Exhibit 10.9 

AMERICAN TECHNOLOGY CORPORATION

2005 EQUITY INCENTIVE PLAN

1.              Purpose of the Plan . The purpose of this Plan is to encourage ownership in the Company by key personnel whose long-term
service is considered essential to the Company’s continued progress and, thereby, encourage
recipients to act in the stockholders’ interest and share in the Company’s success. 

2.              Definitions . As used herein, the following definitions shall apply: 

                                “Administrator” shall mean the Board, any Committees or such delegates as shall be administering
the Plan in accordance with Section 4 of the Plan. 

                                “Affiliate” shall mean any entity that is directly or indirectly controlled by the Company
or any entity in which the Company has a significant ownership interest as determined by the Administrator.


                                “Applicable Laws” shall mean the requirements relating to the administration of stock plans
under federal and state laws, any stock exchange or quotation system on which the Company has listed
or submitted for quotation the Common Stock to the extent provided under the terms of the Company’s
agreement with such exchange or quotation system and, with respect to Awards subject to the laws
of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such
jurisdiction. 

                                “Award” shall mean, individually or collectively, a grant under the Plan of Options, Stock
Awards, SARs, or Cash Awards.

                                “Awardee” shall mean a Service Provider who has been granted an Award under the Plan. 

                                “Award Agreement” shall mean an Option Agreement, Stock Award Agreement, SAR Award Agreement,
and/or Cash Award Agreement, which may be in written or electronic format, in such form and with
such terms as may be specified by the Administrator, evidencing the terms and conditions of an individual
Award. Each Award Agreement is subject to the terms and conditions of the Plan.

                                “Award Transfer Program” shall mean any program instituted by the Administrator which would
permit Participants the opportunity to transfer any outstanding Awards to a financial institution
or other person or entity selected by the Administrator.

                                “Board” shall mean the Board of Directors of the Company. 

                                “Cash Award” shall mean a bonus opportunity awarded under Section 13 pursuant to which a
Participant may become entitled to receive an amount based on the satisfaction of such performance
criteria as are specified in the agreement or other documents evidencing the Award (the “Cash
Award Agreement”). 








                                “Change in Control” shall mean any of the following, unless the Administrator provides otherwise:


	 	                (i)              any merger or consolidation in which the Company shall not be the surviving entity (or survives only
as a subsidiary of another entity whose stockholders did not own all or substantially all of the
Common Stock in substantially the same proportions as immediately prior to such transaction);
		 
	 	                (ii)             the sale of all or substantially all of the Company’s assets to any other person or entity (other
than a wholly-owned subsidiary);
		 
	 	                (iii)            the acquisition of beneficial ownership of a controlling interest (including, without limitation,
power to vote) in the outstanding shares of Common Stock by any person or entity (including a “group”
as defined by or under Section 13(d)(3) of the Exchange Act); or
		 
	 	                (iv)            the dissolution or liquidation of the Company.


Notwithstanding the foregoing, the term “Change in Control” shall not include any under written
public offering of Shares registered under the Securities Act of 1933, as amended.

                                “Code” shall mean the Internal Revenue Code of 1986, as amended.

                                “Committee” shall mean a committee of Directors appointed by the Board in accordance with
Section 4 of the Plan.

                                “Common Stock” shall mean the common stock of the Company.

                                “Company” shall mean American Technology Corporation, a Delaware corporation, or its successor.

                                “Consultant” shall mean any person engaged by the Company or any Affiliate to render services
to such entity as an advisor or consultant.

                                “Conversion Award” has the meaning set forth in Section 4(b)(xii) of the Plan.

                                “Director” shall mean a member of the Board.

                                “Dividend Equivalent” shall mean a credit, made at the discretion of the Administrator, to
the account of a Participant in an amount equal to the cash dividends paid on one Share for each
Share represented by an Award held by such Participant.








                                “Employee” shall mean a regular, active employee of the Company or any Affiliate, including
an Officer and/or Director. Within the limitations of Applicable Law, the Administrator shall have
the discretion to determine the effect upon an Award and upon an individual’s status as an Employee
in the case of (i) any individual who is classified by the Company or its Affiliate as leased from
or otherwise employed by a third party or as intermittent or temporary, even if any such classification
is changed retroactively as a result of an audit, litigation or otherwise, (ii) any leave of absence
approved by the Company or an Affiliate, (iii) any transfer between locations of employment with
the Company or an Affiliate or between the Company and any Affiliate or between any Affiliates, (iv)
any change in the Awardee’s status from an employee to a Consultant or Director, and (v) at
the request of the Company or an Affiliate an employee becomes employed by any partnership, joint
venture or corporation not meeting the requirements of an Affiliate in which the Company or an Affiliate
is a party.

                                “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

                                “Exchange Program” shall mean a program under which (i) outstanding Awards are surrendered
or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different
terms), Awards of a different type, and/or cash, and/or (ii) the exercise price of an outstanding
Award is reduced. The terms and conditions of any Exchange Program will be determined by the Administrator
in its sole discretion.

                                “Fair Market Value” shall mean, unless the Administrator determines otherwise, as of any
date, the closing price for such Common Stock as of such date (or if no sales were reported on such
date, the closing price on the last preceding day for which a sale was reported), as reported in
such source as the Administrator shall determine.

                                “Grant Date” shall mean the date upon which an Award is granted to an Awardee pursuant to
this Plan.

                                “Incentive Stock Option” shall mean an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

                                “Nonstatutory Stock Option” shall mean an Option not intended to qualify as an Incentive
Stock Option.

                                “Officer” shall mean a person who is an officer of the Company within the meaning of Section
16 of the Exchange Act and the rules and regulations promulgated thereunder.

