Exhibit 10.1

EMPLOYMENT AGREEMENT

Agreement made and effective this 27th day of August, 2008, between
VirtualScopics, Inc., a Delaware corporation (the “Company”), and L. Jeffrey
Markin, Executive Officer, (“Executive Officer”).

WITNESSETH

WHEREAS, Executive Officer has been employed by the Company as its President and
Chief Executive Officer (“CEO”) since August 2006;

WHEREAS, the Company believes and recognizes that Executive Officer’s
contributions to the Company’s improvement and success have been substantial;

WHEREAS, the Company desires to continue to employ Executive Officer as its CEO
and to be assured of Executive Officer’s services on the terms and conditions
set forth in this Agreement;

WHEREAS, Executive Officer desires to be employed by the Company as its CEO; and

WHEREAS, the Company and Executive Officer intend and desire to be legally bound
by this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions contained in this Agreement, the Company and Executive Officer agree
as follows:

1. Employment. The Company hereby employs Executive Officer as its CEO for the
term of employment as defined in paragraph 2 of this Agreement. Executive
Officer shall be responsible for the management of the operations of the
Company, subject to the supervision and direction of the Board of Directors of
the Company (the “Board”). Executive Officer shall report directly to the Board.

2. Term of Employment. Executive Officer’s “Term of Employment” under this
Agreement shall commence as of the effective date hereof and shall end one year
following the effective date hereof, except as the term may be extended in a
writing executed by the Company and Executive Officer.

3. Performance. Executive Officer shall devote his full working time, attention,
skills and energies to the performance of his duties as CEO of the Company.

 
 

--------------------------------------------------------------------------------

 

4. Salary, Bonus and Benefits.

(a) Salary. As basic compensation for his services under this Agreement, and
effective as of the effective date hereof, the Company shall pay to Executive
Officer a gross salary of $265,000 per year. Executive Officer’s salary shall be
paid in accordance with the customary payroll practices of the Company.

(b) Bonus. In addition to his Salary, and as incentive bonus for his services
under this Agreement, the Company shall establish an annual incentive bonus plan
for Executive tied to the achievement of certain Company Annual Plan goals, with
a targeted maximum payout of 30% of Executive's base salary in effect at the end
of each fiscal year. The bonus will be paid to Executive on a timely basis upon
official close of the fiscal year. The committee reserves the right, at its sole
discretion, to exceed the maximum payout for exceptional performance.

(c) Benefits. Executive Officer shall participate in all benefit plans, option
plans, retirement plans, vacation plans, and other plans, arrangements, policies
and perquisites as are afforded from time to time to other executive officers of
the Company, including, but not limited to, all health, medical and dental
(“health”) insurance plans, disability insurance plans and all other insurance
plans.

Executive Officer also shall be entitled to reimbursement of all reasonable
expenses which are incurred by Executive Officer in the performance of his
duties with the Company and which are documented in accordance with procedures
approved by the Company for all executive officers of the Company.

5. Other Activities.

(a) Executive Officer may serve from time to time as an advisor, director or
trustee of outside organizations (e.g., for-profit organizations, not-for-profit
organizations, professional organizations), provided that such service does not
conflict with (i) the business or reputation of the Company, or (ii) Executive
Officer’s performance of his duties with the Company.

(b) Executive Officer shall consult with, and obtain the consent of, the
Chairman, which consent shall not be unreasonably withheld, with respect to his
service as an advisor, director or trustee of any outside organization.

(c) The Chairman shall have the sole discretion, to be exercised reasonably, in
determining whether or not Executive Officer’s service as an advisor, director
or trustee of any outside organization conflicts with (i) the business or
reputation of the Company, or (ii) Executive Officer’s performance of his duties
with the Company.

 
2

--------------------------------------------------------------------------------

 

6. Membership on the Company’s Board of Directors

It is the intention and expectation of the Company and Executive Officer that
Executive Officer shall serve as a member of the Board during the Term of
Employment. The Company shall use its best efforts, as customary for any
proposed nominee, to cause Executive Officer’s re-election to the Board, and
Executive Officer agrees to serve in such capacity without compensation in
addition to the compensation he receives as CEO.

7. Termination of Employment.

(a) Voluntary termination by Executive Officer

Executive Officer may voluntarily terminate his employment under this Agreement
by delivering written notice to the Board of Directors of his decision to
terminate his employment.

