Exhibit 10.1


 





VIRTUALSCOPICS, INC. 


 


EMPLOYMENT AGREEMENT 


 


This Employment Agreement
(this “Agreement”) is made and effective this 15th day of December, 2015, between VirtualScopics,
Inc., a Delaware corporation (the “Company”), and Ronald Way (“Executive Officer”).


 


WITNESSETH


 


WHEREAS, Executive
Officer has been serving as Vice President of Operations for the Company since January 3, 2011;


 


WHEREAS, the
Company desires now to employ Executive Officer as its Chief Operating Officer, or COO, effective the date hereof, pursuant to
this Employment Agreement;


 


WHEREAS, Executive
Officer desires to be employed by the Company as its COO; 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 COO for the term of employment as defined in Section 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 to the CEO and 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 automatically
be extended for additional one-year periods so long as the Executive Officer remains fully employed by the Company or until this
Agreement is amended or superseded by a new agreement.


 


3.Performance.  Executive
Officer shall devote his full working time, attention, skills and energies to the performance of his duties as COO 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 $150,000.00 per year, which may be further increased or decreased as determined by the Compensation
Committee of the Board; provided, however, any salary decreases shall occur only as part of a broad-based cost reduction program
approved by the Board. Any increases or decreases in the salary made after the effective date of this Agreement shall be considered
to be the salary for purposes of this Agreement. 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 Officer tied to the achievement of certain Company annual bonus plan goals approved by the Board’s
Compensation Committee, with a targeted maximum payout of twelve percent (12%) of Executive Officer’s salary in effect at
the end of each fiscal year. The bonus for 2015 shall take into account Executive Officer’s performance since January 1,
2015. The bonus will be paid to Executive Officer in accordance with the customary bonus payout practices of the Company, typically
within two (2) months of the official close of the fiscal year. The Compensation Committee reserves the right per the Company’s
annual bonus plan and at its sole discretion, to exceed the maximum payout for exceptional performance.


 


(c)Benefits;
Expenses.  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.


 


(d)Change in
Control Bonus.


 


(i)Payment
of Change in Control Bonus.  If a Change in Control (as defined below) occurs on or before the third anniversary
of the effective date of this Agreement (“Change in Control Period”) and provided that the Executive Officer
remains in the continuous employment of the Company through the occurrence of such Change in Control and for three (3) months thereafter,
then the Company shall pay the Executive Officer a lump-sum cash payment equal to twenty-five percent (25%) of the Executive Officer’s
annual salary for the year in which the Change in Control occurs (the “Change in Control Bonus”) within ten
(10) days following the expiration of the three (3) month period following the occurrence of such Change in Control, subject to
Section 4(d)(vi) and the other provisions of this Agreement. The date that is three (3) months after the date upon which a
Change in Control occurs is sometimes referred to herein as the “Expiration Date”. The Change in Control Period
may be extended by the Compensation Committee of the Board at any time prior to the end of such period.


 


(ii)Involuntary
Termination without Cause.  In the event of the involuntary termination of the Executive Officer’s employment
by the Company without Cause (as defined below) after a Change in Control and prior to the Expiration Date, the Executive Officer
shall be entitled to a Change in Control Bonus corresponding to the occurrence of a Change in Control of the Company within the
Change in Control Period, subject to Section 4(d)(viii) and the other provisions of this Agreement. The Change in Control
Bonus shall be paid in a lump-sum cash payment within ten (10) days after the date on which the Executive Officer is terminated.


 


(iii)Involuntary
Termination for Cause or Voluntary Termination for any Reason.  In the event of the involuntary termination of the
Executive Officer’s employment by the Company for Cause, or the voluntary termination of employment by the Executive Officer
for any reason, in each case after a Change in Control and prior to the Expiration Date, then the Executive Officer shall immediately
forfeit his right to the Change in Control Bonus, and no Change in Control Bonus shall be paid to the Executive Officer upon any
Change in Control of the Company.