                                “Option” shall mean a right granted under Section 8 of the Plan to purchase a certain number
of Shares at such exercise price, at such times, and on such other terms and conditions as are specified
in the agreement or other documents evidencing the Award (the “Option Agreement”). Both
Options intended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be granted
under the Plan.

                                “Participant” shall mean the Awardee or any person (including any estate) to whom an Award
has been assigned or transferred as permitted hereunder.

                                “Plan” shall mean this American Technology Corporation 2005 Equity Incentive Plan, as amended
from time to time.

                                “Prior Plan” shall mean the Company’s 2002 Stock Option Plan authorizing up to 2,350,000
Shares for issuance pursuant to stock options.








                                “Qualifying Performance Criteria” shall have the meaning set forth in Section 14(b) of the
Plan.

                                “Related Corporation” shall mean any parent or subsidiary (as defined in Sections 424(e)
and (f) of the Code) of the Company.

                                “Rule 701” shall mean Rule 701 promulgated under the Securities Act of 1933, as amended.

                                “Service Provider” shall mean an Employee, Director, or Consultant.

                                “Share” shall mean a share of the Common Stock, as adjusted in accordance with Section 15
of the Plan.

                                “Stock Award” shall mean an award or issuance of Shares or Stock Units made under Section
11 of the Plan, the grant, issuance, retention, vesting and/or transferability of which is subject
during specified periods of time to such conditions (including continued service or performance conditions)
and terms as are expressed in the agreement or other documents evidencing the Award (the “Stock
Award Agreement”).

                                “Stock Appreciation Right” or “SAR” shall mean an Award, granted alone or in connection
with an Option, that pursuant to Section 12 of the Plan is designated as a SAR. The terms of the
SAR are expressed in the agreement or other documents evidencing the Award (the “SAR Agreement”).

                                “Stock Unit” shall mean a bookkeeping entry representing an amount equivalent to the fair
market value of one Share, payable in cash, property or Shares. Stock Units represent an unfunded
and unsecured obligation of the Company, except as otherwise provided for by the Administrator. 

                                “10% Stockholder” shall mean the owner of stock (as determined under Section 424(d)
of the Code) possessing more than 10% of the total combined voting power of all classes of stock
of the Company (or any Related Corporation).

                                “Termination of Service” shall mean ceasing to be a Service Provider. However, for Incentive
Stock Option purposes, Termination of Service will occur when the Awardee ceases to be an employee
(as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder)
of the Company or one of its Related Corporations. The Administrator shall determine whether any
corporate transaction, such as a sale or spin-off of a division or business unit, or a joint venture,
shall be deemed to result in a Termination of Service. 

                                “Total and Permanent Disability” shall have the meaning set forth in Section 22(e)(3) of
the Code. 








3.             Stock Subject to the Plan.

                (a)           Aggregate Limits.

	 	                (i)              The number of Shares initially reserved for issuance under the Plan through Awards is a maximum of
3,312,501 Shares. Such reserve shall consist of (A) the number of Shares available for issuance,
as of the effective date of the Plan, under the Prior Plan, plus (B) those Shares that are issuable
upon exercise of (x) options granted pursuant to the Prior Plan, or (y) “Prior Plan Options”
as such term is defined in the Prior Plan, in either case which expire or become unexercisable for
any reason without having been exercised in full after the effective date of the Plan, plus (C) an
additional increase of 1,500,000 Shares to be approved by the Company’s shareholders on the
effective date of the Plan. Notwithstanding the foregoing, the maximum aggregate number of Shares
that may be issued under the Plan through Incentive Stock Options is 3,312.501. The limitations of
this Section 3(a)(i) shall be subject to the adjustments provided for in Section 15 of the Plan.
		 
	 	                (ii)             Upon payment in Shares pursuant to the exercise of an Award, the number of Shares available for issuance
under the Plan shall be reduced only by the number of Shares actually issued in such payment. If
any outstanding Award expires or is terminated or canceled without having been exercised or settled
in full, or if Shares acquired pursuant to an Award subject to forfeiture or repurchase are forfeited
or repurchased by the Company, the Shares allocable to the terminated portion of such Award or such
forfeited or repurchased Shares shall again be available to grant under the Plan. Notwithstanding
the foregoing, the aggregate number of shares of Common Stock that may be issued under the Plan upon
the exercise of Incentive Stock Options shall not be increased for restricted Shares that are forfeited
or repurchased. Notwithstanding anything in the Plan, or any Award Agreement to the contrary, Shares
attributable to Awards transferred under any Award Transfer Program shall not be again available
for grant under the Plan. The Shares subject to the Plan may be either Shares reacquired by the Company,
including Shares purchased in the open market, or authorized but unissued Shares.



                (b)            Code Section 162(m) Limit.  Subject to the provisions of Section 15 of the Plan, the aggregate number of Shares subject
to Awards granted under this Plan during any calendar year to any one Awardee shall not exceed 250,000,
except that in connection with his or her initial service, an Awardee may be granted Awards covering
up to an additional 500,000 Shares. Notwithstanding anything to the contrary in the Plan, the limitations
set forth in this Section 3(b) shall be subject to adjustment under Section 15 of the Plan
only to the extent that such adjustment will not affect the status of any Award intended to qualify
as “performance based compensation” under Code Section 162(m). 

4.             Administration of the Plan.

                (a)            Procedure. 


	 	                (i)              Multiple Administrative Bodies. The Plan shall be administered by the Board, a Committee and/or their delegates. 








	 	                (ii)             Section 162. To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder
as “performance-based compensation” within the meaning of Section 162(m) of the Code, Awards
to “covered employees” within the meaning of Section 162(m) of the Code or Employees that
the Committee determines may be “covered employees” in the future shall be made by a Committee
of two or more “outside directors” within the meaning of Section 162(m) of the Code. 
		 
