Document:

EXHIBIT 4.55

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
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  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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THESE  SECURITIES AND THE  SECURITIES  ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                              E.DIGITAL CORPORATION

                                     WARRANT

Warrant No. o                       Date of Original Issuance: November o, 2004

      e.Digital  Corporation,  a Delaware  corporation (the  "COMPANY"),  hereby
certifies that, for value received, ? or its, registered assigns (the "HOLDER"),
has the right to  purchase  from the Company up to a total of ? shares of common
stock,  $0.001 par value per share (the "COMMON  STOCK"),  of the Company  (each
such share, a "WARRANT SHARE" and all such shares,  the "WARRANT  SHARES") at an
exercise  price  equal to $0.50  per  share  (as  adjusted  from time to time as
provided in Section 8, the "EXERCISE PRICE"),  at any time and from time to time
from and after the date hereof and through and  including  November ?, 2007 (the
"EXPIRATION DATE"), and subject to the following terms and conditions.

      1. Registration of Warrant. The Company shall register this Warrant,  upon
records  to be  maintained  by  the  Company  for  that  purpose  (the  "WARRANT
REGISTER"),  in the name of the  record  Holder  hereof  from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise  hereof or any  distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

      2.  Registration of Transfers.  The Company shall register the transfer of
any portion of this  Warrant in the Warrant  Register,  upon  surrender  of this
Warrant,  with the Form of Assignment attached hereto duly completed and signed,
to the  Company's  transfer  agent or to the  Company at its  address  specified
herein. Upon any such registration or transfer, a new warrant to purchase Common
Stock, in substantially  the form of this Warrant (any such new warrant,  a "NEW
WARRANT"), evidencing the portion of this Warrant so transferred shall be issued
to the  transferee and a New Warrant  evidencing  the remaining  portion of this

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Warrant not so transferred,  if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee  thereof shall be deemed the
acceptance by such  transferee of all of the rights and  obligations of a holder
of a Warrant.

      3. Exercise and Duration of Warrants. This Warrant shall be exercisable by
the  registered  Holder  at any time and from  time to time on or after the date
hereof to and including the Expiration  Date. At 6:30 p.m.,  Pacific Time on the
Expiration  Date, the portion of this Warrant not exercised  prior thereto shall
be and become void and of no value.

      4. Delivery of Warrant Shares.

            (a) Upon delivery of the Form of Election to Purchase to the Company
(with the attached  Warrant  Shares  Exercise Log) at its address for notice set
forth in Section 14 and upon payment of the  Exercise  Price  multiplied  by the
number of Warrant  Shares  that the Holder  intends to purchase  hereunder,  the
Company  shall  promptly (but in no event later than five trading days after the
Date of  Exercise  (as  defined  herein))  issue and  deliver to the  Holder,  a
certificate  for the Warrant  Shares  issuable  upon such  exercise  free of all
restrictive  or other  legends,  other than as required  under Section 4(e). Any
person so designated by the Holder to receive  Warrant Shares shall be deemed to
have become  holder of record of such Warrant  Shares as of the Date of Exercise
of this Warrant.

            A "DATE OF  EXERCISE"  means the date on which the Holder shall have
delivered  to the Company (i) the Form of Election to Purchase  attached  hereto
(with the Warrant Exercise Log attached to it), appropriately completed and duly
signed and (ii) payment of the Exercise  Price for the number of Warrant  Shares
so indicated by the Holder to be purchased.

            (b) If the Company fails to deliver to the Holder a  certificate  or
certificates  representing  the Warrant Shares  issuable upon an exercise by the
third  trading  day after the Date of  Exercise,  then the Holder  will have the
right to rescind such exercise.

            (c) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same,  any waiver or consent
with respect to any provision  hereof,  the recovery of any judgment against any
person  or  any  action  to  enforce  the  same,  or any  setoff,  counterclaim,
recoupment,  limitation or  termination,  or any breach or alleged breach by the
Holder or any other person of any  obligation to the Company or any violation or
alleged violation of law by the Holder or any other person,  and irrespective of
any other  circumstance  which  might  otherwise  limit such  obligation  of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder,  at law or in  equity  including,  without  limitation,  a decree  of
specific  performance  and/or  injunctive  relief with respect to the  Company's
failure to timely deliver certificates  representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof. If the Company
breaches its  obligations  under this  Warrant,  then,  in addition to any other
liabilities the Company may have hereunder and under applicable law, the Company
shall pay or  reimburse  the  Holder on demand for all costs of  collection  and
enforcement (including reasonable attorneys fees and expenses).

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            (d) Transfer Restrictions.

                  (i) This  Warrant and the Warrant  Shares 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 this Warrant or any Warrant  Shares 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 to the effect that such
transfer does not require registration under the Securities Act. Notwithstanding
the foregoing,  the Company,  without  requiring a legal opinion as described in
the immediately preceding sentence, hereby consents to and agrees to register on
the books of the Company and with any transfer  agent for the  securities of the
Company any transfer of this Warrant and the Warrant  Shares by the Holder to an
Affiliate (as defined in Rule 405 under the Securities  Act) of the Holder or to
one or more funds or managed accounts under common  management with such Holder,
and any  transfer  among any such  Affiliates  or one or more  funds or  managed
accounts,  provided that the  transferee  certifies to the Company that it is an
"accredited  investor"  as defined in Rule 501(a) under the  Securities  Act and
that it is acquiring the Warrant and the Warrant  Shares  solely for  investment
purposes (subject to the qualifications hereof).

                  (ii)  Warrant  Shares  issued  while there is not an effective
registration  statement  covering the resale by the Holder of the Warrant Shares
(a  "REGISTRATION  STATEMENT")  or while the Holder may not resell such  Warrant
Shares pursuant to Rule 144(k) under the Securities Act shall be issued with the
following legend:

                  THESE  SECURITIES HAVE NOT 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  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.  HOWEVER,  THESE SECURITIES AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE  SECURITIES MAY BE PLEDGED IN CONNECTION  WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

                  (iii)  Notwithstanding  anything  to  the  contrary  contained
herein, Warrant Shares issued when there is an effective Registration Statement,
or at a time when the Holder may resell such  Warrant  Shares  under Rule 144(k)
under  the  Securities  Act,  or when  such  legend  is not  required  under the
Securities Act (including judicial  interpretations and pronouncements issued by
the Staff of the Commission)  shall be issued free of all restrictions and other
legends.  The Company  agrees that  following  the date on which a  Registration
Statement is first declared effective by the Securities and Exchange  Commission
and the date on which  Warrant  Shares may be resold under  144(k),  it will, no
later than five trading days  following  the delivery by a Holder to the Company

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of a certificate or certificates  representing  any Warrant Shares issued with a
restrictive  legend,  deliver  to such  Holder  certificates  representing  such
Warrant Shares which shall be free from all restrictive legends. The Company may
not make any notation on its records or give  instructions to any transfer agent
of the Company  which  enlarge the  restrictions  of transfer  set forth in this
Section.

