Employment Letter - Zavoli

Exhibit
    10.47

    AMERICAN
      TECHNOLOGY CORPORATION

     

    October
      17, 2005

     

    Mr.
      John
      Zavoli

     

    Dear
      John,

     

    American
      Technology Corporation ("Company") is very pleased to confirm our offer of
      employment. This offer is contingent upon the recommendation of the Company's
      Compensation Committee, and approval by the Company's Board of Directors (both
      to be obtained no later than October 18, 2005), and satisfactory results of
      all
      reference, education, and background checks. Our offer is based on the following
      terms and conditions:

     

    


    
      	
              Title:

            	
              President
                and Chief Operating Officer
                commencing on the start date.

            
	 	 
	
              Start
                Date:

            	
              We
                have anticipated your start date as
                Tuesday, November 1, 2005.

            
	 	 
	
              Salary:

            	
              Your
                base salary will be $250,000.00 per year, payable in accordance with
                the
                normal payroll practices of the Company. Your base salary will be
                reviewed
                by the Compensation Committee
                at the end of fiscal 2006, and any
                increase recommended by the Compensation Committee
                will be subject to approval by the
                Board of Directors.

            
	 	 
	
              Bonus:

            	
              You
                will be eligible for an annual bonus
                with respect to fiscal years beginning fiscal 2006 as recommended
                by the
                Compensation Committee and approved by the Board of Directors. The
                bonus
                will be based in part on your achievement of detailed quarterly and
                annual
                goals that will be established by the Compensation Committee with
                input
                from you and the chairman of the Board during the first 90 days
                of
                your
                employment. Any bonus so determined will
                be
                payable at the same time as annual bonuses are
                paid to other executive officers of the
                Company.

            
	 	 


    

    



    
      
        
        

      

      
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    AMERICAN
      TECHNOLOGY CORPORATION

    


    


    
      	
              Stock
                Options:

            	
              Management
                will recommend to the Compensation
                Committee that you be granted a stock
                option under the Company's 2005 Equity
                Incentive Plan (the "Plan") to purchase 100,000 shares of common
                stock at
                the first meeting of the Compensation Committee held after your start
                date, or earlier by unanimous written consent. This option will be
                in
                addition to the stock option granted to you on June 14, 2005. The
                recommended option will have an exercise price equal to the
                fair market value of our common stock on the
                date the Compensation Committee approves the
                grant, determined in accordance with the
                Plan. The recommended option will be exercisable for five (5) years
                after
                grant, subject to earlier termination upon termination of your continuous
                service. The recommended option will vest over four (4) years, with
                one
                fourth (1/4) of the shares vesting twelve (12) months after the grant
                date, and the balance vesting in equal quarterly
                installments through and including
                the fourth anniversary of the grant date. The recommended option
                will be a
                non-qualified stock option and will not qualify for incentive stock
                option
                (ISO) treatment under the Internal Revenue Code.

            
	 	 
	
              Severance:

            	
              In
                the event your employment is terminated for
                any reason other than Cause (as defined
                on
                Exhibit A), or if you resign for Good Reason (as defined on Exhibit
                A),
                you will be entitled to severance in the form of post-termination
                salary
                continuation and payment by the Company of the premiums for extension
                of
                benefits on COBRA (collectively,
                "Compensation Continuation")
                for the number of months set forth below, conditioned
                on your execution of a general
                release of all known and unknown claims against the company, and
                the
                continued effectiveness of such release beyond any statutory revocation
                period. The Compensation
                Continuation, if payable, shall
                be
                paid for one (1) month for each two (2) month period of your employment
                or
                part thereof, up to a maximum of six (6) months of Compensation
                Continuation. (For example, if your employment were terminated without
                Cause after 4 months and 5 days of employment,
                you would be entitled to 3
                months Compensation Continuation.)

            
	 	 


    

    



    
      
        
        

      

      
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    AMERICAN
      TECHNOLOGY CORPORATION

    


    


    
      	
              Resignation
                from Board Committees:

            	
              In
                order to ensure that the Company remains in compliance with the rules
                of
                the Nasdaq Stock Market concerning the composition of certain board
                committees, by your execution of this letter, you are tendering your
                resignation
                from the Audit Committee and the
                Compensation Committee.

