Document:

EXHIBIT
        10.11

      

      CONSULTING
        AGREEMENT

      

      THIS
        CONSULTING AGREEMENT
        (the
“Agreement”) is made as of the 1st day of March, 2004 (the “Effective Date”), by
        and between VIRTUALSCOPICS,
        LLC,
        a New
        York limited liability company ("Company"), and DR.
        FELIX ECKSTEIN,
        with a
        current mailing address of Jahnstr. 48, 80469 München, Germany ("Consultant”).
        This Agreement, together with that certain Services and Co-Marketing Agreement
        between Company and Chondrometrics GmbH (“Chondrometrics”) dated March 1, 2004
        and that certain Consulting Agreement between Company and Consultant dated
        January 1, 2004 (the “January Consulting Agreement”), supercedes, and replaces
        entirely, that certain Preliminary Service Agreement between Company and
        Chondrometrics, dated January 30, 2004, a copy of which is attached to this
        Agreement as Exhibit E (the “Services Agreement”).

      

      R
        E C I T A L S:

      

      WHEREAS,
        Consultant is
        an
        internationally recognized authority in Osteoarthritis research, especially
        as
        it relates to cartilage degeneration, and has conducted and published an
        extensive body of validation studies in the accurate and reproducible
        measurement of cartilage changes using manual and semi-automated software
        techniques;

       

      WHEREAS,
        Consultant is
        CEO
        and CSO of Chondrometrics, which provides consultant services and image analysis
        services of medical image data, with a focus on quantitative analysis of
        cartilage morphology from magnetic resonance imaging (MRI) data;

       

      WHEREAS,
        Company and Chondrometrics simultaneously herewith are entering into the
        Services Agreement to leverage their research and commercial capabilities
        by
        co-marketing each other’s services and abilities, with the goal of expanding
        each party’s customer base and visibility in the industry, and gaining economic
        benefits resulting therefrom;

      

      WHEREAS,
        Company desires to retain Consultant to provide the services set forth in
        this
        Agreement;

      

      WHEREAS,
        the parties hereto recognize that in the course of providing the Services,
        Consultant will be exposed to and have access to certain confidential
        information of Company and that there is a need for Company to protect such
        confidential information from unauthorized use and disclosure; and

       

      WHEREAS,
        the parties hereto contemplate the potential sharing of certain technology
        between the parties, and possible development of certain patent, patent rights,
        copyright, trade secrets, trademarks, and other proprietary rights in connection
        with Consultant’s provision of the Services, and that such situations be
        addressed in more detail in this Agreement. 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      P
        R O V I S I O N S:

      

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

      

      1. 
        Definitions.
        Capitalized terms not defined elsewhere in this Agreement shall have the
        meanings ascribed to them in this Section 1:

       

      (a) “Cartilage
        Analysis”
        means a
        manual, semi-automated or automated process for segmenting MR images to quantify
        the volume or other morphological parameters of total cartilage or cartilage
        sub-regions in Research Trials and Clinical Trials for
        Osteoarthritis.

       

      (b) “Non-Cartilage
        Analysis”
        means a
        manual, semi-automated or automated process for segmenting MRI images to
        quantify characteristics of tissues related to Osteoarthritis other than
        cartilage, including, but not limited to, Bone Marrow Edema, Meniscus, and
        Fluid.

       

      (c) “Clinical
        Trial”
        means
        Cartilage Analysis and Non-Cartilage Analysis that is performed for the purpose
        of understanding the efficacy of a disease modifying osteoarthritic drug
        in
        humans, intended and/or required to be submitted to a regulatory body as
        part of
        a drug approval submission. The paying entity for a Clinical Trial can be
        a
        pharmaceutical, biotechnology, or medical device company, or a governmental
        or
        non-governmental research agency. 

       

      (d) “Research
        Trial”
        means
        Cartilage Analysis and Non-Cartilage Analysis that is performed for the purpose
        of understanding human cartilage physiology or disease progressions of
        Osteoarthritis. The paying entity for a Research Trial can be a pharmaceutical,
        biotechnology, or medical device company, or a governmental or non-governmental
        research agency. Results from a Research Trial are not intended or required
        to
        be submitted to a government regulatory body as part of a drug approval
        submission. 

       

      2. Duties
        and Responsibilities.
        

       

      (a) Services.
        During
        the term of this Agreement Consultant shall perform the services described
        in
        this Section 2 (collectively, the “Services”):

       

      (i)    Ongoing
        Consulting with Respect to Company’s Cartilage Analysis and Non-Cartilage
        Analysis:
        Consultant shall consult with Company regarding Company’s Cartilage Analysis and
        Non-Cartilage Analysis as follows:

       

      
        	 	
                ·

              	
                Design
                  of cross-validation studies including segmentation technique, landmarks,
                  region definitions, and impact of pulse
                  sequences.

              

      

       

      
        	 	
                ·

              	
                Study
                  design for Clinical Trials.

              

      

       

      
        	 	
                ·

              	
                Publications
                  and publication strategy.

              

      

       

      
        
           

        

        
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      Optional
        services, depending on consultant’s availability include:

       

      
        	 	
                ·

              	
                Conference
                  presentations.

              

      

       

      
        	 	
                ·

              	
                Customer
                  interactions including but not limited to sales
                  activities.

              

      

       

      
        	 	
                ·

              	
                U.S.,
                  European, and other regulatory agency
                  interactions.

              

      

       

      If
        consultant is unable to participate in conferences, customer interactions
        and
        meetings with regulatory agencies in person due to obligations as chairman
        of
        the Institute of Anatomy, Paracelsus Private Medical University, Salzburg,
        he
        will assist Company in the preparation of these activities and/or will make
        best
        efforts to participate via teleconference.

       

      Company
        and Consultant jointly will develop a plan for specific publications,
        presentations and customer contacts to be performed during the term of this
        Agreement for the purposes of publicizing the results of the Consultant’s
        cross-validation studies and promoting Company’s Cartilage Analysis and
        Non-Cartilage Analysis. The plan will be included as Exhibit A to this
        Agreement. One such collaborative publication to be included in the plan
        is a
        publication by Company and Consultant pertaining to the Cartilage Analysis
        conducted by Company and/or Chondrometrics pursuant to the Osteoarthritic
        Initiative (as described in the Services Agreement).
        With
        respect to each proposed publication and presentation, the parties will follow
        the following procedure:

       

      Consultant
        or Company will be designated as the primary author assigned to the publication
        or presentation. If both parties make active and substantial contributions
        to a
        publication or presentation, then any credit identifying the party that is
        not
        the primary author of the work will be the last credit included in any list
        of
        authors of the work. The choice of authorship hereby should adhere to the
        generally accepted practice of authorship as set forth by international journals
        in the industry. The primary author will (1) prepare a first draft of the
        proposed publication or presentation, (2) collaborate with the other party
        to
        obtain the other party’s insights and input, and (3) create a final draft of the
        proposed publication or presentation which includes the other party’s
        suggestions and input. The final draft then will be reviewed by both Consultant
        and Company over a thirty (30) day period. On or before the conclusion of
        such
        thirty (30) day period, each party shall notify the other of its approval
        or
        disapproval of the draft. Each party shall have the right to extend the thirty
        (30) day period for an additional forty-five (45) days upon notice to the
        other
        party in the event the party making such extension request desires to further
        edit the draft to correct any errors or inconsistencies.

       

      (ii)    Initial
        cross validation study.
        Consultant will consult with Company in accordance with Exhibit A attached
        hereto and incorporated herein by reference. 

       

      
        
           

        

        
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      (iii)    Marketing
        Activities.
        Consultant will exercise commercially reasonable best efforts to market and
        promote Company’s Cartilage Analysis services for Clinical Trials, and the
        collaborative efforts of Company and Consultant as more fully set forth on
        Exhibit B attached hereto and incorporated herein by reference. 

       

      (b) Consultant
        shall provide the Services described in clauses (i) and (ii) above sixteen
        (16)
        days during the Year 1 Performance Period, and twenty (20) days during the
        Year
        2 Performance Period and Year 3 Performance Period, where the “Year 1
        Performance Period” is defined as the ten-month period from March 1, 2004
        through December 31, 2004, the “Year 2 Performance Period” is defined as the
        twelve-month period from January 1, 2005 through December 31, 2005, and the
        “Year 3 Performance Period” is defined as the twelve-month period from January
        1, 2006 through December 31, 2006. Each workday shall consist of ten hours.
        The
        parties may agree to increase the number of workdays by mutual written
        agreement. 

       

      (c) Company
        and Consultant mutually agree to coordinate the timing and specific content
        of
        the consulting activities. The
        parties may amend any Exhibit from time to time to modify the services or
        add
        additional services. To be effective, each amended Exhibit must be signed
        and
        dated by both parties. 

       

      (d) Consultant
        agrees to perform the Services personally. 

       

      (e) Consultant,
        whether acting individually or on behalf of Chondrometrics or any third party,
        shall be prohibited from marketing or otherwise promoting Chondrometrics’ or any
        third party’s Non-Cartilage Analysis or Cartilage Analysis services for Clinical
        Trials. Further, Consultant, whether acting individually or on behalf of
        Chondrometrics or any third party, will not provide any Clinical Trial services,
        and will refer all such potential business to Company. 

       

      3. Term
        and Termination.
        

       

      (a) Unless
        earlier terminated as provided in this Section 3, the term of this Agreement
        shall commence on the Effective Date and shall continue until December 31,
        2006.
        Thereafter, this Agreement shall automatically renew for successive one year
        periods so long as (i) the Services Agreement is in full force and effect,
        and
        (ii) neither party delivers written notice of its intention not to renew
        this
        Agreement within ninety (90) days before expiration of the applicable
        term.