      5. Charges, Taxes and Expenses.  Issuance and delivery of certificates for
shares of Common  Stock upon  exercise  of this  Warrant  shall be made  without
charge to the Holder for any issue or transfer tax,  withholding  tax,  transfer
agent fee or other  incidental tax or expense in respect of the issuance of such
certificates,  all of which  taxes and  expenses  shall be paid by the  Company;
provided,  however,  that the Company shall not be required to pay any tax which
may be payable in respect of any transfer  involved in the  registration  of any
certificates  for  Warrant  Shares or  Warrants in a name other than that of the
Holder.  The Holder shall be  responsible  for all other tax liability  that may
arise as a result of holding or transferring  this Warrant or receiving  Warrant
Shares upon exercise hereof.

      6. Replacement of Warrant.  If this Warrant is mutilated,  lost, stolen or
destroyed,  the  Company  shall  issue or cause to be  issued  in  exchange  and
substitution for and upon  cancellation  hereof,  or in lieu of and substitution
for this Warrant,  a New Warrant,  but only upon receipt of evidence  reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable  indemnity,  if  requested.  Applicants  for a New Warrant under such
circumstances  shall also  comply  with such other  reasonable  regulations  and
procedures and pay such other  reasonable  third-party  costs as the Company may
prescribe.

      7.  Reservation of Warrant Shares.  The Company  covenants that it will at
all times reserve and keep  available out of the aggregate of its authorized but
unissued  and  otherwise  unreserved  Common  Stock,  solely for the  purpose of
enabling  it to issue  Warrant  Shares upon  exercise of this  Warrant as herein
provided,  the number of Warrant Shares which are then issuable and  deliverable
upon the exercise of this entire  Warrant,  free from  preemptive  rights or any
other  contingent  purchase rights of persons other than the Holder (taking into
account the  adjustments and  restrictions of Section 8). The Company  covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.

      8. Certain  Adjustments.  The Exercise  Price and number of Warrant Shares
issuable upon  exercise of this Warrant are subject to  adjustment  from time to
time as set forth in this Section 8.

            (a) Stock  Dividends and Splits.  If the Company,  at any time while
this Warrant is  outstanding,  (i) pays a stock  dividend on its Common Stock or
otherwise  makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides  outstanding shares of Common Stock into
a larger number of shares, or (iii) combines  outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall

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be multiplied by a fraction of which the numerator shall be the number of shares
of Common  Stock  outstanding  immediately  before  such  event and of which the
denominator   shall  be  the  number  of  shares  of  Common  Stock  outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph  shall  become  effective  immediately  after the record  date for the
determination of stockholders entitled to receive such dividend or distribution,
and any  adjustment  pursuant  to clause (ii) or (iii) of this  paragraph  shall
become  effective  immediately  after the effective date of such  subdivision or
combination.

            (b) Pro Rata  Distributions.  If the Company, at any time while this
Warrant is outstanding, distributes to all holders of Common Stock (i) evidences
of its  indebtedness,  (ii) any security  (other than a  distribution  of Common
Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe
for  or  purchase  any  security,  or  (iv)  any  other  asset  (in  each  case,
"DISTRIBUTED  PROPERTY"),  then in each such case the  Exercise  Price in effect
immediately  prior to the record date fixed for  determination  of  stockholders
entitled  to receive  such  distribution  shall be adjusted  (effective  on such
record  date) to equal the  product of such  Exercise  Price times a fraction of
which the  denominator  shall be such Exercise  Price and of which the numerator
shall be such Exercise Price less the then fair market value of the  Distributed
Property  distributed in respect of one  outstanding  share of Common Stock,  as
determined  by the  Company's  independent  certified  public  accountants  that
regularly examine the financial  statements of the Company (an "APPRAISER").  In
such event,  the Holder,  after receipt of the  determination  by the Appraiser,
shall  have the  right to  select  an  additional  appraiser  (which  shall be a
nationally  recognized  accounting  firm),  in which case such fair market value
shall be deemed to equal the  average  of the values  determined  by each of the
Appraiser and such appraiser.  As an alternative to the foregoing  adjustment to
the Exercise Price, at the request of the Holder  delivered  before the 90th day
after such record date,  the Company  will  deliver to such Holder,  within five
trading  days after such request (or, if later,  on the  effective  date of such
distribution),  the  Distributed  Property  that  such  Holder  would  have been
entitled  to receive in respect  of the  Warrant  Shares for which this  Warrant
could have been exercised immediately prior to such record date.

            (c) Fundamental Transactions.  If, at any time while this Warrant is
outstanding,  (i) the Company effects any merger or consolidation of the Company
with or into  another  Person,  (ii)  the  Company  effects  any  sale of all or
substantially  all of its  assets  in one or a series of  related  transactions,
(iii) any tender  offer or  exchange  offer  (whether  by the Company or another
Person) is completed  pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities,  cash or property, or (iv)
the Company effects any  reclassification  of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively  converted into
or  exchanged  for other  securities,  cash or  property  (in any such  case,  a
"FUNDAMENTAL  TRANSACTION"),  then the Holder shall have the right thereafter to
receive,  upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been  entitled to receive upon the  occurrence
of such  Fundamental  Transaction  if it had  been,  immediately  prior  to such
Fundamental  Transaction,  the  holder of the  number  of  Warrant  Shares  then
issuable upon exercise in full of this Warrant (the "ALTERNATE  CONSIDERATION").
The aggregate  Exercise  Price for this Warrant will not be affected by any such
Fundamental Transaction, but the Company shall apportion such aggregate Exercise
Price among the Alternate  Consideration in a reasonable  manner  reflecting the
relative value of any different  components of the Alternate  Consideration.  If
holders  of Common  Stock are given  any  choice as to the  securities,  cash or
property to be received in a Fundamental  Transaction,  then the Holder shall be
given the same choice as to the  Alternate  Consideration  it receives  upon any
exercise of this Warrant following such Fundamental Transaction. In addition, at
the Holder's  request,  any successor to the Company or surviving entity in such

