<SEC-DOCUMENT>0001012870-01-502279.txt : 20011019
<SEC-HEADER>0001012870-01-502279.hdr.sgml : 20011019
ACCESSION NUMBER:		0001012870-01-502279
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20011012
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20011012

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMERICAN TECHNOLOGY CORP /DE/
		CENTRAL INDEX KEY:			0000924383
		STANDARD INDUSTRIAL CLASSIFICATION:	HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651]
		IRS NUMBER:				870361799
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24248
		FILM NUMBER:		1758397

	BUSINESS ADDRESS:	
		STREET 1:		13114 EVENING CREEK DRIVE SOUTH
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92128
		BUSINESS PHONE:		6196792114
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d8k.txt
<DESCRIPTION>FORM 8-K
<TEXT>
<PAGE>

=======================================================================



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K
                                 CURRENT REPORT



     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported):
                      October 12, 2001 (September 28, 2001)



                         AMERICAN TECHNOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)





        Delaware                   0-24248                 87-0361799
        --------                  -------                 ----------
(State or other jurisdiction of   (Commission         (I.R.S. Empl. Ident. No.)
incorporation or organization)     File Number)




          13114 Evening Creek Drive South, San Diego, California 92128
               (Address of principal executive offices) (Zip Code)



                                 (858) 679-2114
              (Registrant's telephone number, including area code)





=======================================================================


<PAGE>


ITEM 5.    OTHER EVENTS
-------    ------------

On September 28, 2001 the Company sold for cash in a private offering an
aggregate of $1,000,000 of unsecured 12% Convertible Subordinated Promissory
Notes due December 31, 2002 ("Notes") to accredited investors. On October 11,
2001 the Company completed the sale of an additional $950,000 of the Notes to
accredited investors. The principal and interest amount of each Note may at the
election of the Note holder be converted one or more times into fully paid and
nonassessable shares of common stock, $.00001 par value, of the Company, at a
price of $2.00 per share. The Notes may be called by the Company for conversion
if the market price exceeds $5.00 per share for five days and certain conditions
are met.

Each purchaser was granted a warrant to purchase one common share of the Company
at $2.00 per share until September 30, 2006 ("Warrant") for each $2.00 of Notes
(aggregate Warrants exercisable into 975,000 shares).

The Company is not required to register the stock underlying the Notes or
Warrants but the holders have certain piggyback registration rights. The
securities have antidilution rights reducing the conversion and exercise price
for certain issuances of equity securities by the Company at an effective price
below the applicable conversion or exercise price of the Notes and Warrants.

The securities were offered and sold without registration under the Securities
Act of 1933, as amended (the "Act"), in reliance upon the exemption provided by
Section 4(2) thereunder and/or Regulation D. The securities may not be offered
or sold in the United States absent registration or an applicable exemption from
the registration requirements of the Act.

Net proceeds from the sale of the Notes of approximately $1,950,000 are being
applied for working capital primarily related to providing HyperSonic Sound
transducers to licensees, providing NeoPlanar(TM) transducers to high-end
customers and for general marketing and corporate expenses.

This Current Report on Form 8-K ("Form 8-K") is neither an offer to sell nor a
solicitation of an offer to buy any of these securities. This Form 8-K is being
filed pursuant to and in accordance with Rule 135c under the Act.

ITEM 7.    FINANCIAL STATEMENTS AND EXHIBITS
------     ---------------------------------

(a) Financial statements of businesses acquired.
       None

(b) Pro forma financial information.
       None

(c) Exhibits


<PAGE>

         4.11 Form of 12% Convertible Subordinated Promissory Note due December
31, 2002 aggregating $1,950,000 granted to accredited investors (individual
notes differ as to holder, amount and issuance date).

         4.12 Form of Stock Purchase Warrant exercisable until September 30,
2006 granted to accredited investors for an aggregate of 975,000 common shares
(individual warrants differ as to holder, number of shares and issuance date).

         99.1 Shareholder Communication, dated October 3, 2001 re: Thomson


                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                     AMERICAN TECHNOLOGY CORPORATION



Date: October 12, 2001                     By: /s/ Renee Warden
                                               ------------------------
                                               Renee Warden
                                               Chief Accounting
                                               Officer, Treasurer and
                                               Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.11
<SEQUENCE>3
<FILENAME>dex411.txt
<DESCRIPTION>CONVERTIBLE SUBORDINATED PROMISSORY NOTE
<TEXT>
<PAGE>

                                                                    Exhibit 4.11

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND ARE "RESTRICTED
SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER SUCH ACT. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE
LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND/OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.

                         AMERICAN TECHNOLOGY CORPORATION
                    CONVERTIBLE SUBORDINATED PROMISSORY NOTE

$                                                         San Diego, California
 -------------------
                                                                         , 2001
                                                         ----------------

AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation (the "Company"), for
value received hereby promises to pay to _________________, or its assigns, the
sum of _________________ ($____________ ), or such lesser amount as shall then
equal the outstanding principal amount hereof and any unpaid accrued interest
hereon, as set forth below, which shall all be due and payable in one (1)
installment on the earlier to occur of (i) December 31, 2002, or (ii) when
declared due and payable by the Holder upon the occurrence of an Event of
Default (as defined below) ("Maturity Date"). Payment for all amounts due
hereunder shall be made by mail to the registered address of the Holder as
defined below.

         This Note is one of a duly authorized issue of the Company designated
as 12% Convertible Subordinated Promissory Notes (the "Notes") due December 31,
2002 and limited to the aggregate principal amount of $3,000,000. The following
is a statement of the rights of the Holder of this Note and the conditions to
which this Note is subject, and to which the Holder hereof, by the acceptance of
this Note, agrees:

1.       Definitions.  As used in this Note, the following terms, unless the
         -----------
context otherwise requires, have the following meanings:

         1.1  "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Note.

         1.2  "Holder," when the context refers to a holder of this Note, shall
mean any person who shall at the time be the registered holder of this Note.

2.       Interest. The Company shall pay interest at the rate of twelve percent
         --------
(12%) per annum, or the maximum rate permissible under the laws of the State of
California relating to permissible rates of interest for commercial loans,
whichever is less (the "Interest Rate") on the principal of this Note
outstanding during the period beginning on the date of issuance of this Note and
ending on the Maturity Date. Subject to the provisions of Section 7 regarding
conversion of this Note, all outstanding principal plus all accrued but unpaid
interest therein shall become due and


<PAGE>

                                                                    Exhibit 4.11

payable in one (1) installment on December 31, 2002, unless sooner accelerated
in accordance with the provisions herein.

3.       Events of Default. If any of the events specified in this Section 3
         -----------------
shall occur (herein individually referred to as an "Event of Default"), the
Holder of the Note may, so long as such condition exists, declare the entire
principal and unpaid accrued interest hereon immediately due and payable, by
notice in writing to the Company:

         3.1  Default in the payment of the principal and unpaid accrued
interest of this Note when due and payable if such default is not cured by the
Company within thirty (30) days after the Holder has given the Company written
notice of such default; or

         3.2  The institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to institution of bankruptcy or
insolvency proceedings against it or the filing by it of a petition or answer or
consent seeking reorganization or release under the federal Bankruptcy Act, or
any other applicable federal or state law, or the consent by it to the filing of
any such petition or the appointment of a receiver, liquidator, assignee,
trustee or other similar official of the Company, or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the taking of corporate action by the Company in furtherance of any such
action; or

         3.3  If, within ninety (90) days after the commencement of an action
against the Company (and service of process in connection therewith on the
Company) seeking any bankruptcy, insolvency, reorganization, liquidation or
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been resolved in favor of the Company or
all orders or proceedings thereunder affecting the operations or the business of
the Company stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within ninety (90) days after the appointment
without the consent or acquiescence of the Company of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the properties of
the Company, such appointment shall not have been vacated.

