Document:

patriot_8k-ex1001.htm

    Exhibit
      10.1

     

    

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT ("Agreement") is by and between Patriot Scientific
      Corporation, a Delaware corporation ("Employer" or the "Company") and Clifford
      Flowers ("Executive").

    

    In
      consideration of the promises and mutual covenants contained herein, and for
      other good and valuable consideration, receipt of which is hereby acknowledged,
      the parties hereto do hereby agree as follows:

    

    1.           Employment. 
Upon
      the terms and
      conditions hereinafter set forth, Employer hereby employs Executive to serve
      as
      the Chief Financial Officer of the Company ("CFO"), and Executive hereby accepts
      such employment under the terms and conditions set forth herein.

    

    2.           Effective
      Date.  The
      effective date of the Agreement shall be September 17, 2007 (the "Effective
      Date"). The employment relationship pursuant to this Agreement shall be for
      an
      initial one hundred twenty (120) day period commencing on the Effective Date
      set forth above ("Initial Term"), unless sooner terminated in accordance with Section 7 below.
      On completion of the Initial Term specified above, and if not terminated
      pursuant to Section 7 below, this Agreement will extend for a one year term
      ("One Year Term") and will be terminable by either party, with or without cause
      as set forth in Sections 4 and 7 of this Agreement. If neither party has
      terminated the Agreement within one year of the expiration of the Initial Term,
      the employment relationship as set forth in this Agreement shall continue in
      accordance with the terms of this Agreement on a day to day basis.

    

    3.           Duties. 
Executive
      shall perform such duties as are customarily performed by a Chief Financial
      Officer, and such other duties and responsibilities that may be assigned to
      him
      by the Chief Executive Officer ("CEO") and/or the Board of Directors.
      Specifically, Executive shall manage the Company's budget, business development,
      financial affairs, and perform such duties and responsibilities as set forth
      in
      the CFO job description, a current copy of which is attached hereto as Exhibit
      "B".

    

    Executive
      shall report to the President/CEO and Audit Committee and have such authority
      as
      is delegated by the President/CEO and Audit Committee. Executive shall be
      governed by the policies and practices established by the Company. Employer
      requires that: (1) Executive will devote his utmost knowledge and best skill
      to
      the performance of his duties; (ii) Executive shall devote his full business
      time (not less than 40 hours per week) to the rendition of such services,
      subject to absences for customary vacations and for temporary illness; and
      (iii)
      Executive will not engage in any other gainful occupation which requires his
      personal attention and/or creates a conflict of interest with his job
      responsibilities under this Agreement without the prior written consent of
      the
      Board of Directors of the Company, with the exception that Executive may
      personally trade in stock, bonds, securities, commodities or real estate
      investments for his own benefit to the extent permitted by the provisions herein
      and applicable law.

    

    
      
        
          
          

        

        
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    Executive's
      job performance will be reviewed annually. Executive acknowledges and
      understands that performance reviews do not necessitate or correlate with salary
      increases and that a favorable performance review neither guarantees continued
      employment nor increased compensation.

    

    4.           At-Will
      Employment. .  Executive and Employer agree that
      Executive's employment may be terminated by Executive or by Employer, with
      or
      without cause any time prior to the expiration of the Initial Term and/or the
      One Year Term and any time after the One Year Term in accordance with paragraph
      7 of this Agreement. Executive and Employer expressly agree that this provision
      is intended by Executive and Employer to be the complete and final expression
      of
      their understanding regarding the terms and conditions under which Executive's
      employment may be terminated. Executive and Employer further understand and
      agree that no representation contrary to this provision is valid, and that
      this
      provision may not be augmented, contradicted or modified in any way, except
      in
      writing signed by Executive, the President/CEO and the Chairperson of the
      Auditing Committee.

    

    5.           Compensation.

     

    5.1           Base
      Salary. 
Executive shall be paid an annual base salary of Two Hundred Twenty-Five
      Thousand Dollars ($225,000), payable according to Employer's payroll schedule
      and subject to applicable state and federal withholdings and other payroll
      deductions.

    

    5.2           Bonus. 
In
      addition
      to Executive's base salary, Executive shall be eligible to receive an additional
      annual discretionary bonus of up to fifty percent (50%) of his then in effect
      base salary, as determined by the CEO and Board of Directors/Compensation
      Committee in their sole discretion. Executive acknowledges that although a
      discretionary bonus may be provided by the Company, any such bonus is neither
      required nor guaranteed by this Agreement.

     

    5.3    Stock
      Options. 
Employer agrees to provide stock options to Executive as follows
      (collectively, the "Options"):

    

    (i)             The
      Company shall provide Executive with a non-qualified stock option
      for exercise into One Hundred Fifty Thousand (150,000) shares of the Company's
      common stock effective as of the Effective Date (the "Signing Bonus Option").
      The grant price of the Signing Bonus Option shall be the closing sales price
      of
      the Company's common stock on September 17, 2007 as quoted on the OTC Bulletin
      Board, or if there is no closing sales price on that date, the closing selling
      price on the last preceding date for which such quotation exists. 100% of the
      shares subject to the Signing Bonus Option will vest immediately upon the
      expiration of the Initial Term, provided that Executive is still employed by
      the
      Company at such time.

    

    (ii)            Effective
      as of the Effective Date, the Company shall provide Executive
      with a non-qualified stock option for exercise into Six Hundred Thousand
      (600,000) shares of the Company's common stock, with a grant price equal to
      the
      closing sales price of the Company's common stock on September 17, 2007 as
      quoted on the OTC Bulletin Board, or if there is no closing sales price on
      that
      date, the closing selling price on the last preceding date for which such
      quotation exists, to vest as follows: (i) regular vesting to commence after
      twelve

     

    

    
      
        
          
          

        

        
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    (12)
      months employment at 1/48th
      over a period of four (4) years; and (ii) automatic accelerated vesting to
      occur
      for a percentage of unvested options, which amount shall be determined by the
      CEO and the Board of Directors, but in no event, less than twenty-five percent
      (25%), upon the "effective date" of a major event which shall include an
      acquisition of the Company or merger or the listing of the Company on the Amex
      or NASDAQ stock exchanges. Any remaining unvested options, if any, will vest
      according to the regular vesting schedule set forth above in this Section 5.3
      (ii).

     

    (iii)           The
      options referenced above will be granted pursuant to, and will be subject to
      the
      terms of the Company's Stock Option Plan.

     

    6.    Fringe
      Benefits.

     

    6.1    Benefits. 
      Executive shall, in accordance with Company policy and the terms
      of
      the applicable plan documents, be eligible to participate in benefits under
      any
      Company benefit plan or arrangement which may be in effect from time to time
      and
      made available to its management employees. Such benefits currently include:
      health insurance, which is a PPO plan with the Company paying 90% of employee
      cost and 50% of dependent cost; life insurance with disability coverage, 401K
      plan with Employer matching up to 6% of employee's annual salary, with 3 year
      vesting on Employer match. 401K vesting to accelerate in the case of a Change
      of
      Control in accordance with the terms of the applicable plan.

    

    6.2    Vacation. 
      Upon the expiration of the Initial Term, Executive shall begin to
      earn
      and accrue vacation days at the rate of fifteen (15) days per year. Unused
      vacation shall carry over to the next year, but Executive shall cease accruing
      further vacation at any time Executive has accrued twenty-three (23) vacation
      days, and shall not accrue further vacation days until Executive has used some
      or all of the accrued vacation days. Unused vacation days which are not in
      excess of twenty-three (23) vacation days shall be paid in a cash lump sum
      payment promptly after Executive's termination of employment. Executive shall
      earn vacation days at the rate of twenty (20) days per year after five (5)
      years
      of employment.

