  Registration  Statement  required to be filed
hereunder  shall  include (but not be limited to),  12,210,527  shares of Common
Stock registered for the benefit of the Holders.  If the Registration  Statement
is not filed on or prior to its Filing Date,  then the Company shall pay to each
Holder an amount in cash, as liquidated  damages and not as a penalty,  equal to
1.5% per month of the  Subscription  Amount paid by such Holder  pursuant to the
Purchase Agreement for Registrable Securities then held by such Holder. Further,
if the Registration  Statement is not declared effective by the Commission on or
before the 90th day following  the Closing  Date,  then the Company shall pay to
each Holder an additional  amount in cash,  as  liquidated  damages and not as a
penalty,  equal to 1.5% per month of the Subscription Amount paid by such Holder
pursuant to the Purchase Agreement for Registrable  Securities then held by such
Holder.  Notwithstanding  the  foregoing,  such  penalties  shall  be paid for a
maximum  of  twelve  months  or  until  the  Holders  are  eligible  to sell the
Registrable Securities pursuant to Rule 144, whichever shall first occur.

                                      -3-
<PAGE>

            (c) If the Holders of a majority of the  Registrable  Securities  so
elect,  an  offering of  Registrable  Securities  pursuant  to the  Registration
Statement  may be  effected  in the form of an  Underwritten  Offering.  In such
event, and, if the managing  underwriters advise the Company and such Holders in
writing that in their opinion the amount of Registrable  Securities  proposed to
be sold  in  such  Underwritten  Offering  exceeds  the  amount  of  Registrable
Securities  which  can be sold in such  Underwritten  Offering,  there  shall be
included in such Underwritten Offering the amount of such Registrable Securities
which in the opinion of such managing  underwriters can be sold, and such amount
shall be allocated  pro-rata  among the Holders  proposing  to sell  Registrable
Securities in such Underwritten Offering.

            (d) If  any  of the  Registrable  Securities  are to be  sold  in an
Underwritten  Offering,  the investment  banker in interest that will administer
the  offering  will be selected by the Holders of a majority of the  Registrable
Securities  included in such offering  upon  consultation  with the Company.  No
Holder may participate in any Underwritten Offering hereunder unless such Holder
(i)  agrees to sell its  Registrable  Securities  on the basis  provided  in any
underwriting  agreements  approved by the Persons entitled  hereunder to approve
such arrangements and (ii) completes and executes all questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other  documents  required
under the terms of such arrangements.

      3.    Registration Procedures

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Prepare and file with the  Commission  on or prior to the Filing
Date,  a  Registration  Statement on the form  contemplated  by Section 2(a) and
cause the  Registration  Statement to become  effective and remain  effective as
provided herein.

            (b) (i)  Prepare  and file  with  the  Commission  such  amendments,
including  post-effective  amendments,  to the  Registration  Statement  and the
Prospectus  used  in  connection  therewith  as may be  necessary  to  keep  the
Registration  Statement  continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such  additional  Registration  Statements in order to register for resale under
the Securities  Act all of the  Registrable  Securities;  (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus  supplement,
and as so  supplemented  or  amended  to be filed  pursuant  to Rule 424 (or any
similar  provisions then in force)  promulgated  under the Securities Act; (iii)
respond as promptly as  reasonably  possible,  and in any event  within ten (10)
days,  to  any  comments  received  from  the  Commission  with  respect  to the
Registration  Statement or any  amendment  thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to the Registration Statement; and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by the
Registration  Statement  during the  applicable  period in  accordance  with the
intended  methods  of  disposition  by the  Holders  thereof  set  forth  in the
Registration Statement as so amended or in such Prospectus as so supplemented.

                                      -4-
<PAGE>

                  (c) File such  supplements  or "STICKERS" to the  Registration
Statement or Prospectus as and when required by the Commission.

