Document:

SEPARATION, WAIVER AND RELEASE AGREEMENT

 

THIS SEPARATION, WAIVER
AND RELEASE AGREEMENT (the “Agreement”) is made the 25th day of October, 2013 by L. Jeffrey Markin, residing at 6739
Falcons Pt.,Victor NY 14564 (hereinafter “Markin”), for the benefit, and in favor, of VirtualScopics, Inc., a Delaware
corporation, with offices located at 500 Linden Oaks, Rochester, NY 14625, together with parents, subsidiaries and affiliates,
and the officers, directors, agents, employees, successors and assigns of VirtualScopics, Inc. and each of the other aforementioned
entities (hereinafter all collectively referred to as “VS”).

 

WHEREAS, MARKIN is
employed as the President, Chief Executive Officer and Treasurer of VS pursuant to an Employment Agreement dated February 24, 2009,
as amended by the Amendment to Employment Agreement dated December 28, 2012 (as amended, the “Employment Agreement”);

 

WHEREAS, MARKIN and
VS mutually agree that MARKIN will resign his employment with VS effective October 25, 2013; and

 

WHEREAS, MARKIN and
VS wish to enter into this Agreement for the purpose of determining the respective rights and obligations of MARKIN and VS after
such termination of employment and resolving any and all claims or disputes that exist or may exist between them through the effective
date of this Agreement.

 

NOW, THEREFORE, in
consideration of the mutual promises made and payments provided for herein, MARKIN and VS agree as follows:

 

VS, in full and complete
settlement and satisfaction of all matters and claims related to MARKIN's employment with, and termination of employment from VS,
will:

 

    	 

    	 

    

 

1.         Resignation.
Effective October 25, 2013, MARKIN resigns his position as an employee, as President, Chief Executive Officer, Treasurer and Director
of VS and from all other directorships and offices he may hold at VS including its subsidiaries.

 

2.         Separation
Payments. VS agrees to pay to MARKIN Twenty-Five Thousand Three Hundred and Ten and 00/100 Dollars ($25,310) per month, paid
in accordance with VS's standard payroll practices beginning on the payroll date immediately following October 25, 2013 and ending
May 31, 2014. Such separation payments shall be prorated for any partial calendar month during which VS is obligated to make the
separation payments. In the event of MARKIN's death before all payments have been made, any amounts still due to MARKIN will be
paid to MARKIN's estate. While VS is making the separation payments to MARKIN, it is agreed that MARKIN will not take employment
with any competitor of VS without VS's prior written consent. During the period from October 25, 2013 through January 31, 2014,
MARKIN will be available for a total of at least five (5) business days to consult with VS, upon reasonable notice, during regular
business hours, without any requirement that he travel or incur any unreimbursed expenses. MARKIN furthers agrees that upon reasonable
request of VS beyond November 30, 2013 and through and until December 31, 2016, he will reasonably cooperate with any investigation,
audit or review by the VS or any federal, state or local regulatory, quasi-regulatory or self-governing authority (including, without
limitation, the Securities and Exchange Commission) as any such investigation, audit or review relates to events or incidents that
occurred during his employment with VS, as well as with litigation or other proceedings involving matters that occurred during
his employment by VS. Such cooperation shall include, but not be limited to, being available to meet and speak with officers or
employees of VS and/or VS’s counsel at reasonable times and locations, executing accurate and truthful documents, giving
accurate and truthful testimony, and taking such other actions as may reasonably be requested by VS and/or VS’s counsel to
effectuate the foregoing. Notwithstanding the foregoing, provided that, VS shall make reasonable efforts to minimize disruption
of MARKIN’s other activities and shall reimburse MARKIN for reasonable expenses incurred in connection with such cooperation
and, to the extent that MARKIN is required to spend any substantial time on such matters. MARKIN may also receive reasonable compensation
from VS for time expended while assisting VS with respect to investigations, audits, reviews, litigations or other proceedings.
However, MARKIN and VS agree that no compensation shall be paid for the content or substance of any testimony.

 

    	-2-

    	 

    

 

3.         Medical
Insurance and Dental Insurance. MARKIN's present coverage will be continued through May 31, 2014 if MARKIN signs this Agreement.
MARKIN will be responsible for the applicable premiums during this period which are not otherwise covered by VS. Such premiums
will be deducted from MARKIN's separation payments through May 31, 2014. Thereafter, in accordance with the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA) and/or New York State's Mini-COBRA provisions, MARKIN may choose continuation coverage
under the provisions of the applicable law, provided MARKIN pays the full cost of the premium, plus a two percent (2%) administrative
fee. Please refer to the COBRA qualifying event letter will be sent under separate cover.

 

4.         Bonus.
On February 28, 2014, VS shall pay MARKIN the 2013 bonus earned by MARKIN under VS's 2013 Bonus Plan, pro-rated to date of termination
of his employment. In calculating MARKIN’s bonus entitlement, the parties shall use the formula previously adopted by the
Compensation Committee for that purpose but the input values shall be taken from (i) VS’s current full-year forecast
for bookings delivered to the Board of Directors via an email from MARKIN in early October 2013 based on an October 1, 2013 Sage
CRM report, (ii) VS’s current full-year financial projections delivered to the Board of Directors via an email from James
Groff on October 11, 2013, and (iii) the completion of milestones as presented to a Task Force of the Board of Directors by
MARKIN; and the resulting full-year bonus amount shall then be multiplied by the fraction 10/12 to reflect the portion of the year
that MARKIN has served (the “Bonus Determination Procedure”). VS and MARKIN will agree in good faith on a bonus amount
determined according to the Bonus Determination Procedure within three business days of the date of this Agreement.

