Separation Agreement

EXHIBIT 10.15.2


SEPARATION AGREEMENT AND GENERAL RELEASE


This Agreement is entered into by and between AMERICAN TECHNOLOGY CORPORATION ("Employer"), a Delaware corporation, and DALE WILLIAMS, an individual ("Employee").


RECITALS


A. Employee has been employed by Employer in the positions of Chairman of the Board, President and Chief Executive Officer.


B. Employer and Employee desire to terminate Employee's employment and to have Employee resign from such positions.


C. Employee has previously hereto received consideration in the amount of $19,340.01 representing Employee's accrued and unused vacation benefits through June 12, 1998, together with Employee's final paycheck through June 12, 1998 and final expense reimbursement.


D. Employer and Employee are desirous of entering into a Consulting Agreement (the "Consulting Agreement") and provide for the settlement and release of Employer for any claims related to Employee's employment or the termination of that employment.


NOW, THEREFORE, in consideration of the terms, conditions and agreements set forth below, the parties agree as follows:


1. Review Period. Employee shall have until the close of business on July 3, 1998 to accept the terms of this Separation Agreement and General Release ("Separation Agreement"). Employee has been encouraged to consult with an attorney before signing the Release. Employee understands that whether or not to do so is Employee's decision.


2. Termination of Employment. Employer agrees to accept Employee's resignation. By entering into this Separation Agreement, Employee tenders and Employer accepts Employee's resignation from employment effective on June 12, 1998 ("Termination Date"). Employer will ensure that all of its records reflect a resignation from employment on the Termination Date. Employee also agrees to concurrently submit his resignation as a member of Employer's Board of Directors and, in connection therewith, shall cease being Chairman of the Board.


3. Payments and Benefits. Employer will provide to Employee the Consulting Agreement generally described in subparagraph 3.1 below. Employee understands that the amounts to be paid to Employee pursuant to the Consulting Agreement are all that Employee is entitled to receive from Employer. Employee acknowledges that the payments to be made pursuant to the Consulting Agreement below are being made by Employer in lieu of the remaining payments under Employee's Employment Agreement, dated as of September 1, 1997 (the "Employment Agreement") and , in connection therewith, hereby forfeits and releases any claim that Employee may have as to any regular or incentive compensation including, without limitation, vested or unbelted options and bonuses.


3.1 Consulting Agreement. In lieu of receipt of the remaining payments under the Employment Agreement and the stock options currently exercisable under that certain Stock Option Agreement between the parties dated as of September 1, 1997 (the "Option Agreement") entered into in connection with the Employment Agreement, each of which agreements may be canceled for cause without payment of additional consideration, Employee and Employer agree to (i) terminate the Employment Agreement (ii) amend the Option Agreement as set forth below and (iii) enter into the Consulting Agreement. In consideration for Employee's agreement to be available and consult with the Company for a period of four months upon the terms and conditions set forth therein, and for a covenant by Employee not to compete with Employer for the term thereof, Employee will receive compensation equal to $10,000 per month, plus retain an option (the "Option") to purchase up to 120,000 shares of Employer's common stock at a price of $5.81 per share, representing the closing bid price on August 29, 1997 (the original date of grant), with such Option to be exercisable until 5:00 p.m. PDT, June 12, 1999. In connection therewith, the Option Agreement shall be amended to cancel all options previous granted in excess of 120,000 option shares. Employer shall register the option shares pursuant to a Registration Statement on Form S-8 as soon as practicable after the execution hereof, but in no event later than July 31, 1998 and, in connection therewith, shall submit a copy of the Registration Statement to its accountants for review no later than July 15, 1998.


3.2 Medical Coverage. Employer has given Employee written notification of his rights to continuation of insurance coverage under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). Employee will be responsible for the full cost of continued coverage in accordance with the provisions of COBRA.


4. Press Release. Employer and Employee shall jointly agree on the form and content of the press release to be issued in connection with Employee's termination.


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5. Release of Claims. Subject only to paragraph 6, Employee on his own behalf, and on behalf of his s ...