Employment Agreement


     

    Exhibit
      10.1

    
 

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (hereinafter “Agreement”) is entered into and becomes
      effective as of June 5, 2007 by and between Patriot Scientific Corporation
      (hereinafter “PTSC” or “Employer” or “Company”), and James Turley (hereinafter
“Mr. Turley” or “Employee”).

     

    RECITALS

     

    A. PTSC
      is
      an intellectual property licensing company that develops, markets and enables
      innovative proprietary technologies.

     

    B. PTSC
      is a
      Delaware corporation and is doing business in the State of
      California.

     

    C. Mr. Turley
      is currently a member of the Board of Directors of PTSC. Both PTSC and Mr.
      Turley desire that Mr. Turley be hired as the President and Chief Executive
      Officer of PTSC on a full-time basis and that said employment be pursuant to
      the
      terms of this written Agreement.

     

    IN
      CONSIDERATION of their respective promises and covenants contained herein,
      and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the parties hereto do hereby agree as
      follows:

     

    AGREEMENT

     

    1. Employment.
      PTSC
      hereby engages Employee to serve as its President and Chief Executive Officer,
      and Employee hereby accepts such engagement upon the terms and conditions set
      forth herein.

     

    2. Term.
      The
      term of this Agreement shall begin on June 5, 2007 above and shall remain
      in effect for one (1) year, unless terminated earlier pursuant to
      Section 8.

     

    3. Duties.
      Mr. Turley is employed to serve as PTSC’s President and Chief Executive
      Officer and shall perform such duties as are customarily performed by a person
      serving in that office. Mr. Turley will report to the Board of Directors.
      As part of Employee’s duties, Mr. Turley acknowledges and understands that:
      (a) Employee will devote his best knowledge and skill to the performance of
      his duties; (b) Employee shall devote his reasonable business time to the
      rendition of such services, subject to absences for customary vacations and
      for
      temporary illness, which time shall not be less than forty (40) hours each
      week;
      and (c) Employee will not engage in any other gainful occupation which
      requires his personal attention without prior consent of the Board of Directors,
      with the exception that Employee may personally trade in stock, bonds,
      securities, commodities or real estate investments for his own
      benefit.

     

    a. Six
      Month Performance Evaluation.
      PTSC
      shall provide Mr. Turley with feedback regarding his performance within six
      months of the effective date of this Agreement.

     

    
      
         

      

      
        Page
          1 of
          9

        
          

        

      

      
         

      

    

    b. Nine
      Month Performance Evaluation.
      PTSC
      shall provide Mr. Turley with additional feedback regarding his performance
      within nine months of the effective date of this Agreement.

     

    4. Personnel
      Policies and Procedures.
      PTSC
      shall have the authority to establish from time to time personnel policies
      and
      procedures to be followed by its employees. Employee agrees to comply with
      the
      policies and procedures of PTSC. To the extent any provisions in PTSC’s
      personnel policies and procedures differ with the terms of this Agreement,
      the
      terms of this Agreement shall apply.

     

    5. Compensation.

     

    a. Salary.
      During
      the term of this Agreement, Employee shall be paid a salary of Two Hundred
      and
      Twenty Five Thousand Dollars ($225,000) per year. Employer, in its sole
      discretion, may, but is not obligated to, provide additional compensation to
      Employee, consistent with Employer’s policies and procedures.

     

    b. Bonus.
      Mr. Turley is eligible to receive an annual merit bonus as determined in
      the sole discretion of the Board of Directors. 

     

    c. Stock
      Options.
      Mr. Turley shall also receive the following Stock Options as additional
      compensation. The Stock Options referenced below will be granted pursuant to,
      and will at all times be subject to, the terms of the Patriot Scientific
      Corporation 2003 Stock Option Plan (“Plan”) and the Stock Option Agreements
      pursuant to which they are granted.

     

    i. Company
      will provide Mr. Turley with incentive stock options (“ISO”) to purchase 400,000
      shares of the Company’s common stock. These ISOs shall vest in a manner such
      that the aggregate fair market value of the stock with respect to which the
      ISOs
      options are exercisable for the first time during any calendar year shall
      approximate, but not exceed, $100,000, as set forth in Exhibit ”A” to the
      Incentive Stock Option Agreement granting such options under the Plan. The
      strike price for such shares shall be the fair market value of the stock on
      the
      date of grant (i.e. the effective date of that Agreement).

