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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950168-02-003485.txt : 20021118
<SEC-HEADER>0000950168-02-003485.hdr.sgml : 20021118
<ACCEPTANCE-DATETIME>20021118164928
ACCESSION NUMBER:		0000950168-02-003485
CONFORMED SUBMISSION TYPE:	S-8
PUBLIC DOCUMENT COUNT:		5
FILED AS OF DATE:		20021118
EFFECTIVENESS DATE:		20021118

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:		S-8
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-101279
		FILM NUMBER:		02831663

	BUSINESS ADDRESS:	
		STREET 1:		13114 EVENING CREEK DRIVE SOUTH
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92128
		BUSINESS PHONE:		6196792114
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>ds8.htm
<DESCRIPTION>FORM S-8
<TEXT>
<HTML><HEAD>
<TITLE>Form S-8</TITLE>
</HEAD>
  <BODY BGCOLOR="WHITE">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Registration No. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="3"
NOSHADE COLOR="#000000" ALIGN="left"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="4" COLOR="#000000"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></DIV>
<DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Washington, D.C. 20549 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="5" COLOR="#000000"><B>FORM S-8 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>REGISTRATION STATEMENT </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>UNDER </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>THE SECURITIES ACT OF 1933 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="5" COLOR="#000000"><B>AMERICAN TECHNOLOGY CORPORATION </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Exact name of Registrant as specified in its charter) </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Delaware</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>87-0361799</B></FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(State or other jurisdiction of</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">incorporation or organization)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(I.R.S. Employer Identification Number)</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>13114 Evening Creek Drive South
</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>San Diego, California 92128 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(858) 679-2114
</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Address, including zip code, and telephone number, including area code, of </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">Registrant&#146;s principal executive offices) </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="17%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>2002 Stock Option Plan </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Special Stock Options </B></FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(Full Title of the Plan) </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="17%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Elwood G. Norris </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Chief Executive Officer </B></FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AMERICAN TECHNOLOGY CORPORATION </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>13114 Evening Creek Drive South </B></FONT></DIV> <DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>San Diego, California 92128 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(858) 679-2114 </B></FONT></DIV> <DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(Name, address, including zip code, and telephone number, including area code, </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">of agent for
service) </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="17%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Copies to:
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">John D. Tishler, Esq. </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Stephen R.
LaSala, Esq. </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Procopio, Cory, Hargreaves &amp; Savitch LLP </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">530 B Street,
Suite 2100 </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">San Diego, CA 92101 </FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(619) 238-1900 </FONT></DIV>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>CALCULATION OF REGISTRATION FEE </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" COLSPAN="2"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" COLSPAN="2"><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD VALIGN="bottom" WIDTH="47%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Title of Securities</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>to be
Registered</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Amount&nbsp;to&nbsp;be</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>Registered</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Proposed&nbsp;Maximum</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>Offering&nbsp;Price</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>per Share(1)</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Proposed&nbsp;Maximum</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>Aggregate</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Offering&nbsp;Price(1)</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Amount&nbsp;of</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>Registration&nbsp;Fee</B></FONT></DIV> </TD> </TR>
<TR>
<TD COLSPAN="11"> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="47%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Common Stock, $.00001 par value</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="10%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,550,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="14%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$4.35-$4.50</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">11,148,000.00</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$</FONT></DIV> </TD>
<TD VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,025.62</FONT></DIV> </TD> </TR>
<TR>
<TD COLSPAN="11"> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 of the Securities Act of 1933. The price per share and
aggregate offering price are based upon (a) the average of the high and low sales price of American Technology Corporation&#146;s common stock on November 13, 2002 as reported on the NASDAQ SmallCap Market for shares available under the
Company&#146;s 2002 Stock Option Plan (the &#147;Plan&#148;); (b) the actual exercise price for shares subject to outstanding options under the Plan; and (c) the actual exercise price for shares subject to Special Stock Options granted outside the
Plan. The following chart shows the calculation of the registration fee: </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD VALIGN="bottom" WIDTH="59%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>TYPES OF SHARES</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>NUMBER&nbsp;OF</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>SHARES</B></FONT></DIV>
</TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>OFFERING&nbsp;PRICE</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>PER&nbsp;SHARE</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>AGGREGATE</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>OFFERING&nbsp;PRICE</B></FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="59%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Shares available for grant under 2002 Stock Option Plan</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="10%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,180,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="14%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.35</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="14%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">9,483,000</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="59%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Shares subject to outstanding options under the 2002 Stock Option Plan</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="10%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">170,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="14%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.50</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="14%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">765,000.00</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="59%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Shares subject to outstanding stock options outside the 2002 Stock Option Plan</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="10%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">100,000</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">100,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="14%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.50</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.50</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="14%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">450,000.00</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">450,000.00</FONT></DIV> </TD>
</TR>
<TR>
<TD COLSPAN="7"> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
 </TABLE> </DIV>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>PART II </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>INFORMATION NOT REQUIRED IN THE REGISTRATION STATEMENT </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>ITEM 3.&nbsp;&nbsp;&nbsp;&nbsp;INCORPORATION OF DOCUMENTS BY REFERENCE </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The following
documents filed by American Technology Corporation (the &#147;Registrant&#148;) with the Securities and Exchange Commission (the &#147;SEC&#148;) are incorporated by reference into this Registration Statement: </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Annual Report of the Registrant on Form 10-K for the year ended September 30, 2001; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">All other reports filed by the Registrant pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 (the &#147;Exchange Act&#148;) since
September 30, 2001; and </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The description of the Registrant&#146;s Common Stock which is contained in a registration statement filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">All documents filed by the
Registrant with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>ITEM 4.&nbsp;&nbsp;&nbsp;&nbsp;DESCRIPTION OF SECURITIES. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Not applicable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>ITEM 5.&nbsp;&nbsp;&nbsp;&nbsp;INTERESTS OF NAMED EXPERTS AND
COUNSEL. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Not applicable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>ITEM 6.&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION OF OFFICERS AND DIRECTORS. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">As permitted by Delaware law, our Certificate of Incorporation provides that we will indemnify our officers, directors, employees and agents against attorneys&#146; fees and other expenses and liabilities they incur to defend, settle
or satisfy any civil or criminal action brought against them arising out of their association with or activities on behalf of us unless, in any such action, they are adjudged to have acted with gross negligence or to have engaged in willful
misconduct. We may also bear the expenses of such litigation for any such persons upon their promise to repay such sums if it is ultimately determined that they are not entitled to indemnification. Such expenditures could be substantial and may not
be recouped, even if we are so entitled. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the &#147;Securities Act&#148;) may be permitted to directors, officers or persons controlling us pursuant to </FONT></DIV>

 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-1 </FONT></DIV>


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<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Pursuant to the General Corporation Law of Delaware, our Certificate of Incorporation excludes personal liability
on the part of its directors to the Company for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts in violation of Section 174 of the General Corporation Law of Delaware, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not
limit any right which a director may have to be indemnified and does not affect any director&#146;s liability under federal or applicable state securities laws. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>ITEM 7.&nbsp;&nbsp;&nbsp;&nbsp;EXEMPTION FROM REGISTRATION CLAIMED. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Not
applicable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>ITEM 8.&nbsp;&nbsp;&nbsp;&nbsp;EXHIBITS. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Exhibit&nbsp;No.</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="68" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Description</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="73" ALIGN="left" COLOR="#000000"></TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;5.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Opinion of Procopio, Cory, Hargreaves &amp; Savitch LLP.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of BDO Seidman, LLP, independent certified public accountants.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of Procopio, Cory, Hargreaves &amp; Savitch LLP (contained in Exhibit 5.1).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">24.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Power of Attorney. Reference is made to Page II-6.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">99.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2002 Stock Option Plan</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">99.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Form of Special Stock Option used in connection with option grants outside of Registrant&#146;s stock option
plans</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-2 </FONT></DIV>


<p Style='page-break-before:always'>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>ITEM 9.&nbsp;&nbsp;&nbsp;&nbsp;UNDERTAKINGS. </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;Rule 415 Offering. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">The undersigned Registrant hereby undertakes: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: </FONT></DIV> </TD></TR></TABLE>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(i)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To include any prospectus required by Section 10(a)(3) of the Securities Act; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) (Section
230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the &#147;Calculation of Registration Fee&#148; table in the effective
