Document:

Exhibit
        10.3

       
REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this "Agreement"),
      dated
      as of September 12, 2007, by and between VirtualScopics, Inc., a Delaware
      corporation (the "Company"),
      and
      each buyer identified on the Schedule of Buyers attached hereto (collectively,
      the “BUYERS” and each individually, the “BUYER”).

    

    WHEREAS:

    

    A.
      In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the "Securities
      Purchase Agreement"),
      the
      Company has agreed, upon the terms and subject to the conditions contained
      therein, to issue and sell to the Buyers the following (as each capitalized
      term
      not otherwise defined herein shall have the meaning ascribed to it in the
      Securities Purchase Agreement):

    

    (i)
      Series B Convertible Preferred Stock (“Preferred Stock”) of the Company (the
“Preferred
      Stock”)
      issued
      pursuant to the Securities Purchase Agreement and the Certificate of Designation
      of Rights and Preferences of the Company’s Series B Convertible Preferred Stock
      (the “Certificate of Designation”), and

    

    (ii)
      Warrants in the amount described in the Securities Purchase
      Agreement,

    

    where
      the
      Preferred Stock is convertible into shares of the Company's common stock, par
      value $0.001
      per
      share (the "Common
      Stock"),
      upon
      the terms and subject to the limitations and conditions set forth in the
      Certificate of Designation and where each of the Warrants is exercisable into
      shares of the Company's Common Stock, each upon the terms and conditions and
      subject to the limitations and conditions set forth in the Warrants, all subject
      to the terms and conditions of the Securities Purchase Agreement;
      and

    

    B.
      To
      induce the Buyer to execute and deliver the Securities Purchase Agreement,
      the
      Company has agreed to provide certain registration rights under the Securities
      Act of 1933, as amended, and the rules and regulations thereunder, or any
      similar successor statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws;

    

    NOW,
      THEREFORE,
      In
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Buyer hereby agree as
      follows:

    

    1.
      DEFINITIONS.

    

    a.
      As
      used in this Agreement, the following terms shall have the following
      meanings:

    

    “Additional
      Registration Statement” shall
      have the meaning ascribed to it in Section 3(b) below.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    “Additional
      Registration Effectiveness Deadline” shall
      have the meaning ascribed to it in Section 3(b) below.

     

    “Additional
      Registration Filing Deadline”
      shall
      have the meaning ascribed to it in Section 3(b) below.

    

    "Buyer"
      means
      the purchaser of Preferred Stock and Warrants pursuant to the Securities
      Purchase Agreement specified on the signature page hereof, and any transferee
      or
      assignee who agrees to become bound by the provisions of this Agreement in
      accordance with Section 10 hereof.

    

    "Cutback
      Shares"
      means
      any of the Target Registration Amount of Registrable Securities not included
      in
      any of the Registration Statements previously declared effective hereunder
      as a
      result of a limitation on the maximum number of shares of Common Stock of the
      Company permitted to be registered by the staff
      of the SEC
      pursuant
      to Rule 415.

    

    “Dividends”
      shall
      have the meaning ascribed to it in the Certificate of Designation.

    

    “Dividend
      Payment Shares”
      shall
      mean shares of Common Stock that are used to pay Dividends pursuant to the
      terms
      of the Certificate of Designation.

    

    “Effective
      Date”
      shall
      mean the date that the initial Registration Statement is first declared
      effective by the Commission.

    

    "Effectiveness
      Period"
      means,
      as to any Registration Statement required to be filed pursuant to this
      Agreement, the period commencing on the Effective Date of such Registration
      Statement and ending on the earliest to occur of (a) the second anniversary
      of
      the date hereof, (b) such time as all of the Registrable Securities covered
      by
      such Registration Statement have been publicly sold by the Holders of the
      Registrable Securities included therein, or (iii) such time as all of the
      Registrable Securities covered by such Registration Statement may be sold by
      the
      Holders pursuant to Rule 144(k) as determined by the counsel to the Company
      pursuant to a written opinion letter to such effect, addressed and acceptable
      to
      the Company's transfer agent and the affected Holders.

     

    “Effectiveness
      Deadline,”
      (a) with
      respect to the Initial Registration Statement, shall mean the date that is
      the
      120 days following the date hereof and with respect to any Additional
      Registration Statements which may be required pursuant to Section 3(b), the
      90th
      calendar day following the date on which an additional Registration Statement
      is
      required to be filed hereunder; provided, however, that in the event the Company
      is notified by the Commission that one or more of the above Registration
      Statements will not be reviewed or is no longer subject to further review and
      comments, the Effectiveness Deadline as to such Registration Statement shall
      be
      the fifth Trading Day following the date on which the Company is so notified
      if
      such date precedes the dates otherwise required above and (b) with respect
      to
      any Additional Registration Statement, shall mean the Additional Registration
      Effectiveness Deadline. 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Exclusion
      Period” shall
      have the meaning set forth in Section 3(p) below.

    

    “Filing
      Deadline” shall
      mean the Initial Registration Filing Deadline, or any applicable Additional
      Registration Filing Deadline.   

    

    “Initial
      Registration Filing Deadline”
      shall
      mean, with respect to the Initial Registration Statement required hereunder,
      the
      45th calendar day following the date hereof.

    

    “Initial
      Registration Minimum”
      means a
      number of Registrable Securities equal to the lesser of (i) the total number
      of
      Registrable Securities and (ii) the maximum number which would enable the
      Company to conduct such offering in accordance with the provisions of Rule
      415
      as advised by the staff of the Commission in a written comment letter or
      otherwise.

    

    "Investor"
      means a
      Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights
      under this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 10 hereof and any transferee or assignee
      thereof to whom a transferee or assignee assigns its rights under this Agreement
      and who agrees to become bound by the provisions of this Agreement in accordance
      with Section 10.

    

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a) below.

    

    “Prospectus”
      means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    

    "Register,"
      "Registered,"
      and
"Registration"
      refer to
      a registration effected by preparing and filing a Registration Statement or
      Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
      1933 Act or any successor rule providing for offering securities on a continuous
      basis ("Rule
      415"),
      and
      the declaration or ordering of effectiveness of such Registration Statement
      by
      the United States Securities and Exchange Commission (the "Commission").

    

    "Registrable
      Securities,"
      for a
      given Registration, means (a) the shares of Common Stock (the “Conversion
      Shares”)
      issued
      or issuable upon full conversion of the Preferred Stock or otherwise pursuant
      to
      the Certificate of Designation, for which such Registration is being effected
      (including, without limitation, any shares issued or issuable as Dividend
      Payment Shares (as defined above) or as “Payment Shares” or otherwise pursuant
      to the Securities Purchase Agreement), (b) any shares of Common Stock (the
      “Warrant
      Shares”)
      issued
      or issuable upon exercise of or otherwise pursuant to the Warrant(s), and (c)
      any shares of capital stock issued or issuable as a dividend on or in exchange
      for or otherwise with respect to any of the foregoing, (d) any additional shares
      of Common Stock issuable in connection with any anti-dilution provisions in
      the
      Certificate of Designation or the Warrants (in each case, without giving effect
      to any limitations on conversion set forth in the Certificate of Designation
      or
      limitations on exercise set forth in the Warrant), (e) any shares of Common
      Stock issuable upon exercise of warrants issued to any placement agent as
      compensation in connection with the financing that is the subject of the
      Securities Purchase Agreement ("Placement Agent Warrant Shares"), and (f) any
      securities issued or issuable upon any stock split, dividend or other
      distribution, recapitalization or similar event with respect to the
      foregoing.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    "Registration
      Statement(s)"
      means a
      registration statement(s) of the Company under the 1933 Act.

    

    “Registration
      Trigger Date”
      shall
      have the meaning set forth in Section 3(b) below.