            (d) Notify the Holders of Registrable  Securities to be sold and any
managing  underwriters  as promptly as reasonably  possible (and, in the case of
(i)(A)  below,  not less  than  five (5)  Business  Days  (or,  in the case of a
supplement or "sticker"  required to be filed  pursuant to Section 3(c),  within
one Business  Day) prior to such  filing) and (if  requested by any such Person)
confirm such notice in writing no later than one (1) Business Day  following the
day (i)(A) when a Prospectus  or any  Prospectus  supplement  or  post-effective
amendment to the  Registration  Statement is proposed to be filed;  (B) when the
Commission  notifies  the  Company  whether  there  will be a  "review"  of such
Registration  Statement and whenever the Commission  comments in writing on such
Registration  Statement  (the Company  shall  provide  true and complete  copies
thereof  and all written  responses  thereto to each of the  Holders,  which the
Holders  shall keep  confidential);  and (C) with  respect  to the  Registration
Statement or any post-effective  amendment,  when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority  for  amendments  or  supplements  to the  Registration  Statement  or
Prospectus  or  for  additional  information;  (iii)  of  the  issuance  by  the
Commission of any stop order  suspending the  effectiveness  of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) if at any time any of the representations
and  warranties  of the  Company  contained  in  any  agreement  (including  any
underwriting agreement) contemplated hereby ceases to be true and correct in all
material  respects;  (v) of the receipt by the Company of any notification  with
respect to the suspension of the  qualification or exemption from  qualification
of any of the  Registrable  Securities  for  sale  in any  jurisdiction,  or the
initiation or threatening  of any  Proceeding for such purpose;  and (vi) of the
occurrence of any event or passage of time that makes the  financial  statements
included in the Registration  Statement  ineligible for inclusion therein or any
statement  made in the  Registration  Statement  or  Prospectus  or any document
incorporated  or deemed to be  incorporated  therein by reference  untrue in any
material respect or that requires any revisions to the  Registration  Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus,  as the case may be, it will not contain any untrue statement
of a material  fact or omit to state any  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.

            (e) Use its best  efforts to avoid the  issuance  of, or, if issued,
obtain the  withdrawal  of (i) any order  suspending  the  effectiveness  of the
Registration  Statement,  or  (ii)  any  suspension  of  the  qualification  (or
exemption from  qualification) of any of the Registrable  Securities for sale in
any jurisdiction, at the earliest practicable moment.

            (f) If  requested by any  managing  underwriter  or the Holders of a
majority in interest of the Registrable Securities to be sold in connection with
an Underwritten Offering, (i) promptly incorporate in a Prospectus supplement or
post-effective  amendment to the Registration Statement such information as such
managing  underwriters  and such  Holders  reasonably  agree  should be included
therein,  and (ii) make all required  filings of such  Prospectus  supplement or
such  post-effective  amendment  as soon as  practicable  after the  Company has

                                      -5-
<PAGE>

received  notification  of the  matters to be  incorporated  in such  Prospectus
supplement or  post-effective  amendment;  provided,  however,  that the Company
shall not be required  to take any action  pursuant  to this  Section  3(f) that
would, in the opinion of counsel for the Company,  violate  applicable law or be
materially detrimental to the business prospects of the Company.

            (g) Furnish to each Holder and any  managing  underwriters,  without
charge,  at least one  conformed  copy of each  Registration  Statement and each
amendment thereto, including, if requested,  financial statements and schedules,
all documents  incorporated or deemed to be  incorporated  therein by reference,
and all  exhibits  to the  extent  requested  by such  Person  (including  those
previously  furnished or incorporated by reference) promptly after the filing of
such documents with the Commission.

            (h) Promptly  deliver to each Holder and any  underwriters,  without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus)  and each  amendment  or  supplement  thereto  as such  Persons  may
reasonably  request;  and  the  Company  hereby  consents  to the  use  of  such
Prospectus  and each  amendment  or  supplement  thereto by each of the  selling
Holders and any  underwriters  in  connection  with the offering and sale of the
Registrable   Securities  covered  by  such  Prospectus  and  any  amendment  or
supplement thereto.