registration statement; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="13%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(iii)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to
such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if this Registration Statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration
Statement. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the
offering. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;Filings Incorporating Subsequent Exchange Act Documents By Reference. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each
filing of the Registrant&#146;s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan&#146;s annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(h)&nbsp;&nbsp;Request for Acceleration of Effective Date or Filing of Registration Statement on Form S-8.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against
 </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-3 </FONT></DIV>


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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-4 </FONT></DIV>


<p Style='page-break-before:always'>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>SIGNATURES </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on November 15, 2002. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AMERICAN TECHNOLOGY CORPORATION </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="2%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="37%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;E<SMALL>LWOOD</SMALL> G. N<SMALL>ORRIS</SMALL></FONT></DIV> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <HR SIZE="1" NOSHADE COLOR="#000000"></TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Elwood G. Norris</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Chief Executive Officer</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-5 </FONT></DIV>


<p Style='page-break-before:always'>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">POWER OF ATTORNEY </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Elwood G. Norris and Renee Warden and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or
any of them, or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Pursuant to
the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" WIDTH="41%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Signature</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="54" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="41%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Title</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="25" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="17%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Date</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="26" COLOR="#000000"></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;E<SMALL>LWOOD</SMALL> G. N<SMALL>ORRIS</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"
ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Elwood G. Norris</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Chief Executive Officer and Director</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(Principal Executive Officer)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;15,&nbsp;2002</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;R<SMALL>ENEE</SMALL> W<SMALL>ARDEN</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"><DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Renee Warden</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Chief Accounting Officer, Treasurer</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">and Secretary (Principal Financial</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">and Accounting Officer)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;15,&nbsp;2002</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;T<SMALL>ERRY</SMALL> C<SMALL>ONRAD</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"><DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Terry Conrad</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">President and Director</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;15,&nbsp;2002</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;R<SMALL>ICHARD</SMALL> M. W<SMALL>AGNER</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"
ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Richard M. Wagner</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;4,&nbsp;2002</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;D<SMALL>AVID</SMALL> J. C<SMALL>ARTER</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"
ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">David J. Carter</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;7,&nbsp;2002</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;O&#146;C<SMALL>ONNELL</SMALL> J. B<SMALL>ENJAMIN</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000"
ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">O&#146;Connell J. Benjamin</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;4,&nbsp;2002</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="41%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/<SMALL>S</SMALL>/&nbsp;&nbsp;&nbsp;&nbsp;D<SMALL>ANIEL</SMALL> H<SMALL>UNTER</SMALL></FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"><DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Daniel Hunter</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="41%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="17%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">November&nbsp;6,&nbsp;2002</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-6 </FONT></DIV>


<p Style='page-break-before:always'>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>EXHIBIT INDEX </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Exhibit&nbsp;No.</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="68" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Description</B></FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="73" ALIGN="left" COLOR="#000000"></TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;5.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Opinion of Procopio, Cory, Hargreaves &amp; Savitch LLP.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of BDO Seidman, LLP, independent certified public accountants.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of Procopio, Cory, Hargreaves &amp; Savitch LLP (contained in Exhibit 5.1).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">24.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Power of Attorney. Reference is made to Page II-6.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">99.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2002 Stock Option Plan</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="9%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">99.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="90%"> <DIV STYLE="margin-left:5%; text-indent:-5%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Form&nbsp;&nbsp;of Special Stock Option used in connection with option grants outside of Registrant&#146;s stock
option plans</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">II-7 </FONT></DIV>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>3
<FILENAME>dex51.htm
<DESCRIPTION>OPINION AND CONSENT OF PROCOPIO, CORY
<TEXT>
<HTML><HEAD>
<TITLE>Opinion and Consent of Procopio, Cory</TITLE>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">EXHIBIT 5.1 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">OPINION AND CONSENT OF PROCOPIO, CORY, HARGREAVES &amp; SAVITCH LLP </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">November 18, 2002 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">American Technology Corporation </FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">13114 Evening Creek Drive South </FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">San Diego, CA 92128 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">Ladies and Gentlemen: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">You have requested our opinion with respect to certain matters in
connection with the filing by American Technology Corporation, a Delaware corporation (the &#147;Company&#148;), of a Registration Statement on Form S-8 (the &#147;Registration Statement&#148;) with the Securities and Exchange Commission covering
the registration of up to 2,550,000 shares of the Company&#146;s Common Stock, $.00001 par value (the &#147;Shares&#148;), on behalf of the Company including: (i) 2,350,000 shares of Common Stock authorized under the Company&#146;s 2002 Stock Option
Plan (the &#147;Option Plan&#148;); and (iii) 200,000 shares of the Company&#146;s Common Stock issuable upon exercise of Special Stock Option grants described in the Registration Statement (the &#147;Option Grants&#148;). This opinion is being
furnished in accordance with the requirements of Item 601(b)(5)(i) of Regulation S-K. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In connection with this
opinion, we have examined and relied upon the Registration Statement, the Option Plan, the Option Grants and the originals or copies certified to our satisfaction of such records, documents, certificates, memoranda and other instruments as in our
judgment are necessary or appropriate to enable us to render the opinion expressed below. We have assumed the genuineness and authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as
copies thereof and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when sold and issued in accordance with the Option Plan and the Option Grants, will be validly issued,
fully paid, and nonassessable. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Shares, the
Option Plan or the Option Grants. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Very truly yours, </FONT></DIV> <DIV
STYLE="margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">PROCOPIO, CORY, HARGREAVES &amp; SAVITCH LLP </FONT></DIV>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>4
<FILENAME>dex231.htm
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>
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<TITLE>Consent of Independent Accountants</TITLE>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">EXHIBIT 23.1 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Stockholders and Board of Directors
</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">American Technology Corporation </FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">San Diego, California </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We hereby consent to the incorporation by reference in the Registration Statement of American Technology Corporation of our report dated November 16, 2001,
relating to the financial statements and schedules of American Technology Corporation appearing in the Annual Report on Form 10-K for the year ended September 30, 2001. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">BDO SEIDMAN, LLP </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Costa Mesa, California </FONT></DIV> <DIV><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">November 14, 2002 </FONT></DIV>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>5
<FILENAME>dex991.htm
<DESCRIPTION>2002 STOCK OPTION PLAN
<TEXT>
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<TITLE>2002 Stock Option Plan</TITLE>
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 <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>EXHIBIT 99.1 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>AMERICAN TECHNOLOGY CORPORATION </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>2002 STOCK OPTION PLAN </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>1.&nbsp;&nbsp;&nbsp;&nbsp;ESTABLISHMENT, PURPOSE AND TERM OF PLAN. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>1.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Establishment</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The AMERICAN TECHNOLOGY CORPORATION 2002 Stock Option Plan (the &#147;<B><I>Plan</I></B>&#148;) is hereby established effective as of August 1,
2002 (the &#147;<B><I>Effective Date</I></B>&#148;), subject to the approval of the Company&#146;s stockholders. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>1.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Purpose</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract and
retain persons eligible to receive Options under the Plan and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>1.3</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Term of Plan</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall continue in effect until the earlier of its termination by the Board or
the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However,
all Incentive Stock Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS AND CONSTRUCTION. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>2.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Definitions</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Whenever used herein, the following terms shall have their respective meanings set forth below: </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;&#147;<B><I>Affiliate</I></B>&#148; means (i) an entity, other than a Parent Corporation, that
directly, or indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other than a Subsidiary Corporation, that is controlled by the Company directly, or indirectly through one or more intermediary entities, or
(iii) an entity which the Board designates as an Affiliate. For this purpose, the term &#147;control&#148; (including the term &#147;controlled by&#148;) means the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of the relevant entity, whether through the ownership of voting securities, by contract or otherwise; or shall have such other meaning assigned such term for the purposes of registration on Form S-8 under the Securities Act.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;&#147;<B><I>Board</I></B>&#148; means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan, &#147;<B><I>Board</I></B>&#148; also means such Committee(s). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(c)&nbsp;&nbsp;A &#147;<B><I>Change In Control</I></B>&#148; shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, a &#147;<B><I>Transaction</I></B>&#148;)
wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company&#146;s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the
 </FONT></DIV>
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 <DIV STYLE="margin-left:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
outstanding voting securities of the Company or, in the case of a Transaction described in Section 2.1(t)(iii), the corporation or other business entity to which the assets of the Company were
transferred (the &#147;<B><I>Transferee</I></B>&#148;), as the case may be. The Board shall determine in its discretion whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related.