4.       Rights of Holder Upon Default. Upon the occurrence or existence of any
         ------------------------------
Event of Default and at any time thereafter during the continuance of such Event
of Default, Holder may declare all outstanding principal and accrued interest
due under this Note and payable by the Company hereunder to be immediately due
and payable in cash.

5.       Subordination. The indebtedness evidenced by this Note is hereby
         -------------
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.

         5.1  Senior Indebtedness. As used in this Note, the term "Senior
              -------------------
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company to banks, commercial finance lenders, insurance
companies or other financial institutions regularly engaged in the business of
lending money, which is for money borrowed by the Company (whether or not
secured), and (ii) amounts owed to equipment lessors pursuant to equipment lease
lines approved by the Company's Board of Directors, and (iii) all indebtedness
of the Company evidenced by notes, debentures, bonds or other securities of the
Company which are

                                       2

<PAGE>

                                                                    Exhibit 4.11

designated by and approved by the Company's Board of Directors, and (iv) all
obligations and liabilities in connection with the lease of real property, and
(v) all modifications, renewals, extensions and refundings of indebtedness,
liabilities or obligations of the kind described in any of the preceding
clauses, provided, however no indebtedness of the Company, all or part of which
is convertible into equity, and no indebtedness which has a material equity
component shall be designated as Senior Indebtedness by the Company without the
consent of a majority of the Holders of the Notes.

         5.2  Default on Senior Indebtedness. If there should occur any
              ------------------------------
receivership insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangement with creditors (whether or not pursuant to
bankruptcy or other insolvency laws), sale of all or substantially all of the
assets, dissolution, liquidation or any other marshalling of the assets and
liabilities of the Company, or if this Note shall be declared due and payable
upon the occurrence of an Event of Default with respect to any Senior
Indebtedness, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be satisfied, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payment in respect of the principal of and interest on this Note,
except subject to the satisfaction of the principal of and interest on all of
the Senior Indebtedness then outstanding. If there occurs an event of default
that has been declared in writing with respect to any Senior Indebtedness, or in
the instrument under which any Senior Indebtedness is outstanding, permitting
the holder of such Senior Indebtedness to accelerate the maturity thereof, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, or all Senior Indebtedness shall have been satisfied, no
payment shall be made in respect of the principal of or interest on this Note,
unless within three (3) months after the happening of such event of default, the
maturity of such Senior Indebtedness shall not have been accelerated.

         5.3  Effect of Subordination. Subject to the rights, if any, of the
              -----------------------
holders of Senior Indebtedness under this Section 5 to receive cash, securities
or other properties otherwise payable or deliverable to the Holder of this Note,
nothing contained in this Section 5 shall impair, as between the Company and the
Holder, the obligation of the Company, subject to the terms and conditions
hereof, to pay to the Holder the principal hereof and interest hereon as and
when the same become due and payable, or shall prevent the Holder of this Note,
upon default hereunder, from exercising all rights, powers and remedies
otherwise provided herein or by applicable law.

         5.4  Subrogation. Subject to the payment in full of all Senior
              -----------
Indebtedness and until this Note shall be paid in full, the Holder shall be
subrogated to the rights of the holders of Senior Indebtedness (to the extent of
payments or distributions previously made to such holders of Senior Indebtedness
pursuant to the provisions of Section 5.2 above) to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior Indebtedness shall, as
between the Company and its creditors, other than the holders of Senior
Indebtedness and the Holder, be deemed to be a payment by the Company to or on
account of this Note; and for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness to which the Holder would he
entitled except for the provisions of this Section 5 shall, as between the

                                       3

<PAGE>

                                                                    Exhibit 4.11

Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness.

         5.5  Undertaking. By its acceptance of this Note, the Holder agrees to
              -----------
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 5.

         5.6  Pro Rata Distribution In the event that the Company's assets are
              ---------------------
insufficient to satisfy the Holder of this Note and the Holders of all other
Notes issued contemporaneously or in connection with the offering of the Notes
by the Company, the Company's available assets shall be distributed pro rata to
all such Holders based on the total principal and interest then due to each such
Holder.

6.       Prepayment. This Note may not be prepaid in whole or in part without
         ----------
the prior written consent of the Holder and the Company.

7.       Conversion.
         ----------

         7.1  Voluntary Conversion. Any Holder of this Note has the right, at
              --------------------
the Holder's option, at any time beginning forty-eight (48) hours after the date
of the Note and prior to payment in full of the principal balance of this Note,
to convert this Note, in accordance with the provisions of Section 7.3.1 hereof,
in whole or in part, into fully paid and nonassessable shares of common stock of
the Company (the "Common Stock"). The number of shares of Common Stock into
which this Note may be converted ("Conversion Shares") shall be determined by
dividing the aggregate principal amount together with all accrued interest to
the date of conversion by the Conversion Price (as defined below) in effect at
the time of such conversion. The initial Conversion Price shall be equal to Two
Dollars ($2.00).

         7.2  Mandatory Conversion. The Company has the right, at the Company's
              --------------------
option, at any time prior to the payment in full of the principal balance of
this Note, to require that any Holder of this Note must convert the entire
principal balance of this Note, in accordance with the provisions of Section
7.3.1 hereof, into Common Stock of the Company in the event that the closing bid
price of the Common Stock of the Company is at least $5.00 per share (as
adjusted in accordance with the Conversion Price adjustment set forth in
Sections 8.2 and 8.3 herein) for five (5) consecutive days of regular trading on
the over-the-counter market or on an exchange where the Common Stock of the
Company is then traded, at the Conversion Price in effect on the first trading
day immediately prior to the first day such five (5) day period. Such mandatory
conversion is subject to the further requirement that a registration statement
registering the Conversion Shares is filed under the Securities Act of 1933, as
amended, ("Securities Act") and declared effective by the Securities and
Exchange Commission ("Commission") which shall be effective and current at all
times beginning on the date the Company exercises its right of mandatory
conversion as set forth in Section 7.3.2 below and continuing until the
Conversion Shares are issued.

                                       4

<PAGE>
                                                                    Exhibit 4.11

         7.3  Conversion Procedure.
              --------------------

              7.3.1  Notice of Conversion Pursuant to Section 7.1. Before the
                     --------------------------------------------
Holder shall be entitled to voluntarily convert this Note into shares of Common
Stock, it shall surrender this Note at the office of the Company and shall give
written notice by mail, postage prepaid, to the Company at its principal
corporate office, of the election to convert the same pursuant to this Section
7.3, and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. Unless waived by the
Company in its sole discretion, the minimum conversion amount accepted by the
Company for conversion hereunder shall be the lesser of: a $50,000 principal
balance on the Holder's Note, or the remaining principal and accrued interest
balance on the Holder's Note. The Company shall, as soon as practicable
thereafter, issue and deliver at such office to the Holder of this Note a
certificate or certificates for the number of shares of Common Stock to which
the Holder of this Note shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of this Note, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date.