     

    ii. Company
      will provide Mr. Turley with a non-qualified stock options (“NSO”) to purchase
      1,500,000 shares of the Company’s common stock. These NSOs shall vest based upon
      certain performance milestones as set forth in Exhibit ”A” to the
      Non-Qualified Stock Option Agreement granting such options under the Plan.
      The
      strike price for such shares shall be the fair market value of the stock on
      the
      date of grant (i.e. the effective date of that Agreement).

     

    6. Fringe
      Benefits.

     

    a. Travel
      Allowance.
      Company
      shall reimburse Employee for reasonable commuting expenses from his home to
      Patriot’s corporate offices for a period not to exceed six months.

     

    
      
         

      

      
        Page
          2 of
          9

        
          

        

      

      
         

      

    

    b. Lodging.
      Company
      shall reimburse Employee for the cost of lodging in the County of San Diego
      for
      up to six months in an amount that is to be preapproved by the Compensation
      Committee of the Board of Directors.

     

    c. Automobile
      Allowance.
      Company
      shall pay Employee up to eight hundred dollars ($800.00) per month as an
      automobile allowance during the term of this Agreement.

     

    d. Vacation.
      Employee shall be eligible to receive the standard vacation benefits generally
      available to similar employees of the Company, as may from time to time may
      be
      adopted by the Company.

     

    e. Other
      Benefits.
      Employee shall be eligible to participate in all current employee benefit plans
      or any other benefit plans established or made available by PTSC from time
      to
      time during the term of this Agreement to employees generally, subject to and
      on
      a basis consistent with the terms, conditions and overall administration of
      such
      plans and the written policies of PTSC, as modified by PTSC from time to time.
      Employee shall receive other benefits as determined by the Board of
      Directors.

     

    7. Business
      Expenses.
      PTSC
      shall reimburse Employee for reasonable and necessary expenses incurred by
      Employee in the ordinary course of business for PTSC, in accordance with PTSC’s
      policies and procedures. 

     

    8. Termination.
      This
      Agreement and the employment of Employee shall terminate prior to its expiration
      date under the following conditions:

     

    a. Upon
      receipt by Employee of written notice from PTSC that Employee’s employment is
      being terminated; or

     

    b. The
      death
      of Employee; or,

     

    c. The
      permanent disability of Employee (permanent disability shall exist when Employee
      suffers from a condition of mind or body that indefinitely prevents his further
      performance of his essential duties, with or without reasonable accommodation);
      or

     

    d. Upon
      thirty (30) days written notice by Employee that he is resigning his employment
      from PTSC; or

     

    e. Upon
      receipt by Employee of written notice from PTSC that Employee’s employment is
      being terminated for “good cause.” PTSC has “good cause” to terminate Employee’s
      employment if:

     

    i. Employee
      fails or refuses to faithfully and diligently perform the usual and customary
      duties of his employment, which failure or refusal is not cured within thirty
      (30) days after written notice thereof is given to Employee; or

     

    ii. Employee
      fails or refuses to comply with the policies, standards and/or rules of Employer
      which from time to time may be established, which failure or refusal is not
      cured within thirty (30) days after written notice thereof is given to Employee;
      or

     

    
      
         

      

      
        Page
          3 of
          9

        
          

        

      

      
         

      

    

    iii. Employee
      fails or refuses to act in accordance with any lawful direction or order of
      the
      Board of Directors; or 

     

    iv. It
      is
      determined by the Board of Directors that Employee has conducted himself in
      an
      unprofessional, unethical, illegal or fraudulent manner, or has acted in a
      manner detrimental to the reputation, character or standing of Employer;
      including, but not limited to, theft or misappropriation of Employer’s assets,
      engaging in unlawful discriminatory or harassing conduct, the filing of false
      expense or related reports, or being convicted of a felony; or

     

    v. Employee
      violates any material term or condition of this Agreement.

     

    9. Compensation
      Upon Termination.

     

    a. For
      Other Than Good Cause.
      In the
      event Employee receives notice from Employer that his employment is terminated
      for other than “good cause,” he shall receive his then current salary level for
      the remaining term of the Agreement provided that Employee signs a release
      of
      all claims against PTSC on a release form provided by PTSC to him at that
      time.

