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                                                                   Exhibit 10.16

                        AMERICAN TECHNOLOGY CORPORATION
                        ______________________________

                             Special Stock Option
                               ________________

  Granted Under the Approval of the Board of Directors of American Technology
                                  Corporation


     THIS SPECIAL STOCK OPTION, dated as of July 16, 1999 (the "Date of Grant"),
is granted by AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation
("Company"), to Cornelius J. Brosnan (the "Optionee"), whose status with the
Company is described on the signature page hereof below his signature.

     WHEREAS, the Optionee is now the President, CEO and Chairman of the Company
and the Company desires to have the Optionee remain in its service and desires
to encourage stock ownership by the Optionee and to increase the Optionee's
proprietary interest in the Company's success; and as an inducement thereto has
determined to grant to the Optionee the option herein provided for, to the end
that the Optionee may thereby be assisted in obtaining an interest, or an
increased interest, as the case may be, in the stock ownership of the Company;

     NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:

     1.      Grant. Pursuant to the Motion passed at the Board of Directors of
the Company dated July 16, 1999, the Company hereby grants to the Optionee an
option (the "Option") to purchase 100,000 shares of the Company's common stock,
$.00001 par value per share (the "Option Shares") at the price of $10.00 per
share (the "Purchase Price" or "Exercise Price") and exercisable only upon the
Company's publicly traded common shares achieving and maintaining $25.00 for a
minimum of twenty (20) consecutive trading days. This Option is granted
separately at the discretion of the Board of Directors and is not an option
pursuant to the 1992 or 1997 option plans. Both the Purchase Price and the
number of Option Shares purchasable may be adjusted pursuant to Paragraph 10
hereof.

     2.      Term. This Option is exercisable during the period beginning with
the Date of Grant and ending July 16, 2003, at 5:00 p.m. (Pacific Time), except
as provided in Paragraph 7 hereof.

     3.      Exercise of Option. During the Optionee's life, this Option may
only be exercised by him or her. This Option may only be exercised by
presentation at the principal offices of the Company in San Diego, California of
written notice to the Company's Secretary advising the Company of the Optionee's
election to purchase Option Shares, specifying the number of Option Shares being
purchased, accompanied by payment. No Option Shares shall be issued until full
payment is made therefor. Payment shall be made in cash, represented by bank or
cashier's check, certified check or money order.

     4.      Issuance of Option Shares; Restrictive Legend. (a) Upon proper
exercise of this Option, the Company shall mail or deliver to the Optionee, as
promptly as practicable, a stock certificate or certificates representing the
Option Shares purchased, subject to clause (b) below. The Company shall not be
required to sell or issue any shares under the Option if the issuance of such
shares shall constitute a violation of any applicable law or regulation or of
any requirements of any national securities exchange upon which the Company's
common stock may be listed.

     (b)     Upon any exercise of this Option, if a registration statement under
the Securities Act of 1933 (the "Act") is not in effect with respect to the
Option Shares, then the Company shall not be required to issue any Option Shares
unless the Company has received evidence reasonably satisfactory to it to the
effect that the Optionee is acquiring such shares for investment and not with a
view to the distribution thereof. Any reasonable determination in this
connection by the Company shall be final, binding and conclusive.

     (c)     Unless and until removed as provided below, each certificate
evidencing unregistered Option Shares shall bear a legend in substantially the
following form:
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             "The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws of any
state and may not be sold or transferred except upon such registration or upon
receipt by this Corporation of an opinion or counsel satisfactory to this
Corporation, in form and substance satisfactory to this Corporation, that
registration is not required for such sale or transfer."