              7.3.2  Notice of Conversion Pursuant to Section 7.2. If this Note
                     --------------------------------------------
is mandatorily converted in accordance with Section 7.2 above, written notice
shall be delivered to the Holder of this Note not less than ten (10) days prior
to the date fixed for such conversion ("Notice of Mandatory Conversion")
specifying the date of such conversion, at the address last shown on the records
of the Company for the Holder or given by the Holder to the Company for the
purpose of notice or, if no such address appears or is given, at the place where
the principal executive office of the Company is located, notifying the Holder
of the mandatory conversion to be effected, specifying the Conversion Price, the
principal amount of the Note to be converted, the amount of accrued interest to
be converted, the date on which such conversion will occur and calling upon such
Holder to surrender to the Company, in the manner and at the place designated,
the Note. The mandatory conversion pursuant to the preceding sentence is
effective with respect to each Holder on the tenth (10th) day following the
mailing to the Holder or any other person at the Holder's designated address of
the Notice of Mandatory Conversion.

              7.3.3  Delivery of Stock Certificates. As promptly as practicable
                     ------------------------------
after the conversion of this Note, the Company at its expense will issue and
deliver to the Holder of this Note a certificate or certificates for the number
of full shares of Common Stock issuable upon such conversion.

         7.4  Mechanics and Effect of Conversion. No fractional shares of
              ----------------------------------
Common Stock shall be issued upon conversion of this Note. In lieu of the
Company issuing any fractional shares to the Holder upon the conversion of this
Note, the Company shall pay to the Holder the amount of outstanding principal
that is not so converted, such payment to be in the form as provided below. Upon
the conversion of this Note pursuant to Section 7.1 above, the Holder shall
surrender this Note, duly endorsed, at the principal office of the Company. At
its expense, the Company shall, as soon as practicable thereafter, issue and
deliver to such Holder at such principal office a certificate or certificates
for the number of shares of such Common Stock to which the Holder shall be
entitled upon such conversion (bearing such legends as are required hereby and
by applicable state and federal securities laws in the opinion of counsel to the

                                       5

<PAGE>

                                                                    Exhibit 4.11

Company), together with any other securities and property to which the
Holder is entitled upon such conversion under the terms of this Note, including
a check payable to the Holder for any cash amounts payable as described above.
Upon conversion of this Note, the Company shall be forever released from all its
obligations and liabilities under this Note, except that the Company shall be
obligated to pay the Holder, within thirty (30) days after the date of such
conversion, any interest accrued and unpaid or unconverted to and including the
date of such conversion, and no more.

8.       Conversion Price Adjustments.
         ----------------------------

         8.1  Shares Issued for Less Than Conversion Price. If at any time or
              --------------------------------------------
from time to time prior to the Maturity Date, the Company sells any Common Stock
or any indebtedness, bonds, debentures, notes, preferred stock or similar equity
securities which are convertible into or exercisable for Common Stock at a price
less than the Conversion Price, the Conversion Price shall thereupon be reduced
to such lesser price. Notwithstanding anything to the contrary herein, the
provisions of this Section 8.1 shall not apply to any such securities issued or
to be issued pursuant to (i) securities issued to employees, consultants,
officers or directors of the Company pursuant to any stock option, stock
purchase or stock bonus plan, agreement or arrangement approved by the Board of
Directors; (ii) securities issued pursuant to the acquisition of another
business entity or business segment of any such entity by the Company by merger,
purchase of substantially all of the assets or other reorganization whereby the
Company will own more than fifty (50%) of the voting power of such business
segment of any such entity; (iii) securities issued to vendors or customers or
to other persons in similar commercial situations with the Company if such
issuance is approved by the Board of Directors; (iv) securities issued in
corporate partnering transactions on terms approved by the Board of Directors;
(v) securities issued in accordance with the terms of any of the Company's
preferred stock or warrants outstanding on the date hereof; and (vi) borrowings,
direct or indirect, from financial institutions regularly engaged in the
business of lending money, whether or not presently authorized with an equity
component which is not a major component of such borrowing. Notwithstanding
anything to the contrary herein, the provisions of this Section 8.1 shall not
apply to the first $100,000 in proceeds received by the Company from the sale of
any Common Stock or any securities convertible into or exercisable for Common
Stock or similar equity securities sold in any separate 180-day period beginning
on the date of this Note and continuing through the Maturity Date. For example,
to demonstrate the operation of the preceding sentence, the Company may sell
such equity securities and receive $100,000 in the first 180-day period after
the date of this Note, and after the expiration of the first 180-day period may
sell another $100,000 in such securities during the succeeding 180-day period
and the $200,000 in total proceeds received from the sales in both such
transactions shall not apply to and shall be exempt from the operation of this
Section 8.1.

         8.2  Adjustments for Stock Splits and Subdivisions. In the event the
              ---------------------------------------------
Company should at any time or from time to time after the date of issuance
hereof fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as "Common Stock Equivalents")
without payment of any consideration

                                       6

<PAGE>

                                                                    Exhibit 4.11

by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of this Note shall be appropriately decreased so that the
number of shares of Common Stock issuable upon conversion of this Note shall be
increased in proportion to such increase of outstanding shares.

         8.3  Adjustment for Reverse Stock Splits. If the number of shares of
              -----------------------------------
Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for this Note shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion hereof shall be decreased in proportion to such decrease in
outstanding shares.

         8.4  Notices of Record Date, etc.
              ---------------------------

              In the event of:

              8.4.1  Any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of the last such cash
dividend theretofore paid) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or

              8.4.2  Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to any other
person or any consolidation or merger involving the Company; or

              8.4.3  Any voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company will mail to the holder of this Note at
least ten (10) days prior to the earliest date specified therein, a notice
specifying:

                     8.4.3.1  The date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right; and

                     8.4.3.2  The date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective and the record date for determining
stockholders entitled to vote thereon.

         8.5  Reservation of Stock Issuable Upon Conversion. The Company shall
              ---------------------------------------------
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
Note such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of the Note; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the entire outstanding principal amount of this Note,
in addition to such other

                                       7

<PAGE>

                                                                    Exhibit 4.11

remedies as shall be available to the holder of this Note, the Company will use
its best efforts to take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.

9.       Representations and Warranties of the Holder.
         --------------------------------------------

         9.1  Holder Bears Economic Risk. Holder has substantial experience in
              --------------------------
evaluating and investing in private placement transactions of securities in
companies similar to the Company and can afford a complete loss of its
investment. Holder must bear the economic risk of this investment indefinitely
unless the Note or the Conversion Shares are registered pursuant to the
Securities Act or an exemption from registration is available. Holder
understands that the Company has no present intention of registering the Note,
the Conversion Shares or any shares of its Common Stock. Holder also understands
that there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such exemption may
not allow Holder to transfer all or any portion of the Conversion Shares or the
Note under the circumstances, in the amounts or at the times Holder might
propose.

         9.2  Acquisition  for Own Account. Holder is acquiring the Note and
              ----------------------------
the Conversion Shares for Holder's own account for investment only, and not with
a view towards their distribution.

         9.3  Holder Can Protect Its Interest. Holder represents that it has
              -------------------------------
such knowledge and experience in business and financial matters as to be capable
of evaluating the merits and risks of the investment and has the ability to bear
the economic risks of its investment, and by reason of its, or of its
management's, business or financial experience, Holder has the capacity to
protect its own interests in connection with the transactions contemplated in
this Agreement. Further, Holder is aware of no publication of any advertisement
in connection with the transactions contemplated in the Agreement.