    

    “Rule
      424” means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “SEC
      Guidance”
      means
      (i) the Securities Act, and (ii) any publicly-available written or oral
      guidance, comments, requirements or requests of the Commission
      staff.

    

    “SEC
      Share Reduction”
      shall
      have the meaning ascribed to it in Section 2(a) below.

    

    “Securities”
      shall
      have the meaning ascribed to it in the Securities Purchase
      Agreement.

    

    “Target
      Registration Amount”
      shall
      have the meaning set forth in Section 2(a) below.

     

    “Target
      Registration Shortfall”
      shall
      have the meaning set forth in Section 2(a) below.

    

    “Underlying
      Preferred Shares”
      means
      the shares of Common Stock issuable upon conversion of the Preferred Stock
      and
      payment of Dividends thereunder.

    

    “Warrants”
      means
      the warrants issued by the Company pursuant to the Securities Purchase
      Agreement.

    

    “Warrant
      Shares”
      means
      the shares of Common Stock issuable upon exercise of the Warrants.

    

    b.
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings set forth in the Securities Purchase Agreement.

    

    2.
      REGISTRATION.

     

    a.
      MANDATORY REGISTRATION.
      Following the Closing of any Preferred Stock pursuant to the Securities Purchase
      Agreement, the Company shall prepare, and, on or prior to the Initial
      Registration Filing Deadline (as defined above) file with the Commission a
      Registration Statement on such form of Registration Statement as is then
      available to effect a registration of the Registrable Securities, (the
“Initial
      Registration Statement”)
      covering the resale of the Registrable Securities which Registration Statement,
      to the extent allowable under the 1933 Act and the rules and regulations
      promulgated thereunder (including Rule 416), shall state that such Registration
      Statement also covers such indeterminate number of additional shares of Common
      Stock as may become issuable upon conversion of or otherwise pursuant to the
      Certificate of Designation and exercise of or otherwise pursuant to the Warrants
      to prevent dilution resulting from stock splits, stock dividends or similar
      transactions and shall contain (unless otherwise directed by at least a two
      thirds (2/3) in interest of the Holders) substantially the “Plan
      of Distribution”
      attached hereto as Annex A. The number of shares of Common Stock initially
      included in such Registration Statement shall be no less than 150%
      of the
      aggregate number of Conversion Shares that are then issuable upon conversion
      of
      the Preferred Stock or otherwise pursuant to the Certificate of Designation
      (based on the Conversion Price [as defined in the Certificate of Designation]
      then in effect) and assuming that all Dividends that would accrue on the
      Preferred Stock for the immediately following 12 month period is payable in
      Common Stock, plus the aggregate number of Warrant Shares that are then issuable
      upon exercise of or otherwise pursuant to the Warrants, without regard to any
      limitation on the Buyer's ability to convert the Preferred Stock or exercise
      the
      Warrants (collectively, the “Target
      Registration Amount”).
      Notwithstanding the foregoing, if the Company is advised by the staff of the
      Commission in a written comment letter that it is not eligible to conduct the
      offering of the Preferred Stock under Rule 415 promulgated under the 1933 Act
      because of the number of shares sought to be included in the Registration
      Statement, then the Company may reduce (an “SEC
      Share Reduction”)
      the
      number of shares covered by such Registration Statement to the maximum number
      which would enable the Company to conduct such offering in accordance with
      the
      provisions of Rule 415 (“Rule
      415 Eligible”).
      In the
      event of an SEC Share Reduction, the inclusion of the Underlying Preferred
      Shares in such initial Registration Statement shall take precedence over and
      shall not be cut back until the following securities of the Company are cut
      back
      and removed from such Registration Statement (in the following order): (i)
      any
      securities of the Company to be included in such Registration Statement pursuant
      to Section 3(r) and (ii) Warrant Shares. Any cut back of Underlying Preferred
      Shares will be applied pro rata to each holder in proportion to the aggregate
      Stated Value (as defined in the Certificate of Designation) of the Preferred
      Stock held by each Holder. In the event that, due to an SEC Share Reduction
      or
      otherwise, any Registration Statement filed hereunder shall (when combined
      with
      any previous Registration Statements that are current and effective) register
      a
      number of shares of Common Stock which less than the Target Registration Amount
      (a “Target
      Registration Shortfall”),
      then
      the unregistered portion of the Target Registration Amount (the “Target
      Registration Shortfall Amount”)
      shall
      be included in the next Additional Registration Statement (in accordance with
      Section 3(b) below). 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    The
      Company shall, by 9:30 a.m. New York City time on the Trading Day after the
      effective date of such Registration Statement, file a final Prospectus with
      the
      Commission as required by Rule 424. The Company acknowledges that the number
      of
      shares initially included in each Registration Statement represents a good
      faith
      estimate of the maximum number of shares issuable upon conversion of the
      Preferred Stock or otherwise pursuant to the Certificate of Designation and
      exercise of or otherwise pursuant to the Warrants. Each Registration Statement
      (and each amendment or supplement thereto, and each request for acceleration
      of
      effectiveness thereof) shall be provided to the Buyer prior to its filing or
      other submission. 

     

    b.
      PIGGY-BACK REGISTRATIONS.
      If at
      any time prior to the expiration of the Registration Period (as hereinafter
      defined) the Company shall determine to file with the Commission a Registration
      Statement relating to an offering for its own account or the account of others
      under the 1933 Act of any of its equity securities (other than on Form S-4
      or
      Form S-8 or their then equivalents relating to equity securities to be issued
      solely in connection with any acquisition of any entity or business or equity
      securities issuable in connection with stock option or other employee benefit
      plans), the Company shall send to Buyer written notice of such determination
      and, if within fifteen (15) days after the effective date of such notice, the
      Buyer shall so request in writing, the Company shall include in such
      Registration Statement all or any part of the Registrable Securities the Buyer
      requests to be registered, except that if, (i) inclusion of such shares would
      result in the offering not being Rule 415 Eligible, or (ii) in connection with
      any underwritten public offering for the account of the Company, the managing
      underwriter(s) thereof shall impose a limitation on the number of shares of
      Common Stock which may be included in the Registration Statement because, in
      such underwriter(s)' judgment, marketing or other factors dictate such
      limitation is necessary to facilitate public distribution, then the Company
      shall be obligated to include in such Registration Statement only such limited
      portion of the Registrable Securities with respect to which the Buyer has
      requested inclusion hereunder (i) as would enable the offering to be Rule 415
      Eligible or (ii) as the underwriter shall permit;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    PROVIDED,
      HOWEVER,
      that
      the Company shall not exclude any Registrable Securities unless the Company
      has
      first excluded all outstanding securities, the holders of which are not entitled
      by contract to inclusion of such securities in such Registration Statement
      or
      are not entitled to pro rata inclusion with the Registrable Securities;
      and

    

    PROVIDED,
      FURTHER, HOWEVER,
      that,
      after giving effect to the immediately preceding proviso, any exclusion of
      Registrable Securities shall be made pro rata with holders of other securities
      having the contractual right to include such securities in the Registration
      Statement other than holders of securities entitled to inclusion of their
      securities in such Registration Statement by reason of demand registration
      rights. No right to registration of Registrable Securities under this Section
      2(b) shall be construed to limit any registration required under Section 2(a)
      hereof. If an offering in connection with which the Buyer is entitled to
      registration under this Section 2(d) is an underwritten offering, then the
      Buyer
      shall, unless otherwise agreed by the Company, offer and sell such Registrable
      Securities in an underwritten offering using the same underwriter or
      underwriters and, subject to the provisions of this Agreement, on the same
      terms
      and conditions as other shares of Common Stock included in such underwritten
      offering. Notwithstanding anything to the contrary set forth herein, the
      registration rights of the Buyer pursuant to this Section 2(b) shall only be
      available in the event the Company fails to timely file, obtain effectiveness
      or
      maintain effectiveness of any Registration Statement to be filed pursuant to
      Section 2(a) in accordance with the terms of this Agreement.

