E DIGITAL CORP
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex_10-1.txt
<TEXT>


                                                                    Exhibit 10.1

            Form of Restricted  Common Stock Purchase  Agreement (each signature
            page  differed with respect to the name,  address,  amount and other
            information for each individual investor) CONFIDENTIAL

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                                    e.Digital

                              E.DIGITAL CORPORATION
                   RESTRICTED COMMON STOCK PURCHASE AGREEMENT
                                February 24, 2006

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CONFIDENTIAL

<PAGE>

                   RESTRICTED COMMON STOCK PURCHASE AGREEMENT

      THIS RESTRICTED  COMMON STOCK PURCHASE  AGREEMENT dated as of February 24,
2006 (this "Agreement"),  among e.Digital  Corporation,  a Delaware  corporation
(the "Company"),  and each of the individual  purchasers  listed on Exhibit A to
this Agreement who have executed the signature page hereof (the "Purchasers").

      WHEREAS,  the Company wishes to sell and issue to the Purchasers shares of
Common Stock (the "Common  Stock") of the Company,  and the  Purchasers  wish to
purchase such shares from the Company,  pursuant to the terms and conditions set
forth herein;

      NOW, THEREFORE, in consideration of the mutual representations, warranties
and  covenants  set  forth  herein,  and  other  valuable   consideration,   the
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:

Section 1.        PURCHASE AND SALE.

      1.1. Sale and Issuance of Shares to  Purchasers.  Subject to the terms and
conditions  of this  Agreement,  and upon the basis of the  representations  and
warranties contained in this Agreement,  the Company agrees to sell and issue to
the Purchasers,  free and clear of any liens,  claims,  charges and encumbrances
whatsoever,  and the  Purchasers  agree to purchase,  severally and not jointly,
from the Company,  an aggregate of 18,750,000  shares of Common Stock, par value
$.001  per  share,  of  the  Company,   for  the  aggregate  purchase  price  of
$1,500,000.00 (the "Purchase Price") or $0.08 per share.

      1.2.  Issuance of Warrants to Purchasers.  Subject to  satisfaction of the
terms and  conditions  specified in Section 1.1, the Company  agrees to issue to
each Purchaser, without payment of additional consideration,  (i) a Common Stock
purchase  warrant in an amount equal to twenty-five  percent (25%) of the shares
of Common Stock purchased, in the form of Exhibit B-1, registered in the name of
such Purchaser,  (collectively, the "Series A Warrants") and (ii) a Common Stock
purchase  warrant in an amount equal to twenty-five  percent (25%) of the shares
of Common Stock purchased, in the form of Exhibit B-2, registered in the name of
such  Purchaser  (collectively,  the "Series B Warrants",  and together with the
Series A Warrants, the "Warrants"). The Series A Warrants shall have an exercise
price  ("Exercise  Price")  of $0.10 per share  and shall be  exercisable  for a
period from issuance to February 28, 2009.  The Series B Warrants  shall have an
Exercise Price of $0.09 per share and shall be  exercisable  for a period ending
on the  earlier  of  (a)  of  six  months  following  the  effectiveness  of the
registration  statement   ("Registration   Statement")  to  be  filed  with  the
Securities and Exchange  Commission ("SEC") for the benefit of the Purchasers or
(b) July 31, 2008. The Warrants shall provide the Purchasers with  anti-dilution
protection  such that  whenever  the  Company  issues or sells any shares of its
Common Stock for consideration per share that is less than the Exercise Price in
effect  immediately  prior to the time of such issue, then immediately upon such
issue or sale the Exercise Price shall be reduced to the consideration per share
received in exchange  for such  issuance of Common  Stock.  Notwithstanding  the
foregoing,  such  anti-dilution  provisions  shall not  apply to (i)  securities
issued to employees,  consultants, officers or directors of the Company pursuant
to  any  stock  option,  stock  purchase  or  stock  bonus  plan,  agreement  or