     

    b. For
      Good Cause.
      In the
      event Employee is terminated for good cause as defined in Section 8(e)
      above, he shall receive notice that his employment is terminated and shall
      receive two weeks’ pay at his then current wage level, even though the
      employment terminated at the time notice was provided to Employee. Employee
      is
      entitled to no other severance compensation when he is terminated for good
      cause
      as defined in Section 8(e) above.

     

    c. Death
      or Permanent Disability.
      In the
      event Employee dies or becomes permanently disabled as defined in this
      Agreement, PTSC’s obligations hereunder shall terminate after paying Employee
      any compensation owed through the last day he worked.

     

    d. Resignation.
      In the
      event Employer receives notification that Employee is resigning, Employee shall
      be paid for the remainder of the time he continues to be employed at PTSC,
      up to
      a maximum of thirty (30) days.

     

    10. Covenants
      and Representations.

     

    a. Confidential
      Information.
      By
      signing this Agreement, Employee acknowledges and agrees that during the course
      of Employee’s employment, Employer has disclosed and will disclose or make
      available to Employee confidential and proprietary information related to
      Employer’s business including, without limitation, trade secrets, business
      records, intellectual property licensing programs, licensing terms and
      conditions, strategic planning, business acquisition planning, research and
      development, business development, joint venture planning, forward planning,
      strategic initiatives, prospective patent portfolio information, prospective
      investor information, prospective joint venture information, marketing
      strategies and related data, financial information, targeted areas of
      concentration of business development, contracts, business systems, plans and
      projections whether or not patentable or entitled to trademark (the
“Confidential Information”), that such Confidential Information has been
      developed and will be developed through the expenditure by Employer of
      substantial time and money and that all such Confidential Information, except
      to
      the extent it is in the public domain, shall constitute valuable, special and
      unique assets of Employer and trade secrets protected under applicable law.
      Employee’s employment with Company creates in Employee a duty of trust and
      confidentiality to Company with respect to the Confidential Information.
      Accordingly, Employee agrees to use such Confidential Information only for
      the
      purpose of carrying out Employee’s duties with Employer and agrees that Employee
      will not, during the period of employment or at any time thereafter,
      misappropriate for Employee for others, disclose or in any way make available
      to
      others, directly or indirectly, any such Confidential Information. It is
      expressly agreed that upon termination of employment Employee shall promptly
      surrender to Employer any and all documents, equipment or other records in
      any
      media referencing or containing any Confidential Information including but
      not
      limited to the following: all equipment belonging to Employer and all documents
      relating to Employer’s business, including without limitation computers, keys,
      pagers, correspondence, computer disks, software, accounting or financial
      records, employee lists, documents relating to Employer’s employees, drawings,
      manuals, notes, notebooks, reports, flow charts, diagrams, designs, programs,
      proposals, or any other physical items or documents relating to Employer.
      Employee further agrees that he will not make or retain any unauthorized copies
      or other reproductions of such materials. If Employee does not promptly
      surrender the equipment and documents, Employee agrees that he shall be
      responsible for reimbursing Employer for all costs, including attorney’s fees,
      incurred by Employer in an attempt to recover said equipment and
      documents.

     

    
      
         

      

      
        Page
          4 of
          9

        
          

        

      

      
         

      

    

    b. Prohibited
      Solicitation of Employees.
      During
      Employee’s employment with Employer and for one year following the termination
      of employment for any reason, Employee agrees that Employee shall not, directly
      or indirectly, either for Employee or for any other person, firm or corporation,
      call on, solicit, induce or encourage any employee, consultant or independent
      contractor of Employer to become employed by any direct or indirect competitor
      of Employer or to terminate his, her or its relationship with Employer.


     

    c. Competition
      During Employment.
      In
      consideration of Employee’s access to the Confidential Information described in
      paragraph 10(a), Employee agrees that during Employee’s employment,
      Employee shall not directly or indirectly compete with Employer.

     

    11. Arbitration/Sole
      Remedy for Breach of Agreement.
      In the
      event of any dispute between PTSC and Employee concerning any aspect of the
      employment relationship, including any disputes relating to termination, all
      such disputes shall be resolved by binding arbitration before a single neutral
      arbitrator pursuant to the following terms. This provision shall supersede
      any
      prior arbitration agreement, policy or understanding between the parties. The
      parties intend to revoke any prior arbitration agreement.