     

    3.
      OBLIGATIONS OF THE COMPANY.
      In
      connection with the registration of the Registrable Securities, the Company
      shall have the following obligations:

    

    a.
      The
      Company shall prepare promptly, and file with the Commission as soon as
      practicable after the date of the Closing under the Securities Purchase
      Agreement (the "Closing
      Date")
      (but no
      later than the Filing Deadline), Registration Statements with respect to the
      number of Registrable Securities provided in Section 2(a), and thereafter use
      its commercially reasonable efforts to cause each such Registration Statement
      relating to Registrable Securities to become effective no later than the
      Effectiveness Deadline, and except as provided in Section 3(e),
      shall
      keep the Registration Statement current and effective pursuant to Rule 415
      at
      all times until such date as is the earlier of (i) the date on which all of
      the
      Registrable Securities for such Registration Statement have been sold and (ii)
      the date on which all of the Registrable Securities for such Registration
      Statement (in the opinion of counsel to the Buyer) may be immediately sold
      to
      the public without registration or restriction (including without limitation
      as
      to volume by each holder thereof) under the 1933 Act, and (iii) two years from
      the date hereof (the "Registration
      Period").

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    b.
      The
      Company shall prepare and file with the Commission such amendments (including
      post-effective amendments) and supplements to each Registration Statements
      and
      the prospectus used in connection with the Registration Statements as may be
      necessary to keep the Registration Statements current and effective at all
      times
      during the Registration Period, and, during such period, comply with the
      provisions of the 1933 Act with respect to the disposition of all Registrable
      Securities of the Company covered by the Registration Statements until such
      time
      as all of such Registrable Securities have been disposed of in accordance with
      the intended methods of disposition by the seller or sellers thereof as set
      forth in the Registration Statements. In the event of a Target Registration
      Shortfall (the date of each of which is referred to as a “Registration
      Trigger Date”),
      or in
      the event that on any Trading Day (as defined in the Certificate of Designation)
      (each such Trading Day is also referred to as a "Registration
      Trigger Date")
      the
      number of shares available under a Registration Statement filed pursuant to
      this
      Agreement is otherwise insufficient to cover all of the Registrable Securities
      issued or issuable upon conversion of the Preferred Stock or otherwise pursuant
      to the Certificate of Designation (based on the Conversion Price of the
      Preferred Stock [as defined in the Certificate of Designation] then in effect),
      exercise of or otherwise pursuant to the Warrants (based on the Exercise Price
      [as defined in the Warrants] then in effect), and otherwise issuable pursuant
      to
      the Transaction Documents, in each case without giving effect to any limitations
      on the Buyer' ability to convert the Preferred Stock, exercise the Warrants
      or
      otherwise receive shares of Common Stock pursuant to the Transaction Documents,
      the Company shall amend the Registration Statement, or file a new Registration
      Statement, or both (each, an “Additional
      Registration Statement”),
      so as
      to cover at least 150%
      of the
      total number of Registrable Securities so issued or issuable (based on the
      Conversion Prices of the Preferred Stock, the Exercise Prices of the Warrants,
      and other relevant factors on which the Company reasonably elects to rely,
      and
      without giving effect to any limitations on conversion of the Preferred Stock
      contained in the Certificate of Designation, limitations on exercise contained
      in the Warrants or limitations on conversion or exercise or other payment of
      shares contained in the Securities Purchase Agreement) as of the Registration
      Trigger Date (subject to an SEC Share Reduction, if applicable). The Company
      shall prepare and file each Additional Registration Statement as soon as
      practicable following any Registration Trigger Date, but not later than not
      later than the date that is thirty (30) days following the applicable
      Registration Trigger Date (the “Additional
      Registration Filing Deadline”)
      provided that, if Cutback Shares are required to be included in the Additional
      Registration Statement, the “Additional
      Registration Filing Deadline”
      shall
      mean the later of (i) the date that is sixty (60) days after the date
      substantially all (as such term is then interpreted by the Commission) of the
      Registrable Securities registered
      under the immediately preceding Registration Statement are sold
      and (ii)
      the date that is six (6) months following the date of effectiveness of the
      most
      recently effective Registration Statement or Additional Registration Statement
      filed hereunder. The Company shall use its commercially reasonable efforts
      to
      cause such amendment and/or new Registration Statement to become effective
      within ninety (90) days of the Registration Trigger Date (the
      “Additional Registration Effectiveness Deadline”)
      or as
      promptly as practicable in the event the Company is required to increase its
      authorized shares. 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    c.
      The
      Company shall furnish to the Buyer and its legal counsel (i) promptly after
      the
      same is prepared and publicly distributed, filed with the Commission, or
      received by the Company, one copy of each Registration Statement and any
      amendment thereto, each preliminary prospectus and prospectus and each amendment
      or supplement thereto, and, in the case of the Registration Statement referred
      to in Section 2(a), each letter written by or on behalf of the Company to the
      Commission or the staff of the Commission, and each item of correspondence
      from
      the Commission or the staff of the Commission, in each case relating to such
      Registration Statement (other than any portion of any thereof which contains
      information for which the Company has sought confidential treatment), and (ii)
      such number of copies of a prospectus, including a preliminary prospectus,
      and
      all amendments and supplements thereto and such other documents as the Buyer
      may
      reasonably request in order to facilitate the disposition of the Registrable
      Securities owned by the Buyer. The Company will promptly notify the Buyer by
      facsimile of the effectiveness of each Registration Statement or any
      post-effective amendment. The Company will promptly respond to any and all
      comments received from the Commission, with a view towards causing each
      Registration Statement or any amendment thereto to be declared effective by
      the
      Commission as soon as practicable and shall file an acceleration request as
      soon
      as practicable, but no later than three (3) business days (the "Acceleration
      Request Deadline"),
      following the resolution or clearance of all Commission comments or, if
      applicable, following notification by the Commission that any such Registration
      Statement or any amendment thereto will not be subject to review.

    

    d.
      The
      Company shall use commercially reasonable efforts to (i) register and qualify
      the Registrable Securities covered by the Registration Statements under such
      other securities or "blue sky" laws of such jurisdictions in the United States
      as the Buyer shall reasonably request, (ii) prepare and file in those
      jurisdictions such amendments (including post-effective amendments) and
      supplements to such registrations and qualifications as may be necessary to
      maintain the effectiveness thereof during the Registration Period, (iii) take
      such other actions as may be necessary to maintain such registrations and
      qualifications in effect at all times during the Registration Period, and (iv)
      take all other actions reasonably necessary or advisable to qualify the
      Registrable Securities for sale in such jurisdictions;

    

    e.
      As
      promptly as practicable after becoming aware of such event, the Company shall
      notify the Buyer of the happening of any event, of which the Company has
      knowledge, as a result of which the prospectus included in any Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state a material fact required to be stated therein or necessary to
      make the statements therein not misleading, and use its best efforts promptly
      to
      prepare a supplement or amendment to any Registration Statement to correct
      such
      untrue statement or omission, and deliver such number of copies of such
      supplement or amendment to the Buyer as the Buyer may reasonably request;
      provided that, for not more than twenty (20) consecutive days (or a total of
      not
      more than sixty (60) days in any twelve (12) month period), the Company may
      delay the disclosure of material non-public information concerning the Company
      (as well as prospectus or Registration Statement updating) the disclosure of
      which at the time is not, in the good faith opinion of the Company, in the
      best
      interests of the Company (an "Allowed
      Delay");
      provided, further, that the Company shall promptly (i) notify the Buyer in
      writing of the existence of (but in no event, without the prior notice to the
      Buyer, shall the Company disclose to the Buyer any of the facts or circumstances
      regarding) material non-public information giving rise to an Allowed Delay
      and
      (ii) advise the Buyer in writing to cease all sales under such Registration
      Statement until the end of the Allowed Delay, provided the above actions are
      consistent with the requirements of the 1933 Act and/or 1934 Act or other
      applicable law. Upon expiration of the Allowed Delay, the Company shall again
      be
      bound by the first sentence of this Section 3(e) with respect to the information
      giving rise thereto. 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    f.
      The
      Company shall use its commercially reasonable efforts to prevent the issuance
      of
      any stop order or other suspension of effectiveness of any Registration
      Statement, and, if such an order is issued, to obtain the withdrawal of such
      order at the earliest possible moment and to notify the Buyer who holds
      Registrable Securities being sold (or, in the event of an underwritten offering,
      the managing underwriters) of the issuance of such order and the resolution
      thereof.