     The Company shall issue a new certificate which does not contain such
legend if (i) the shares represented by such certificate are sold pursuant to a
registration statement (including a current prospectus) which has become
effective under the Act, or (ii) the staff of the Securities and Exchange
Commission shall have issued a "no action" letter, reasonably satisfactory to
the Company's counsel, to the effect that such shares may be freely sold and
thereafter traded publicly without registration under the Act, or (iii) the
Company's counsel, or other counsel acceptable to the Company, shall have
rendered an opinion satisfactory to the Company to the effect that such shares
may be freely sold and thereafter publicly traded without registration under the
Act.  The Company may, but shall in no event by obligated to, register any
securities covered hereby pursuant to the Act.  The Company shall not be
obligated to take any other affirmative action in order to cause the exercise of
the Option or the issuance of any Option Shares to comply with any law or
regulation of any governmental authority.

     5.      Transfer of Option Shares. Option Shares issued upon exercise of
this Option which have not been registered under the Act shall be transferable
by a holder thereof only upon compliance with the conditions in this Paragraph.
Before making any transfer of Option Shares, the holder of the shares shall give
written notice to the Company of the holder's intention to make the transfer,
describing the manner and circumstances of the transfer. If in the opinion of
the Company's counsel, or of other counsel acceptable to the Company, the
proposed transfer may be effected without registration under the Act, the
Company shall so notify the holder and the holder shall be entitled to transfer
such shares as described in the holder's notice to the Company. If such counsel
opines that the transfer may not be made without registration under the Act,
then the Company shall so notify the holder, in which event the holder shall not
be entitled to transfer the shares until (i) the Company notifies the holder
that it is permissible to proceed with the transfer, or (ii) registration of the
shares under the Act has become effective. The Company may issue "stop transfer"
instructions to its transfer agent with respect to any or all of the Option
Shares as it deems necessary to prevent any violation of the Act.

     6.      Transfer or Encumbrance of this Option Prohibited.  This Option may
not be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death or by operation of law under the laws of descent
and distribution.  The same restriction on transfer or assignment shall apply to
any heirs, devisees, beneficiaries or other persons acquiring this Option or an
interest herein under such an instrument or by operation of law.  Further, this
Option may not be pledged, hypothecated or otherwise encumbered, by operation of
law or otherwise, nor shall it be subject to execution, attachment or similar
process.

     7.      Termination of Service, Death, or Disability.  (a) Except as may be
otherwise expressly provided in this Agreement, this Option shall terminate as
follows:

     (i)     Upon termination of the Optionee's directorship with the Company
for cause;

     (ii)    At the expiration of six (6) months from the date of the Optionee's
resignation or termination of the Optionee's directorship with the Company
without cause, for any reason other than death; provided, that if the Optionee
dies within such six-month period, subclause (iii) below shall apply; or

     (iii)   At the expiration of fifteen (15) months after the date of death of
the Optionee.

     (b)     This Option confers no right upon the Optionee with respect to the
continuation of his directorship (or his position as an officer, director or
other provider of services) with the Company or any parent or subsidiary of the
Company, and shall not interfere with the right of the Company, or any parent or
subsidiary Company, to terminate such relationship(s) at any time in accordance
with law and any agreements then in force.

     8.      No Rights as Stockholder.  The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares.  No adjustment for dividends, or otherwise, except
as provided in Paragraph 9, shall be made if the record date therefor is prior
to the date of exercise of such Option.

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     9.      Changes in the Company's Capital Structure.  The existence of this
Option shall not limit or affect in any way the right or power of the Company or
its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
However,

     (a)     If, prior to the Company's delivery of all the Option Shares
subject to this Option, the Company shall effect a subdivision (split) or
combination (reverse split) of shares or other capital readjustment, the payment
of a common stock dividend, or other increase or reduction of the number of
shares of common stock outstanding, without receiving compensation therefor in
money, services or property, then (i) in the event of an increase in the number
of such shares outstanding, the Purchase Price shall be proportionately reduced
and the number of Option Shares then still purchasable shall be proportionately
increased; and (ii) in the event of a reduction in the number of such shares
outstanding, the Purchase Price payable per share shall be proportionately
increased and the number of Option Shares then still purchasable shall be
proportionately reduced.