       

      (b) Either
        party may terminate this Agreement in the event the other party materially
        breaches this Agreement and fails to cure such breach within fifteen (15)
        days
        after receiving written notice of such breach.

       

      (c) This
        Agreement shall terminate upon termination of the Services Agreement, unless
        the
        parties agree in writing to continue this Agreement notwithstanding the
        termination of the Services Agreement.

       

      (d) Company
        may terminate this Agreement immediately upon notice to Consultant in the
        event
        of any breach by Consultant of Section 5 hereof. 

       

      
        
           

        

        
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      (e) If
        Consultant consistently fails to make himself available, including consistently
        being unavailable for meetings (whether in-person or by telephone) or public
        events, or is not performing the Services regularly throughout the term of
        this
        Agreement, then Consultant shall be deemed in material breach of this Agreement.
        Company will make best efforts to announce in-person meetings at least one
        month
        in advance, and teleconference and videoconference meetings at least 48 hours
        prior to such events. Consultant will make best efforts to be available for
        these events. However, occasional non-availability of Consultant for in-person
        meetings or teleconferences due to his obligations as director of the Department
        of Anatomy of the Paracelsus Private Medical University of Salzburg or other
        obligations, including holidays, provides no adequate reason to terminate
        this
        agreement prior to December 2006. Further, if any
        of
        the studies listed in Exhibit A are cancelled, or if there is inadequate
        third-party funding to perform quantitative cartilage analysis under
        economically reasonable conditions, non-ability of the Consultant to produce
        the
        intended publication shall not be deemed a material breach of this Agreement.
        

       

      (f) Upon
        termination of this Agreement the provisions of Sections 5, 6, 7, 8(b)(c),
        and
        (d), and 9 hereof, and any other provision that by its nature survives
        termination of this Agreement, shall survive termination of this Agreement.
        

       

      4. Compensation
        and Expenses.
        

       

      (a) In
        consideration for Consultant’s performance of the Ongoing Consulting Services
        described in Section 2(a)(i) hereof during the term of this Agreement, Company
        shall compensate Consultant $246 per hour (i.e., $2,460 per day). Payment
        shall
        be due within thirty (30) days after the end of each calendar month during
        which
        Services have been performed. All other amounts owed for Services rendered
        shall
        be set forth in the applicable Exhibit, along with the payment schedule for
        such
        amount. All amounts shall be paid in U.S. Dollars. 

       

      (b) It
        is
        understood that Company is guaranteeing Consultant payment of (i) $39,360
        for
        the Year 1 Performance Period, (ii) $49,200 for the Year 2 Performance Period,
        and (iii) $49,200 for the Year 3 Performance Period (i.e., $2460/per day
        multiplied by 16 or 20 days, as the case may be). Therefore, subject to the
        last
        sentence of this clause (b), if services of less than 16 or 20 days, as the
        case
        may be, have been requested by Company for any Performance Period, Company
        shall
        remain obligated to pay the Consultant the difference between $39,360 or
        $49,200.00, as the case may be, and the actual payments made to Consultant
        during such Performance Period. The balance shall be due within thirty (30)
        days
        after the end of the Performance Period. The foregoing shall not apply, however,
        if this Agreement is terminated for any reason other than a material breach
        of
        this Agreement by Company. 

       

      (c) Consultant’s
        traveling and related expenses may be subject to reimbursement by Company.
        Exhibit C attached hereto and incorporated herein by reference sets forth
        Company’s travel reimbursement policy.

       

      (d) Consultant
        shall be solely responsible for all costs and expenses, including any income
        taxes, taxes, sales taxes, benefit costs and the like, if any, attributable
        to
        the Services being performed by him hereunder, and shall indemnify and hold
        Company harmless from any and all claims in respect thereof.

       

      
        
           

        

        
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      (e) All
        payments under this Agreement have been established in U.S. Dollars based
        on a
        U.S. Dollar to Euro exchange rate band of $1.10 to $1.30 per Euro. If the
        U.S.
        Dollar to Euro exchange rate deviates from this band, the parties agree in
        good
        faith to renegotiate such payments and fees to establish the appropriate
        U.S.
        Dollar value of this Agreement. 

       

      5. Confidential
        Information.

       

      (a) Definition
        of Confidential Information.
        “Confidential Information” means any and all trade secrets, confidential
        knowledge, or any other proprietary information existing as of the date of
        this
        Agreement, or thereafter developed, pertaining to Company, its affiliates
        and
        subsidiaries, or any of their respective existing or prospective clients,
        customers, or consultants. By way of illustration but not limitation,
“Confidential Information” includes (i) inventions, ideas, concepts,
        improvements, discoveries, trade secrets, processes, data, programs, knowledge,
        know-how, designs, techniques, formulas, test data, computer code, other
        works
        of authorship and designs whether or not patentable, copyrightable, or otherwise
        protected by law (hereinafter collectively referred to as “Inventions”) (ii)
        information regarding new developments, new products and services, marketing
        plans and strategies, merchandising and selling, business plans and processes,
        data models, strategies, forecasts, projections, profits, investments,
        operations, financings, records, budgets and unpublished financial statements,
        licenses, prices and costs, suppliers and customers; and (iii) identity,
        requirements, preferences, practices and methods of doing business of specific
        parties with whom a party transacts business, and information regarding the
        skills and compensation of employees of such party and independent contractors
        performing services for such party. 

       

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

       

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

       

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

       

      (iii)   Not
        to
        make or use any copies, synopses or summaries of oral or written material
        made
        available by Company to Consultant, except as are necessary to carry out
        Consultant’s duties and/or obligations as a Consultant.

       

      (iv)   In
        the
        event of disclosure
        in accordance with Section 5(b)(ii) hereof, to limit
        disclosure to persons with a bona fide need to know the Confidential
        Information, to communicate
        to all persons to whom such Confidential Information is made available the
        strictly confidential nature of such Confidential Information and to obtain
        from
        all such persons an agreement in writing to be bound by the restrictions
        imposed
        by this Agreement.

       

      
        
           

        

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

       

      (c) Return
        of Confidential Information.
        Upon
        Company's request and upon the termination of this Agreement, Consultant
        will
        promptly return to Company all written material and other documentation which
        includes any of the Confidential Information, and will, at Company's request,
        provide Company with a written certification that Consultant has done
        so.

       

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

       

      (e) Permitted
        Disclosures.
        In
        order to permit Consultant to communicate with customer contacts regarding
        Company’ business and capabilities without breaching this Section, Consultant
        will confer with Company from time to time so that the parties can determine
        appropriate guidelines for such customer discussions.

       

      6. Advisory
        Nature of Services; Inventions.

       

      (a) It
        is
        understood and agreed that Consultant’s role hereunder is that of an advisor,
        educator, and facilitator rather than a developer of new or modified Inventions.
        However, the parties recognize that circumstances may arise where, intentionally
        or unintentionally, Consultant may produce, author, or develop one or more
        Inventions in connection with the performance of the Services, whether alone
        or
        jointly with others, in which case, Consultant shall immediately notify Company
        in writing of any such Invention, at which time the parties shall determine
        the
        parties’ respective rights and interests in such Invention. 

       

      (b) In
        the
        event the parties determine that Company is the sole owner of any Invention
        described in clause (a) above, then Consultant shall agree in writing, to
        the
        extent applicable, that such Invention, is a “work made for hire,” as that term
        is defined in the United States Copyright Act (17 U.S.C., Section 101). In
        the
        event that any rights to the Invention are deemed not to be works made for
        hire,
        or in the event Consultant should, by operation of law, be deemed to retain
        any
        rights in such Invention, Consultant shall irrevocably assign, without any
        further consideration and regardless of any use by Company of any such
        Invention, all of Consultant’s rights, title and interest, if any, in and to
        such Invention to Company. Consultant agrees that Company, as the owner of
        all
        rights to the Invention, shall have the full and complete right to prepare
        and
        create derivative works based upon the Invention, and to use, reproduce,
        publish, print, copy, market, advertise, distribute, transfer, sell, publicly
        perform and publicly display, and otherwise exploit by all means now known
        or
        later developed, such Invention and derivative works anywhere throughout
        the
        world. Consultant shall further irrevocably and unconditionally transfer
        and
        assign to Company, without any further consideration, any and all Moral Rights
        (as hereinafter defined) Consultant may have in or with respect to the
        Invention. To the extent that Consultant cannot assign such rights, Consultant
        shall waive and agree never to assign such rights against Company, Company’s
        successors-in-interest, or any of their licensees. “Moral Rights” shall mean any
        right to (i) divulge the Invention to the public; (ii) retract such Invention
        from the public; (iii) claim authorship of such Inventions; (iv) object to
        any
        distortion, mutilation, or other modification of such Invention; and (v)
        any and
        all similar rights, existing under judicial or statutory law of any country
        or
        jurisdiction in the world, or under any treaty regardless of whether or not
        such
        right is called or generally referred to as a “moral right.”

       

      
        
           

        

        
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      (c) In
        the
        event (i) the parties determine that Consultant is the owner of any Invention
        described in clause (a) above, or (ii) the issue of ownership cannot be resolved
        by the parties, and the question of ownership is determined by a judge or
        other
        judicial or similar body, and such party determines that Consultant is the
        owner
        of the Invention in question, then, notwithstanding any ownership rights
        of
        Consultant in the Invention, Consultant shall grant Company a non-exclusive,
        perpetual, irrevocable, royalty-free license, with a right of sublicense,
        to
        use, publish, distribute, publicly perform, integrate, modify, create derivative
        works of, and otherwise exploit for internal, commercial, or any other purpose
        the Invention. Further, Consultant shall agree that, notwithstanding any
        ownership rights of Consultant in the Invention, Consultant shall be permitted
        to use, modify, and exploit the Invention solely for (1) Research Trial,
        and (2)
        academic, educational purposes, and Consultant shall be prohibited from using,
        modifying, or otherwise exploiting the Invention for Clinical Trial purposes.
        Any sublicense or transfer of the Invention by Consultant to a third party
        shall
        be subject to the foregoing limitations. The restrictions set forth in the
        preceding two sentences shall terminate upon termination of the Consulting
        Agreement, except in the case of a material breach by Chondrometrics or
        Consultant, as the case may be, of this Agreement, the Services Agreement,
        or
        that certain Ancillary Agreement between Chondrometrics and Company dated
        as of
        the date hereof. 