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Fundamental  Transaction shall issue to the Holder a new warrant consistent with
the  foregoing  provisions  and  evidencing  the Holder's  right to purchase the
Alternate  Consideration for the aggregate Exercise Price upon exercise thereof.
The  terms of any  agreement  pursuant  to which a  Fundamental  Transaction  is
affected shall include terms requiring any such successor or surviving entity to
comply with the  provisions of this  paragraph (c) and insuring that the Warrant
(or  any  such  replacement  security)  will  be  similarly  adjusted  upon  any
subsequent   transaction  analogous  to  a  Fundamental   Transaction.   If  any
Fundamental  Transaction  constitutes or results in a Change of Control, then at
the request of the Holder  delivered  before the 90th day after such Fundamental
Transaction,  the Company  (or any such  successor  or  surviving  entity)  will
purchase  the  Warrant  from the Holder for a  purchase  price,  payable in cash
within five trading days after such request (or, if later, on the effective date
of the  Fundamental  Transaction),  equal  to the  Black  Scholes  value  of the
remaining  unexercised  portion of this Warrant on the date of such request.  As
used in this Warrant,  "CHANGE OF CONTROL" means the occurrence of any of (i) an
acquisition after the date hereof by any Person or "GROUP" (as described in Rule
13d-5(b)(1)  promulgated  under the Exchange Act) of more than  one-third of the
voting rights or equity  interests in the Company,  (ii) a  replacement  of more
than  one-half of the members of the  Company's  board of directors  that is not
approved by those  individuals  who are member of the board of  directors on the
date  hereof  in one or a series  of  related  transactions,  (iii) a merger  or
consolidation  of the Company or any subsidiary or a sale of more than one-third
of the assets of the Company in one or a series of related transactions,  unless
following  such  transactions  or series of  transactions,  the  holders  of the
Company's  securities  prior to the first such  transaction  continue to hold at
least  two-thirds of the voting rights and equity  interests in of the surviving
entity or acquirer of such  assets,  or (iv) the  execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (i), (ii) or (iii).

            (d) Number of Warrant Shares.  Simultaneously with any adjustment to
the Exercise Price pursuant to paragraphs (a) or (b) of this Section, the number
of Warrant  Shares that may be purchased  upon exercise of this Warrant shall be
increased proportionately,  so that after such adjustment the aggregate Exercise
Price payable  hereunder for the increased number of Warrant Shares shall be the
same as the  aggregate  Exercise  Price  in  effect  immediately  prior  to such
adjustment. Notwithstanding the foregoing, no adjustment will be made under this
Section 8 in respect of any grant of options or  warrants,  or the  issuance  of
additional   securities,   under  any  duly  authorized  Company  stock  option,
restricted stock plan or stock purchase plan.

            (e)  Calculations.  All  calculations  under this Section 8 shall be
made to the nearest cent or the nearest 1/100th of a share,  as applicable.  The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company,  and the  disposition
of any such shares shall be considered an issue or sale of Common Stock.

            (f) Notice of  Adjustments.  Upon the occurrence of each  adjustment
pursuant to this  Section 8, the Company at its expense  will  promptly  compute
such  adjustment  in  accordance  with the terms of this  Warrant  and prepare a
certificate setting forth such adjustment, including a statement of the adjusted

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Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable  upon  exercise  of  this  Warrant  (as  applicable),   describing  the
transactions  giving  rise to such  adjustments  and showing in detail the facts
upon which such  adjustment  is based.  Upon written  request,  the Company will
promptly  deliver  a copy of each  such  certificate  to the  Holder  and to the
Company's transfer agent.

            (g)  Notice of  Corporate  Events.  If the  Company  (i)  declares a
dividend or any other  distribution  of cash,  securities  or other  property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or  solicits  stockholder  approval  for any  Fundamental  Transaction  or (iii)
authorizes the voluntary  dissolution,  liquidation or winding up of the affairs
of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction, at least 20 calendar days
prior to the applicable record or effective date on which a Person would need to
hold  Common  Stock in order to  participate  in or vote  with  respect  to such
transaction,  and the Company will take all steps reasonably  necessary in order
to insure that the Holder is given the  practical  opportunity  to exercise this
Warrant prior to such time so as to  participate in or vote with respect to such
transaction;  provided,  however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described  in such notice.  Until the exercise of this Warrant or any portion
of this  Warrant,  the Holder  shall not have nor  exercise any rights by virtue
hereof as a stockholder of the Company  (including  without limitation the right
to  notification  of stockholder  meetings or the right to receive any notice or
other  communication  concerning  the business and affairs of the Company  other
than as provided in this Section 8(g)).

            (h)  Subsequent  Sales.  If the  Company  at any  time  prior to the
Expiration  Date shall sell shares of Common  Stock (or  securities  convertible
into shares of Common Stock) at a price per share (or having a conversion  price
per share,  if a security  convertible  into  Common  Stock)  which is less than
$0.19,  then the  Warrant  Exercise  Price  shall be  reduced to equal the lower
offering price.  Notwithstanding anything to the contrary herein, the provisions
of this  Section  8(h)  shall not apply to any such  securities  issued or to be
issued  pursuant to: (i)  employees,  consultants,  officers or directors of the
Company  pursuant  to any stock  option,  stock  purchase  or stock  bonus plan,
agreement  or  arrangement  approved  by  the  Board  of  Directors;   (ii)  the
acquisition of another business entity or business segment of any such entity by
the  Company by merger,  purchase  of  substantially  all of the assets or other
reorganization  whereby the Company will own more than fifty (50%) of the voting
power of such business segment of any such entity; (iii) vendors or customers or
to other  persons  in similar  commercial  situations  with the  Company if such
issuance  is  approved  by the Board of  Directors;  (iv)  corporate  partnering
transactions  on terms approved by the Board of Directors;  (v) the terms of any
of the  Company's  preferred  stock,  warrants or other  convertible  securities
outstanding  on the date  hereof;  (vi)  borrowings,  direct or  indirect,  from
financial  institutions  regularly  engaged in the  business  of lending  money,
whether or not presently  authorized  which include an equity component which is
not a major component of such borrowing or (v) other non-cash transactions.

            (i) Payment of Exercise  Price.  The Holder  shall pay the  Exercise
Price by delivery of immediately available funds.

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      9.  Limitation  on  Exercise.  Notwithstanding  anything  to the  contrary
contained  herein,  the number of shares of Common Stock that may be acquired by
the Holder upon any  exercise of this Warrant (or  otherwise in respect  hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or  other  issuance),   the  total  number  of  shares  of  Common  Stock  then
beneficially  owned by such Holder and its Affiliates under Section 13(d) of the
Exchange  Act,  does not  exceed  4.999%  of the  total  number  of  issued  and
outstanding  shares of Common  Stock  (including  for such purpose the shares of
Common  Stock  issuable  upon  such  exercise).  For such  purposes,  beneficial
ownership  shall be determined in accordance  with Section 13(d) of the Exchange
Act and the rules and regulations  promulgated  thereunder.  Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation  set forth in this  paragraph and  determined  that
issuance of the full number of Warrant Shares  requested in such Exercise Notice
is permitted under this paragraph.  The restrictions set forth in this Section 9
shall not apply in  determining  the  consideration  and the number of shares or
other  securities,  and other  property to which Holder may be entitled upon any
adjustment or event contemplated in Section 8 of this Warrant.