     

    a. Claims
      Covered by the Agreement.
      Employee and Employer mutually consent to the resolution by final and binding
      arbitration of all claims or controversies (“claims”) that Employer may have
      against Employee or that Employee may have against Employer or against its
      officers, directors, partners, employees, agents, pension or benefit plans,
      administrators, or fiduciaries, franchisors, or any parent, subsidiary or
      affiliated company or corporation (collectively referred to as “PTSC”), relating
      to, resulting from, or in any way arising out of Employee’s employment
      relationship with PTSC and/or the termination of Employee’s employment
      relationship with PTSC, to the extent permitted by law. The claims covered
      by
      this Agreement include, but are not limited to, claims for wages or other
      compensation due; claims for breach of any contract or covenant (express or
      implied); tort claims; claims for discrimination and harassment (including,
      but
      not limited to, race, sex, religion, national origin, age, marital status or
      medical condition, disability, or sexual orientation); claims for benefits
      (except where an employee benefit or pension plan specifies that its claims
      procedure shall culminate in an arbitration procedure different from this one);
      claims for breach of any duties or obligations, including, but not limited
      to,
      claims for unfair competition, unauthorized use or disclosure of trade secrets
      or confidential information, including claims for injunctive and/or other
      equitable relief; and claims for violation of any public policy, federal, state
      or other governmental law, statute, regulation or ordinance, except claims
      excluded in the following section.

     

    b. Claims
      Not Covered by the Agreement.
      Claims
      Employee may have for workers’ compensation (excluding discrimination claims
      under workers’ compensation statutes) or unemployment compensation benefits are
      not covered by this Agreement.

     

    
      
         

      

      
        Page
          5 of
          9

        
          

        

      

      
         

      

    

    c. Required
      Notice of Claims and Statute of Limitations.
      Arbitration may be initiated by Employee by serving or mailing a written notice
      to the Chairman of the Board of Directors of PTSC. Arbitration may be initiated
      by PTSC by serving or mailing a written notice to Employee at his last known
      address. The notice shall identify and describe the nature of all claims
      asserted and the facts upon which such claims are based. The written notice
      shall be served or mailed within the applicable statute of limitations period
      set forth by federal or state law.

     

    d. Arbitration
      Procedures.

     

    i. After
      demand for arbitration has been made by serving written notice under the terms
      of Section 11(c) of this Agreement, the party demanding arbitration shall
      file a demand for arbitration with the office of Judicial Arbitration and
      Mediation Services (“JAMS”) located in San Diego, California. The
      arbitrator shall be selected from the JAMS panel and the arbitration shall
      be
      conducted pursuant to JAMS policies and procedures. All rules governing the
      arbitration shall be the rules as set forth by JAMS. If the dispute is
      employment-related, the dispute shall be governed by JAMS’s then current version
      of the national rules for the resolution of employment disputes. JAMS’s then
      applicable rules governing the arbitration may be obtained from JAMS’s website
      which currently is www.jamsadr.com. 

     

    ii. The
      arbitrator shall apply the substantive law (and the law of remedies, if
      applicable) of the state in which the claim arose, or federal law, or both,
      as
      applicable to the claim(s) asserted. The arbitrator shall have exclusive
      authority to resolve any dispute relating to the interpretation, applicability,
      enforceability or formation of this Agreement, including but not limited to
      any
      claim that all or any part of this Agreement is void or voidable.

     

    iii. Either
      party may file a motion for summary judgment with the arbitrator. The arbitrator
      is entitled to resolve some or all of the asserted claims through such a motion.
      The standards to be applied by the arbitrator in ruling on a motion for summary
      judgment shall be the applicable laws as specified in Section 11(d)(ii) of
      this Agreement.

     

    iv. Discovery
      shall be allowed and conducted pursuant to the then applicable arbitration
      rules
      of JAMS, provided that the parties shall be entitled to discovery sufficient
      to
      adequately arbitrate their claims and defenses. The arbitrator is authorized
      to
      rule on discovery motions brought under the applicable discovery
      rules.