            (i) Prior to any public offering of Registrable Securities,  use its
best  efforts to register or qualify or cooperate  with the selling  Holders and
any  underwriters  in connection  with the  registration  or  qualification  (or
exemption  from  such   registration  or   qualification)  of  such  Registrable
Securities  for offer and sale  under  the  securities  or Blue Sky laws of such
jurisdictions  within the United States as any Holder or underwriter requests in
writing,   to  keep  each  such  registration  or  qualification  (or  exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or  things  necessary  or  advisable  to  enable  the  disposition  in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided,  however,  that the Company shall not be required to qualify generally
to do business in any jurisdiction  where it is not then so qualified or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.

            (j)  Cooperate  with the Holders and any  managing  underwriters  to
facilitate  the timely  preparation  and delivery of  certificates  representing
Registrable   Securities  to  be  delivered  to  a  transferee   pursuant  to  a
Registration  Statement,  which  certificates  shall  be  free,  to  the  extent
permitted by  applicable  law, of all  restrictive  legends,  and to enable such
Registrable  Securities to be in such denominations and registered in such names
as any such managing underwriters or Holders may request.

            (k) Upon the occurrence of any event  contemplated  by Section 6(e),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related  Prospectus or any document  incorporated  or deemed to be  incorporated
therein  by  reference,  and file  any  other  required  document  so  that,  as
thereafter  delivered,  neither the  Registration  Statement nor such Prospectus
will contain an untrue  statement of a material fact or omit to state 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.

            (l) Use  its  best  efforts  to  cause  all  Registrable  Securities
relating to such  Registration  Statement to be listed on the OTC Bulletin Board
or on any other stock  market or trading  facility on which the shares of Common

                                      -6-
<PAGE>

Stock are  traded,  listed or quoted  (each a  "SUBSEQUENT  MARKET") as and when
required pursuant to the Purchase Agreement.

            (m) Enter into such agreements (including an underwriting  agreement
in form, scope and substance as is customary in Underwritten Offerings) and take
all such other  actions in  connection  therewith  (including  those  reasonably
requested  by any  managing  underwriters  and the  Holders of a majority of the
Registrable  Securities  being  sold) in order to  expedite  or  facilitate  the
disposition of such Registrable Securities.

            (n)  Comply  with  all  applicable  rules  and  regulations  of  the
Commission.

            (o) The Company may require  each  selling  Holder to furnish to the
Company  such  information   regarding  the  distribution  of  such  Registrable
Securities and the  beneficial  ownership of Common Stock held by such Holder as
is  required  by law to be  disclosed  in the  Registration  Statement,  and the
Company may exclude from such  registration  the  Registrable  Securities of any
such  Holder  who  unreasonably  fails  to  furnish  such  information  within a
reasonable time after receiving such request.

            (p) Each Holder  covenants  and agrees that (i) it will not sell any
Registrable  Securities under the  Registration  Statement until it has received
copies of the  Prospectus as then amended or  supplemented  as  contemplated  in
Section 3(h) and notice from the Company that such  Registration  Statement  and
any  post-effective  amendments thereto have become effective as contemplated by
Section 3(d) and (ii) it and its officers, directors or Affiliates, if any, will
comply  with the  prospectus  delivery  requirements  of the  Securities  Act as
applicable to it in connection with sales of Registrable  Securities pursuant to
the Registration Statement.