	 	                (iii)            Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3 promulgated
under the Exchange Act (“Rule 16b-3”), Awards to Officers and Directors shall be made in
such a manner to satisfy the requirement for exemption under Rule 16b-3. 
		 
	 	                (iv)            Other Administration. The Board or a Committee may delegate to an authorized Officer or Officers of the Company the power
to approve Awards to persons eligible to receive Awards under the Plan who are not (A) subject to
Section 16 of the Exchange Act or (B) at the time of such approval, “covered employees”
under Section 162(m) of the Code. 
		 
	 	                (v)             Delegation of Authority for the Day-to-Day Administration of the Plan. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more
individuals the day-to-day administration of the Plan and any of the functions assigned to it in
this Plan. Such delegation may be revoked at any time. 




           (b)            Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee or delegates acting as
the Administrator, subject to the specific duties delegated to such Committee or delegates, the Administrator
shall have the authority, in its discretion:


	 	                (i)              to select the Service Providers of the Company or its Affiliates to whom Awards are to be granted
hereunder; 
		 
	 	                (ii)             to determine the number of shares of Common Stock to be covered by each Award granted hereunder; 
		 
	 	                (iii)            to determine the type of Award to be granted to the selected Service Provider; 
		 
	 	                (iv)            to approve the forms of Award Agreements for use under the Plan; 
		 
	 	                (v)             to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted
hereunder. Such terms and conditions include, but are not limited to, the exercise and/or purchase
price, the time or times when an Award may be exercised (which may or may not be based on performance
criteria), the vesting schedule, any vesting and/or exercisability, acceleration or waiver of forfeiture
restrictions, the acceptable forms of consideration, the term, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine and may be established at the time an Award is granted or
thereafter; 
		 
	 	                (vi)            to correct administrative errors; 








	 	                (vii)           to construe and interpret the terms of the Plan (including sub-plans and Plan addenda) and Awards
granted pursuant to the Plan; 
		 
	 	                (viii)          to adopt rules and procedures relating to the operation and administration of the Plan to accommodate
the specific requirements of local laws and procedures. Without limiting the generality of the foregoing,
the Administrator is specifically authorized (A) to adopt the rules and procedures regarding the
conversion of local currency, withholding procedures and handling of stock certificates which vary
with local requirements and (B) to adopt sub-plans and Plan addenda as the Administrator deems desirable,
to accommodate foreign laws, regulations and practice; 
		 
	 	                (ix)            to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations
relating to sub-plans and Plan addenda; 
		 
	 	                (x)              to modify or amend each Award, including, but not limited to, the acceleration of vesting and/or exercisability,
provided, however, that any such amendment is subject to Section 16 of the Plan and may not materially
impair any outstanding Award unless agreed to in writing by the Participant; 
		 
	 	                (xi)            to allow Participants to satisfy withholding tax amounts by electing to have the Company withhold
from the Shares to be issued pursuant to an Award that number of Shares having a Fair Market Value
equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall
be determined in such manner and on such date that the Administrator shall determine or, in the absence
of provision otherwise, on the date that the amount of tax to be withheld is to be determined. All
elections by a Participant to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may provide; 
		 
	 	                (xii)            to authorize conversion or substitution under the Plan of any or all stock options, stock appreciation
rights or other stock awards held by service providers of an entity acquired by the Company (the
“Conversion Awards”). Any conversion or substitution shall be effective as of the close
of the merger or acquisition. The Conversion Awards may be Nonstatutory Stock Options or Incentive
Stock Options, as determined by the Administrator, with respect to options granted by the acquired
entity. Unless otherwise determined by the Administrator at the time of conversion or substitution,
all Conversion Awards shall have the same terms and conditions as Awards generally granted by the
Company under the Plan; 
		 
	 	                (xiii)          to authorize any person to execute on behalf of the Company any instrument required to effect the
grant of an Award previously granted by the Administrator; 
		 
	 	                (xiv)          to implement an Award Transfer Program;
		 
	 	                (xv)           to determine whether Awards will be settled in Shares, cash or in any combination thereof;
		 
	 	                (xvi)          to determine whether Awards will be adjusted for Dividend Equivalents;









	 	                (xvii)         to establish a program whereby Service Providers designated by the Administrator can reduce compensation
otherwise payable in cash in exchange for Awards under the Plan;
		 
	 	                (xviii)        to impose such restrictions, conditions or limitations as it determines appropriate as to the timing
and manner of any resales by a Participant or other subsequent transfers by the Participant of any
Shares issued as a result of or under an Award, including, without limitation, (A) restrictions under
an insider trading policy and (B) restrictions as to the use of a specified brokerage firm for such
resales or other transfers; 
		 
	 	                (xix)           to provide, either at the time an Award is granted or by subsequent action, that an Award shall contain
as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative
thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash
or a combination thereof, the amount of which is determined by reference to the value of the Award;
		 
	 	                (xx)            to institute an Exchange Program; and
		 
	 	                (xxi)           to make all other determinations deemed necessary or advisable for administering the Plan and any
Award granted hereunder.



                (c)            Effect of Administrator’s Decision.  All decisions, determinations and interpretations by the Administrator regarding the Plan,
any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder,
shall be final and binding on all Participants. The Administrator shall consider such factors as
it deems relevant, in its sole and absolute discretion, to making such decisions, determinations
and interpretations, including, without limitation, the recommendations or advice of any officer
or other employee of the Company and such attorneys, consultants and accountants as it may select. 

5.              Eligibility.  Awards may be granted to Service Providers of the Company or any of its Affiliates.

6.              Term of Plan.  The Plan shall become effective on the effective date of its approval by stockholders of the
Company. It shall continue in effect for a term of ten years from the date the Plan is approved by
stockholders of the Company unless terminated earlier under Section 16 of the Plan.