      10. No Fractional  Shares.  No fractional shares of Warrant Shares will be
issued  in  connection  with  any  exercise  of  this  Warrant.  In  lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such  fraction  multiplied  by the closing  price of one
Warrant  Share  as  reported  on the  American  Stock  Exchange  on the  date of
exercise.

      11. Exchange Act Filings. The Holder agrees and acknowledges that it shall
have  sole  responsibility  for  making  any  applicable  filings  with the U.S.
Securities  and  Exchange  Commission  pursuant  to  Sections  13  and 16 of the
Securities  Exchange Act of 1934, as amended,  as a result of its acquisition of
this  Warrant  and the  Warrant  Shares and any  future  retention  or  transfer
thereof.

      12.  Piggy-Back  Registrations.  If at any time during  after the Original
Issue  Date  and  through  the  Expiration   Date  there  is  not  an  effective
Registration  Statement covering all of the Warrant Shares and 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  written notice of such  determination  and, if within
fifteen 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 of
the Warrant Share such holder  requests to be  registered,  subject to customary
underwriter cutbacks applicable to all holders of registration rights.

      13.  Notices.  Any and all notices or other  communications  or deliveries
hereunder (including without limitation any Exercise Notice) 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 number specified in this Section prior to 6:30 p.m.  (Pacific Time) on
a trading day, (ii) the next trading day after the date of transmission, if such

                                       8
<PAGE>

notice or  communication  is delivered  via  facsimile at the  facsimile  number
specified  in this Section on a day that is not a trading day or later than 6:30
p.m. (Pacific Time) on any trading day, (iii) the trading 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  addresses  for such  communications  shall be:  (i) if to the  Company,  to
e.Digital  Corporation,  13114 Evening Creek Drive,  South San Diego,  CA 92128,
Facsimile No.: (858) 486-3992,  Attn: Chief Executive Officer, or (ii) if to the
Holder,  to the address or facsimile number appearing on the Warrant Register or
such other address or facsimile  number as the Holder may provide to the Company
in accordance with this Section.

      14.  Warrant  Agent.  The Company  shall serve as warrant agent under this
Warrant.  Upon 30 days'  notice to the  Holder,  the  Company  may appoint a new
warrant agent.  Any corporation  into which the Company or any new warrant agent
may be merged or any corporation  resulting from any  consolidation to which the
Company or any new warrant  agent shall be a party or any  corporation  to which
the  Company  or  any  new  warrant  agent  transfers  substantially  all of its
corporate trust or shareholders  services  business shall be a successor warrant
agent under this Warrant  without any further act.  Any such  successor  warrant
agent shall  promptly  cause  notice of its  succession  as warrant  agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

      15. Miscellaneous.

            (a) This Warrant shall be binding on and inure to the benefit of the
parties  hereto and their  respective  successors  and  assigns.  Subject to the
preceding  sentence,  nothing in this Warrant  shall be construed to give to any
Person  other than the  Company  and the Holder  any legal or  equitable  right,
remedy or cause of action under this  Warrant.  This Warrant may be amended only
in  writing  signed by the  Company  and the  Holder  and their  successors  and
assigns.

            (b) All questions concerning the construction, validity, enforcement
and  interpretation  of this  Warrant  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 agrees
that all legal  proceedings  concerning  the  interpretations,  enforcement  and
defense of the  transactions  contemplated  by this  Warrants  (whether  brought
against  a party  hereto  or its  respective  affiliates,  directors,  officers,
shareholders,  employees or agents)  shall be commenced in the state and federal
courts  sitting in the City and County of San Diego.  Each party  hereto  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 this
Warrant),  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  hereto  hereby  irrevocably  waives  personal  service of

                                       9
<PAGE>

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 Warrant 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. Each party hereto  (including  its  affiliates,
agents,  officers,  directors and employees) hereby  irrevocably  waives, to the
fullest extent  permitted by applicable  law, any and all right to trial by jury
in any legal  proceeding  arising  out of or  relating  to this  Warrant  or the
transactions  contemplated  hereby.  If either party shall commence an action or
proceeding to enforce any provisions of this Warrant,  then the prevailing party
in such  action or  proceeding  shall be  reimbursed  by the other party for its
attorneys  fees and other costs and expenses  incurred  with the  investigation,
preparation and prosecution of such action or proceeding.

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

            (d) In case any one or more of the  provisions of this Warrant shall
be invalid or unenforceable in any respect,  the validity and  enforceability of
the  remaining  terms and  provisions  of this  Warrant  shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially  reasonable
substitute  therefor,  and upon so agreeing,  shall  incorporate such substitute
provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                       10
<PAGE>

      IN  WITNESS  WHEREOF,  the  Company  has  caused  this  Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                            E.DIGITAL CORPORATION

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

                                       11
<PAGE>

                          FORM OF ELECTION TO PURCHASE

To e.Digital Corporation:

      In  accordance  with the  Warrant  enclosed  with this Form of Election to
Purchase,  the undersigned hereby  irrevocably elects to purchase  _____________
shares of common  stock  ("Common  Stock"),  $0.001  par  value  per  share,  of
e.Digital  Corporation  and encloses  herewith  $________ in cash,  certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the  Warrant)  for the number of shares of Common  Stock to which
this Form of Election to Purchase  relates,  together with any applicable  taxes
payable by the undersigned pursuant to the Warrant.

      By its  delivery  of  this  Form  of  Election  To  Purchase,  the  Holder
represents  and  warrants to the Company  that in giving  effect to the exercise
evidenced hereby the Holder will not beneficially own in excess of the number of
shares of Common Stock  (determined  in  accordance  with  Section  13(d) of the
Securities  Exchange Act of 1934)  permitted to be owned under Section 9 of this
Warrant to which this notice relates.

      The undersigned  requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of

PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER

                         (Please print name and address)

                                       12
<PAGE>

                                              WARRANT SHARES EXERCISE LOG

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
             Date                Number of Warrant Shares     Number of Warrant Shares     Number of Warrant Shares
                                 Available to be Exercised            Exercised            Remaining to be Exercised
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                           <C>                          <C>

----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       13
<PAGE>

                               FORM OF ASSIGNMENT

      [To be completed and signed only upon transfer of Warrant]

      FOR VALUE RECEIVED,  the undersigned  hereby sells,  assigns and transfers
unto  ________________________________  the  right  represented  by  the  within
Warrant to purchase ____________ shares of Common Stock of e.Digital Corporation
to which the within Warrant  relates and appoints  ________________  attorney to
transfer  said right on the books of  e.Digital  Corporation  with full power of
substitution in the premises.

Dated:   _______________, ____

                                      ---------------------------------------
                                      (Signature   must   conform   in   all
                                      respects   to   name  of   holder   as
                                      specified on the face of the Warrant)

                                      ---------------------------------------
                                      Address of Transferee

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

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

In the presence of:

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

                                       14QT 5, INC.
                              Employment Agreement

         This Employment Agreement ("Agreement") is made and entered into this
24th day of September 2004 by and between QT 5, Inc., a Delaware corporation
(the "Company"), and Edward W. Withrow, III ("Executive").