<PAGE>

arrangement approved by the Board of Directors;  (ii) securities issued pursuant
to 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)  securities
issued to  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) securities issued in corporate partnering transactions on terms
approved by the Board of Directors; (v) securities issued in accordance with the
terms of any of the Company's  preferred  stock or warrants  outstanding  on the
date hereof,  if any; and (vi)  borrowings,  direct or indirect,  from financial
institutions  regularly engaged in the business of lending money, whether or not
presently  authorized with an equity component which is not a major component of
such  borrowing;  (vii) the first  $100,000 in proceeds  received by the Company
from  the  sale  of any  Common  Stock  or any  securities  convertible  into or
exercisable for Common Stock or similar equity securities sold in any successive
180-day period beginning on the date of the Warrants and continuing  through the
expiration date thereof.

      1.3.  Closing;  Payment  and  Delivery.  The  name  and  address  of  each
Purchaser,  the number of shares of Common  Stock to be sold to each  Purchaser,
the Purchase  Price and the number of shares  issuable  upon exercise of each of
the  Warrants  is set  forth on  Exhibit  A.  Payment  for and  delivery  of the
certificates  evidencing  the  Common  Stock to be sold to the  Purchasers  (the
"Closing")  shall be  effected  at the  offices  of the  Company,  at 10:00 a.m.
Pacific Standard time  contemporaneously with the execution and delivery of this
Agreement,  or at such other place,  time or date upon which the Company and the
Purchasers  shall  agree.  At the Closing,  the Purchase  Price shall be paid in
immediately  available  funds against  delivery by the Company to the Purchasers
(within three business days) of the stock certificates  (representing the Common
Stock) and the  Warrants.  The  Closing is subject to receipt by the  Company of
minimum aggregate proceeds of $800,000.

Section 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
represents, warrants and covenants to the Purchasers as follows:

      2.1.  Organization  and  Qualification.  The Company is a corporation duly
organized and validly  existing in good standing  under the laws of the State of
Delaware with the requisite legal and corporate power to own its property and to
carry on its  business  as  proposed  to be  conducted  by it.  The  Company  is
qualified  and  authorized  to transact  business  and is in good  standing as a
foreign  corporation  in each  jurisdiction  in which the  failure so to qualify
would have a material adverse effect on its business,  properties,  prospects or
financial condition.

      2.2.  Power.  The Company has all requisite legal power to enter into this
Agreement  and to carry out and perform its  obligations  under the terms hereof
and thereof. The Company has all requisite legal power to issue the Common Stock
and the Warrants.

      2.3. Capitalization.

                                       2
<PAGE>

            (a) The  authorized  capital  stock of the Company  consists of: (i)
300,000,000  shares of Common Stock ("Common Stock"),  and (ii) 5,000,000 shares
of  Preferred  Stock.  As of December  31,  2005,  the total number of shares of
Common  Stock  outstanding   (fully-diluted)   is  205,351,842,   consisting  of
175,260,876  shares of Common Stock issued and outstanding,  7,906,491 shares of
Common  Stock  issuable  upon  conversion  of  outstanding  shares  of  Series D
Preferred  Stock,  2,485,573  shares of Common Stock issuable upon conversion of
outstanding  shares of Series EE  Preferred  Stock,  7,894,736  shares of Common
Stock  issuable upon  conversion of  outstanding  12%  Convertible  Subordinated
Promissory Notes, 6,182,500 shares of Common Stock issuable upon the exercise of
warrants  and  5,621,666  shares of Common Stock  issuable  upon the exercise of
options (December 31, 2005 options outstanding less cancellations).

            (b) No person is entitled to any preemptive  right or right of first
refusal with respect to the issuance of the Common Stock as contemplated by this
Agreement.  There  are no  outstanding  preemptive  rights,  options,  warrants,
conversion rights,  agreements or other rights to purchase any of the authorized
but unissued stock of the Company other than those  identified  above or issued,
reserved or committed to be issued pursuant to this Agreement.

