Document:

EXHIBIT 10.1 

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement
(this “Agreement”) is made and effective this 23rd day of July, 2014, between VirtualScopics, Inc., a Delaware
corporation (the “Company”), and Eric T. Converse, Executive Officer, (“Executive Officer”).

 

WITNESSETH

 

WHEREAS, Executive
Officer has been acting as interim President and Chief Executive Officer (CEO) for the Company since October 25, 2013 pursuant
to a Service Agreement dated October 25, 2013 and a Services Agreement Extension Agreement dated March 23, 2014;

 

WHEREAS, the Services
Agreement Extension Agreement expired on July 18, 2014;

 

WHEREAS, the Company
desires now to employ Executive Officer as its CEO effective the date hereof, pursuant to this Employment 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 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Agreement is amended or superseded by a new agreement.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 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 $325,000 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 thirty-seven and one-half percent (37.5%) of Executive's salary in effect at the end
of each fiscal year. The bonus for 2014 shall take into account Executive Officer’s performance since April 18, 2014. The
bonus will be paid to Executive 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. 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.

 

(d)Stock Options.

 

(i)The Company
shall award Executive Officer an option to purchase 87,017 shares of the Company’s common stock, par value $0.001 per share
(“Common Stock”) (each award being subject to adjustment as provided below in this Section) pursuant to the terms of
the Company’s Amended and Restated 2006 Long-Term Incentive Plan, as may be amended from time to time (“2006 Plan”),
as approved by the Company’s Compensation Committee on the effective date of this Agreement.

 

(ii)Provided Executive Officer is employed
by the Company on the date which is 12 months after the effective date hereof, the Company shall award Executive Officer an option
to purchase 87,017 shares of the Company's Common Stock (each award subject to adjustment as provided below in this Section) pursuant
to the terms of the 2006 Plan (or any replacement plan).  Provided Executive Officer is employed by the Company on the date
which is 24 months after the effective date hereof, the Company shall award Executive Officer an option to purchase 43,510 shares
of the Company's Common Stock (each award subject to adjustment as provided below in this Section) pursuant to the terms of the
2006 Plan (or any replacement plan).

 

In each case under this Section 4(d): (x)
the options will vest at the rate of 25% on each anniversary of the date of the award while the Executive is employed by the Company
until fully vested; (y)  the number of shares to be subject to an option shall be subject to adjustment upon the occurrence
of certain events to the extent and in the manner provided in the 2006 Plan for “Awards” thereunder, including but
not limited to Section 4(c) thereof, or similar provisions in any amendments to the 2006 Plan or similar provisions in any replacement
plan; and (z) the grants are expressly contingent upon there being sufficient Shares (as defined in the 2006 Plan) reserved for
awards of the type of award under the 2006 Plan (or any replacement plan) on the applicable date to cover the specified number.

 

    	 

    	 

    

 

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. Executive Officer shall be reimbursed for actual mileage expenses incurred for travel between Rochester and his
home in New Hope, Pennsylvania and lodging expenses in Rochester at the aggregate gross rate of up to two thousand two hundred
and fifty dollars ($2,250.00) per month. Documentation for the latter expenses for mileage and lodging shall be submitted separately
from other business expenses. 

 

(e)Change in Control
Bonus.

 

(i)Payment of
Change in Control Bonus. If a Change in Control occurs on or before the third anniversary of the effective date of this Agreement
(the “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, then the Company shall pay the Executive Officer a lump-sum cash payment
equal to seventy-five percent (75%) of the Executive Officer’s annual salary for the year in which the Change in Control
occurs (the “Change in Control Bonus”) within forty-five (45) days following the occurrence of such Change in Control.
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)Change in
Control of the Company. A “Change in Control of the Company” 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.

 

4.A Change in Control
shall be deemed to occur: (A) with respect to a Change in Control pursuant to Section 4(e)(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(e)(ii)(2) or (3), on the date the applicable transaction closes.

 

(iii)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, 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.

 

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’s payments and benefits must be reduced in order to avoid
application of the Excise Tax will be made by the Company 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.