            
	 	 
	
              Health
                Benefits: 

            	
              The
                Company offers a comprehensive benefits plan
                that includes medical, dental, vision, short-term
                disability, long-term disability
                and life insurances. The Company pays for 100% of all health benefit
                premiums, including dependents, and you can elect HMO or
                PPO medical coverage. You may pay for any qualified
                out-of-pocket expense on a pre-tax
                basis through a Section 125 plan. Benefits begin the first day of
                the
                month following your start date.

            
	 	 
	
              Paid
                Time & Holidays:

            	
              You
                will receive 15 days of accrued Paid
                Time Off (PTO) annually, for use for vacation
                or for personal time off. PTO hours
                are accrued per pay period. Any hours in excess of 200 will be paid
                out in
                the first pay period of December. In the event of short-term illness,
                you
                will be provided time to convalesce at home and will be paid your
                regular salary for this time. Sick time
                is
                not accrued but rather is taken as needed.

            
	 	 
	 	
              The
                Company offers nine (9) paid holidays each calendar year, subject
                to
                future change.
                You must be on active status the day before and the day after the
                holiday
                to
                receive holiday pay.

            
	 	 


    

    



    
      
        
        

      

      
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    AMERICAN
      TECHNOLOGY CORPORATION

    


    


    
      	
              Retirement:

            	
              A
                401k package is available with multiple investment
                options and the company matches 25%
                of the employee's deferral up to 6% of
                your annual earnings. (Note: Some IRS limitations may
                apply.)

            
	 	 
	
              Public
                Announcement:

            	
              We
                plan to announce
                our
                understanding regarding your employment and other matters required
                to be
                disclosed in connection
                with
                this letter on
                or
                about October 18, 2005 in
                a
                press release and Form 8-K, each of which will
                be submitted to you for your comment in
                advance of issuance or filing.

            
	 	 
	
              Arbitration:

            	
              As
                a contingency
                of
                this offer, you will be
                required to sign the attached Mutual Agreement to Arbitrate ("Arbitration
                Agreement").

            


    

    


    Due
      to
      the enactment of the Immigration Reform and Control Art of 1986, this offer
      is
contingent
      on
      your
      ability to produce acceptable documentation verifying your eligibility to work
      in the
      United States. You will be required to present the necessary
      documents on the day you begin work at American Technology
      Corporation.

    


    Additionally,
      as a condition of this offer and of your employment
      with American Technology Corp., you will be required
      to
      preserve the Company's proprietary and confidential information
      and you must comply with the Company's policies and
      procedures. Accordingly, you will be required to execute the Company's
      Non-Disclosure Agreement on your first date of employment.

    


    If
      accepted, your employment will be at-will with no specified period
      or
      term of employment. This means that either you or the
      Company
      may terminate employment at anytime, with or without reason, subject only to
      the
      severance provision above. An employment agreement for a specified period of
      time, which contradicts
      this at-will agreement, may be entered into only in
      writing,
      and only following the recommendation of the Compensation
      Committee
      and the approval by the Board of Directors of such an employment
      agreement.


    
      
        
        

      

      
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    AMERICAN
      TECHNOLOGY CORPORATION

    


     

     

    We
      sincerely hope that you decide to join American Technology Corp.
      Please acknowledge your acceptance of our offer by signing
      below
      and returning a copy of this letter to me.

    


    If
      there
      are any questions, please do not hesitate to call me. 

    


    Sincerely,

    


    /s/
      Elwood G. Norris

    


    Elwood
      G.
      Norris 

    Chairman
      of the Board

    


    


    I
      understand and agree to the terms and conditions set forth in
      this
      letter. I further understand that any misrepresentations that I have made on
      my
      employment application or resume can result in termination. I acknowledge that
      no statement contradicting
      this letter, oral or written, has been made to me, that
      I am
      not relying on any statement or term not contained in this
      letter, and that no agreements exist which are contrary to
      the
      terms and conditions set forth in this letter.

    


    


    Accepted
      by: /s/ John Zavoli        Date:
      10/17/2005

     

     

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