**EMPLOYMENT      AGREEMENT**

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| /s/                Cornelius J. Brosnan                          |   | February                28, 2000 |
|------------------------------------------------------------------|--------|----------------------------------|
| American                Technology Corporation                   |   |                             |
| Cornelius                J. Brosnan, Chairman, President and CEO |   |                             |
|                                                             |   |                             |
|                                                             |   |                             |
| /s/                James J. Croft III                            |   | February                28, 2000 |
| James                J. Croft III, Employee                      |   |                             |

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**Addendum      to**

**American      Technology Corporation**

**Employee      Intellectual Property Policy**

**For**

**James      J. Croft**

| 1. | Croft                  hereby agrees to grant an exclusive license to ATC for the Croft                  Invention                  known as "Acoustic Transformer Based Woofer Systems", hereinafter                  defined,                  under the terms and conditions set forth in this                  addendum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| 2. | ATC                  agrees to provide reasonable financial support for the development                  of the                  system product and expenses for obtaining patent(s) for the                  system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3. | Croft                  agrees to use his best efforts to finalize the patent documentation                  as                  quickly as                  possible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4. | For                  products sold utilizing the Croft Invention prior to final action                  by the                  U. S. Patent                  and Trademark Office (PTO) on the application, Croft shall receive                  the                  applicable income, as per the Policy. Should the PTO deny a                  patent                  on the Croft Invention                  Claims, then these payments shall cease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 5. | ATC.                  agrees to start payments to Croft on August 1, 1999 in the amount                  of $900                  per month. On February 1, 2000, these payments shall increase to                  $1,800                  per month. Thereafter, Croft shall receive the greater of the amounts                  of                  monthly payments above or the commission earned of royalties paid                  to ATC                  by third party sublicensees, or from sales of products made by                  ATC. These                  monthly amounts paid to Croft shall be based on the amount received                  by ATC                  in quarterly lump sum payments by sublicensees averaged to determine                  a                  monthly royalty amount. In the event the royalty amount due to                  Croft                  should fall below $1800 per month and ATC should decide to pay                  Croft less                  than $1800 per month, but equal to or greater than $900 per month                  then the                  license granted by Croft shall be non-exclusive. In the further                  event that                  ATC decides not to pay Croft at least $900 per month, then the                  license                  grant is revoked and ATC shall have no rights in the                  invention. |
| 6. | ATC                  agrees that Section III.B of the ATC Employee Intellectual Property                  Policy                  shall not apply to Croft.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 7. | ATC                  agrees to use reasonable efforts to market and/or sell the Croft                  Invention                  products, consistent with the best interests of the                  company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 8. | "Acoustic                  Transformer Based Woofer System" is defined as a woofer driver                  coupled                  with a small coupling chamber to a two different sized back to                  back                  connected cone passive radiator such that the output is transformed                  up by                  the size of the largest cone and the ratio of the active woofer                  cone to                  the difference ratio of the passive cones or to the smaller of                  the passive                  cones. This can be used to create a                  scaled or vented or multi-chamber vented bandpass system and/or                  used to                  drive                  a                  dipole sub woofer system. It may also have a vent in the auxiliary                  chamber                  driven by the difference cone passive                  radiator.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   | James                  J. Croft |   | American                  Technology Corporation |
|--------|---------------------------------|--------|--------------------------------------------------|
|   |                            |   |                                             |   |

|                                  | By:                  /s/ James J. Croft |                               | By:                  /s/                  Con Brosnan |
|---------------------------------------|-----------------------------------------|------------------------------------|-------------------------------------------------------|
|                                  |                                    |                               |                                                  |   |
| Name:                  James J. Croft |                                    | Name:                  Con Brosnan |
|                                  |                                    |                               | Title:                  President and CEO             |

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**Addendum        Number Two**