       

      (d) In
        the
        event it is determined that a third party has ownership interests in any
        Invention described in clause (a) above, then Consultant shall use his best
        efforts to obtain from the third party a license grant for Company’s benefit
        with the rights and benefits described in clause (c) above, and to cause
        the
        third party to agree to the limitations on use of the Invention described
        in
        clause (c).

       

      7. License
        of Tools.
        

       

      (a) It
        is
        understood that as of the Effective Date Consultant and/or Chondrometrics,
        as
        the case may be, own certain Inventions, including without limitation, the
        process described in a guidebook authored by Consultant for segmenting cartilage
        or other general concepts and techniques currently employed or currently
        developed by Consultant or, as the case may be, Chondrometrics, any of which
        Consultant may be required to employ in performing the Services hereunder.
        To
        the extent, if any, Consultant is required to employ any such Invention
        Consultant shall first notify Company, and, if Company agrees to the use
        of such
        Invention by Consultant, the parties shall set forth the Invention on Exhibit
        D
        to this Agreement (any such Invention set forth on Exhibit D is hereinafter
        referred to as a “Tool”). Consultant hereby agrees, at the time a Tool is
        identified on Exhibit D hereto, to grant to Company a non-exclusive, perpetual,
        irrevocable, royalty-free license, with a right of sublicense, to use, publish,
        distribute, publicly perform, integrate, modify, create derivative works
        of, and
        otherwise exploit the Tool for internal and commercial purposes; provided,
        that
        (i) Company’s commercial use of the Tool shall be limited to the provision by
        Company of services to its customers and clients, (ii) use of the Tools shall
        be
        permitted solely at Company’s facilities (or, if necessary the facilities of a
        Company customer or client), (iii) the license grant shall not include the
        right
        to license or sell any Tool separate and apart from any Company services,
        and
        (iv) any sublicense shall contain the foregoing limitations. 

       

      
        
           

        

        
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      (b) Consultant
        shall agree, or shall cause Chondrometrics to agree, as the case may be,
        that,
        notwithstanding Consultant’s (or Chondrometrics’, as the case may be) ownership
        of the Tool, Consultant (or Chondrometrics, as the case may be) shall be
        permitted to use, modify, and exploit the Tool solely for (i) Research Trial,
        and (ii) academic, educational purposes, and Consultant (or Chondrometrics,
        as
        the case may be) shall be prohibited from using, modifying, or otherwise
        exploiting the Tool for Clinical Trial purposes. Consultant shall ensure
        that
        any sublicense or transfer of the Tool by Consultant (or Chondrometrics,
        as the
        case may be) to a third party shall be subject to the foregoing limitations.
        The
        restrictions set forth in the preceding two sentences shall terminate upon
        termination of this Agreement, except in the case of a material breach by
        Chondrometrics or Consultant, as the case may be, of this Agreement, the
        Services Agreement, or that certain Ancillary Agreement between Chondrometrics
        and Company dated as of the date hereof.

       

      8. Representations
        and Warranties; Indemnification.
        

       

      (a) Consultant
        hereby represents and warrants to Company as follows:

       

      (i)    Consultant
        is authorized to enter into this Agreement and perform as contemplated
        herein;

       

      (ii)    in
        performing hereunder, Consultant will comply materially with German and
        applicable international laws, rules, and regulations, and, if advised by
        Company of Consultant’s failure to comply materially with applicable U.S. law,
        such that Company has a good faith reason to believe that Company, its business,
        or the continuation of this Agreement will be impaired, Consultant will take
        reasonable steps (taking into account his available resources) to comply
        materially with such U.S. law; 

       

      (iii)   the
        Services will be performed in a diligent and professional manner, using
        reasonable care;

       

      (iv)    to
        the
        best of Consultant’s knowledge, the Services will not violate any trademark,
        trade secret, copyright, patent or other intellectual property right of any
        third party; 

       

      
        
           

        

        
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      (v)    Consultant’s
        performance under this Agreement will not violate any contract, agreement,
        or
        other document to which Consultant is subject, including any contract,
        agreement, or other document governing Consultant’s relationship with
        Chondrometrics;

       

      (vi)   in
        performing under this Agreement, Consultant will not use any resources and/or
        facilities of any employer, sponsor, or third party to whom Consultant is
        providing services, except for resources of (1) Chondrometrics as contemplated
        in Section 7 hereof, and (2) Paracelsus Private Medical University of Salzburg
        pursuant to an agreement between such party and Consultant dated 3rd
        December
        2003; 

       

      (vii)   to
        the
        best of Consultant’s knowledge, Consultant’s performance under the Paracelsus
        Private Medical University agreement, has not and will not, under Austrian
        law
        or any other applicable international law, create for the benefit of Paracelsus
        Private Medical University any right, title, or interest in any intellectual
        property being used or developed by Consultant hereunder;

       

      (viii)   Consultant
        will not misrepresent to third parties the relationship between Consultant
        and
        Company created hereunder, and will not make any statement or omit to make
        any
        statements or otherwise act or fail to act in any manner that may (1) portray
        Company in a negative light, or (2) result in a misstatement of fact regarding
        Company or Company’s business or services. 

       

      (b)
        Consultant
        will defend, indemnify and hold harmless Company from and against any and
        all
        claims, actions, demands, liabilities, losses, damages, judgments, settlements,
        costs and expenses (including reasonable attorneys' fees) (any or all of
        the
        foregoing hereinafter referred to as "Losses") insofar as such Losses (or
        actions in respect thereof) arise out of or are based on (i) the grossly
        negligent or intentional acts or omissions of Consultant, (ii) a material
        breach
        of any representation, warranty or covenant made by Consultant hereunder,
        or
        (iii) a claim that any Work, Invention, or Tool infringes the patent, trademark,
        trade secret, copyright, or other intellectual property right of any third
        party, except to the extent that Company’s use or modification of the foregoing
        has contributed to any such infringement claim. Consultant’s maximum
        indemnification obligation hereunder shall not exceed the aggregate amounts
        payable under this Agreement, except that, in the event Consultant has been
        paid
        any fees hereunder and, in turn, has paid or will owe income taxes to any
        German
        or other taxing authority in connection with such payment, the foregoing
        limitation shall be reduced by an amount equal to such tax payments. The
        foregoing limitation shall not affect Company’s ability to pursue any of its
        other rights or remedies under this Agreement, including without limitation,
        liability for breaches of contract. 

       

      (c) Company
        will defend, indemnify and hold harmless Consultant from and against any
        and all
        Losses insofar as such Losses (or actions in respect thereof) arise out of
        or
        are based on a claim that Consultant’s use of Company’s Confidential Information
        as contemplated hereunder infringes the patent, trademark, trade secret,
        copyright, or other intellectual property right of any third party, except
        to
        the extent that Consultant’s use or modification of the foregoing has
        contributed to any such infringement claim. Company’s maximum indemnification
        obligation hereunder shall not exceed the aggregate amounts payable under
        this
        Agreement. The foregoing limitation shall not affect Consultant’s ability to
        pursue any of its other rights or remedies under this Agreement, including
        without limitation, liability for breaches of contract.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      (d) With
        respect to each party’s indemnification obligations hereunder, each party
        warrants that it will incur only reasonable and necessary attorney’s fees and
        will apply only reasonable and necessary resources to cure or prevent damages
        that may have been caused by the other party, with the intention of keeping
        indemnification amounts within reasonable limits. Further, the indemnifying
        party shall defend and hold harmless the indemnified party with counsel chosen
        and paid for by the indemnifying party upon receipt of prompt written notice
        of
        the claim from the indemnified party (provided, that failure to provide prompt
        notice shall not relieve the indemnifying party of its indemnification
        obligations, except to the extent it has been damaged thereby), and the
        indemnified party will reasonably cooperate in the defense of the action
        or
        proceeding at the indemnifying party’s expense. Upon the indemnifying party
        assuming the defense of any such claim, the indemnified party’s counsel may
        thereafter participate in an advisory capacity at the indemnified party’s sole
        cost. Neither party may enter into any settlement or compromise that may
        require
        the other party to admit liability, pay any monies out-of-pocket, or assume
        any
        other material obligation or relinquish any material right, without the prior
        written consent of the other party, not to be unreasonably withheld or
        delayed.

       

      9. Publicity. Company
        shall have the right to refer to Consultant verbally and in writing in
        connection with Company’s marketing and promotion of itself and its image
        analysis capabilities. Such references may include descriptions of Consultant’s
        research findings and publications as they relate to Company’s services, with
        particular emphasis on the value being added to Company’s services by way of
        this Agreement. Company shall be permitted to use Consultant’s name, image, and
        biography in connection with the forgoing.

       

      10. General.

       

      (a) Notices.
        Except
        as otherwise provided in this Agreement, notices required to be given pursuant
        to this Agreement shall be effective when received, and shall be sufficient
        if
        given in writing, hand delivered, sent by facsimile with confirmation of
        receipt, sent by First Class Mail, return receipt requested (for all types
        of
        correspondence), postage prepaid, or sent by overnight courier service and
        delivered to the addresses appearing on the first page of this Agreement.
        Any
        notice to Company sent pursuant to this Section shall be addressed to Mikael
        Totterman, Chief Operating Officer (Fax No.: 585 218-7350).