                                    RECITALS

         WHEREAS, Executive has the experience to provide services to the
Company of an extraordinary character which gives such services a unique value;
and

         WHEREAS, the Company desires to retain the services of Executive, and
Executive desires to be employed by the Company for the term of this Agreement.

         NOW AND THEREFORE, the Company and Executive, intending to be legally
bound, hereby agree as follows:

         1. Employment. The Company hereby employs Executive as the CHIEF
EXECUTIVE OFFICER of the Company. For the term of Executive's employment, and
upon the other conditions set forth in this Agreement, Executive accepts such
employment and agrees to perform services for the Company, subject always to
such resolutions as are established from time to time by the Board of Directors
of the Company.

         2. Term. The term of Executive's employment hereunder shall become
effective on September 27, 2004 and continue through October 1, 2007 subject to
the termination provisions contained herein. The Agreement may be terminated by
the Company only for cause as set forth below, and shall not constitute "at
will" employment.

         3. Position and Duties.

                  3.1. Services with the Company. During the term of this
Agreement, Executive agrees to perform such duties and exercise such powers
related thereto as may from time to time be assigned to him by the Company's
Board of Directors (the "Board"). Executive shall duly and diligently perform
all duties assigned to him while in the employ of the Company. He shall be bound
by and faithfully observe and abide by all rules and regulations of the Company
which are brought to his notice or of which he should be reasonably aware.
Executive hereby accepts such employment, agrees to serve the Company in the
capacities indicated, and agrees to use Executive's best efforts in, and shall
devote sufficient working time, attention, skill and energies to, the
advancement of the interests of the Company and the performance of Executive's
duties and responsibilities hereunder.

                  3.2. No Conflicting Duties. Executive shall devote sufficient
productive time, ability, and attention to the business of the Company during
the term of this Agreement in a manner that will serve the best interests of the
Company. This Agreement shall not be interpreted to prohibit Executive from
making passive personal investments or conduct other business affairs if those
activities do not materially interfere with the services required under this
Agreement.

                                       1
<PAGE>

         4.       Compensation.

                  4.1 Annual Salary. As compensation for all services to be
rendered by Executive under this Agreement, the Company shall pay to Executive
an annual salary of One Hundred Ninety Eight Thousand Dollars ($198,000.00) (the
"Annual Salary"). Executive's Annual Salary shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies. On or
before the yearly anniversary date of this Agreement, the Board of Directors
shall determine the increase to the Annual Salary, if any, but in no event shall
it exceed ten (10%) . The adjusted Annual Salary shall become effective on
September 24th of each year.

                  4.2 Signing Bonus. Upon the execution of this Agreement,
Executive shall earn a signing bonus of (a) Seventy Five Thousand Dollars
($75,000) payable by the Company in four quarterly payments of Eighteen Thousand
Seven Hundred Fifty Dollars ($18,750) each on January 1, 2005, April 1, 2005,
July 1, 2005 and October 1, 2005 and (b) in addition upon the execution of this
Agreement, Executive shall be issued One Hundred Fifty Million (150,000,000)
shares of company's common stock, collectively (the "Signing Bonus").

                  4.3 Bonus. The Company shall pay to Executive an annual cash
bonus (the "Bonus") equal to the amount computed herein below (the "Performance
Share Amount") for Fiscal Year Ended June 30, for the years 2005, 2006 and 2007,
(each, a "Bonus Year") as the case may be, subject to meeting the Company's
"Sales Goal" (as that term is defined below) for the applicable Bonus Year. The
Performance Share Amount shall equal 100,000 times the difference between: (i)
the "Average Bid Price" (as defined below) for the applicable Bonus Year, and
(ii) at the closing price of the Company's stock on the day of the closing of
the 1 to 150 reverse stock split; provided, however, in any Bonus Year, the
maximum Bonus payable to Executive shall not exceed ten percent (10%) of net
sales of the Company for such Bonus year. The Bonus shall be payable as follows:
On July 31 of each Bonus year, an amount equal to eighty percent (80%) of the
Bonus shall be paid to Executive based upon the internal unaudited financial
statements of the Company for the prior year. The balance of the Bonus for such
Bonus Year (as adjusted for the actual amount of Bonus computed based the final
year end audited financial statements of the Company) shall be paid when such
financial statements are available, but without interest, provided, however, if
the audited financial statements are not available by October 15 of the next
year, Company shall pay the balance of the Bonus computed on the basis of the
unaudited internal financial statements, and the parties shall adjust any
amounts due to or from Executive therefore when the audited financial statements
become available.

                  The "Average Bid Price" shall mean for any fiscal (calendar)
year the average of the Bid Price of the Company's Common Stock as quoted on
NASDAQ, the OTC Bulletin Board or on the "pink sheets" published by the national
Daily Quotation Bureau, as the case may be, on the trading day nearest the 15th
and 30th day of each month (each, a "Quote Date") for the months of January
through June for such Bonus Year. Assuming the Sales Goal is met for Fiscal Year
Ended June 30, 2005, the following is an example of the calculation of the Bonus
for Bonus Year Ended June 30, 2005:

                  The Bid Prices on each Quote Date are summed and the sum is
divided by 12. If the Average Bid Price for the months of January through June
2005 was $0.115, then the Performance Share Amount for Fiscal Year Ending June
30, 2005 shall be $8,500 [($0.115 - $0.03) x 100,000].

                                       2
<PAGE>

                  The Sales Goal for Fiscal Year Ending June 30, 2005 shall be
$250,000. The Sales Goal Fiscal Year Ending June 30, 2006 shall be $1,000,000.
The Sales Goal for Fiscal Year Ending June 30, 2007 shall be $3,000,000. "Sales
Goal" is defined as net sales as that term is defined by generally accepted
accounting standards, (i.e. gross sales, less returns and allowances) of
medical, diagnostic, cosmetic or therapeutic products or devices and related
services, whether sold by the Company as an OEM for other manufacturers or
distributors or manufactured and distributed directly by the Company.

                  The Bonus payable to Executive shall be due and payable only
if Executive is employed on the last day of each fiscal year; provided, however,
if Executive is terminated by date of termination, assuming the Sales Goal is
met for such Bonus Year.