 

    	 

    	 

    

 

(iv)Administration.
The Compensation Committee shall administer this Section 4(e). 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(e),
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(e). All decisions and interpretations of the
Compensation Committee are final and binding on the Executive Officer. In the administration of this Section 4(e), 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(e).

 

(v)Nontransferability.
No amount payable to the Executive Officer under this Section 4(e) 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(e) is binding upon the Executive Officer and his personal representatives, but neither this Section 4(e)
nor any obligations or benefits under this Section 4(e) may be assigned by the Executive Officer.

 

(vi)Confidentiality.
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.

 

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.Membership on
the Company’s Board of Directors. Executive Officer is currently serving as and shall continue to serve as a member of the
Board during the Term of Employment subject to approval by the shareholders. Executive Officer, as an inside Director, is not eligible
and agrees to serve in such capacity without compensation in addition to the compensation he receives as CEO. In the event the
Executive Officer’s employment is terminated for any reason, the Executive Officer shall immediately resign as a member of
the Board.

 

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 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:

 

(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 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)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, 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.

 

    	 

    	 

    

 

(iv)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.

 

(c)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, six (6) months’ worth
of his 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 salary and benefits shall be payable in the normal course
for the six (6) 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, prorated for the number of days elapsed in such calendar year.

 

(d)The Company’s
obligation to pay the severance pay and benefits provided for under Section 7(c) of this Employment Agreement is expressly conditioned
upon Executive Officer’s execution and delivery to the Company of a Release Agreement, as drafted at the time of Employee’s
termination of employment, including, but not limited to:

 

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

 

(ii)A representation
and warranty that Employee 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 Employee breaches any portion of the Release Agreement.

 

Employee acknowledges
such Release Agreement shall not be construed as an admission by the Company or any other releasee of any wrongdoing whatsoever
against Employee, and all of the releases specifically deny any such wrongdoing.

 

In the event the Employee
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 Employee shall
be required to reimburse the Company for all severance pay and benefits received herein.

 

(e)Rights under Long
Term Incentive Plan. Upon the termination of Executive Officer’s employment he shall have such rights under the Company’s
Amended and Restated 2006 Long Term Incentive Plan, subject to any future amendments the Company may make thereto.

 

8.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 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.

 

(d)To the extent
any reimbursement provided under this Agreement is includable in the Executive Officers 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 Officers 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 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 Officers separation from service had the payment commenced as of
such date and will not include interest.

 

9.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 Agreement shall not
be deemed to supersede such agreement or agreements.

 

10.Arbitration.
Subject to the provisions of Section 11 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.

 

11.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.

 

12.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.

 

13.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.

 

    	 

    	 

    

 

14.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.

 

15.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
	
        Eric T. Converse

        ________________________

        ________________________

 

16.Entire Agreement.
Subject to the Confidentiality and Non-Competition Agreement, the agreements acknowledged in Section 9 above and an Indemnification
Agreement previously entered into by the parties and which remains in full force and effect, this 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, including the Services Agreement dated October
25, 2013, the Amended Services Agreement dated March 18, 2014 and the Confidentiality and Non-Competition Agreement dated October
25, 2013 between Employee, Converse & Company, and the Company. Notwithstanding this, Employee agrees that he and Converse
& Company are legally required to comply with all obligations and covenants as set forth in those agreements, which include
but are not limited to, confidentiality, fiduciary duty, restrictive covenant, intellectual property rights, etc., all of which
survive the expiration and termination of those agreements.

 

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

 

18.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.

 

19.Legal Fees.
Company shall reimburse Executive Officer for such reasonable legal fees incurred by Executive Officer in connection with the review
and negotiation of this Agreement up to $5,000.