       

      (b) Independent
        Contractor.
        Consultant is, and at all times will be,
        an
        independent contractor. Nothing in this Agreement shall be deemed to create
        an
        employer/employee, principal/agent, or joint venture relationship. Unless
        expressly agreed to in writing, neither party has the authority to enter
        into
        any contracts on behalf of the other party or otherwise act on behalf of
        the
        other party.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      (c) Governing
        Law and Jurisdiction; No Trial by Jury.
        

       

      (i)    With
        respect to matters pertaining to (1) Section 1 hereof (Definitions), (2)
        Sections 2(a)(iii) and 2(e) hereof (certain marketing-related provisions),
        as
        well as the provision of marketing-related services and Trial-related services
        within the United States, (3) Section 5 hereof (Confidential Information),
        (4)
        intellectual property, including without limitation, Section 6 hereof (Advisory
        Nature of Services; Inventions) and Section 7 hereof (License of Tools),
        and the
        existence, validity, or enforcement of a party’s rights in any existing or
        future intellectual property, including any issues regarding interpretation
        of
        the relevant provisions herein, (5) Sections 8(b), (c), and (d) hereof
        (indemnification), and (6) any intentional material breach by Consultant
        of this
        Agreement, such matters shall be governed by New York law, without regard
        to
        conflicts of law principles. The federal and state courts located in Monroe
        County, New York shall have exclusive jurisdiction over any such claim brought
        under this Agreement, and the parties hereby consent to the personal
        jurisdiction of such courts. 

       

      (ii)    With
        respect to matters pertaining to (1) Sections 2(a)(i) and (ii), 2(c), and
        2(d)
        hereof (certain marketing-related provisions), as well as the provision of
        marketing-related services and Trial-related services outside of the United
        States, (2) Section 3 hereof (Term and Termination), including any intentional
        material breach by Company, but excluding any intentional material breach
        of
        this Agreement by Consultant, (3) Section 4 hereof (Compensation and Expenses),
        (4) Section 8(a) hereof (representations and warranties), (5) Section 9 hereof
        (Publicity), and (6) Sections 10(a), (b), (d), (e), (f), (g), and (h) hereof,
        such matters shall be governed by German law. The courts located in Munich,
        Germany shall have exclusive jurisdiction over any such claim brought under
        this
        Agreement, and the parties hereby consent to the personal jurisdiction of
        such
        courts. 

       

      (d) Entire
        Agreement.
        This
        Agreement, together with the Exhibits attached hereto, and that certain
        Ancillary Agreement between Company and Chondrometrics dated as of the date
        hereof, is the entire agreement between the parties and supersedes and replaces
        all other agreements oral and written with respect to its subject matter.
        This
        Agreement may
        not
        be modified, amended or terminated except by a writing signed by all parties
        to
        it.

       

      (e) Assignment.
        Consultant may not assign any of its rights or obligations under this Agreement
        to any other person or entity (including any subcontractor). All of the terms
        and conditions of this Agreement shall be binding upon, shall inure to the
        benefit of, and shall be enforceable by the respective successors and assigns
        of
        the parties. Any attempted assignment in conflict with the terms herein shall
        be
        deemed null and void. 

       

      (f) Remedies.
        The
        parties acknowledge that the financial hardship to a non-defaulting party
        as a
        result of breach of this Agreement may be difficult or impossible to measure
        in
        dollars and that no remedy at law will be adequate to compensation the
        non-breaching party for such violation; therefore, in any action to enforce
        this
        Agreement, a party shall be entitled to preliminary, temporary or permanent
        injunctive relief and the other party waives the defense of adequate remedy
        at
        law, acknowledging that no such remedy exists. In
        the
        event of litigation to enforce the terms and conditions of this Agreement,
        the
        losing party agrees to pay the substantially prevailing party's costs and
        expenses incurred including, without limitation, reasonable attorneys' fees.
        Each and all of the rights and remedies provided for in the Agreement shall
        be
        cumulative. No one right or remedy shall be exclusive of the others or any
        right
        or remedy allowed in law or in equity. 

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      (g) Waiver.
        No
        waiver by Company of any failure by Consultant to keep or perform any promise
        of
        condition of this Agreement shall be a waiver of any proceeding or succeeding
        breach of the same or any other promise or condition. No waiver of Company
        of
        any right shall be construed as a waiver of any other right.

       

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

       

      IN
        WITNESS WHEREOF,
        each of
        the parties hereto has executed this Agreement as of the Effective
        Date.

      

      

      VIRTUALSCOPICS
        LLC

      

      By:
        /s/Mikael
        Totterman_____

      

      

      Its:
        Chief
        Operating Officer__

      

      

      _/s/
        Felix Eckstein________

      FELIX
        ECKSTEIN

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      EXHIBIT
        A

       

      Plan
        for Publications, Presentations 

      

      Company
        and Consultant plan the following publications and
        presentations:

      

      
        	 	
                ·

              	
                Proposal
                  for a generally accepted nomenclature for quantifying cartilage
                  morphology
                  in osteoarthritis, as drafted by Eckstein and Felson 2003 (OARSI
                  Meeting
                  Berlin). First author of this publication will be Consultant, senior
                  author David Felson (Boston University). The study will be co-authored
                  by
                  Saara Totterman and as many as possible other researchers in the
                  field, in
                  order to gain general acceptance of this nomenclature. Consultant
                  will not
                  charge work hours on this publication to
                  Company.

              

      

      

      
        	 	
                ·

              	
                Study
                  cross-calibrating Company’s cartilage analysis versus cartilage analysis
                  by Chondrometrics both at 1.5 T and 3 T in a number of healthy
                  volunteers
                  and patients (data from Pfizer cross calibration
                  study)

              

      

      

      
        	 	
                ·

              	
                Study
                  cross-calibrating Company’s longitudinal cartilage analysis versus
                  longitudinal cartilage analysis by Chondrometrics in a number of
                  patients
                  over 6 months and 12 months periods (data from Pfizer longitudinal
                  study)

              

      

      

      
        	 	
                ·

              	
                Study
                  cross calibrating Company’s cartilage analysis versus cartilage analysis
                  by Chondrometrics in a number of patients from the Osteoarthritic
                  Initiative

              

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      EXHIBIT
        B 

      

      Marketing
        Activities

      

       

      Consultant
        will promote Company’s Cartilage Analysis services for use in Clinical Trials,
        with the goal of leveraging Consultant’s reputation in the industry to increase
        awareness of Company’s activities, and to add enhanced credibility to Company’s
        services. Promotional activities will focus on the collaborative efforts
        of the
        parties, primarily with respect to cross-validation activities. At a minimum,
        Consultant will:

       

      
        	 	
                ·

              	
                Distribute
                  Company-provided marketing materials to clients and prospects with
                  whom
                  Consultant comes in contact, when clients and prospects demand
                  services
                  for quantitative analysis of cartilage and non-cartilage parameters
                  in the
                  context of clinical trials, or when clients and prospects show
                  interest in
                  services for quantitative analysis of non-cartilage parameter in
                  the
                  context of non-clinical or clinical
                  trials.

              

      

       

      
        	 	
                ·

              	
                Be
                  available for phone calls, videoconferences, and in-person meetings
                  as
                  reasonably necessary to solicit and maintain Clinical Trial business
                  for
                  Company. 

              

      

       

      
        	 	
                ·

              	
                Assist
                  Company in preparing and distributing joint press releases promoting
                  Company and the collaborative efforts of Company and
                  Consultant.

              

      

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      EXHIBIT
        C

       

      Company’s
        Travel Reimbursement Policy

      

      

      
        	
                1.

              	
                Meeting
                  between Company and Consultant upon request of
                  Company

              

      

      Meeting
        between Consultant and customer upon request of Company

      

      Company
        will reimburse Consultant for: 

      
        	 	
                ·

              	
                Airtravel
                  in business class

              

      

      
        	 	
                ·

              	
                $80
                  for transport within Munich or Salzburg (from/to
                  airport)

              

      

      
        	 	
                ·

              	
                Transport
                  at customer or Company site 

              

      

      
        	 	
                ·

              	
                Accommodation
                  at site (up to $200 per day)

              

      

      
        	 	
                ·

              	
                Each
                  transatlantic flight (both legs) will equate to 1 full workday
                  (10 hours)
                  at $2,460 per flight

              

      

      
        	 	
                ·

              	
                Each
                  flight (both legs) within the U.S. or Europe will equate to one-half
                  workday (5 hours) at $1,230 per
                  flight

              

      

      
        	 	
                ·

              	
                Consultant
                  will be paid for each full workday at $2,460 per
                  day

              

      

      

      
        	
                2.

              	
                Scientific
                  conference in which Consultant represents Company upon request
                  of
                  Company

              

      

      

      Company
        will reimburse Consultant for:

      
        	 	
                ·

              	
                Airtravel
                  in business class

              

      

      
        	 	
                ·

              	
                $80
                  for transport within Munich or Salzburg (from/to
                  airport)

              

      

      
        	 	
                ·

              	
                Transport
                  at site (conference)

              

      

      
        	 	
                ·

              	
                Conference
                  fee (if any)

              

      

      
        	 	
                ·

              	
                Accommodation
                  at site (conference) (up to $200 per
                  day)

              

      

      
        	 	
                ·

              	
                $50
                  (U.S. Dollars) per day for meals

              

      

      
        	 	
                ·

              	
                Each
                  transatlantic flight (both legs) will equate to 1 full workday
                  (10 hours)
                  at $2,460 per flight

              

      

      
        	 	
                ·

              	
                Each
                  flight (both legs) within the U.S. or Europe will equate to one-half
                  workday (5 hours) at $1,230 per
                  flight

              

      

      
        	 	
                ·

              	
                Each
                  full workday at a conference will equate to one-half workday (5
                  hours) at
                  $1,230 

              

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
        	
                3.