 

    	-3-

    	 

    

 

5.         Group
Life Insurance. MARKIN's coverage will terminate effective October 25, 2013. Following termination of coverage there may be
a conversion period. If MARKIN wishes to convert his present coverage, he should immediately contact Nancy Volkmuth for
his conversion options, if any.

 

6.         Options
and Grants. Except as set forth below, unvested stock options, stock awards and restricted stock units granted to MARKIN will
by their terms be forfeited as of the effective date of this Agreement and MARKIN shall have no rights to or with respect to any
equity awards from VS except for stock options fully vested prior to the date of this Agreement, which shall expire in accordance
with their terms. For the avoidance of doubt, this Agreement shall not affect the timing of any payment under any fully vested
stock options. Notwithstanding the foregoing, the vesting of the 11,992 restricted stock units granted on January 29, 2013 will
be accelerated to October 25, 2013 and the 11,992 shares of VS stock issuable thereunder will be issued to MARKIN within a commercially
reasonable time following the date of this Agreement, but no later than two and one-half months following the end of the fiscal
year when vested.

 

    	-4-

    	 

    

 

7.         Long-term
and Short-term Disability Insurance. If MARKIN is participating in the VS long-term and/or short-term disability insurance
plans, MARKIN's coverage will terminate October 25, 2013.

 

8.         401K
Plan. MARKIN's participation in this plan will cease October 25, 2013. The VS Human Resources Director will contact MARKIN
to review distribution options available. This matter should be carefully reviewed by MARKIN and his tax advisor before selecting
the manner in which payment of MARKIN's vested account balance is to be made to MARKIN from the plan. After MARKIN has completed
and signed the distribution form, he should return it to VS for processing.

 

9.         Accrued
Vacation Pay. VS will pay to MARKIN 139.23 hours accrued vacation pay in the amount of $20,349.55, whether or not MARKIN signs
this Agreement.

 

10.        Withholdings.
All cash payments made to MARKIN under this Agreement shall be subject to withholdings for Federal and State income taxes and,
where applicable, for Social Security and Unemployment Compensation taxes.

 

In consideration of
the payments to MARKIN by VS, continuation of specifically enumerated benefits, and other good and valuable consideration received,
receipt of which is accepted and acknowledged, MARKIN agrees as follows:

 

11.        Waiver
and Release. MARKIN hereby waives, releases and forever discharges VS from and against any and all claims, causes of action,
judgments, orders, assessments, damages, losses, injuries, proceedings, interest, penalties, fines, expenses, costs (including
reasonable attorneys' fees and litigation costs) and suits of any kind, in law or equity (“Claims”), which MARKIN,
his heirs, executors, legal representatives or assigns ever had, now have, or hereafter may have against VS by reason of any matter
from the beginning of the world to the date of this Agreement. This release is intended to be as complete and inclusive as may
be permitted under law, and it includes Claims based upon contract, tort or otherwise, and includes any claims for compensatory,
consequential or punitive damages, and for attorneys' fees and costs. It also includes any Claims based upon constitutional or
common law grounds, or based upon federal, state, or local laws, rules or regulations, including, but not limited to, claims based
upon:

 

    	-5-

    	 

    

 

		a.	MARKIN's employment with, or termination of employment from VS including, but not limited to any
claims of illegal discrimination or retaliation against him based on age, sex, sexual orientation, race, religion, national origin,
citizenship, disability or any other characteristic protected by law;

 

		b.	Violation of federal, state or local law constitutional, statutory or regulatory provisions affecting
employment rights and/or relationships including, but not limited to, the New York State Executive Law, New York Labor Law, section
120 of the New York State Workers' Compensation Law, Title VII of the Civil Rights Acts, the Equal Pay Act, all State and Federal
overtime and wage claims, the Age Discrimination in Employment Act (ADEA), the Employee Retirement Income Security Act (ERISA),
the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), and the Older Worker's Benefit Protection Act
(OWBPA), as each may have been amended or modified; and

 

    	-6-

    	 

    

 

		c.	Wrongful discharge, whether based on claimed violations of statute or based on claims in contract
or tort, common law or equity; fraud, misrepresentation, defamation, commercial or trade defamation, commercial or trade defamation,
libel, slander, invasion of privacy, interference with prospective economic advantage, or disparagement of any kind or nature;
negligence and claims of intentional or negligent infliction of emotional distress.

 

However, notwithstanding
the foregoing, there shall be excluded from this release (i) Claims arising out of or attributable to VS’s breach of this
Agreement and (ii) Claims for indemnification and/or contribution for losses or liabilities under the Delaware General Corporation
Law, any provision of VS’s past or present charter or bylaws, or that certain Indemnification Agreement between MARKIN and
VS dated October 24, 2013.

 

12.         Waiver
of Right to Sue. MARKIN represents and agrees not to file a suit, charge, complaint, demand, action or otherwise assert any
claims against VS with respect to any matter relating to, or arising from, MARKIN's employment with VS or the termination of that
employment that he has released under this Agreement. Nothing in this Agreement shall be construed to prohibit MARKIN from participating
in any Equal Employment Opportunity Commission (“EEOC”) investigation or proceeding and/or from filing a charge
with the EEOC or any other administrative agency, to the extent such a right is protected by law. However, MARKIN acknowledges
that he shall not be entitled to any legal or equitable relief (including, but not limited to, monetary relief) from any such proceeding
or charge.

 

    	-7-

    	 

    

 

13.         No
Right to Re-Employment. MARKIN represents and agrees that his employment with VS terminated effective October 25, 2013, and
he waives any right to thereafter seek or apply for employment with VS.