    

    6.3           Expenses. 
      Employer shall reimburse Executive on a monthly basis for receipts Executive
      submits for all reasonable and necessary travel and other business expenses
      incurred by Executive in the performance of Executive's duties hereunder,
      consistent with Employer's normal expense reimbursement policy. Such expenses
      shall include professional society membership dues. Additionally, Employer
      will
      reimburse Executive up to a maximum of One Thousand Five Hundred Dollars
      ($1,500) per year for successful completion (with a passing grade) of
      job-related continuing education courses.

    

    7.    Termination.

     

    7.1           Termination
      With Cause.  If Executive (a) breaches in any material respect or fails
      to fulfill any fiduciary duty owed to Employer; (b) breaches in any material
      respect this Agreement or any other confidentiality or non-solicitation,
      non-competition agreement between Employer and Executive; (c) pleads guilty
      to
      or is convicted of a felony, a crime of moral turpitude or any other crime;
      (d)
      is found to have engaged in any reckless, fraudulent, dishonest or grossly
      negligent misconduct, or act of moral turpitude, (e) fails to satisfactorily
      perform his

    

    
      
        
          
          

        

        
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    duties
      to
      the Company or comply with Company policies and rules (excluding those policies
      set forth in paragraph 7.1(f) for which no opportunity to cure is requires),
      provided that Executive fails to cure any such failure within thirty (30) days
      after written notice from Employer of such failure, provided further, however,
      that such right to cure shall not apply to any repetition of the same failure
      previously cured hereunder; or (f) violates any material rule, regulation or
      policy of the Company relating to harassment, discrimination, retaliation,
      violence, theft/embezzlement, business ethics, and drug and alcohol use, that
      may be established and made known to Employer's employees from time to time,
      including without limitation, the Company Employee Handbook, a copy of which
      has
      been provided to Executive, Employer may terminate immediately his employment
      and Executive shall have no right to receive any compensation or benefit
      hereunder after such termination other than base salary and vacation earned
      or
      accrued but unpaid as of the date of termination. Executive shall not be
      entitled to any bonus, or proration thereof, if terminated under this
      paragraph.

    

    7.2    Termination
      Without Cause.  As stated in Section 4 of this Agreement, Executive or
      the Company may at any time terminate Executive's employment with or without
      cause. If the Company terminates Executive's employment within two years of
      the
      Effective Date and such termination is not a Termination With Cause as defined
      above, the Company shall continue to pay Executive's base salary then in effect
      as of the date of such termination on a pro­rated basis according to
      Employer's payroll schedule and subject to applicable withholdings for a period
      of six (6) months or the remainder of the one-year time period from the
      Effective Date, whichever time period is greater (and if the Company, terminates
      Executive's employment any time after two (2) years of continuous employment
      without Cause as defined above, the Company shall continue to pay Executive's
      base salary for twelve (12) months) (collectively "Severance"), provided only
      if
      Executive signs a general release. Such Severance does not include the
      continuation of the benefits allowance after termination or the proration of
      any
      bonus. At the Company's sole option, any Severance to which Executive is
      entitled may be paid in a lump sum less applicable withholdings in lieu of
      payment made over time in accordance with Employer's payroll
      schedule.

    

    In
      order
      to be entitled to the Severance reflected herein, Executive must sign a general
      release of all claims known and unknown, against Employer, its officers and
      directors, agents and employees and any related entities or persons. Although
      a
      copy of the Company's current standard general release shall be available for
      Executive's review upon his request, Executive acknowledges that such release
      is
      subject to change at the Company's discretion. Nothing herein will be construed
      to limit or modify the duty of Executive to mitigate Executive's damages in
      the
      event Employer terminates Executive's employment without Cause.

    

    7.3    Termination
      Upon
      Death or Disability.  Executive's employment shall terminate upon his
      death or disability ("disability" being defined as any mental or physical
      condition which, in the reasonable opinion of a mutually agreed upon licensed
      physician and/or psychiatrist (as the case may be), renders Executive unable
      or
      incompetent to carry out Executive's duties under this Agreement, with or
      without reasonable accommodation, for a period of at least three months). In
      the
      event of a termination of Executive's employment for death or disability,
      Executive shall have no right to receive any further compensation or benefit
      hereunder after such termination other than base salary and vacation earned
      or
      accrued but unpaid as of the date of termination.

    

    
      
        
          
          

        

        
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    7.4           Change
      of Control. 
In the event of any merger, acquisition .or consolidation of the
      Company where
      the Company is not the surviving or resulting corporation, or upon transfer
      of
      all or substantially all of the assets of the Company, and Employee is not
      retained by the surviving or resulting corporation in a substantially similar
      position or position satisfactory to Employee ("Change of Control"), Employee
      shall be paid a lump sum equivalent to six (6) months of Employee's base salary
      then in effect (or twelve (12) months if such Change of Control occurs after
      two
      continuous years of employment) upon the execution of a general release. Such
      lump sum payment shall be considered to be in full and complete satisfaction
      of
      any and all rights which Employee may enjoy under the terms of this Agreement,
      except that any and all of Executive's unvested stock options shall become
      fully
      vested and exercisable.

    

    7.5    Resignation
      For Good
      Reason.  In the event Executive resigns his employment and such
      resignation is with "Good Reason" as defined below, Executive will be entitled
      to receive Severance in accordance with the terms set forth in paragraph 7.2
      above, provided Executive complies with the conditions in paragraph 7.2 above.
      In the event Executive resigns without Good Reason, Executive will not be
      entitled to receive the Severance described in paragraph 7.2 above. Executive
      will be deemed to have resigned with "Good Reason" upon the occurrence of any
      of
      the following events without Executive's consent: (i) a material reduction
      in
      Executive's duties, authority, or responsibilities relative to the duties,
      authority, or responsibilities in effect immediately prior to such reduction;
      (ii) the relocation of Executive's principal place of business to a point more
      than sixty (60) miles from Carlsbad, California; or (iii) a material reduction
      by the Company of Executive's base salary as initially set forth herein or
      as
      the same may be increased from time to time. Provided however
      that, such termination by Executive shall only be deemed
      for Good Reason pursuant to the foregoing definition if: (i) Executive gives
      the
      Company written notice of the intent to terminate for Good Reason within thirty
      (30) days following the first occurrence of the condition(s) that Executive
      believes constitutes Good Reason, which notice shall describe such condition(s);
      (ii) the Company fails to remedy such condition(s) within thirty (30) days
      following receipt of the written notice (the "Cure Period"); and (iii) Executive
      terminates his employment within thirty (30) days following the end of the
      Cure
      Period.

    

    7.6    280G
      Limitation on Payments.

     

    (i)    In
      the event
      that the severance and other benefits provided for in this Agreement or
      otherwise payable to the Executive (i) constitute "parachute payments" within
      the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
      (the "Code") and (ii) but for this Section 7.6 would be subject to the excise
      tax imposed by Section 4999 of the Code, then the Executive's severance and
      other benefits provided under this Agreement shall be payable either (i) in
      full, or (ii) as to such lesser amount which would result in no portion of
      such
      benefits being subject to excise tax under Section 4999 of the Code, whichever
      of the foregoing amounts, taking into account the applicable federal, state
      and
      local income taxes and the excise tax imposed by Section 4999, results in the
      receipt by the Executive on an after-tax basis, of the greatest amount of
      benefits under this Agreement, notwithstanding that all or some portion of
      such
      benefits may be taxable under Section 4999 of the Code.

    

    (ii)    If
      a
      reduction in the payments and benefits that would otherwise be paid or provided
      to the Executive under the terms of this Agreement is necessary to comply
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    the
      provisions of Section 7.6(i), the Executive shall be entitled to select which
      payments or benefits will be reduced and the manner and method of any such
      reduction of such payments or benefits (including but not limited to the number
      of options that would vest under Sections 5.3 or 7.4) subject to reasonable
      limitations (including, for example, express provisions under the Company's
      benefit plans) so long as the requirements of Section 7.6(i) are met. Within
      thirty (30) days after the amount of any required reduction in payments and
      benefits is finally determined in accordance with the provisions of Section
      7.6(iii), the Executive shall notify the Company in writing regarding which
      payments or benefits are to be reduced. If no notification is given by the
      Executive, the Company will determine which amounts to reduce. If, as a result
      of any reduction required by Section 7.6(i), amounts previously paid to the
      Executive exceed the amount to which the Executive is entitled, the Executive
      will promptly return the excess amount to the Company.