              	
                Scientific
                  conference in which Consultant represents both Company (upon request
                  of
                  Company) as well as Chondrometrics or other third party (e.g.,
                  a
                  university) 

              

      

      

      
        	 	
                ·

              	
                Airtravel
                  in business class

              

      

      
        	 	
                ·

              	
                $80
                  for transport within Munich or Salzburg (from/to
                  airport)

              

      

      
        	 	
                ·

              	
                Transport
                  at site (conference)

              

      

      
        	 	
                ·

              	
                No
                  reimbursement by Company for conference fee, accommodation at site,
                  or
                  meals

              

      

      
        	 	
                ·

              	
                Each
                  transatlantic flight (both legs) will equate to one-half workday
                  (5 hours)
                  at $1,230 per flight

              

      

      
        	 	
                ·

              	
                No
                  reimbursement for workdays for flights within U.S. or
                  Europe

              

      

      
        	 	
                ·

              	
                Each
                  full workday at a conference will equate to one-half workday (5
                  hours) at
                  $1230 

              

      

      

      Consultant
        will endeavour whenever possible to coordinate visits to reduce costs and
        prevent double billing. For example, in the event Consultant is required
        to
        participate in a Pfizer meeting, and Consultant also is scheduled to work
        at
        Company’s offices in Rochester, Consultant would be required to coordinate such
        visits to avoid multiple flights and excessive expenses. In this case Consultant
        would be reimbursed for:

      

      
        	 	
                ·

              	
                Airtravel
                  between Detroit and Rochester

              

      

      
        	 	
                ·

              	
                Transport
                  and accommodation at Rochester

              

      

      
        	 	
                ·

              	
                One-half
                  workday (5 hours) at $1,230 for flight within
                  U.S.

              

      

      
        	 	
                ·

              	
                Full
                  workday pay for actual workdays 

              

      

      

      All
        amounts are in U.S. Dollars

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      EXHIBIT
        D

       

      Tools

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

EXHIBIT E
       

      Services
        and Co-Marketing Agreement between 

      VirtualScopics
        LLC and Chondrometrics GmbH

      
        
           

        

        
          19EXHIBIT
      10.12

    

    SERVICES
      AND CO-MARKETING AGREEMENT 

    

    This
      Services and Co-Marketing Agreement (“Agreement”)
      is
      entered into this 1st day of March, 2004 (the “Effective
      Date”),
      by
      and between VirtualScopics LLC, a New York limited liability company with its
      principal place of business at 140 Office Park Way, Pittsford, New York 14534
      (“VirtualScopics”),
      and
      Chondrometrics GmbH (“Chondrometrics”),
      a
      German limited liability company, with its current principal place of business
      at Munich, Germany. This
      Agreement, together with those certain Consulting Agreements between
      VirtualScopics and Dr. Felix Eckstein, dated January 1, 2004 and March 1, 2004,
      respectively, supercede, and replace entirely, that certain Preliminary Service
      Agreement between VirtualScopics and Chondrometrics, dated January 30, 2004
      (the
“Preliminary
      Agreement”). 

    

    RECITALS:

    

    A.    Chondrometrics
      conducts and commercializes medical research with particular emphasis on
      cartilage degeneration as it relates to the development of Osteoarthritis.
      Chondrometrics has existing relationships with entities in need of research
      services to assist in understanding human disease progressions of
      Osteoarthritis, and/or the efficacy of disease modifying osteoarthritic
      drugs.

    

    B.    Chondrometrics
      currently distinguishes itself from its competitors due to Chondrometrics’
      status in its industry as the sole provider of cartilage degeneration medical
      research services validating its findings with highly regarded peer reviews
      and
      industry publications.

     

    C.    VirtualScopics
      is in the business of developing image-based biomarkers and image analysis
      software tools (such software and tools, together with any documentation, and
      modifications, updates, and enhancements to the foregoing, the “VirtualScopics
      Technology”)
      as
      well as providing customers regulatory compliant image analysis services and
      field operations to accelerate both drug efficacy testing and drug discovery.
      VirtualScopics has existing relationships covering a broad range of disease
      areas including Osteoarthritis. 

    

    D.    VirtualScopics
      and Chondrometrics desire to leverage their research and commercial capabilities
      by co-marketing each other’s services and abilities, with the goal of expanding
      each party’s customer base and visibility in the industry, and gaining economic
      benefits resulting therefrom. 

    

    E.    In
      consideration of and relying upon the covenants and obligations herein,
      including VirtualScopics’ obligation to make certain payments to Chondrometrics
      as further set forth in this Agreement, Chondrometrics
      (1) has permitted, and is permitting, as the case may be, Dr. Felix Eckstein
      (CEO and CSO of Chondrometrics) to execute two consulting agreements with
      VirtualScopics relating to services that were provided by Dr. Eckstein from
      January 1, 2004 through February 29, 2004, and services that will be provided
      from March 1, 2004 through December 31, 2006 (collectively, the “Consulting
      Agreements”),
      thereby releasing Dr. Eckstein from certain of his obligations to Chondrometrics
      so that Dr. Eckstein may perform his obligations under the Consulting
      Agreements, (2) temporarily is replacing Dr. Eckstein Chondrometrics with
      outside expert personnel in connection with certain of Dr. Eckstein’s
      obligations as CEO/CSO of, (3) is permitting Dr. Eckstein to use certain of
      Chondrometrics’ resources in his work under the Consulting Agreements, and (4)
      is losing its distinction as the sole provider in its industry of cartilage
      degeneration medical research services capable of validating its technology
      and
      findings through peer reviews and publications, thereby diminishing
      Chondrometrics’ potential revenue stream to the extent such revenues are derived
      by such distinction. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    THEREFORE,
      for
      valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties agree as follows: 

    

    1. Definitions.
      Capitalized
      terms not defined elsewhere in this Agreement shall have the meanings ascribed
      to them in this Section 1.

     

    1.1.
      “Cartilage
      Analysis”
      means a
      manual, semi-automated or automated process for segmenting MR images to quantify
      the volume or other morphological parameters of total cartilage or cartilage
      sub-regions in Research Trials and Clinical Trials for
      Osteoarthritis.

     

    1.2.
      “Non-Cartilage
      Analysis”
      means a
      manual, semi-automated or automated process for segmenting MR images to quantify
      characteristics of tissues related to Osteoarthritis other than cartilage,
      including, but not limited to, Bone Marrow Edema, Meniscus, and
      Fluid.

     

    1.3.
      “Clinical
      Trial”
      means
      Cartilage Analysis and Non-Cartilage Analysis that is performed for the purpose
      of understanding the efficacy of a disease modifying osteoarthritic drug in
      humans, intended and/or required to be submitted to a regulatory body as part
      of
      a drug approval submission. The paying entity for a Clinical Trial can be a
      pharmaceutical, biotechnology, or medical device company, or a governmental
      or
      non-governmental research agency. 

     

    1.4.
      “Research
      Trial”
      means
      Cartilage Analysis and Non-Cartilage Analysis that is performed for the purpose
      of understanding human cartilage physiology or disease progressions of
      Osteoarthritis. The paying entity for a Research Trial can be a pharmaceutical,
      biotechnology, or medical device company, or a governmental or non-governmental
      research agency. Results from a Research Trial are not intended or required
      to
      be submitted to a government regulatory body as part of a drug approval
      submission. 

     

    1.5.
      “Trial
      Commitment”
      means
      each contract or agreement with respect to which Research Trial or Clinical
      Trial services are being by provided by VirtualScopics or Chondrometrics, as
      the
      case may be. 

     

    (a) “Gross
      Revenues”
      means
      all amounts actually collected by VirtualScopics, net of any discounts or other
      sales incentives, and any sales tax collected, for each Research Trial
      Commitment and each Clinical Trial Commitment during the term of the Commitment.
      However, Gross Revenues shall not include (a) amounts collected for any Clinical
      Trial Commitment pursuant to which (i) solely Non-Cartilage Analysis is being
      provided, or (ii) Cartilage Analysis is being provided by a third party, or
      (b)
      amounts collected under the following Clinical Trial Commitment or Research
      Trial Commitment entered into by VirtualScopics prior to January 1, 2004: (1)
      the Pfizer
      GARP Study commencing in 2002, (2) the Pfizer BOIS Study commencing in 2002,
      (3)
      the Pfizer KANON Study commencing in 2002, and (4) the DePuy Meniscus Study
      started in 2003). All other amounts collected under Trial Commitments
      (net
      of
      any discounts or other sales incentives, any sales tax collected,
      and
      subject to the exclusions specified in clause (a) above), including all amounts
      collected from January 2005 onwards, will be included in Gross Revenues,
      irrespective of the date of commencement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    1.6.
      “Intellectual
      Property Rights”
      means
      any and all rights in and to all patents, patent applications, copyrights,
      trademarks, trade secrets, know-how and any other proprietary
      rights.

     

    1.7.
      “Marketing
      Materials”
      of a
      party means those materials being used by such party to promote itself and
      its
      business, and which are delivered to the other party for marketing purposes
      as
      contemplated in Sections 2.4 and 3 hereof. Marketing Materials include, without
      limitation (a) marketing brochures or other printed materials generally
      promoting such party, its staff and resources, and the research and other
      service capabilities of such party, (b) publications, if any, relating to work
      performed by such party, its owners, employees, or agents, pertaining to
      Osteoarthritic research as well as any other research that may be relevant
      in
      sales pitches to prospects in the Osteoarthritis field, (c) web site materials,
      and (d) any other documentation or information that may be useful in promoting
      such party to third parties. 

     

    1.8.
      “Osteoarthritic
      Initiative”
      means
      the government and industry sponsored study using imaging and image analysis
      to
      determine end-points for detecting progression of Osteoarthritis.