                                      -7-
<PAGE>

      4.    Registration Expenses

            (a)  All  fees  and  expenses  incident  to  the  performance  of or
compliance  with this  Agreement  by the  Company,  except as and to the  extent
specified in Section 4(b), shall be borne by the Company whether or not pursuant
to an  Underwritten  Offering and whether or not the  Registration  Statement is
filed or becomes  effective and whether or not any  Registrable  Securities  are
sold pursuant to the Registration  Statement.  The fees and expenses referred to
in  the  foregoing  sentence  shall  include,   without   limitation,   (i)  all
registration and filing fees (including,  without limitation,  fees and expenses
(A) with respect to filings  required to be made with the OTC Bulletin Board and
any Subsequent Market on which the Common Stock is then listed for trading,  and
(B) in compliance  with state  securities or Blue Sky laws  (including,  without
limitation, fees and disbursements of counsel for the Holders in connection with
Blue  Sky  qualifications  or  exemptions  of  the  Registrable  Securities  and
determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such  jurisdictions as the managing  underwriters,  if any, or
the  Holders of a majority  of  Registrable  Securities  may  designate)),  (ii)
printing  expenses   (including,   without  limitation,   expenses  of  printing
certificates  for  Registrable  Securities and of printing  prospectuses  if the
printing of prospectuses is requested by the managing  underwriters,  if any, or
by the  holders of a majority  of the  Registrable  Securities  included  in the
Registration Statement), (iii) messenger,  telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company,  (v) Securities Act liability
insurance, if the Company so desires such insurance,  and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the  transactions  contemplated by this Agreement.  In addition,  the Company
shall be  responsible  for all of its internal  expenses  incurred in connection
with  the  consummation  of the  transactions  contemplated  by  this  Agreement
(including,  without  limitation,  all salaries and expenses of its officers and
employees  performing  legal or  accounting  duties),  the expense of any annual
audit,  the fees and  expenses  incurred in  connection  with the listing of the
Registrable Securities on any securities exchange as required hereunder.

            (b) If the Holders require an Underwritten  Offering pursuant to the
terms hereof,  the Company shall be responsible for all costs, fees and expenses
in  connection  therewith,   except  for  the  fees  and  disbursements  of  the
Underwriters  (including any  underwriting  commissions and discounts) and their
legal counsel and accountants.  By way of illustration  which is not intended to
diminish  from  the  provisions  of  Section  4(a),  the  Holders  shall  not be
responsible  for,  and  the  Company  shall  be  required  to pay  the  fees  or
disbursements  incurred  by the  Company  (including  by its legal  counsel  and
accountants)  in connection  with, the  preparation and filing of a Registration
Statement and related  Prospectus  for such  offering,  the  maintenance of such
Registration  Statement in accordance with the terms hereof,  the listing of the
Registrable  Securities in accordance with the requirements hereof, and printing
expenses incurred to comply with the requirements hereof.

                                      -8-
<PAGE>

      5.    Indemnification

            (a)   Indemnification   by   the   Company.   The   Company   shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each  Holder,  the  officers,  directors,  agents  (including  any  underwriters
retained by such  Holder in  connection  with the offer and sale of  Registrable
Securities),   brokers   (including  brokers  who  offer  and  sell  Registrable
Securities  as principal as a result of a pledge or any failure to perform under
a margin call of Common  Stock),  investment  advisors and  employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the  Securities  Act or Section  20 of the  Exchange  Act) and the  officers,
directors,  agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, "LOSSES"), as incurred, arising
out of or relating to any untrue or alleged untrue  statement of a material fact
contained  in  the  Registration  Statement,  any  Prospectus  or  any  form  of
prospectus  or in any  amendment  or  supplement  thereto or in any  preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein  (in the case of any  Prospectus  or form of  prospectus  or
supplement  thereto,  in light of the circumstances  under which they were made)
not  misleading,  except to the extent,  but only to the  extent,  that (1) such
untrue statements or omissions are based solely upon information  regarding such
Holder  furnished  in writing to the  Company by such Holder  expressly  for use
therein,  or to the extent that such information  relates to such Holder or such
Holder's  proposed  method of  distribution  of  Registrable  Securities and was
reviewed and expressly  approved in writing by such Holder  expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement  thereto or (2) in the case of an occurrence of an event
of the type  specified  in Section  6(d)(ii)-(vi),  the use by such Holder of an
outdated or defective  Prospectus  after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 6(f). The Company shall notify
the Holders promptly of the  institution,  threat or assertion of any Proceeding
of which the Company is aware in connection with the  transactions  contemplated
by this Agreement.

