FIRST AMENDMENT TO STOCK PURCHASE WARRANT

 

 

THIS FIRST AMENDMENT TO STOCK PURCHASE WARRANT (this “Amendment”) is made and entered into as of June 30, 2005, by E.DIGITAL CORPORATION, a Delaware corporation (“Company”) in favor of [_____________________________], or its registered assigns (“Holder”).

R E C I T A L S

A. Whereas, the Company has previously executed and delivered to Holder that certain 12% Subordinated Promissory Note dated on or about July 1, 2004 (the “Note”) and, in connection therewith, issued to Holder a Stock Purchase Warrant of even date (the “Warrant”);

B. Whereas, Holder is one of several holders of the 12% Subordinated Promissory Notes (collectively, the “12% Subordinated Promissory Notes”) and one of several holders of Stock Purchase Warrants (collectively, the “Warrants”);

C. Whereas, holders of at least fifty-one percent (51%) in the aggregate principal amount of the 12% Subordinated Promissory Notes outstanding may amend, modify and/or waive certain requirements and obligations of the Company under the 12% Subordinated Promissory Notes and the Warrants and bind all holders with respect to such amendment, modification and waiver; and

D. Whereas, the Company desires to modify the 12% Subordinated Promissory Notes and the Warrants and Holder, 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:

5.  Purchase Price. The “Purchase Price” referenced in Section 3 of the Warrant is hereby reduced from twenty-five cents ($0.25) to nineteen cents ($0.19).

6.  Conditions to Amendment. As a condition to the obligation of the Company to execute and deliver this Amendment, Holder concurrently herewith shall enter into Amendment No. 1 to 12% Subordinated Promissory Note entered into as of July 1, 2004 (the “Note”) extending the maturity date thereof from July 1, 2005 to December 31, 2005.

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

8.  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 First Amendment to Stock Purchase Warrant as of the date first above written.