     

    2. Collaborative
      Work for Research Trials.
      

     

    2.1.
      Proposals.
      Throughout the Term (as defined in Section 11.1 hereof), VirtualScopics and
      Chondrometrics intend to submit separate Research Trial proposals to third
      parties for project contracts and grant proposals (each, a “Project”).
      Unless otherwise agreed to by the parties, VirtualScopics will provide
      Non-Cartilage Analysis and/or Cartilage Analysis, and Chondrometrics will
      provide solely Cartilage Analysis for each Project. Each party will solicit
      and
      separately negotiate client Projects; provided, however, (a) in no event will
      a
      party provide services to a third party if such party, to the best of such
      party’s knowledge, should have reason to believe that the third party already is
      receiving, or is contracting to receive, the same or similar services from
      the
      other party, and (b) each party will consult with the other party as necessary
      to prevent providing overlapping or conflicting services to the other party’s
      clients. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    2.2.
      Osteoarthritis
      Initiative.
      Each
      party intends to submit a proposal for a Project to the Osteoarthritis
      Initiative. In this instance, VirtualScopics’ Project will specify that
      VirtualScopics is to provide Non-Cartilage Analysis, including end-points of
      interest, and Chondrometrics’ Project will specify that Chondrometrics is to
      provide Cartilage Analysis. Further, if Chondrometrics is unable to finalize
      a
      Project with the Osteoarthritic Initiative that meets Chondrometrics’ financial
      expectations, Cartilage Analysis may alternatively be provided by VirtualScopics
      under a separate Project upon the parties’ mutual written agreement. Thereafter,
      from time to VirtualScopics and Chondrometrics may each submit additional
      separate proposals to the Osteoarthritic Initiative based on the parties’ mutual
      agreement and under the same conditions formulated above. 

     

    2.3.
      Generally.
      Each of
      VirtualScopics and Chondrometrics agrees not submit a Research Trial proposal
      to, or otherwise solicit Research Trial business from, the Osteoarthritic
      Initiative, without giving written notice to each other. VirtualScopics
      maintains the right to analyze the cartilage images of the Osteoarthritic
      Initiative analyzed by Chondrometrics for comparative and publication purposes,
      including a collaborative publication with Dr. Felix Eckstein.

     

    2.4.
      Co-Marketing
      Efforts.
      Each of
      VirtualScopics and Chondrometrics agrees to exercise commercially reasonable
      best efforts to market and promote the other party’s Research Trial capabilities
      with the goal of establishing numerous Projects throughout the Term.

     

    2.5.
      Other
      Commitments.
      Nothing
      herein shall restrict either party’s ability to continue providing Research
      Trial services. 

     

    3. Marketing
      for Clinical Trials and Research Trials. 

     

    3.1.
      Throughout the Term each party will exercise commercially reasonable best
      efforts to market and promote VirtualScopics’ Non-Cartilage Analysis and
      Cartilage Analysis services for Clinical Trials and Research Trials, and the
      collaborative efforts of VirtualScopics and Chondrometrics. VirtualScopics
      will
      perform any such Cartilage Analysis using a Clinical Trial or Research Trial
      approach, as the case may be, that has been cross-validated in accordance with
      a
      methodology designed by Dr. Eckstein pursuant to the Consulting Agreements.
      

     

    3.2.
      At a
      minimum, Chondrometrics’ obligations hereunder require that it:

     

    (a) distribute
      VirtualScopics’ Marketing Materials to existing clients and prospects, when
      clients and prospects actively demand services for quantitative analysis of
      cartilage in the context of Clinical Trials and Research Trials;

     

    (b) distribute
      VirtualScopics’ Marketing Materials to existing clients and prospects, when
      clients and prospects show interest in services for quantitative analysis of
      non-cartilage parameters in the context of Research Trials or Clinical Trials;
      and

     

    (c) assist
      VirtualScopics in preparing and distributing joint press releases promoting
      VirtualScopics and the collaborative efforts of VirtualScopics and
      Chondrometrics.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3.3.
      Chondrometrics shall be prohibited from marketing or otherwise promoting any
      third party’s Non-Cartilage Analysis or Cartilage Analysis services for Clinical
      Trials. Further, Chondrometrics will not provide any Clinical Trial services,
      and will refer all such potential business to VirtualScopics. 

     

    4. Payments.
      In
      consideration of the successful performance of all mutual covenants contained
      in
      this Agreement, including the consideration described in Recital E, the parties
      agree to the following:

     

    4.1.
      VirtualScopics shall pay Chondrometrics an upfront guaranteed payment (each
      a
“Guaranteed
      Payment”)
      during
      the first three (3) years of the Term as follows: 

     

    (a) First
      Year Guaranteed Payment:
      $110,700, payable (i) $55,350 on the Effective Date, and (ii) $55,350 within
      six
      months thereafter;

     

    (b) Second
      Year Guaranteed Payment:
      $75,000, payable on the first anniversary of the Effective Date;

     

    (c) Third
      Year Guaranteed Payment:
      $60,000, payable on the second anniversary of the Effective Date. 

     

    Notwithstanding
      the foregoing, Chondrometrics acknowledges its receipt of $27,675 as partial
      payment of the $55,350 payment obligation in clause (a)(i) above, which amount
      was paid to Chondrometrics by VirtualScopics on March 10th, 2004 pursuant to
      the
      Preliminary Service Agreement. 

     

    4.2.
      VirtualScopics shall pay Chondrometrics seven percent (7%) of Gross Revenues
      generated by VirtualScopics (the “Marketing
      Fee”),
      which
      amounts during the first three years of the Term shall not be payable unless
      and
      until the Guaranteed Payment for such year has been recouped fully. During
      the
      first three years of the Term, the Marketing Fee for each year will be deducted
      from the Guaranteed Payment for such year, and the balance remaining, if any,
      will be payable within thirty (30) days after the end of such year. The
      Marketing Fee for the fourth and fifth year of the Term will be calculated
      at
      the end of each year, and will be payable within thirty (30) days after the
      end
      of each such yearly period. 

     

    4.3.
      For
      so long as amounts are owed under this Section 4, and for a period of one year
      thereafter, VirtualScopics shall maintain and make available to Chondrometrics,
      no more than once per year, and upon ten calendar days written request, such
      records as are required to establish accurate payments due under this Agreement.
      Chondrometrics shall, at its expense, have the right to have an auditor inspect
      such records on a confidential basis during normal business hours. Such
      inspection is solely for the purpose of verifying the accuracy of payments
      due
      under this Section 4. 

     

    4.4.
      The
      above payments and fees have been established in U.S. Dollars based on a U.S.
      Dollar to Euro exchange rate band of $1.10 to $1.30 per Euro. If the U.S. Dollar
      to Euro exchange rate deviates from this band, the parties agree in good faith
      to renegotiate such payments and fees to establish the appropriate U.S. Dollar
      value of this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    4.5.
      Each
      payment hereunder shall be due notwithstanding termination of this Agreement,
      except that the foregoing shall not apply if the Agreement is terminated (a)
      by
      VirtualScopics or its successors under Section 11.3 hereof, (b) due to the
      termination of the March 2004 Consulting Agreement by VirtualScopics pursuant
      to
      Sections 3(b), (d), or (e) of that agreement, or (c) due to the termination
      by
      Dr. Eckstein of the March 2004 Consulting Agreement (other than pursuant to
      Section 3(b) thereunder). If after termination of this Agreement VirtualScopics
      is obligated to make any payment by virtue of this Section 4.5, then Section
      3.4
      hereof shall survive termination of this Agreement, and Chondrometrics shall
      comply with such provision for the duration of each twelve month period
      corresponding with any such payment. 

     

    5. Ownership;
      Publicity.
      Except
      as
      set forth in the Consulting Agreements, nothing in this Agreement shall confer
      on either party any right, title, license or other interest in or to the
      Intellectual Property Rights of the other party. Each party hereby consents
      to
      the other party’s use of such party’s Marketing Materials, and to the other
      party’s use of such party’s trademarks; provided, that all uses shall be solely
      as contemplated by this Agreement. 

     

    6. Confidentiality.

     

    6.1.
      Confidential
      Information.
      With
      respect to each party, “Confidential
      Information”
      of such
      party means any and all information existing as of the date of this Agreement
      or
      thereafter developed in which such party (and its affiliates or subsidiaries)
      has a proprietary interest or a business reason for guarding against
      unauthorized disclosure, including but not limited to, all facts, opinions,
      conclusions, projections, software, technical data, trade secrets, know-how,
      and
      other information relating to research and development, methods of distribution,
      customer information activities, work in process, marketing, financial or
      personnel matters related to such party, its present or future products,
      services, technology, customers, employees, investors, prospects, markets or
      business, whether communicated orally, electronically or in writing, or obtained
      by the other party through observation or examination of such party’s business.
      VirtualScopics’ Confidential Information shall include, without limitation, the
      VirtualScopics Technology.

     

    6.2.
      Exclusions.
      Confidential Information does not include any information that at the time
      of
      disclosure (a) is or becomes generally available to the public through no fault
      of the receiving party or a third party with a duty not to disclose; (b) is
      already known to the receiving party as evidenced by its written records; or
      (c)
      is disclosed to the receiving party by a third party not known by the receiving
      party to be bound by a confidentiality agreement with the disclosing
      party.