     

    (iii)    Any
      determination required under this Section 7.6(iii) shall be made
      in
      writing by a nationally recognized accounting or consulting firm appointed
      by
      the Company, which firm shall not then be serving as accountant or auditor
      for
      or consultant to the Company or the person or entity that effected the Change
      in
      Control and whose determinations shall be conclusive and binding upon the
      Executive and the Company for all purposes. For purposes of making the
      calculations required by this Section 7.6, such firm may make reasonable
      assumptions and approximations concerning applicable taxes and may rely on
      reasonable, good faith interpretations concerning the application of Sections
      280G and 4999 of the Code. The Company and the Executive shall furnish to such
      firm such information and documents as such firm may reasonably request in
      order
      to make a determination under this Section 7.6. The Company shall bear all
      costs
      such firm may reasonably incur in connection with any calculations contemplated
      by this Section 7.6.

    

    7.7    Application
      of
      Internal Revenue Code Section 409A.  Severance payable under Sections
      7.2 and 7.5 of this Agreement are intended to be payable pursuant to the "short-
      term deferral" rule set forth in Section 1.409A-1(b)(4) of the Treasury
      Regulations. Severance payable pursuant to Section 7.4 of this Agreement are
      intended to be payable pursuant to a window program pursuant to Section
      1.409A-1(b)(9)(iii) of the Treasury Regulations to the maximum extent permitted
      by said provision, with any excess amount being regarded as subject to the
      distribution requirements of Section 409A(a)(2)(A) of the Code, including,
      without limitation, the requirement of Section 409A(a)(2)(B)(i) of the Code
      that
      payment to Executive be delayed until 6 months after Executive's separation
      from
      service if Executive is a "specified employee' within the meaning of the
      aforesaid section of the Code at the time of such separation from
      service

    

    8.    Trade
      Secrets, Confidential Information and Inventions.

    

    8.1    Trade
      Secrets In General. During the course of Executive's employment, Executive
      will have access to various trade secrets, confidential information and
      inventions of Employer as defined below.

     

    (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 or obtained from the Company by the Executive, which relates to
      the
      Company'

    

    
      
        
          
          

        

        
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    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 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.

    

    This
      section includes not only information belonging to Employer which existed before
      the date of this Agreement, but also information developed by Executive for
      Employer or its employees during his employment and thereafter.

    

    8.2    Restriction
      on Use of Confidential Information.  Executive agrees that his use of
      Trade Secrets and other Confidential Information is subject to the following
      restrictions during the term of the Agreement and for an indefinite period
      thereafter so long as the Trade Secrets and other Confidential Information
      have
      not become generally known to the public.

    

    8.2.1    Non-Disclosure. 
      Except as required by the performance of the Executive's services to the Company
      under the terms of this Agreement, neither the Executive nor any of his agents
      or representatives, shall, directly or indirectly, publish or otherwise
      disclose, or permit others to publish, divulge, disseminate, copy or otherwise
      disclose the Company's Trade Secrets, Confidential Information and/or Inventions
      as defined above.

    

    8.2.2    Use
      Restriction.  Executive shall use the Trade Secrets, other Confidential
      Information and/or Inventions only for the limited purpose for which they were
      disclosed. Executive shall not disclose the Trade Secrets, other Confidential
      Information and/or Inventions to any third party without first obtaining written
      consent from the CEO and shall disclose the Trade Secrets, other Confidential
      Information and/or Inventions only to Employer's

    

    
      
        
          
          

        

        
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    own
      employees having a need know. Executive shall promptly notify the CEO of any
      items of Trade Secrets prematurely disclosed.

     

    

    8.2.3    Surrender
      Upon Termination.  Upon termination of his employment with Employer for
      any reason, Executive will surrender and return to Employer all documents and
      materials in his possession or control which contain Trade Secrets, Inventions
      and other Confidential Information. Executive shall immediately return to the
      Company all lists, books, records, materials and documents, together with all
      copies thereof, and all other Company property in his possession or under his
      control, relating to or used in connection with the past, present or anticipated
      business of the Company, or any affiliate or subsidiary thereof. Executive
      acknowledges and agrees that all such lists, books, records, materials and
      documents, are the sole and exclusive property of the Company.

    

    8.2.4    Prohibition
      Against Unfair Competition.  At any time after the termination of his
      employment with Employer for any reason, Executive will not engage in
      competition with Employer while making use of the Trade Secrets of
      Employer.

    

    8.2.5    Patents
      and Inventions.  The Executive agrees that any inventions made,
      conceived or completed by him during the term of his service, 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 service and all patent applications filed by the Executive
      within one year after the termination of his service.

    

    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.

    

    9.    Solicitation
      of Employees or Customers.

    

    9.1    Information
      About
      Other Employees.  Executive will be called upon to work closely with
      employees of Employer in performing services under this Agreement. All
      information about such employees which becomes known to Executive during the
      course of his employment with Employer, and which is not otherwise known to
      the
      public, including compensation or commission structure, is a Trade Secret of
      Employer and shall not be used by

    

    
      
        
          
          

        

        
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    Executive
      in soliciting employees of Employer at any time during or after termination
      of
      his employment with Employer.

    

    9.2    Solicitation
      of
      Employees Prohibited.  During Executive's employment and for one year
      following the termination of Executive's employment, Executive shall not,
      directly or indirectly ask, solicit or encourage any employee(s) of Employer
      to
      leave their employment with Employer. Executive further agrees that he shall
      make any subsequent employer aware of this non-solicitation
      obligation.

    

    9.3    Solicitation
      of
      Customers Prohibited.  For a period of one year following the
      termination of Executive's employment, Executive shall not, directly or
      indirectly solicit the business of any of Employer's customers in any way
      competitive with the business or demonstrably anticipated business of the
      Company. Executive further agrees that he shall make any subsequent employer
      aware of this non-solicitation obligation.

    

    10.    Non-Competition. 
      During the course of Executive's employment with the Company, Executive shall
      not directly or indirectly own any interest in (other than owning less than
      5%
      of a publicly held company), manage, control, participate in (whether as an
      officer, director, employee, partner, agent, representative, volunteer or
      otherwise), consult with, render services for or in any manner engage (whether
      or not during business hours) anywhere in the Restricted Territories (as defined
      below) in any business activity that is in any way competitive with the business
      or demonstrably anticipated business of the Company, Further, Executive will
      not
      during the course of his employment with the Company assist any other person
      or
      organization in competing or in preparing to compete with any business or
      demonstrably anticipated business of the Company anywhere in the Restricted
      Territories.

    

    "Restricted
      Territories" shall mean any county in the State of California or any other
      state
      or territory in the United States or any other similar political subdivision
      in
      any state or foreign country in which the Company has done business or has
      actually investigated doing business or where its products are sold or
      distributed whether or not for compensation.

    

    11.    Unfair
      Competition, Misappropriation of Trade Secrets and Violation of
      Solicitation/Noncompetition Clauses.  Executive acknowledges that
      unfair competition, misappropriation of trade secrets or violation of any of
      the
      provisions contained in paragraphs 8 through 10 would cause irreparable injury
      to Employer, that the remedy at law for any violation or threatened violation
      thereof would be inadequate, and that Employer shall be entitled to temporary
      and permanent injunctive or other equitable relief without the necessity of
      proving actual damages.