Notwithstanding the preceding sentence, a Change in Control shall not include a Spinoff Transaction. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(d)&nbsp;&nbsp;&#147;<B><I>Code</I></B>&#148; means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(e)&nbsp;&nbsp;&#147;<B><I>Committee</I></B>&#148; means the Compensation Committee or other committee of the Board duly appointed to administer the Plan
and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend
or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">(f)&nbsp;&nbsp;&#147;<B><I>Company</I></B>&#148; means American Technology Corporation, a Delaware corporation, or any Successor. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(g)&nbsp;&nbsp;&#147;<B><I>Consultant</I></B>&#148; means a person engaged to provide consulting or advisory services (other than as an Employee or a
Director) to a Participating Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(h)&nbsp;&nbsp;&#147;<B><I>Director</I></B>&#148; means a
member of the Board or of the board of directors of any other Participating Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(i)&nbsp;&nbsp;&#147;<B><I>Disability</I></B>&#148; means the Participant has been determined by the long-term disability insurer of the Participating Company Group as eligible for disability benefits under the long-term disability
plan of the Participating Company Group or the Participant has been determined eligible for Supplemental Security Income benefits by the Social Security Administration of the United States of America. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(j)&nbsp;&nbsp;&#147;<B><I>Employee</I></B>&#148; means any person treated as an employee (including an Officer or a
Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that
neither Service as a Director nor payment of a Director&#146;s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual has
become or has ceased to be an Employee and the effective date of such individual&#146;s employment or termination of employment, as the case may be. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(k)&nbsp;&nbsp;&#147;<B><I>Exchange Act</I></B>&#148; means the Securities Exchange Act of 1934, as amended. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(l)&nbsp;&nbsp;&#147;<B><I>Fair Market Value</I></B>&#148; means, as of any date, the value of the Stock determined as
follows: </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(i)&nbsp;&nbsp;If the Stock is listed on any established stock
exchange or traded on the Nasdaq Stock Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or
market (or if the stock is traded on more than one exchange or market, the exchange or market with the greatest volume of trading in the Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)&nbsp;&nbsp;If the common stock is quoted
by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of common stock shall be the mean between the bid and asked prices for the common stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as the Board deems reliable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(iii)&nbsp;&nbsp;In the absence of such markets for the Stock, the Fair Market Value shall be determined in good faith by the Board. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(m)&nbsp;&nbsp;&#147;<B><I>Incentive Stock Option</I></B>&#148; means an Option intended to be (as set forth in the Option Agreement) and which qualifies as
an incentive stock option within the meaning of Section 422(b) of the Code. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(n)&nbsp;&nbsp;&#147;<B><I>Insider</I></B>&#148; means an Officer, a Director of the Company or other person whose transactions in Stock are subject to Section 16 of the Exchange Act. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(o)&nbsp;&nbsp;&#147;<B><I>Non-Control Affiliate</I></B>&#148; means any entity in which any Participating Company has an
ownership interest and which the Board shall designate as a Non-Control Affiliate. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(p)&nbsp;&nbsp;&#147;<B><I>Nonstatutory Stock Option</I></B>&#148; means an Option not intended to be (as set forth in the Option Agreement) or which does not qualify as an Incentive Stock Option. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(q)&nbsp;&nbsp;&#147;<B><I>Officer</I></B>&#148; means any person designated by the Board as an officer of the Company.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(r)&nbsp;&nbsp;&#147;<B><I>Option</I></B>&#148; means a right to purchase Stock pursuant to the
terms and conditions of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">(s)&nbsp;&nbsp;&#147;<B><I>Option Agreement</I></B>&#148; means an agreement, in such form as the Board may approve, between the Company and a Participant setting forth the terms, conditions and restrictions of an Option
granted to the Participant and any shares acquired upon the exercise thereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(t)&nbsp;&nbsp;An
&#147;<B><I>Ownership Change Event</I></B>&#148; shall be deemed to have occurred if any of the following occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all, as
 </FONT></DIV>
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determined by the Board in its discretion, of the assets of the Company; or (iv) a liquidation or dissolution of the Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(u)&nbsp;&nbsp;&#147;<B><I>Parent Corporation</I></B>&#148; means any present or future &#147;parent corporation&#148; of the Company, as defined in Section
424(e) of the Code. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(v)&nbsp;&nbsp;&#147;<B><I>Participant</I></B>&#148; means any eligible
person who has been granted one or more Options. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(w)&nbsp;&nbsp;&#147;<B><I>Participating
Company</I></B>&#148; means the Company or any Parent Corporation or Subsidiary Corporation or Affiliate. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(x)&nbsp;&nbsp;&#147;<B><I>Participating Company Group</I></B>&#148; means, at any point in time, all entities collectively which are then Participating Companies. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(y)&nbsp;&nbsp;&#147;<B><I>Prior Plan Option</I></B>&#148; means, any option granted pursuant to the Company&#146;s 1997 Stock Option Plan which is
outstanding on or after the date on which the Board adopts the Plan or which is granted thereafter and prior to the date the Plan is duly approved by the stockholders of the Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(z)&nbsp;&nbsp;&#147;<B><I>Rule 16b-3</I></B>&#148; means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or
regulation. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(aa)&nbsp;&nbsp;&#147;<B><I>Section 162(m)</I></B>&#148; means Section 162(m) of the
Code. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(bb)&nbsp;&nbsp;&#147;<B><I>Securities Act</I></B>&#148; means the Securities Act of 1933,
as amended. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(cc)&nbsp;&nbsp;&#147;<B><I>Service</I></B>&#148; means </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(i)&nbsp;&nbsp;a Participant&#146;s employment or service with the Participating Company Group, whether in the capacity of
an Employee, a Director or a Consultant. A Participant&#146;s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Participating Company Group or a change in the
Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant&#146;s Service. Furthermore, only to such extent as may be provided by the Company&#146;s leave policy, a
Participant&#146;s Service with the Participating Company Group shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other leave of absence approved by the Company. Notwithstanding the foregoing, a leave
of absence shall be treated as Service for purposes of vesting only to such extent as may be provided by the Company&#146;s leave policy. The Participant&#146;s Service shall be deemed to have terminated either upon an actual termination of Service
or upon the entity for which the Participant performs Service ceasing to be a Participating Company; except that if the entity for which Participant performs Service is a Subsidiary Corporation and ceases to be a Participating Company as a result of
the distribution of the voting stock of such Subsidiary Corporation to the stockholders of the Company, Service shall not be deemed to have terminated as a result of such distribution. Subject to the foregoing, the Company, in its discretion, shall
determine whether the Participant&#146;s Service has terminated and the effective date of such termination. </FONT></DIV>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)&nbsp;&nbsp;Notwithstanding any other provision of this
Section, a Participant&#146;s Service shall not be deemed to have terminated merely because the Participating Company for which the Participant renders Service ceases to be a member of the Participating Company Group by reason of a Spinoff
Transaction, nor shall Service be deemed to have terminated upon resumption of Service from the Spinoff Company to a Participating Company. For all purposes under this Plan, a Participant&#146;s Service shall include Service, whether in the capacity
of an Employee, Director or a Consultant, for the Spinoff Company provided a Participant was employed by the Participating Company Group immediately prior to the Spinoff Transaction. Notwithstanding the foregoing, if the Company&#146;s auditors
determine that the provisions or operation of the preceding two sentences would cause the Company to incur a compensation expense and provided further that in the absence of the preceding two sentences no such compensation expense would be incurred,
then the two preceding sentences shall be without force or effect, and the vesting and exercisability of each outstanding Option and any shares acquired upon the exercise thereof shall be determined under any other applicable provision of the Plan
or the Option Agreement evidencing such Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(dd)&nbsp;&nbsp;&#147;<B><I>Spinoff
Company</I></B>&#148; means a Participating Company which ceases to be such as a result of a Spinoff Transaction. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(ee)&nbsp;&nbsp;&#147;<B><I>Spinoff Transaction</I></B>&#148; means a transaction in which the voting stock of an entity in the Participating Company Group is distributed to the shareholders of a parent corporation as defined by
Section 424(e) of the Code, of such entity. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ff)&nbsp;&nbsp;&#147;<B><I>Stock</I></B>&#148; means
the common stock of the Company, as adjusted from time to time in accordance with Section 4.2. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(gg)&nbsp;&nbsp;&#147;<B><I>Subsidiary Corporation</I></B>&#148; means any present or future &#147;subsidiary corporation&#148; of the Company, as defined in Section&nbsp;424(f) of the Code. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(hh)&nbsp;&nbsp;&#147;<B><I>Successor</I></B>&#148; means a corporation into or with which the Company is merged or
consolidated or which acquires all or substantially all of the assets of the Company and which is designated by the Board as a Successor for purposes of the Plan. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)&nbsp;&nbsp;&#147;<B><I>Ten Percent Stockholder</I></B>&#148; means a person who, at the time an Option is granted to such person, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>2.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Construction</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Captions and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term &#147;or&#148; is not intended to be exclusive,