     

    6.3.
      Obligations.
      Chondrometrics and VirtualScopics each agree that it shall,
      indefinitely:

     

    (a) hold
      the
      other party’s Confidential Information in strictest confidence; 

     

    (b) use
      the
      other party’s Confidential Information only for purposes permitted under this
      Agreement, and for no other purpose whatsoever; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) disclose
      the other party’s Confidential Information only to those of such party’s
      employees, agents or contractors with a need to know, and permit such employees,
      agents or contractors to use the other party’s Confidential Information only in
      connection with the purposes referred to above; 

     

    (d) take,
      and
      require such party’s employees, agents and contractors to take, all precautions
      reasonably necessary to keep the other party’s Confidential Information
      confidential and protect the other party’s Confidential Information from theft,
      unauthorized duplication or discovery; 

     

    (e) advise
      such party’s employees and agents who receive the other party’s Confidential
      Information that they may only use, and are required to protect, such other
      party’s Confidential Information as set forth above, and require any and all
      contractors to sign a non-disclosure agreement in a form substantially
      equivalent to the form of non-disclosure agreement attached hereto as
Exhibit
      A.
      Chondrometrics and VirtualScopics are responsible for the safe-keeping of the
      Confidential Information disclosed by it to their employees, agents and
      contractors; 

     

    (f) notify
      the receiving party immediately upon discovery of any use or disclosure of
      the
      disclosing party’s Confidential Information in violation of this Agreement, or
      any other breach of the confidentiality obligations herein, and cooperate fully
      with the disclosing party to assist it in regaining possession of the
      Confidential Information and to prevent further disclosure or use of the
      Confidential Information in violation of this Agreement; and

     

    (g) in
      the
      event that the receiving party is required by law to disclose any part or all
      of
      the disclosing party’s Confidential Information, immediately notify the
      disclosing party in writing, and fully cooperate with the disclosing party
      in
      its efforts to protect from or limit the disclosure of the Confidential
      Information.

     

    6.4.
      Return
      of Confidential Information.
      At any
      time upon request by the disclosing party or immediately on the termination
      of
      this Agreement (whichever event occurs first), the non-disclosing party shall
      return to the disclosing party all of the disclosing party’s Confidential
      Information, whether in written, electronic or other form. 

     

    7. Non-Solicitation.
      

     

    7.1.
      Except as agreed by VirtualScopics and Chondrometrics, VirtualScopics and
      Chondrometrics agree that, during the Term and for a period of six months
      thereafter, neither shall directly or indirectly, by itself or with any other
      person, persons, partnership, company or any other entity, whether as owner,
      shareholder, partner, employee or independent contractor, solicit,
      recruit or hire, or in any manner attempt to solicit, recruit or hire, any
      person employed by the other or any parent, subsidiary or affiliate of the
      other
      to leave such employment or to induce any such person to breach his or her
      employment agreement.

     

    7.2.
      VirtualScopics and Chondrometrics agree that the covenant in Section 7.1 hereof
      constitutes an independent covenant, which shall be enforceable by the other
      notwithstanding any other right or remedy that the other party may have under
      any other provision of this Agreement or otherwise. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    8. Representations
      and Warranties.
      

     

    8.1.
      Chondrometrics represents and warrants to VirtualScopics that:

     

    (a) Chondrometrics
      is a corporation, duly organized and validly existing in Germany; 

     

    (b) Chondrometrics
      is not subject to any agreement, order, decree, security interest, whether
      or
      not perfected, or other document that would affect, prohibit or restrict the
      execution or delivery of this Agreement or the performance by Chondrometrics
      of
      its obligations under the terms and conditions of this Agreement; 

     

    (c) this
      Agreement constitutes Chondrometrics’ valid and binding obligation and is
      enforceable in accordance with its terms, subject only to the laws affecting
      creditors’ rights;

     

    (d) there
      are
      no known suits or proceedings or other litigation of any kind pending or
      threatened against Chondrometrics that could adversely affect Chondrometrics’
      ability to perform its obligations under this Agreement; 

     

    (e) there
      are
      no known violations of any laws, rules or regulations of any governmental agency
      that could affect Chondrometrics’ ability to perform its obligations under this
      Agreement;

     

    (f) in
      performing hereunder, Chondrometrics will comply materially with German and
      applicable international laws, rules, and regulations, and, if advised by
      VirtualScopics of Chondrometrics’ failure to comply materially with applicable
      U.S. law, such that VirtualScopics has a good faith reason to believe that
      VirtualScopics, its business, or the continuation of this Agreement will be
      impaired, Chondrometrics will take reasonable steps (taking into account
      Chondrometrics’ available resources) to comply materially with such U.S. law;

     

    (g) Chondrometrics
      will not misrepresent to third parties the relationship between Chondrometrics
      and VirtualScopics created hereunder, and will not make any statement or omit
      to
      make any statements or otherwise act or fail to act in any manner that may
      (i)
      portray VirtualScopics in a negative light, or (ii) result in a misstatement
      of
      fact regarding VirtualScopics or any services provided or to be provided by
      VirtualScopics; 

     

    (h) all
      services provided by Chondrometrics to third parties as contemplated hereunder
      will be performed by Chondrometrics in a diligent and conscientious manner,
      using reasonable care; and 

     

    (i) Chondrometrics
      has no knowledge of any facts that if true would have a material adverse affect
      upon the business currently conducted by Chondrometrics or its ability to
      perform its obligations under this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    8.2.
      VirtualScopics represents and warrants to Chondrometrics that:

     

    (a) VirtualScopics
      is a corporation, duly organized and validly existing in the State of New York;
      

     

    (b) VirtualScopics
      is not subject to any agreement, order, decree, security interest, whether
      or
      not perfected, or other document that would affect, prohibit or restrict the
      execution or delivery of this Agreement or the performance by VirtualScopics
      of
      its obligations under the terms and conditions of this Agreement;

     

    (c) this
      Agreement constitutes VirtualScopics’ valid and binding obligation and is
      enforceable in accordance with its terms, subject only to the laws affecting
      creditors’ rights;

     

    (d) there
      are
      no known suits or proceedings or other litigation of any kind pending or
      threatened against VirtualScopics that could adversely affect VirtualScopics’
      ability to perform its obligations under this Agreement; 

     

    (e) there
      are
      no known violations of any laws, rules or regulations of any governmental agency
      that could affect VirtualScopics’ ability to perform its obligations under this
      Agreement;

     

    (f) in
      performing hereunder, VirtualScopics will comply materially with all applicable
      U.S. laws, rules, and regulations, and, if advised by Chondrometrics of
      VirtualScopics’ failure to comply materially with applicable German and/or other
      international laws, such that Chondrometrics has a good faith reason to believe
      that Chondrometrics, its business, or the continuation of this Agreement will
      be
      impaired, VirtualScopics will take reasonable steps (taking into account
      VirtualScopics’ available resources) to comply materially with such German
      and/or other international laws; 

     

    (g) VirtualScopics
      will not misrepresent to third parties the relationship between Chondrometrics
      and VirtualScopics created hereunder, and will not make any statement or omit
      to
      make any statements or otherwise act or fail to act in any manner that may
      (i)
      portray Chondrometrics in a negative light, or (ii) result in a misstatement
      of
      fact regarding Chondrometrics or any services provided or to be provided by
      Chondrometrics; 

     

    (h) all
      services provided by VirtualScopics to third parties as contemplated hereunder
      will be performed by VirtualScopics in a diligent and conscientious manner,
      using reasonable care; and

     

    (i) VirtualScopics
      has no knowledge of any facts that if true would have a material adverse affect
      upon the business currently conducted by VirtualScopics or its ability to
      perform its obligations under this Agreement.

     

    9. Disclaimer,
      Limitation of Liability.
      

     

    9.1.
      Disclaimer.
      EXCEPT
      AS OTHERWISE EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT, EACH PARTY HEREBY
      DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING,
      WITHOUT LIMITATION (a) ANY WARRANTY OF NON-INFRINGEMENT OR THAT THE SERVICES
      BEING PROVIDED BY SUCH PARTY WILL BE ERROR-FREE; OR (b) ANY AND ALL
      WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    9.2.
      Limitation
      of Liability.
      EXCEPT
      FOR BREACHES OF CONFIDENTIALITY, NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT,
      INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING THE LOSS
      OF
      PROFITS, REVENUE, DATA, OR USE OR COST OF PROCUREMENT OF SUBSTITUTE GOODS
      INCURRED BY THE OTHER PARTY OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT
      OR TORT OR BASED ON A WARRANTY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
      POSSIBILITY OF SUCH DAMAGES. 

     

    10. Indemnification.
      

     

    10.1.
      Each party agrees to indemnify and hold harmless the other party, and such
      other
      party’s officers, members, agents, employees, successors, and assigns harmless
      from and against any claims, actions, demands, liabilities, losses, damages,
      judgments, settlements, costs and expenses (including reasonable attorneys'
      fees) arising from or relating to (a) a material breach of the indemnifying
      party’s representations and warranties hereunder, (b) the indemnified party’s
      use of the indemnifying party’s Marketing Materials (provided the indemnified
      party’s use was in accordance with this Agreement), and (c) the acts or
      omissions of the indemnifying party, including without limitation, the
      indemnifying party’s provision of image analysis services. Each party warrants
      that it will incur only reasonable and necessary attorney’s fees and will apply
      only reasonable and necessary resources to cure or prevent damages that may
      have
      been caused by the other party, with the intention of keeping indemnification
      amounts within reasonable limits. 

     

    10.2.
      The
      indemnifying party shall defend and hold harmless the indemnified party with
      counsel chosen and paid for by the indemnifying party upon receipt of prompt
      written notice of the claim from the indemnified party (provided, that failure
      to provide prompt notice shall not relieve the indemnifying party of its
      indemnification obligations, except to the extent it has been damaged thereby),
      and the indemnified party will reasonably cooperate in the defense of the action
      or proceeding at the indemnifying party’s expense. Upon the indemnifying party
      assuming the defense of any such claim, the indemnified party’s counsel may
      thereafter participate in an advisory capacity at the indemnified party’s sole
      cost. Neither party may enter into any settlement or compromise that may require
      the other party to admit liability, pay any monies out-of-pocket, or assume
      any
      other material obligation or relinquish any material right, without the prior
      written consent of the other party, not to be unreasonably withheld or
      delayed.

