Document:

EXHIBIT
      4.1 

    

    YTXP
      CORPORATION

    2006
      STOCK INCENTIVE PLAN

    

    1.    Establishment,
      Purpose and Types of Awards

    

    YTXP
      Corporation, a Nevada corporation (the “Company”),
      hereby establishes the YTXP Corporation 2006 STOCK INCENTIVE PLAN (the
“Plan”).
      The
      purpose of the Plan is to promote the long-term growth and profitability of
      the
      Company by (i) providing key people with incentives to improve stockholder
      value and to contribute to the growth and financial success of the Company
      through their future services, and (ii) enabling the Company to attract,
      retain and reward the best-available persons.  

    

    The
      Plan
      permits the granting of stock options (including incentive stock options
      qualifying under Code section 422 and nonqualified stock options), stock
      appreciation rights, restricted or unrestricted stock awards, phantom stock,
      performance awards, other stock-based awards, or any combination of the
      foregoing.

    

    2.    Definitions
      

    

    Under
      this Plan, except where the context otherwise indicates, the following
      definitions apply:

    

    (a)    “Administrator”
      means
      the Board or the committee(s) or officer(s) appointed by the Board that have
      authority to administer the Plan as provided in Section 3
      hereof.

    

    (b)    “Affiliate”
      means
      any entity, whether now or hereafter existing, which controls, is controlled
      by,
      or is under common control with, the Company (including, but not limited to,
      joint ventures, limited liability companies, and partnerships). For this
      purpose, “control”
shall
      mean ownership of 50% or more of the total combined voting power or value of
      all
      classes of stock or interests of the entity.

    

    (c)    “Award”
      means
      any
      stock option, stock appreciation right, stock award, phantom stock award,
      performance award, or other stock-based award.

    

    (d)    “Board”
      means
      the Board of Directors of the Company.

    

    (e)    “Change
      in Control” means:
      (i) the acquisition (other than from the Company) in one or more
      transactions by any Person, as defined in this Section 2(e),
      of the
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
      Securities Exchange Act of 1934, as amended) of 50% or more of (A) the then
      outstanding shares of the securities of the Company, or (B) the combined
      voting power of the then outstanding securities of the Company entitled to
      vote
      generally in the election of directors (the “Company
      Voting Stock”);
      (ii) the closing of a sale or other conveyance of all or substantially all
      of the assets of the Company; or (iii) the effective time of any merger,
      share exchange, consolidation, or other business combination involving the
      Company if immediately after such transaction persons who hold a majority of
      the
      outstanding voting securities entitled to vote generally in the election of
      directors of the surviving entity (or the entity owning 100% of such surviving
      entity) are not persons who, immediately prior to such transaction, held the
      Company Voting Stock; provided,
      however,
      that a
      Change in Control shall not include (Y) a
      public
      offering of capital stock of the Company or (Z) any
      transaction pursuant to which shares of capital stock of the Company are
      transferred or issued to any trust, charitable organization, foundation, family
      partnership or other entity controlled directly or indirectly by, or established
      for the benefit of, Michael C. Shores or his immediate family members (including
      spouses, children, grandchildren, parents, and siblings, in each case to include
      adoptive relations), or transferred to any such immediate family members. For
      purposes of this Section 2(e),
      a
“Person”
means
      any individual, entity or group within the meaning of Section 13(d)(3) or
      14(d)(2) of the Securities Exchange Act of 1934, as amended, other than:
      employee benefit plans sponsored or maintained by the Company and corporations
      controlled by the Company.

    

    (f)    “Code”
      means
      the
      Internal Revenue Code of 1986, as amended, and any regulations promulgated
      thereunder.

     

    
      
         

      

      
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    (g)    “Common
      Stock” means
      shares of common stock of the Company, par value of $0.001 per
      share.

    

    (h)    “Fair
      Market Value” means,
      with respect to a share of the Company’s Common Stock for any purpose on a
      particular date, the value determined by the Administrator in good faith.
      However, if the Common Stock is registered under Section 12(b) or 12(g) of
      the Securities Exchange Act of 1934, as amended, and listed for trading on
      a
      national exchange or market, “Fair
      Market Value”
      means,
      as applicable, (i) either the closing price or the average of the high and
      low sale price on the relevant date, as determined in the Administrator’s
      discretion, quoted on the New York Stock Exchange, the American Stock Exchange,
      or the Nasdaq National Market; (ii) the last sale price on the relevant
      date quoted on the Nasdaq SmallCap Market; (iii) the average of the high
      bid and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin
      Board Service or by the National Quotation Bureau, Inc. or a comparable service
      as determined in the Administrator’s discretion; or (iv) if
      the
      Common Stock is not quoted by any of the above, the average of the closing
      bid
      and asked prices on the relevant date furnished by a professional market maker
      for the Common Stock, or by such other source, selected by the Administrator.
      If
      no public trading of the Common Stock occurs on the relevant date but the shares
      are so listed, then Fair Market Value shall be determined as of the next
      preceding date on which trading of the Common Stock does occur. For all purposes
      under this Plan, the term “relevant
      date”
as
      used
      in this Section
      2(h) means
      either
      the date as of which Fair Market Value is to be determined or the next preceding
      date on which public trading of the Common Stock occurs, as determined in the
      Administrator’s discretion.

     

    (i)    “Grant
      Agreement”
      means a
      written document memorializing the terms and conditions of an Award granted
      pursuant to the Plan and shall incorporate the terms of the Plan.