unless the context clearly requires otherwise. </FONT></DIV>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>3.&nbsp;&nbsp;&nbsp;&nbsp;ADMINISTRATION. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>3.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Administration By The Board</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall be administered by the Board and its designees.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>3.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Authority Of Officers</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Any Officer shall
have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Board has delegated such authority
to the Officer with respect to such matter, right, obligation, determination or election. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>3.3</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Powers Of The Board</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the power and
authority: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;to determine the persons to whom, and the time or times at which,
Options shall be granted and the number of shares of Stock to be subject to each Option; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(b)&nbsp;&nbsp;to designate Options as Incentive Stock Options or Nonstatutory Stock Options; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(c)&nbsp;&nbsp;to determine the terms, conditions and restrictions applicable to each Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of
the Option, (ii) the method of payment for shares purchased upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability of the Option or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the
Participant&#146;s termination of Service on any of the foregoing, and (vii)&nbsp;all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(d)&nbsp;&nbsp;to approve one or more forms of Option Agreement; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(e)&nbsp;&nbsp;to amend, modify, extend, cancel (subject to the limitations in Section 11) or renew any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise thereof; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(f)&nbsp;&nbsp;to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following a Participant&#146;s termination
of Service; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(g)&nbsp;&nbsp;to delegate to any proper Officer the authority to grant one or more
Options, without further approval of the Board, to any person eligible pursuant to Section 5, other than a person who, at the time of such grant, is an Insider; provided, however, that (i) the exercise price per share of each such Option shall be
equal to the Fair Market Value per share of the Stock on the effective date of grant, and (ii) each such Option shall be subject to the terms and conditions of the appropriate standard form of Option Agreement approved by the Board and </FONT></DIV>

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shall conform to the provisions of the Plan and such other guidelines as shall be established from time to time by the Board; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(h)&nbsp;&nbsp;to determine the Fair Market Value of shares of Stock or other property; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(i)&nbsp;&nbsp;to construe, interpret and apply the provisions of the Plan and Options granted under it, in its discretion; to establish, amend and revoke
rules and regulations for its administration; and to take all such actions and make all such decisions as may be necessary or appropriate for the operation and administration of the Plan, including, without limitation, all such decisions and
determinations as may be expressly delegated to the Board by the terms of the Plan. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner and to the extent it
shall deem, in its discretion, necessary, desirable, appropriate or expedient to make the Plan fully effective. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>3.4</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Scope Of Review Of Board Action.</I></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(a)&nbsp;&nbsp;The Board&#146;s action taken pursuant to the authority set forth in Sections 3.3(a) through (g) above, and any action, decision or determination with respect to any matter reserved to the Board in its sole and
absolute discretion under the terms of this Plan shall be final, binding, and conclusive on the Participating Company Group, any Participant and any person having an interest in the Plan or any Option granted hereunder. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;Except as otherwise provided in Section 3.4(a), the Board&#146;s determination of the construction and interpretation of
any provision of the Plan and any actions, decisions or determinations reserved to the Board in its discretion which are made in good faith shall be final, binding and conclusive on the Participating Company Group, any Participant, and any person
having an interest in the Plan or any Option granted hereunder. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>3.5</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Administration With Respect To Insiders</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is
registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>3.6</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Committee Complying With Section 162(m)</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;If the Company is a &#147;publicly held corporation&#148; within the meaning of Section
162(m), the Board may establish a Committee of &#147;outside directors&#148; within the meaning of Section 162(m) to approve the grant of any Option which might reasonably be anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section 162(m). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>3.7</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Indemnification</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;In addition to such other rights of indemnification as they may have as members of the Board or Officers or Employees of the Participating
Company Group, members of the Board and any Officers or Employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including
attorneys&#146; fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in </FONT></DIV>
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connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after
the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same, and to retain complete control over the litigation and/or settlement of such
suit, action or proceeding. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>3.8</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Arbitration</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Any dispute or claim concerning any Options granted (or not granted) pursuant to this Plan and any other disputes or claims relating to or arising
out of the Plan shall be fully, finally and exclusively resolved by binding arbitration conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association in San Diego, California. By accepting an Option, Participants and
the Company waive their respective rights to have any such disputes or claims tried by a judge or jury. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>4.&nbsp;&nbsp;&nbsp;&nbsp;SHARES SUBJECT TO PLAN. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>4.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Maximum Number Of Shares Issuable</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the
Plan shall be Two Million Three Hundred and Fifty Thousand (2,350,000). The share reserve shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof. However, the share reserve, determined at any time, shall be
reduced by the number of shares subject to the Prior Plan Options. If an outstanding Option, including a Prior Plan Option, for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Option subject
to a Company repurchase option and are repurchased by the Company at the Participant&#146;s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Option or Prior Plan Option or such repurchased shares of Stock
shall again be available for issuance under the Plan. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>4.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Adjustments For
Changes In Capital Structure</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate
adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Options, in the Section 162(m) Grant Limit set forth in Section 5.3, and in the exercise price per share of any outstanding Options. If a majority
of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 2.1(t)) shares of
another corporation (the &#147;<B><I>New Shares</I></B>&#148;), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares. In the event of any such amendment, the number of shares subject
to, and the exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section shall be rounded down to the nearest whole number, and in no event may the exercise </FONT></DIV>
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price of any Option be decreased to an amount less than the par value, if any, of the Stock subject to the Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>5.&nbsp;&nbsp;&nbsp;&nbsp;ELIGIBILITY AND OPTION LIMITATIONS. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>5.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Persons Eligible For Options</I></B>. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(a)&nbsp;&nbsp;Except as otherwise provided in this Section 5.1, Options may be granted only to Employees, Consultants, and Directors. Options are granted in the sole and absolute discretion of the Board and eligibility in accordance
with this Section shall not entitle any person to be granted an Option, or, having been granted an Option, to be granted an additional Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;<I>Incentive Stock Options</I>.&nbsp;&nbsp;&nbsp;&nbsp;An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee of the Company, a
Parent Corporation or a Subsidiary Corporation (each being an &#147;<B><I>ISO-Qualifying Corporation</I></B>&#148;). Any person who is not an Employee of an ISO-Qualifying Corporation on the effective date of the grant of an Option to such person
may be granted only a Nonstatutory Stock Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(c)&nbsp;&nbsp;<I>Consultant
Options</I>.&nbsp;&nbsp;&nbsp;&nbsp;A Consultant shall not be eligible for the grant of an Option if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (&#147;<B><I>Form S-8</I></B>&#148;) is not available to register
either the offer or the sale of the Company&#146;s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by
the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration
under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>5.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fair Market Value Limitation</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;To the extent that Options designated
as Incentive Stock Options (granted under all stock plans of the ISO-Qualifying Corporation, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One
Hundred Thousand Dollars ($100,000), the portions of such Options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section, Options designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the Option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this
Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and
as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be
deemed to have exercised the Incentive Stock Option portion of the Option first. </FONT></DIV>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>5.3</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Section 162(m) Grant
Limit</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to adjustment as provided in Section 4.2, at any such time as the Company is a &#147;publicly held corporation&#148; within the meaning of Section 162(m), no Employee or prospective Employee shall be
granted one or more Options within any fiscal year of the Company which in the aggregate are for the purchase of more than five hundred thousand (500,000) shares (the &#147;<B><I>Section 162(m) Grant Limit</I></B>&#148;). An Option which is canceled