7.              Term of Award.  The term of each Award shall be determined by the Administrator and stated in the Award Agreement.
In the case of an Option, the term shall be ten years from the Grant Date or such shorter term as
may be provided in the Award Agreement. 








8.              Options.  The Administrator may grant an Option or provide for the grant of an Option, either from time
to time in the discretion of the Administrator or automatically upon the occurrence of specified
events, including, without limitation, the achievement of performance goals, the satisfaction of
an event or condition within the control of the Awardee or within the control of others. 

                (a)           Option Agreement.  Each Option Agreement shall contain provisions regarding (i) the number of Shares that may
be issued upon exercise of the Option, (ii) the type of Option, (iii) the exercise price of the Shares
and the means of payment for the Shares, (iv) the term of the Option, (v) such terms and conditions
on the vesting and/or exercisability of an Option as may be determined from time to time by the Administrator,
(vi) restrictions on the transfer of the Option and forfeiture provisions, and (vii) such further
terms and conditions, in each case not inconsistent with this Plan, as may be determined from time
to time by the Administrator. 

                (b)           Exercise Price.  The per share exercise price for the Shares to be issued pursuant to exercise of an Option
shall be determined by the Administrator, subject to the following: 

	 	                (i)              In the case of an Incentive Stock Option, the per Share exercise price shall be no less than 100%
of the Fair Market Value per Share on the Grant Date. Notwithstanding the foregoing, if any Employee
to whom an Incentive Stock Option is granted is a 10% Stockholder, then the exercise price shall
not be less than 110% of the Fair Market Value of a share of Common Stock on the Grant Date.
		 
	 	                (ii)             In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100%
of the Fair Market Value per Share on the Grant Date. The per Share exercise price may also vary
according to a predetermined formula; provided, that the exercise price never falls below 100% of
the Fair Market Value per Share on the Grant Date. In the case of a Nonstatutory Stock Option intended
to qualify as “performance-based compensation” within the meaning of Section 162(m)
of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the Grant Date.
		 
	 	                (iii)            Notwithstanding the foregoing, so long as the issuance and sale of securities under this Plan require
qualification under the California Corporate Securities Law of 1968, the per Share exercise price
of an Option shall be determined by the Administrator but shall not be less than 100% (or 110% in
the case of a person who owns on the date of grant of such Option, securities of the Company possessing
more than 10% of the total combined voting power of all classes of stock of the Company or any Related
Corporation) of the Fair Market Value of a share of Common Stock on the Grant Date.
		 
	 	                (iv)            Notwithstanding the foregoing, at the Administrator’s discretion, Conversion Awards may be granted
in substitution and/or conversion of options of an acquired entity, with a per Share exercise price
of less than 100% of the Fair Market Value per Share on the date of such substitution and/or conversion.
The terms of the Conversion Awards shall be determined by the Administrator in accordance with the
rules provided for in Code Section 424(a).









                (c)            Vesting Period and Exercise Dates.  Options granted under this Plan shall vest and/or be exercisable at such time and in such installments
during the period prior to the expiration of the Option’s term as determined by the Administrator.
The Administrator shall have the right to make the timing of the ability to exercise any Option granted
under this Plan subject to continued service, the passage of time and/or such performance requirements
as deemed appropriate by the Administrator. At any time after the grant of an Option, the Administrator
may reduce or eliminate any restrictions surrounding any Participant’s right to exercise all
or part of the Option. Notwithstanding the foregoing, so long as the issuance and sale of securities
under this Plan require qualification under the California Corporate Securities Law of 1968, an Option
awarded to anyone other than an Officer, Director or Consultant of the Company shall vest at a rate
of at least 20% per year.

                (d)            Form of Consideration.  The Administrator shall determine the acceptable form of consideration for exercising an Option,
including the method of payment, either through the terms of the Option Agreement or at the time
of exercise of an Option. Acceptable forms of consideration may include: 

	 	                (i)              cash; 
		 
	 	                (ii)             check or wire transfer; 
		 
	 	                (iii)            subject to any conditions or limitations established by the Administrator, other Shares which (A)
in the case of Shares acquired upon the exercise of an Option, have been owned by the Participant
for more than six months (or such other period of time, as required by the applicable accounting
requirements) on the date of surrender or attestation and (B) have a Fair Market Value on the date
of surrender or attestation equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised; 
		 
	 	                (iv)            consideration received by the Company under a broker-assisted sale and remittance program acceptable
to the Administrator; 
		 
	 	                (v)             such other consideration and method of payment for the issuance of Shares to the extent permitted
by Applicable Laws; or 
		 
	 	                (vi)            any combination of the foregoing methods of payment. 


                (e)            Buyout Provisions.  The Administrator may at any time offer to buy out for a payment in Shares an Option previously
granted based on such terms and conditions as the Administrator shall establish and communicate to
the Participant at the time that such offer is made.

9.              Incentive Stock Option Limitations.

                (a)            Eligibility.  Only employees (as determined in accordance with Section 3401(c) of the Code and the regulations
promulgated thereunder) of the Company or any of its Related Corporations may be granted Incentive
Stock Options. 








                (b)           $100,000 Limitation.  Notwithstanding the designation “Incentive Stock Option” in an Option Agreement,
if and to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Awardee during any calendar year (under all
plans of the Company and any of its Related Corporations) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. An Incentive Stock Option is considered to be first exercisable
during a calendar year if the Incentive Stock Option will become exercisable at any time during the
year, assuming that any condition on the Awardee’s ability to exercise the Incentive Stock Option
related to the performance of services is satisfied. If the Awardee’s ability to exercise the
Incentive Stock Option in the year is subject to an acceleration provision, then the Incentive Stock
Option is considered first exercisable in the calendar year in which the acceleration provision is
triggered. For purposes of this Section 9(b), Incentive Stock Options shall be taken into account
in the order in which they were granted. However, because an acceleration provision is not taken
into account prior to its triggering, an Incentive Stock Option that becomes exercisable for the
first time during a calendar year by operation of such provision does not affect the application
of the $100,000 limitation with respect to any Incentive Stock Option (or portion thereof) exercised
prior to such acceleration. The Fair Market Value of the Shares shall be determined as of the Grant Date. 