     (b)     If while this Option remains outstanding the Company is
reorganized, merged, consolidated or party to a plan of share exchange with
another corporation, or if the Company sells or otherwise disposes of all or
substantially all its property or assets to another corporation, then subject to
the provisions of clause (ii) below, (i) after the effective date of such
reorganization, merger, consolidation, exchange or sale, as the case may be, the
Optionee shall be entitled, upon exercise of this Option, to receive, in lieu of
the Option Shares, the number and class of shares of such stock, other
securities, cash and other property or rights as the holders of shares of the
Company's common stock received pursuant to the terms of the reorganization,
merger, consolidation, exchange or sale and to which he would have been entitled
if, immediately prior to such reorganization, merger, consolidation, exchange or
sale, he had been the holder of record of a number of shares of common stock
equal to the number of Option Shares as to which this Option shall be so
exercised; and (ii) this Option may be canceled by the Board of Directors of the
Company as of the effective date of any such reorganization, merger,
consolidation, exchange or sale; provided that (x) such reorganization, merger,
consolidation, exchange or sale results in a change in control of the Company
rather than a mere change of form or domicile of the Company, (y) written notice
of such cancellation is given to the Optionee or other holder of this Option not
less than 45 days prior to such effective date, and (z) the Options or other
holder shall have the right to exercise the Option in full during such 45-day
period preceding the effective date of such reorganization, merger,
consolidation, exchange or sale.

     (c)     In case the Company shall determine to offer to the holders of its
common stock rights to subscribe pro rata for any new or additional shares of
common stock, or any securities convertible into common stock, then the Optionee
shall be entitled to participate in such pro rata offering in the same manner
and to the same extent as if this Option had been exercised at the Purchase
Price then in effect and the number of Option Shares then purchasable upon
exercise hereof had been issued to the Optionee pursuant to the terms hereof.

     (d)     Except as herein before expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the Purchase Price or the number
of Option Shares then subject to this Option.

     10.     Notification to Company of Certain Sales. The Optionee or other
holder of Option Shares who sells any of such shares shall notify the Company of
such fact in writing within 30 days after the date of sale, if:

     (a)     At the time the Option Shares were sold, less than ONE year had
elapsed since the date the Option Shares were purchased by the Optionee, and
less than TWO years had elapsed since the Date of Grant of this Option; or

     (b)     the Optionee was not an employee of the Company (or of a parent or
subsidiary thereof) at all times during the period beginning on the Date of
Grant of this Option and ending on the date three (3) months prior to the date
this Option was exercised to purchase the Option Shares sold.

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     The failure of the Optionee or other holder of Option Shares to promptly
give such notice to the Company shall entitle the Company to cancel this Option
forthwith, without prior notice to the holder hereof.

     11.     Notices, etc. Any notice hereunder by the Optionee shall be given
to the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 13114 Evening Creek Drive South, San Diego, California
92128, or at such other address as the Company may designate by notice to the
Optionee. Any notice or other communication to the Optionee hereunder shall be
in writing and shall be deemed duly given or made if mailed or delivered to the
Optionee at the last address as the Optionee may have on file with the Company's
Secretary. This Option shall be governed under and construed in accordance with
the laws of the State of California. This address shall be binding on the
Company and the Optionee and all successors, assigns, heirs, devisees and
personal representatives thereof.

NOTE:  This option must match the Control copy maintained by the Company, in all
particulars.

IN WITNESS WHEREOF, the parties hereto have executed this Special Stock Option
as of the day and year first above written.


                                  AMERICAN TECHNOLOGY CORPORATION



                                  By /s/ ELWOOD G. NORRIS
                                     --------------------
                                     Elwood G. Norris, Director

ATTEST:




By /s/ RENEE WARDEN
   ----------------
   Renee Warden, Secretary

                                  OPTIONEE NAME and STATUS;

                                  Cornelius J. Brosnan, President, CEO and
                                  Chairman


                                  ORIGINAL to Optionee / COPY to Company