    

    g.
      The
      Company shall use its commercially reasonable efforts to cause all the
      Registrable Securities covered by the Registration Statement to be listed on
      each national securities exchange on which securities of the same class or
      series issued by the Company are then listed, if any, if the listing of such
      Registrable Securities is then permitted under the rules of such
      exchange.

    

    h.
      The
      Company shall provide a transfer agent and registrar, which may be a single
      entity, for the Registrable Securities not later than the effective date of
      the
      Registration Statement.

    

    i.
      At the
      request of the holders of a majority-in-interest of the Registrable Securities,
      the Company shall prepare and file with the Commission such amendments
      (including post-effective amendments) and supplements to a Registration
      Statement and any prospectus used in connection with the Registration Statement
      as may be necessary in order to change the plan of distribution set forth in
      such Registration Statement.

    

    j.
      The
      Company shall not, and shall not agree to, allow the holders of any securities
      of the Company to include any of their securities in any Registration Statement
      under Section 2(a) hereof or any amendment or supplement thereto under Section
      3(b) hereof without the consent of the holders of a majority-in-interest of
      the
      Registrable Securities, except for securities which have contractual piggyback
      registration rights in effect at the time of the Initial Closing (as defined
      in
      the Securities Purchase Agreement). In addition, the Company shall not offer
      any
      securities for its own account or the account of others in any Registration
      Statement under Section 2(a) hereof or any amendment or supplement thereto
      under
      Section 3(b) hereof without the consent of the holders of a majority-in-interest
      of the Registrable Securities.

    

    k.
      The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Buyer of Registrable Securities pursuant to a
      Registration Statement.

    

    l.
      The
      Company shall comply with all applicable laws related to a Registration
      Statement and offering and sale of securities and all applicable rules and
      regulations of governmental authorities in connection therewith (including
      without limitation the 1933 Act and the 1934 Act and the rules and regulations
      promulgated by the Commission).

    

    m.
      Pre-Effective
      Amendment.
      Prior
      to the effective date of any Registration Statement, the Company shall use
      commercially reasonable efforts to file a pre-effective amendment in respect
      of
      any Registration Statement within 20 Business Days after the receipt of notice
      from the Commission that such amendment is required in order for such
      Registration Statement to be declared effective.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    4.
      Omitted. 

    

    5.
      OBLIGATIONS OF THE BUYER.
      In
      connection with the registration of the Registrable Securities, the Buyer shall
      have the following obligations:

    

    a.
      It
      shall be a condition precedent to the obligations of the Company to complete
      the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of the Buyer that the Buyer shall furnish to the Company such
      information regarding itself, the Registrable Securities held by it and the
      intended method of disposition of the Registrable Securities held by it as
      shall
      be reasonably required to effect the registration of such Registrable Securities
      and shall execute such documents in connection with such registration as the
      Company may reasonably request. At least three (3) business days prior to the
      first anticipated filing date of the Registration Statement, the Company shall
      notify the Buyer of the information the Company requires from each
      Buyer.

    

    b.
      The
      Buyer, by the Buyer's acceptance of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of the Registration Statements hereunder, unless
      the Buyer has notified the Company in writing of the Buyer's election to exclude
      all of the Buyer's Registrable Securities from the Registration
      Statements.

    

    c.
      In the
      event of an underwritten offering pursuant to Section 2(b) in which any
      Registrable Securities are to be included, the Buyer agrees to enter into and
      perform the Buyer's obligations under an underwriting agreement, in usual and
      customary form, including, without limitation, customary indemnification and
      contribution obligations, with the managing underwriter of such offering and
      take such other actions as are reasonably required in order to expedite or
      facilitate the disposition of the Registrable Securities, unless the Buyer
      has
      notified the Company in writing of the Buyer's election to exclude all of the
      Buyer's Registrable Securities from such Registration Statement.

    

    d.
      The
      Buyer agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 3(e) or 3(f), the Buyer will
      immediately discontinue disposition of Registrable Securities pursuant to the
      Registration Statement covering such Registrable Securities until the Buyer's
      receipt of the copies of the supplemented or amended prospectus contemplated
      by
      Section 3(e) or 3(f) and, if so directed by the Company, the Buyer shall deliver
      to the Company (at the expense of the Company) or destroy (and deliver to the
      Company a certificate of destruction) all copies in the Buyer's possession,
      of
      the prospectus covering such Registrable Securities current at the time of
      receipt of such notice.

    

    e.
      No
      Buyer may participate in any underwritten registration hereunder unless the
      Buyer (i) agrees to sell the Buyer's Registrable Securities on the basis
      provided in any underwriting arrangements in usual and customary form entered
      into by the Company, (ii) completes and executes all questionnaires, powers
      of
      attorney, indemnities, underwriting agreements and other documents reasonably
      required under the terms of such underwriting arrangements, and (iii) agrees
      to
      pay its pro rata share of all underwriting discounts and commissions and any
      expenses in excess of those payable by the Company pursuant to Section 5
      below.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    f. Each
      Holder agrees to furnish to the Company a completed questionnaire in the form
      attached to this Agreement as Annex B (a “Selling
      Shareholder Questionnaire”)
      not
      less than ten (10) days following the date hereof. 

    

    6.
      EXPENSES OF REGISTRATION.
      All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualification fees, printers and accounting fees, the fees and disbursements
      of
      counsel for the Company shall be borne by the Company.

    

    7.
      INDEMNIFICATION.
      In the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

    