**to**

**American        Technology Corporation**

**Employee        Intellectual Property Policy**

**For**

**James        J. Croft**

| 1. | This Addendum                  Number Two incorporates                  and restates the original Addendum                  to                  the Policy dated January 12, 1999 (Original Addendum).                                                                                                                                                                                                     |
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| 2. | The                  duties, obligations and benefits, which are set forth in the Original                  Addendum which flow to Croft shall also flow to Croft's heirs.                  In a                  similar manner, duties, obligations and benefits which are set                  forth in                  the Original Addendum which flow to ATC shall also flow to ATC's                  successors. |

|   | James                    J. Croft |   | American                    Technology Corporation |
|--------|-----------------------------------|--------|----------------------------------------------------|
|   |                              |   |                                               |   |

|                                    | By:                    /s/ James J. Croft |                                 | By:                    /s/                    Con Brosnan |
|-----------------------------------------|-------------------------------------------|--------------------------------------|-----------------------------------------------------------|
|                                    |                                      |                                 |                                                      |   |
| Name:                    James J. Croft |                                      | Name:                    Con Brosnan |
|                                    |                                      |                                 | Title:                    President and CEO               |

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**Addendum        Number Three to**

**American        Technology Corporation**

**Employee        Intellectual Property Policy**

**For**

**James        J. Croft III**

| 1.     | Croft                  hereby agrees to grant an exclusive license to ATC for the Croft                  Invention                  known as 'Three chamber, series tuned band-pass subwoofer"[ Three                  Chamber                  Subwoofer]                  , hereinafter defined, under the terms and conditions set forth                  in                  this                  addendum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.     | ATC agrees                  to provide reasonable financial                  support for                  the development of the                  system product and expenses for obtaining patent(s) for the                  system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 3.     | Croft                  agrees to use his best efforts to finalize the patent documentation                  as                  quickly                  as                  possible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 4.     | For                  products sold utilizing the Croft Invention prior to final action                  by the                  U. S. Patent and Trademark Office (PTO) on the application, Croft                  shall                  receive the ap-plicable income, as explained below. Should the                  PTO deny a                  patent on the Croft Invention                  Claims, then                  these payments shall cease. Should ATC have                  to cease                  and desist                  the use of the Three Chamber Subwoofer during a patent infringement                  suit                  or action the payments under all terms herein shall be suspended                  for the                  duration of the suit                  or                  action but ATC                  shall not                  thereby revoke its rights herein. |
| 5.     | The                  applicable income sections of the Employee Intellectual Property                  Policy                  of                  ATC are set forth as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | The                  percentages earned by the New Employee will be: |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | In                  the case of royalty payments to American Technology Corporation                  based                  solely on the former Intellectual Property of the New Employee,                  the New                  Employee shall receive 5% of the royalties pertaining to the Employee's                  former patents) or copyright(s). In the                  case                  where there are multiple former patents or copy-rights of the New                  Employee                  combined in a single royalty, the compensation to the New Employee                  will be                  5% of the royalty paid to American Technology Corporation for that                  combination of Intellectual Property. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | In                  the case of                  an individual                  product, component, or software program sold by American Technology                  Corporation the                  New Employee                  shall receive 2% of the net                  selling price. Net selling price is herein defined as American                  Technology                  Corporation's selling price minus all terms and conditions of sales                  [cash                  discounts, advertising, returns and                  allowances]. |