            (b) Indemnification by Holders. Each Holder shall, severally and not
jointly,  indemnify  and hold  harmless the Company,  its  directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents or employees of such controlling  Persons,  to the
fullest  extent  permitted by  applicable  law,  from and against all Losses (as
determined by a court of competent  jurisdiction in a final judgment not subject
to appeal or  review)  arising  solely  out of or based  solely  upon any untrue
statement  of a material  fact  contained  in the  Registration  Statement,  any
Prospectus,  or any  form  of  prospectus,  or in any  amendment  or  supplement
thereto,  or  arising  solely  out of or based  solely  upon any  omission  of a
material fact required to be stated  therein or necessary to make the statements
therein not misleading to the extent,  but only to the extent,  that such untrue
statement or omission is contained in any information so furnished in writing by

                                      -9-
<PAGE>

such  Holder to the  Company  specifically  for  inclusion  in the  Registration
Statement or such Prospectus or to the extent that such  information  relates to
such Holder or such Holder's  proposed  method of  distribution  of  Registrable
Securities  and was  reviewed and  expressly  approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus,  or in any  amendment or supplement  thereto.  In no event shall the
liability of any selling  Holder  hereunder be greater in amount than the dollar
amount  of the  net  proceeds  received  by such  Holder  upon  the  sale of the
Registrable Securities giving rise to such indemnification obligation.

            (c) Conduct of Indemnification  Proceedings. If any Proceeding shall
be brought or asserted  against any Person  entitled to indemnity  hereunder (an
"INDEMNIFIED  PARTY"),  such Indemnified  Party shall promptly notify the Person
from whom  indemnity is sought (the  "INDEMNIFYING  PARTY") in writing,  and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably  satisfactory to the Indemnified Party and the payment of all
fees and expenses  incurred in connection with defense thereof;  provided,  that
the failure of any  Indemnified  Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally  determined  by a court
of  competent  jurisdiction  (which  determination  is not  subject to appeal or
further  review)  that  such  failure  shall  have  proximately  and  materially
adversely prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense  thereof,  but the fees
and expenses of such counsel shall be at the expense of such  Indemnified  Party
or Parties unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses;  or (2) the Indemnifying  Party shall have failed promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory to such Indemnified Party in any such Proceeding;  or (3) the named
parties to any such Proceeding  (including any impleaded  parties)  include both
such Indemnified  Party and the Indemnifying  Party, and such Indemnified  Party
shall have been  advised by counsel  that a conflict  of  interest  is likely to
exist if the same  counsel  were to  represent  such  Indemnified  Party and the
Indemnifying  Party (in which  case,  if such  Indemnified  Party  notifies  the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  affected without its written  consent,  which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

            All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent  incurred in connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified  Party,  as incurred,  within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification  hereunder;  provided,  that the Indemnifying  Party may require
such  Indemnified  Party to undertake to reimburse all such fees and expenses to
the extent it is finally  judicially  determined that such Indemnified  Party is
not entitled to indemnification hereunder).

            (d) Contribution.  If a claim for indemnification under Section 5(a)
or 5(b) is unavailable  to an  Indemnified  Party (by reason of public policy or
otherwise),   then  each  Indemnifying  Party,  in  lieu  of  indemnifying  such
Indemnified  Party,  shall  contribute  to the  amount  paid or  payable by such
Indemnified  Party  as a  result  of  such  Losses,  in  such  proportion  as is
appropriate  to  reflect  the  relative  fault  of the  Indemnifying  Party  and
Indemnified  Party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  Indemnifying  Party and  Indemnified  Party shall be

                                      -10-
<PAGE>

determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied by, such Indemnifying  Party or Indemnified Party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent  such  action,  statement  or  omission.  The amount  paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable  fees or  expenses  incurred  by such  party in  connection  with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the  indemnification  provided for in this Section was  available to
such party in accordance with its terms.

            The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds  actually  received  by such  Holder  from the sale of the  Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has  otherwise  been  required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any Person who was not guilty of such
fraudulent misrepresentation.

            The indemnity and contribution  agreements contained in this Section
are in addition to any liability that the  Indemnifying  Parties may have to the
Indemnified Parties.

      6.    Miscellaneous

            (a)  Remedies.  In the  event of a  breach  by the  Company  or by a
Holder,  of any of their  obligations  under this Agreement,  each Holder or the
Company,  as the case may be, in  addition to being  entitled  to  exercise  all
rights granted by law and under this Agreement,  including  recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary  damages would not provide  adequate
compensation  for any losses  incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific  performance  in respect of such breach,  it shall waive the
defense that a remedy at law would be adequate.