                (c)            Leave of Absence.  For purposes of Incentive Stock Options, no leave of absence may exceed three months, unless
reemployment upon expiration of such leave is provided by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company or a Related Corporation is not so provided
by statute or contract, an Awardee’s employment with the Company shall be deemed terminated
on the first day immediately following such three month period of leave for Incentive Stock Option
purposes and any Incentive Stock Option granted to the Awardee shall cease to be treated as an Incentive
Stock Option upon the expiration of the three month period following the date the employment relationship
is deemed terminated. 

                (d)            Transferability.  The Option Agreement must provide that an Incentive Stock Option cannot be transferable by
the Awardee otherwise than by will or the laws of descent and distribution, and, during the lifetime
of such Awardee, must not be exercisable by any other person. Notwithstanding the foregoing, the
Administrator, in its sole discretion, may allow the Awardee to transfer his or her Incentive Stock
Option to a trust where under Section 671 of the Code and other Applicable Law, the Awardee is considered
the sole beneficial owner of the Option while it is held in the trust. If the terms of an Incentive
Stock Option are amended to permit transferability, the Option will be treated for tax purposes as
a Nonstatutory Stock Option.

                (e)            Exercise Price.  The per Share exercise price of an Incentive Stock Option shall be determined by the Administrator
in accordance with Section 8(b)(i) of the Plan. 

                (f)            10% Stockholder.  If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, then the
Option term shall not exceed five years measured from the date of grant of such Option.








                (g)            Other Terms.  Option Agreements evidencing Incentive Stock Options shall contain such other terms and conditions
as may be necessary to qualify, to the extent determined desirable by the Administrator, with the
applicable provisions of Section 422 of the Code. 

10.           Exercise of Option.

                (a)           Procedure for Exercise; Rights as a Stockholder. 

	 	                (i)              Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times
and under such conditions as determined by the Administrator and set forth in the respective Award
Agreement.
		 
	 	                (ii)             An Option shall be deemed exercised when the Company receives (A) written or electronic notice of
exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option;
(B) full payment for the Shares with respect to which the related Option is exercised; and (C) with
respect to Nonstatutory Stock Options, payment of all applicable withholding taxes. 
		 
	 	                (iii)            Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested
by the Participant, in the name of the Participant and his or her spouse. Unless provided otherwise
by the Administrator or pursuant to this Plan, until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist with respect to the
Shares subject to an Option, notwithstanding the exercise of the Option. 
		 
	 	                (iv)            The Company shall issue (or cause to be issued) such Shares as soon as administratively practicable
after the Option is exercised. An Option may not be exercised for a fraction of a Share. 


                (b)           Effect of Termination of Service on Options. 

	 	                (i)              Generally. Unless otherwise provided for by the Administrator, if a Participant ceases to be a Service Provider,
other than upon the Participant’s death or Total and Permanent Disability, the Participant may
exercise his or her Option within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Award Agreement). Notwithstanding the foregoing, so
long as the issuance and sale of securities under this Plan require qualification under the California
Corporate Securities Law of 1968, upon Participant’s Termination of Service, other than due
to death, Total and Permanent Disability, or cause, the Participant may exercise his or her Option
(i) at any time on or prior to the date determined by the Administrator, which date shall be at least
30 days subsequent to the Participant’s termination date (but in no event later than the expiration
of the term of such Option), and (ii) only to the extent that the Participant was entitled to exercise
such Option on the termination date. In the absence of a specified time in the Award Agreement, the
vested portion of the Option will remain exercisable for three months following the Participant’s
termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant
is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option will terminate, and the Shares covered
by such Option will revert to the Plan.








	 	                (ii)             Disability of Awardee. Unless otherwise provided for by the Administrator, if a Participant ceases to be a Service Provider
as a result of the Participant’s Total and Permanent Disability, the Participant may exercise
his or her Option within such period of time as is specified in the Award Agreement to the extent
the Option is vested on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Award Agreement). Notwithstanding the foregoing, so long
as the issuance and sale of securities under this Plan require qualification under the California
Corporate Securities Law of 1968, in the event of Participant’s Termination of Service due to
his or her Total and Permanent Disability, the Participant may exercise his or her Option (i) at
any time on or prior to the date determined by the Administrator, which date shall be at least six
months subsequent to the termination date (but in no event later than the expiration date of the
term of his or her Option), and (ii) only to the extent that the Participant was entitled to exercise
such Option on the termination date. In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve months following the Participant’s termination. Unless
otherwise provided by the Administrator, if at the time of disability the Participant is not vested
as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately
revert to the Plan on the date of the Participant’s disability. If the Option is not so exercised
within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
		 
	 	                (iii)            Death of Awardee. Unless otherwise provided for by the Administrator, if a Participant dies while a Service Provider,
the Option may be exercised following the Participant’s death within such period of time as
is specified in the Award Agreement to the extent that the Option is vested on the date of death
(but in no event may the Option be exercised later than the expiration of the term of such Option
as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided
such beneficiary has been designated prior to Participant’s death in a form acceptable to the
Administrator. Notwithstanding the foregoing, so long as the issuance and sale of securities under
this Plan require qualification under the California Corporate Securities Law of 1968, in the event
that the Participant dies prior to a Termination of Service, the Participant’s Option may be
exercised by the Participant’s designated beneficiary (i) at any time on or prior to the date
determined by the Administrator, which date shall be at least six months subsequent to the date of
death (but in no event later than the expiration date of the term of his or her Option), and (ii)
only to the extent that the Participant was entitled to exercise the Option at the date of death.
If no such beneficiary has been designated by the Participant, then such Option may be exercised
by the personal representative of the Participant’s estate or by the person(s) to whom the Option
is transferred pursuant to the Participant’s will or in accordance with the laws of descent
and distribution. In the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve months following Participant’s death. Unless otherwise provided by the
Administrator, if at the time of death Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will immediately revert to the Plan on the
date of the Participant’s death. If the Option is not so exercised within the time specified
herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.