    

    12.    Representation
      Concerning Prior Agreements.  Executive represents to Employer that he
      is not bound by any non-competition and/or non-solicitation agreement that
      would
      preclude, limit or in any manner affect his employment with Employer. Executive
      further represents that he can fully perform the duties of his employment
      without violating any obligations he may have to any former employer, including
      but not limited to, misappropriating any proprietary information acquired from
      a
      prior employer. Executive agrees that he will indemnify and hold Employer
      harmless from any and all liability and damage, including attorneys' fees and
      costs, resulting from any breach of this provision.

    

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    

     

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

    

    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.    Successors
      and Assigns.  The rights and obligations of the Employer under this
      Agreement shall inure to the benefit of and shall be binding upon the successors
      and assigns of Employer. Executive shall not be entitled to assign any of his
      rights or obligations under this Agreement.

    

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

    

    17.    Severability. 
      Each term, condition, covenant or provision of this Agreement shall be viewed
      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.

    

    18.    Survival. 
      The provisions in paragraphs 8 through 11, 14 through 23, inclusive, of this
      Agreement shall survive termination of Executive's employment, regardless of
      who
      causes the termination and under what circumstances.

    

    19.    Waiver. 
      Neither party's failure to enforce any provision or provisions of this Agreement
      shall be deemed or in any way construed as a waiver of any such provision or
      provisions, nor prevent that party thereafter from enforcing each and every
      provision of this Agreement. 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.

    

    20.    Notices. 
      Any notice required or permitted to be given under this Agreement shall be
      sufficient, if in writing, sent by mail to Executive's residence in the case
      of
      Executive, or hand delivered to the Executive, and, in the case of Employer,
      to
      the Board of Directors at the principal corporate office.

    

    21.    Arbitration. 
      The parties agree that disputes concerning the terms of this Agreement and
      Executive's employment under this Agreement are subject to arbitration in
      accordance with the Employee Arbitration Agreement attached hereto as Exhibit
      "A" and incorporated by this reference as though fully set forth
      herein.

    

    22.             Entire
      Agreement.  Executive acknowledges receipt of this Agreement and agrees
      that this Agreement represents the entire agreement with Employer concerning
      the
      subject matter hereof, and supersedes any previous oral or written
      communications, representations, understandings or agreements with Employer
      or
      any officer or agent thereof through the date the Agreement is executed by
      the
      parties, except the Employee Arbitration Agreement which is

    

    

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    

    incorporated
      herein as set forth in paragraph 21 of this Agreement and attached hereto as
      Exhibit "A." Executive understands that no representative of the Employer has
      been authorized to enter into any agreement or commitment with Executive which
      is inconsistent in any way with the terms of this Agreement.

     

    23.     Construction. 
      This Agreement shall not be construed against any party on the grounds that
      such
      party drafted the Agreement or caused it to be drafted.

    

    24.     Counterparts. 
      This Agreement may be executed simultaneously in two or more counterparts,
      each
      of which shall be deemed to be an original, but all of which together shall
      constitute one and the same instrument. Further, facsimiles of signatures may
      be
      taken as the actual signatures, and each party agrees to furnish the other
      with
      documents bearing the original signatures within ten days of the facsimile
      transmission.

    

    25.     Acknowledgment. 
      Executive acknowledges that he has been advised by Employer to consult with
      independent counsel of his own choice, at his expense, concerning this
      Agreement, that he has had the opportunity to do so, and that he has taken
      advantage of that opportunity to the extent that he desires. Executive further
      acknowledges that he has read and understands this Agreement, is fully aware
      of
      its legal effect, and has entered into it freely based on his own
      judgment.

     

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

     

     

    
      	 	
              CLIFFORD
                FLOWERS

            
	 	 
	 	 
	
              Dated:     
                9-17-07                     
                

            	/s/
              Clifford Flowers

    

    

    

     

    
 

    
      	PATRIOT
              SCIENTIFIC CORPORATION	 
	 	 
	Dated:
              17-Sept.
              07                                           	
              By:  /s/
                James L.
                Turley                             
                

              
                Name:
                     James L.
                  Turley                            
                  

                Title: 
                  President/CEO                                 
                  

              

            

    

     

    

     

    

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A

     

    EXECUTIVE
      ARBITRATION AGREEMENT

     

    THIS
      ARBITRATION AGREEMENT ("Agreement") is made by and between Patriot Scientific
      Corporation ("Employer") and Clifford Flowers ("Executive").

    

    The
      purpose of this Agreement is to establish final and binding arbitration for
      all
      disputes arising out of Executive's relationship with Employer, including
      without limitation Executive's employment or the termination of Executive's
      employment. Executive and Employer desire to arbitrate their disputes on the
      terms and conditions set forth below to gain the benefits of a speedy, impartial
      dispute-resolution procedure. Executive and Employer agree to the
      following:

    

    2.    Claims
      Covered by the Agreement.  Executive and Employer mutually consent to
      the resolution by final and binding arbitration of all claims or controversies
      ("claims") that Employer may have against Executive or that Executive may have
      against Employer or against its officers, directors, partners, employees,
      agents, pension or benefit plans, administrators, or fiduciaries, or any
      subsidiary or affiliated company or corporation (collectively referred to as
      "Employer"), relating to, resulting from, or in any way arising out of
      Executive's relationship with Employer, Executive's employment relationship
      with
      Employer and/or the termination of Executive's employment relationship with
      Employer, 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 unfair competition, misappropriation of trade secrets, breach of
      fiduciary duty, usurpation of corporate opportunity or similar claims; claims
      for discrimination and harassment (including, but not limited to, race, sex,
      religion, national origin, age, marital status or medical condition, disability,
      sexual orientation, or any other characteristic protected by federal, state
      or
      local law); 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); and claims for violation of any public
      policy, federal, state or other governmental law, statute, regulation or
      ordinance.

    

    3.    Required
      Notice of Claims and Statute of Limitations.  Executive may initiate
      arbitration by serving or mailing a written notice to the Board of Directors.
      Employer may initiate arbitration by serving or mailing a written notice to
      Executive at the last address recorded in Executive's personnel file. The
      written notice must specify the claims asserted against the other party. Notice
      of any claim sought to be arbitrated must be served within the limitations
      period established by applicable federal or state law.

    

    4.    Arbitration
      Procedures.

    

    a.    After
      demand
      for arbitration has been made by serving written notice under the terms of
      Section 2 of this Agreement, the party demanding arbitration shall file a demand
      for arbitration with the American Arbitration Association ("AAA") in San Diego
      County.

     

     

    EXHIBIT
      "A"

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

     

    b.    Except
      as
      provided herein, all rules governing the arbitration shall be the then
      applicable rules set forth by the AAA. If the dispute is employment-related,
      the
      dispute shall be governed by the AAA's then current version of the national
      rules for the resolution of employment disputes. The AAA's then applicable
      rules
      governing the arbitration may be obtained from the AAA's website which currently
      is www.adr.org.

    

    c.    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.

    

    d.    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 3(c) of this
      Agreement.

    

    e.    Discovery
      shall be allowed and conducted pursuant to the then applicable arbitration
      rules
      of the AAA. The arbitrator is authorized to rule on discovery motions brought
      under the applicable discovery rules.

    

    5.    Application
      for Emergency Injunctive and/or Other Equitable Relief. Claims by Employer
      or Executive 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 subject to the then current version
      of the AAA's Optional Rules for Emergency Measures of Protection set forth
      within the AAA's Commercial Dispute Resolution Procedures. The AAA shall appoint
      a single emergency arbitrator to handle the claim(s) for emergency relief.
      The
      emergency arbitrator selected by the AAA shall be either a retired judge or
      an
      individual experienced in handling matters involving claims for emergency
      injunctive and/or other equitable relief relating to unfair competition and
      the
      use or unauthorized disclosure of trade secrets and/or confidential
      information.

    

    6.    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.

    

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

    8.            Administrative
      Agencies. Nothing in this Agreement is intended to prohibit Employee from
      filing a claim or communicating with the United States Equal Employment
      Opportunity Commission ("EEOC"), the National Labor Relations Board ("NLRB")
      or
      the California Department of Fair Employment and Housing ("DFEH").

