<PAGE>   1

                         PATRIOT SCIENTIFIC CORPORATION





                                   FORM 10-KSB

                                  Annual Report



                                EXHIBIT NO. 10.20






                      PHILIP MORETTINI EMPLOYMENT AGREEMENT


                                     EX-82
<PAGE>   2

    EMPLOYMENT AGREEMENT dated as of July 28, 1997, between PATRIOT SCIENTIFIC
          CORPORATION, a Delaware Corporation (the "Company"), and Philip
          Morettini (the "Executive").

                                   WITNESSETH:

1.  Term of Employment.

        (a) The Company hereby agrees to employ the Executive and the Executive
hereby agrees to accept employment as Vice President of Sales and Marketing of
the Company for a three year period commencing July 28, 1997, or for such
shorter period as may be mutually agreed by the Company and the Executive (the
"Employment Period"), subject to the terms and conditions of this Agreement. In
his capacity as Vice President of Sales and Marketing of the Company, Executive
will be responsible for the general duties associated with his title including,
but not limited to developing, implementing, and monitoring the plans and
programs to successfully market and sell the Company's microprocessor,
communications, radar and antenna technologies, and/or such other management
duties on behalf of the Company as may be assigned to him from time to time by
the President and Chief Executive Officer ("CEO") of the Company.

        (b) The Executive agrees that, during the Employment Period, he will
serve the Company faithfully and to the best of his abilities, devoting
substantially all his time, energy and skill to the activities of the Company
and the promotion of its interests. It is expressly understood that the
Executive may devote a reasonable amount of time to such charitable, civic and
personal affairs as shall not interfere with the obligations set forth in the
preceding sentence. The Executive agrees not to work for or participate in any
business that competes in any manner with the business of the Company during his
employment with the Company, including after hours, on weekends, or during
vacation time, even if only organizational assistance or limited consultation is
involved.

2.  Compensation and Benefit Plans

        (a) The Executive shall receive a base salary during the Employment
Period which shall be payable in installments at such times as other employees
are paid but in any case at least monthly as follows: (1) During the first year
of the Employment Period ("Year One"), the Executive shall receive a gross base
salary of not less than nine thousand one hundred sixty seven dollars
($9,167.00) per month; (2) During the second and third year of the Employment
Period ("Year Two" and "Year Three" respectively), the Executive shall receive a
base salary of not less than the base salary received in Year One. The base
salary received in any year shall be subject to other upward adjustments as
shall be recommended by the President and CEO of the Company to the Board of
Directors of the Company (the "Board") and as shall be approved by the Board and
Compensation Committee.

        (b) The Executive is entitled, at the discretion of the Board of
Directors of the Company, to an Annual Incentive Bonus up to 50% of the total
yearly base compensation for the applicable year (the "Annual Incentive Bonus").
The Annual Incentive Bonus payment will be based upon mutually agreed upon
objectives and levels of performance.


                                     EX-83
<PAGE>   3

        (c) The Executive shall be eligible to participate in all employee
benefit programs, if any, maintained by the Company, including, but not limited
to, group life insurance, medical, dental, retirement and pension plans, any
deferred compensation profit sharing plans, 401(k) savings plan, and other such
fringe benefits as are or may be available from time to time to senior
executives of the Company. During the Employment Period, the Executive is
entitled to 4 weeks vacation per annum.

        (d) The Company will pay or reimburse the Executive during the
Employment Period for all expenses normally reimbursed by the Company and
reasonably incurred by the Executive in furtherance of his duties hereunder and
authorized by the Company, including but not limited to, expenses of
entertainment, travel, meals, hotel accommodations and the like upon the
submission of the Executive of vouchers or an itemized list thereof and as may
be required in order to permit such payments as proper deductions for the
Company under the Internal Revenue Code of 1986 and the rules and regulations
adopted pursuant thereto now or hereafter in effect.

3.  Stock Options.

        (a) The Executive will be granted an option to purchase three hundred
thousand (300,000) shares of the Company's common stock at the average of the
closing bid and ask price of the Company's stock on July 28, 1997. This option
will be granted under the Company's 1996 Stock Option Plan and is subject to
shareholders approval. The Company and the Executive will sign a Stock Option
Agreement memorializing the grant on July 28, 1997 in the form of the attached
Exhibit A upon approval by the Stock Compensation Committee.