 

14.         Acknowledgement
of Compensation Paid. MARKIN acknowledges and agrees that except as provided for in this Agreement, MARKIN has received all
compensation to which he is entitled for services provided to VS, up to and including MARKIN’s termination date, and agrees
not to make any claims for further compensation of any type, including, but not limited to, claims for wages or salary, bonus payments,
incentive compensation, business expenses, pension or retirement contributions or benefits, sick pay, holiday pay, or vacation
pay.

 

15.        Confidential
Information. MARKIN represents and agrees that he has not disclosed, and will not at anytime disclose, to any person, firm,
corporation or entity any confidential or proprietary information concerning the business affairs of VS which he acquired in the
course of, or as incident to, his employment, for his own benefit, the benefit of any other person, firm, corporation or entity.

 

16.         Work
Product or Inventions. MARKIN agrees that MARKIN shall have no proprietary interest in any work product developed or used by
MARKIN and arising out of employment by VS, including but not limited to, all forms of invention (as understood from Title 35 of
the United States Code), patents and patent applications (and all divisions, parts and continuations thereof), all copyrightable
work, and any trademarks or servicemarks (registered or unregistered) and trade names. MARKIN shall, from time to time as may be
requested by VS, do all things which may be necessary to establish or document VS’s ownership in any such work product including,
but not limited to, execution of appropriate copyright, patent and trademark applications, or assignments.

 

    	-8-

    	 

    

 

17.         Company
Property. MARKIN agrees that all papers, documents and equipment which have come into his possession in the course of business
remain the property of VS, and shall not be disclosed, disseminated, taken, removed from VS's premises or copied without the express
written permission of VS. MARKIN further agrees that he will return on or before October 25, 2013, all records and property, including,
but not limited to, his laptop computer, phone, security passes, keyfobs and keys, and all hard drives, jump drives, thumb drives
and other electronic and storage devices in his possession or custody belonging to or relating in any way to the affairs of VS.
MARKIN represents and warrants to VS that he does not have any VS documents or files of any nature copied or otherwise stored on
his personal computer(s), phone, hard drives, thumb drives and other devices and that he has deleted any such VS documents or files
that were stored on any devices remaining in his possession, except for VS information stored on his personal cell phone, which
VS may delete after October 25, 2013 on at least two (2) business days advance notice. Except as set forth above, MARKIN represents
and warrants that he has not deleted or destroyed any VS papers, documents, files or records outside of the ordinary course of
business. MARKIN shall cooperate with VS to terminate his signature authority on all financial and other accounts of VS.

 

18.         Non-Disclosure.
MARKIN and VS agree that any public announcement of MARKIN’S resignation will be consistent with the press release attached
hereto as Exhibit A.

 

19.         Non-Defamation.
MARKIN further agrees not to in any way defame, slander, demean, criticize or disparage VS. VS agrees that the members of its Board
of Directors and its senior management (specifically, Chief Executive Officer, Chief Financial Officer and Director of Human Resources)
will not in any way defame, slander, demean, criticize or disparage MARKIN. This Section does not in any way restrict or impede
either party from exercising rights to the extent that such rights cannot be waived by agreement or from complying with any applicable
law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such
compliance does not exceed that required by the law, regulation or order.

 

    	-9-

    	 

    

 

20.         Non-Admission
of Liability. MARKIN understands and agrees that this Agreement and the actions and matters settled and provided for herein,
shall not constitute (and may not be construed as) an admission of liability in any respect by VS, and MARKIN agrees to make no
such representations to any person or entity.

 

21.         Tax
Liability. In the event that any liability arises from the monies paid to MARKIN under this Agreement with respect to taxes
of any kind that are imposed on employees including, but not limited to, local, state or Federal and/or income or withholding taxes
that are imposed on employees (together with any applicable interest and penalties), such liability shall be MARKIN's sole responsibility
and not that of VS.

 

22.         References.
In accordance with VS's reference policy, prospective employers will receive information only regarding dates of employment and
positions MARKIN held. If the prospective employer requests salary and compensation information, it will also be disclosed with
the consent of MARKIN.

 

23.         Free
and Voluntary. MARKIN represents and agrees that he is entering into this Agreement freely and voluntarily, and with a complete
understanding of its terms and consequences. MARKIN further represents and agrees that VS encouraged him to review this Agreement
with his own private attorney prior to his execution hereof and that he has had the opportunity to thoroughly discuss all aspects
of this Agreement with a private attorney of his own choosing.

 

    	-10-

    	 

    

 

24.         Rights
to Review and Revoke. Because MARKIN is over forty (40) years of age, MARKIN is granted specific rights under the Older Workers
Benefit Protection Act (“OWBPA”), which prohibits discrimination on the basis of age. The release set forth
in the section of this Agreement entitled “Waiver and Release” is intended to release any rights MARKIN may have against
VS with the provisions of OWBPA. As such, and pursuant to the requirements of OWBPA, MARKIN has twenty-one (21) days to consider
and accept the provisions of this Agreement. MARKIN, by his signature to this Agreement prior to the expiration of such period,
after consultation with counsel of his choosing concerning the terms of this Agreement, waives the balance of such twenty-one (21)
day period. In addition, MARKIN may rescind his assent to this Agreement if, within seven (7) days after the date MARKIN signs
this Agreement, MARKIN delivers a written notice of rescission to VS. To be effective, such notice of rescission must be postmarked,
and sent by certified mail, return receipt requested, or delivered in-hand within the seven (7) day period to Gregory W. Gribben,
Esq., Woods Oviatt Gilman LLP, 2 State Street, 700 Crossroads Building, Rochester, NY 14614. MARKIN further understands and agrees
any separation payments shall only be paid to MARKIN if the aforementioned seven (7) day revocation period has expired, provided
that MARKIN has not revoked this Agreement as previously described. The timing of any payment hereunder shall not be affected by
the date of this Agreement or the expiration of the aforementioned seven day revocation period. MARKIN acknowledges and agrees
that if he exercises his right to revoke this Agreement, MARKIN’s resignation of employment and from the offices and positions
set forth in Section 1 of this Agreement will remain valid and effective as of October 25, 2013.