 

20.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/ Terence A. Walts	 
	 	Terence A. Walts	 
	 	Chairman, Compensation Committee	 
	 	to the Board of Directors	 
	 	 	 
	 	 	 
	EXECUTIVE OFFICER:	 
	 	 	 
	 	 	 
	 	/s/ Eric T. Converse	 
	 	Eric T. ConverseEXHIBIT 10.2

 

CONFIDENTIALITY AND NON-COMPETITION
AGREEMENT

 

THIS CONFIDENTIALITY
AND NON-COMPETITION AGREEMENT (this "Agreement") is made as of this 23rd day of July, 2014, by
and between VIRTUALSCOPICS, INC., a Delaware corporation with its principal office at 500 Linden Oaks, Rochester, NY 14625
(the "Company"), and Eric
TIMOTHY Converse, an individual with a mailing address of ________________________ ("Executive Officer").

 

R E C I T A L S:

 

WHEREAS, the Company
is engaged in the business of providing of imaging solutions to accelerate drug and medical device development, including, but
not limited to, developing and providing a software platform for analysis and modeling of both structural and functional medical
images and image analysis tools used to, among other things, determine the efficacy of drugs, medical procedures and medical products
and seeks to use its technology to improve treatment planning for patients with cancer and other diseases (collectively, the "Business").

 

WHEREAS, the Company
owns and continues to research and develop image analysis tools and other products and technologies used to determine the efficacy
of drugs, medical procedures and medical products and for other purposes in connection with its Business.

 

WHEREAS, the Company
and Executive Officer are parties to that certain Employment Agreement of even date herewith (the "Employment Agreement"),
pursuant to which the Company has employed Executive Officer as the CEO of the Company;

 

WHEREAS, the Company
and Executive Officer recognize that in the course of performing services for the Company, Executive Officer will be exposed to
and have access to certain confidential information and that there is a need for the Company to protect such confidential information
from unauthorized use and disclosure;

 

WHEREAS, Executive
Officer intends that any and all patent, patent rights, copyright, trade secrets and trademarks relating to the work that Executive
Officer will provide to the Company are to be owned and controlled by the Company.

 

P R O V I S I O N S:

 

NOW, THEREFORE,
in consideration of the mutual covenants and promises herein contained, and for other good and valuable consideration the receipt
and sufficiency of which are expressly acknowledged, the parties hereby agree as follows:

 

1. Confidential Information.

 

(a)Definition of Confidential
Information. “Confidential Information” means any and all proprietary information existing as of the date
of this Agreement, or thereafter developed, of the Company (and its affiliates or subsidiaries), not generally known in the industry,
about its or their technical data, trade secrets, know-how, services and products, including information related to research, development,
inventions and other intellectual property, finances, and marketing, including methods of distribution and customer information,
whether communicated orally, electronically or in writing, or obtained by Executive Officer as a result of his employment,
through observation or examination of Company’s Business or otherwise.

 

    	 

    	 

    

 

(b)Confidentiality Obligations.
Executive Officer acknowledges that irreparable injury and damage will result from disclosure of the Confidential Information to
third parties or its use for purposes other than those connected with Executive Officer’s employment. Executive Officer agrees,
indefinitely:

 

(i)To hold the Confidential Information
in strictest confidence.

 

(ii)Not to disclose Confidential
Information to any third party except as specifically authorized herein or as specifically authorized by Company, and to use all
precautions necessary to prevent the unauthorized disclosure of the Confidential Information, including without limitation, protection
of documents from theft, unauthorized duplication and discovery of contents, and restrictions on access by other persons to the
Confidential Information.

 

(iii)Not to make or use any copies,
synopses or summaries of oral or written material made available by Company to Executive Officer, except as are necessary to carry
out his duties and/or obligations as an employee of the Company.

 

(iv)In the event of disclosure
in accordance with Section 1(b)(ii) above, to limit disclosure to persons with a bona fide need to know the Confidential
Information, to communicate to all persons to whom such Confidential Information is made available the strictly confidential
nature of such Confidential Information and to obtain from all such persons agreement in writing to be bound by the restrictions
imposed by this Agreement.

 

(v)In the event Executive Officer
is required by law to disclose such Confidential Information, to provide Company with prompt written notice of such requirement
so that Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement;
in the event that such protective order or other remedy is not obtained, or that Company waives compliance with the provisions
of this Agreement in writing, to furnish only that portion of Confidential Information that is legally required and to use his
best efforts to obtain reliable assurance that confidential treatment will be accorded to that portion of the Confidential Information
to be disclosed.