            (b) No Inconsistent  Agreements.  Neither the Company nor any of its
subsidiaries  has,  as of the date  hereof,  nor shall the Company or any of its
subsidiaries,  on or after the date of this Agreement,  enter into any agreement
with respect to its securities that is  inconsistent  with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.

            (c) No Piggyback on Registrations.  Except for the rights previously
granted to the  holders of the  Company's  Series D  Preferred  Stock and to the
extent  specified in Schedule  6(c)  hereto,  neither the Company nor any of its

                                      -11-
<PAGE>

security  holders (other than the Holders in such capacity  pursuant hereto) may
include  securities of the Company in the Registration  Statement other than the
Registrable Securities.

            (d)  Piggy-Back  Registrations.  If at any time when there is not an
effective  Registration Statement covering all of the Registrable Securities and
the Underlying  Shares, the Company shall determine to prepare and file with the
Commission a registration  statement relating to an offering for its own account
or the  account  of  others  under  the  Securities  Act  of  any of its  equity
securities,  other than on Form S-4 or Form S-8 (each as  promulgated  under the
Securities Act) or their then  equivalents  relating to equity  securities to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit  plans,  then the  Company  shall  send to each  holder  of  Registrable
Securities  written notice of such determination and, if within twenty (20) days
after receipt of such notice,  any such holder shall so request in writing,  the
Company  shall  include in such  registration  statement all or any part of such
Registrable Securities such holder requests to be registered; provided, however,
that the Company  shall not be required to register any  Registrable  Securities
pursuant to this Section 6(d) that are eligible for sale pursuant to Rule 144(k)
of the Commission.

            (e)  Prospectus  Delivery  Requirements.  Each Holder  covenants and
agrees  that  (i)  it  will  not  sell  any  Registrable  Securities  under  the
Registration  Statement  until it has received  copies of the Prospectus as then
amended or  supplemented  as  contemplated  in Section  3(h) and notice from the
Company  that such  Registration  Statement  and any  post-effective  amendments
thereto have become  effective as  contemplated  by Section 3(d) and (ii) it and
its officers,  directors or Affiliates,  if any, will comply with the prospectus
delivery  requirements  of the  Securities  Act as  applicable to any of them in
connection  with sales of Registrable  Securities  pursuant to the  Registration
Statement.

            (f) Discontinued Disposition.  Each Holder agrees by its acquisition
of such  Registrable  Securities that, upon receipt of a notice from the Company
of the  occurrence  of any event of the kind  described  in  Sections  3(d)(ii),
3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith discontinue
disposition of such  Registrable  Securities  under the  Registration  Statement
until such Holder's receipt of the copies of the supplemented  Prospectus and/or
amended  Registration  Statement  contemplated  by Section  3(k), or until it is
advised in writing (the  "ADVICE") by the Company that the use of the applicable
Prospectus  may be resumed,  and, in either  case,  has  received  copies of any
additional  or  supplemental  filings  that are  incorporated  or  deemed  to be
incorporated  by reference in such  Prospectus or  Registration  Statement.  The
Company may provide  appropriate  stop orders to enforce the  provisions of this
paragraph.

            (g)  Amendments  and  Waivers.  The  provisions  of this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given,  unless the same shall be in writing and signed by the Company
and the  Holders  of at least a  majority  of the then  outstanding  Registrable
Securities.  Notwithstanding  the foregoing,  a waiver or consent to depart from
the provisions  hereof with respect to a matter that relates  exclusively to the
rights of Holders and that does not directly or indirectly  affect the rights of
other Holders may be given by Holders of at least a majority of the  Registrable
Securities to which such waiver or consent relates; provided,  however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