         9.4  Accredited  Investor.  Holder represents that it is an accredited
              --------------------
investor within the meaning of Regulation  D under the Securities Act.

         9.5  Company Information. Holder has received and read the Company's
              -------------------
Form 10-K Annual Report for the fiscal year ended September 30, 2000 and the
Form 10-Q Quarterly Reports for the quarters ended December 31, 2000; March 30,
2001; June 30, 2001 and all other reports filed after December 31, 2000 through
the date hereof with the Commission under the Securities Exchange Act of 1934,
as amended. Holder has also had the opportunity to ask questions of and receive
answers from, the Company and its management regarding the terms and conditions
of this investment.

         9.6  Rule 144. Holder acknowledges and agrees that the Note, and, if
              --------
issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Holder has been advised or is aware of the provisions
of Rule 144 promulgated under the Securities Act as in effect from time to time,
which permits limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things: the
availability of certain

                                       8

<PAGE>

                                                                    Exhibit 4.11

current public information about the Company, the resale occurring following
the required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.

         9.7  Residence. If the Holder is an individual, then the Holder
              ---------
resides in the state or province identified in the address of the Holder set
forth on the signature page hereto; if the Holder is a partnership, corporation,
limited liability company or other entity, then the office or offices of the
Holder in which its investment decision was made is located at the address or
addresses of the Holder set forth on the signature page hereto.

         9.8  Disposition of Note and Conversion Shares.
              -----------------------------------------

              9.8.1  The Holder further agrees not to make any disposition of
all or any part of the Note or Conversion Shares unless and until:

                     9.8.1.1  The Company shall have received a letter secured
by the Holder from the Commission stating that no action will be recommended to
the Commission with respect to the proposed disposition; or

                     9.8.1.2  There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with said registration statement; or

                     9.8.1.3  The Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, the Holder shall have furnished the Company
with an opinion of counsel, satisfactory to the Company, for the Holder to the
effect that such disposition will not require registration of such Note or
Conversion Shares under the Securities Act or any applicable state securities
laws.

              9.8.2  The Holder understands and agrees that all certificates
evidencing the Conversion Shares to be issued to the Holder may bear the
following legend:

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
         PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
         SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

         9.9  Usury. Holder acknowledges it has been advised by the Company
              -----
that the Company believes the Interest Rate payable herein is exempt from the
usury provisions of the General Corporations Law of the State of California
("GCLC"), pursuant to Section 25118 of the California Corporations Code,
provided, however, the Company expressly disclaims any representation or
warranty that the Interest Rate payable in this Note is exempt from the usury
provisions of the GCLC under such section or is otherwise exempt from the usury
provisions of applicable California law.

                                       9

<PAGE>
                                                                    Exhibit 4.11

10.      Registration Rights.
         -------------------

         10.1 Definitions. As used in this Section 10 the following terms shall
              -----------
have the following respective meanings:

              "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

              "Note Holder" means any person owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Section 10.8 hereof.

              "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.

              "Registrable Securities" means (a) Common Stock of the Company
issuable upon conversion of the Note or upon exercise of the Warrant issued to
Note Holder of even date herewith in connection with the issuance of the Note
and (b) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such above-described securities. Notwithstanding the foregoing,
Registrable Securities shall not include any securities sold by a person to the
public either pursuant to a registration statement or Rule 144 adopted by the
SEC under the Securities Act ("Rule 144") or sold in a private transaction in
which the transferor's rights under Section 9.8 of this Note are not assigned.

              "Registrable Securities then outstanding" shall be the number
of shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.

              "Registration Expenses" shall mean all expenses incurred by
the Company in complying with Section 10.2 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).

              "SEC" or "Commission" means the Securities and Exchange
Commission.

              "Securities Act" shall mean the Securities Act of 1933, as
amended.

              "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale.

              "Shares" shall mean the Company's Common Stock issued upon
conversion of this Note and held by the investors who purchase the Notes and
their permitted assigns and the Common Stock issuable upon exercise of the
Warrants.

                                       10

<PAGE>
                                                                    Exhibit 4.11

              "Special Registration Statement" shall mean a registration
statement relating to any employee benefit plan or with respect to any corporate
reorganization or other transaction under Rule 145 of the Securities Act.

              "Warrants" shall mean those certain warrants to purchase
Common Stock issued in connection with the Notes.

         10.2 Piggyback Registrations. The Company shall notify all Note
              -----------------------
Holders of Registrable Securities in writing at least fifteen (15) days prior to
the filing of any registration statement under the Securities Act for purposes
of a public offering of securities of the Company (including, but not limited
to, registration statements relating to secondary offerings of securities of the
Company, but excluding Special Registration Statements) and will afford each
such Note Holder an opportunity to include in such registration statement all or
part of such Registrable Securities held by such Note Holder. Each Note Holder
desiring to include in any such registration statement all or any part of the
Registrable Securities held by it shall, within fifteen (15) days after the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Registrable
Securities by such Note Holder. If a Note Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Note Holder shall nevertheless continue to have the right to
include any Registrable Securities in a subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein, provided,
however, Note Holders shall be entitled to exercise their piggyback registration
rights as set forth herein for a maximum of two (2) such registration
statements.

              10.2.1 Underwriting. If the registration statement under which
                     ------------
the Company gives notice under this Section 10.2 is for an underwritten
offering, the Company shall so advise the Note Holders of Registrable
Securities. In such event, the right of any such Note Holder to be included in a
registration pursuant to this Section 10.2 shall be conditioned upon such Note
Holder's participation in such underwriting and the inclusion of such Note
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Note Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Note Holders on a pro rata basis based on the total
number of Registrable Securities held by the Note Holders; and third, to any
shareholder of the Company (other than a Note Holder) on a pro rata basis. No
such reduction shall reduce the securities being offered by the Company for its
own account to be included in the registration and underwriting. If any Note
Holder disapproves of the terms of any such underwriting, such Note Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Note Holder which is a partnership or corporation, the
partners, retired partners and shareholders of such Note Holder, or the estates
and family members of any such partners and retired partners and any trusts for
the benefit of any of the

                                       11

<PAGE>

                                                                    Exhibit 4.11

foregoing person shall be deemed to be a single "Note Holder," and any
pro rata reduction with respect to such "Note Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Note Holder," as defined in this sentence.

              10.2.2 Right to Terminate Registration. The Company shall have
                     -------------------------------
the right to terminate or withdraw any registration initiated by it under this
Section 10.2 prior to the effectiveness of such registration whether or not any
Note Holder has elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 10.3 hereof.

         10.3 Expenses of Registration. Except as specifically provided herein,
              ------------------------
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 10.2 shall be borne by the
Company. Fees of counsel for the Note Holders shall be paid for exclusively by
the Note Holders. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered.

         10.4 Obligations of the Company.  Whenever  required to effect the
              --------------------------
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:

              10.4.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective, and, upon the request of
the Note Holders holding a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to thirty (30)
days or, if earlier, until the Note Holder or Note Holders have completed the
distribution related thereto. The Company shall not be required to file, cause
to become effective or maintain the effectiveness of any registration statement
that contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act.