in the same fiscal year of the Company in which it was granted shall continue to be counted against the Section 162(m) Grant Limit for such period. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>6.&nbsp;&nbsp;&nbsp;&nbsp;TERMS AND CONDITIONS OF OPTIONS. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Options shall be evidenced by
Option Agreements specifying, among other things, the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Option Agreement or by communicating with the Company in such other manner as the Company may authorize. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>6.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exercise
Price</I></B>.&nbsp;&nbsp;&nbsp;&nbsp; The exercise price for each Option shall be established in the discretion of the Board; provided, however, that (A) the exercise price per share for an Option shall be not less than the Fair Market Value of a
share of Stock on the effective date of grant of the Option, and (B) no Incentive Stock Option granted to a Ten Percent Stockholder shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>6.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exercisability And Term Of Options</I></B>. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;<I>Option Exercisability</I>.&nbsp;&nbsp;&nbsp;&nbsp;Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance
criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (A) no Incentive Stock Option shall be exercisable after the expiration of ten (10) years after the
effective date of grant of such Option, and (B) no Incentive Stock Option granted to a Ten Percent Stockholder shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option. Subject to the foregoing,
unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions, or the terms
of the Plan. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;<I>Participant Responsibility For Exercise Of Option</I>.&nbsp;&nbsp;&nbsp;&nbsp;Each
Participant is responsible for taking any and all actions as may be required to exercise any Option in a timely manner, and for properly executing any documents as may be required for the exercise of an Option in accordance with such rules and
procedures as may be established from time to time. By signing an Option Agreement each Participant acknowledges that information </FONT></DIV>
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regarding the procedures and requirements for the exercise of any Option is available upon such Participant&#146;s request. The Company shall have no duty or obligation to notify any Participant
of the expiration date of any Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>6.3</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Payment Of Exercise Price</I></B>.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)<I>&nbsp;&nbsp;Forms Of Consideration Authorized</I>.&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock
owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a
sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a &#147;<B><I>Cashless Exercise</I></B>&#148;), (iv) provided that the Participant is an Employee (unless otherwise not prohibited by law, including, without limitation, any regulation promulgated by the
Board of Governors of the Federal Reserve System) and in the Company&#146;s sole and absolute discretion at the time the Option is exercised, by delivery of the Participant&#146;s promissory note in a form approved by the Company for the aggregate
exercise price, provided that, if the Company is incorporated in the State of Delaware, the Participant shall pay in cash that portion of the aggregate exercise price not less than the par value of the shares being acquired, (v) by such other
consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any combination thereof. The Board may at any time or from time to time, by approval of or by amendment to the standard forms of
Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;<I>Limitations On Forms Of Consideration</I>. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(i)&nbsp;&nbsp;<I>Tender Of Stock</I>.&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the
Company&#146;s stock. Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six
(6) months (and were not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)&nbsp;&nbsp;<I>Cashless Exercise</I>.&nbsp;&nbsp;&nbsp;&nbsp;The Company reserves, at any and all times, the right, in the Company&#146;s sole and
absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(iii)&nbsp;&nbsp;<I>Payment By Promissory Note</I>.&nbsp;&nbsp;&nbsp;&nbsp;No promissory note shall be permitted if the exercise of an Option using a
promissory note would be a violation of any law. </FONT></DIV>
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Any permitted promissory note shall be on such terms as the Board shall determine. The Board shall have the authority to permit or require the Participant to secure any promissory note used to
exercise an Option with the shares of Stock acquired upon the exercise of the Option or with other collateral acceptable to the Company. Unless otherwise provided by the Board, if the Company at any time is subject to the regulations promulgated by
the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Company&#146;s securities, any promissory note shall comply with such applicable regulations, and the
Participant shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicable regulations. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>6.4</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Transferability</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution,
and shall be exercisable during the lifetime of the person to whom the Incentive Stock Option is granted only by such person. A Nonstatutory Stock Option shall not be transferable in any manner (including without limitation, sale, alienation,
anticipation, pledge, encumbrance, or assignment) other than, (i) by will or by the laws of descent and distribution, (ii) by written designation of a beneficiary, in a form acceptable to the Company, with such designation taking effect upon the
death of a Participant, (iii) by delivering written notice to the Company, in a form acceptable to the Company (including such representations, warranties and indemnifications as the Company shall require a Participant to make to protect the
Company&#146;s interests and ensure that this Nonstatutory Stock Option has been transferred under the circumstances approved by the Company), by gift to a Participant&#146;s spouse, former spouse, children, stepchildren, grandchildren, parent,
stepparent, grandparent, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, persons having one of the foregoing types of relationship with a Participant due to adoption, any person
sharing a Participant&#146;s household (other than a tenant or employee), a foundation in which these persons or the Participant control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty
percent of the voting interests. A transfer to an entity in which more than fifty percent of the voting interests are owned by these persons (or the Participant) in exchange for an interest in that entity is specifically included as a permissible
type of transfer. In addition, a transfer to a trust created solely for the benefit (i.e., a Participant and/or any or all of the foregoing persons hold more than 50 percent of the beneficial interest in the trust) of a Participant and/or any or all
of the foregoing persons is also a permissible transferee, or (iv) such other transferees as may be authorized by the Board in its sole and absolute discretion. During a Participant&#146;s life this Nonstatutory Stock Option is exercisable only by
the Participant or a transferee satisfying the above conditions. Except in the event of a Participant&#146;s death, upon transfer of a Nonstatutory Stock Option to any or all of the foregoing persons, the Participant, as the Optionee, is liable for
any and all taxes due upon exercise of those transferred Nonstatutory Stock Options. At no time will a transferee who is considered an affiliate under Rule 144(a)(1) be able to sell any or all such Stock without complying with Rule 144. The right of
a transferee to exercise the transferred portion of this Nonstatutory Stock Option shall terminate in accordance with the Participant&#146;s right of exercise under this Nonstatutory Stock Option and is further subject to such representations,
warranties and indemnifications from the transferee that the Company requires the transferee to make to protect the Company&#146;s interests and ensure that this Nonstatutory Stock Option has been transferred under the circumstances approved by the
Company. Once a portion of a Nonstatutory Stock Option is transferred, no further transfer may be made of that portion of the Nonstatutory Stock Option. </FONT></DIV>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>6.5</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Effect Of Termination Of Service</I></B>.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;<I>Option Exercisability</I>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to earlier termination of the Option
as otherwise provided herein and unless otherwise provided by the Board in the grant of an Option and set forth in the Option Agreement, an Option shall be exercisable after a Participant&#146;s termination of Service only during the applicable time
period determined in accordance with this Section and thereafter shall terminate. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(i)&nbsp;&nbsp;<I>Disability</I>.&nbsp;&nbsp;&nbsp;&nbsp;If the Participant&#146;s Service terminates because of the Disability of the Participant, the Option shall continue for the period of such Disability under the terms and
conditions of the Option Agreement and may be exercised by the Participant at any time during the period of Disability but in any event no later than the date of expiration of the Option&#146;s term as set forth in the Option Agreement evidencing
such Option (the &#147;<I>Option Expiration Date</I>&#148;). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(ii)&nbsp;&nbsp;<I>Death</I>.&nbsp;&nbsp;&nbsp;&nbsp;If the Participant&#146;s Service terminates because of the death or because of the Disability of the Participant and such termination is subsequently followed by the death of the
Participant, (A) the exercisability and vesting of the Option and, in the case of an immediately exercisable Option, any Shares acquired upon exercise thereof shall be accelerated effective upon the Participant&#146;s death, and (B) the Option, to
the extent unexercised and exercisable on the date of the Participant&#146;s death, may be exercised by the Participant&#146;s legal representative or other person who acquired the right to exercise the Option by reason of the Participant&#146;s
death at any time prior to the expiration of twelve (12) months after the date of the Participant&#146;s death, but in any event no later than the Option Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(iii)&nbsp;&nbsp;<I>Termination Upon Transfer To Non-Control Affiliate</I>.&nbsp;&nbsp;&nbsp;&nbsp;If at the request of the Company, Participant transfers
Service to a Non-Control Affiliate and the Participant&#146;s Service ceases as a result, then, subject to the Participant&#146;s execution of a general release of claims form reasonably satisfactory to the Company, the Option, to the extent
unexercised and exercisable on the date on which the Participant&#146;s Service terminated, may be exercised by the Participant (or the Participant&#146;s guardian or legal representative) at any time prior to the expiration of twelve (12) months
after the date on which the Participant&#146;s Service terminated, but in any event no later than the Option Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(iv)&nbsp;&nbsp;<I>Termination After Change In Control</I>.&nbsp;&nbsp;&nbsp;&nbsp;If the Participant&#146;s Service ceases as a result of Termination After Change in Control (as defined below), then