            (c)  The  Company  has not  issued  or  obligated  itself  to  issue
securities  other  than  as  listed  above  or  otherwise  contemplated  by this
Agreement.

      2.4.  Company  Authorizations.  All  corporate  action  on the part of the
Company and its directors  and  stockholders  necessary  for the  authorization,
execution  and  delivery  of  this  Agreement  and  the   consummation   of  the
transactions  contemplated  hereby  and  thereby,  and  for  the  authorization,
issuance and delivery of the Common Stock and the Warrants has been taken.  This
Agreement is a legal, valid and binding  obligation of the Company,  enforceable
in accordance with its terms, except (a) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors  rights generally and (b) that
the  availability of equitable  relief is subject to the discretion of the court
before which any proceeding therefor may be brought.

      2.5.  Validity  of  Securities.  Except  for  liens,  charges,  claims  or
encumbrances created by or through the Purchasers,  imposed by this Agreement or
restrictions  generally imposed by applicable securities laws, the Common Stock,
when issued,  sold and delivered in accordance with the terms of this Agreement,
will be duly and validly issued,  fully paid,  non-assessable and free and clear
of all liens, charges, claims and encumbrances.

      2.6. No Breach. The execution,  delivery and performance of this Agreement
by Purchasers and the Company will not  contravene,  breach or otherwise cause a
default  under  the  Company's  Certificate  of  Incorporation,  bylaws  or  any
agreement to which the Company is a party or of which the Company is aware.

Section  3.  REPRESENTATIONS  AND  WARRANTIES  OF  PURCHASERS.   Each  Purchaser
represents to the Company as follows:

      3.1.  Authority.  Such  Purchaser has full power and authority to purchase
the Common Stock from the Company as provided  herein and to otherwise  execute,
deliver and perform this Agreement.

                                       3
<PAGE>

      3.2. Adequate Information.  Such Purchaser  acknowledges that he or it has
reviewed  the reports  filed by the Company  with the  Securities  and  Exchange
Commission  ("SEC") pursuant to the Securities  Exchange Act of 1934, as amended
(the "Exchange Act"),  including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (collectively,  the "SEC Documents") and
has been afforded the  opportunity  to request and receive from the Company such
other  documents,  materials  and  information  as he or it deems  necessary  or
appropriate  for  evaluating  the purchase of the Common Stock.  Such  Purchaser
confirms  that  he  or it  has  made  such  investigation  as  he  or it  deemed
appropriate  to evaluate the merits and risks of this  purchase.  Such Purchaser
has had the  opportunity  to ask  questions  of and  receive  answers  from  the
Company, or their  representatives,  concerning the terms and conditions of this
sale and such  Purchaser  confirms  that he or it has  taken  advantage  of such
opportunity to the extent he or it deems necessary.

      3.3. Investment Intent. Such Purchaser: (a) is an "accredited investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended; (b) has such knowledge and experience in financial and business matters
that he or it is capable of evaluating  the merits and risks of an investment in
the Company;  (c) is able to bear the economic risks (including a complete loss)
of an investment in the Company;  (d) is purchasing  the Common Stock for his or
its own  account  and not with a view  towards  the  sale or other  distribution
thereof; (e) understands that there is currently no public market for the Common
Stock  and that  the  Common  Stock  may  have to be held  indefinitely  without
possibility of liquidation.

      3.4. General Solicitation. Purchaser is not purchasing the Common Stock or
the Warrants as a result of or subsequent to any advertisement,  article, notice
or other  communication  regarding such  securities  published in any newspaper,
magazine or similar media or broadcast over  television or radio or presented at
any seminar or any other general solicitation or general advertisement.

      3.5.  Reliance.  Each Purchaser  understands and acknowledges that (i) the
Common  Stock and  Warrants  are being  offered  and sold to  Purchaser  without
registration under the Securities Act of 1933, as amended (the "Securities Act")
in a private  placement that is exempt from the  registration  provisions of the
Securities Act and (ii) the availability of such exemption,  depends in part on,
and the Company will rely upon the accuracy and  truthfulness  of, the foregoing
representations and such Purchaser hereby consents to such reliance.

