Document:

Exhibit 10.3

	Philip G. Putnam	Telephone: 212.262.2668 

	Managing Director	Email: putnamp@ flagstonesecurites.com 

December 13, 2004

Mr. Michael Russell

Chief Financial Officer

American Technology Corporation

13114 Evening Creek Drive South

San Diego, California 92128

Dear Mike:

                                This
letter agreement (“Agreement”) will confirm the understanding and agreement between Flagstone
Securities LLC (“Consultant”) and American Technology Corporation (the “Company”).

                                The Company acknowledges that Consultant has introduced the Company to the concept of a Committed Equity
Financing Facility, or “Structured Secondary Financing,” and has introduced the Company
to Kingsbridge Capital Limited (“Kingsbridge”), and may introduce the Company to other
potential investors for a Structured Secondary Financing. In consideration of such introductions,
the Company agrees with Consultant as follows:

                                1.             Agreement Regarding Equity Financing

                                In the event that the Company enters into any agreement with a third party investor introduced to the
Company by Consultant, and such introduction was made during the Term (as defined below), including
but not limited to “Kingsbridge”, for a Structured Secondary Financing, the Company shall
pay Consultant a success fee determined by the following schedule on all financing thereafter received
by the Company from such third party investor in connection with or pursuant to the Structured Secondary
Financing:                                 

	Transaction Proceeds	(% of Transaction Proceeds)
	
	

	 	 
	For the 1st $5,000,000.00	4%
	For the 2nd $5,000,000.00	3%
	For the 3rd $5,000,000.00	2%
	For additional amounts	   1.5%

                                The term “Structured Secondary Financing” shall mean a contractual arrangement pursuant to
which a third party investor agrees to purchase equity securities of the Company from the Company
on a private placement basis from time to time at the election of the Company at a price determined
by the market price at or around the dates of such sales, and on condition (among other things) that
the Company has registered such shares for resale by such third party under the Securities Act of
1933, as amended, at the time that funds are paid for the securities. For the avoidance of doubt,
this Agreement does not apply to, and the Company has no obligation to pay a success fee with respect
to, financings introduced by Consultant other than Structured Secondary Financings, absent a separate
written agreement between the parties.

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December 13, 2004
Page 2

                                The term “Transaction Proceeds” shall mean the gross amount of cash actually received by
the Company in a Structured Secondary Financing, exclusive of proceeds received upon the exercise
of any warrants that may be granted to the investors in such Structured Secondary Financings.

		(a)	All fees payable under this Section 1 are due and payable to Consultant, in cash or by certified check
or wire transfer (or as mutually agreed), at the closing or closings of any sale of the Company’s
equity securities by the Company to, or other equity investment in the Company by, a third party
investor introduced to the Company by Consultant, in connection with a Structured Secondary Financing.
			 
		(b)	The Company will be entitled to a credit against future success fees payable for any success fee which
is paid with respect to Transaction Proceeds which are paid back to the investor, either in the form
of liquidated or other damages payable to the investor related to the status of the registration
statement required to be filed, or the Company’s repurchase of securities from the investor
in lieu of such penalties. 

                               2.          Other Duties of Consultant

                               During
the term of this Agreement, Consultant agrees to:

		(a)	Inform the Company of similar financings, and their terms and conditions, completed by Kingsbridge
or other third party investors. 
			 
		(b)	Provide research results and findings of the digital signage market. 
			 
		(c)	Use its best efforts to help the Company secure analyst coverage.

                                3.         Term and Termination

                                This Agreement shall be for a term of twelve (12) months from the date hereof (the “Term”);
provided, however, that notwithstanding termination, the Company’s obligations to the Consultant
under this Agreement (i) shall remain in full force and effect with respect to any Structured Secondary
Financing that is entered into by the Company during the term of this Agreement or within six (6)
months following the termination of this Agreement and (ii) shall continue with respect to such Structured
Secondary Financing for the duration of such Structured Secondary Financing. 

                                4.             Expenses

                                The Consultant shall bear all costs and expenses incurred by Consultant directly in connection with
the introduction(s) or attempted introduction(s) made by Consultant in connection with Structured
Secondary Financings and otherwise in connection with the performance of its services hereunder,
unless otherwise agreed to by the Company.

                                5.             Use of Name and Reports

                                Use of Consultant’s name in annual reports or any other reports of the Company or press releases
issued by the Company shall require the prior written approval of Consultant.

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December 13, 2004

Page 3

                                6.             Status as Independent Contractor

                                The Consultant shall perform its services as an independent contractor and not as an employee of the
Company or affiliate thereof. It is expressly understood and agreed to by the parties that Consultant,
and any individual or entity that Consultant shall employ in order to perform its services hereunder,
shall have no authority to act for, represent or bind the Company or any affiliate thereof in any
manner, except as may be expressly agreed to by the Company in writing from time to time.

                                7.             Entire Agreement

                                This Agreement constitutes the entire understanding between the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral or written, with respect
thereto. This Agreement may not be modified or terminated orally or in any manner other than by an
agreement in writing signed by the parties hereto.