 

(c)Return of Confidential Information.
Upon Company's request or upon any termination of Executive Officer's employment with the Company for any reason, Executive Officer
will promptly return to Company all written material and other documentation which includes any of the Confidential Information,
and will, at Company's request, provide Company with a written certification that they have done so.

 

    	 

    	 

    

 

(d)Unauthorized Disclosure of
Confidential Information. If it appears that Executive Officer has disclosed, or has threatened to disclose, any Confidential
Information in violation of Section 1 of this Agreement, Company shall be entitled to an injunction to restrain Executive Officer
from disclosing, in whole or in part, such information as a result of Executive Officer’s violation of Section 1 of this
Agreement. Company shall not be prohibited by this provision from pursuing other remedies available at law, including a claim for
losses and damages.

 

2.Goodwill of Company and
Fiduciary Duties. Executive Officer acknowledges that the Company is engaged in the Business, which is highly competitive,
and that the Company has spent a great deal of time and resources to develop and maintain the Business and to otherwise create
good-will. Executive Officer further acknowledges that the services that have been and will be provided by Executive Officer are
an integral part of the total transaction and relationship between Company and its customers.

 

Executive Officer understands
and acknowledges that the Confidential Information is not available to the general public and is not readily ascertainable through
public sources, and is the Company’s proprietary trade secret and the Company’s unique and valuable asset. Therefore,
Executive Officer acknowledges that the value of the Business would be seriously diminished if Executive Officer was to engage
in certain conduct during a certain time period, as referenced below. Executive Officer further acknowledges that, but for his
employment relationship with the Company, Executive Officer would not have access to the Confidential Information or other trade
secrets and information of the Company.

 

Executive Officer further
acknowledges that he owes a fiduciary duty to the Company because of the Confidential Information he will create or be exposed
to. This duty encompasses a duty to act in good faith and to faithfully serve and be mindful of Company's interests. It is also
understood that Executive Officer upon any termination of his employment with the Company would be in an advantageous position,
because of the Confidential Information and proprietary business information known to him, to obtain the business of and to serve
the Company’s customers; it is further agreed that the use of such Confidential Information and other proprietary information
to obtain the business of the Company’s customers would be a breach of Executive Officer's fiduciary responsibilities to
the Company and of this Agreement.

 

The parties further
acknowledge that the financial hardship to the Company as a result of a breach of this Agreement may be difficult or impossible
to measure in dollars and that no remedy at law may be adequate to compensate the Company for such violation.

 

3.Restrictive Covenants.

 

(a)Based on the information in
Section 2 of this Agreement, and in consideration of the Company employing Executive Officer, it is agreed that during Executive
Officer's employment with the Company and for a period of twelve (12) months thereafter (the “Restrictive Period”),
Executive Officer shall not, except on behalf of the Company, directly or indirectly, by himself, or through or on behalf of, or
in conjunction with, any other person, persons, company, partnership or other entity which Executive Officer is directly or indirectly
associated, own, operate, participate in the management or control of, be employed by, or act as a consultant to any enterprise
in the United States or Europe engaged in the business of performing services or producing and/or selling products which compete
directly with the Business, products or services of Company.

 

    	 

    	 

    

 

(b)Executive Officer agrees that
during the Restrictive Period, Executive Officer shall not directly or indirectly solicit or induce or attempt to solicit or induce
any employee, current or future, of the Company to leave the Company for any reason whatsoever or hire any current or future employees
of the Company.

 

(c)Executive Officer agrees that
during the Restrictive Period, Executive Officer shall not directly or indirectly solicit the trade of or trade with any customer
or prospective customer of the Company, except that during his period of employment Executive Officer may solicit customers for
legitimate business purposes for the benefit of the Company.

 

(d)Executive Officer agrees not
to take advantage of, use, acquire, or usurp any business opportunities of which Executive Officer is made aware during his employment
by the Company. All such business opportunities shall be for the sole benefit of the Company, and Executive Officer may not pursue
such business opportunities for anyone other than the Company, unless the Company expressly consents in writing or until one (1)
year after termination of Executive Officer's employment by the Company.