(b) Voluntary termination by Executive Officer following change in control

Within 180 days following a “change in control” of the Company (as defined
below), and either i) following a decision or implementation of a decision by
the Company to materially change the title, status, responsibilities, location
of employment, benefits or privileges to which the Executive Officer was
entitled immediately prior to the “change in control”, or ii) this Agreement is
not extended or renewed, or replaced with a fully executed substantially
equivalent agreement, prior to 14 days before it is scheduled to expire, the
Executive Officer may elect to terminate his employment upon thirty (30) days’
written notice to the Board of Directors or the appropriate governing
organization in the event the Board of Directors as it is currently constituted
is no longer in place. Executive Officer’s termination of his employment shall
be effective on the thirty-first day after the date on which the written notice
is delivered.

In the event that Executive Officer shall elect to terminate his employment
pursuant to this paragraph 7(b), the Company shall pay him, as separation pay,
one year’s worth of his gross annual salary, as defined in 4(a) herein, as of
the date upon which his termination becomes effective plus twelve (12) months
worth of benefits Executive Officer is then currently receiving. The gross
salary and benefits shall be payable within thirty (30) days following the
effective date of the termination.

For purposes of this Agreement, a “change in control” shall be deemed to have
occurred if (A) a majority of the Board is replaced in a 12 month period by
directors whose appointment or election was not endorsed by a majority of the
Board before their appointment or election; or (B) substantially all the assets
of the Company are disposed of by the Company pursuant to a merger,
consolidation, partial or complete liquidation, a sale of assets (including
stock of a subsidiary) or otherwise, but not including a reincorporation or
similar transaction resulting in a change only in the form of ownership of such
assets.

 
3

--------------------------------------------------------------------------------

 

In the event that the payments to Executive Officer pursuant to this paragraph
7(b) constitute parachute payments (as defined in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”)), and if the sum of these
payments and all other parachute payments received or to be received by
Executive Officer in connection with the change in control equal or exceed three
(3) times his base amount (as defined in Section 280G(b)(3) of the Code) for the
calendar year in which the change in control occurs, then the payments to
Executive Officer pursuant to this paragraph 7(b) shall be reduced to the extent
necessary to ensure that the sum of all parachute payments is one dollar ($1.00)
less than three (3) times such base amount.

(c) Voluntary termination by Executive Officer not following a change in control

If Executive Officer voluntarily terminates his employment under this Agreement,
other than pursuant to paragraph 7(b), then Executive Officer’s rights and
duties under this Agreement shall terminate as of the effective date of such
termination; provided, however, that Executive Officer shall not be deprived, by
reason of such termination, of any rights, payments, options or benefits which
have vested or have been earned or to which Executive Officer is otherwise
entitled as of the effective date of such termination, and no such right,
payment, option or benefit will be reduced or otherwise affected by reason of
such termination.

(d) Involuntary termination for cause

The employment of Executive Officer under this Agreement shall terminate for
cause upon delivery to Executive Officer of notice in writing from the Chairman
of the Board of Directors (acting pursuant to a duly adopted resolution of the
Board) of the termination of his employment for cause. “Cause” shall mean:

(i) any willful act or failure to act by Executive Officer that causes material
harm to the Company; any fraud by Executive Officer upon the Company; the
conviction of Executive Officer, or the plea of nolo contendere by Executive
Officer, with respect to any felony; for the purposes of this subparagraph 7(d),
any act or failure to act by Executive Officer which was done or omitted to be
done by Executive Officer in good faith and for a purpose which he reasonably
believed to be in the best interests of the Company shall not be considered to
have been willful; or

(ii) Executive Officer’s chronic alcoholism or other form of chemical addiction
that is not cured by Executive Officer within 90 days after receipt by him of
written notice from the Board of its determination that a condition exists which
must be cured; or

(iii) any material breach by Executive Officer of his obligations under this
Agreement that is not cured by Executive Officer within 30 days after receipt by
him of written notice from the Board of its determination that a material breach
has occurred; or

 
4

--------------------------------------------------------------------------------

 

(iv) Executive Officer’s unethical behavior, dishonesty, moral turpitudes which
has caused a material harm or injury to the business, operations or financial
condition of the Company.

In the event that Executive Officer is terminated for cause, then Executive
Officer’s rights and duties under this Agreement shall terminate as of the
effective date of such termination. Notwithstanding anything to the contrary
contained in this Agreement, it is the intention and agreement of the Company
and Executive Officer that Executive Officer shall not be deprived, by reason of
termination for cause, of any rights, payments, options or benefits which have
vested or have been earned or to which Executive Officer is otherwise entitled
as of the effective date of such termination, and it is also the intention and
agreement of the Company and Executive Officer that no such right, payment,
option or benefit will be reduced or otherwise affected by reason of such
termination.