    

    3.    Administration

    

    (a)    Administration
      of the Plan.
      The Plan
      shall be administered by the Board or by such committee or committees as may
      be
      appointed by the Board from time to time. To the extent allowed by applicable
      state law, the Board by resolution may authorize an officer or officers to
      grant
      Awards (other than Stock Awards) to other officers and employees of the Company
      and its Affiliates, and, to the extent of such authorization, such officer
      or
      officers shall be the Administrator.

    

    (b)    Powers
      of the Administrator.
      The
      Administrator shall have all the powers vested in it by the terms of the Plan,
      such powers to include authority, in its sole and absolute discretion, to grant
      Awards under the Plan, prescribe Grant Agreements evidencing such Awards and
      establish programs for granting Awards.

    

    The
      Administrator shall have full power and authority to take all other actions
      necessary to carry out the purpose and intent of the Plan, including, but not
      limited to, the authority to: (i) determine the eligible persons to whom,
      and the time or times at which Awards shall be granted; (ii) determine the
      types of Awards to be granted; (iii) determine the number of shares to be
      covered by or used for reference purposes for each Award; (iv) impose such
      terms, limitations, restrictions and conditions upon any such Award as the
      Administrator shall deem appropriate; (v) modify, amend, extend or renew
      outstanding Awards, or accept the surrender of outstanding Awards and substitute
      new Awards (provided however, that, except as provided in Section 6
      or 7(d)
      of the
      Plan, any modification that would materially adversely affect any outstanding
      Award shall not be made without the consent of the holder); (vi) accelerate
      or otherwise change the time in which an Award may be exercised or becomes
      payable and to waive or accelerate the lapse, in whole or in part, of any
      restriction or condition with respect to such Award, including, but not limited
      to, any restriction or condition with respect to the vesting or exercisability
      of an Award following termination of any grantee’s employment or other
      relationship with the Company; (vii) establish objectives and conditions,
      if any, for earning Awards and determining whether Awards will be paid after
      the
      end of a performance period; and (viii) for any purpose, including but not
      limited to, qualifying for preferred tax treatment under foreign tax laws or
      otherwise complying with the regulatory requirements of local or foreign
      jurisdictions, to establish, amend, modify, administer or terminate sub-plans,
      and prescribe, amend and rescind rules and regulations relating to such
      sub-plans.

    

    The
      Administrator shall have full power and authority, in its sole and absolute
      discretion, to administer and interpret the Plan, Grant Agreements and all
      other
      documents relevant to the Plan and Awards issued thereunder, and to adopt and
      interpret such rules, regulations, agreements, guidelines and instruments for
      the administration of the Plan and for the conduct of its business as the
      Administrator deems necessary or advisable.

     

    
      
         

      

      
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    (c)    Non-Uniform
      Determinations.
      The
      Administrator’s determinations under the Plan (including without limitation,
      determinations of the persons to receive Awards, the form, amount and timing
      of
      such Awards, the terms and provisions of such Awards and the Grant Agreements
      evidencing such Awards) need not be uniform and may be made by the Administrator
      selectively among persons who receive, or are eligible to receive, Awards under
      the Plan, whether or not such persons are similarly situated.

    

    (d)    Limited
      Liability. To
      the
      maximum extent permitted by law, no member of the Administrator shall be liable
      for any action taken or decision made in good faith relating to the Plan or
      any
      Award thereunder.

    

    (e)    Indemnification.
      To the
      maximum extent permitted by law and by the Company’s charter and by-laws, the
      members of the Administrator shall be indemnified by the Company in respect
      of
      all their activities under the Plan.

    

    (f)    Effect
      of Administrator’s Decision.
      All
      actions taken and decisions and determinations made by the Administrator on
      all
      matters relating to the Plan pursuant to the powers vested in it hereunder
      shall
      be in the Administrator’s sole and absolute discretion and shall be conclusive
      and binding on all parties concerned, including the Company, its stockholders,
      any participants in the Plan and any other employee, consultant, or director
      of
      the Company, and their respective successors in interest.

    

    4.    Shares
      Available for the Plan

    

    Subject
      to adjustments as provided in Section 7(d)
      of the
      Plan, the shares of Common Stock that may be issued with respect to Awards
      granted under the Plan shall not exceed an aggregate of 10,000,000 shares of
      Common Stock. The Company shall reserve such number of shares for Awards under
      the Plan, subject to adjustments as provided in Section 7(d)
      of the
      Plan. If any Award, or portion of an Award, under the Plan expires or terminates
      unexercised, becomes unexercisable or is forfeited or otherwise terminated,
      surrendered or canceled as to any shares, or if any shares of Common Stock
      are
      surrendered to the Company in connection with any Award (whether or not such
      surrendered shares were acquired pursuant to any Award), or
      if any
      shares are withheld by the Company, the
      shares subject to such Award and the surrendered
      and withheld
      shares
      shall thereafter be available for further Awards under the Plan; provided,
      however,
      that
      any such shares that are surrendered to or
      withheld by the
      Company in connection with any Award or that are otherwise forfeited after
      issuance shall not be available for purchase pursuant to incentive stock options
      intended to qualify under Code section 422.

    

    5.    Participation

    

    Participation
      in the Plan shall be open to all employees, officers, and directors of, and
      other individuals providing bona fide services to or for, the Company, or of
      any
      Affiliate of the Company, as may be selected by the Administrator from time
      to
      time. The Administrator may also grant Awards to individuals in connection
      with
      hiring, retention or otherwise, prior to the date the individual first performs
      services for the Company or an Affiliate, provided
      that
      such Awards shall not become vested or exercisable prior to the date the
      individual first commences performance of such services.