 






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(iv)Change
in Control of the Company.  A “Change in Control” means the first occurrence of any of the following:


 


(1)Any person or
group (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), other than the Company or a trustee or other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company, becomes the beneficial owner (within the meaning of Rule 13(d)(3) under the Exchange
Act), directly or indirectly, of securities representing more than fifty percent (50%) of the combined voting power of the Company’s
then-outstanding securities entitled generally to vote for the election of directors;


 


(2)The Company
merges or consolidates with another corporation (other than a majority-controlled subsidiary of the Company) unless the Company’s
stockholders immediately before the merger or consolidation are to own at least fifty percent (50%) of the combined voting power
of the resulting entity’s voting securities entitled generally to vote for the election of directors; or


 


(3)The Company
sells or otherwise disposes of all or substantially all of the business or assets of the Company.


 


A Change in Control shall be deemed to
occur: (A) with respect to a Change in Control pursuant to Section 4(d)(ii)(1), on the date any person or group first
becomes the beneficial owner, directly or indirectly, of securities representing more than fifty percent (50%) of the combined
voting power of the Company’s then-outstanding securities entitled generally to vote for the election of directors, or (B) with
respect to a Change in Control pursuant to Section 4(d)(ii)(2) or (3), on the date the applicable transaction closes.


 


(v)Sections
280G and 4999 of the Code.  In the event that the Executive Officer becomes entitled to any payment or benefit under
this Agreement (such benefits together with any other payments or benefits payable to the Executive Officer under any other agreement
with the Executive Officer, or plan or policy of the Company, are referred to in the aggregate as the “Total Payments”),
if all or any part of the Total Payments will be subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended, and all regulations, interpretations and administrative guidance issued thereunder (the “Code”),
or any similar tax that may hereafter be imposed (the “Excise Tax”), then:


 


(1)Within thirty
(30) days following an event entitling the Executive Officer to a payment under this Agreement, the Company will notify the Executive
Officer in writing: (i) whether the payments and benefits under this Agreement, when added to any other payments and benefits
making up the Total Payments, exceed an amount equal to 299% of the Executive Officer’s “base amount” as defined
in Section 280G(b)(3) of the Code (the “299% Amount”); and (ii) the amount that is equal to the 299% Amount.


 






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(2)The payments
and benefits under this Agreement shall be reduced such that the Total Payments do not exceed the 299% Amount, so that no portion
of the payments and benefits under this Agreement will be subject to the Excise Tax. Any payment or benefit so reduced will be
permanently forfeited and will not be paid to the Executive Officer.


 


(3)The calculation
of the 299% Amount and the determination of how much the Executive Officer’s payments and benefits must be reduced in order
to avoid application of the Excise Tax will be made by the Company’s public accounting firm prior to the Executive Officer’s
termination of employment, which firm must be reasonably acceptable to the Executive Officer (the “Accounting Firm”).
The Company will cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and
the Executive Officer. Notice must be given to the Accounting Firm within fifteen (15) business days after an event entitling the
Executive Officer to a payment under this Agreement. All fees and expenses of the Accounting Firm will be borne solely by the Company.


 


(4)For purposes
of making the reduction of amounts payable under this Agreement, such amounts will be eliminated in compliance with the requirements
of Section 409A of the Code and in the following order: (1) any cash compensation, (2) any health or welfare benefits, and (3)
any equity compensation. Reductions of such amounts will take place in the chronological order with respect to which such amounts
would be paid from the date of the event entitling the Executive to a payment under this Agreement absent any acceleration of payment.


 


(vi)Administration.  The
Compensation Committee shall administer this Section 4(d). Except as otherwise specifically provided herein, the Compensation
Committee shall have the sole responsibility for and the sole control of the operation and administration of this Section 4(d),
and shall have the sole power, authority and discretion to take all action and to make all decisions and interpretations which
may be necessary or appropriate in order to administer and operate this Section 4(d). All decisions and interpretations of
the Compensation Committee are final and binding on the Executive Officer. In the administration of this Section 4(d), the
Compensation Committee may, to the maximum extent permitted by law, engage agents and delegate to them such duties as it sees fit.
No director, officer, agent or employee of the Company shall be liable to the Executive Officer for any action taken or omitted
in connection with the interpretation and administration of this Section 4(d).


 


(vii)Nontransferability.  No
amount payable to the Executive Officer under this Section 4(d) will, except as otherwise specifically provided by law, be
subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in equity),
levy, execution, pledge, encumbrance, charge or any other legal or equitable process, and any attempt to do so will be void; nor
will any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person
entitled thereto. This Section 4(d) is binding upon the Executive Officer and his personal representatives, but neither this
Section 4(d) nor any obligations or benefits under this Section 4(d) may be assigned by the Executive Officer.