(A) the exercisability and vesting of the Option and, in the case of an immediately exercisable Option, any shares acquired upon the exercise thereof shall be accelerated effective as of the date on which the Participant&#146;s Service terminated,
and (B) the Option, to the extent unexercised and exercisable on the date on which the Participant&#146;s Service terminated, may be exercised by the Participant (or the Participant&#146;s guardian or legal representative) at any time prior to the
expiration of six (6) months after the date on which the Participant&#146;s Service terminated, but in any event no later than the Option Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(v)&nbsp;&nbsp;<I>Other Termination Of Service</I>.&nbsp;&nbsp;&nbsp;&nbsp;If the Participant&#146;s Service with the Participating Company Group terminates
for any reason except Disability, death, Transfer to a Non-Control Affiliate, or Termination after Change in Control, the Option, to the </FONT></DIV>
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extent unexercised and exercisable by the Participant on the date on which the Participant&#146;s Service terminates, may be exercised by the Participant at any time prior to the expiration of
thirty (30) days after the date on which the Participant&#146;s Service terminates, but in any event no later than the Option Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;<I>Extension If Exercise Prevented By Law</I>.&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, other than termination for Cause, if the exercise of an Option within the applicable
time periods set forth in Section 6.5(a) is prevented by the provisions of Section 10 below, the Option shall remain exercisable until three (3) months after the date the Participant is notified by the Company that the Option is exercisable, but in
any event no later than the Option Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(c)&nbsp;&nbsp;<I>Extension If Participant Subject To Section
16(b)</I>.&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, other than termination for Cause, if a sale within the applicable time periods set forth in Section 6.5(a) of shares acquired upon the exercise of the Option would subject the
Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Participant would no longer be subject
to such suit, (ii) the one hundred and ninetieth (190th) day after the Participant&#146;s termination of Service, or (iii) the Option Expiration Date. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(d)&nbsp;&nbsp;<I>Certain Definitions</I>. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(i)&nbsp;&nbsp;&#147;<B><I>Cause</I></B>&#148; shall mean any of the following: (1) the Participant&#146;s theft, dishonesty, or falsification of any Participating Company documents or records; (2) the Participant&#146;s improper use
or disclosure of a Participating Company&#146;s confidential or proprietary information; (3) any action by the Participant which has a detrimental effect on a Participating Company&#146;s reputation or business; (4) the Participant&#146;s failure or
inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (5) any material breach by the Participant of any employment or service
agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; (6) the Participant&#146;s conviction (including any plea of guilty or nolo contendere) of any criminal act which
impairs the Participant&#146;s ability to perform his or her duties with a Participating Company; or (7) violation of a material Company policy. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)&nbsp;&nbsp;&#147;<B><I>Good Reason</I></B>&#148; shall mean any one or more of the following: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)&nbsp;&nbsp;without the Participant&#146;s express written consent, the assignment to the Participant of any duties, or any limitation of the
Participant&#146;s responsibilities, substantially inconsistent with the Participant&#146;s positions, duties, responsibilities and status with the Participating Company Group immediately prior to the date of the Change in Control; </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2)&nbsp;&nbsp;without the Participant&#146;s express written consent, the relocation of the principal place of
the Participant&#146;s employment or service to a location that </FONT></DIV>
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is more than fifty (50) miles from the Participant&#146;s principal place of employment or service immediately prior to the date of the Change in Control, or the imposition of travel requirements
substantially more demanding of the Participant than such travel requirements existing immediately prior to the date of the Change in Control; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(3)&nbsp;&nbsp;any failure by the Participating Company Group to pay, or any material reduction by the Participating Company Group of, (A) the Participant&#146;s base salary in effect immediately prior
to the date of the Change in Control (unless reductions comparable in amount and duration are concurrently made for all other employees of the Participating Company Group with responsibilities, organizational level and title comparable to the
Participant&#146;s), or (B) the Participant&#146;s bonus compensation, if any, in effect immediately prior to the date of the Change in Control (subject to applicable performance requirements with respect to the actual amount of bonus compensation
earned by the Participant); </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(4)&nbsp;&nbsp;any failure by the Participating Company Group to (A)
continue to provide the Participant with the opportunity to participate, on terms no less favorable than those in effect for the benefit of any employee or service provider group which customarily includes a person holding the employment or service
provider position or a comparable position with the Participating Company Group then held by the Participant, in any benefit or compensation plans and programs, including, but not limited to, the Participating Company Group&#146;s life, disability,
health, dental, medical, savings, profit sharing, stock purchase and retirement plans, if any, in which the Participant was participating immediately prior to the date of the Change in Control, or their equivalent, or (B) provide the Participant
with all other fringe benefits (or their equivalent) from time to time in effect for the benefit of any employee group which customarily includes a person holding the employment or service provider position or a comparable position with the
Participating Company Group then held by the Participant; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(5)&nbsp;&nbsp;any breach by the
Participating Company Group of any material agreement between the Participant and a Participating Company concerning Participant&#146;s employment; or </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(6)&nbsp;&nbsp;any failure by the Company to obtain the assumption of any material agreement between Participant and the Company concerning
Participant&#146;s employment by a successor or assign of the Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">(iii)&nbsp;&nbsp;&#147;<B><I>Termination After Change In Control</I></B>&#148; shall mean either of the following events occurring within twenty-four (24)&nbsp;months after a Change in Control: </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)&nbsp;&nbsp;termination by the Participating Company Group of the Participant&#146;s Service with the Participating
Company Group for any reason other than for Cause; or </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2)&nbsp;&nbsp;the Participant&#146;s
resignation for Good Reason from all capacities in which the Participant is then rendering Service to the Participating Company Group within a reasonable period of time following the event constituting Good Reason. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Notwithstanding any provision herein to the contrary, Termination After Change in Control shall not include any termination of the
Participant&#146;s Service with the Participating Company Group
 </FONT></DIV>
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 <DIV STYLE="margin-left:8%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
which (1) is for Cause; (2) is a result of the Participant&#146;s death or Disability; (3) is a result of the Participant&#146;s voluntary termination of Service other than for Good Reason; or
(4) occurs prior to the effectiveness of a Change in Control. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>7.&nbsp;&nbsp;&nbsp;&nbsp;STANDARD FORMS OF AGREEMENTS.
</B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>7.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Option Agreement</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise
provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in the form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as amended
from time to time. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>7.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Authority To Vary
Terms</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The Board shall have the authority from time to time to vary the terms of any standard form of agreement described in this Section either in connection with the grant or amendment of an individual Option or in
connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of agreement are not inconsistent with the terms of the Plan.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>8.&nbsp;&nbsp;&nbsp;&nbsp;CHANGE IN CONTROL. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the
&#147;<B><I>Acquiring Corporation</I></B>&#148;), may, without the consent of any Participant, either assume the Company&#146;s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options
for the Acquiring Corporation&#146;s stock. In the event the Acquiring Corporation elects not to assume or substitute for outstanding Options in connection with a Change in Control, the exercisability and vesting of each such outstanding Option and
any shares acquired upon the exercise thereof held by Participants whose Service has not terminated prior to such date shall be accelerated, effective as of the date ten (10) days prior to the date of the Change in Control. The exercise or vesting
of any Option and any shares acquired upon the exercise thereof that was permissible solely by reason of this Section and the provisions of such Option Agreement shall be conditioned upon the consummation of the Change in Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in
Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all
applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement. Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options
immediately prior to an Ownership Change Event described in Section 2.1(t)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the
Code, the outstanding Options shall not terminate unless the Board otherwise provides in its discretion. </FONT></DIV>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;TAX WITHHOLDING. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>9.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tax Withholding In General</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall have the right to deduct from any and all payments
made under the Plan, or to require the Participant, through cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for, the federal, state, local and foreign taxes, if any, required by law to be
withheld by the Participating Company Group with respect to an Option or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to an
Option Agreement until the Participating Company Group&#146;s tax withholding obligations have been satisfied by the Participant. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>9.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Withholding In Shares</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise of
an Option, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of the Participating Company Group.