    

    6.    Awards

    

    The
      Administrator, in its sole discretion, establishes the terms of all Awards
      granted under the Plan. Awards may be granted individually or in tandem with
      other types of Awards. All Awards are subject to the terms and conditions
      provided in the Grant Agreement. The Administrator may permit or require a
      recipient of an Award to defer such individual’s receipt of the payment of cash
      or the delivery of Common Stock that would otherwise be due to such individual
      by virtue of the exercise of, payment of, or lapse or waiver of restrictions
      respecting, any Award. If any such payment deferral is required or permitted,
      the Administrator shall, in its sole discretion, establish rules and procedures
      for such payment deferrals.

    

    (a)    Stock
      Options.
      The
      Administrator may from time to time grant to eligible participants Awards of
      incentive stock options as that term is defined in Code section 422 or
      nonstatutory stock options; provided,
      however,
      that
      Awards of incentive stock options shall be limited to employees of the Company
      or of any current or hereafter existing “parent
      corporation”
or
      “subsidiary
      corporation,”
as
      defined in Code sections 424(e) and (f), respectively, of the Company. Options
      intended to qualify as incentive stock options under Code section 422 must
      have an exercise price at least equal to Fair Market Value as of the date of
      grant, but nonstatutory stock options may be granted with an exercise price
      less
      than Fair Market Value. No stock option shall be an incentive stock option
      unless so designated by the Administrator at the time of grant or in the Grant
      Agreement evidencing such stock option. All options shall be exercised within
      90
      calendar days of any termination of the employee’s or officer’s employment with
      the Company.

     

    
      
         

      

      
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    (b)    Stock
      Appreciation Rights. The
      Administrator may from time to time grant to eligible participants Awards of
      Stock Appreciation Rights (“SAR”).
      An
      SAR entitles the grantee to receive, subject to the provisions of the Plan
      and
      the Grant Agreement, a payment having an aggregate value equal to the product
      of
      (i) the excess of (A) the Fair Market Value on the exercise date of
      one share of Common Stock over (B) the base price per share specified in
      the Grant Agreement, times (ii) the number of shares specified by the SAR,
      or portion thereof, which is exercised. Payment by the Company of the amount
      receivable upon any exercise of an SAR may be made by the delivery of Common
      Stock or cash, or any combination of Common Stock and cash, as determined in
      the
      sole discretion of the Administrator. If upon settlement of the exercise of
      an
      SAR a grantee is to receive a portion of such payment in shares of Common Stock,
      the number of shares shall be determined by dividing such portion by the Fair
      Market Value of a share of Common Stock on the exercise date. No fractional
      shares shall be used for such payment and the Administrator shall determine
      whether cash shall be given in lieu of such fractional shares or whether such
      fractional shares shall be eliminated.

    

    (c)    Stock
      Awards. The
      Administrator may from time to time grant restricted or unrestricted stock
      Awards to eligible participants in such amounts, on such terms and conditions,
      and for such consideration, including no consideration or such minimum
      consideration as may be required by law, as it shall determine. A stock Award
      may be paid in Common Stock, in cash, or in a combination of Common Stock and
      cash, as determined in the sole discretion of the Administrator.

    

    (d)    Phantom
      Stock.
      The
      Administrator may from time to time grant Awards to eligible participants
      denominated in stock-equivalent units (“phantom
      stock”)
      in
      such amounts and on such terms and conditions as it shall determine. Phantom
      stock units granted to a participant shall be credited to a bookkeeping reserve
      account solely for accounting purposes and shall not require a segregation
      of
      any of the Company’s assets. An Award of phantom stock may be settled in Common
      Stock, in cash, or in a combination of Common Stock and cash, as determined
      in
      the sole discretion of the Administrator. Except as otherwise provided in the
      applicable Grant Agreement, the grantee shall not have the rights of a
      stockholder with respect to any shares of Common Stock represented by a phantom
      stock unit solely as a result of the grant of a phantom stock unit to the
      grantee.

    

    (e)    Performance
      Awards.
      The
      Administrator may, in its discretion, grant performance awards which become
      payable on account of attainment of one or more performance goals established
      by
      the Administrator. Performance awards may be paid by the delivery of Common
      Stock or cash, or any combination of Common Stock and cash, as determined in
      the
      sole discretion of the Administrator. Performance goals established by the
      Administrator may be based on the Company’s or an Affiliate’s operating income
      or one or more other business criteria selected by the Administrator that apply
      to an individual or group of individuals, a business unit, or the Company or
      an
      Affiliate as a whole, over such performance period as the Administrator may
      designate.

    

    (f)    Other
      Stock-Based Awards.
      The
      Administrator may from time to time grant other stock-based awards to eligible
      participants in such amounts, on such terms and conditions, and for such
      consideration, including no consideration or such minimum consideration as
      may
      be required by law, as it shall determine. Other stock-based awards may be
      denominated in cash, in Common Stock or other securities, in stock-equivalent
      units, in stock appreciation units, in securities or debentures convertible
      into
      Common Stock, or in any combination of the foregoing and may be paid in Common
      Stock or other securities, in cash, or in a combination of Common Stock or
      other
      securities and cash, all as determined in the sole discretion of the
      Administrator.