 


(viii)Confidentiality;
No Duplication with Severance.  Payment of the Change in Control Bonus is contingent upon the Executive Officer’s
compliance, during the period prior to a Change in Control, with all confidentiality requirements, provisions or agreements related
to any and all proposed Change in Control transactions, as determined by the Board of Directors in its sole discretion. In addition,
the parties hereto acknowledge and agree that Executive Officer shall not be entitled to receive the Change in Control Bonus if
Executive Officer receives severance payments under Section 6.


 






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 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. Executive Officer has provided the Chairman
with a current list of all such outside organizations to which he provides such service.


 


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


 


(c)The Chairman
shall have the discretion, to be exercised reasonably, in determining whether or not Executive Officer’s service as an advisor,
director, consultant or trustee of any outside organization that conflicts with (i) the business or reputation of the Company,
or (ii) Executive Officer’s performance of his duties with the Company; provided, however, in the event of a dispute between
Chairman and Executive Officer concerning whether such service constitutes a conflict described in this Section 5(c), the
Board shall decide whether such service is a conflict described for purposes of this Section 5(c).


 


6.Termination
of Employment. In the event a Change in Control has not occurred and the employment of Executive Officer is terminated, the
provisions of this Section 6 shall apply. For avoidance of doubt, the parties hereto acknowledge and agree that Executive
Officer shall not be entitled to receive the Change in Control Bonus if Executive Officer receives severance payments under this
Section 6.


 


(a)Voluntary
Termination by Executive Officer.  Executive Officer may voluntarily terminate his employment under this Agreement
by delivering written notice to the Board of his decision to terminate his employment providing the Board with a minimum of thirty
(30) days advance written notice from date of termination. Executive Officer shall not be deprived, by reason of such termination,
of any rights, payments, options, unrestricted Shares 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.


 


(b)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:


 






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(i)any willful
act or failure to act by Executive Officer that causes material harm to the Company or at the discretion and/or sole opinion of
the Board has the potential to cause 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 at any time during his business
career; for the purposes of this Section 6(b), 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)any material
breach by Executive Officer of his obligations under this Agreement that is not cured by Executive Officer within thirty (30) days
after receipt by him of written notice from the Chairman of his determination that a material breach has occurred; or


 


(iii)Executive
Officer’s unethical behavior, dishonesty, or moral turpitudes which has caused harm or injury to the business, operations
or financial condition of the Company or at the discretion and/or sole opinion of the Board has the potential to cause harm or
injury to the Company.


 


(c)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, unrestricted Shares 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.


 


(d)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, the Company shall pay Executive Officer, as separation pay,
three (3) months’ worth of his annual salary, as defined in Section 4(a) herein, as of the date upon which his termination
becomes effective; plus three (3) months’ worth of benefits Executive Officer is then currently receiving. The salary and
benefits shall be payable in the normal course for the three (3) month period following the effective date of the termination.
In addition, in the event such termination occurs after June 30 of any calendar year, Executive Officer shall be entitled to receive
payment of any bonus earned through the date of such termination, pro-rated for the number of days elapsed in such calendar year.


 


(e)The Company’s
obligation to pay the severance pay and benefits provided for under Section 6(d) of this Agreement is expressly conditioned
upon Executive Officer’s execution and delivery to the Company of a release agreement, as drafted at the time of Executive
Officer’s termination of employment, the provisions of which shall include without limitation:


 


(i)An unconditional
release of all rights to any claims, charges, complaints, grievances, known or unknown to Executive Officer, against Company, its
affiliates or assigns, through the date of Executive Officer’s termination from employment;


 






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(ii)A representation
and warranty that Executive Officer has not filed or assigned any claims, charges, complaints, or grievances that the Company,
its affiliates, or assigns;


 


(iii)An agreement
not to use, disclose or make copies of any confidential information of the Company, as well as to return any such confidential
information and property to the Company upon execution of release;


 


(iv)An agreement
to maintain the confidentiality of the release, except as may be disclosed by Executive Officer to his advisors for purposes of
evaluating the terms of the release; and


 


(v)An agreement
to indemnify the Company, or its affiliates or assigns, in the event that Executive Officer breaches any portion of the release
agreement.