     

     

    
      EXHIBIT
        "A"

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

    

    9.            Construction.     Should
      any portion of this Agreement be found to be unenforceable, such portion will
      be
      severed from this Agreement, and the remaining portions shall continue to be
      enforceable.

    

    10.         
      Representation,
      Fees and Costs. Each party may be represented by an attorney or other
      representative selected by the party. Except as otherwise provided for by
      statute, the arbitrator shall award reasonable attorneys' fees and costs
      (including without limitation, costs for depositions, experts, etc.) to the
      prevailing party except that Employer shall be responsible for the arbitrator's
      fees and costs, or any fees or costs charged by the AAA, to the extent they
      exceed any fee or cost that Executive would be required to bear if the action
      were brought in court.

    

    11.         
      Waiver
      of Jury Trial/Exclusive Remedy. EXECUTIVE AND EMPLOYER 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.        
      Sole
      and Entire Agreement. This Agreement expresses the entire Agreement of the
      parties and shall supersede any and all other agreements, oral or written,
      concerning arbitration. This Agreement is not, and shall not be construed to
      create, any contract of employment, express or implied.

    

    13.         
      Requirements
      for Modification or Revocation. This Agreement to arbitrate shall survive
      the termination of Executive's employment. It can only be revoked or modified
      by
      a writing signed by the Chairperson of the Board of Directors of Employer
      and Executive that specifically states an intent to revoke or modify this
      Agreement.

    

    14.             Voluntary
      Agreement. EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS
      AGREEMENT, UNDERSTANDS ITS TERMS, AND AGREES THAT ALL UNDERSTANDINGS AND
      AGREEMENTS BETWEEN EMPLOYER AND EXECUTIVE RELATING TO THE SUBJECTS COVERED
      IN
      THE AGREEMENT ARE CONTAINED IN IT. EXECUTIVE HAS KNOWINGLY AND VOLUNTARILY
      ENTERED INTO THE AGREEMENT WITHOUT RELIANCE ON ANY PROVISIONS OR REPRESENTATIONS
      BY EMPLOYER, OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

     

    
      EXHIBIT
        "A"

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

     

    EXECUTIVE
      FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THE OPPORTUNITY TO DISCUSS
      THIS AGREEMENT WITH EXECUTIVE'S PRIVATE LEGAL COUNSEL AND EXECUTIVE HAS UTILIZED
      THAT OPPORTUNITY TO THE EXTENT DESIRED.

     

    
      
        	
                EXECUTIVE:

              	
                EMPLOYER:

              
	 	 
	 	
                PATRIOT
                  SCIENTIFIC CORPORATION, a Delaware corporation

              
	 	 
	/s/
                Clifford
                Flowers              
                 	
                By: 
                  /s/ James L.
                  Turley              
                  

              
	Clifford
                Flowers	
                Name: 
                  James L. Turley

              
	 	
                Title: 
                  President/CEO

              

      

    

     

     

     

     

     

     

     

     

    
      EXHIBIT
        "A"

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
 

    PATRIOT
      SCIENTIFIC CORPORATION CFO JOB DESCRIPTION

     

    PRIMARY
      RESPONSIBILITIES

     

     

    
      	
               

            	
              1.

            	
              Create,
                coordinate, and evaluate the financial programs and supporting information
                systems of the company to include budgeting, tax planning, real estate,
                and conservation of assets.

            

    

    
      	
               

            	
              2.

            	
              Approve
                and coordinate changes and improvements in automated financial and
                management information systems for the
                company.

            

    

    
      	
               

            	
              3.

            	
              Oversee
                and full responsibility for SEC compliance and timely filings of
                quarterly
                10 Q's, annual 10K's and all other related SEC required
                filings.

            

    

    
      	
               

            	
              4.

            	
              Establish
                a close working relationship with CEO as a right hand person and
                work
                closely and effectively with the Patriot Board members and committee
                groups, in particular the Audit Committee. Retention of outside resources,
                ie consultants in connection with financial reporting must be approved
                by
                the Audit Committee.

            

    

    
      	
               

            	
              5.

            	
              Ensure
                compliance with local, state, and federal budgetary reporting
                requirements.

            

    

    
      	
               

            	
              6.

            	
              Oversee
                the approval and processing of revenue, expenditure, and position control
                documents, department budgets, mass salary updates, ledger, and account
                maintenance and data entry.

            

    

    
      	
               

            	
              7.

            	
              Coordinate
                the preparation of financial statements, financial reports, special
                analyses, and information reports.

            

    

    
      	
               

            	
              8.

            	
              Develop
                and implement finance, accounting, billing, and auditing
                procedures.

            

    

    
      	
               

            	
              9.

            	
              Establish
                and maintain appropriate internal control
                safeguards.

            

    

    
      	
            	
              10.

            	
              Interact
                with CEO and Controller to provide consultative support to planning
                initiatives through financial and management information analyses,
                reports, and recommendations.

            

    

    
      	
            	
              11.

            	
              Ensure
                records systems are maintained in accordance with generally accepted
                auditing standards and GAAP
                reporting.

            

    

    
      	
            	
              12.

            	
              Work
                closely with CEO to develop and direct the implementation of strategic
                business and/or operational plans, projects, programs, and
                systems.

            

    

    
      	
            	
              13.

            	
              Analyze
                cash flow, cost controls, and expenses to guide business leaders.
                Analyze
                financial statements to pinpoint potential weak
                areas.

            

    

    
      	
            	
              14.

            	
              Establish
                and implement short- and long-range departmental goals, objectives,
                policies, and operating procedures.

            

    

    
      	
            	
              15.

            	
              Oversee
                financial management of foreign operations to include developing
                financial
                and budget policies and procedures.

            

    

    
      	
            	
              16.

            	
              Other
                duties as assigned.

            

    

     

     

    ADDITIONAL
      RESPONSIBILITIES

    

    
      	
               

            	
              1.

            	
              Represent
                the company externally to media, government agencies, funding agencies,
                and the general public.

            

    

    
      	
               

            	
              2.

            	
              Recruit,
                train, supervise, and evaluate department
                staff.

            

    

     

     

    
 

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
 

    KNOWLEDGE
      AND SKILL REQUIREMENTS

     

    
      	
               

            	
              1.

            	
              Strong
                background in SEC and Sarbanes compliance and filings. Experience
                in
                strategic planning and execution. Knowledge of contracting, negotiating,
                and change management. Knowledge of finance, accounting, budgeting,
                and
                cost control principles including Generally Accepted Accounting
                Principles. Knowledge of automated financial and accounting reporting
                systems. Knowledge of federal and state financial regulations. Ability
                to
                analyze financial data and prepare financial reports, statements,
                and
                projections.

            

    

    
      	
               

            	
              2.

            	
              Work
                requires professional written and verbal communication and interpersonal
                skills. Ability to motivate teams to produce quality materials within
                tight timeframes and simultaneously manage several projects. Ability
                to
                participate in and facilitate group
                meetings.

            

    

    
      	
               

            	
              3.

            	
              This
                is normally acquired through a combination of the completion of a
                Masters
                Degree in Finance or Accounting, and no less than ten years of experience
                in a senior-level finance or accounting position, and a
                CPA.

            

    

    
      	
               

            	
              4.

            	
              Work
                requires willingness to work a flexible
                schedule.

            

    

     

     

    Acknowledged
      Receipt by:

    

    
      	
              /s/
                Clifford Flowers

            	
              9-17-07

            
	
              Clifford
                Flowers

            	
              Date

            

    

     

    
 

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    
 

    SEPARATION
      AGREEMENT AND RELEASE OF CLAIMS

     

     

    In
      consideration of the promises, terms, conditions, provisions and covenants
      described below, the sufficiency of which consideration is hereby acknowledged,
      the parties agree as follows:

     

    1.    Parties.
      This Separation Agreement and Release of Claims ("Agreement") is made by and
      between_______________("Mr._____________") on the one hand and Patriot
      Scientific Corporation ("PTSC" or the "Company") on the other hand. Mr. _____and
      the Company shall collectively be referred to as the "Parties".