              10.4.2 Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the distribution of all
securities covered by such registration statement for the period set forth in
Section 10.4.1 above.

              10.4.3 Furnish to the Note Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the distribution of Registrable
Securities owned by them.

              10.4.4 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Note
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

              10.4.5 Notify each Note Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered

                                       12

<PAGE>

                                                                    Exhibit 4.11

under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing. The Company will
use reasonable efforts to amend or supplement such prospectus in order to cause
such prospectus not to include any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

         10.5 Termination of Registration Rights. All registration rights
              ----------------------------------
granted under this Section 10 shall terminate and be of no further force and
effect four (4) years after the date the Note is executed by the Company. In
addition, a Note Holder's registration rights shall expire if such Note Holder
(together with its affiliates, partners and former partners) holds less than 1%
of the Company's outstanding Common Stock and all Registrable Securities held by
and issuable to such Note Holder (and its affiliates, partners, former partners,
members and former members) may be sold under Rule 144 during any ninety (90)
day period.

         10.6 Delay of Registration; Furnishing Information.
              ---------------------------------------------

              10.6.1 No Note Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 10.

              10.6.2 It shall be a condition precedent to the obligations of
the Company to take any action pursuant to Section 10.2 that the selling Note
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.

         10.7 Indemnification.  In the event any Registrable Securities are
              ---------------
included in a registration statement under Section 10.2:

              10.7.1 To the extent permitted by law, the Company will indemnify
and hold harmless each Note Holder, the partners, officers and directors of each
Note Holder, any underwriter (as defined in the Securities Act) for such Note
Holder and each person, if any, who controls such Note Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in

                                       13

<PAGE>

                                                                    Exhibit 4.11

connection with the offering covered by such registration statement; and the
Company will pay as incurred to each such Note Holder, partner, officer,
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this Section 10.7.1 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Note Holder, partner, officer, director,
underwriter or controlling person of such Note Holder and provided, however, the
aggregate amount of the Company's obligation to indemnify each Note Holder and
all other related parties referred to herein pursuant to this Section 10.7.1
shall not exceed the net proceeds from the offering received by such Note
Holder.

              10.7.2 To the extent permitted by law, each Note Holder will, if
Registrable Securities held by such Note Holder are included in the securities
as to which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Note Holder selling securities
under such registration statement or any of such other Note Holder's partners,
directors or officers or any person who controls such Note Holder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Note Holder, or partner, director, officer or controlling person of such other
Note Holder may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Note Holder; and each such Note Holder will pay as incurred
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Note Holder, or
partner, officer, director or controlling person of such other Note Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement contained in this
Section 10.7.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Note Holder, which consent shall not be unreasonably withheld;
provided further, that in no event shall any indemnity under this Section 10.7.2
exceed the net proceeds from the offering received by such Note Holder.

              10.7.3 Promptly after receipt by an indemnified party under this
Section 10.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 10.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and

                                       14

<PAGE>

                                                                    Exhibit 4.11

expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
10.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 10.7.

              10.7.4 If the indemnification provided for in this Section 10.7
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Note Holder hereunder exceed the net proceeds from the offering received by such
Note Holder.

              10.7.5 The obligations of the Company and Note Holders under this
Section 10.7 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Note. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.

         10.8 Assignment of Registration Rights. The rights to cause the
              ---------------------------------
Company to register Registrable Securities pursuant to this Section 10 may be
assigned by a Note Holder to a transferee or assignee of Registrable Securities
which (a) is a subsidiary, parent, general partner, limited partner, retired
partner, member or retired member of a Note Holder, (b) is a Note Holder's
family member or trust for the benefit of an individual Note Holder, or (c)
acquires at least twenty-five thousand (25,000) shares of Registrable Securities
(as adjusted for stock splits and combinations); provided, however, (i) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (ii) such transferee shall agree to be subject to all restrictions
set forth in this Agreement.

         10.9 Amendment of Registration Rights. Any provision of this Section 10
              --------------------------------
may be amended and the observance thereof may be waived (either generally or in
a particular instance

                                       15

<PAGE>

                                                                    Exhibit 4.11

and either retroactively or prospectively), only with the written consent
of the Company and the Note Holders holding at least a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 10.9 shall be binding upon each Note Holder and the
Company. By acceptance of any benefits under this Section 10, Note Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.

11.      Assignment.  Subject to the restrictions on transfer described herein,
         ----------
the rights and obligations of the Company and the Holder of this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.

12.      Expenses; Waivers. If action is instituted to collect this Note, the
         -----------------
Company promises to pay all reasonable costs and expenses, including without
limitation reasonable attorneys' fees and costs, incurred in respect with such
action. The Company hereby waives notice of default, presentation or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or
demands relative to this Note.

13.      Waiver and Amendment. Any provision of this Note may be amended,
         --------------------
waived or modified upon the written consent of the Company and the holders of a
majority of the face amount of all then outstanding Notes.

14.      Notices. Any notice, request or other communication required or
         -------
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if telegraphed or mailed by registered or
certified mail, postage prepaid, at the respective addresses of the parties as
set forth herein. Any party hereto may by notice so given change its address for
future notice hereunder. Notice shall conclusively be deemed to have been given
when personally delivered or when deposited in the mail or telegraphed in the
manner set forth above and shall be deemed to have been received when delivered.

15.      No Stockholder Rights. Nothing contained in this Note shall be
         ---------------------
construed as conferring upon the Holder or any other person the right to vote or
to consent, except as provided herein, or to receive notice as a shareholder in
respect of meetings of shareholders for the election of directors of the Company
or any other matters or any rights whatsoever as a shareholder of the Company;
and no dividends or interest shall be payable or accrued in respect of this Note
or the interest represented hereby or the shares of Common Stock issuable upon
conversion of this Note until, and only to the extent that, this Note shall have
been converted.

16.      Governing  Law. This Note and all actions arising out of or in
         --------------
connection with this Note shall be governed by and construed in accordance with
the laws of the State of California, excluding that body of law relating to
conflict of laws.


17.      Heading;  References.  All headings used herein are used for
         --------------------
this Note. Except where otherwise indicated, all references herein to Sections
refer to Sections hereof.

                                       16

<PAGE>
                                                                    Exhibit 4.11

IN WITNESS WHEREOF, the Company has caused this Note to be issued this
      day of                   ,  2001.
-----        ------------------

                                       AMERICAN TECHNOLOGY CORPORATION


                                       By:
                                           -----------------------------------

                                       Title:
                                              --------------------------------

Acknowledged and Agreed:



-----------------------------------------------------

By:
    -------------------------------------------------

Title:
       ----------------------------------------------

Address:
         --------------------------------------------


         --------------------------------------------




                                       17


<PAGE>
                                                                    Exhibit 4.11

                              NOTICE OF CONVERSION
                   (To Be Signed Only Upon Conversion of Note)


AMERICAN TECHNOLOGY CORPORATION

The undersigned, the Note Holder of the foregoing Note, hereby surrenders such
Note for conversion into shares of Common Stock of AMERICAN TECHNOLOGY
CORPORATION, to the extent of $_________ unpaid principal amount of such Note,
and requests that the certificates for such shares be issued in the name of, and
delivered to, whose address is _________________________________________________

________________________________________________.


Dated:____________________



                                        ---------------------------------------
                                        (Signature must conform in all respects
                                        to name of Note Holder as specified
                                        on the face of the Note)


                                        ---------------------------------------
                                        (Address)