                  4.4 Incentive Stock Options. The Company shall issue incentive
stock options to Executive pursuant to the Company's qualified Incentive Stock
Option Plan. At the discretion of, and in an amount to be determined by, the
Board of Directors, no later than seventy five (75) days following the end of
each of the Company's fiscal years, Executive will receive incentive stock
options at an exercise price equal to the fair market value at the end of each
fiscal year. However, if the Executive owns at least 10% of the Company's common
stock, then the purchase price that will be paid to the Company when the option
is exercised and the stock purchase must equal 110% of the fair market value of
the common stock as of the date of grant. The Incentive Stock Options shall vest
immediately and shall terminate ten years from the date of grant. Executive may
exercise the incentive stock options, at his sole and absolute discretion, by
providing the Company with written notice accompanied by (1) cash or a cashier's
check an amount equal to the product of the incentive stock option exercise
price and the number of shares Executive desires to purchase pursuant to this
provision; or (2) by a cashless exercise whereby Executive receives the net
amount of shares after deducting the value of the exercise price.

                  4.5 Stock and Option Registration Rights. In the event the
Company with or without the assistance of an investment banking firm, conducts a
registered offering of the Company's shares, the Company shall provide Executive
with registration rights to all shares, warrants and/or options which Executive
then holds or otherwise directly or constructively owns.

                  4.6 Expenses. During the term of this Agreement, to the extent
that such expenditures satisfy the criteria under the Internal Revenue Code for
deductibility for federal income tax purposes as ordinary and necessary business
expenses, the Company shall reimburse Executive promptly for reasonable business
expenditures, including but not limited to: airfare, automobile rental, parking,
entertainment, lodging, meals, entertainment, telephone, copy costs, and
supplies and all other expenses incurred by Executive in the performance of his
duties made and substantiated in accordance with policies, practices and
procedures established from time to time by the Company and, incurred in the
pursuit and furtherance of the Company's business goodwill.

                  4.7 Annual Vacation. Executive shall be entitled to Ten (10)
business days' vacation time for the first year, Fifteen (15) business days for
the second year and Twenty (20) business days for the third year without loss of
compensation. In the event that Executive is unable for any reason to take the
total amount of vacation time authorized herein during any year, any unused
vacation time shall carry over from year to year. Any earned but unused vacation
time will be paid to Executive based upon his annual rate of all compensation
paid in the previous twelve months upon termination or expiration of this
Agreement.

                                       3
<PAGE>
                  4.8 Sick Leave. Executive shall be entitled to seven (7) days
sick leave each year without loss of compensation. In the event that Executive
does not take the total amount of sick leave authorized herein during any year,
any unused sick leave shall carry over from year to year. Any entitled but
unused sick leave will be paid to Executive based upon his annual rate of all
compensation paid in the previous twelve months upon termination or expiration
of this Agreement.

                  4.9 Health Insurance. The Company, at its sole cost and
expense, shall provide Executive and his immediate family members with
comprehensive PPO or HMO health insurance including but not limited to medical,
dental, vision and disability coverage.

                  4.10 Payment Upon Sale or Merger of Company. In the event the
Company shall merge, sell a controlling interest, or sell a majority of its
assets, the Company shall provide for Executive to vested any but unexercised
options to purchases shares in the Company which are held by Executive at the
earlier of (1) the Company's execution of a Letter of Intent to (a) merge, (b)
sell a controlling interest, or (c) sell a majority of its assets, or (2) the
date of any such merger or sale is consummated, the Company shall pay Executive
cash in the amount equal to the difference between the consideration paid to the
Company on a per share basis less the exercise price of the option, the value of
which is multiplied by the number of options which Executive holds.

                  4.11 Automobile Allowance. The Company shall provide Executive
a monthly automobile allowance in the amount of $700.00 (the "Automobile
Allowance"). In the event this Agreement is terminated prior to its expiration
for any reason, all payments of the Automobile Allowance shall cease immediately
and Executive shall be responsible for any and all payments remaining on any
lease, loan or rental agreement in connection with said Automobile Allowance.
Payment of the aforesaid allowance shall be subject to any applicable
withholdings tax. The Executive shall be responsible for all income taxes
imposed on the Executive by reason of the automobile allowance.

         5. Termination and Termination Benefits. Notwithstanding the provisions
of Section 2, Executive's employment under this Agreement shall terminate under
the following circumstances set forth in this Section 5.

                  5.1 Termination by the Company for Cause. Executive's
employment under this Agreement may be terminated for Cause without further
liability on the part of the Company other than for accrued but unpaid Annual
Salary through the date of termination effective immediately upon written notice
to Executive. No termination for Cause may be invoked by the Company without
first providing Executive with at least thirty (30) days written notice to
correct any breach, default or causation. Such written notice shall set forth
with reasonable specificity the Company's basis for such notice of termination
and Executive shall have thirty (30) days to correct the condition set forth in
the notice. "Cause" shall mean the following:

                                       4
<PAGE>

                           (i) Commission of a criminal act involving fraud,
                           embezzlement or breach of trust or other act which
                           would prohibit Executive from holding his position
                           under the rules of the Securities and Exchange
                           Commission.

                           (ii) Willful, knowing and malicious violation of
                           written corporate policy or rules of the Company.

                           (iii) Willful, knowing and malicious misuse,
                           misappropriation, or disclosure of any of the
                           Proprietary Matters.

                           (iv) Misappropriation, concealment, or conversion of
                           any money or property of the Company.

                           (v) Being under the habitual influence of
                           intoxicating liquors or controlled substances while
                           in the course of employment.

                           (vi) Reckless and wanton conduct which endangers the
                           safety of other persons or property during the course
                           of employment or while on premises leased or owned by
                           the Company.

                           (vii) The performance of duties in a habitually
                           unsatisfactory manner after being repeatedly advised
                           in writing by the Company of such unsatisfactory
                           performance.

                           (viii) Continued incapacity on the part of Executive
                           to perform his duties, unless waived by the Company.

                  5.2      Termination Without Cause.

                  5.2.1 Disability. Executive's employment shall terminate upon
Executive becoming totally or permanently disabled for a period of six (6)
months or more. For purposes of this Agreement, the term "totally or permanently
disabled" or "total or permanent disability" means Executive's inability on
account of sickness or accident, whether or not job related, to engage in
regularly or to perform adequately his assigned duties under this Agreement as
determined reasonably and in good faith by the Company. Prior to terminating the
Agreement pursuant to this provision, the Company shall engage and consult one
or more physicians as may be reasonable. In the event of termination pursuant to
this paragraph, Executive shall be entitled to receive any accrued and unpaid
base salary and any and all accrued, earned but unpaid bonuses or benefits
described in Section 4 to which Executive is entitled on the date of such
termination. All other rights Executive has under any benefit or stock option
plans and programs shall be determined in accordance with the terms of such
plans and programs.