Section 4. OTHER AGREEMENT OF THE PARTIES.

      4.1. Transfer Restrictions.

            (a) The securities acquired hereunder or pursuant to the exercise of
the  Warrants  may only be disposed of  pursuant  to an  effective  registration
statement  under the Securities  Act, to the Company or pursuant to an available
exemption from or in a transaction not subject to the registration  requirements
of the Securities Act, and in compliance  with any applicable  federal and state
securities  laws.  In  connection  with any  transfer of  Securities  other than
pursuant to an effective  registration  statement  or to the Company,  except as
otherwise set forth herein,  the Company may require the  transferor  thereof to
provide to the  Company an opinion of counsel  selected by the  transferor,  the
form and  substance of which opinion  shall be  reasonably  satisfactory  to the
Company, to the effect that such transfer does not require  registration of such
transferred Securities under the Securities Act.

                                       4
<PAGE>

            (b) Each Purchaser agrees to the imprinting,  so long as is required
by this Section 4.1(b), of the following legend on the Securities:

      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.

      4.2. Use of Proceeds. The Company shall use the net proceeds from the sale
of the Common Stock hereunder for general working capital purposes.

      4.3. Fees and Expenses.  Each party hereto hereby agrees to be responsible
for his or its own  fees  and  expenses  in  connection  with  the  transactions
contemplated hereby.

      4.4. Brokers'  Commissions.  Each party hereto hereby agrees to indemnify,
defend, and hold harmless the other party from and against any and all expenses,
costs,  liabilities,  losses,  damages,  claims,  causes  of  action,  or  other
proceedings  which  result  from any  broker,  agent,  or  finder,  licensed  or
otherwise,  claiming  through,  under,  or by  reason  of  the  conduct  of  the
indemnifying party in connection with the transactions contemplated hereby.

      4.5. Registration Statement. The Company shall utilize its best efforts to
prepare and file, on or before March 31, 2006, a Registration  Statement on Form
S-1 (or other comparable form) to register for resale the shares of Common Stock
issued at  Closing  and to be  issued to the  Purchasers  upon  exercise  of the
Warrants. All costs and expenses incurred in connection with the preparation and
filing of the Registration  Statement shall be borne by the Company.  Purchasers
acknowledge  that  additional  securities  of the Company may be included in the
Registration Statement pursuant to existing piggyback registration rights.

Section 5. MISCELLANEOUS.

      5.1.  Representations,  Warranties and Covenants to Survive  Closing.  All
representations,  warranties  and covenants  contained  herein shall survive the
execution and delivery of this Agreement and the sale and issuance of the Common
Stock.

      5.2. Successors and Assigns.  All representations,  warranties,  covenants
and agreements of the parties  contained in this Agreement or made in writing in
connection herewith, shall, except as otherwise provided herein, be binding upon
and inure to the benefit of the parties hereto and their  respective  successors
and assigns.

                                       5
<PAGE>

      5.3.  Governing Law. This Agreement  shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts
of laws principles.

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

      5.5. Headings.  The headings used herein are solely for the convenience of
the parties and shall not serve to modify or interpret  the text of the Sections
at the beginning of which they appear.

      5.6.  Further  Assurances.  Each party will execute all documents and take
such  other  actions as the other  parties  may  reasonably  request in order to
consummate the  transactions  provided for herein and to accomplish the purposes
of this Agreement.