 

(e)Executive Officer represents
and warrants that his experience and capabilities are such that the restrictive covenants set forth herein will not prevent him
from earning a livelihood and that Executive Officer will be fully able to earn an adequate livelihood for himself if any of such
provisions should be specifically enforced against Executive Officer.

 

(f)The parties agree that each
paragraph of this Section 3 of this Agreement constitutes an independent covenant, which shall be enforceable notwithstanding any
other right or remedy that the Company may have under any other provision of this Agreement or otherwise.

 

4.Intellectual Property Rights.

 

(a)Work Made For Hire. Executive
Officer agrees that all works that he produces, either solely or with others, during his employment (individually and collectively,
"Work"), have been or are prepared for the Company as part of and in the course of said employment, and constitute
a work made for hire as that term is defined in 17 U.S.C. Section 101 and as such, all right, title and interest in all Work, and
all intellectual property therein or resulting therefrom, shall be owned by the Company. In the event that all or any part of a
Work is for any reason deemed not to be a work made for hire, then Executive Officer hereby irrevocably and unconditionally assigns
to Company (or Company's designee) all of his right, title and interest in and to such Work, and all intellectual property therein
or resulting therefrom, and related proprietary information or intellectual property.

 

    	 

    	 

    

 

(b)Assignment of Inventions.
Executive Officer agrees that Executive Officer shall not have any proprietary interest in any work product developed or used by
Executive Officer and arising out of his employment by the Company. Executive Officer shall, from time to time, as may be requested
by the Company, do all things which may be necessary to establish or document the Company’s ownership in any such work product
including, but not limited to, execution of appropriate copyright applications or assignments.

 

Executive Officer hereby
agrees to assign and does hereby assign to the Company his entire right, title and interest throughout the world in and to all
inventions, improvements, processes, techniques, discoveries and ideas (whether or not patentable) relating to any aspect of the
Company’s technology, products, production methods, service, proprietary information, research and/or development, or any
other aspect of the Company’s business or property (“Inventions”), which are made, conceived or first
reduced to practice by Executive Officer (alone or with others) during his employment, whether or not during normal working hours
and whether or not while on the Company’s premises, or, to the extent any such Inventions exist, which have been made, conceived
or first reduced to practice by him (alone or with others) prior to his employment by the Company but in contemplation of such
employment or the possibility thereof, or which result from or are suggested by any of the work that Executive Officer has performed
or may perform for or on behalf of the Company at any time. Executive Officer agrees not to assert any right with regard to any
Invention, whether or not Executive Officer perfected or acquired such right prior to his employment by the Company. Executive
Officer agrees to do all things which the Company determines are necessary or useful to apply for and/or obtain, extend or improve
Letters Patent in the United States and patent rights in such other jurisdictions as the Company may determine, and otherwise to
secure and protect all rights in and to all Inventions, all at Company’s expense. Executive Officer agrees and acknowledges
that the obligations in this regard will continue beyond the termination of this Agreement for any reason.

 

(c)Disclosure and Assignment
of Inventions. Executive Officer agrees to communicate to the Company promptly and fully in writing, in such form as the Company
may deem appropriate, all Inventions. Executive Officer agrees to make and maintain adequate permanent records of all Inventions,
in the form of memoranda, notebook entries, drawings, print-outs or reports relating thereto, and agree that these records, as
well as the Inventions themselves, shall be and remain the exclusive property of the Company.

 

Any Invention Executive
Officer discloses to a third person or which is described in a patent application filed by Executive Officer, by an assignee of
Executive Officer or on behalf of Executive Officer at any time during his employment and within twelve (12) months thereafter
and which meets any of the criteria in this Section 4 above, will be presumed to have been conceived or made by Executive Officer
during the period of his employment by the Company unless Executive Officer proves that he made or conceived such Invention following
the termination of engagement by the Company.

 

Further, Executive
Officer agrees, upon the request of the Company, to take all steps necessary to cause any third party to promptly and fully disclose
and assign all patents, copyrights and other intellectual property created by Executive Officer and such third party during the
period of Executive Officer's employment by Company.

