**Exhibit
      10.1**





**EMPLOYMENT
      AGREEMENT**





Agreement
      made and effective this 27 th 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.


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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.


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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


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(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.




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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.


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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. WaltsTerence
                A. WaltsVirtualScopics,
                Inc.Chairman,
                Compensation Committee to the Board of DirectorsAugust
                27, 2008Date




s/o
                Jeffrey Markin*Jeffrey
                Markin (Executive Officer)*




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