 

    	-11-

    	 

    

 

25.         Legal
Action. MARKIN understands and acknowledges that VS’s purpose for entering into this Agreement and Release was to avoid
litigation. Therefore, if any legal action is instituted by or brought on behalf of MARKIN against VS, MARKIN agrees to pay back
to VS all monies received as well as any other thing of value received under this Agreement and to pay VS its costs and attorneys'
fees in such action.

 

If
in any legal action the Release set forth in the paragraph of this Agreement entitled “Waiver and Release” is found
to be unenforceable for any reason, then:

 

		a.	this Agreement shall be null and void from today on;
and

 

		b.	any money paid by VS to MARKIN after today and not previously
returned to VS under this paragraph, and the value of any benefit coverage paid by VS, shall be treated as an overpayment and
shall have to be repaid to VS with interest at the rate of 9%.

 

This paragraph does
not apply to any thing of value given to MARKIN for which MARKIN actually performed services and by law MARKIN is entitled to receive.

 

26.         Dispute
Costs. If either party institutes any legal suit, action or proceeding against the other party to enforce this Agreement (or
obtain any other remedy regarding any breach of this Agreement) or otherwise arising out of or relating to this Agreement, including,
but not limited to, contract, equity, tort, fraud and statutory claims, the prevailing party in the suit, action or proceeding
shall be entitled to receive, and the non-prevailing party shall pay, in addition to all other remedies to which the prevailing
party may be entitled, the reasonable costs and expenses incurred by the prevailing party in conducting the suit, action or proceeding,
including reasonable attorneys' fees and expenses.

 

    	-12-

    	 

    

 

27.         Entire
Agreement. Each party represents and agrees that he or it has read the entire contents of this Agreement and that this Agreement
represents the entire understanding and agreement between MARKIN and VS, and supersedes any and all agreements between MARKIN and
VS concerning the subject matter hereof, including but not limited to, the Employment Agreement, which is hereby terminated in
its entirety, and any and all severance and other post-termination payments and benefits payable to MARKIN by VS contained therein;
provided, however that this Agreement does not replace or supersede that certain Agreement dated April 17, 2006 by and between
VS and MARKIN, which shall remain in full force in effect in accordance with the terms thereof; provided further, that the “Restricted
Period” in Section 3(a) of said agreement is hereby amended to reduce such period from 12 months following termination from
COMPANY to 9 months following termination from COMPANY. MARKIN agrees that no representations or agreements have been made with
respect to these matters other than those contained in this Agreement. In the event MARKIN does not sign this Agreement, he shall
retain only those rights and benefits provided for under the Employment Agreement.

 

28.         Severability.
Each party agrees that, if any of the provisions of this Agreement shall be deemed illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not invalidate or render unenforceable the entire Agreement, but rather the entire Agreement
shall be construed as if not containing the particular illegal, invalid or unenforceable provision or provisions, and the rights
and obligations of MARKIN and VS shall be construed and enforced accordingly. Further, under such circumstances, VS and MARKIN
agree to exercise their best efforts to carry out the original intention of this Agreement and shall make such amendments and take
such steps as may be necessary to ensure the continued validity of this Agreement.

 

    	-13-

    	 

    

 

29.         Venue
and Choice of Law. MARKIN agrees that this Agreement shall be governed by New York law and that any action or proceeding arising
out of this Agreement and/or MARKIN’s employment with VS shall be venued in Monroe County, New York.

 

30.         Section
409A.

 

a)          The
compensation and benefits under this Agreement are intended to comply with or be exempt from the requirements of Section 409A of
the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other official guidance promulgated and issued
thereunder (collectively, “Section 409A”), and this Agreement will be interpreted in a manner consistent with
that intent.

 

b)          The
preceding provisions, however, shall not be construed as a guarantee by VS of any particular tax effect to MARKIN under this Agreement.
VS shall not be liable to MARKIN for any payment made under this Agreement that is determined to result in an additional tax, penalty
or interest under Section 409A, nor for reporting in good faith any payment made under this Agreement as an amount includible in
gross income under Section 409A.

 

c)          References
to “termination of employment” and similar terms used in this Agreement mean, to the extent necessary to comply with
Section 409A, the date that MARKIN first incurs a “separation from service” within the meaning of Section 409A.

 

d)          Notwithstanding
anything in this Agreement to the contrary, if at the time of separation from service with VS, MARKIN is a “specified employee”
as defined in Section 409A, and any payment payable under this Agreement as a result of such separation from service is required
to be delayed by six months pursuant to Section 409A, then VS will make such payment on the date that is six months following your
separation from service with VS. The amount of such payment will equal the sum of the payments that would have been paid to MARKIN
during the six-month period immediately following your separation from service had the payment commenced as of such date. Each
payment under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

    	-14-

    	 

    

 

IN WITNESS WHEREOF, the
undersigned have executed this Separation, Waiver and Release Agreement as of the date first written above.

 

	Dated:	October 24, 2013	 	 	/s/ Jeffrey Markin	 
	 	 	 	 	L. Jeffrey Markin	 
	 	 	 	 	 	 
	 	 	 	 	VirtualScopics, Inc.	 
	 	 	 	 	 	 