        (b) The Stock Options will vest according to the following schedule: (1)
30,000 shares effective upon shareholder approval, 90,000 shares will vest at
the end of Year One if, and only if, the Executive meets mutually agreed upon
performance goals including, but not limited to two (2) significant design wins
for the microprocessor technology and significant increased sales in the
Company's other technologies ("Year One Performance"). If the Year One
Performance criteria are not met, but the Executive has one (1) significant
design win for the Company's family of PSC1000 (ShBoom) microprocessors in Year
One and the Executive meets such other performance goals as shall be determined
by the President and CEO in his sole discretion, then the 90,000 shares can be
vested at the end of Year One; (2) 90,000 shares will vest at the end of Year
Two if, and only if, the Executive meets mutually agreed upon performance goals
including, but not limited to significant sales of the Company's microprocessor
and communication technologies in each of the respective quarters of Year Two
("Year Two Performance"); (3) 90,000 shares will vest at the end of Year Three
if, and only if, the Executive meets mutually agreed upon performance goals,
including, but not limited to significant sales of the Company's microprocessor
and communication technologies in each of the respective quarters of Year Three
("Year Three Performance"); (4) During any year, at the discretion of the Board,
any unvested options can be vested if it is determined that significant progress
has been made toward reaching the respective performance goals for that year.
All stock options held by employee will vest immediately prior to a Change in
Control of the Company.

4.  Termination of Employment.


                                     EX-84
<PAGE>   4

        (a) The employment of the Executive hereunder shall automatically
terminate if the Executive shall die during the Term of Employment. The
employment of the Executive can be terminated for cause by the Company at its
option only for the following:

        (1) the conviction of the Executive under state or federal law of a
felony or other crime, or the equivalent under foreign law; unless in any such
case Executive performed such act in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Company;

        (2) the material breach by Executive of any provision of the Agreement
which has not been cured pursuant to the provisions of Section 5 hereof; or

        (3) a determination or request by an appropriate regulatory authority
that the Executive be removed or disqualified from acting as an officer of the
Company.

        (b) If the Executive's employment is terminated for other than cause by
the Company, then the Executive is entitled to severance payments equal to four
(4) months of the current base salary payable in a lump sum payment on the last
day of the thirty (30) day notice period;

        (c) The Executive shall have the right as his sole option to terminate
his employment at any time upon ninety (90) days written notice or for such
other notice period to be determined by the President and CEO in his sole
discretion.

        (d) If within twelve (12) months of a Change in Control, as that term is
defined herein, Executive's employment is terminated for other than cause or
Executive refused to accept or voluntarily resigns from a position other than a
Qualified Position, as that term is defined herein, Executive shall receive
severance compensation equal to twelve (12) months of his then current base
salary. A "Change in Control" means the acquisition, directly or indirectly of
more than 40% of the outstanding shares of any class of voting securities of the
Company by one person or one entity that is not an existing shareholder as of
the date of this Agreement, or a merger, consolidation or sale of all or
substantially all of the assets of the Company, such that the individuals
constituting the Board of the Company immediately prior to such period shall
cease to constitute a majority of the Board, unless the election of each
director who was not a director prior thereto was approved by vote of at least
two-thirds of the directors then in office who were directors prior to such
period. Notwithstanding the foregoing, an acquisition of the requisite
percentage of voting securities in connection with a public offering of
securities by the Company for the primary purpose of providing capital resources
to the Company shall not be considered a "Change in Control" for purposes of
this Section 4(d). "Qualified Position" is an executive officer position with
the entity surviving the Change in Control with substantially the same
responsibilities as those held by the Executive on the date of the Change in
Control. Also, notwithstanding the foregoing, if the Company determines that the
amounts payable to Executive under this employment agreement, when considered
together within the other amounts payable to Executive as a result of a Change
in Control, cause such payments to be treated as excess parachute payments
within the meaning of Section 280G of the Internal Revenue Code, the Company
shall reduce the amount payable to Executive under this Section 4(d) to an
amount that will not subject Executive to the imposition of tax under Section


                                     EX-85
<PAGE>   5

4999 of the Internal Revenue Code; provided, however, that this provision shall
apply only to payments to be made under this employment agreement and shall not
cause the reduction of any other payments to be made to Executive by the
Company.

5. Notice of Breach. The Company and the Executive agree that, prior to the
termination of the Employment Period by reason of any breach of any provision of
the Agreement, the injured party will give the party in breach written notice,
specifying such breach and permitting the party in breach to cure such breach
within a period of thirty (30) days after receipt of such notice, except a
breach by Executive of provisions of Section 7 of this Agreement shall not have
a cure period.