    

    7.    Miscellaneous

    

    (a)    Withholding
      of Taxes.
      Grantees and holders of Awards shall pay to the Company or its Affiliate, or
      make provision satisfactory to the Administrator for payment of, any taxes
      required to be withheld in respect of Awards under the Plan no later than the
      date of the event creating the tax liability. The Company or its Affiliate
      may,
      to the extent permitted by law, deduct any such tax obligations from any payment
      of any kind otherwise due to the grantee or holder of an Award. In the event
      that payment to the Company or its Affiliate of such tax obligations is made
      in
      shares of Common Stock, such shares shall be valued at Fair Market Value on
      the
      applicable date for such purposes and shall not exceed in amount the minimum
      statutory tax withholding obligation.

     

    
      
         

      

      
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    (b)    Loans.
      The
      Company or its Affiliate may make or guarantee loans to grantees to assist
      grantees in exercising Awards and satisfying any withholding tax
      obligations.

    

    (c)    Transferability.
      Except
      as otherwise determined by the Administrator, and in any event in the case
      of an
      incentive stock option or a stock appreciation right granted with respect to
      an
      incentive stock option, no Award granted under the Plan shall be transferable
      by
      a grantee otherwise than by will or the laws of descent and distribution. Unless
      otherwise determined by the Administrator in accord with the provisions of
      the
      immediately preceding sentence, an Award may be exercised during the lifetime
      of
      the grantee, only by the grantee or, during the period the grantee is under
      a
      legal disability, by the grantee’s guardian or legal
      representative.

    

    (d)    Adjustments
      for Corporate Transactions and Other Events.

     

    
      	 	
              (i)

            	
              Stock
                Dividend, Stock Split and Reverse Stock Split. In
                the event of a stock dividend of, or stock split or reverse stock
                split
                affecting, the Common Stock, (A) the maximum number of shares of
                such
                Common Stock as to which Awards may be granted under this Plan,
                as
                provided in Section 4
                of
                the Plan, and (B) the number of shares covered by and the exercise
                price and other terms of outstanding Awards, shall, without further
                action
                of the Board, be adjusted to reflect such event
                unless the Board determines, at the time it approves such stock dividend,
                stock split or reverse stock split, that no such adjustment shall
                be
                made.
                The Administrator may make adjustments, in its discretion, to address
                the
                treatment of fractional shares and fractional cents that arise with
                respect to outstanding Awards as a result of the stock dividend,
                stock
                split or reverse stock split.

            

    

     

    
      	 	
              (ii)

            	
              Non-Change
                in Control Transactions. Except
                with respect to the transactions set forth in Section 7(d)(i),
                in the event of any change affecting the Common Stock, the Company
                or its
                capitalization, by reason of a spin-off, split-up, dividend,
                recapitalization, merger, consolidation or share exchange, other
                than any
                such change that is part of a transaction resulting in a Change in
                Control
                of the Company, the
                Administrator, in its discretion and without the consent of the holders
                of
                the Awards, may make (A) appropriate adjustments to the maximum
                number and kind of shares reserved for issuance or with respect to
                which
                Awards may be granted under the Plan, as provided in Section 4
                of
                the Plan, and (B) any adjustments in outstanding Awards, including
                but not limited to modifying the number, kind and price of securities
                subject to Awards.

            

    

     

    
      	 	
              (iii)

            	
              Change
                in Control Transactions. In
                the event of any transaction resulting in a Change in Control of
                the
                Company, outstanding stock options and other Awards that are payable
                in or
                convertible into Common Stock under this Plan will terminate upon
                the
                effective time of such Change in Control unless provision is made
                in
                connection with the transaction for the continuation or assumption
                of such
                Awards by, or for the substitution of the equivalent awards of, the
                surviving or successor entity or a parent thereof. In the event of
                such
                termination, the holders of stock options and other Awards under
                the Plan
                will be permitted, immediately before the Change in Control, to exercise
                or convert all portions of such stock options or other Awards under
                the
                Plan that are then exercisable or convertible or which become exercisable
                or convertible upon or prior to the effective time of the Change
                in
                Control. If, immediately before the Change in Control, no stock of
                the
                Company is readily tradeable on an established securities market
                or
                otherwise, and the vesting of an Award or Awards pursuant to this
                Section 7(d)(iii)
                would be treated as a “parachute payment” (as defined in section 280G
                of the Code), then such Award or Awards shall not vest unless the
                requirements of the shareholder approval exemption of
                section 280G(b)(5) of the Code have been satisfied with respect to
                such Award or Awards. 

            

    

     

    
      
         

      

      
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              (iv)

            	
              Unusual
                or Nonrecurring Events. The
                Administrator is authorized to make, in its discretion and without
                the
                consent of holders of Awards, adjustments in the terms and conditions
                of,
                and the criteria included in, Awards in recognition of unusual or
                nonrecurring events affecting the Company, or the financial statements
                of
                the Company or any Affiliate, or of changes in applicable laws,
                regulations, or accounting principles, whenever the Administrator
                determines that such adjustments are appropriate in order to prevent
                dilution or enlargement of the benefits or potential benefits intended
                to
                be made available under the Plan. 

            

    

     

    (e)    Substitution
      of Awards in Mergers and Acquisitions. Awards
      may be granted under the Plan from time to time in substitution for awards
      held
      by employees, officers, consultants or directors of entities who become or
      are
      about to become employees, officers, consultants or directors of the Company
      or
      an Affiliate as the result of a merger or consolidation of the employing entity
      with the Company or an Affiliate, or the acquisition by the Company or an
      Affiliate of the assets or stock of the employing entity. The terms and
      conditions of any substitute Awards so granted may vary from the terms and
      conditions set forth herein to the extent that the Administrator deems
      appropriate at the time of grant to conform the substitute Awards to the
      provisions of the awards for which they are substituted.