     

    
      
         

      

      
        Page
          6 of
          9

        
          

        

      

      
         

      

    

    e. Application
      For Emergency Injunctive And/Or Other Equitable Relief.
      Claims
      by Employer or Employee for emergency injunctive and/or other equitable relief
      relating to unfair competition and/or the use and/or unauthorized disclosure
      of
      trade secrets or confidential information shall be submitted to JAMS for
      emergency treatment. The parties agree that the JAMS administrator may select
      a
      neutral hearing officer (subject to conflicts) to hear the emergency request
      only. The hearing officer should be experienced in considering requests for
      emergency injunctive and/or other equitable relief. The hearing officer shall
      conform his/her consideration and ruling with the applicable legal standards
      as
      if this matter were heard in a court of law in the applicable jurisdiction
      for
      such a dispute.

     

    f. Arbitration
      Decision.
      The
      arbitrator’s decision will be final and binding. The arbitrator shall issue a
      written arbitration decision revealing the essential findings and conclusions
      upon which the decision and/or award is based. A party’s right to appeal the
      decision is limited to grounds provided under applicable federal or state
      law.

     

    g. Place
      of Arbitration.
      The
      arbitration will be at a mutually convenient location that must be within 50
      miles of Employee’s last company employment location. If the parties cannot
      agree upon a location, then the arbitration will be held at JAMS’s office
      nearest to Employee’s last employment location.

     

    h. Representation,
      Fees and Costs.
      Each
      party may be represented by an attorney or other representative selected by
      the
      party. Each party shall be responsible for its own attorneys’ or
      representative’s fees. However, if any party prevails on a statutory claim that
      affords the prevailing party’s attorneys’ fees, or if there is a written
      agreement providing for fees, the arbitrator may award reasonable fees to the
      prevailing party. PTSC shall be responsible for the arbitrator’s fees and costs
      to the extent they exceed any fee or cost that Employee would be required to
      bear if the action were brought in court.

     

    i. Waiver
      Of Jury Trial/Exclusive Remedy.
      Employee and PTSC knowingly and voluntarily waive any constitutional right
      to
      have any dispute between them decided by a court of law and/or by a jury in
      court.

     

    12. Successors
      and Assigns.
      The
      rights and obligations of PTSC under this Agreement shall enure to the benefit
      of and shall be binding upon the successors and assigns of PTSC. Employee shall
      not be entitled to assign any of his rights or obligations under this
      Agreement.

     

    13. Governing
      Law.
      This
      Agreement shall be interpreted, construed, governed and enforced in accordance
      to the laws of the State of California.

     

    14. Amendments.
      No
      amendment or modification of the terms or conditions of this Agreement shall
      be
      valid unless in writing and signed by the parties hereto.

     

    15. Separate
      Terms.
      Each
      term, condition, covenant or provision of this Agreement shall be reviewed
      as
      separate and distinct, and in the event that any such term, covenant or
      provision shall be held by a court of competent jurisdiction to be invalid,
      the
      remaining provisions shall continue in full force and effect.

     

    
      
         

      

      
        Page
          7 of
          9

        
          

        

      

      
         

      

    

    16. Waiver.
      A
      waiver by either party of a breach of provision or provisions of this Agreement
      shall not constitute a general waiver, or prejudice the other party’s right
      otherwise to demand strict compliance with that provision or any other
      provisions in this Agreement.

     

    17. Notices.
      Any
      notices required or permitted to be given under this Agreement shall be
      sufficient, if in writing, sent by mail to his residence in the case of
      Employee, or hand delivered to Employee, or to its principal office in the
      case
      of PTSC.

     

    


     

    


     

    [Remainder
      of page intentionally left blank]

     

    
      
         

      

      
        Page
          8 of
          9

        
          

        

      

      
         

      

    

    18. Entire
      Agreement.
      Employee acknowledges receipt of this Agreement and agrees that this Agreement
      represents the entire Agreement with PTSC concerning the subject matter hereof,
      and supersedes any previous oral or written communications, representations,
      understandings or Agreements with PTSC or any agent thereof. Employee
      understands that no representative of PTSC has been authorized to enter into
      any
      Agreement or commitment with Employee, which is inconsistent in any way with
      the
      terms of this Agreement.

     

    IN
      WITNESS HEREOF, the parties have executed this Agreement as of the dates set
      forth below.

     

    


    
      	Dated:
              June 5, 2007	
              /s/
                James Turley

              James
                Turley

            


    

    


    


    Patriot
      Scientific Corporation

     

    


    
      	Dated:
              June 5, 2007	
              By:
                /s/
                David H. Pohl

                    
                David
                H. Pohl, Chairman of the Board

            


    

     

     

     

    Page
      9 of
      9