	Dated:	October 24, 2013	 	By:	/s/ Mostafa Analoui	 
	 	 	 	 	Mostafa Analoui, Chairman	 

 

    	-15-

    	 

    

 

EXHIBIT A

PRESS RELEASE

Contact:

Nicole Schoenberg

FleishmanHillard

212-453-2445

nicole.schoenberg@fleishman.com

 

VirtualScopics’ Board of Directors
Appoints Eric Converse Interim Chief Executive Officer, Announces Resignation of Jeff Markin

 

Korn Ferry Retained to Initiate Search for
Next CEO

 

ROCHESTER, N.Y. October 25, 2013
– Mostafa Analoui Ph.D., Chairman of the Board of Directors of VirtualScopics, Inc. (NASDAQ: VSCP), a leading provider of
quantitative imaging, today announced the appointment of current board member, Eric Converse as Interim CEO. Mr. Converse succeeds
Jeff Markin, President and CEO since 2006, who has stepped down to pursue other interests.

 

Dr. Analoui also announced that the Board
has retained Korn/Ferry International, a leading executive recruiting firm, to initiate a search process for the next CEO.

 

This management change is in line with
the latest in a series of recent steps led by Dr. Analoui and VirtualScopics’ Board, to unlock future growth, broaden the
company’s offering and expand its global reach. Since taking the Chairman role in August, Dr. Analoui has been initiating
internal actions designed to accelerate new contract awards while enhancing client satisfaction, continued diligence on expenses
to improve profitability and other measures to improve top and bottom line growth.

 

The company also intends to establish a
world-class Scientific Advisory Board (SAB), which will comprise insight and analysis from Dr. Edward Ashton, VirtualScopics’
Chief Scientific Officer, as well as top scientists and researchers from around the world. The SAB will enable VirtualScopics to
continue to maintain its leadership position in delivering innovative technologies that drive value and results for customers and
their patients.

 

-more-

 

    	-16-

    	 

    

 

“This is certainly a unique transitional
period for VirtualScopics, as we believe our innovative technology and continued investment in both research and talent have positioned
us quite well to generate value for our customers, shareholders and employees,” said Dr. Analoui. “We want to recognize
the significant achievements the company has made under Jeff’s leadership and wish him well in his future endeavors. The
Board looks forward to working with Eric to guide the company through this transition and we remain confident in our ability to
successfully execute this next stage of VirtualScopics’ growth.”

 

Mr. Markin said, "I have greatly enjoyed
my tenure at VirtualScopics and am proud of our accomplishments. We’ve laid a strong foundation for success as evidenced
by growth in revenue, margin, cash and new bookings. I wish Mostafa, the Board, and our employees well as they steward VirtualScopics
into a successful and profitable future.”

 

Eric Converse, 47, has been associated
with Nedamco Capital, a privately-held international investment firm since 2002. During his tenure, he has held multiple board
and executive management seats on behalf of the firm, including serving as CEO of Oblicore (Waltham, MA), where he led the sale
of that firm to CA Technologies.  Earlier in his career, Mr. Converse was CEO of Oneswoop.com (London, UK), which was acquired
by Norwich Union Consumer Products, now Aviva. 

 

About VirtualScopics, Inc.

 

VirtualScopics, Inc. is a leading provider
of imaging solutions to accelerate drug and medical device development. VirtualScopics has developed a robust software platform
for analysis and modeling of both structural and functional medical images. In combination with VirtualScopics’ industry-leading
experience and expertise in advanced imaging biomarker measurement, this platform provides a uniquely clear window into the biological
activity of drugs and devices in clinical trial patients, allowing sponsors to make better decisions faster. For more information
about VirtualScopics, visit www.virtualscopics.com.

 

-more-

 

    	-17-

    	 

    

 

Forward Looking Statements

 

The statements contained in this press
release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe
harbors created thereby. These forward-looking statements include, but

 

are not limited to, statements regarding
the expected benefits of the Company’s initiatives on new contract awards, client satisfaction and financial improvements,
the establishment, composition and expected benefits of a Scientific Advisory Board and/or statements preceded by, followed by
or that include the words “believes,” “could,” “expects,” “anticipates,” “estimates,”
“intends,” “plans,” “projects,” “seeks,” or similar expressions. Forward-looking
statements deal with the Company’s current plans, intentions, beliefs and expectations. Investors are cautioned that all
forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the
forward-looking statements. Many of these risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2012 filed with the Securities and Exchange Commission (the “SEC”), and in any
subsequent reports filed with the SEC, all of which are available at the SEC’s website at www.sec.gov. These include without
limitation: the risk of cancellation or delay of customer contracts or specifically as it relates to contact awards, the risk that
they may not get signed.

 

Other risks include the company’s
dependence on its largest customers and risks of contract performance, protection of our intellectual property and the risks of
infringement of the intellectual property rights of others. All forward-looking statements speak only as of the date of this press
release and the Company undertakes no obligation to update such forward-looking statements.

 

###

 

    	-18-SERVICES AGREEMENT

 

This Services Agreement
(this “Agreement”) is entered into by and between VirtualScopics, Inc., a Delaware corporation with its principal
office at 500 Linden Oaks, Rochester, NY 14625 (the “Company”), and Converse & Company, a New Jersey corporation
with its principal office at P.O. Box 15, Mechanicsville, PA 18934 (the “Service Provider”).

 

WITNESSETH

 

WHEREAS,  the
Company wishes to retain the services of the Service Provider, and the Service Provider wishes to provide the Company with its
services, as specified in this Agreement; and

 

WHEREAS,  the
parties wish to set forth in writing their agreements and understanding with respect to provision of services by the Service Provider
to the Company.