     

    11. Term
      and Termination.

     

    11.1.
      Term
      of Agreement. This
      Agreement shall take effect on the Effective Date and shall remain in effect
      until December 31st,
      2008,
      unless and until terminated in accordance with this Section (the “Term”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    11.2.
      Termination
      Upon Mutual Agreement.
      This
      Agreement may be terminated upon the mutual agreement of VirtualScopics and
      Chondrometrics.

     

    11.3.
      Termination
      for Cause by Either Party.
      Either
      party, as applicable, shall have the right, in addition to and without prejudice
      to any other rights or remedies, to terminate this Agreement:

     

    (a) for
      a
      material breach of this Agreement by the other party, which is not cured within
      thirty (30) days of receipt by the party in default of a notice specifying
      the
      breach and requiring its cure; or

     

    (b) effective
      immediately upon written notice if (i) all or a substantial portion of the
      assets of the other party are transferred to an assignee for the benefit of
      creditors to a receiver or to a trustee in bankruptcy, (ii) a proceeding is
      commenced by or against the other party for relief under the bankruptcy or
      similar laws, and such proceeding is not dismissed within thirty (30) days,
      (iii) the other party is adjudged bankrupt, (iv) the other party dissolves
      or
      otherwise ceases to operate its business, or (iv) the other party materially
      breaches its obligations under Section 6 hereof.

     

    11.4.
      Termination
      upon Termination of a Consulting Agreement.
      This
      Agreement shall terminate upon the termination of the March 2004 Consulting
      Agreement if such agreement is terminated prior to its scheduled expiration
      date, including the expiration date of any renewal term. However, this Agreement
      will continue if the March 2004 Consulting Agreement expires on December 31,
      2006, and is not thereafter renewed. Notwithstanding the foregoing, the parties
      may mutually agree in writing to continue this Agreement notwithstanding such
      early termination of the Consulting Agreement. 

     

    11.5.
      Obligations
      on Termination.
      Upon
      termination of this Agreement, each party shall promptly return to the other
      party all marketing materials of such party, and any and all Confidential
      Information in its possession, in any form. The parties shall have no further
      obligations under terms this Agreement, but Sections 6, 7, 9, 10, and 13 hereof,
      and any other provision that by its nature survives termination, shall survive
      termination of this Agreement.

     

    12. Insurance.
      Each
      party will obtain and maintain throughout the Term and thereafter, insurance
      coverages of the types and in the amounts as are customary in such party’s
      industry (within the primary territory within which such party operates), and
      otherwise as necessary to cover its obligations and potential liabilities
      hereunder.

     

    13. General.
      

     

    13.1.
      Assignment.
      Neither
      party may assign or transfer its rights or delegate its obligations under this
      Agreement without the other party’s prior written consent, which will not be
      unreasonably withheld, except that VirtualScopics shall be permitted to assign
      any of its rights and obligations under this Agreement in connection with any
      merger, consolidation, or sale of all or substantially all of VirtualScopics’
      assets. Any attempted assignment contrary to the foregoing shall be null and
      void. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    13.2.
      Entire
      Agreement.
      This
      Agreement, together with any Exhibits attached hereto, and that certain
      Ancillary Agreement between VirtualScopics and Chondrometrics dated as of the
      date hereof, constitutes the final, complete, and exclusive understanding
      between the parties, and replaces and supersedes all previous oral or written
      agreements, understandings, or arrangements between the parties with respect
      to
      the subject matter of this Agreement. This Agreement may not be modified or
      amended except by a writing signed by an authorized officer of each party to
      this Agreement. 

     

    13.3.
      Notices.
      Except
      as otherwise provided in this Agreement, notices required to be given pursuant
      to this Agreement shall be effective when received, and shall be sufficient
      if
      given in writing, hand delivered, sent by facsimile with confirmation of
      receipt, sent by First Class Mail, return receipt requested (for all types
      of
      correspondence), postage prepaid, or sent by overnight courier service and
      addressed as follows: 

     

    
      	 	
              To:

            	
              VirtualScopics
                LLC

            
	 	 	
              140
                Office Park Way

            
	 	 	
              Pittsford,
                New York 14534

            
	 	 	
              Attn:
                Mikael Totterman, Chief Operating Officer

            
	 	 	
              Fax
                No.: 585 218-7350

            
	 	 	 
	 	
              To:

            	
              Chondrometrics
                GmbH

            
	 	 	
              Jahnstr.
                48

            
	 	 	
              80469
                München

            
	 	 	
              Attn:
                Dr. Felix Eckstein

            
	 	 	
              Fax
                No.: ++
                49 89 5160 4802

            

    

    

    13.4.
      Independent
      Contractor.
      The
      parties shall, and at all times will be independent contractors of one another.
      Nothing in this Agreement shall be deemed to create an employer/employee,
      principal/agent, or joint venture relationship. Neither party has the authority
      to enter into any contracts on behalf of the other party or otherwise act on
      behalf of the other party. 

     

    13.5.
      Governing
      Law; Jurisdiction; No Trial by Jury.
      

     

    (a) With
      respect to matters pertaining to (i) Section 1 hereof (Definitions), (ii)
      Sections 2.4, 3.1, and 3.3 hereof (marketing provisions), as well as the
      provision of marketing-related services and Trial-related services within the
      United States, (iii) issues relating to intellectual property, including without
      limitation, Section 5 hereof (Ownership; Publicity), and the existence,
      validity, or enforcement of a party’s rights in any existing or future
      intellectual property, including any issues regarding interpretation of the
      relevant provisions herein, (iv) Section 6 hereof (Confidentiality), (v) Section
      7 hereof (Non-Solicitation), (vi) Section 9 hereof (Disclaimer; Limitation
      of
      Liability), (vii) Section 10 hereof (Indemnification), and (viii) any
      intentional material breach of this Agreement by Chondrometrics, this Agreement
      shall be governed by New York law, without regard to conflicts of law
      principles. The federal and state courts located in Monroe County, New York
      shall have exclusive jurisdiction over any such claim brought under this
      Agreement, and the parties hereby consent to the personal jurisdiction of such
      courts. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b) With
      respect to matters pertaining to (i) Sections 2.1, 2.2, 2.3 and 2.5 hereof
      (Research Trials), (ii) Section 3.2 hereof, including the provision of
      marketing-related services and Trial-related services outside of the United
      States, (iii) Section 4 hereof (Payments), (iv) Section 8 hereof
      (Representations and Warranties), (v) Section 11 hereof (Term and Termination),
      including any intentional material breach of this Agreement by VirtualScopics,
      but excluding any intentional material breach of this Agreement by
      Chondrometrics, (vi) Section 12 hereof (Insurance), and (vii) Sections 13.1,
      13.2, 13.3, 13.4, 13.6, 13.7, 13.8, 13.9, and 13.10 hereof, German law shall
      apply. The courts located in Munich, Germany shall have exclusive jurisdiction
      over any such claim brought under this Agreement, and the parties hereby consent
      to the personal jurisdiction of such courts. 

     

    13.6.
      Severability.
      In case
      any provision of this Agreement is held to be invalid, unenforceable, or
      illegal, that provision shall be severed from this Agreement, and such
      invalidity, unenforceability, or illegality will not affect any other provisions
      of this Agreement.

     

    13.7.
      Waiver.
      The
      failure of either party to enforce any provisions of this Agreement is not
      a
      waiver of the provisions or of the right of that party to subsequently enforce
      that, or any other, provision of this Agreement. 

     

    13.8.
      Injunctive
      Relief.
      VirtualScopics
      and Chondrometrics acknowledge that the financial hardship to the non-breaching
      party as a result of a breach of this Agreement may be difficult or impossible
      to measure in dollars and that no remedy at law will be adequate to compensate
      the non-breaching party for such violation; therefore, the non-breaching party
      shall be entitled to injunctive relief as well as any other applicable remedies
      at law or in equity, and the breaching party waives the defense of adequate
      remedy at law, acknowledging that no such remedy exists. Should a court of
      competent jurisdiction declare any of the covenants set forth in this
      Agreement unenforceable
      due to an unreasonable restriction, duration, geographical area or otherwise,
      the parties agree that such court shall be empowered and shall grant the
      non-breaching party injunctive relief to the extent reasonably necessary to
      protect its interests. The parties further agree that the breaching party will
      not require the non-breaching party to post a bond in such situations as the
      posting of a bond is unnecessary. 

     

    13.9.
      Attorneys’
      Fees.
      In
      the
      event of any dispute between the parties arising out of this Agreement, the
      substantially prevailing party shall be entitled to recover its reasonable
      attorneys’ fees and costs from the non-substantially prevailing
      party

     

    13.10.
      Force
      Majeure.
      Neither
      Chondrometrics nor VirtualScopics shall be responsible for any failure or delay
      in the performance of its obligations under this Agreement which is caused
      by
      acts of God, flood, fire, war or public enemy.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the
      undersigned have executed and delivered this Agreement on the date set forth
      above. 

    
 

    
      
        	CHONDROMETRICS
                GMBH	 	VIRTUALSCOPICS
                LLC
	 	 	 	 	 
	By:	/s/ Felix
                Eckstein	 	By:	/s/ Mikael
                Totterman
	 	
                
                  
[Signature]

              	 	 	
                
                  
[Signature]

              
	Title:	Chief Executive Officer	 	Title:	Chief
                Operating Officer
	 	
                

                  	 	 	
                

                 
	By:	Felix Eckstein	 	By:	 Mikael Totterman
	 	
                

                 	 	 	
                

                 

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      A

    

    Form
      of Non-Disclosure Agreement

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