    

    (f)    Other
      Agreements. As
      a
      condition precedent to the grant of any Award under the Plan, the exercise
      pursuant to such an Award, or to the delivery of certificates for shares issued
      pursuant to any Award, the Administrator may require the grantee or the
      grantee’s successor or permitted transferee, as the case may be, to become a
      party to a stock restriction agreement, shareholders’ agreement, voting trust
      agreement or other agreements regarding the Common Stock of the Company in
      such
      form(s) as the Administrator may determine from time to time.

    

    (g)    Termination,
      Amendment and Modification of the Plan.
      The
      Board may terminate, amend or modify the Plan or any portion thereof at any
      time.

    

    (h)    Non-Guarantee
      of Employment or Service.
      Nothing
      in the Plan or in any Grant Agreement thereunder shall confer any right on
      an
      individual to continue in the service of the Company or shall interfere in
      any
      way with the right of the Company to terminate such service at any time with
      or
      without cause or notice and whether or not such termination results in
      (i) the failure of any Award to vest; (ii) the forfeiture of any
      unvested or vested portion of any Award; and/or (iii) any other adverse
      effect on the individual’s interests under the Plan.

    

    (i)    Compliance
      with Securities Laws; Listing and Registration.
      If at
      any time the Administrator determines that the delivery of Common Stock under
      the Plan is or may be unlawful under the laws of any applicable jurisdiction,
      or
      Federal or state securities laws, the right to exercise an Award or receive
      shares of Common Stock pursuant to an Award shall be suspended until the
      Administrator determines that such delivery is lawful. The Company shall have
      no
      obligation to effect any registration or qualification of the Common Stock
      under
      Federal, state or foreign laws. The Company may require that a grantee, as
      a
      condition to exercise of an Award, and as a condition to the delivery of any
      share certificate, make such written representations (including representations
      to the effect that such person will not dispose of the Common Stock so acquired
      in violation of Federal, state or foreign securities laws) and furnish such
      information as may, in the opinion of counsel for the Company, be appropriate
      to
      permit the Company to issue the Common Stock in compliance with applicable
      Federal, state or foreign securities laws. The stock certificates for any shares
      of Common Stock issued pursuant to this Plan may bear a legend restricting
      transferability of the shares of Common Stock unless such shares are registered
      or an exemption from registration is available under the Securities Act of
      1933,
      as amended, and applicable state or foreign securities laws.

    

    (h)    No
      Trust or Fund Created.
      Neither
      the Plan nor any Award shall create or be construed to create a trust or
      separate fund of any kind or a fiduciary relationship between the Company and
      a
      grantee or any other person. To the extent that any grantee or other person
      acquires a right to receive payments from the Company pursuant to an Award,
      such
      right shall be no greater than the right of any unsecured general creditor
      of
      the Company.

     

    
      
         

      

      
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    (i)    Governing
      Law.
      The
      validity, construction and effect of the Plan, of Grant Agreements entered
      into
      pursuant to the Plan, and of any rules, regulations, determinations or decisions
      made by the Administrator relating to the Plan or such Grant Agreements, and
      the
      rights of any and all persons having or claiming to have any interest therein
      or
      thereunder, shall be determined exclusively in accordance with applicable
      federal laws and the laws of the State of Maryland, without regard to its
      conflict of laws principles.

    

    (j)    Effective
      Date; Termination Date.
      The
      Plan is effective as of the date on which the Plan is adopted by the Board,
      subject to approval of the stockholders within twelve months before or after
      such date. No Award shall be granted under the Plan after the close of business
      on the day immediately preceding the tenth anniversary of the effective date
      of
      the Plan, or if earlier, the tenth anniversary of the date this Plan is approved
      by the stockholders. Subject to other applicable provisions of the Plan, all
      Awards made under the Plan prior to such termination of the Plan shall remain
      in
      effect until such Awards have been satisfied or terminated in accordance with
      the Plan and the terms of such Awards. 

    

    PLAN
      APPROVAL

    

    Date
      Approved by the
      Board:                                                                                                    
      

    

    Date
      Approved by the
      Stockholders:                                                                                        
                                                      
     

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

     

    APPENDIX
      A

    PROVISIONS
      FOR CALIFORNIA RESIDENTS

    

    With
      respect to Awards granted to California residents prior to a public offering
      of
      capital stock of the Company that is effected pursuant to a registration
      statement filed with, and declared effective by, the Securities and Exchange
      Commission under the Securities Act of 1933, as amended, and only to the extent
      required by applicable law, the following provisions shall apply notwithstanding
      anything in the Plan or a Grant Agreement to the contrary:

    

    1.    Stock
      appreciation rights Awards under to Section 6(b) of the Plan or phantom stock
      Awards under Section 6(d) of the Plan, which may be settled in shares of Company
      stock, shall not be issued to California residents.

    

    2.    With
      respect to any Award granted in the form of a stock option pursuant to Section
      6(a) of the Plan:

    

    (a)    The
      Award
      shall provide an exercise price which is not less than 85% of the Fair Market
      Value of the underlying security at the time the option is granted, except
      that
      the price shall be not less than 110% of the Fair Market Value in the case
      of
      any person who owns securities possessing more than 10% of the total combined
      voting power (as defined in Section 194.5 of the California Corporations Code)
      of all classes of securities of the issuer or its parent or subsidiaries
      possessing voting power.

    

    (b)    The
      exercise period shall be no more than 120 months from the date the option is
      granted.