 

NOW, THEREFORE,
in consideration of the promises and mutual agreements and undertakings set forth herein, and with the intention to be bound hereby,
the parties hereto agree as follows:

 

		1.	Services

 

		1.1.	The Services. As of the date hereof, the Service Provider shall be engaged by the Company
to provide the Company with management services with respect to the Company's activities as set forth on Exhibit “A”
attached hereto (the “Services”), all in accordance with the terms set forth herein and subject to the instructions
of the Board of Directors of the Company (the “Board”). The Service Provider shall report to the Board, and
shall be subject to the supervision of the Board. The Service Provider shall assume such duties and responsibilities as are customarily
incident to such position and such duties commensurate with the Service Provider's position as may be delegated from time to time
by the Board.

 

		1.2.	Provision of Services. During the term of this Agreement, the Services shall be provided
only by Eric Timothy Converse (the “Individual”), who shall serve as the Company’s interim President and
Chief Executive Officer. The Service Provider represents, warrants and undertakes that the Service Provider’s representations,
warranties, obligations and undertakings set forth in this Agreement shall apply also to the Individual, mutatis mutandis.

 

The Service Provider
represents and warrants that during the term of this Agreement the Individual shall not be engaged in the provision of any additional
business services to the Service Provider or to any third party, without obtaining the Board’s prior written consent, except
as set forth in Section 1.5 or in connection with charitable or civic activities, personal investments, or serving as an executor,
trustee or in some similar fiduciary capacity.

 

		1.3.	Level of Service. The Service Provider shall utilize the highest professional skill, diligence,
ethics and care to ensure that all Services are performed to the reasonable satisfaction of the Company and to provide the expertise
required in connection with the Services.

 

    	Page 1 of 8

    	 

    

 

		1.4.	Service Provider's Representations and Warranties. The Service Provider represents and warrants
that the execution and delivery of this Agreement and the fulfillment of its terms: (i) will not constitute a default under or
conflict with any agreement or other instrument to which it is a party or by which it is bound; and (ii) do not require the consent
of any person or entity. In addition, the Service Provider represents and warrants that it has been provided with copies of the
Company’s policies and procedures set forth on Schedule A, as well as the Board book provided to the Individual upon his
election as a Director of the Company (the “Company Policies”), is familiar with their contents, and understands
its obligation to perform the Services in compliance therewith in furtherance of the Company’s ongoing obligations as a publicly
traded company. Further, with respect to any past engagement of the Service Provider with third parties and with respect to any
permitted engagement of the Service Provider with any third party during the Term (as defined below) (for purposes hereof, such
third parties shall be referred to as “Other Employers”), the Service Provider represents, warrants and undertakes
that: (a) its engagement with the Company is and/or will not be in breach of any of its undertakings toward Other Employers, and
(b) it will not disclose to the Company, nor use, in provision of any services to the Company, any proprietary or confidential
information belonging to any Other Employers.

 

		1.5.	Individual’s Personal Undertakings. Without derogating from the generality of Section
1.2 above and expressly excluding the Individual’s service as a member of the Board of Directors of the Service Provider,
service on the Board of Directors of Swyx Communications AG, and service as a general advisor to Nedamco Capital, the Individual
hereby undertakes that he shall devote substantially all of his business time, attention, skill and effort exclusively for the
performance of the Services under this Agreement. The Individual undertakes that, except as provided under this Agreement, he shall
not engage in any business, commercial or professional activities, during the Term, other than the provisions of the Services hereunder,
without the prior written consent of the Board, except in connection with charitable or civic activities, personal investments,
or serving as an executor, trustee or in some similar fiduciary capacity and provided that such activities will not interfere with
the Individual’s obligations hereunder. Individual agrees to dedicate at least forty (40) hours per week to the performance
of the Services.

 

		1.6.	Location of Service Provider. The Company acknowledges and agrees that the Individual maintains
his physical office at 6893 Sladek Road, New Hope, PA 18938. However, the Individual shall perform the majority of the Services
from the Company's facilities in Rochester, New York. The Service Provider and the Individual acknowledge that the Services, however,
shall involve domestic and possible international travel. The Company shall reimburse the Service Provider and the Individual for
(i) all reasonable living expenses incurred in connection with working at the Company’s facilities in Rochester, New York
(including any hotel fees or apartment rental) and (ii) all reasonable expenses incurred in connection with travel pursuant to
Section 2.2 below. However, these expenses must be pre-approved by the Company.

 

    	Page 2 of 8

    	 

    

 

		2.	Service Provider's Compensation and Reimbursement

 

		2.1.	Monthly Fee. The Company shall pay the Service Provider, as compensation for the provision
of the Services hereunder, a monthly fee of $25,310 (the “Monthly Fee”) payable in arrears on the first business
day of each month during the Term, commencing as of October 21, 2013 (the “Commencement Date”). To the extent
that the Service Provider provides the Services for a partial month, a pro-rata portion of the Monthly Fee shall be payable to
the Service Provider based on the number of days in the partial month period in which the Services were provided.

 

		2.2.	Reimbursement of Expenses. The Company shall reimburse the Service Provider for reasonable
and customary out of pocket expenses incurred by the Individual in connection with the performance of the Services, including reasonable
living and travel expenses, in accordance with the Company’s policy (including the Individual’s preapproved expenses
incurred in connection with travel to the Company’s facilities in Rochester, New York, and in connection with any hotel fees
or apartment rental while performing services at the Company’s facilities in Rochester, New York). The Company shall reimburse
the Service Provider for mobile telephone fees in the amount of $250 per month. Extraordinary expenses shall also require the Company’s
prior written approval. As a condition to reimbursement, the Service Provider shall provide the Company with all invoices, receipts
and other evidence of expenditure as may be reasonably required by the Company from time to time in accordance with its written
policies. The Company shall also reimburse the Service Provider for its documented expenses incurred in the negotiating and drafting
of this Agreement, including attorney’s fees, up to the amount of $2,000.