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.12
<SEQUENCE>4
<FILENAME>dex412.txt
<DESCRIPTION>WARRANT TO PURCHASE COMMON STOCK
<TEXT>
<PAGE>

                                                                    Exhibit 4.12

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

                         AMERICAN TECHNOLOGY CORPORATION

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.____________                                       ____________, 2001

                          Void After September 30, 2006

     THIS CERTIFIES THAT, for value received, ____________________________, or
assigns (the "Holder"), is entitled to subscribe for and purchase at the
Exercise Price (defined below) from American Technology Corporation, a Delaware
corporation, (the "Corporation") up to _____________________ (______) shares of
Common Stock of the Corporation (the "Common Stock"). The term "Warrant" as used
herein shall include this Warrant, which is one of a series of warrants issued
in connection with the authorization and issuance of Convertible Subordinated
Promissory Notes ("Notes") due December 31, 2002 and limited to the aggregate
principal amount of $3,000,000. Each purchaser of the Notes is granted a Warrant
in connection therewith which upon exercise entitles the Holder to purchase one
share of Common Stock of the Corporation at a purchase price of $2.00 for each
$2.00 principal amount of Notes purchased thereunder.

     1.  Definitions. As used herein, the following terms shall have the
         -----------
following respective meanings:

         (a) "Exercise Period" shall mean the period commencing with the date
beginning 48 hours after the date hereof and ending five (5) years from
September 30, 2001, unless sooner terminated as provided below.

         (b) "Exercise Price" shall mean $2.00 per share, subject to adjustment
pursuant to Section 6 below.

         (c) "Exercise Shares" shall mean the shares of the Corporation's Common
Stock issuable upon exercise of this Warrant.

     2.  Exercise of Warrant. The rights represented by this Warrant may be
         -------------------
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Corporation at its address set forth above (or
at such other address as it may designate by notice in writing to the Holder):

<PAGE>


                                                                    Exhibit 4.12

         (a) An executed Notice of Exercise in the form attached hereto;

         (b) Payment of the Exercise Price either (i) in cash or by check, or
(ii) by cancellation of indebtedness; and

         (c) This Warrant or a true and correct copy thereof.

     Upon the exercise of the rights represented by this Warrant, certificates
for the Exercise Shares so purchased shall be registered in the name of, and
issued and delivered to the Holder, together with a warrant of like tenor and
effect for any Exercise Shares not purchased upon partial exercise hereof.

     The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

     2.1  Net Exercise. Notwithstanding any provisions herein to the contrary,
          ------------
if the fair market value of one share of the Corporation's Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant by payment of cash, the Holder
may elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Corporation together with the properly endorsed
Notice of Exercise in which event the Corporation shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

   X = Y (A-B)
       -------
          A

Where     X =  the number of shares of Common Stock to be issued to the Holder

          Y =  the number of shares of Common Stock purchasable under the
               Warrant or, if only a portion of the Warrant is being exercised,
               the portion of the Warrant being canceled (at the date of such
               calculation)

          A =  the fair market value of one share of the Corporation's Common
               Stock (at the date of such calculation)

          B =  Exercise Price (as adjusted to the date of such calculation)

     For purposes of this Section 2.1 fair market value of a share of Common
Stock shall mean:



                                       2

<PAGE>

                                                                    Exhibit 4.12

         (i) If traded on a stock exchange, the fair market value of the Common
Stock shall be deemed to be the average of the closing selling prices of the
Common Stock on the stock exchange determined by the Board of Directors to be
the primary market for the Common Stock over the ten (10) trading day period
ending on the date prior to the date the Warrant is exercised, as such prices
are officially quoted in the composite tape of transactions on such exchange;

         (ii) If traded over-the-counter or if listed by the National Daily
Quotation Service "Pink Sheets," the fair market value of the Common Stock shall
be deemed to be the average of the closing bid prices (or, if such information
is available, the closing selling prices) of the Common Stock over the ten (10)
trading day period ending on the date prior to the date the Warrant is
exercised, as such prices are reported by the National Association of Securities
Dealers through its NASDAQ system, any successor system, the Pink Sheets, or any
exchange on which it is listed, whichever is applicable; or

         (iii) If there is no public market for the Common Stock, then the fair
market value shall be determined by the Board of Directors of the Corporation in
good faith.

     3.  Covenants of the Corporation.
         ----------------------------

         3.1  Covenants as to Exercise Shares. The Corporation covenants and
              -------------------------------
agrees that all Exercise Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued and outstanding, fully paid and nonassessable, and free from all
preemptive rights of any shareholder and all taxes, liens and charges with
respect to the issuance thereof. The Corporation further covenants and agrees
that the Corporation will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights represented
by this Warrant. If at any time during the Exercise Period the number of
authorized but unissued shares of Common Stock shall not be sufficient to permit
exercise of this Warrant, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes.

         3.2  No Impairment. Except and to the extent as waived or consented to
              -------------
by the Holder, the Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.




                                       3

<PAGE>

                                                                    Exhibit 4.12


         3.3  Notices of Record Date. In the event of any taking by the
              ----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, the Corporation shall mail to the Holder, at
least ten (10) days prior to the date specified herein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend or
distribution.

     4.  Representations of Holder.
         -------------------------

         4.1  Acquisition of Warrant for Personal Account; Financial Risk. The
              -----------------------------------------------------------
Holder represents and warrants that it is acquiring the Warrant solely for its
account for investment and not with a view to or for sale or distribution of
said Warrant or any part thereof. The Holder also represents that the entire
legal and beneficial interests of the Warrant and Exercise Shares the Holder is
acquiring are being acquired for, and will be held for, its account only. Holder
has such knowledge and experience in financial and business matters, or Holders
professional advisors who are not affiliated with and who are not associated
with the Corporation have such knowledge and experience in financial or business
matters, as to be capable of evaluating the merits and risks of its investment
and of protecting their own interests in connection with the transaction, and
has the ability to bear the economic risks of its investment and can afford a
complete loss of Holder's investment.

         4.2  Accredited Investor. The Holder represents and warrants that it is
              -------------------
an "Accredited Investor" as that term is defined in Regulation D, Rule 501 of
the Securities Act of 1933.

         4.3  Securities Are Not Registered.
              -----------------------------

              (a) The Holder understands that the Warrant and the Exercise
Shares have not been registered under the Securities Act of 1933, as amended
(the "Act") on the basis that no distribution or public offering of the stock of
the Corporation is to be effected by the issuance of this Warrant. The Holder
realizes that the basis for the exemption may not be present if, notwithstanding
its representations, the Holder has a present intention of acquiring the
securities for a fixed or determinable period in the future, selling (in
connection with a distribution or otherwise), granting any participation in, or
otherwise distributing the securities. The Holder has no such present intention.

              (b) The Holder recognizes that the Warrant and the Exercise Shares
must be held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available. The Holder recognizes that
the Corporation has no obligation hereunder to register the Warrant or the
Exercise Shares or to comply with any exemption from such registration,
provided, however, the Exercise Shares are subject to piggyback registration
rights as set forth in Section 5 herein.

              (c) The Holder is aware that neither the Warrant nor the Exercise
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are






                                       4

<PAGE>

                                                                    Exhibit 4.12

met, including, among other things, the existence of a public market for the
shares, the availability of certain current public information about the
Corporation, the resale following the required holding period under Rule 144 and
the number of shares being sold during any three month period not exceeding
specified limitations.