    

    (c)    The
      options shall be non-transferable other than by will, by the laws of descent
      and
      distribution, or, if and to the extent permitted under the Grant Agreement,
      as
      permitted by Rule 701 of the Securities Act of 1933, as amended
      (17 C.F.R. 230.701).

    

    (d)    The
      Award
      recipient shall have the right to exercise at the rate of at least 20% per
      year
      over 5 years from the date the option is granted, subject to reasonable
      conditions such as continued employment. However, in the case of an option
      granted to officers, directors, managers or consultants of the Company or the
      issuer of the underlying security or any of its affiliates, the option may
      become fully exercisable, subject to reasonable conditions such as continued
      employment, at any time or during any period established by the issuer of the
      option or the issuer of the underlying security or any of its
      affiliates.

    

    (e)    Unless
      employment is terminated for “cause” as defined by applicable law, the terms of
      the Plan or Grant Agreement, or a contract of employment, the right to exercise
      the option in the event of termination of employment, to the extent that the
      Award recipient is entitled to exercise on the date employment terminates,
      will
      be as follows:

    

    (1)
      At
      least 6 months from the date of termination if termination was caused by death
      or disability.

    

    (2)
      At
      least 30 days from the date of termination if termination was caused by other
      than death or disability.

    

    3.    With
      respect to an Award, granted pursuant to Section 6(c) of the Plan, that
      provides the Award recipient the right to purchase stock:

    

    (a)    The
      Award
      shall provide a purchase price which is not less than 85% of the Fair Market
      Value of the security at the time the Award recipient is granted the right
      to
      purchase securities under the Grant Agreement, or at the time the purchase
      is
      consummated; or, not less than 100% of the Fair Market Value of the security
      either at the time the Award recipient is granted the right to purchase
      securities under the Grant Agreement, or at the time the purchase is
      consummated, in the case of any person who owns securities possessing more
      than
      10% of the total combined voting power (as defined in Section 194.5 of the
      California Corporations Code) of all classes of securities of the issuer or
      its
      parent or subsidiaries possessing voting power.

    

    (b)    The
      Award
      shall be non-transferable other than by will, by the laws of descent and
      distribution, or, if and to the extent permitted under the Grant Agreement,
      as
      permitted by Rule 701 of the Securities Act of 1933, as amended
      (17 C.F.R. 230.701).

    

    4.    The
      Plan
      shall have a termination date of not more than 10 years from the date the Plan
      is adopted by the Board or the date the Plan is approved by the security
      holders, whichever is earlier.

    

    5.    Security
      holders representing a majority of the Company’s outstanding securities entitled
      to vote must approve the Plan within 12 months before or after the date the
      Plan
      is adopted. Any option exercised or any securities purchased before security
      holder approval is obtained must be rescinded if security holder approval is
      not
      obtained within 12 months before or after the Plan is adopted. Such securities
      shall not be counted in determining whether such approval is
      obtained.

    

    6.    At
      the
      discretion of the Administrator, the Company may reserve to itself and/or its
      assignee(s) in the Grant Agreement or any applicable stock restriction agreement
      a right to repurchase securities held by an Award recipient upon such Award
      recipient’s termination of employment at any time within 90 days after such
      Award recipient’s termination date (or in the case of securities issued upon
      exercise of an option after the termination date, within 90 days after the
      date
      of such exercise) for cash or cancellation of purchase money indebtedness,
      at:

    

    (A) no
      less than the Fair Market Value of such securities as of the date of the Award
      recipient’s termination of employment, provided,
      that
      such right to repurchase securities terminates when the Company’s securities
      have become publicly traded; or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (B) the
      Award recipient’s original purchase price, provided,
      that
      such right to repurchase securities at the original purchase price lapses at
      the
      rate of at least 20% of the securities per year over 5 years from the date
      the
      option is granted (without respect to the date the option was exercised or
      became exercisable).

    

    The
      securities held by an officer, director, manager or consultant of the Company
      or
      an affiliate may be subject to additional or greater restrictions.

    

    7.    The
      Company will provide financial statements to each Award recipient annually
      during the period such individual has Awards outstanding, or as otherwise
      required under Section 260.140.46 of Title 10 of the California Code of
      Regulations. Notwithstanding the foregoing, the Company will not be required
      to
      provide such financial statements to Award recipients when issuance is limited
      to key employees whose services in connection with the Company assure them
      access to equivalent information.

    

    8.    The
      Company will comply with Section 260.140.1 of Title 10 of the California Code
      of
      Regulations with respect to the voting rights of Common Stock and similar equity
      securities.

    

    9.    The
      Plan
      is intended to comply with Section 25102(o) of the California Corporations
      Code.
      Any provision of this Plan which is inconsistent with Section 25102(o),
      including without limitation any provision of this Plan that is more restrictive
      than would be permitted by Section 25102(o) as amended from time to time, shall,
      without further act or amendment by the Board, be reformed to comply with the
      provisions of Section 25102(o). If at any time the Administrator determines
      that the delivery of Common Stock under the Plan is or may be unlawful under
      the
      laws of any applicable jurisdiction, or federal or state securities laws, the
      right to exercise an Award or receive shares of Common Stock pursuant to an
      Award shall be suspended until the Administrator determines that such delivery
      is lawful. The Company shall have no obligation to effect any registration
      or
      qualification of the Common Stock under federal or state
      laws.EXHIBIT 4.53
                                                             FORM OF NEW WARRANT

WARRANT SERIES 82006W-____                                   WARRANT NO. ______

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

                             STOCK PURCHASE WARRANT

         THIS CERTIFIES THAT, for value received, E.DIGITAL CORPORATION, a
Delaware corporation (the "Company"), hereby grants to ("Holder") the right to
purchase from the Company up to ( ) shares of the Common Stock of the Company
(the "Warrant Shares"), subject to the following terms and conditions:

         1. Series. This Warrant is one of a duly authorized series of warrants
of the Company (which are identical except for the variations necessary to
express the identification numbers, names of the holder, number of shares of
Common Stock issuable upon exercise thereof and warrant issue dates) designated
as its "2004 Series A Warrants."