(e) Involuntary termination without cause

The Company has the right to terminate Executive Officer without cause. In the
event that the Executive Officer is involuntarily terminated without cause
within one year following a change in control, as change in control is defined
in subparagraph 7(b), notwithstanding paragraph 2. herein, the Company shall pay
Executive Officer, as separation pay, one year’s worth of his gross annual
salary, as defined in 4(a) herein, as of the date upon which his termination
becomes effective; plus twelve (12) months worth of benefits Executive Officer
is then currently receiving. The base salary and benefits shall be payable in
the normal course for the twelve (12) month period following the effective date
of the termination.

In the event that Executive Officer is involuntarily terminated without cause
not following a change in control, as change in control is defined in
subparagraph 7(b), the Company shall pay Executive Officer, as separation pay,
six (6) months worth of his gross annual salary, as defined in 4(a) herein, as
of the date upon which his termination becomes effective; plus six (6) months
worth of benefits Executive Officer is then currently receiving. The base salary
and benefits shall be payable in the normal course for the six (6) month period
following the effective date of the termination.

8. Confidentiality, Commitments by Executive Officer.

Executive Officer hereby acknowledges that he has executed, and agrees to be
bound by the Company agreement or agreements containing confidentiality,
non-compete and restrictive covenant provisions, and this Employment Agreement
shall not be deemed to supersede such agreement or agreements.

9. Arbitration. Subject to the provisions of paragraph 10 of this Agreement
regarding injunctive relief, any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall be determined and settled by
arbitration in Rochester, New York administered by the American Arbitration
Association under its Commercial Arbitration Rules then in effect.
 
 
5

--------------------------------------------------------------------------------

 

10. Enforceability. If any provision of this Agreement shall be found in
arbitration or by any court of competent jurisdiction to be contrary to law or
public policy and therefore unenforceable, the Company and Executive Officer
hereby waive such provision or part thereof, but only to the extent that such
provision or part is found in arbitration or by such court to be unenforceable.
The Company and Executive Officer agree that such provision should be modified,
consistent with the intent of this Agreement, by the arbitrator or such court so
that it becomes enforceable, and, as modified, will be enforced as any other
provision of this Agreement. The lack of enforceability of any particular
provision of this Agreement shall not affect any other provision of this
Agreement.

11. Governing Law. This Agreement and the rights and obligations of Executive
Officer and the Company shall be governed by and construed under the laws of the
State of New York.

12. No Waiver. The failure by either Executive Officer or the Company at any
time to require performance or compliance by the other with any provision of
this Agreement shall in no way affect either party’s full right to require such
performance or compliance at any time thereafter. The waiver by either party of
a breach of any provision of this Agreement shall not be taken or held to be a
waiver of any succeeding breach of such provision or as a waiver of the
provision itself.

13. Binding Agreement. This Agreement shall be binding upon and inure to the
benefit of Executive Officer and his heirs and legal representatives, and shall
be binding upon and inure to the benefit of the Company and its legal
representatives, successors and assigns.

14. Notice. Any notice required or permitted to be given under the Agreement
shall be in writing and shall be deemed to be delivered when delivered
personally to Executive Officer, to the Chairman of the Board of Directors or to
an officer of the Company, or three business days after the date of mailing, if
the mailing is made postage pre-paid, by registered or certified mail, return
receipt requested, to the business address if to the Company, or the residence
address if to Executive Officer or to such other address as the applicable party
may from time to time designate.

15. Entire Agreement. Subject to the agreements acknowledged in paragraph 8
above, this Employment Agreement constitutes the only agreement and the entire
agreement between Executive Officer and the Company relating to his employment
and supersedes and cancels any and all previous contracts, arrangements or
understandings with respect thereto.

16. Amendment. This Agreement may not be amended or modified except in a writing
executed by both Executive Officer and the Company.

 
6

--------------------------------------------------------------------------------

 

17. Headings. The descriptive headings used in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision in this Agreement.

18. Counterparts. This Agreement may be executed in separate counterparts, each
of which shall be deemed an original and together shall constitute one and the
same instrument.

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

 
VirtualScopics, Inc.
       
By:
s/o Terence A. Walts
   
Terence A. Walts
   
VirtualScopics, Inc.
   
Chairman, Compensation Committee to the Board of Directors
         
August 27, 2008
   
Date

 

   
s/o Jeffrey Markin
   
Jeffrey Markin (Executive Officer)

 
 
7

--------------------------------------------------------------------------------