11.            Stock Awards.

                (a)            Stock Award Agreement.  Each Stock Award Agreement shall contain provisions regarding (i) the number of Shares subject
to such Stock Award or a formula for determining such number, (ii) the purchase price of the Shares,
if any, and the means of payment for the Shares, (iii) the performance criteria, if any, and level
of achievement versus these criteria that shall determine the number of Shares granted, issued, retained
and/or vested, (iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of
the Shares as may be determined from time to time by the Administrator, (v) restrictions on the transferability
of the Stock Award and (vi) such further terms and conditions in each case not inconsistent with
this Plan as may be determined from time to time by the Administrator.

                Notwithstanding the foregoing, so long as the issuance and sale of securities under this Plan require
qualification under the California Corporate Securities Law of 1968, the purchase price for restricted
Shares shall be determined by the Administrator, but shall not be less than 85% (or 100% in the case
of a person who owns on the date of grant of such restricted stock, securities of the Company possessing
more than 10% of the total combined voting power of all classes of stock of the Company or any Related
Corporation) of the Fair Market Value of a share of Common Stock on the date of grant of such restricted
stock.

                (b)            Restrictions and Performance Criteria.  The grant, issuance, retention and/or vesting of each Stock Award may be subject to such performance
criteria and level of achievement versus these criteria as the Administrator shall determine, which
criteria may be based on financial performance, personal performance evaluations and/or completion
of service by the Awardee. Notwithstanding the foregoing, so long as the issuance and sale of securities
under this Plan require qualification under the California Corporate Securities Law of 1968, restricted
stock awarded to anyone other than an Officer, Director or Consultant of the Company shall vest at
a rate of at least 20% per year.

                Notwithstanding anything to the contrary herein, the performance criteria for any Stock Award that
is intended to satisfy the requirements for “performance-based compensation” under Section
162(m) of the Code shall be established by the Administrator based on one or more Qualifying Performance
Criteria selected by the Administrator and specified in writing. 

                (c)            Forfeiture.  Unless otherwise provided for by the Administrator, upon the Awardee’s Termination of
Service, the Stock Award and the Shares subject thereto shall be forfeited, provided that to the
extent that the Participant purchased any Shares, the Company shall have a right to repurchase the
unvested Shares at the original price paid by the Participant, provided that for so long as the issuance
and sale of securities under this Plan require qualification under the California Corporate Securities
Law of 1968, the Company must exercise such right to repurchase (i) for either cash or cancellation
of purchase money indebtedness for such unvested Shares, and (ii) within 90 days of such Termination
of Service.








                (d)            Rights as a Stockholder.  Unless otherwise provided by the Administrator, the Participant shall have the rights equivalent
to those of a stockholder and shall be a stockholder only after Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company)
to the Participant. Unless otherwise provided by the Administrator, a Participant holding Stock Units
shall be entitled to receive dividend payments as if he or she was an actual stockholder.

12.          Stock Appreciation Rights.  Subject to the terms and conditions of the Plan, a SAR may be granted to a Service Provider
at any time and from time to time as determined by the Administrator in its sole discretion. 

                (a)            Number of SARs.  The Administrator shall have complete discretion to determine the number of SARs granted to
any Service Provider. 

                (b)            Exercise Price and Other Terms.  The per SAR exercise price shall be no less than 100% of the Fair Market Value per Share on
the Grant Date. The Administrator, subject to the provisions of the Plan, shall have complete discretion
to determine the other terms and conditions of SARs granted under the Plan.

                (c)            Exercise of SARs.  SARs shall be exercisable on such terms and conditions as the Administrator, in its sole discretion,
shall determine. 

                (d)            SAR Agreement.  Each SAR grant shall be evidenced by a SAR Agreement that will specify the exercise price,
the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator,
in its sole discretion, shall determine. 

                (e)            Expiration of SARs.  A SAR granted under the Plan shall expire upon the date determined by the Administrator, in
its sole discretion, and set forth in the SAR Agreement. Notwithstanding the foregoing, the rules
of Section 10(b) will also apply to SARs. 

                (f)             Payment of SAR Amount.  Upon exercise of a SAR, the Participant shall be entitled to receive a payment from the Company
in an amount equal to the difference between the Fair Market Value of a Share on the date of exercise
over the exercise price of the SAR. This amount shall be paid in Shares of equivalent value.

13.          Cash Awards.  Each Cash Award will confer upon the Participant the opportunity to earn a future payment tied
to the level of achievement with respect to one or more performance criteria established for a performance
period. 

                (a)            Cash Award.  Each Cash Award shall contain provisions regarding (i) the performance goal(s) and maximum
amount payable to the Participant as a Cash Award, (ii) the performance criteria and level of achievement
versus these criteria which shall determine the amount of such payment, (iii) the period as to which
performance shall be measured for establishing the amount of any payment, (iv) the timing of any
payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the Cash
Award prior to actual payment, (vi) forfeiture provisions, and (vii) such further terms and conditions,
in each case not inconsistent with the Plan, as may be determined from time to time by the Administrator.
The maximum amount payable as a Cash Award that is settled for cash may be a multiple of the target
amount payable, but the maximum amount payable pursuant to that portion of a Cash Award granted under
this Plan for any fiscal year to any Awardee that is intended to satisfy the requirements for “performance
based compensation” under Section 162(m) of the Code shall not exceed $1,000,000.