         2. Term. This Warrant may be exercised in whole at any time during the
period from the date of issuance of this Warrant until 5:00 p.m., California
time, on August 31, 2009, unless sooner terminated as provided below (the
"Exercise Period").

         3. Purchase Price. The purchase price for each Warrant Share
purchasable hereunder shall be fifteen cents (U.S. $0.15), as adjusted from
time-to-time pursuant to Section 10 hereof (the "Warrant Exercise Price").

         4. Exercise of Warrant. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part, at any time and from time
to time before the end of the Exercise Period by surrender of this Warrant at
the principal office of the Company in San Diego, California (or such other
office or agency of the Company as may be designated by notice in writing to the
Holder at the address of the Holder appearing on the books of the Company),
together with the Notice of Exercise annexed hereto duly completed and executed
on behalf of the Holder accompanied by payment in full of the amount of the
aggregate Warrant Exercise Price in immediately available funds in United States
Dollars. Certificates for shares purchased hereunder shall be delivered to the
Holder within thirty (30) business days after the date on which this Warrant
shall have been exercised as aforesaid, but Holder shall be deemed the record
owner of such Warrant Shares as of and from the close of business on the date on
which this Warrant shall be surrendered. The Holder may also designate that the
Company apply any note obligation balance owed Holder by the Company towards the
exercise price of this Warrant.
<PAGE>

         5. Net Issuance Option. After August 31, 2007, if a registration
statement permitting the Holder to resell the Warrant Shares is not then
effective, then at the option of the Holder, in lieu of payment of the Warrant
Exercise Price, the Holder may request in writing that the Company issue to it
the net Warrant Shares issuable determined in accordance with the following
formula:

         NS      =     WS - [EP/CMP x WS]
         NS      =     New Shares
         WS      =     No. of Warrant Shares issuable upon exercises of the
                       warrants
         EP      =     Exercise Price
         CMP     =     Current Market Price (defined as the closing bid price on
                       the date of the request)

                   For purposes of Rule 144 promulgated under the securities
act, it is intended, understood and acknowledged that the warrant shares issued
in a cashless exercise transaction shall be deemed to have been acquired by the
holder, and the holding period for the warrant shares shall be deemed to have
commenced, on the date this warrant was originally issued.

         6. Fractional Interest. The Company shall not be required to issue any
fractional shares on the exercise of this Warrant.

         7. Warrant Confers No Rights of Shareholder. Holder shall not have any
rights as a shareholder of the Company with regard to the Warrant Shares prior
to actual exercise resulting in the purchase of the Warrant Shares.

         8. Investment Representation. Neither this Warrant nor the Warrant
Shares issuable upon the exercise of this Warrant have been registered under the
Securities Act, or under any applicable state securities laws. Holder
acknowledges by acceptance of this Warrant that (a) it has acquired this Warrant
for investment and not with a view toward distribution; (b) it has a
pre-existing personal or business relationship with the Company, or its
executive officers, or by reason of its business or financial experience it has
the capacity to protect its own interests in connection with the transaction;
and (c) except as so notified to the Company in writing, it is an accredited
investor as that term is defined in Regulation D promulgated under the
Securities Act or not a U.S. Person within the definition set forth in
Regulation S and not an affiliate of the Company. Holder agrees that any Warrant
Shares issuable upon exercise of this Warrant will be acquired for investment
and not with a view toward distribution; and acknowledges that to the extent
such Warrant Shares may not be registered under the Securities Act and
applicable state securities laws, that such Warrant Shares may have to be held
indefinitely unless they are subsequently registered or qualified under the
Securities Act and applicable state securities laws; or, based on an opinion of
counsel reasonably satisfactory to the Company, an exemption from such
registration and qualification is available. Holder, by acceptance hereof,
consents to the placement of the following restrictive legends, or similar
legends, on each certificate to be issued to Holder by the Company in connection
with the issuance of such Warrant Shares:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
         STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
         PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
         SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
         REGISTRATION IS AVAILABLE.

                                       2
<PAGE>

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
         RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN PURCHASE AGREEMENT
         THEREFOR BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER HEREOF.

         9. Reservation of Shares. The Company agrees at all times during the
Exercise Period to take all reasonable steps to have authorized and reserved,
for the exclusive purpose of issuance and delivery upon exercise of this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented hereby.

         10. Adjustments. If the Company at any time during the Exercise Period
shall, by subdivision, combination or re-classification of securities, change
any of the securities to which purchase rights under this Warrant exist under
the same or different number of securities of any class or classes, this Warrant
shall thereafter entitle the Holder to acquire such number and kind of
securities as would have been issuable as a result of such change with respect
to the Warrant Shares immediately prior to such subdivision, combination or
re-classification. If shares of the Company's Common Stock are subdivided into a
greater number of shares of Common Stock, the purchase price for the Warrant
Shares upon exercise of this Warrant shall be proportionately reduced and the
Warrant Shares shall be proportionately increased; and conversely, if shares of
the Company's Common Stock are combined into a smaller number of Common Stock
shares, the price shall be proportionately increased, and the Warrant Shares
shall be proportionately decreased.