    a.
      To the
      extent permitted by law, the Company will indemnify, hold harmless and defend
      (i) the Buyer, (ii) the directors, officers, partners, managers, members,
      employees, agents and each person who controls any Buyer within the meaning
      of
      the 1933 Act or the Securities Exchange Act of 1934, as amended (the
"1934
      Act"),
      if
      any, (each, an "Indemnified
      Person"),
      against any joint or several losses, claims, damages, liabilities or expenses
      (collectively, together with actions, proceedings or inquiries by any regulatory
      or self-regulatory organization, whether commenced or threatened, in respect
      thereof, "Claims")
      to
      which any of them may become subject insofar as such Claims arise out of or
      are
      based upon: (i) any untrue statement or alleged untrue statement of a material
      fact in a Registration Statement or the omission or alleged omission to state
      therein a material fact required to be stated or necessary to make the
      statements therein not misleading; (ii) any untrue statement or alleged untrue
      statement of a material fact contained in any preliminary prospectus if used
      prior to the effective date of such Registration Statement, or contained in
      the
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the Commission) or the omission or alleged
      omission to state therein any material fact necessary to make the statements
      made therein, in light of the circumstances under which the statements therein
      were made, not misleading; or (iii) any violation or alleged violation by the
      Company of the 1933 Act, the 1934 Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation thereunder
      relating to the offer or sale of the Registrable Securities (the matters in
      the
      foregoing clauses (i) through (iii) being, collectively, "Violations").
      Subject to the restrictions set forth in Section 7(b) with respect to the number
      of legal counsel, the Company shall reimburse the Indemnified Person, promptly
      as such expenses are incurred and are due and payable, for any reasonable legal
      fees or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 7(a): (i) shall not apply to a Claim arising out of or based upon a
      Violation which occurs in reliance upon and in conformity with information
      furnished in writing to the Company by any Indemnified Person or underwriter
      for
      such Indemnified Person expressly for use in connection with the preparation
      of
      such Registration Statement or any such amendment thereof or supplement thereto;
      (ii) shall not apply to amounts paid in settlement of any Claim if such
      settlement is effected without the prior written consent of the Company, which
      consent shall not be unreasonably withheld; and (iii) with respect to any
      preliminary prospectus, shall not inure to the benefit of any Indemnified Person
      if the untrue statement or omission of material fact contained in the
      preliminary prospectus was corrected on a timely basis in the prospectus, as
      then amended or supplemented, such corrected prospectus was timely made
      available by the Company pursuant to Section 3(c) hereof, and the Indemnified
      Person was promptly advised in writing not to use the incorrect prospectus
      prior
      to the use giving rise to a Violation and such Indemnified Person,
      notwithstanding such advice, used it. Such indemnity shall remain in full force
      and effect regardless of any investigation made by or on behalf of the
      Indemnified Person and shall survive the transfer of the Registrable Securities
      by the Buyer pursuant to Section 10. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    b.
      Promptly after receipt by an Indemnified Person under this Section 7 of notice
      of the commencement of any action (including any governmental action), such
      Indemnified Person shall, if Claim in respect thereof is to be made against
      any
      the Company under this Section 7, deliver to the Company a written notice of
      the
      commencement thereof, and the Company shall have the right to participate in,
      and, to the extent the Company so desires, to assume control of the defense
      thereof with counsel mutually satisfactory to the Company and the Indemnified
      Person, as the case may be. 

    

    PROVIDED,
      HOWEVER,
      that an
      Indemnified Person shall have the right to retain its own counsel with the
      fees
      and expenses to be paid by the Company, if, in the reasonable opinion of counsel
      retained by the Company, the representation by such counsel of the Indemnified
      Person and the Company would be inappropriate due to actual or potential
      differing interests between such Indemnified Person and any other party
      represented by such counsel in such proceeding. The Company shall pay for only
      one separate legal counsel for the Indemnified Persons, and such legal counsel
      shall be selected by Buyer, if the Buyer is entitled to indemnification
      hereunder. The failure to deliver written notice to the Company within a
      reasonable time of the commencement of any such action shall not relieve the
      Company of any liability to the Indemnified Person under this Section 7, except
      to the extent that the Company is actually prejudiced in its ability to defend
      such action. The indemnification required by this Section 7 shall be made by
      periodic payments of the amount thereof during the course of the investigation
      or defense, as such expense, loss, damage or liability is incurred and is due
      and payable.

    

    c.
      To the
      extent permitted by law, the Buyer will indemnify, hold harmless and defend
      (i)
      the Company, and (ii) the directors, officers, partners, managers, members,
      employees, or agents of the Company, if any (each, a "Company
      Indemnified Person"),
      against any joint or several losses, claims, damages, liabilities or expenses
      (collectively, together with actions, proceedings or inquiries by any regulatory
      or self-regulatory organization, whether commenced or threatened, in respect
      thereof, "Claims")
      to
      which any of them may become subject insofar as such Claims arise out of or
      are
      based upon a Claim arising out of or based upon any violation or alleged
      violation by the Company of the 1933 Act, the 1934 Act, any other law,
      including, without limitation, any state securities law, or any rule or
      regulation thereunder relating to the offer or sale of the Registrable
      Securities, which occurs due to the inclusion by the Company in a Registration
      Statement of false or misleading information about the Buyer, where such
      information was furnished in writing to the Company by the Buyer for the purpose
      of inclusion in such Registration Statement.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    8.
      CONTRIBUTION.
      To the
      extent any indemnification by the Company or a Buyer is prohibited or limited
      by
      law, the Company, and the Buyer, as the case maybe, agrees to make the maximum
      contribution with respect to any amounts for which it would otherwise be liable
      under Section 7 to the fullest extent permitted by law, based upon a comparative
      fault standard. 

    

    9.
      REPORTS UNDER THE 1934 ACT.
      With a
      view to making available to the Buyer the benefits of Rule 144 promulgated
      under
      the 1933 Act or any other similar rule or regulation of the Commission that
      may
      at any time permit the Buyer to sell securities of the Company to the public
      without registration ("Rule
      144"),
      the
      Company agrees to:

    

    a.
      make
      and keep public information available, as those terms are understood and defined
      in Rule 144;

    

    b.
      file
      with the Commission in a timely manner all reports and other documents required
      of the Company under the 1933 Act and the 1934 Act so long as the Company
      remains subject to such requirements (it being understood that nothing herein
      shall limit the Company's obligations under Section 4(c) of the Securities
      Purchase Agreement) and the filing of such reports and other documents is
      required for the applicable provisions of Rule 144; and

    

    c.
      furnish to the Buyer so long as the Buyer owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company that it has complied with
      the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii)
      a
      copy of the most recent annual or quarterly report of the Company and such
      other
      reports and documents so filed by the Company, and (iii) such other information
      as may be reasonably requested to permit the Buyers to sell such securities
      pursuant to Rule 144 without registration.

    

    10.
      ASSIGNMENT OF REGISTRATION RIGHTS.
      The
      rights under this Agreement shall be automatically assignable by the Buyers
      to
      any transferee of all or any portion of Registrable Securities if: (i) the
      Buyer
      agrees in writing with the transferee or assignee to assign such rights, and
      a
      copy of such agreement is furnished to the Company within a reasonable time
      after such assignment, (ii) the Company is, within a reasonable time after
      such
      transfer or assignment, furnished with written notice of (a) the name and
      address of such transferee or assignee, and (b) the securities with respect
      to
      which such registration rights are being transferred or assigned, (iii)
      following such transfer or assignment, the further disposition of such
      securities by the transferee or assignee is restricted under the 1933 Act and
      applicable state securities laws, (iv) at or before the time the Company
      receives the written notice contemplated by clause (ii) of this sentence, the
      transferee or assignee agrees in writing with the Company to be bound by all
      of
      the provisions contained herein, and (v) such transfer shall have been made
      in
      accordance with the applicable requirements of the Securities Purchase
      Agreement. In the event that the Buyer transfers all or any portion of its
      Registrable Securities pursuant to this Section, the Company shall have at
      least
      ten (10) days from the date transferee agrees in writing to be bound by this
      Agreement, and notice is given to the Company, to file any amendments or
      supplements necessary to keep the Registration Statement current and effective
      pursuant to Rule 415.

    

    11.
      AMENDMENT OF REGISTRATION RIGHTS.
      Provisions of this Agreement may be amended and the observance thereof may
      be
      waived (either generally or in a particular instance and either retroactively
      or
      prospectively), only with written consent of the Company, the Buyer (to the
      extent such Buyer still owns Registrable Securities) and Buyers who hold a
      majority interest of the Registrable Securities. Any amendment or waiver
      effected in accordance with this Section 10 shall be binding upon the Buyer
      and
      the Company.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    12.
      MISCELLANEOUS. 