 

		2.3.	Days of Absence. Throughout the term of this Agreement, the Individual shall be entitled
to be absent and not to provide the Services from time to time pursuant to Company policy, including a one week pre-planned trip
in November 2013 and a pre-planned trip to Europe in December 2013 (with no deduction of the Monthly Fee or other compensation).

 

		2.4.	Exclusive Consideration and Compensation. For the avoidance of any doubt, the Monthly Fee
and the aforementioned reimbursement of expenses constitute the full and final consideration for the Services, and the Service
Provider and/or the Individual shall not be entitled to any additional consideration, of any form, for its services, and such amounts
include any and all taxes, withholding taxes, levies, fees and charges of any kind whatsoever, to the extent that any of the above
items may apply to payments due to the Service Provider and/or the Individual. Individual shall not be eligible for or entitled
to participate in any employee benefits provided by the Company for its employees.

 

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		2.5.	Taxes. The Service Provider shall bear all taxes and duties due with respect to the Services
hereunder and undertakes to pay all such taxes and duties. The Company shall provide Service Provider with an Internal Revenue
Service Form 1099 at the end of each calendar year.

 

		2.6.	Indemnification by the Company. The Company will indemnify the
Service Provider and the Individual for and defend the Service Provider and the Individual from claims arising from the Service
Provider’s performance of the Services to the extent provided in the Company’s bylaws and the Company’s form
of Indemnification Agreement attached hereto as Exhibit “B.” The Company will maintain in effect a Directors and Officers
liability insurance policy during the Term with coverage terms as currently in effect.

 

		2.7.	Indemnification by Service Provider and Individual. Service Provider and Individual hereby
agree to indemnify and hold the Company harmless from and against all loss costs, and expenses, including reasonable attorney’s
fees, incurred by the Company as a result of any gross negligent act, omission, or intentional wrongful conduct of the Service
Provider or Individual or for any breach by the Service Provider or Individual of any of the terms and conditions of this Agreement.

 

		3.	Term; Termination

 

		3.1.	Term. Unless terminated by the Company or the Service Provider in accordance with this Section
3, the initial term of this Agreement (including any period of extension pursuant to the next sentence, the “Term”)
is deemed to have commenced as of the Commencement Date, and shall continue for a period of six (6) months until Friday, April
18, 2014. If mutually agreed to by the Company and the Service Provider, the Term may be extended for additional thirty (30) day
periods upon thirty (30) days prior written notice.

 

		3.2.	Termination for Cause by the Company. The Company may terminate the engagement of the Service
Provider for Cause (as defined herein) by providing the Service Provider with written notice that the Service Provider is terminating
for Cause. The following, as determined by the Board in its reasonable judgment, shall constitute “Cause” for
termination: (i) the Service Provider’s failure to perform (other than by reason of death or disability on the part of the
Individual), or material negligence in performing, its duties and responsibilities to the Company which is not cured within fifteen
(15) days after the Company delivers to the Service Provider a written demand for performance that specifically identifies the
actions or inactions constituting such failure; (ii) a material breach by the Service Provider of any provision of this Agreement
which is not cured within fifteen (15) days after the Company delivers to the Service Provider a written demand for performance
that specifically identifies the material breach; (iii) any act of dishonesty or misconduct, such as for example fraud, embezzlement
or theft, by the Service Provider or the Individual in connection with the performance of its duties and responsibilities to the
Company or any of its affiliates; (iv) other conduct by the Service Provider that is materially harmful to the business, interests
or reputation of Company; or (v) the Individual’s conviction of, or plea of guilty or nolo contendere to (y) any felony or
(z) a misdemeanor involving dishonesty or fraud. If the Company terminates this Agreement for Cause, the Company shall pay the
Service Provider (A) the Monthly Fee (or pro rata portion thereof) accrued through the date of termination, and (B) any unreimbursed
expenses in accordance with Section 2.2 above that were incurred up until the date of termination, but shall have no obligation
to pay any other compensation to the Service Provider. If the Service Provider is unable to perform due to the Individual’s
death or disability, this Agreement shall terminate upon ten (10) days’ notice. Disability shall be defined as the inability
of the Individual to perform his duties for a period of ten (10) business days in any given month.

 

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		3.3.	Termination by Service Provider for Good Reason and Termination by the Company Without Cause.
The Service Provider may terminate the engagement for Good Reason (as defined below) at any time by providing the Company with
written notice that the Service Provider is terminating for Good Reason. The Company may terminate this Agreement without Cause
with written notice to the Service Provider that it is terminating without Cause. If the Service Provider terminates for Good Reason
or the Company terminates without Cause, the Company shall (i) pay the Service Provider the Monthly Fee (or pro rata portion thereof)
accrued up to the date of the termination, (ii) continue to pay the Monthly Fee, at the rate in effect on the date of termination,
for the remainder of the Term; and (iii) pay any unreimbursed expenses in accordance with Section 2.2 above that were incurred
up until the date of termination. The following shall constitute “Good Reason” for purposes of this Section
3: a material breach by the Company of its obligations under this Agreement which is not cured within thirty (30) days after the
Company’s receipt of written notice from the Service Provider of such breach.

