AMENDMENT TO 12% SUBORDINATED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

A.   Whereas, the Company has previously entered into that certain 12% Subordinated Promissory Note and Warrant Purchase Agreement dated on or about July 1, 2004 (the “ Agreement ”) and, in connection therewith, issued to Purchasers certain 12% Subordinated Promissory Note (individually, a “ Note ” and collectively, the “ Notes ”) and certain Stock Purchase Warrants of even date (individually, a “ Warrant ” and collectively, the “ Warrants ”);

B.   Whereas, holders of at least fifty-one percent (51%) in the aggregate principal amount of the Notes outstanding may amend, modify and/or waive certain requirements and obligations of the Company under the Agreement and bind all Purchasers with respect to such amendment, modification and waiver;

C.   Whereas, the Company desires to amend, modify and/or waive certain requirements and obligations of the Company under the Agreement and Purchaser, consents to such modification as set forth herein.

NOW, THEREFORE, for a valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

1.    Aggregate Principal Amount . The Company is hereby authorized to issue an additional $500,000 in principal amount of Notes. In connection therewith, the aggregate principal amount of Notes referenced in (i) the first unnumbered Recital and (ii) Section 7 of the Agreement, is hereby increased from $1,000,000 to $1,500,000. Section 2.3 is hereby revised to delete the phrase “June 30, 2004” and replace it with November 30, 2005.” No increase in the number of Warrants is authorized by this Amendment.

2.    Amendments to Note . Exhibit B is hereby deleted in its entirety and replaced with the Amended and Restated 12% Subordinated Promissory Note attached hereto as Exhibit A. Purchasers hereby consent to the revised terms contained therein including, without limitation, (i) a “ Maturity Date ” of December 31, 2006, (ii) amended “conversion” rights and (iii) a royalty to be paid solely to the purchasers of the additional $500,000 in Notes (the “ Additional Notes ”) as consideration for the additional financing necessary for the development of the Company’s new MedeViewer product, which shall, in the aggregate, shall be equal to up to Twenty Dollars ($20.00) for each MedeViewer sold for a period of three years (the “ Royalty ”). Purchaser hereby consents to the payment of the aggregate Royalty to the holders of the Additional Notes pro rata. Purchaser understands that Purchaser will not receive the Royalty unless Purchaser is a purchaser of Additional Notes.

3.    Effective Amendment . Except as expressly modified, altered or supplemented herein, all of the provisions of the Note remain in full force and effect; provided , however , that in the event of any conflict between the provisions of the Note and the provisions of this Amendment, the provisions of this Amendment shall control.

4.    Counterparts . This Amendment may be executed in two or more counterparts each of which shall be deemed an original but all of which taken together shall constitute but one and the same Amendment.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to 12% Subordinated Promissory Note and Warrant Purchase Agreement as of the date first above written.

2

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND IS A “RESTRICTED SECURITY” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THIS NOTE 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 COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN 12% SUBORDINATED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT (“PURCHASE AGREEMENT”) THEREFOR BETWEEN THE COMPANY AND THE ORIGINAL HOLDER HEREOF.

FOR VALUE RECEIVED, e.Digital Corporation, the undersigned Delaware corporation (together with all successors, the “ Company ”), hereby promises to pay to the order of

Payee:    

or his, her or its successors or assigns

(collectively, “ Noteholder ”) at

Address:

or at such other address or addresses as Noteholder may subsequently designate in writing to the Company, the principal sum of ________________ and NO/100 Dollars ($______________.00), due and payable in one installment on December 31, 2006 (“ Maturity Date ”), plus simple interest thereon at the rate of twelve percent (12.00%) per annum, in lawful monies of the United States of America. Interest shall be paid in monthly installments on or before the first day of each month, computed on the basis of a 360 day year and a 30 day month. If the Maturity Date should fall on a weekend or national holiday, payment shall be due on the following business day. This Note is one of a duly authorized issue of Notes of the Company designated as its 12% Subordinated Promissory Notes (herein called the “ Notes ”), limited in aggregate principal amount to $1,500,000.

1.    Payment . Any payment shall be deemed timely made if received by Noteholder within fifteen (15) calendar days of the due date. Payments received shall be imputed first to late or penalty charges, if any, then due, next to interest payments then due, and next to the remaining unpaid principal balance.

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

A default above is not an Event of Default until the holders of at least 25% in aggregate principal amount of the Notes then outstanding notify the Company of such default and the Company does not cure it within sixty (60) days after receipt of such notice, which must specify the default, demand that it be remedied and state that it is a “ Notice of Default .” If an Event of Default occurs and is continuing, the Noteholder hereof by notice to the Company, may declare the principal of and accrued interest on this Note to be due and payable immediately; provided, however, that the holders of at least 51% in aggregate principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul such declaration and its consequences.

2.    Prepayment . The Company may prepay this Note at any time and from time to time, in whole or in part, without the prior written agreement of Noteholder, upon payment of a prepayment fee equal to thirty days’ interest (on the portion of principal that is being prepaid). Any prepayment of this Note shall be applied first against any prepayment fee, then against accrued interest and then against principal. Upon payment in full of the principal amount of this Note and interest thereon, the Noteholder shall surrender this Note for cancellation. The Company shall only make principal reductions or prepayments pro rata among the Noteholders of this series. Likewise any Noteholder who receives any payments or proceeds from any enforcement of a security interest or any distribution in connection with a bankruptcy, liquidation, reorganization, dissolution, winding-up or similar proceedings, shall be obligated to pro rate such amounts among the other Noteholders of this series as provided in the Purchase Agreement between the Company and the original holder hereof.

3.    Intercreditor Agreement . Relationships between the Noteholder and each of the other Noteholders shall be determined pursuant to the intercreditor agreements set forth in Section 7 of the 12% Subordinated Promissory Note and Warrant Purchase Agreement of even date (the “ Purchase Agreement ”) and Sections 1 and 2 herein on a pari passu basis.

4.    Warrants . This Note is being issued in conjunction with certain warrants. A portion of the original issue price of this investment unit (consisting of this Note and its associated warrants) has been allocated to these warrants. The original issue price of this Note is therefore less than its principal amount. Because the excess of the principal amount of this Note over its original issue price is less than (a) one-quarter of one percent of this Note’s principal amount (b) multiplied by the number of complete years to this Note’s maturity, this Note will not have “ original issue discount ” as that phrase is defined for United States income tax purposes. Any Noteholder may contact the Company’s Chief Financial Officer, Treasurer or Chief Accounting Officer at its principal office (or such other address as the Company shall subsequently furnish to the Noteholder) for further information concerning the computation of original issue discount under the terms of this Note.

5.    Conversion .

5.1   Voluntary Conversion . Any Noteholder of this Note has the right, at the Noteholder’s option, at any time beginnin