    

    2.    Purpose
      of Agreement. The purpose of this Agreement is to settle completely and
      cause the release of PTSC and all persons and entities being released herein
      from every claim or cause of action which Mr. has or may have against PTSC
      and
      all persons and entities being released herein.

    

    3.             Consideration.
      In consideration of the covenants and releases given herein, PTSC agrees to
      pay
      Mr._____ severance equivalent to ___________ months his current base salary,
      less standard payroll taxes and deductions (the "Severance Payment").
      ___________ is in consideration of Mr. _______'s release of all claims other
      than Age Discrimination Employment Act of 1967 ("ADEA") claims, given herein.
      __________ is in consideration of Mr. ____________'s release of all ADEA claims,
      given herein. The Severance Payment will be tendered to Mr.___________ in
      installments per the Company's regular payroll schedule eight (8) days after
      PTSC has received the original of this Agreement executed by Mr. ___________
      without Mr. _____________ having revoked his ADEA release addressed in Paragraph
      5 of this Agreement. The parties agree Mr.___________ is not entitled to any
      other consideration, compensation or benefits under any employment contract
      or
      otherwise.

    

    4.    Release
      of All Claims Except ADEA Claims.

    

    (a)    Mr.______for
      himself and for his successors, assigns, heirs, executors, administrators and
      representatives, in consideration of the covenants contained herein, hereby
      releases and discharges PTSC, and each of its past and present officers,
      directors, employees, shareholders, agents, predecessors, affiliated entities,
      successors, assigns, joint venturers, attorneys, heirs, executors,
      administrators and representatives ("Releasees") from any and all claims,
      charges and causes of action which Mr. has or may have against PTSC or any
      of
      the Releasees, accruing or arising on or before the date of this Agreement,
      including, (b)but
      not
      limited to, any claims arising out of or related to Mr. ___________'s employment
      with PTSC, PTSC's actions or representations concerning Mr.__________'s
      employment, the termination of his employment, the payment of wages, claims
      for
      breach of contract, breach of implied covenant of good faith and fair dealing,
      negligent misrepresentation, fraud, infliction of emotional distress, invasion
      of privacy, defamation, employment discrimination in violation of the California
      Fair Employment and Housing Act, Title VII
      of the Civil Rights Act of 1964, or the Americans with
      Disabilities Act or similar state or federal law, violation of public policy,
      violation of the California Labor Code, violation of the California Business
      and
      Professions Code, violation of the Fair Credit Reporting Act, violation of
      the
      California Consumer Credit Reporting Agencies Act, violation of the California
      Investigative Consumer Reporting Agencies

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

     

    Act
      and
      violation of constitutional rights. This release provision specifically excludes
      any and all loss, liability, claims, demands, causes of action or suits of
      any
      type arising under the ADEA. Mr._________ 's release of ADEA claims will be
      separately addressed in Paragraph 5 of this Agreement. The Parties expressly
      acknowledge that PTSC would not enter into this Agreement but for the
      representation and warranty of Mr.__________ that he is hereby releasing any
      and
      all claims of any nature whatsoever, known or unknown, whether statutory or
      at
      common law, which he now has or could assert directly or indirectly against
      any
      of the persons or entities being released herein except as expressly reserved
      herein.

     

    (b)    Mr.____________expressly
      agrees that neither he nor his spouse, employees, agents, representatives,
      successors, assigns or attorneys will continue and/or institute any legal or
      administrative proceedings against any party to this Agreement, or any person
      or
      entity released in this Agreement, before any court, administrative agency,
      arbitrator or any other tribunal whatsoever, by reason of any claim, liability
      or cause of action, whether known or unknown, being released
      herein.

    

    5.    Release
      of All ADEA Claims.

     

    (a)     This
      section of the Agreement exclusively addresses Mr.__________ 's release of
      claims arising under federal law involving discrimination on the basis of age
      in
      employment (age forty and above). This section is provided separately, in
      compliance with federal law, including but not limited to the Older Workers'
      Benefit Protection Act of 1990, to ensure that Mr. clearly understands his
      rights so that any release of age discrimination claims under federal law (the
      "ADEA Release") is knowing and voluntary on the part of
      Mr._____________

    

    (b)     Mr.
      ________ represents, acknowledges and agrees that he has been advised in
      writing, to discuss this Agreement with an attorney, and to the extent, if
      any,
      that Mr. __________ has desired, Mr.____________  has done so; that
      Mr.____________  has been given twenty-one (21) days from receipt of
      this Agreement to review and consider this ADEA Release before signing it;
      that
      Mr.  understands that he may use as much of this twenty-one (21) day
      period as he wishes prior to releasing the ADEA claims; that no promise,
      representation, warranty or agreement not contained herein has been made by
      or
      with anyone to cause him to sign this Agreement; that this Agreement has been
      read and interpreted for him by counsel to the extent desired, and that he
      fully
      understands and is aware of its meaning, intent, content and legal effect;
      and
      that he is executing this release voluntarily and free of any duress or
      coercion. Mr.__________  further understands and agrees that he is not
      waiving any rights or claims under the ADEA which might arise after the date
      he
      signs this Agreement.

    

    (c)            The
      Parties acknowledge that for a period of seven (7) days following the execution
      of this Agreement, Mr.  may revoke the ADEA Release, and the ADEA
      Release shall not become effective or enforceable until the revocation period
      has expired. This ADEA Release shall become effective eight {8) days after
      it
      has been signed by the Parties, and in the event the Parties do not sign on
      the
      same date, then this ADEA Release shall become effective eight (8) days after
      the date it is signed by Mr. _________.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    
 

    (d)     In
      consideration of the payment to be made to Mr.___________described in Paragraph
      3 of this Agreement, which Mr.___________would otherwise not be entitled to
      except for signing this Agreement and releasing his ADEA claims, Mr.___________
      does hereby unconditionally, irrevocably and absolutely release and discharge
      PTSC, its past and present directors, officers, employees, shareholders, agents,
      predecessors, affiliated entities, successors, assigns, joint venturers,
      attorneys, heirs, executors, administrators and representatives ("Releasees")
      from any and all loss, liability, claims, demands, causes of action or suits
      of
      any type arising under ADEA.

    

    6.    Waiver
      of Known and Unknown Claims. It is the intention of the parties in executing
      this instrument that it shall be effective as a bar to each and every claim,
      demand and cause of action herein above specified. In furtherance of this
      intention, Mr.  has agreed to and does expressly waive any and all
      rights and benefits conferred upon him by the provisions of section 1542 of
      the
      California Civil Code, which provides:

     

    A
      general
      release does not extend to claims which the creditor does not know or suspect
      to
      exist in his or her favor at the time of executing the release, which if known
      by him or her, must have materially affected this settlement with the
      debtor.

    

    Notwithstanding
      the provisions of section 1542, this Agreement shall be in full settlement
      of
      all claims and disputes being released herein, including unknown claims. Having
      received advice from counsel to the extent desired, Mr._______ expressly waives
      all rights under section 1542, which he fully understands. Mr. _______ waives
      all rights which he may have by virtue of Section 1542 and any similar law
      of
      any state or territory of the United States, or federal law.

    

    7.            Future
      Employment. Mr._______ agrees that neither PTSC nor any of its affiliates or
      related entities are obligated to offer employment to him or to hire him for
      any
      reason, regardless of the circumstances, at any time on or after the date of
      this Agreement. Mr._______ acknowledges that he shall not knowingly apply for
      nor accept such employment. Mr. _______acknowledges that any such application
      for employment may be denied and he agrees to waive any and all claims arising
      out of or related to his application and/or the denial of such
      employment.