         4.4  Disposition of Warrant and Exercise Shares.
              ------------------------------------------

              (a) The Holder further agrees not to make any disposition of all
or any part of the Warrant or Exercise Shares in any event unless and until:

                  (i) The Corporation shall have received a letter secured by
the Holder from the Securities and Exchange Commission stating that no action
will be recommended to the Commission with respect to the proposed disposition;

                  (ii) There is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or

                  (iii) The Holder shall have notified the Corporation of the
proposed disposition and shall have furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Corporation, the Holder shall have furnished the
Corporation with an opinion of counsel, reasonably satisfactory to the
Corporation, for the Holder to the effect that such disposition will not require
registration of such Warrant or Exercise Shares under the Act or any applicable
state securities laws.

              (b) The Holder understands and agrees that all certificates
evidencing the shares to be issued to the Holder may bear the following legend:

         THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
         PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
         SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

         5.   Registration Rights. The Corporation hereby grants Holder and
              -------------------
holders of Exercise Shares the "piggyback" registration rights set forth in
Section 10 of the Convertible Subordinated Promissory Note of even date
herewith, by and among the Corporation and the Holder ("Note"). Notwithstanding
anything to the contrary in the Note, such "piggyback" registration rights of
Holder shall be fully transferable with this Warrant and the Exercise Shares
subject to the terms of Section 4.4 herein.



                                       5

<PAGE>

                                                                    Exhibit 4.12


         6.   Adjustments. The Exercise Price and Exercise Shares purchaseable
              -----------
hereunder are subject to adjustment form time to time as follows:

              6.1  Recapitalizations, Reorganizations, etc. In the event of
                   ---------------------------------------
changes in the outstanding Common Stock of the Corporation by reason of stock
dividends, split-ups, recapitalizations, reclassifications, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
the number and class of shares or other property available under the Warrant in
the aggregate and the Exercise Price shall be correspondingly adjusted to give
the Holder of the Warrant, on exercise for the same aggregate Exercise Price,
the total number, class, and kind of shares or other property as the Holder
would have owned had the Warrant been exercised prior to the event and had the
Holder continued to hold such shares until after the event requiring adjustment;
provided, however, that such adjustment shall not be made with respect to, and
this Warrant shall terminate if not exercised prior to, the events set forth in
Section 8 below. The form of this Warrant need not be changed because of any
adjustment in the number of Exercise Shares subject to this Warrant. Upon any
adjustment pursuant to this Section 6, the Corporation shall give written notice
thereof, by first class mail postage prepaid, addressed to the registered Holder
of this Warrant at the address of such Holder as shown on the books of the
Corporation. The notice shall be signed by the Corporation's' chief financial
officer and shall state the Exercise Price resulting from such adjustment and
number, class and kind of shares or other property purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.

              6.2  Shares Issued for Less Than Exercise Price. If at any time or
                   ------------------------------------------
from time to time during the Exercise Period the Corporation sells any Common
Stock or any indebtedness, bonds, debentures, notes, preferred stock or similar
equity securities which are convertible into or exercisable for Common Stock at
a price less than the Exercise Price, the Exercise Price shall thereupon be
reduced to such lesser price. Notwithstanding anything to the contrary herein,
the provisions of this Section 6.2 shall not apply to any such securities issued
or to be issued pursuant to: (i) securities issued to employees, consultants,
officers or directors of the Corporation pursuant to any stock option, stock
purchase or stock bonus plan, agreement or arrangement approved by the Board of
Directors; (ii) securities issued pursuant to the acquisition of another
business entity or business segment of any such entity by the Corporation by
merger, purchase of substantially all of the assets or other reorganization
whereby the Corporation will own more than fifty (50%) of the voting power of
such business segment of any such entity; (iii) securities issued to vendors or
customers or to other persons in similar commercial situations with the
Corporation if such issuance is approved by the Board of Directors; (iv)
securities issued in corporate partnering transactions on terms approved by the
Board of Directors; (v) securities issued in accordance with the terms of any of
the Corporation's preferred stock or warrants outstanding on the date hereof;
and (vi) borrowings, direct or indirect, from financial institutions regularly
engaged in the business of lending money, whether or not presently authorized
which include an equity component which is not a major component of such
borrowing. Notwithstanding anything to the contrary herein, the provisions of
this Section 6.2 shall not apply to the first $100,000 in proceeds received by
the Corporation from the sale of any



                                       6

<PAGE>

                                                                    Exhibit 4.12

Common Stock or any securities convertible into or exercisable for Common Stock
or similar equity securities sold in any separate 180-day period beginning on
the date of this Warrant and continuing throughout the Exercise Period. For
example, to demonstrate the operation of the preceding sentence, the Corporation
may sell such equity securities and receive $100,000 in the first 180-day period
after the date of this Warrant, and after the expiration of the first 180-day
period the Corporation may sell another $100,000 in such securities during the
succeeding 180-day period, and the $200,000 in total proceeds received from the
sales in both such transactions shall not apply to and shall be exempt from the
operation of this Section 6.2.

         7.   Fractional Shares. No fractional shares shall be issued upon the
              -----------------
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including fractions) issuable upon exercise of this Warrant may
be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Corporation shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.

         8.   Early Termination. In the event of, at any time during the
              -----------------
Exercise Period, the consolidation or merger of the Corporation with or into
another corporation in which the Corporation is not the surviving entity or in
which the stockholders of the Corporation do not own at least 51% of the voting
power of the surviving entity (other than a merger solely to effect a
reincorporation of the Corporation into another state), or the sale or other
disposition of all or substantially all the properties and assets of the
Corporation in its entirety to any other person, the Corporation shall provide
to the Holder twenty (20) days advance written notice of such consolidation,
merger or sale or other disposition of the Corporation's assets, and of this
Warrant shall terminate unless exercised prior to the date of the occurrence of
such consolidation, merger or sale or other disposition of the Corporation's
assets.

         9.   No Stockholder Rights. This Warrant in and of itself (prior to the
              ---------------------
exercise of rights hereunder) shall not entitle the Holder to any voting rights
or other rights as a shareholder of the Corporation.

         10.  Transfer of Warrant. Subject to applicable laws, the restriction
              -------------------
on transfer set forth on the first page of this Warrant, this Warrant and all
rights hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder. The transferee shall sign an
investment representation letter in form and substance reasonably satisfactory
to the Corporation.

         11.  Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
              --------------------------------------------
lost, stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen,
or other form of




                                       7

<PAGE>

                                                                    Exhibit 4.12

mutilated or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.

         12.  Notices, etc. All notices and other communications required or
              ------------
permitted hereunder shall be in writing and shall be sent by telex, telegram,
express mail rapid communications, if possible, and if not then such notice or
communication shall be mailed by first-class mail, postage prepaid, addressed in
each case to the party entitled thereto at the following addresses: (a) if to
the Corporation, to American Technology Corporation, Attention: President, 13114
Evening Creek Drive South, San Diego, California 92128 and (b) if to the Holder,
_______________________, or at such other address as one party may furnish to
the other in writing. Notice shall be deemed effective on the date dispatched if
by personal delivery, telecopy, telex or telegram, two days after mailing if by
express mail, or three days after mailing if by first-class mail.

         13.  Acceptance. Receipt of this Warrant by the Holder shall constitute
              ----------
acceptance of and agreement to all of the terms and conditions contained herein.