    

    a.
      A
      person or entity is deemed to be a holder of Registrable Securities whenever
      such person or entity owns of record such Registrable Securities. If the Company
      receives conflicting instructions, notices or elections from two or more persons
      or entities with respect to the same Registrable Securities, the Company shall
      act upon the basis of instructions, notice or election received from the
      registered owner of such Registrable Securities.

    

    b.
      Any
      notices required or permitted to be given under the terms hereof shall be sent
      by certified or registered mail (return receipt requested) or delivered
      personally or by courier (including a recognized overnight delivery service)
      or
      by facsimile and shall be effective five days after being placed in the mail,
      if
      mailed by regular United States mail, or upon receipt, if delivered personally
      or by courier (including a recognized overnight delivery service) or by
      facsimile, in each case addressed to a party. The addresses for such
      communications shall be:

    

    If
      to the
      Company: To the address set forth immediately below such

    Company’s
      name on the signature pages hereto.

    

    With
      copy
      to:

    

    Gregory
      W. Gribben

    Woods
      Oviatt Gilman LLP

    700
      Crossroads Building

    2
      State
      Street

    Rochester,
      New York 14614

    Phone:
      (585) 987-2800

    Fax:
      (585) 987-2975

    

    If
      to a
      Buyer: To the address set forth immediately below such Buyer's name on the
      signature pages hereto.

    

    Each
      party shall provide notice to the other party of any change in
      address.

    

    c.
      Failure of any party to exercise any right or remedy under this Agreement or
      otherwise, or delay by a party in exercising such right or remedy, shall not
      operate as a waiver thereof.

    

    d.
      Governing Law. All questions concerning the construction, validity, enforcement
      and interpretation of this Agreement shall be governed by and construed and
      enforced in accordance with the internal laws of the State of New York, without
      regard to the principles of conflicts of law thereof. Each party agrees that
      all
      legal proceedings concerning the interpretations, enforcement and defense of
      the
      transactions contemplated by this Agreement (whether brought against a party
      hereto or its respective affiliates, directors, officers, shareholders,
      employees or agents) shall be commenced exclusively in the state and federal
      courts sitting in the City of New York. Each party hereby irrevocably submits
      to
      the exclusive jurisdiction of the state and federal courts sitting in the City
      of New York, borough of Manhattan for the adjudication of any dispute hereunder
      or in connection herewith or with any transaction contemplated hereby or
      discussed herein (including with respect to the enforcement of any of the
      Transaction Documents), and hereby irrevocably waives, and agrees not to assert
      in any suit, action or proceeding, any claim that it is not personally subject
      to the jurisdiction of any such court, that such suit, action or proceeding
      is
      improper or is an inconvenient venue for such proceeding. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of delivery)
      to such party at the address in effect for notices to it under this Agreement
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to limit
      in
      any way any right to serve process in any other manner permitted by law. The
      parties hereby waive all rights to a trial by jury. If either party shall
      commence an action or proceeding to enforce any provisions of the this
      Agreement, then the prevailing party in such action or proceeding shall be
      reimbursed by the other party for its reasonable attorneys’ fees and other costs
      and expenses incurred with the investigation, preparation and prosecution of
      such action or proceeding.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    e.
      This
      Agreement and the Securities Purchase Agreement (including all schedules and
      exhibits thereto) constitute the entire agreement among the parties hereto
      with
      respect to the subject matter hereof and thereof. There are no restrictions,
      promises, warranties or undertakings, other than those set forth or referred
      to
      herein and therein. This Agreement and the Securities Purchase Agreement
      supersede all prior agreements and understandings among the parties hereto
      with
      respect to the subject matter hereof and thereof.

    

    f.
      Subject to the requirements of Section 10 hereof, this Agreement shall inure
      to
      the benefit of and be binding upon the successors and assigns of each of the
      parties hereto.

    

    g.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    

    h.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

    

    i.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    

    j.
      Except
      as otherwise provided herein, all consents and other determinations to be made
      by the Buyer pursuant to this Agreement shall be made by Buyers holding a
      majority of the Registrable Securities, determined as if the all of the
      Preferred Stock and Warrants then outstanding have been converted or exercised
      into for Registrable Securities.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    k.
      The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to the Buyer by vitiating the intent and purpose of the
      transactions contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for breach of its obligations hereunder will be inadequate and
      agrees, in the event of a breach or threatened breach by the Company of any
      of
      the provisions hereunder, that the Buyer shall be entitled, in addition to
      all
      other available remedies in law or in equity, to an injunction or injunctions
      to
      prevent or cure breaches of the provisions of this Agreement and to enforce
      specifically the terms and provisions hereof, without the necessity of showing
      economic loss and without any bond or other security being
      required.

    

    l.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

    

    m.
      In the
      event that any provision of this Agreement is invalid or unenforceable under
      any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any provision hereof
      which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision hereof.

    

    n.
      The
      initial number of Registrable Securities included in any Registration Statement
      and each increase to the number of Registrable Securities included therein
      shall
      be allocated pro rata among the Buyers based on the number of Registrable
      Securities held by the Buyer at the time of such establishment or increase,
      as
      the case may be. In the event a Buyer shall sell or otherwise transfer any
      of
      such holder's Registrable Securities, each transferee shall be allocated a
      pro
      rata portion of the number of Registrable Securities included in a Registration
      Statement for such transferor. Any shares of Common Stock included in a
      Registration Statement and which remain allocated to any person or entity which
      does not hold any Registrable Securities shall be allocated to the remaining
      Buyers, pro rata based on the number of shares of Registrable Securities then
      held by the Buyers. For the avoidance of doubt, the number of Registrable
      Securities held by a Buyer shall be determined as if all the Preferred Stock
      and
      Warrants then outstanding and held by a Buyer were converted into or exercised
      for Registrable Securities, without regard to any limitation on the Buyer's
      ability to convert the Preferred Stock or exercise the Warrants.

    

    o.
      There
      shall be no oral modifications or amendments to this Agreement. This Agreement
      may be modified or amended only in writing.

    
      
         

      

      
        16

        
          

        

      

       

    

    

    IN
      WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
      Agreement to be duly executed as of the 12th
      day of
      September, 2007.

     

    
      	
              COMPANY:

            	 	 	
              BUYER:

            
	 	 	 	 
	
              VirtualScopics,
                Inc.

            	 	 	
              

            
	 	 	 	 
	
              By:
                /s/
                Molly Henderson 

            	 	 	By:
	
              
                

              

              Print
                Name: Molly Henderson

            	 	 	
              
                

              
Print Name: 
	
              Title:
                Chief Financial Officer

            	 	 	
              
                

              
Title:
	 	 	 	
              
                
 

            
	
              ADDRESS:

            	 	 	
              ADDRESS:

               

            
	
              VirtualScopics,
                Inc.

              
                500
                  Linden Oaks

              

            	 	 	
              

            
	
              Rochester,
                New York 14625

              
                Phone:
                  (585) 249-6231

              

            	 	 	
              
 
	
              Fax:
                (585) 218-7350

            	 	 	
              
Phone:
	
            	 	 	
              
                

              
Fax:
	
            	 	 	
              
                
 

            

    

     

    
      
         

      

      
        17

        
          

        

      

       

    

    SCHEDULE
      OF BUYERS

     

    
      	
              Buyer

            	 	
              Address
                and

              Facsimile
                Number

            	 	
              Legal
                Representative’s

              Address
                and

              Facsimile
                Number

            
	
               

            	 	
               

            	 	
               

            
	
              Bridgepointe
                Master Fund Ltd.

            	 	
              1120
                Sanctuary Parkway

              Suite
                325

              Alpharetta,
                GA 30004

              Facsimile:
                770-777-5844

            	 	
              P.
                Bradford Hathorn, Esq.

              Roswell
                Capital Partners, LLC

              1120
                Sanctuary Parkway, Suite 325

              Alpharetta,
                GA 30004

              Facsimile:
                770-777-5844

            
	 	 	 	 	 
	
              BayStar
                Capital III Investment Fund, L.P.