                (b)            Performance Criteria.  The Administrator shall establish the performance criteria and level of achievement versus
these criteria which shall determine the target and the minimum and maximum amount payable under
a Cash Award, which criteria may be based on financial performance and/or personal performance evaluations.
The Administrator may specify the percentage of the target Cash Award that is intended to satisfy
the requirements for “performance-based compensation” under Section 162(m) of the Code.
Notwithstanding anything to the contrary herein, the performance criteria for any portion of a Cash
Award that is intended to satisfy the requirements for “performance-based compensation”
under Section 162(m) of the Code shall be a measure established by the Administrator based on one
or more Qualifying Performance Criteria selected by the Administrator and specified in writing. 

                (c)            Timing and Form of Payment.  The Administrator shall determine the timing of payment of any Cash Award. The Administrator
may specify the form of payment of Cash Awards, which may be cash or other property, or may provide
for an Awardee to have the option for his or her Cash Award, or such portion thereof as the Administrator
may specify, to be paid in whole or in part in cash or other property. 

                (d)            Termination of Service.  The Administrator shall have the discretion to determine the effect of a Termination of Service
on any Cash Award due to (i) disability, (ii) retirement, (iii) death, (iv) participation in a voluntary
severance program, or (v) participation in a work force restructuring. 

14.          Other Provisions Applicable to Awards.

                (a)            Non-Transferability of Awards.  An Award may be exercised, during the lifetime of the Participant, only by the Participant,
and may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will, by the laws of descent and distribution, or as permitted by Rule 701; provided that
so long as the issuance and sale of securities under this Plan does not require qualification under
the California Corporate Securities Law of 1968, the Administrator may in each case determine otherwise.
If the Administrator makes an Award transferable, either at the time of grant or thereafter, such
Award shall contain such additional terms and conditions as the Administrator deems appropriate,
and any transferee shall be deemed to be bound by such terms upon acceptance of such transfer.








                (b)            Qualifying Performance Criteria.  For purposes of this Plan, the term “Qualifying Performance Criteria” shall mean
any one or more of the following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit, Affiliate or business
segment, either individually, alternatively or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a pre-established target,
to previous years’ results or to a designated comparison group, in each case as specified by
the Committee in the Award: (i) cash flow; (ii) earnings (including gross margin,
earnings before interest and taxes, earnings before taxes, and net earnings); (iii) earnings
per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return
on equity or average stockholders’ equity; (vii) total stockholder return; (viii) return
on capital; (ix) return on assets or net assets; (x) return on investment; (xi) revenue;
(xii) income or net income; (xiii) operating income or net operating income; (xiv) operating
profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue;
(xvii) market share; (xviii) contract awards or backlog; (xix) overhead or other expense
reduction; (xx) growth in stockholder value relative to the moving average of the S&P 500
Index or a peer group index; (xxi) credit rating; (xxii) strategic plan development and
implementation; (xxiii) improvement in workforce diversity, (xxiv) EBITDA, and (xxv) any
other similar criteria. The Committee may appropriately adjust any evaluation of performance under
a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance
period: (A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the
effect of changes in tax law, accounting principles or other such laws or provisions affecting reported
results; (D) accruals for reorganization and restructuring programs; and (E) any extraordinary
non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s
annual report to stockholders for the applicable year.

                (c)            Certification.  Prior to the payment of any compensation under an Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall certify the extent to which
any Qualifying Performance Criteria and any other material terms under such Award have been satisfied
(other than in cases where such relate solely to the increase in the value of the Common Stock). 

                (d)            Discretionary Adjustments Pursuant to Section 162(m).  Notwithstanding satisfaction of any completion of any Qualifying Performance Criteria, to the
extent specified at the time of grant of an Award to “covered employees” within the meaning
of Section 162(m) of the Code, the number of Shares, Options or other benefits granted, issued, retained
and/or vested under an Award on account of satisfaction of such Qualifying Performance Criteria may
be reduced by the Committee on the basis of such further considerations as the Committee in its sole
discretion shall determine.

                (e)            Section 409A.  Notwithstanding anything in the Plan to the contrary, it is the intent of the Company that
all Awards granted under this Plan shall not cause an imposition of the additional taxes provided
for in Section 409A(a)(1)(B) of the Code.

                (f)             Financial Information.  For so long as the issuance and sale of securities under this Plan require qualification under
the California Corporate Securities Law of 1968, the Company shall at least annually provide financial
statements to Participants as required by Section 260.140.46 of the California Code of Regulations.








15.           Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

                (a)            Changes in Capitalization.  Subject to any required action by the stockholders of the Company, (i) the number and kind
of Shares covered by each outstanding Award, and the number and kind of shares of Common Stock which
have been authorized for issuance under the Plan but as to which no Awards have yet been granted
or which have been returned to the Plan upon cancellation or expiration of an Award, (ii) the price
per Share subject to each such outstanding Award, and (iii) the Share limitations set forth in Section
3 of the Plan, shall be proportionately adjusted for any increase or decrease in the number or kind
of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Administrator, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Award. 

                (b)            Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall
notify each Participant as soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Option to be fully vested and exercisable
until ten days prior to such transaction. In addition, the Administrator may provide that any restrictions
on any Award shall lapse prior to the transaction, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such proposed transaction. 