                  5.2.2 Death. Executive's employment shall terminate
immediately upon the death of Executive. Upon such termination, the obligations
of Executive and Company under this Agreement shall immediately cease. If
Executive's employment is terminated pursuant to this paragraph, Company shall
pay Executive's beneficiary or beneficiary designated by Executive in writing to
the Company, or in the absence of such beneficiary, Executive's estate, shall be
entitled to receive (i) any accrued but unpaid base salary and any and all
accrued, earned but unpaid bonuses or benefits described in Section 4 to which
Executive is entitled on the date of such termination, and (ii) Executive's then
current base salary through ninety (90) days after the date of death in
accordance with Company's payroll procedures as if Executive's employment by
Company had continued for such period. All other rights Executive has under any
benefit or stock option plans and programs shall be determined in accordance
with the terms and conditions of such plans and programs.

                                       5
<PAGE>

                  5.2.3 Election By Executive. Executive's employment may be
terminated at any time by Executive upon not less than ninety (90) days written
notice by Executive to the Board of Directors. Upon such termination, the
obligations of the Executive and Company under this Agreement shall immediately
cease. In the event of termination pursuant to this paragraph, Executive shall
be entitled to receive any accrued and unpaid base salary and any and all
accrued, earned but unpaid bonuses or benefits described in Section 4 to which
Executive is entitled on the date of such termination. All other rights
Executive has under any benefit or stock option plans and programs shall be
determined in accordance with the terms of such plans and programs.

                  5.2.4 Election By Company. Executive's employment may be
terminated at any time by the Company upon not less than ninety (90) days
written notice by the Company to Executive. Upon such termination, the
obligations of the Executive and Company under this Agreement shall immediately
cease. In the event of termination pursuant to this paragraph, Executive shall
be entitled to receive (i) any accrued and unpaid base salary and (ii) any and
all accrued, earned but unpaid bonuses or benefits described in Section 4 to
which Executive is entitled on the date of such termination. Additionally, in
the event of termination of Executive's employment with the Company pursuant to
this Section 5.2.4, the Company shall pay to Executive (i) In the event of
Executive's termination within the first year of the Term, One Hundred Fifty
percent (150%) of Executive's Annual Salary for the remainder of the Term,
payable on the date of termination; (ii) In the event of Executive's termination
within the second year of the Term, One Hundred Twenty-Five percent (125%) of
Executive's annual salary for the remainder of the Term, payable on the date of
termination; and (iii) In the event of Executive's termination within the third
year of the Term, One Hundred percent (100%) of Executive's annual salary for
the remainder of the Term, payable on the date of termination.. All other rights
Executive has under any benefit or stock option plans and programs shall be
determined in accordance with the terms of such plans and programs.

                  5.3 Surrender of Records and Property. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, electronic media, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, and calculations or copies
thereof, which are the property of the Company and which relate in any way to
the business, products, practices or techniques of the Company, and all other
property (keys, office equipment, computers, mobile phones, credit cards, etc.)
of the Company and Proprietary Matter, including but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control.

                                       6
<PAGE>

                  5.4 Full Satisfaction of Claims. The parties hereto agree that
the benefits upon termination described in this Section 5 are to be in full
satisfaction, compromise and release of any claims arising out of any
termination of the Executive's employment pursuant to Section 6(c), and such
amounts shall be contingent upon the Executive's delivery of a general release
of such claims upon termination of employment in a form reasonably satisfactory
to the Company, it being understood that none of the benefits shall be provided
unless and until the Executive determines to execute and deliver such release.

                  5.5 Survival of Terms. Notwithstanding termination of this
Agreement as provided in this Section 5 or any other termination of Executive's
employment with the Company, Executive's obligations under Sections 6, 8, 9 and
10 hereof shall survive any termination of Executive's employment with the
Company at any time and for any reason.

         6. Proprietary Matter. Except as permitted or directed by the Company,
Executive shall not during the term of his employment or at any time thereafter
divulge, furnish, disclose, or make accessible (other than in the ordinary
course of the business of the Company) to anyone for use in any way any
confidential, secret, or proprietary knowledge or information of the Company
("Proprietary Matter") which Executive has acquired or become acquainted with or
will acquire or become acquainted with, whether developed by himself or by
others, including, but not limited to, any trade secrets, confidential or secret
designs, processes, formulae, software or computer programs, plans, devices or
material (whether or not patented or patentable, copyrighted or copyrightable)
directly or indirectly useful in any aspect of the business of the Company, any
confidential customer, distributor or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any other
confidential, secret or non-public aspects of the business of the Company.
Executive acknowledges that the Proprietary Matter constitutes a unique and
valuable asset of the Company acquired at great time and expense by the Company,
and that any disclosure or other use of the Proprietary Matter other than for
the sole benefit of the Company would be wrongful and would cause irreparable
harm to the Company. Both during and after the term of this Agreement, Executive
will refrain from any acts or omissions that would reduce the value of
Proprietary Matter to the Company. The foregoing obligations of confidentiality,
however, shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a direct
or indirect result of the breach of this Agreement by Executive nor shall it
apply to any knowledge or information Executive had prior to the execution of
this Agreement.

         7. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program, or venture involving the Company and a third party or parties, all
rights in the project, program, or venture shall belong to the Company and shall
constitute a corporate opportunity belonging exclusively to the Company. Except
as expressly approved in writing by the Company, Executive shall not be entitled
to any interest in such project, program, or venture or to any commission,
finder's fee or other compensation in connection therewith, other than the
compensation to be paid to Executive as provided in this Agreement.

         8. Non-Solicitation of Executives. During Executive's employment by the
Company hereunder and for the one (1) year period following the termination of
such employment for any reason, Executive shall not, either directly or
indirectly, on his own behalf or in the service or on behalf of others solicit,
divert or hire away, or attempt to solicit, divert or hire away any person then
employed full time by the Company.

                                       7
<PAGE>

         9. Non-Competition. Executive agrees that he shall not, during the term
of this Agreement, and for a period of one (1) year thereafter:

                           (i) directly or indirectly own, engage in, manage,
                           operate, join, control, or participate in the
                           ownership, management, operation, or control of, or
                           be connected as a stockholder, partner, member, joint
                           venturer, director, officer, Executive, consultant,
                           agent, beneficiary, or otherwise with, any
                           corporation, limited liability company, partnership,
                           sole proprietorship, association, business, trust, or
                           other organization, entity or individual which
                           develops, manufactures or markets products or
                           performs services which are competitive with or
                           similar to the products or services of the Company or
                           its subsidiaries; provided, that Executive may own,
                           directly or indirectly, securities of any entity
                           traded on any national securities exchange or listed
                           on the National Association of Securities Dealers
                           Automated Quotation System if Executive does not,
                           directly or indirectly, own 1% or more of any class
                           of equity securities, or securities convertible into
                           or exercisable or exchangeable for 1% or more of any
                           class of equity securities, of such entity;

                           (ii) call upon, solicit, direct, take away, provide
                           products or services to, or attempt to call upon,
                           solicit, direct, take away or provide products or
                           services to, or accept any orders of business from
                           any customers or clients of the Company for products
                           or services which are competitive with or similar to
                           the products or services of the Company or its
                           subsidiaries.