            	 	
              80
                E. Sir Francis Drake Blvd.

              Suite
                2B

              Larkspur,
                CA 94939

              Facsimile:
                415-834-4601

            	 	
              John
                O’Neill, Esq.

              Collette,
                Erickson, Farmer & O’Neill

              235
                Pine Stree

              Suite
                1300

              San
                Francisco, CA 94104

              Facsimile:
                415-788-6929

            
	 	 	 	 	 
	
              Crescent
                International, Ltd.

            	 	
              c/o
                Cantara (Switzerland) S.A.

              84
                Avenue Louis-Casal

              CH-1216
                Cointrin/Geneva

              Switzerland

              Facsimile:
                +41 22 7917171

            	 	
              Feldman
                Weinstein & Smith LLP

              The
                Graybar Building

              420
                Lexington Avenue

              New
                York, New York 10170-0002

              Facsimile:
                (212) 401-4741

            
	 	 	 	 	 
	
              Gemini
                Master Fund, Ltd.

            	 	
              c/o
                Gemini Strategies, LLC

              12220
                El Camino Real

              Suite
                400

              San
                Diego, CA 92130

              Facsimile:
                (858) 505-8808

            	 	
              Steven
                Winters

              c/o
                Gemini Strategies, LLC

              12220
                El Camino Real

              Suite
                400

              San
                Diego, CA 92130

              Facsimile:
                (858) 505-8808

            
	 	 	 	 	 
	
              Bristol
                Investment Fund, Ltd.

            	 	
              c/o
                Bristol Capital Advisors, LLC

              10990
                Wilshire Boulevard

              Suite
                1410

              Los
                Angeles, CA 90024

              Facsimile:
                (310) 696-0334

            	 	
              Amy
                Wang, Esq.

              c/o
                Bristol Capital Advisors, LLC

              10990
                Wilshire Boulevard

              Suite
                1410

              Los
                Angeles, CA 90024

              Facsimile:
                (310) 696-0334

            
	 	 	 	 	 
	
              Robert
                G. Klimasewski

            	 	
              19
                Junction Road

              Honeoye
                Falls, NY 14472

            	 	
              19
                Junction Road

              Honeoye
                Falls, NY 14472

            
	 	 	 	 	 
	
              SRK
                Management Co.

            	 	
              810
                Seventh Avenue 

              41st
                Floor

              New
                York, New York 10019

            	 	
              810
                Seventh Avenue 

              41st
                Floor

              New
                York, New York 10019

            

    

    
      
         

      

      
        18

        
          

        

      

       

    

    

    
      	
              EGATNIV,
                LLC

            	
              150
                West 46th
                Street

              6th
                Floor

              New
                York, New York 10036

              Facsimile:
                (212) 730-4306

            	
              Joshua
                Greenberg

              150
                West 46th
                Street

              6th
                Floor

              New
                York, New York 10036

              Facsimile:
                (212) 730-4306

            

    

     

    
      
         

      

      
        19

        
          

        

      

       

    

    

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock and any of
      their pledgees, assignees and successors-in-interest may, from time to time,
      sell any or all of their shares of common stock on the Nasdaq
      Capital Market
      or any
      other stock exchange, market or trading facility on which the shares are traded
      or in private transactions. These sales may be at fixed or negotiated prices.
      A
      Selling Stockholder may use any one or more of the following methods when
      selling shares:

     

    
      	
            	·	
              ordinary
                brokerage transactions and transactions in which the brokerȭdealer
                solicits purchasers;

            

    

     

    
      
        	
              	·	
                block
                  trades in which the brokerȭdealer will attempt to sell the shares as agent
                  but may position and resell a portion of the block as principal
                  to
                  facilitate the
                  transaction;

              

      

    

     

    
      
        	
              	·	
                purchases
                  by a brokerȭdealer as principal and resale by the brokerȭdealer for its
                  account;

              

      

    

     

    
      
        	
              	·	
                an
                  exchange distribution in accordance with the rules of the applicable
                  exchange;

              

      

    

     

    
      	
            	·	
              privately
                negotiated transactions;

            

    

     

    
      
        	
              	·	
                settlement
                  of short sales entered into after the effective date of the registration
                  statement of which this prospectus is a part;
                  

              

      

    

     

    
      	
            	·	
              brokerȭdealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	
            	·	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	
            	·	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      
        	
              	·	
                any
                  other method permitted pursuant to applicable
                  law.

              

      

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than under
      this prospectus.

    

    Brokerȭdealers
      engaged by the Selling Stockholders may arrange for other brokersȭdealers to
      participate in sales. Brokerȭdealers may receive commissions or discounts from
      the Selling Stockholders (or, if any brokerȭdealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
      in compliance with NASDR IM-2440. 

    

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

    

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

    

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

    

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

    

    Under
      applicable rules and regulations under the 1934 Act, any person engaged in
      the
      distribution of the resale shares may not simultaneously engage in market making
      activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the 1934 Act and the rules and regulations thereunder,
      including Regulation M, which may limit the timing of purchases and sales of
      shares of the common stock by the Selling Stockholders or any other person.
      We
      will make copies of this prospectus available to the Selling Stockholders and
      have informed them of the need to deliver a copy of this prospectus to each
      purchaser at or prior to the time of the sale (including by compliance with
      Rule
      172 under the Securities Act).

    
      
         

      

      
        21

        
          

        

      

       

    

    Annex
      B

    

    Virtualscopics,
      Inc.

    

    Selling
      Securityholder Notice and Questionnaire

    

    The
      undersigned beneficial owner of common stock (the “Registrable Securities”) of
      Virtualscopics, Inc. a Delaware corporation (the “Company”), understands that
      the Company has filed or intends to file with the Securities and Exchange
      Commission (the “Commission”) a registration statement (the “Registration
      Statement”) for the registration and resale under Rule 415 of the Securities Act
      of 1933, as amended (the “Securities Act”), of the Registrable Securities, in
      accordance with the terms of the Registration Rights Agreement (the
“Registration Rights Agreement”) to which this document is annexed. A copy of
      the Registration Rights Agreement is available from the Company upon request
      at
      the address set forth below. All capitalized terms not otherwise defined herein
      shall have the meanings ascribed thereto in the Registration Rights
      Agreement.

    

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Registration Statement and the related
      prospectus.

    

    NOTICE

    

    The
      undersigned beneficial owner (the “Selling Securityholder”) of Registrable
      Securities hereby elects to include the Registrable Securities owned by it
      in
      the Registration Statement.

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

    

    
      1.Name.

    

    

    
      	
            	(a)	
              Full
                Legal Name of Selling Securityholder:

            

      	 	 	
              ________________________________________________

            

    

     

    
      	
            	(b)	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are held:

            

      	 	 	
              _________________________________________________

            

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    
      	
            	(c)	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this
                Questionnaire):

            

      	 	 	
              ________________________________________________

            

    

     

    
      2.Address
        for Notices to Selling Securityholder:

    

     

    Telephone:
      __________

    Fax:
      _______________

    Contact
      Person: ______________

     

    3.
      Broker-Dealer Status:

    

    (a) Are
      you a
      broker-dealer?

    Yes
o  No
o

    

    (b) If
“yes”
      to Section 3(a), did you receive your Registrable Securities as compensation
      for
      investment banking services to the Company?

    Yes
o  No
o

    

    Note: If
“no”
      to Section 3(b), the Commission’s staff has indicated that you should be
      identified as an underwriter in the Registration Statement.

    

    (c) Are
      you
      an affiliate of a broker-dealer?