                (c)            Change in Control.  In the event there is a Change in Control of the Company, as determined by the Board or a Committee,
the Board or Committee may, in its discretion, (i) provide for the assumption or substitution of,
or adjustment to, each outstanding Award; (ii) accelerate the vesting of Options and SARs and terminate
any restrictions on Stock Awards or Cash Awards; and (iii) provide for the cancellation of Awards
for a cash payment to the Participant. 

16.           Amendment and Termination of the Plan.

                (a)            Amendment and Termination.  The Administrator may amend, alter or discontinue the Plan or any Award Agreement, but any
such amendment shall be subject to approval of the stockholders of the Company in the manner and
to the extent required by Applicable Law. 

                (b)            Effect of Amendment or Termination.  No amendment, suspension or termination of the Plan shall impair the rights of any Award, unless
mutually agreed otherwise between the Participant and the Administrator, which agreement must be
in writing and signed by the Participant and the Company. Termination of the Plan shall not affect
the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.








                (c)            Effect of the Plan on Other Arrangements.  Neither the adoption of the Plan by the Board or a Committee nor the submission of the Plan
to the stockholders of the Company for approval shall be construed as creating any limitations on
the power of the Board or any Committee to adopt such other incentive arrangements as it or they
may deem desirable, including, without limitation, the granting of restricted stock or stock options
otherwise than under the Plan, and such arrangements may be either generally applicable or applicable
only in specific cases. 

17.          Designation of Beneficiary.

                (a)            An Awardee may file a written designation of a beneficiary who is to receive the Awardee’s rights
pursuant to Awardee’s Award or the Awardee may include his or her Awards in an omnibus beneficiary
designation for all benefits under the Plan. To the extent that Awardee has completed a designation
of beneficiary such beneficiary designation shall remain in effect with respect to any Award hereunder
until changed by the Awardee to the extent enforceable under Applicable Law. 

                (b)            Such designation of beneficiary may be changed by the Awardee at any time by written notice. In the
event of the death of an Awardee and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Awardee’s death, the Company shall allow the executor
or administrator of the estate of the Awardee to exercise the Award, or if no such executor or administrator
has been appointed (to the knowledge of the Company), the Company, in its discretion, may allow the
spouse or one or more dependents or relatives of the Awardee to exercise the Award to the extent
permissible under Applicable Law. 

18.           No Right to Awards or to Service.  No person shall have any claim or right to be granted an Award and the grant of any Award shall
not be construed as giving an Awardee the right to continue in the service of the Company or its
Affiliates. Further, the Company and its Affiliates expressly reserve the right, at any time, to
dismiss any Service Provider or Awardee at any time without liability or any claim under the Plan,
except as provided herein or in any Award Agreement entered into hereunder. 

19.           Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such compliance. Notwithstanding
anything in the Plan to the contrary, it is the intent of the Company that the Plan shall be administered
so that the additional taxes provided for in Section 409A(a)(1)(B) of the Code are not imposed.

20.           Inability to Obtain Authority.  To the extent the Company is unable to or the Administrator deems that it is not feasible to
obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company shall
be relieved of any liability with respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.








21.          Reservation of Shares.  The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

22.          Notice.  Any written notice to the Company required by any provisions of this Plan shall be addressed
to the Secretary of the Company and shall be effective when received. 

23.          Governing Law; Interpretation of Plan and Awards.

                (a)            This Plan and all determinations made and actions taken pursuant hereto shall be governed by the substantive
laws, but not the choice of law rules, of the state of Delaware.

                (b)            In the event that any provision of the Plan or any Award granted under the Plan is declared to be
illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, such provision
shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable,
or otherwise deleted, and the remainder of the terms of the Plan and/or Award shall not be affected
except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision. 

                (c)            The headings preceding the text of the sections hereof are inserted solely for convenience of reference,
and shall not constitute a part of the Plan, nor shall they affect its meaning, construction or effect.


                (d)            The terms of the Plan and any Award shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted heirs, beneficiaries, successors and assigns. 

                (e)            All questions arising under the Plan or under any Award shall be decided by the Administrator in its
total and absolute discretion. In the event the Participant believes that a decision by the Administrator
with respect to such person was arbitrary or capricious, the Participant may request arbitration
with respect to such decision. The review by the arbitrator shall be limited to determining whether
the Administrator’s decision was arbitrary or capricious. This arbitration shall be the sole
and exclusive review permitted of the Administrator’s decision, and the Awardee shall as a condition
to the receipt of an Award be deemed to explicitly waive any right to judicial review.

24.          Limitation on Liability.  The Company and any Affiliate which is in existence or hereafter comes into existence shall
not be liable to a Participant, an Employee, an Awardee or any other persons as to: 

                (a)            The Non-Issuance of Shares.  The non-issuance or sale of Shares as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any shares hereunder; and 

                (b)            Tax Consequences.  Any tax consequence expected, but not realized, by any Participant, Employee, Awardee or other
person due to the receipt, exercise or settlement of any Option or other Award granted hereunder.








25.           Unfunded Plan.  Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Awardees who are granted Stock Awards under this Plan, any such
accounts will be used merely as a bookkeeping convenience. The Company shall not be required to segregate
any assets which may at any time be represented by Awards, nor shall this Plan be construed as providing
for such segregation, nor shall the Company nor the Administrator be deemed to be a trustee of stock
or cash to be awarded under the Plan. Any liability of the Company to any Participant with respect
to an Award shall be based solely upon any contractual obligations which may be created by the Plan;
no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance
on any property of the Company. Neither the Company nor the Administrator shall be required to give
any security or bond for the performance of any obligation which may be created by this Plan. 

                                IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this Plan, effective
as of August __, 2005.

                                                                                              

	 	AMERICAN TECHNOLOGY CORPORATION,

    a Delaware corporation    
	 	 
	Date:  August __, 2005	              By: /s/ Michael A. Russell                       
	 	Its: Chief Financial Officer and Secretary