The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>10.&nbsp;&nbsp;&nbsp;&nbsp;COMPLIANCE WITH SECURITIES LAW. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">The grant of Options and the issuance of shares of Stock upon exercise of Options shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such
securities. Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange
or market system upon which the Stock may then be listed. In addition, no Option may be exercised unless (A) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares
issuable upon exercise of the Option or (B) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of
the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company&#146;s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of any Option, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>11.&nbsp;&nbsp;&nbsp;&nbsp;TERMINATION OR AMENDMENT OF PLAN. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Board may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval
of the Company&#146;s stockholders, there shall be (A) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of
 </FONT></DIV>
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Section 4.2), (B) no change in the class of persons eligible to receive Incentive Stock Options, and (C) no other amendment of the Plan that would require approval of the Company&#146;s
stockholders under any applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then outstanding Option unless expressly provided by the Board. In any event, no termination or amendment of the Plan may adversely
affect any then outstanding Option without the consent of the Participant, unless such termination or amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply
with any applicable law, regulation or rule. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>12.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS PROVISIONS. </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>12.1</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Repurchase Rights</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Shares issued under the Plan may be subject to
a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its sole and absolute discretion at the time the Option is granted. The Company shall have the right to assign at any time
any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends
evidencing any such transfer restrictions. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>12.2</B>&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Provision Of
Information</I></B>.&nbsp;&nbsp;&nbsp;&nbsp;Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Company&#146;s common stockholders. </FONT></DIV>
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 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>PLAN HISTORY </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="28%"><DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">August 1, 2002 </FONT></DIV> </TD>
<TD><DIV STYLE="margin-left:1%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Board adopts Plan. </FONT></DIV> </TD></TR></TABLE><DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="28%"><DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">August 1, 2002 </FONT></DIV> </TD>
<TD><DIV STYLE="margin-left:1%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Board delegates all of its powers under Plan to Compensation Committee. </FONT></DIV> </TD></TR></TABLE><DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="28%"><DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">September 26, 2002 </FONT></DIV> </TD>
<TD><DIV STYLE="margin-left:1%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Stockholders approve Plan. </FONT></DIV> </TD></TR></TABLE><DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="28%"><DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">October 29, 2002 </FONT></DIV> </TD>
<TD><DIV STYLE="margin-left:1%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Compensation Committee adopts technical amendments to Plan, and restates Plan as so amended. </FONT></DIV> </TD></TR></TABLE>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">19 </FONT></DIV>

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<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>6
<FILENAME>dex992.htm
<DESCRIPTION>FORM OF SPECIAL STOCK OPTION
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<TITLE>Form of Special Stock Option</TITLE>
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 <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>EXHIBIT 99.2 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="3" COLOR="#000000"><B>AMERICAN TECHNOLOGY CORPORATION </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="17%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="3" COLOR="#000000"><B>Special Stock Option </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE WIDTH="17%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="1" COLOR="#000000">Granted Under the Approval of the Board of Directors of American Technology Corporation </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>THIS SPECIAL STOCK OPTION</B>, dated as of <B>May 8, 2002</B> (the &#147;<I>Date of Grant</I>&#148;), is granted by AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation (&#147;<I>Company</I>&#148;), to <B>David
Graebener</B> (the &#147;<I>Optionee</I>&#148;), whose status with the Company is described on the signature page hereof below his signature. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>WHEREAS</B>, the Optionee is now an Employee of the Company and the Company desires to have the Optionee remain in its service and desires to encourage stock ownership by the Optionee and to
increase the Optionee&#146;s proprietary interest in the Company&#146;s success; and as an inducement thereto has determined to grant to the Optionee the option herein provided for, to the end that the Optionee may thereby be assisted in obtaining
an interest, or an increased interest, as the case may be, in the stock ownership of the Company; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>NOW</B>,
<B>THEREFORE</B>, in consideration of the covenants and agreements herein contained, the parties hereto hereby agree as follows: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>1.</B>&nbsp;&nbsp;&nbsp;&nbsp;<B>Grant</B>.&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby grants to the Optionee an option (the &#147;<I>Option</I>&#148;) to purchase <B>100,000</B> shares of the Company&#146;s common stock, $.00001
par value per share (the &#147;<I>Option Shares</I>&#148;) at the price of <B>$4.50</B> per share (the &#147;<I>Purchase Price</I>&#148; or &#147;<I>Exercise Price</I>&#148;) and vesting at the date of grant. This Option is granted separately at the
discretion of the Board of Directors and is not an option pursuant to the Company&#146;s 1992 or 1997 option plans. No partial vesting of this Stock Option will be allowed. Both the Purchase Price and the number of Option Shares purchasable may be
adjusted pursuant to Paragraph 9 hereof. This grant fulfills Section 4.3 and any and all stock option consideration of that certain Employment Agreement with Optionee dated as of February 15, 2000 and supersedes any stock compensation obligation of
that Agreement or Exhibit A thereto. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;Term</B>.&nbsp;&nbsp;&nbsp;&nbsp;This Option is
exercisable during the period beginning with the Date of Grant and ending May 7, 2007, at 5:00 p.m. (Pacific Time), except as provided in Paragraph 7 hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>3.&nbsp;&nbsp;&nbsp;&nbsp;Exercise of Option</B>.&nbsp;&nbsp;&nbsp;&nbsp;During the Optionee&#146;s life, this Option may only be exercised by him or her. This Option may only be exercised by
presentation at the principal offices of the Company in San Diego, California of written notice to the Company&#146;s Secretary advising the Company of the Optionee&#146;s election to purchase Option Shares, specifying the number of Option Shares
being purchased, accompanied by payment. No Option Shares shall be issued until full payment is made therefor. Payment shall be made in cash, represented by bank or cashier&#146;s check, certified check or money order. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>4.&nbsp;&nbsp;&nbsp;&nbsp;Issuance of Option Shares; Restrictive Legend</B>.&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;Upon proper exercise
of this Option, the Company shall mail or deliver to the Optionee, as promptly as practicable, a stock certificate or certificates representing the Option Shares purchased, subject to clause (b) below. The Company shall not be required to sell or
issue any shares under the Option if the issuance of such shares shall constitute a violation of any applicable law or regulation or of any requirements of any national securities exchange upon which the Company&#146;s common stock may be listed.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;Upon any exercise of this Option, if a registration statement under the Securities Act of 1933
(the &#147;<I>Act</I>&#148;) is not in effect with respect to the Option Shares, then the Company shall not be required to issue any Option Shares unless the Company has received evidence reasonably satisfactory to it to the effect that the Optionee
is acquiring such shares for investment and not with a view to the distribution thereof. Any reasonable determination in this connection by the Company shall be final, binding and conclusive. </FONT></DIV>

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 <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(c)&nbsp;&nbsp;Unless and until removed as provided below, each certificate evidencing unregistered Option Shares shall
bear a legend in substantially the following form: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>&#147;The shares of stock represented by
this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred except upon such registration or upon receipt by this Corporation of an opinion or counsel
satisfactory to this Corporation, in form and substance satisfactory to this Corporation, that registration is not required for such sale or transfer.&#148; </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">The Company shall issue a new certificate which does not contain such legend if (i) the shares represented by such certificate are sold pursuant to a registration statement (including a current
prospectus) which has become effective under the Act, or (ii) the staff of the Securities and Exchange Commission shall have issued a &#147;no action&#148; letter, reasonably satisfactory to the Company&#146;s counsel, to the effect that such shares
may be freely sold and thereafter traded publicly without registration under the Act, or (iii) the Company&#146;s counsel, or other counsel acceptable to the Company, shall have rendered an opinion satisfactory to the Company to the effect that such
shares may be freely sold and thereafter publicly traded without registration under the Act. The Company will register any securities covered hereby, to the extent possible, at the same time as any other registration of stock option securities of
the Company. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of the Option or the issuance of any Option Shares to comply with any law or regulation of any governmental authority. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>5.&nbsp;&nbsp;&nbsp;&nbsp;Transfer of Option Shares</B>.&nbsp;&nbsp;&nbsp;&nbsp;Option Shares issued upon exercise of this
Option which have not been registered under the Act shall be transferable by a holder thereof only upon compliance with the conditions in this Paragraph. Before making any transfer of Option Shares, the holder of the shares shall give written notice