         14.  Amendment. Any term of this Warrant may be amended with the
              ---------
written consent of the Corporation and the holders of Warrants representing a
majority in interest of the then outstanding Exercise Shares issuable upon
exercise of any outstanding Warrant which was issued in connection with the
Notes. Any amendment effected in accordance with this Section 14 shall be
binding upon each holder of the Warrants.

         15.  Governing Law. This Warrant and all rights, obligations and
              -------------
liabilities hereunder shall be governed by the laws of the State of California.

         IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its duly authorized officer as of _____________, 2001.

                                        American Technology Corporation

                                              By
                                                 -----------------------------

Attest:


---------------------------
Secretary



                                       8

<PAGE>

                               NOTICE OF EXERCISE

TO: American Technology Corporation

         (1)  [ ] The undersigned hereby elects to purchase ________ shares of
the Common Stock of American Technology Corporation (the "Corporation") pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.

              [ ] The undersigned hereby elects to purchase ________ shares of
the Common Stock of American Technology Corporation. (the "Corporation")
pursuant to the terms of the net exercise provisions set forth in Section 2.1 of
the attached Warrant, and shall tender payment of all applicable transfer taxes,
if any.

         (2)  Please issue a certificate or certificates representing said
shares of Common Stock in the name of:


                        ---------------------------------
                                     (Name)

                        ---------------------------------

                        ---------------------------------
                                    (Address)

         (3)  The undersigned represents that (i) the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares; (ii) the undersigned is aware of the Corporation's business affairs
and financial condition, has read and reviewed the Corporation's Form 10-K
Annual Report for the fiscal year ended September 30, 2000, and the Form 10-Q
Quarterly Reports for the quarters ended December 31, 2000, March 30, 2000 and
June 20, 2001 and all other reports filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended, and has
acquired sufficient information about the Corporation to reach an informed and
knowledgeable decision regarding its investment in the Corporation; (iii) the
undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned
is capable of evaluating the merits and risks of this investment and protecting
the undersigned's own interests; (iv) the undersigned understands that the
shares of Common Stock issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of a specific exemption from the registration provisions of the
Securities Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent as expressed herein, and, because such
securities have not been registered under the Securities Act, they must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available; (v) the undersigned is aware that
the aforesaid shares of Common Stock may not be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met and until the
undersigned has held the shares for the number of years prescribed by Rule 144,
that among the conditions for use of the Rule is the


                                       9

<PAGE>

availability of current information to the public about the Corporation and (vi)
the undersigned agrees not to make any disposition of all or any part of the
aforesaid shares of Common Stock unless and until there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement, or the undersigned has provided the Corporation with an opinion of
counsel reasonably satisfactory to the Corporation, stating that such
registration is not required.

---------------------------     ---------------------------------
(Date)                          (Signature)


-----------------------------
(Print name)




                                       10

<PAGE>


                                                                    Exhibit 4.12

                               ASSIGNMENT FORM

                (To assign the foregoing Warrant, execute
                this form and supply required information.
                Do not use this form to purchase shares.)

         FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to Name:


Name:
       -------------------------------------------------------
                           (Please Print)

Name:
       -------------------------------------------------------
                           (Please Print)

Dated:
       -----------------------------

Holder's
Signature:
           ---------------------------------------------------
Holder's
Address:
           ---------------------------------------------------

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should provide proper evidence of authority to
assign the foregoing Warrant.



                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>5
<FILENAME>dex991.txt
<DESCRIPTION>SHAREHOLDER COMMUNICATION
<TEXT>
<PAGE>

                                                                    Exhibit 99.1


The following is a direct communication from the President of American
Technology Corporation.

October 3, 2001

Dear Shareholder,

I am pleased to announce today that we have entered into a long-term royalty
bearing license agreement with Thomson multimedia and its subsidiaries for ATC's
patent-pending PureBass(TM) Technology. PureBass technology will be featured in
selected new Thomson Home Theater Systems scheduled for introduction in 2002.
Thomson multimedia systems are sold throughout the world under several brand
names including RCA in the U.S., and Thomson in Europe. With sales of 9.1
billion Euros (U.S. $ 8.3 billion)in 2000 and 73,000 employees in more than 30
countries, Thomson multimedia Paris Euroclear: 18453) (NYSE: TMS), provides a
wide range of video (and enabling) technologies, systems, finished products and
services to consumers and professionals in the entertainment and media
industries. Thomson's worldwide audio product unit sales increased 25% in 2000.

We are very excited to be working with Thomson multimedia on their scheduled
introduction of both our Stratified Field and PureBass technologies in their
Home Theater Systems. Due to the distortion of `prior art' woofer technologies,
it has been very difficult to achieve accurate, seamless transitions from those
woofer systems to high performance, upper range speakers particularly if the
crossover frequency is much above 100 Hz. Due to the reduced distortion,
PureBass not only has superior sound quality and output capability, it also has
the attribute of allowing for higher crossover frequencies than other
sub-woofers without degrading the sound quality. This creates the opportunity to
reduce the size and cost while increasing the dynamic range of the entire Home
Theater system.

PureBass technology utilizes unique cabinet construction and vent configurations
along with multiple acoustic filters to deliver the world's finest sub-woofer
for use with applications requiring superior low frequency performance and/or
higher crossover frequencies. It has tremendous potential for use in Home
Theater systems, multi-media, surround sound configurations, executive bookshelf
systems, TV, professional sound systems, and many more. We are pleased that
Thomson multimedia will incorporate our technology into their branded line of
systems worldwide under this non-exclusive license agreement. We are
distributing this Shareholder Communication to American Technology Corporation
Shareholders with Thomson's approval and honoring their request that this
information not be released over news wire services at this time.

Sincerely,
/s/ TERRY CONRAD
Terry Conrad, President

About American Technology Corporation

American Technology Corporation is Shaping the Future of Sound(R) by developing
and licensing its technology and intellectual property portfolio which includes:
the award-winning HSS(TM) (HyperSonic(TM) Sound) and StratifiedField(TM)
Technologies; NeoPlanar(TM); PureBass(TM) and Magnified Force(TM) Sub-Woofer
Technologies; and FM Sounds(TM) consumer radio products. The Company is
establishing a strong portfolio of patents, trademarks, and know-how including
over 100 U.S. and Foreign patents and patent filings to date. For more
information on the Company and its technologies and products please visit our
web site at www.atcsd.com.

# # #

Safe Harbor statement under the Private Securities Litigation Reform of 1995:
This document contains forward-looking statements relating to future
performance, technology and product development that may affect future results
and the future viability of the company. Actual results could be affected or
differ

<PAGE>

                                                                    Exhibit 99.1

materially from those projected in the forward-looking statements as a result of
risks and uncertainties, including future products and results, technological
shifts, potential technical difficulties that could delay new products,
competition, general economic factors, and conditions in the markets in which
the company operates, pricing pressures, the uncertainty of market acceptance of
new products and services by OEM's and end-user customers, and other factors
identified and discussed in the Company's most recent filings with the
Securities and Exchange Commission. These forward-looking statements are based
on information and management's expectations as of the date hereof. Future
results may differ materially from the Company's current expectations.

FOR FURTHER INFORMATION CONTACT:

American Technology Corp.
Robert Putnam
(858) 679-3168
Robert@atcsd.com

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