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

         12. Registration Rights.

                  a. If, at any time during the Exercise Period, the Company
proposes to prepare and file any registration statements covering its Common
Stock (in either case, other than in connection with a merger or acquisition,
pursuant to Form S-8 or any successor form, or pursuant to any other form or
type of registration in which Registrable Securities (as defined below) cannot
be appropriately included) (collectively, the "Registration Statements"), it
will give written notice as provided herein at least twenty (20) days prior to
the filing of each such Registration Statement to the Holders of the Warrants
and/or Warrant Shares of its intention to do so. If the Holders of the Warrants
and/or Warrant Shares notify the Company within ten (10) days after receipt of
any such notice of its or their desire to include the shares of Common Stock
issuable upon exercise of the Warrant or the Warrant Shares (collectively, the
"Registrable Securities") in such proposed registration statement, the Company
shall afford the Holders of the Warrant and/or Warrant Shares the opportunity to
have any such Registrable Securities registered under such registration
statement at the Company's sole cost and expense.

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

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

                                       3
<PAGE>

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

         13. Assignment. With respect to any offer, sale or other disposition of
this Warrant or any underlying securities, the Holder will give written notice
to the Company prior thereto, describing briefly the manner thereof, together
with a written opinion of such Holder's counsel, to the effect that such offer,
sale or other distribution may be effected without registration or qualification
(under any applicable federal or state law then in effect). Furthermore, no such
transfer shall be made unless the transferee meets the same investor suitability
standards set forth in Section 8 of this Warrant. Upon receiving such written
notice and reasonably satisfactory opinion, if so requested, the Company, as
promptly as practicable, shall notify such Holder that such Holder may sell or
otherwise dispose of this Warrant or the underlying securities, as the case may
be, all in accordance with the terms of the written notice delivered to the
Company. If a determination has been made pursuant to this Section 13 that the
opinion of counsel for the Holder is not reasonably satisfactory to the Company,
the Company shall so notify the Holder promptly after such determination has
been made. Each Warrant thus transferred shall bear the same legends appearing
on this Warrant, and underlying securities thus transferred shall bear the
legends required by Section 8. The Company may impose stop-transfer instructions
in connection with such restrictions. Subject to any restrictions on transfer
described elsewhere herein, the rights and obligations of the Company and the
Holder of this Warrant shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties hereto.

         14. Notice. Any notice, demand, consent or other communication
hereunder shall be in writing addressed to the other party at its principal
office or, in respect of Holder, as its address as shown on the books of the
Company, or to such other address as such party shall have theretofore furnished
by like notice, and either served personally, sent by express, registered or
certified first class mail, postage prepaid, sent by facsimile transmission, or
delivered by reputable commercial courier. Such notice shall be deemed given (i)
when so personally delivered, or (ii) if mailed as aforesaid, five (5) days
after the same shall have been posted, or (iii) if sent by facsimile
transmission, as soon as sender receives written or telephonic confirmation that
the message has been received and such facsimile is followed the same day by
mailing by prepaid first class mail, or (iv) if delivered by commercial courier,
upon receipt.

         15. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.

                                       4
<PAGE>

         16. Early Termination. In the event of, at any time during the Exercise
Period, the consolidation or merger of the Company with or into another
corporation in which the Company is not the surviving entity or in which the
stockholders of the Company do not own at least 51% of the voting power of the
surviving entity (other than a merger solely to effect a reincorporation of the
Company into another state), or the sale or other disposition of all or
substantially all the properties and assets of the Company in its entirety to
any other person, the Company shall provide to the Holder twenty (20) days
advance written notice of such consolidation, merger or sale or other
disposition of the Company's assets, and of this Warrant shall terminate unless
exercised prior to the date of the occurrence of such consolidation, merger or
sale or other disposition of the Company's assets.

         17. Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.

         18. Amendment. Any term of this Warrant may be amended with the written
consent of the Corporation and the holders of Warrants representing a majority
in interest of the then outstanding Exercise Shares issuable upon exercise of
any outstanding Warrant which was issued in connection with the Notes. Any
amendment effected in accordance with this Section 18 shall be binding upon each
holder of the Warrants.

         19. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.

         20. Fees. If any action at law or in equity is necessary to enforce or
interpret the terms of this Warrant, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.

         21. Descriptive Headings. The headings used herein are descriptive only
and for the convenience of identifying provisions, and are not determinative of
the meaning or effect of any such provisions.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
 by its duly authorized officer this day of August, 2006.

                                       E.DIGITAL CORPORATION

                                       -------------------------------------
                                                Authorized Officer

                                       5
<PAGE>

                               NOTICE OF EXERCISE
                          COMMON STOCK PURCHASE WARRANT

To:      E.DIGITAL CORPORATION

         (1) The undersigned hereby elects to purchase shares of Common Stock of
e.Digital Corporation, pursuant to the terms of the attached Warrant, and either
tenders herewith payment in full of the purchase price for such shares or $ or,

         (2) Requests the Company to issue to the undersigned shares of Common
Stock of e.Digital Corporation, pursuant to the terms of Section 5 of the
attached Warrant on a net issuance basis.

         (3) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws.

         (4) Please issue a certificate representing said shares of Common Stock
in the name of the undersigned.

         (5) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.

Date:               , 20
      --------------    -----                          -------------------------
                                                       (Name)

                                                       -------------------------
                                                       (Signature

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

                                                       -------------------------
                                                        (Print Address)

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