    Yes
o  No
o

    

    (d) If
      you
      are an affiliate of a broker-dealer, do you certify that you purchased the
      Registrable Securities in the ordinary course of business, and at the time
      of
      the purchase of the Registrable Securities to be resold, you had no agreements
      or understandings, directly or indirectly, with any person to distribute the
      Registrable Securities?

    Yes
o  No
o

    

    Note: If
“no”
      to Section 3(d), the Commission’s staff has indicated that you should be
      identified as an underwriter in the Registration Statement.

     

    
      
         

      

      
        23

        
          

        

      

       

    

    4.
      Beneficial Ownership of Securities of the Company Owned by the Selling
      Securityholder.

    Except
      as
      set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

    

    (a) Type
      and
      Amount of other securities beneficially owned by the Selling
      Securityholder:

    

    ________________________________________________

    

    ________________________________________________

    

    ________________________________________________

     

    5.
      Relationships with the Company:

    

    Except
      as
      set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

    

    State
      any
      exceptions here:

    

    _____________________________________________

    

    _____________________________________________

    

    

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

    

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus and any
      amendments or supplements thereto. The undersigned understands that such
      information will be relied upon by the Company in connection with the
      preparation or amendment of the Registration Statement and the related
      prospectus.

     

    
      
         

      

      
        24

        
          

        

      

       

    

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

    
      	 	 	 
	Date: 	Beneficial
              Owner: 
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	
              
                

              

              Title

            
	 	
              
                
 

            

    

     

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    ___________________________

    

    ___________________________

    

    ___________________________

    

    ___________________________

     

    
      
         

      

      
        25Exhibit
      10.4

     

    LIMITED
      STANDSTILL AGREEMENT

    

    This
      AGREEMENT (the “Agreement”) is made as of the 12th
      day of
      September, 2007, by the signatories hereto (each, a “Holder”), in connection
      with his ownership of shares of VirtualScopics, Inc., a Delaware corporation
      (the “Company”).

    

    NOW,
      THEREFORE, for good and valuable consideration, the sufficiency and receipt
      of
      which consideration are hereby acknowledged, Holder agrees as
      follows:

    

    1. Background.

    

    a.
       Holder
      is
      the beneficial owner of the amount of shares of the Common Stock, par value
      $0.001, of the Company (“Common Stock”) designated on the signature page
      hereto.

     

    b. Holder
      acknowledges that the Company has entered into or will enter into at or about
      the date hereof Securities Purchase Agreements (the “Securities Purchase
      Agreements”), dated on or about September 12, 2007, with subscribers (the
“Subscribers”) to up to $5,000,000 of the Company’s Series B Convertible
      Preferred Stock (the “Preferred Stock”) and accompanying Warrants (the
“Offering”). Holder understands that, as a condition to proceeding with the
      Offering, the Subscribers have required, and the Company has agreed to obtain
      on
      behalf of the Subscribers an agreement from the Holder to refrain from selling
      any securities of the Company from the date of the Securities Purchase Agreement
      until the earlier to occur of (i) the date of termination as an employee of
      the
      Company, if applicable, and (ii) two years after the date hereof (the
“Restriction Period”), except as described below. 

     

    2. Share
      Restriction. 

    

    a. Holder
      hereby agrees that during the Restriction Period, the Holder will not sell
      or
      otherwise dispose of any shares of Common Stock or any options, warrants or
      other rights to purchase shares of Common Stock or any other security of the
      Company which Holder owns or has a right to acquire as of the date hereof,
      other
      than in connection with an offer made to all shareholders of the Company in
      connection with merger, consolidation or similar transaction involving the
      Company. Holder further agrees that the Company is authorized to and the Company
      agrees to place “stop orders” on its books to prevent any transfer of shares of
      Common Stock or other securities of the Company held by Holder in violation
      of
      this Agreement. The Company agrees not to allow to occur any transaction
      inconsistent with this Agreement.

    

    b. Any
      subsequent issuance to and/or acquisition by Holder of Common Stock or options
      or instruments convertible into Common Stock will be subject to the provisions
      of this Agreement.

    

    c. The
      foregoing restrictions notwithstanding, the Insider may sell up to the number
      of
      shares of Common Stock (the “Insider Stock”) beneficially owned by Insider on
      the date hereof or hereafter acquired at
      a price
      of not less than the lower of Initial Conversion Price of the Preferred Stock,
      or the Base Conversion Price in effect at the date of any sale, each as defined
      in the Certificate of Designation of Series B Preferred Stock of the Company,
      provided that such sales specified in this item (c) shall be subject
      the 144-Like Volume Limitations, as that term is defined below, and provided
      further that such
      sales specified in this item (c) may
      not
      exceed one-third (1/3) of the 144-Like Volume Restrictions in any thirty (30)
      day period during the Restriction Period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    For
      purposes hereof, 

    

    “144-Like
      Volume Limitations” shall mean that, during any 90 day period after the date
      hereof throughout
      the Restriction Period,
      the
      Holder may not sell or transfer a number of shares of Common Stock that exceeds
      the greater of: (1) 1% of the Company’s total outstanding shares, determined as
      of the first business day of such 90 day period, or, (2) the average reported
      weekly volume in the Company’s Common Stock for the four weeks immediately
      preceding the first business day of the Sales Period.

    

    3. Miscellaneous.

    

    a. At
      any
      time, and from time to time, after the signing of this Agreement Holder will
      execute such additional instruments and take such action as may be reasonably
      requested by the Subscribers to carry out the intent and purposes of this
      Agreement.

    

    b. This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the state of New York. The parties
      to
      this Agreement hereby irrevocably waive any objection to jurisdiction and venue
      of any action instituted hereunder and shall not assert any defense based on
      lack of jurisdiction or venue or based upon forum
      non conveniens.
      The
      parties executing this Agreement and other agreements referred to herein or
      delivered in connection herewith agree to submit to the in personam jurisdiction
      of such courts and hereby irrevocably waive trial by jury.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any
      agreement.

    

    c. The
      restrictions on transfer described in this Agreement are in addition to and
      cumulative with any other restrictions on transfer otherwise agreed to by the
      Holder or to which the Holder is subject to by applicable law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    d. This
      Agreement shall be binding upon Holder, its legal representatives, successors
      and assigns.

    

    e. This
      Agreement may be signed and delivered by facsimile and such facsimile signed
      and
      delivered shall be enforceable.

    

    f. The
      Company agrees not to take any action or allow any act to be taken which would
      be inconsistent with this Agreement.

    

    IN
      WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed
      this Agreement as of the day and year first above written.

    
      
        	 	
                HOLDER:

              
	 	 
	
                /s/
                  Jeffrey Markin

                _______________________________

              	 
	 	 
	 	
                (Signature
                  of Holder)

              
	 	 
	
                Jeffrey
                  Markin

                _______________________________

              	 
	 	
                (Print
                  Name of Holder)

              
	 	 
	
                

              	 
	 	 
	 	
                Number
                  of Shares of Common Stock

              
	 	
                Beneficially
                  Owned and as more fully

              
	 	
                described
                  on an attachment hereto if 

                not
                  in the form of shares of Common Stock

              
	 	 
	 	 
	 	
                COMPANY:

                VIRTUALSCOPICS,
                  INC.

              
	 	 
	 	
                By:  /s/ Molly Henderson

                
                  
                    
Print
                    Name: Molly
                    Henderson 
                    
                      Title:
                        Chief
                        Financial Officer

                    

                  

                

              
	 	 
	 	
                ADDRESS:

                VirtualScopics,
                  Inc.

                500
                  Linden Oaks

                Rochester,
                  NY 14625

                Phone:
                  585-249-6231

                Fax:
                  585-218-7350

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]