                           (iii) directly or indirectly request or advise any
                           present or future supplier, service provider or
                           financial resource of the Company to withdraw,
                           curtail or cancel the furnishing of such service or
                           resource to the Company.

         10.      Confidentiality.

                  10.1 Confidentiality. In the course of performing services
hereunder on behalf of the Company and its affiliates, Executive has had and
from time to time will have access to Confidential Information. Executive agrees
(i) to hold the Confidential Information in strict confidence, (ii) not to
disclose the Confidential Information to any person (other than in the regular
business of the Company or its affiliates), and (iii) not to use, directly or
indirectly, any of the Confidential Information for any purpose other than on
behalf of the Company and its affiliates. All documents, records, data,
apparatus, equipment and other physical property, whether or not pertaining to
Confidential Information, that are furnished to Executive by the Company or are
produced by Executive in connection with Executive's employment will be and
remain the sole property of the Company. Upon the termination of Executive's
employment with the Company for any reason and as and when otherwise requested
by the Company, all Confidential Information (including, without limitation, all
data, memoranda, customer lists, notes, programs and other papers and items, and
reproductions thereof relating to the foregoing matters) in Executive's
possession or control, shall be immediately returned to the Company.

                                       8
<PAGE>

                  10.2 Confidential Information. As used in this Agreement, the
term "Confidential Information" shall mean information belonging to the Company
of value to the Company or with respect to which Company has right in the course
of conducting its business and the disclosure of which could result in a
competitive or other disadvantage to the Company. Confidential Information
includes information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, stored in any medium,
including, by way of example and without limitation, trade secrets, ideas,
concepts, designs, configurations, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts processes, techniques,
formulas, software, improvements, inventions, domain names, data, know-how,
discoveries, copyrightable materials, marketing plans and strategies, sales and
financial reports and forecasts, customer lists, studies, reports, records,
books, contracts, instruments, surveys, computer disks, diskettes, tapes,
computer programs and business plans, prospects and opportunities (such as
possible acquisitions or dispositions of businesses or facilities) which have
been discussed or considered by the management of the Company. Confidential
Information includes information developed by Executive in the course of
Executive's employment by the Company, as well as other information to which
Executive may have access in connection with Executive's employment.
Confidential Information also includes the confidential information of others
with which the Company has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in the public
domain, unless due to breach of Executive's duties under Section 10.1. 11.
Assignment. This Agreement shall not be assignable, in whole or in part, by
either party without the written consent of the other party, except that the
Company may, without the consent of Executive, assign its rights and obligations
under this Agreement to any corporation, firm or other business entity (i) with
or into which the Company may merge or consolidate, or (ii) to which the Company
may sell or transfer all or substantially all of its assets or of which fifty
percent (50%) or more of the equity investment and of the voting control is
owned, directly or indirectly, by, or is under common ownership with, the
Company. Upon such assignment by the Company, the Company shall obtain the
assignees' written agreement enforceable by Executive to assume and perform, and
after the date of such assignment, the terms, conditions, and provisions imposed
by this Agreement upon the Company. After any such assignment by the Company and
such written agreement by the assignee, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement including this
section.

         12. Indemnification. The Company shall indemnify Executive as provided
in the Delaware General Corporations Code, Company's Charter or Bylaws in effect
at the commencement of this Agreement. The scope of indemnification to which
Executive is entitled shall not be diminished, but may be expanded by the
Company, by amendment of the Company's Bylaws, Articles of Incorporation or
otherwise. Executive shall indemnify and hold the Company harmless from all
liability for loss, damages or injury resulting from the negligence or
misconduct of Executive.

         13. Liability Insurance. The Company shall provide, at its sole cost
and expense, under which Executive shall be covered, Directors and Officers
Liability Insurance and Errors and Omissions Liability Insurance in coverage
amounts not less than $10 million, respectively.

         14. Miscellaneous.

                                       9
<PAGE>

                  14.1 Preparation of Agreement. This Agreement was prepared by
the Company solely on behalf of such party. Each party acknowledges that: (i) he
or it had the advice of, or sufficient opportunity to obtain the advice of,
legal counsel separate and independent of legal counsel for any other party
hereto; (ii) the terms of the transactions contemplated by this Agreement are
fair and reasonable to such party; and (iii) such party has voluntarily entered
into the transactions contemplated by this Agreement without duress or coercion.
Each party further acknowledges that such party was not represented by the legal
counsel of any other party hereto in connection with the transactions
contemplated by this Agreement, nor was he or it under any belief or
understanding that such legal counsel was representing his or its interests.
Except as expressly set forth in this Agreement, each party shall pay all legal
and other costs and expenses incurred or to be incurred by such party in
negotiating and preparing this Agreement; in performing due diligence or
retaining professional advisors; in performing any transactions contemplated by
this Agreement; or in complying with such party's covenants, agreements and
conditions contained herein. Each party agrees that no conflict, omission or
ambiguity in this Agreement, or the interpretation thereof, shall be presumed,
implied or otherwise construed against any other party to this Agreement on the
basis that such party was responsible for drafting this Agreement.

                  14.2 Cooperation. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things, and to execute and deliver any documents that may be reasonably
necessary or otherwise reasonably required to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay or expense.

                  14.3     Governing Law.    This   Agreement  is  made  under
and shall be government by and construed in accordance with the laws of the
State of California.

                  14.4 Entire Agreement.This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.

                  14.5 Legal Proceedings. Should any party institute or should
the parties otherwise become a party to any action or proceeding to enforce or
interpret this Agreement, the prevailing party in any such action or proceeding
shall be entitled to receive from the non-prevailing party all costs and
expenses of prosecuting or defending the action or proceeding. This Agreement
and the rights of each party under this Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the laws of the
State of California.

                  14.6 Withholding Taxes. The Company shall undertake to make
deductions, withholdings and tax reports with respect to payments and benefits
under this Agreement to the extent that it reasonably and in good faith believes
that it is required to make such deductions, withholdings and tax reports.
Payments under this Agreement shall be in amounts net of any such deductions or
withholdings. Nothing in this Agreement shall be construed to require the
Company to make any payments to compensate the Executive for any adverse tax
effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.

                  14.7 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.

                                       10
<PAGE>

                  14.8 No Wavier. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

                  14.9 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted here
from and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.

                  14.10 Notices. Any and all notices, requests or other
communications required or permitted in or by any provision of this Agreement
shall be in writing and may be delivered personally or by certified mail
directed to the addressee at such person's or entity's last known post office
address, and if given by certified mail, shall be deemed to have been delivered
when deposited in such, mail postage prepaid.

         This Agreement is executed on the date first written above at Westlake,
California.

Company:                                          Executive:
QT 5, Inc.

By: _________________________                     ___________________________
    Fred De Luca, Secretary                       Edward W. Withrow, III

                                       11

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