    

    8.            Cooperation.
      In further consideration of the promises and covenants described herein,
      Mr._______ agrees to assist and cooperate in connection with any dispute between
      PTSC and third parties where there are allegations of which Mr. _______ would
      have any knowledge based on his relationship with PTSC. Such cooperation
      includes but is not limited to appearing as a witness on behalf of PTSC in
      any
      deposition, trial, arbitration or other dispute resolution forum; and assisting
      with the preparation of this defense or prosecution of any such claims.
      Mr.   shall be entitled to reimbursement of his reasonable out of
      pocket expenses incurred as a result of any such cooperation but only as to
      those expenses pre-approved by PTSC.

    

    9.            No
      Admission of Liability. This Agreement is a compromise and settlement of
      potential or disputed claims being released herein. This Agreement and the
      covenants made in this Agreement do not constitute an admission of liability
      on
      the part of PTSC or its past or present officers, directors, partners, agents,
      affiliated entities, successors, assignees, employees, attorneys or
      representatives, or an admission, directly or by implication, that PTSC or
      any
      of the Releasees have violated any law, rule, regulation, policy or any
      contractual right or other obligation owed to any Party. PTSC and the Releasees
      specifically deny all allegations of improper or unlawful conduct. PTSC intends
      merely to avoid litigation.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

     

    10.            No
      Assignment or Transfer of
      Claims. Mr. _____ represents and warrants that
      he
      has not heretofore assigned, transferred or purported to assign or transfer
      to
      any other person or entity, any rights, claims or causes of action herein
      released and discharged, and that no other person or entity has any interest
      in
      the matters herein released and discharged, except as expressly stated herein.
      Furthermore, Mr._____shall indemnify and hold PTSC, and all persons or entities
      released herein, harmless
      from and against any rights, claims or causes of action which arise from or
      have
      been assigned or transferred contrary to the foregoing representations, or
      in
      violation of the foregoing warranties, and shall hold such persons or entities
      harmless from any and all loss, expense and/or liability arising directly or
      indirectly out of the breach of any of the foregoing representations or
      warranties.

    

    11.           Confidentiality.

     

    (a)     Mr.
      _______warrants and represents that, as of the date of his execution of this
      Agreement, he has not disclosed or discussed the terms of this Agreement, either
      directly or through others, with any person or entity except his attorney,
      PTSC's board members and/or current senior management, members of immediate
      family and accountants or other tax advisors.

    

    (b)     Mr.
      _____
      stipulates, agrees and promises that the terms and conditions of this Agreement
      (including, but not limited to, the fact and amount of consideration), all
      communications relating to this Agreement, and all documents relating thereto
      (collectively the "Confidential Matters"), shall not be described, discussed
      or
      disseminated or caused to be described, discussed, or disseminated in any
      manner, either written or oral, directly or indirectly, with any person,
      organization, company or entity without the prior written consent of the President of PTSC, except
      as
      provided herein.

    

    (c)     Mr.
      _____  stipulates, agrees and promises to avoid any and all publicity
      with respect to the Confidential Matters, and specifically stipulates, agrees
      and promises not to describe or discuss the Confidential Matters with any member
      of the news media, or any other person or entity.

    

    (d)            Mr.
      _____ hereby stipulates and agrees not to make, induce or attempt to influence
      anyone to make, any statement whatsoever, whether written or oral, directly
      or
      indirectly, to any member of any media, or any other person or entity,
      including, but not limited to, statements made or sent on the Internet via
      e-mail, chat room or message board, which is derogatory or disparaging with
      respect to Releasees or in any way which would reflect upon the legal liability
      or responsibility of the Releasees in connection with any of the released
      claims, any other Confidential Matters, or any other disparaging comments about
      the Releasees. Mr.  further agrees and promises not to encourage or
      facilitate in any future litigation or claims against any of the
      Releasees

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    (e)     In
      the
      event that Mr. _______ is contacted by any member of any media, or any other
      person or entity asking to comment on any Confidential Matters, he stipulates,
      agrees and promises that he shall say nothing more the "no comment" and
      specifically shall not refer in any other manner to the terms, conditions,
      or
      amounts paid or to be paid pursuant to the Agreement, or that any amount has
      been paid, whether in specific or general terms.

     

    (f)    It
      shall not
      be a violation for Mr.  to disclose the Confidential Matters to his
      professional legal and tax advisors, or spouse, so long as the advisors and
      spouse maintain the confidentiality, or in litigation required to enforce the
      terms of this Agreement should Company or its representatives breach the terms
      hereof. Nothing in this Paragraph 11 of this Agreement shall be construed as
      prohibiting any disclosure of information pursuant to a lawful subpoena, order
      of a court or administrative agency or as otherwise required by
      law.

    

    (g)    The
      parties
      expressly agree that the provisions of this Paragraph 11 of this Agreement
      are of material importance and were a material inducement to PTSC's execution
      of
      this Agreement. The parties stipulate and agree that the provisions stated
      in
      this Paragraph 11 of this Agreement are to be liberally construed and that
      any
      violation of the provisions herein, shall be deemed a material breach of this
      Agreement, and in the event Mr. _____________ violates any provision of this
      Paragraph 11 of this Agreement, he shall be subject to all available civil
      remedies, including, but not limited to, an action for damages and/or injunctive
      relief and shall pay for reasonable attorneys' fees and costs incurred by PTSC
      in seeking enforcement of the terms of this Paragraph 11, including reasonable
      attorneys' fees and costs incurred in recovering damages. Further, since the
      actual damages which would result from any breach of this Paragraph 11 are
      uncertain and would be extremely difficult to ascertain, Mr. _____ shall pay
      the
      sum of $25,000 as liquidated and agreed damages for each individual breach
      of
      this Paragraph. The Parties also agree that the prevailing party will pay for
      reasonable attorneys' fees and costs incurred by the other party in seeking
      enforcement of the terms of this Paragraph 11, including reasonable attorneys'
      fees and costs incurred in recovering said liquidated and agreed
      damages.

    

    12.             Non-Solicitation
      of Employees. Mr.  agrees not to solicit or attempt to solicit any
      employees, consultants, or independent contractors of the Company to terminate
      their existing employment, consulting or contractor relationships with the
      Company for a period of one year from the date he executes this
      Agreement.

    

    13.             No
      External or Prior Representations. Mr.  represents and warrants
      that he is not relying, and has not relied, on any representations or
      statements, verbal or written, made by any other party with regard to his rights
      or asserted rights or the execution and terms of this Agreement, except as
      provided herein. He has consulted with an attorney to the extent he has desired
      regarding the terms of this Agreement and has entered into this Agreement
      freely, willingly and without any coercion or duress.

    

     14.    Entire
      Agreement. This Agreement constitutes the entire written agreement of
      compromise and settlement between the parties. There are no other agreements,
      whether oral or written, modifying its terms. This Agreement supersedes any
      and
      all prior written or oral agreements or negotiations between the parties, except
      the restrictive covenants stated in  paragraphs through of
      Mr.  's Employment Agreement, dated _______ provisions of the
      Proprietary Information, Inventions and Non-Solicitation Agreement previously
      signed by Mr. , remain in full force and effect, and are hereby incorporated
      by
      this reference as though fully set forth herein. Copies of these respective
      agreement are attached as Exhibits "A" and "B" hereto. In the event there is
      any
      discrepancy between this Agreement and the attached Exhibits, the provisions
      of
      this Agreement shall govern. The terms of this Agreement can only be modified
      by
      a writing signed by the Parties expressly stating that such modification is
      intended.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

    15.     Cooperation
      in Executing Settlement Documentation. The Parties to this Agreement shall
      execute any and all further documents that may be required to effectuate the
      purposes of this Agreement.

    

    16.    Binding
      on
      Successors. This Agreement shall be binding upon and shall inure to the
      benefit of the Parties hereto and to their respective representatives,
      successors, heirs, agents and assigns.