                                      -12-
<PAGE>

            (h)  Notices.  Any  and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (Pacific
time) on a Business Day,  (ii) the Business Day after the date of  transmission,
if such notice or  communication  is delivered  via  facsimile at the  facsimile
telephone  number  specified  in the  Purchase  Agreement  later  than 6:30 p.m.
(Pacific  time) on any date and earlier than 11:59 p.m.  (Pacific  time) on such
date,  (iii)  the  Business  Day  following  the  date  of  mailing,  if sent by
nationally  recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as follows:

         If to the Company:                      e.Digital Corporation
                                                 13114 Evening Creek Drive S.
                                                 San Diego, CA 92128
                                                 Facsimile No.: (858) 486-3922
                                                 Attn:  Chief Executive Officer

         With copies to:                         Higham, McConnell & Dunning LLP
                                                 15 Enterprise, Suite 360
                                                 Aliso Viejo, CA 92656
                                                 Facsimile No.:  (949) 900-4401
                                                 Attn: Curt Barwick, Esq.

         If                                      to a Purchaser:  To the address
                                                 set    forth     under     such
                                                 Purchaser's    name    on   the
                                                 signature pages hereto.

         If to any other Person who is then the registered Holder:

                                                 To the  address of such  Holder
                                                 as  it  appears  in  the  stock
                                                 transfer books of the Company

or such other  address as may be designated  in writing  hereafter,  in the same
manner, by such Person.

            (i)  Successors  and  Assigns.  This  Agreement  shall  inure to the
benefit of and be binding upon the successors  and permitted  assigns of each of
the parties and shall inure to the benefit of each  Holder.  The Company may not
assign its rights or obligations  hereunder without the prior written consent of
each Holder.  An individual  Holder may not assign its rights hereunder  without
the consent of the Company.

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

                                      -13-
<PAGE>

            (k)  Governing  Law.  All  questions  concerning  the  construction,
validity,  enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
California,  without regard to the principles of conflicts of law thereof.  Each
party hereby irrevocably submits to the exclusive  jurisdiction of the state and
federal courts sitting in the City and County of San Diego for the  adjudication
of any dispute  hereunder  or in  connection  herewith  or with any  transaction
contemplated  hereby or discussed herein,  and hereby  irrevocably  waives,  and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service
of process and  consents  to process  being  served in any such suit,  action or
proceeding  by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient  service of process and notice  thereof.  Nothing  contained
herein  shall be deemed to limit in any way any  right to serve  process  in any
manner permitted by law.

            (l) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

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

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

            (o) Shares  Held by The  Company and its  Affiliates.  Whenever  the
consent  or  approval  of  Holders  of a  specified  percentage  of  Registrable
Securities is required hereunder,  Registrable Securities held by the Company or
its  Affiliates  (other than any Holder or  transferees or successors or assigns
thereof  if such  Holder is deemed  to be an  Affiliate  solely by reason of its
holdings of such  Registrable  Securities)  shall not be counted in  determining
whether  such  consent or  approval  was given by the  Holders of such  required
percentage.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                            SIGNATURE PAGE TO FOLLOW]

                                      -14-
<PAGE>

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

                                    E.DIGITAL CORPORATION

                                    By:_____________________________________
                                       Name:
                                       Title:

                                    [NAME OF PURCHASER]

                                    By:_____________________________________
                                       Name:
                                       Title:

                                    Address for Notice:

                                    Facsimile No.: (___)
                                    Attn: _____________

                                      -15-
<PAGE>

                          Registration Rights Agreement
                                 Schedule 6 (c)

Warrants to be registered under S-3:
                                                  Shares Underlying
Party                                                  Warrants
--------------------------------------------------------------------------
Jerry E Polis, Trustee                                  200,000
Eric N. Polis Trust                                     100,000
Charlotte O Polis, Trustee                               50,000
David A. Polis Trust                                     50,000
Mt. Savage Productions                                  200,000
Canusa Trading Ltd                                      200,000
Victor Gabourel                                         100,000
BMNV Investments Ltd                                    200,000
Robert Kaplan                                           100,000
Richard Daniels                                         100,000
Wayne Opperman                                          300,000
James & Josephine Zolin                                 400,000

---------------------------------------------------------------------------
Total                                                 2,000,000
---------------------------------------------------------------------------

                                      -16-

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