to the Company of the holder&#146;s intention to make the transfer, describing the manner and circumstances of the transfer. If in the opinion of the Company&#146;s counsel, or of other counsel acceptable to the Company, the proposed transfer may be
effected without registration under the Act, the Company shall so notify the holder and the holder shall be entitled to transfer such shares as described in the holder&#146;s notice to the Company. If such counsel opines that the transfer may not be
made without registration under the Act, then the Company shall so notify the holder, in which event the holder shall not be entitled to transfer the shares until (i) the Company notifies the holder that it is permissible to proceed with the
transfer, or (ii) registration of the shares under the Act has become effective. The Company may issue &#147;stop transfer&#148; instructions to its transfer agent with respect to any or all of the Option Shares as it deems necessary to prevent any
violation of the Act. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>6.&nbsp;&nbsp;&nbsp;&nbsp;Transfer or Encumbrance of this Option
Prohibited</B>.&nbsp;&nbsp;&nbsp;&nbsp;This Option may not be transferred or assigned in any manner by the Optionee, except by will or trust upon the Optionee&#146;s death or by operation of law under the laws of descent and distribution. The same
restriction on transfer or assignment shall apply to any heirs, devisees, beneficiaries or other persons acquiring this Option or an interest herein under such an instrument or by operation of law. Further, this Option may not be pledged,
hypothecated or otherwise encumbered, by operation of law or otherwise, nor shall it be subject to execution, attachment or similar process. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>7.&nbsp;&nbsp;&nbsp;&nbsp;Termination of Service, Death, or Disability</B>.&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;Except as may be otherwise expressly provided in this Agreement, this Option shall
terminate as follows: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(i)&nbsp;&nbsp;Upon termination of the Optionee&#146;s employment with the
Company for cause; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(ii)&nbsp;&nbsp;At the expiration of six (6) months from the date of the
Optionee&#146;s resignation or termination of the Optionee&#146;s employment with the Company without cause, for any reason other than death; provided, that if the Optionee dies within such six-month period, subclause (iii) below shall apply; or
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(iii)&nbsp;&nbsp;At the expiration of fifteen (15) months after the date of death of the
Optionee. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;This Option confers no right upon the Optionee with respect to the
continuation of his employment (or his position as an officer, director or other provider of services) with the Company or any parent or subsidiary of the Company, and shall not interfere with the right of the Company, or any parent or subsidiary
Company, to terminate such relationship(s) at any time in accordance with law and any agreements then in force. </FONT></DIV>
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 <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>8.&nbsp;&nbsp;&nbsp;&nbsp;No Rights as Stockholder</B>.&nbsp;&nbsp;&nbsp;&nbsp;The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock certificate for such shares. No adjustment for dividends, or otherwise, except as provided in Paragraph 9, shall be made if the record date therefor is prior to the date
of exercise of such Option. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;Changes in the Company&#146;s Capital
Structure</B>.&nbsp;&nbsp;&nbsp;&nbsp;The existence of this Option shall not limit or affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company&#146;s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Option Shares or the rights thereof, or
the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. However, </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;If, prior to the Company&#146;s delivery of all the Option Shares subject to this Option, the Company shall
effect a subdivision (split) or combination (reverse split) of shares or other capital readjustment, the payment of a common stock dividend, or other increase or reduction of the number of shares of common stock outstanding, without receiving
compensation therefor in money, services or property, then (i) in the event of an increase in the number of such shares outstanding, the Purchase Price shall be proportionately reduced and the number of Option Shares then still purchasable shall be
proportionately increased; and (ii) in the event of a reduction in the number of such shares outstanding, the Purchase Price payable per share shall be proportionately increased and the number of Option Shares then still purchasable shall be
proportionately reduced. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;If while this Option remains outstanding the Company is
reorganized, merged, consolidated or party to a plan of share exchange with another corporation, or if the Company sells or otherwise disposes of all or substantially all its property or assets to another corporation, then subject to the provisions
of clause (ii) below, (i) after the effective date of such reorganization, merger, consolidation, exchange or sale, as the case may be, the Optionee shall be entitled, upon exercise of this Option, to receive, in lieu of the Option Shares, the
number and class of shares of such stock, other securities, cash and other property or rights as the holders of shares of the Company&#146;s common stock received pursuant to the terms of the reorganization, merger, consolidation, exchange or sale
and to which he would have been entitled if, immediately prior to such reorganization, merger, consolidation, exchange or sale, he had been the holder of record of a number of shares of common stock equal to the number of Option Shares as to which
this Option shall be so exercised; and (ii) this Option may be canceled by the Board of Directors of the Company as of the effective date of any such reorganization, merger, consolidation, exchange or sale; provided that (x) such reorganization,
merger, consolidation, exchange or sale results in a change in control of the Company rather than a mere change of form or domicile of the Company, (y) written notice of such cancellation is given to the Optionee or other holder of this Option not
less than 45 days prior to such effective date, and (z) the Options or other holder shall have the right to exercise the Option in full during such 45-day period preceding the effective date of such reorganization, merger, consolidation, exchange or
sale. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(c)&nbsp;&nbsp;In case the Company shall determine to offer to the holders of its common
stock rights to subscribe pro rata for any new or additional shares of common stock, or any securities convertible into common stock, then the Optionee shall be entitled to participate in such pro rata offering in the same manner and to the same
extent as if this Option had been exercised at the Purchase Price then in effect and the number of Option Shares then purchasable upon exercise hereof had been issued to the Optionee pursuant to the terms hereof. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(d)&nbsp;&nbsp;Except as herein before expressly provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the Purchase Price or the number of Option Shares then subject to this Option. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>10.&nbsp;&nbsp;&nbsp;&nbsp;Notification to Company of Certain Sales</B>.&nbsp;&nbsp;&nbsp;&nbsp;The Optionee or other holder of Option
Shares who sells any of such shares shall notify the Company of such fact in writing within 30 days after the date of sale, if: </FONT></DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(a)&nbsp;&nbsp;At the time the Option Shares were sold, less than ONE year had elapsed since the date the
Option Shares were purchased by the Optionee, and less than TWO years had elapsed since the Date of Grant of this Option; or </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;the Optionee was not an employee of the Company (or of a parent or subsidiary thereof) at all times during the period beginning on the Date of Grant of this Option and ending on the date
three (3) months prior to the date this Option was exercised to purchase the Option Shares sold. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The failure of
the Optionee or other holder of Option Shares to promptly give such notice to the Company shall entitle the Company to cancel this Option forthwith, without prior notice to the holder hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>11.&nbsp;&nbsp;&nbsp;&nbsp;Notices, etc</B>.&nbsp;&nbsp;&nbsp;&nbsp;Any notice hereunder by the Optionee shall be given to the Company in writing, and such notice
and any payment by the Optionee hereunder shall be deemed duly given or made only upon receipt thereof at the Company&#146;s office at 13114&nbsp;Evening Creek Drive South, San Diego, California 92128, or at such other address as the Company may
designate by notice to the Optionee. Any notice or other communication to the Optionee hereunder shall be in writing and shall be deemed duly given or made if mailed or delivered to the Optionee at the last address as the Optionee may have on file
with the Company&#146;s Secretary. This Option shall be governed under and construed in accordance with the laws of the State of California. This address shall be binding on the Company and the Optionee and all successors, assigns, heirs, devisees
and personal representatives thereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">NOTE:&nbsp;&nbsp;This option must match the Control copy maintained by the Company, in all
particulars. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>IN WITNESS WHEREOF</B>, the parties hereto have executed this Special Stock Option as of the day and year first above
written. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right">
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<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AMERICAN TECHNOLOGY CORPORATION</B></FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="2%"> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">By</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="37%"> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD>
</TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="37%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Terry Conrad, President</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">ATTEST: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
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<TR>
<TD COLSPAN="3"> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="2%"> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="37%"> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="37%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Renee Warden, Secretary</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right">
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<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>OPTIONEE NAME and STATUS;</B></FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>David Graebener, Employee</B></FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="37%"> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">ORIGINAL to Optionee/COPY to Company</FONT></DIV> </TD> </TR>
 </TABLE> </DIV>
 <P></P> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4 </FONT></DIV>

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