Document:

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                                                                  Exhibit 10.5.1

                             EMPLOYMENT AGREEMENT

This Employment Agreement is entered into on this 19th day of May, 1999 by and
between e.Digital Corporation ("Employer") ("Company") and Alfred H. Falk
("Employee").

1.   Position and Title:
     ------------------

     Employee's position and title shall be President and CEO.

     Employee shall report to the Company's Board of Directors.

     Employee shall be responsible for all day-to-day activities of the business
     and shall assume management responsibility for all functions and
     individuals who are part of the Company's operations.

     Employee shall be a member of the Board of Directors for the Company and
     shall participate in all Board related activities.

2.   Compensation:
     ------------

     Employee's base compensation shall be $155,000 per year. In addition, a
     guaranteed bonus of 35% of the base salary at the end of calendar year
     1999. During subsequent years, Employee is eligible for a bonus to 25% of
     the base salary conditioned on Employee meeting certain objectives
     established by the Board of Directors. Future increases in base
     compensation shall be at the determination of the Board of Directors, based
     on performance.

3.   Stock Options:
     -------------

     In the event of any corporate occurrence affecting stock options, the
     options of Employee will be treated equivalently with those of any senior
     officers of the Company. In the event a Change of Control (51% or more)
     occurs, all issued stock options shall become immediately vested.

4.   Termination and Change of Control:
     ---------------------------------

     In the event termination occurs for reasons other than: (1) cause or (2)
     Employee's voluntary termination, six months severance shall be provided:
     including base compensation; health and medical benefits; and outplacement
     services.

     For purposes of this agreement, "cause" shall be defined as contemplated by
     Section 2924 of the California Labor Code.

     In the event a Change of Control occurs and within twelve (12) months of
     that event:

     Employee is involuntarily terminated

     OR

     Employee terminates his employment with the Company for Good Reason (e.g.
     the assignment of duties which are materially different than those of the
     existing position or any failure to reappoint or reelect Employee to the
     highest title held by Employee), Employee shall receive a termination
     payment equal to one year of the then current annual compensation.
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5.   Other Benefits:
     --------------

     Employee shall receive insurance, medical, disability insurance, and health
     benefits currently available to other senior executives as per existing
     policies.

     Employee shall be entitled to take four weeks of vacation annually.

     To the extent currently available, Employee shall receive other such
     benefits equal to those of other senior executives within the Company,
     specifically including directors and officers insurance.

6.   Arbitration Agreement:
     ---------------------

     Any claim or controversy arising out of or related to this agreement, the
     employment relationship or the subject matter hereof shall be settled by
     binding arbitration before one arbitrator in Los Angeles, California in
     accordance with the commercial arbitration rules of the American
     Arbitration Association; and judgment upon any award rendered by the
     arbitrator(s) may be entered as a judgment in any court having competent
     jurisdiction. The party shall have rights to discover as provided in
     Section 1283.05 of the California Code of Civil Procedure. The prevailing
     party in any such dispute shall recover all of its costs and expenses,
     including reasonable attorney fees.

7.   Term of Agreement:
     -----------------

     The term of this agreement shall begin on the date first above written and
     remain in effect for two years from that date.

This agreement supercedes any previous agreement between Employer and Employee.

INTENDING TO BE LEGALLY BOUND, the parties have executed this Employment
Agreement as of the date first above written.

                                         e.Digital Corporation

                                         By: /s/ ELWOOD G. NORRIS
                                             --------------------
                                         Elwood G. Norris, Chairman of the Board

                                         By: /s/ ALFRED H. FALK
                                             ------------------
                                         Alfred H. Falk, Employee<PAGE>

                                                                 Exhibit 10.9.1

                          FIRST AMENDMENT TO SUBLEASE

          This First Amendment to Sublease ("Amendment") dated as of November 1,
                                             ---------
1999, is entered into by and between Smith Industries Aerospace & Defense
Systems Inc., a Delaware corporation ("Landlord") and e.Digital Corporation
                                       --------
(f/k/a Norris Communications Inc.), a Delaware corporation and American
Technology Corporation, a Delaware corporation ("Tenant").
                                                 ------

                                   RECITALS

          WHEREAS, Global Associates, Ltd., a Virginia corporation ("Former
Landlord") and Tenant have entered into that certain Sublease Agreement (the
"Sublease") dated as of the 11th day of July, 1997 for a portion of the building
known as 13112 Evening Creek Drive South, San Diego, California 92128 (the
"Premises"); and

          WHEREAS, Landlord purchased certain assets from Former Landlord
pursuant to a bankruptcy proceeding captioned In re Global Associates, Ltd.,
                                              ------------------------------
United States Bankruptcy Court for the District of Maryland (Greenbelt
Division), Case No. 98-10216-DK, including, without limitation, all of the
Former Landlord's right, title and interest as tenant in and to that certain
Lease Agreement dated August 14, 1996 by and between Scientific Atlanta, Inc.,
predecessor-in-interest to Bedford Property Investors, Inc., a Maryland
corporation ("Prime Landlord"), as landlord and Former Landlord, as tenant, as
amended by amendment dated October 23, 1995, and amendment dated January 24,
1997, as confirmed by the Prime Landlord and Landlord pursuant to that Second
Amendment to Lease Agreement and Reinstatement of Lease dated as of August 15,
1998 (as amended and reinstated, the "Prime Lease"); and

          WHEREAS, Landlord and Tenant desire to amend the Sublease as
particularly set forth herein.