 

    	 

    	 

    

 

(d)Cooperation. Executive
Officer agrees to cooperate with the Company (or Company's designee), during his employment and thereafter for a period of five
years, in securing and protecting patent, trademark, copyright or other similar rights in the United States and foreign countries,
in an Invention or Work. Executive Officer specifically agrees to execute any and all documents which the Company deems necessary,
and to otherwise assist the Company or its assigns, to protect its interests and to vest in the Company all right, title and interest
in all Inventions and Works, including assignments of copyrights and inventions, and to attain, enforce or defend for the Company's
benefit, patents, copyrights or other legal protections from the Inventions and Works in any and all countries. Executive Officer
further agrees to provide such evidence and testimony as may be necessary to secure and enforce the Company’s rights. The
Company agrees to reimburse Executive Officer for all reasonable costs incurred in connection with his cooperation under this provision,
including travel, meals, and lost time/salary, if any.

 

5.Notices. All notices
required or permitted under this Agreement shall be in writing and shall be given by personal delivery or by certified mail, return
receipt requested, enclosed in a duly post-paid envelope and addressed to the post office address of the person to receive the
notice as set forth above or a different address provided by the person to receive notice or in the case of the Company, to the
attention of the Company's Secretary at the Company's principal office; and any notice mailed shall be deemed given seventy-two
(72) hours after mailing.

 

6.Survival. The covenants
contained in this Agreement shall remain in effect for an indefinite period of time and shall not be terminated by any event whatsoever
other than a writing signed by all parties to this Agreement which expressly terminates each covenant.

 

7.General.

 

(a)This Agreement:

 

(i) together with the Employment
Agreement, is the entire agreement between the parties, and this Agreement and the Employment Agreement supersede and replace all
other agreements oral and written with respect to their respective subject matter;

 

(ii) shall bind and benefit the
parties and their heirs, distributees, successors and assigns;

 

(iii) may not be modified, amended
or terminated except by a writing signed by all parties to it;

 

(iv) shall be governed and construed
in accordance with the internal laws of New York and venued in Monroe County, New York; and

 

(v) may not be assigned by
Executive Officer, but may be assigned by the Company.

 

    	 

    	 

    

 

(b)The parties acknowledge that
the financial hardship to a non-defaulting party as a result of breach of this Agreement may be difficult or impossible to measure
in dollars and that no remedy at law will be adequate to compensate the non-breaching party for such violation; therefore, in any
action to enforce this Agreement, a party shall be entitled to preliminary, temporary or permanent injunctive relief and the other
party waives the defense of adequate remedy at law, acknowledging that no such remedy exists.

 

(c)In the event of litigation to
enforce the terms and conditions of this Agreement, the losing party agrees to pay the substantially prevailing party's costs and
expenses incurred including, without limitation, reasonable attorneys' fees.

 

(d)Each and all of the rights and
remedies provided for in the Agreement shall be cumulative. No one right or remedy shall be exclusive of the others or any right
or remedy allowed in law or in equity. No waiver by Company of any failure by Executive Officer to keep or perform any promise
of condition of this Agreement shall be a waiver of any proceeding or succeeding breach of the same or any other promise or condition.
No waiver of Company of any right shall be construed as a waiver of any other right. The existence of any claims or causes of action
of Executive Officer against the Company shall not constitute a defense to the enforcement by the Company of the covenants contained
in this Agreement.

 

(e)If any provision of this Agreement
shall be held invalid or unenforceable by competent authority, such provision shall be construed so as to be limited or reduced
to be enforceable to the maximum extent compatible with the law as it shall then appear. The total invalidity or unenforceability
of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed
in all respects as if such invalid or unenforceable provision were omitted.

  

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY
LEFT BLANK]

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
we have executed this Agreement to be effective as of the day and year first above written.

 

 

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

 

Dated: ____________________, 2014

  

 

ERIC TIMOTHY CONVERSE

 

	 	/s/ Eric T. Converse	 

  

Dated: ____________________, 2014

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