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|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | In                  the case where the New Employee's former Intellectual Property                  is a                  component part of a set of components American Technology Corporation                  sells, the ratio of                  the cost                  basis of                  the Employee's                  Intellectual Property to                  the total value                  of the set                  of components                  will be                  used                  to determine                  the percentage of                  total value that the Employee's                  Intellectual Property represents of the net selling price upon                  which the                  Employees 2% compensation                  will be calculated..                  Net selling price is herein                  defined as American Technology                  Corporation's selling price minus all terms and                  conditions of sales [cash discounts, advertising, returns and                  allowances). |
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| 6.     | Croft                  agrees that when the Three Chamber Subwoofer is a part of a system                  or set                  of components that is earning royalties for American Technology                  Corporation, his 5% royalty will be calculated based on one half                  the total                  royalty earned by ATC from the system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 7.     | Croft                  agrees to suspend all obligations by both parties under the Addendum                  dated                  January                  12, 1999                  regarding the                  Croft Invention                  known as "Acoustic Transformer                  Based                  Woofer Systems" until March 25, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 8.     | ATC                  agrees to start payments for the Three Chamber Subwoofer to Croft                  on                  October 1, 2000 in the amount of $1600 per month paid on a quarterly                  basis. There-after, Croft shall receive the greater of the amounts                  of                  monthly payments above or the commission earned of royalties paid                  to ATC                  by third party licensees, or from sales of products made by ATC.                  These                  monthly amounts paid to Croft shall be based on the amount received                  by ATC                  in quarterly lump sum payments by licensees averaged to determine                  a                  monthly royalty amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 9.     | Croft                  agrees to credit the payments made to him by ATC under the Addendum                  dated                  January 12, 1999 to the payment obligations under this Addendum                  Three. The                  amount of this credit is $5,400. Therefore, applying this credit                  to the                  monthly minimum                  payment of                  $1600, for the Three                  Chamber Subwoofer (as described                  in                  Employee's Employment Agreement of February 28, 2000) the credit                  amount                  shall be exhausted in January, 2001. It is understood and agreed                  by the                  parties to this                  Addendum Three that, since the payment amount                  to Croft is the                  greater of the                  monthly payment or the amount due under the Policy, this credit                  may be                  exhausted earlier than January, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.    | Croft represents                  and warrants he                  has sole                  title to this invention,                  has the right to assign                  it to ATC, that it is free and clear of all encumbrances and that                  no                  rights to                  this invention rest with any of his prior employers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 11.    | ATC                  agrees to use reasonable efforts to market and/or sell the Croft                  Invention                  products, consistent with the best interests of the                  company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 12.    | "Three                  chamber, series tuned band-pass subwoofer" [Three Chamber                  Subwoofer]                  is                  defined and described by Croft as a 3 chamber woofer system that                  has the                  woofer(s) mounted between chamber 1 and 2 and a vent going between                  chamber                  1 and 2, this being the vent with the lowest frequency tuning.                  Another                  vent is between chambers 2 and 3 that has the highest tuning and                  one more                  vent from chamber three to outside the cabinet and this vent being                  tuned                  to a middle frequency between the other two vents. A similar design                  with                  the lowest frequency vent removed is also possible. These designs                  have                  very small cone excursion for power out and also roll-off at a                  steep rate                  which allows them to be used to a higher frequency in a mono bass                  system                  without audible location detection. Rear, sealed chamber could                  also be                  replaced w/ an acoustic pipe. Also a 3 chamber system with a vent                  to the                  outside world from each chamber and with two woofers feeding                  forward into a common chamber tuned to the lowest frequency and                  rear                  waves                  of each feeding separately into their own chambers which are vented                  at                  two                  frequencies. |

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| 13. | The                  duties, obligations and benefits, which are set forth in this Addendum,                  which flow to Croft shall also flow to Croft's heirs. In a similar                  manner,                  duties, obligations and benefits which are set forth in this Addendum                  which flow to ATC shall also flow to ATC's successors and                  assigns. |
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|   | James                    J. Croft        2/28/00 |   | American                    Technology Corporation |
|--------|------------------------------------------------------------------------------------------|--------|----------------------------------------------------|
|   |                                                                                     |   |                                               |   |

|                                    | By:                    /s/ James J. Croft |                                 | By:                    /s/                    Con Brosnan        2/28/00 |
|-----------------------------------------|-------------------------------------------|--------------------------------------|------------------------------------------------------------------------------------------------------------------|
|                                    |                                      |                                 |                                                                                                             |   |
| Name:                    James J. Croft |                                      | Name:                    Con Brosnan |
|                                    |                                      |                                 | Title:                    President and CEO                                                                      |