          NOW, THEREFORE, in reliance upon the foregoing and for good and
valuable consideration, the receipt of which is hereby acknowledged, Landlord
and Tenant agree and hereby amend the Sublease as follows:

                                   AGREEMENT

          1.   Definitions. All capitalized terms used and not otherwise defined
               -----------
herein shall have the same meanings ascribed to them in the Sublease.

          2.   Term. Paragraph 3(B) is hereby amended by deleting "July 31,
               -----
2000" where it appears and inserting in lieu thereof "July 31, 2002."

          3.   Premises. The definition of Premises is amended to add
               ---------
approximately 5,131 rentable square feet to the Premises (the "Additional
Space"), such that, as of the date of this Amendment, the Premises shall
comprise approximately 18,056 rentable square feet in the building, as such
Premises are outlined and shown on Exhibit B attached to this Amendment and by
                                   ---------
this reference made a part hereof and hereby replacing Exhibit B to the
                                                       ---------
Sublease. Tenant represents that it has inspected the Additional Space and has
found the same in satisfactory condition, subject to the completion of the
tenant improvements specified in Exhibit C attached hereto and made a part
hereof.
<PAGE>

          4.   Base Rent. Paragraph 4(A) is hereby deleted and replaced with the
               ---------
following:

     "(A) Tenant covenants and agrees to pay to Landlord an annual base rent
(the "Base Rent") in equal monthly installments, each in advance on the first
      ---------
day of each calendar month during the term of this Sublease in accordance with
the following schedule:

<TABLE>
<CAPTION>

                             Annual Rate per
                             Square Foot of                        Monthly base
    Time Period          Premises Rentable Area  Annual Base Rent     Rent
----------------------   ----------------------  ----------------  ------------
<S>                      <C>                     <C>               <C>
From August 1, 1997             $12.84              $165,957.00     $13,829.75
 through July 31, 1998

From August 1, 1998             $13.44              $173,712.00     $14,476.00
 through July 31, 1999

From August 1, 1999             $14.04              $181,467.00     $15,122.25
 through October 31,
 1999

From November 1,                $14.04              $253,506.24     $21,125.50
 1999 through July 31,
 2000

From August 1, 2000             $14.64              $264,339.84     $22,028.32
 through July 31, 2001

From August 1, 2001             $15.24              $275,173.44     $22,931.12
 through July 31, 2002
</TABLE>

          5.   Additional Alterations. Landlord shall perform the tenant
               ----------------------
improvement work to the Additional Space requested by Tenant and shown on
Exhibit B attached hereto and as specified on the plans and specifications
identified as Attachment No. 1. Tenant shall reimburse Landlord for the costs
              ----------------
incurred by Landlord to perform the tenant improvements, less costs paid by
Landlord for the backflow prevention device and fire door. Landlord and Tenant
hereby agree that the amount to be paid by Tenant to Landlord to reimburse it
for such costs is $41,480.00, together with such additional costs as Landlord
may incur because of (a) change orders or other modifications requested by
Tenant and approved by Landlord, and (b) costs incurred by Landlord to perform
certain pre-occupancy tenant work and improvements, including reconfiguration
and installation of modular furniture. Such amount shall be payable as follows:
$8,296.00 has heretofore been paid or shall be paid by Tenant to Landlord upon
Tenant's execution and delivery of this Sublease. The remaining $33,184.00 shall
be paid no later than December 9, 1999. Any additional costs incurred by
Landlord under (a) and (b) above shall be billed to Tenant and immediately due
and payable.

          6.   This Amendment and Landlord's and Tenant's obligations hereunder
are conditioned upon obtaining the written consent of the Prime Landlord to this
Amendment.

          7.   The obligations of Tenant under the Sublease shall be the joint
and several responsibility of all entities named herein.

                                       2
<PAGE>

          8.   Except as expressly modified herein, the Sublease shall remain
unmodified and in full force and effect. In the event a conflict exists between
the terms and conditions of this Amendment and the terms and conditions of the
Sublease, the terms and conditions of this Amendment shall control.

                                       3
<PAGE>

          IN WITNESS WHEREOF, Landlord and Tenant have entered into this
Amendment as of this date set forth above.

LANDLORD:                               TENANT:

Date: __________________________, 1999  Date: _________________________, 1999

SMITHS INDUSTRIES AEROSPACE &           e.DIGITAL CORPORATION (f/k/a/ Norris
DEFENSE SYSTEMS, INC., a Delaware       Communications, Inc.), a Delaware
Corporation                             Corporation

By:                                     By: /s/ ALFRED H. FALK
                                            ------------------
Name:                                   Name: Alfred H. Falk
Its:                                    Its: President

                                        AMERICAN TECHNOLOGY CORPORATION,
                                        a Delaware Corporation

                                        By: /s/ CON BROSNAN
                                            ---------------
                                        Name: Con Brosnan
                                        Its: President

                                       4

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