6.  Indemnification.

        (a) If, after the date of the commencement of the Employment Period, the
Executive is made a party or is threatened to be made a party to any action ,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director or officer of
the Company or is or was serving at the request of the Company as a director,
officer, member, employee or agent of another corporation or partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether or not the basis of such Proceeding is an alleged act or
failure to act in an official capacity as a director, officer, member, employee
or agent, he shall be indemnified and held harmless by the Company to the
fullest extent authorized by Delaware law, as the same exists or may hereafter
be amended, against all expense, liability and loss (including, without
limitation, attorney's fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Executive in connection
herewith, including , without limitation, payment of expenses incurred in
defending a Proceeding prior to the final disposition of such Proceeding
(subject to receipt of an undertaking by the Executive to repay such amount if
it shall ultimately be determined that the Executive is not entitled to be
indemnified by the Company under Delaware law), and such indemnification shall
continue as to the Executive even if he has ceased to be a director, officer,
member, employee or agent of the Company or other enterprise and shall inure to
the benefit of his heirs, executors and administrators.

        (b) The right of indemnification and the payment of expenses incurred in
defending a Proceeding in advance of its final disposition conferring in this
Section 6 shall not be exclusive of any other right that the Executive may have
or hereafter may acquire under any statute, provision of the Certificate of
Incorporation or Bylaws of the Company, agreement, vote of shareholders or
disinterested directors or otherwise.

7.  Trade Secrets of the Company, Patents and Inventions.

        (a) Except as required by the performance of the Executive's services to
the Company under the terms of this Agreement, neither the Executive or any of
his agents or representatives, shall, during his employment and for so long
afterwards as the pertinent information or data remain Confidential Information,
directly or indirectly, make use of, permit others to use, divulge, disseminate,
copy or otherwise disclose the Company's Confidential Information and/or
Inventions as defined by subparagraphs (i) and (ii), respectively.
        (i) "Confidential Information" means all information and material which
is proprietary to the Company, whether or not marked as "confidential" or
"proprietary" and which is disclosed to 


                                     EX-86
<PAGE>   6

or obtained from the Company by the Executive, which relates to the Company'
past, present or future research, development or business activities.
Confidential Information is all information or materials prepared by or for the
Company and includes, without limitation, all of the following: designs,
drawings, specifications, techniques, models, data, source code, object code,
documentation, diagrams, flow charts, research, development, processes, systems,
methods, machinery, procedures, "know-how", new product or new technology
information, formulas, patents, patent applications, product prototypes, product
copies, cost of production, manufacturing, developing or marketing techniques
and materials, cost of production, development or marketing time tables,
customer lists, strategies related to customers, suppliers or personnel,
contract forms, pricing policies and financial information, volumes of sales,
and other information of similar nature, whether or not reduced to writing or
other tangible form, and any other Trade Secrets, as defined by subparagraph
(iii), or non-public business information. Confidential Information does not
include any information which (1) was in the lawful and unrestricted possession
of the Executive prior to its disclosure by the Company, (2) is or becomes
generally available to the public by acts other than those of the Executive
after receiving it, or (3) has been received lawfully and in good faith by the
Executive from a third party who did not derive it from the Company.

        (ii) "Inventions" means and all discoveries, concepts and ideas, whether
patentable or not, including but not limited to, processes, methods, formulas,
compositions, techniques, articles and machines, as well as improvements thereof
or "know-how" related thereto, relating at the time of conception or reduction
to practice to the business engaged in by the Company, or any actual or
anticipated research or development by the Company.

        (iii) "Trade Secrets" shall mean any scientific or technical data,
information, design, process, procedure, formula or improvement that is
commercially available to the Company and is not generally known in the
industry.

Materials involving Confidential Information and Inventions are the exclusive
property of the Company and shall not be removed under any circumstances from
the premises of the Company where the work is being carried on without prior
written consent of the Company except when consistent with the Company's normal
business practices.

        (b) The Executive agrees that any inventions made, conceived or
completed by him during the term of his employment, solely or jointly with
others, which are made with the Company's equipment, supplies, facilities or
Confidential Information, or which relate at the time of conception or reduction
to purpose of the invention to the business of the Company or the Company's
actual or demonstrably anticipated research and development, or which result
from any work performed by the Executive for the Company, shall be the sole and
exclusive property of the Company. The Executive promises to assign such
inventions to the Company. The Executive also agrees that the Company shall have
the right to keep such inventions as trade secrets, if the Company chooses. The
Executive agrees to assign to the Company the Executive's rights in any other
inventions where the Company is required to grant those rights to the United
States government or any agency thereof. In order to permit the Company to claim
rights to which it may be entitled, the Executive agrees to disclose to the
Company in confidence all inventions which the Executive makes arising out of
the Executive's employment and all patent applications filed by the Executive
within one year after the termination of his employment.