                                8.             Notices

                                Any notices required or permitted to be given hereunder shall be in writing and shall be deemed given
when mailed by certified mail or private courier service, return receipt requested, addressed to
each party at its respective address set forth above, or such other address as may be given by either
party in a notice given pursuant to this Section 8.

                                9.             Successors and Assigns

                                This Agreement may not be assigned by either party without the written consent of the other. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and, except where prohibited,
to their successors and assigns. 

                                10.           Applicable Law

                                This Agreement shall be construed and enforced in accordance with the laws of the State of California
without giving effect to conflict of laws.

                                11.           Regulatory Approvals

                                Consultant represents and warrants to the Company that it has all regulatory licenses and approvals
necessary to perform its obligations hereunder.

                                If the foregoing correctly sets forth the understanding between Consultant and the Company with respect
to the foregoing, please so indicate your agreement by signing in the place provided below, whereupon
this letter shall become a binding contract.

	 	FLAGSTONE SECURITIES
	 	 
	 	
    By: /s/ Philip G. Putnum
	 	       Name:
    Philip G. Putnum
	 	       Title: 
    Managing Director

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December 13, 2004

Page 4

Agreed to and accepted as of the date above written:

	AMERICAN TECHNOLOGY CORPORATION	 
	 	 
	
    By: /s/ Michael A. Russell                    	
    
     12/16/04
	 
	       Name:
    Michael A. Russell	 
	
           Title:  Chief Financial Officer	 

-4-Exhibit 10.4

[KINGSBRIDGE CAPITAL LIMITED LETTERHEAD]

March 15, 2005

American Technology Corporation

13114 Evening Creek Drive South

San Diego, California 92128

Ladies and Gentlemen:

Reference is made to that certain Common Stock Purchase Agreement, dated as of December 14, 2004 (the
“Agreement”), by and between Kingsbridge Capital Limited (the “Investor”) and
American Technology Corporation (the “Issuer”). Capitalized terms used but otherwise undefined
herein shall have the meanings given to such terms under the Agreement.

As a clarification of the understanding between the parties under the Agreement, but in no way as an
amendment thereof, the Investor and the Issuer acknowledge as follows:

                1.             The parties understand the
parenthetical in clause (ii) of Section 5.06 of the Agreement, and the last sentence of such section,
to mean that during a Draw Down Pricing Period, the Investor is permitted to sell, in advance of
the applicable Settlement Date, those Shares for which the Draw Down Discount Price has been determined,
and determined to be above the Threshold Price. Upon Settlement of any Shares so sold, the Investor
will deliver or cause to be delivered such Shares in settlement of the position created by such permitted
sales in accordance with the terms of the Investor’s agreements with its resale brokers. Except
as set forth above, the restrictions set forth in the first sentence of Section 5.06 are applicable
without qualification.

                                For example, assume a Draw Down Notice is given for $1,500,000, with a Threshold Price of $9.00, calling
for a Draw Down Pricing Period beginning on April 4, 2005. The Draw Down Discount Price for the first
Trading Day of the Draw Down Pricing Period (April 4, 2005) will be determined following the close
of trading on that day. Assume that the Draw Down Discount Price is determined to be $10.00 for the
first Trading Day. The Investor will be obligated to purchase 10,000 Shares for such Trading Day,
which purchase will be settled at the next Settlement Date. The Investor will be permitted to sell
such 10,000 Shares immediately following the determination of such Draw Down Discount Price. At such
point in time, the Investor will not be permitted to engage in any prohibited hedging transaction
identified in the first sentence of Section 5.06, except for the sale of those 10,000 Shares. The
Investor will however be able to sell the Shares to be purchased based on the Draw Down Discount
Price for the next Trading Day (April 5, 2005) at any time immediately following determination of
the Draw Down Discount Price for such date; and the same shall apply to the Shares to be purchased
on each subsequent Trading Day during the Draw Down Pricing Period. If the Investor elects to engage
in these permitted sales, then upon the Settlement Date for the Shares that are so sold, the Investor
will settle its positions with respect to the Shares so sold in accordance with the terms of the
Investor’s agreements with its resale brokers. 

                2.             Pursuant to Section 7.09
of the Agreement, any Blackout Shares issued to and then owned or deemed beneficially owned by the
Investor shall be taken into account for the purpose of calculating the 9.9% limitation on the Investor’s
ownership of the Issuer’s Common Stock. 

                Please acknowledge you agreement with the foregoing by countersigning this letter where indicated below.

Very truly yours,

KINGSBRIDGE CAPITAL LIMITED

	By:   	/s/ Adam Gurney	 
	        Name: Adam Gurney	 
	        Title: Director 	 	Acknowledged and agreed,
	 	 	 
	 	 	AMERICAN TECHNOLOGY CORPORATION
	 	 	 
	 	 	 	 
			By:   	
    /s/ Michael A. Russell
	 	 	        Name: Michael A. Russell
	 	 	        Title: CFO

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