      5.7.  Notices.  Any  notice  to any of the  parties  hereunder  must be in
writing  and  shall  be  deemed  sufficiently  given if (i)  given  by  personal
delivery,  (ii) mailed by U.S.  registered or certified mail,  postage  prepaid,
return  receipt  requested,  or  (iii)  deposited  with a  recognized  overnight
delivery service for next business day delivery, delivery charge prepaid, return
receipt requested, if to the Purchasers addressed as set forth on Exhibit A, and
if to the Company, addressed as follows:

      To the Company:          e.Digital Corporation
                               13114 Evening Creek Drive South
                               San Diego, CA  92128
                               Attention:  Robert Putnam, Senior Vice President,

      With copy to:            Higham, McConnell & Dunning LLP
                               15 Enterprise, Suite 360
                               Aliso Viejo, California 92656
                               Attention: Curt C. Barwick, Esq.

or at such other address or addresses as the respective parties may from time to
time specify or give in the manner provided herein.  Such notice shall be deemed
given (i) when received, if given by personal delivery,  (ii) the third business
day after  mailing,  if sent by certified or  registered  mail or (iii) the next
business day after deposit with a recognized overnight delivery service for next
business day delivery.

      5.8.  Entire  Agreement.  This  Agreement  and,  including any  agreements
referred to herein, set forth the entire understanding of the parties hereto and
supersede any prior oral or written agreements and  understandings  with respect
to the subject matter hereof.

                                       6
<PAGE>

      5.9.   Construction  and   Representation.   The  parties  understand  and
acknowledge  that they have each been  represented  by (or have been  advised to
retain and have had the  opportunity to be represented by) counsel in connection
with the preparation,  execution and delivery of this Agreement.  This Agreement
shall not be  construed  against  any party for having  drafted  it. The parties
further  understand  and  acknowledge  that Higham,  McConnell & Dunning LLP has
represented only the Company in connection with this Agreement.

      5.10.  Amendment.  Any  term of this  Agreement  may be  amended  with the
written  consent of the Company and  Purchasers  representing  a majority of the
shares of Common Stock purchased hereunder. Any amendment effected in accordance
with this Section 5.10 shall be binding upon each Purchaser.

      5.11. Arbitration. Any action to enforce or interpret this Agreement shall
be settled by arbitration by the American Arbitration Association ("AAA") in San
Diego  County,  California.  Any party may  commence  arbitration  by  sending a
written demand for  arbitration to the other party.  Such demand shall set forth
the nature of the matter to be resolved by  arbitration.  The substantive law of
the State of California  shall be applied by the arbitrator to the resolution of
the  dispute,  and the  procedural  rules shall be governed by AAA.  The parties
shall share equally all initial costs of arbitration. The prevailing party shall
be entitled to reimbursement of attorney fees,  costs, and expenses  incurred in
connection with the arbitration. All decisions of the arbitrator shall be final,
binding, and conclusive on all parties.

               (THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;
                      INDIVIDUAL SIGNATURE PAGE(S) FOLLOW)

                                       7
<PAGE>
                            E.DIGITAL CORPORATION
                                SIGNATURE PAGE TO
                   RESTRICTED COMMON STOCK PURCHASE AGREEMENT

      IN WITNESS  WHEREOF,  the parties  hereto have  executed this Common Stock
Purchase Agreement on the day and year first above written.

"COMPANY"                                 "PURCHASER"

E.DIGITAL CORPORATION
13114 Evening Creek Drive South           --------------------------------------
San Diego, California  92128              Name

By: /s/ ROBERT PUTNAM                     By:
                                              ----------------------------------
Its: Sr. Vice President and Secretary     Title:
                                                 -------------------------------

                                          Street Address:
                                                          ----------------------



                                          Phone #:
                                                   -----------------------------

                                          E-mail:
                                                  ------------------------------

                                          PURCHASE AMOUNT

                                          $:
                                            ------------------------------------

                                       8
<PAGE>

                                    EXHIBIT A

                                   PURCHASERS

<TABLE>
<CAPTION>
                                          Shares         Aggregate            Series A             Series B
Name of Purchaser & Address               Acquired       Purchase Price       Warrant Shares       Warrant Shares
---------------------------               --------       --------------       --------------       --------------
<S>                                      <C>             <C>                   <C>                 <C>

Total
</TABLE>


</TEXT>
</DOCUMENT>