 


Executive Officer acknowledges such release
agreement shall not be construed as an admission by the Company or any other release of any wrongdoing whatsoever against Executive
Officer, and all of the releases specifically deny any such wrongdoing. In the event the Executive Officer breaches any provision
of this Agreement or the Company’s Confidentiality and Non-Competition Agreement he is signing of even date herewith, the
Company’s obligation to pay severance pay and benefits shall immediately cease and the Executive Officer shall be required
to reimburse the Company for all severance pay and benefits received herein.


 


7.Section 409A
of the Code.


 


(a)The compensation
and benefits under this Agreement are intended to comply with or be exempt from the requirements of Section 409A of the Code, and
this Agreement will be interpreted and administered in a manner consistent with that intent. The preceding provision, however,
shall not be construed as a guarantee by the Company of any particular tax effect to the Executive Officer under this Agreement.
The Company shall not be liable to the Executive Officer if any payment made or provision under this Agreement that is determined
to result in an additional tax, penalty or interest under Section 409A of the Code, nor for reporting in good faith any payment
made under this Agreement as an amount includible in gross income under Section 409A of the Code. The parties agree that they shall
work together in good faith to amend this Agreement, if reasonably necessary to comply with Section 409A of the Code or an interpretation
thereof by the IRS or the Treasury Department.


 


(b)References to
termination of employment and similar terms used in this Agreement mean, to the extent necessary to comply with Section 409A of
the Code, the date that the Executive Officer first incurs a separation from service within the meaning of Section 409A of the
Code. Each payment under this Agreement shall be designated as a separate payment within the meaning of Section 409A of the Code.


 


(c)The bonus referred
to in Section 4(b) of this Agreement shall be paid on a timely basis upon official close of the fiscal year, but in no event later
than March 15th of the year following the year over which the bonus is earned.


 






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(d)To the extent
any reimbursement provided under this Agreement is includable in the Executive Officer’s income, such reimbursements shall
be paid to the Executive Officer not later than December 31st of the year following the year in which the Executive Officer incurs
the expense and the amount of reimbursable expenses provided in one year shall not increase or decrease the amount of reimbursable
expenses to be provided in a subsequent year.


 


(e)Notwithstanding
anything in this Agreement to the contrary, if at the time of the Executive Officer’s separation from service with the Company
the Executive Officer is a specified employee as defined in Section 409A of the Code, and any payment payable under this Agreement
as a result of such separation from service is required to be delayed by six (6) months pursuant to Section 409A of the Code, then
the Company will make such payment on the date that is six (6) months following the Executive Officer’s separation from service
with the Company. The amount of such payment will equal the sum of the payments that would have been paid to the Executive Officer
during the six-month period immediately following the Executive Officer’s separation from service had the payment commenced
as of such date and will not include interest.


 


8.Confidentiality,
Commitments by Executive Officer.  Executive Officer hereby acknowledges that he has executed, and agrees to be bound
by the Company’s Confidentiality and Non-Competition Agreement that he is signing of even date herewith, and this Agreement
shall not be deemed to supersede such agreement.


 


9.Arbitration.  Subject
to the provisions of Section 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.


 


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 and venued in Monroe County, 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.


 






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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 (3) 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.


 


Currently, and until
such time as changed in writing, the addresses of the respective parties for mailing purposes is set forth below:


 


	
        VirtualScopics, Inc.

        500 Linden Oaks

        Rochester, NY 14625
	
        Ronald Way

        5127 North Road

        Canandaigua, NY 14424



 


15.Entire Agreement.  This
Agreement constitutes the entire agreement between Executive Officer and the Company relating to the subject matter hereof 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.


 


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.





 


[signature page follows]


  






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


 


 





	 	VIRTUALSCOPICS, INC. 
	 	 	 	 
	 	By:	/s/ Terence A. Walts	 
	 	 	Terence A. Walts	 
	 	 	Chairman, Compensation Committee of the Board of Directors



 


 


	 	EXECUTIVE OFFICER 	 
	 	 	 
	 	/s/ Ronald Way	 
	 	Ronald Way	 







 





 








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