                                     EX-87
<PAGE>   7

        (c) The Executive shall assist the Company in obtaining patents on all
inventions, designs, improvements and discoveries patentable by the Company in
the United States and in all foreign countries, and shall execute all documents
and do all things necessary to obtain letters patent, to vest the Company with
full and extensive title thereto, and to protect the same against infringement
by others.

8. Severability In the event that any provisions or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole or
in part, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.

9. Assignment. The rights of the Company (but not its obligations) under this
Agreement may, without the consent of the Executive, be assigned by the Company
to any parent, subsidiary, or a successor of the Company; provided that such
parent, subsidiary or successor acknowledges in writing that it is also bound by
the terms and obligations of this Agreement. Except as provided in the preceding
sentence, the Company may not assign all or any of its rights, duties or
obligations hereunder without the prior written consent of the Executive. Except
as provided for in Section 11 hereunder, the Executive may not assign all or any
of his rights, duties or obligations hereunder without the prior written consent
of the Company.

10. Survival of Certain Provisions. The covenants and agreements set forth in
Paragraph 7 of this Agreement shall survive termination of the Executive's
employment and/or this Agreement, and shall remain in full force and effect
regardless of the cause of such termination.

11. Beneficiaries; References. The Executive shall be entitled to select (and
change) a beneficiary or beneficiaries to receive any compensation or benefit
payable following the Executive's death, and may change such election, in either
case, by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement shall be deemed, where appropriate, to refer to the Executive's
beneficiary, estate, committee, conservator or other legal representative.

12. Notices. All notices, requests, demands and other communications shall be in
writing and shall be defined to have been duly given if delivered or if mailed
by registered mail, postage prepaid;

        (a) If to the Executive, addressed to him at the following address as
may be changed in writing from time to time:

               Philip Morettini
               13451 Tiverton Road
               San Diego, CA  92130

        (b) If to the Company, addressed to:

               Patriot Scientific Corporation
               10989 Via Frontera


                                     EX-88
<PAGE>   8

               San Diego, CA  92127

or to such other address as any party may request by notice given as aforesaid
to the other parties hereto.

13. Titles and Headings. Titles and heading to paragraphs hereof are for the
purposes of references only and shall in no way limit, define or otherwise
effect the provisions hereof.

14. Governing Law. This Agreement is being executed and delivered and is
intended to be performed in the State of California, and shall be governed by
and construed in accordance with the laws of the State of California.

14.5 Arbitration/Sole Remedy for Breach of Agreement. In the event of any
dispute between the Company and the Executive concerning any aspect of the
employment relationship, including any disputes upon termination, all such
disputes shall be resolved by binding arbitration before a single neutral
arbitrator. The arbitrator shall be selected from the "American Arbitration
Association." The arbitration shall be held in San Diego, California. The
arbitrator is bound to rule only on whether or not there has been a violation of
the terms of this employment agreement and to render an award, if any, that is
consistent with the terms of this employment agreement. Neither party to this
employment agreement is entitled to any legal recourse or rights or remedies
other than those provided within this employment agreement. The Executive's sole
remedies, are those set forth in this employment agreement. The arbitrator shall
determine a "prevailing party" and shall award such prevailing party (i)
attorney's fees and costs and (ii) the prevailing party's portion of the costs
of arbitration.

In the event of any dispute between the Company and the Executive concerning any
ownership, use or disclosure of the Company's Confidential Information or other
intellectual property, the requirement of arbitration may be waived, at the
Company's sole election, and any such dispute may be brought before a court
having jurisdiction of the matter.

15. Counterparts. This Agreement shall be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be necessary
in making proof of this Agreement to produce or account for more than one
original counterpart.

16. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto and may be modified or amended only by a written instrument
executed by the parties hereto. Effective on the first day of the Employment
Period, any prior employment agreements between the Company and the Executive
shall terminate.

17. Good Faith. Each of the parties hereto agrees that he or it shall act in
good faith in all actions taken under this Agreement.

18. Waiver. No waiver of any of the provisions of this Agreement shall be deemed
to be or shall constitute a waiver of any other provision of the Agreement,
whether or not similar, nor shall any 


                                     EX-89
<PAGE>   9

waiver constitute a continuing waiver. No waiver of any provision of this
Agreement shall be binding upon the parties hereto unless it is executed in
writing by the party making the waiver.

IN WITNESS WHEREOF, the parties hereto have executed the Agreement as of the day
and year first above written.

                             Patriot Scientific Corporation
                             By:


                             /S/ MICHAEL A. CARENZO
                             ----------------------------
                             Michael A. Carenzo
                             President and CEO



                             /S/ PHILIP MORETTINI
                             ----------------------------
                             Philip Morettini
                             Executive


                                     EX-90