    

    17.     Counterparts.
      This Agreement may be executed in counterparts, and if so executed each such
      counterpart shall have the force and effect of an original.

    

    18.      Severability.
      The invalidity of any provision of this Agreement as determined by a court
      of
      competent jurisdiction shall in no way affect the validity of any other
      provision hereof.

    

    19.     Waiver.
      No
      breach of any provision of this Agreement can be waived unless in writing.
      Waiver of any one breach shall not be deemed to be a waiver of any other breach
      of the same or any other provision of this Agreement.

    

    20.    Construction.
      This Agreement shall not be interpreted for or against any party on the basis
      that such party or its legal representative caused part or all of this Agreement
      to be drafted.

    

    21.             Section
      Headings. The section headings of this Agreement are intended solely for
      convenience of reference and shall not in any manner amplify, limit, modify
      or
      otherwise be used in the interpretation of any of the provisions
      hereof.

    

    22.             Arbitration.   In
      the event of any dispute between Mr. _______ and PTSC concerning any aspect
      of
      this Agreement, all such disputes shall be resolved by binding arbitration
      before a single neutral arbitrator in San Diego, California. The arbitrator
      shall be selected from the American Arbitration Association according to its
      procedures. All rules governing the arbitration shall be the rules set forth
      in
      the American Arbitration Association. The Parties shall bear their own costs
      and
      attorneys' fees incurred in any such action, except as provided in Paragraph
      11,
      above.

    

    23.             Venue.
      The parties to this Agreement expressly agree that the only proper venue for
      any
      action arising out of a breach of this Agreement shall be in San Diego County,
      California. The parties to this Agreement expressly agree that the laws of
      the
      State of California will control all issues arising in such action.

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    24    Governing
      Law, This
      Agreement shall be construed in accordance with, and be deemed governed by,
      the
      laws of the State of California.

     

    

    WE,
      THE
      UNDERSIGNED, HAVE READ THE FOREGOING AND, HAVING BEEN ADVISED BY OUR COUNSEL
      TO
      THE EXTENT DESIRED, FULLY UNDERSTAND AND AGREE TO ITS TERMS.

    

    DATED:_____________,
      20__

    

    
      	 	
              ________________

            
	 	
              [Employee
                Name]

            
	
              DATED:_______
                __, 20__

            	
              Patriot
                Scientific Corporation

            
	 	 
	 	
              By:_____________________

            
	 	
              Title:____________________VANGUARD HEALTH SYSTEMS, INC.

EXHIBIT 4.9

SUPPLEMENTAL INDENTURE

                        FOURTH SUPPLEMENTAL INDENTURE (this “Supplemental Senior Subordinated Indenture”), dated as of  June
25, 2007, among  Vanguard San Antonio Partners, LLC, a Delaware limited liability company ( the “New Guarantor”) and a subsidiary of Vanguard Health Holding Company II, LLC, a Delaware limited liability company (“VHS Holdco
II”), Vanguard Holding Company II, Inc., a Delaware corporation and a wholly owned subsidiary of VHS Holdco II (together with VHS Holdco II, the “Issuers”), Vanguard Health Holding Company I, LLC, Vanguard Health Systems, Inc. and U.S.
Bank National Association, as trustee under the Senior Subordinated Indenture referred to below (the “Trustee”).

WITNESSETH

                        WHEREAS, the Issuers and the existing Guarantors have heretofore executed and delivered to the Trustee an indenture (as
amended, supplemented or otherwise modified, the “Senior Subordinated Indenture”), dated as of September 23, 2004 providing for the issuance of 9% Senior Subordinated Notes due 2014 (the “Senior Subordinated Notes”);

                        WHEREAS, Section 4.16 of the Senior Subordinated Indenture provides that under certain circumstances the New Guarantor shall
execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Issuers’ Obligations under the Senior Subordinated Notes and the Senior Subordinated Indenture on the terms and conditions
set forth herein (the “Note Guarantee”); and

                        WHEREAS, pursuant to Section 9.01 of the Senior Subordinated Indenture, the Trustee and the Issuers are authorized to execute
and deliver this Supplemental Senior Subordinated Indenture.

                        NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the New Guarantor, the Issuers and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Senior Subordinated Notes as follows:

                        1.         DEFINED TERMS.  Defined terms used herein without definition shall
have the meanings assigned to them in the Senior Subordinated Indenture.

                        2.         AGREEMENT TO GUARANTEE.  The New Guarantor hereby agrees, jointly and
severally with all existing Guarantors (if any), to provide an unconditional Guarantee on the terms and subject to the conditions set forth in Article 12 of the Senior Subordinated Indenture and to be bound by all other applicable provisions of the Senior
Subordinated Indenture and the Senior Subordinated Notes and to perform all of the obligations and agreements of a Guarantor under the Senior Subordinated

1

Indenture.  The Guarantee of the New Guarantor shall be subordinated to Senior Debt as provided in the Senior Subordinated Note Indenture

                        3.         NO RECOURSE AGAINST OTHERS.  No past, present or future director,
manager, officer, employee, incorporator, stockholder or member of the Issuers, any parent entity of the Issuers or any Subsidiary, as such, will have any liability for any obligations of the Issuers or the Guarantors under the Senior Subordinated Notes, this Senior
Subordinated Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Senior Subordinated Notes by accepting a Senior Subordinated Note waives and releases all such
liability.  The waiver and release are part of the consideration for issuance of the Senior Subordinated Notes.  The waiver may not be effective to waive liabilities under the federal securities laws.

                        4.         NOTICES.  All notices or other communications to the New Guarantor
shall be given as provided in Section 14.02 of the Senior Subordinated Indenture.

                        5.         RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF
INDENTURE.  Except as expressly amended hereby, the Senior Subordinated Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Senior Subordinated
Indenture shall form a part of the Senior Subordinated Indenture for all purposes, and every holder of Senior Subordinated Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

                        6.         GOVERNING LAW.  THIS INDENTURE, THE NOTES AND THE SENIOR SUBORDINATED
NOTE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                        7.         COUNTERPARTS.  The parties may sign any number of copies of this
Supplemental Senior Subordinated Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

                        8.         EFFECT OF HEADINGS.  The Section headings herein are for convenience
only and shall not affect the construction hereof.

                        9.         TRUSTEE MAKES NO REPRESENTATION.  The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.

2

                        IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of
the date first above written.

Dated: June 25, 2007

                                                                             
VANGUARD SAN ANTONIO

                                                                             
PARTNERS, LLC

                                                                             
By:/s/ James H.
Spalding                                     

                                                                             
Name: James H. Spalding

                                                                             
Title: Senior Vice President

                                                                             
VANGUARD HEALTH HOLDING 

                                                                             
COMPANY II, LLC

                                                                             
By:/s/ James H.
Spalding                                     

                                                                             
Name: James H. Spalding

                                                                             
Title: Senior Vice President

                                                                             
VANGUARD HOLDING COMPANY II, 

                                                                             
INC.

                                                                             
By:/s/ James H.
Spalding                                     

                                                                             
Name: James H. Spalding

                                                                             
Title: Senior Vice President

                                                                             
VANGUARD HEALTH HOLDING

                                                                             
COMPANY I, LLC

                                                                             
By:/s/ James H.
Spalding                                     

                                                                             
Name: James H. Spalding

                                                                             
Title: Senior Vice President

                                                                             
VANGUARD HEALTH SYSTEMS, INC.

                                                                             
By:/s/ James H.
Spalding                                     

                                                                             
Name: James H. Spalding

                                                                             
Title: Senior Vice President

3

                                                                             
U.S. BANK NATIONAL ASSOCIATION

                                                                             
as Trustee

                                                                             
By:/s/ Richard
Prokosch                                      

                                                                             
Name: Richard Prokosch

                                                                             
Title: Vice President

4

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