 

		3.4.	Termination by Service Provider other than for Good Reason. The Service Provider may terminate
this Agreement at any time upon thirty (30) days’ prior written notice to Company for any reason. If the Service Provider
terminates its term of engagement other than for Good Reason, the Company shall: (i) pay the Service Provider the Monthly Fee (or
pro rata portion thereof) accrued up to the date of the termination; (ii) pay any and all unreimbursed expenses in accordance with
Section 2.2 above that were incurred up until the date of termination; (iii) have no obligation to pay any other compensation to
the Service Provider; and (v) may elect to waive the period of notice, or any portion thereof, and, if it so elects, shall pay
the Service Provider the Monthly Fee (or any prorated portion thereof) for the notice period (or for any remaining portion of the
period).

 

		4.	Notice Addresses

 

The addresses of the
parties for purposes of this Agreement shall be the addresses set forth above or any other address that a party may advise the
other party of in writing (which such writing shall refer to this Section 4). All notices in connection with this Agreement shall
be sent by registered mail, overnight courier or delivered by hand to the addresses set forth above and shall be deemed to have
been delivered to the other party at the earlier of the following: two days, if sent by registered mail or overnight courier or
if delivered by hand, upon actual delivery or proof of delivery (in the event of a refusal to accept it) at the address of the
addressee.

 

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		5.	Independent Contractor

 

		5.1.	The Service Provider agrees and acknowledges that it is performing the Services hereunder as an
independent contractor and that no employer-employee relationship exists or will exist between the Service Provider or the Individual
and the Company.

 

		5.2.	In the event that the Company shall be demanded and/or obligated in accordance with applicable
law to pay the Service Provider any amount, or give the Service Provider any right derived from the existence of employer-employee
relationship between the Service Provider and the Company in excess of the compensation and expense reimbursement provided for
in Section 2 above, the Service Provider shall indemnify the Company for any and all costs, liabilities and expenses it may have
in connection with such demand and/or obligation, including the economic value of such right and including legal expenses.

 

		6.	Indemnification Agreement

 

		6.1.	Together with the execution of this Agreement the parties shall execute the Indemnification Agreement
in the form attached hereto as Exhibit “B.”

 

		7.	Confidentiality and Covenant Not To Compete

 

		7.1	Service Provider and Individual are bound by the Agreement attached hereto as Exhibit “C”
which they have signed.

 

		8.	Return of Company’s Property

 

		8.1	Immediately upon termination of this Agreement or upon Company’s earlier request, Service
Provider shall return to Company all Confidential Information and other items described in the agreement referenced in Section
7 and all originals and copies of any other property or information owned by Company or relating to its business, that Service
Provider has in his possession or under his control, including all documents, papers, books, equipment, files, and samples.

 

		9.	Legal Counsel

 

		9.1	Understanding Voluntary Agreement. Service Provider represents and warrants that it has
been afforded a reasonable opportunity to review this Agreement, to understand its terms, and to discuss it with an attorney of
its choice, and that it knowingly and voluntarily enters into this Agreement.

 

    	Page 6 of 8

    	 

    

 

		9.2	Waiver of Separate Representation. To the extent Service Provider has not engaged separate
legal counsel to represent it in connection with this Agreement, the parties acknowledge and agree that their respective interests
in this Agreement are in conflict, that they have the right to retain independent counsel, that they have been fully informed about
this right and the conflicts of interest that arise from retaining the same legal counsel to represent both of them, and that this
Section constitutes written disclosure of these conflicts. The parties further affirm that they are waiving separate representation
freely, voluntarily, and with full knowledge of the effects of this waiver. No party shall at any time claim that this Agreement
is void or unenforceable in any respect because of the lack of use of independent counsel, or that the legal counsel who prepared
this Agreement acted improperly in doing so.

 

		10.	Miscellaneous

 

		10.1.	The laws of the State of New York shall apply to this Agreement. The parties hereby consent to
the jurisdiction of the state and federal courts in the State of New York and any action or proceeding involving this Service Agreement
and the parties shall be venued in Monroe County or in the Western District of New York. Accordingly, with respect to any such
court action, the Service Provider and Individual: (a) submit to the personal jurisdiction of such courts; (b) consent to service
of process; and (c) waive any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.

 

		10.2.	No failure, delay of forbearance of either party in exercising any power or right hereunder shall
in any way restrict or diminish such party’s rights and powers under this Agreement, or operate as a waiver of any breach
or nonperformance by either party of any terms of conditions hereof.

 

		10.3.	The Service Provider and Individual may not assign or delegate any of their rights, duties or undertakings
under this Agreement to any third party without the express prior written consent of the Company, and any unauthorized assignment
or delegation shall be null and void.

 

		10.4.	In the event it shall be determined under any applicable law that a certain provision set forth
in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement.

 

		10.5.	The preamble, schedules and exhibits to this Agreement constitute an integral and indivisible part
hereof.

 

		10.6.	This Agreement, and the agreements attached hereto, constitute the entire understanding and agreement
between the parties hereto, supersedes any and all prior discussions, agreements and correspondence with regard to the subject
matter hereof, and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by the
parties hereto.

 

		10.7.	The Service Provider and Individual acknowledge and confirm that all terms of this Agreement are
personal and confidential, and undertake to keep such term in confidence and refrain from disclosing such terms to any third party.

 

    	Page 7 of 8

    	 

    

 

		10.8.	Each individual executing this Agreement on behalf of any party represents and warrants that they
are fully authorized to execute and deliver this Agreement on behalf of such party in accordance with its terms, and that this
Agreement is not in violation of, inconsistent with, or contrary to the provisions of any agreement to which it is a party.

 

		10.9.	General Rules of Construction. The Parties have participated jointly in the negotiating
and drafting of this Agreement. If a question concerning intent or interpretation arises, no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue or authorship. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all related rules and regulations unless the context requires otherwise.

 

IN WITNESS WHEREOF,
the parties have caused this Services Agreement to be executed by their duly authorized representatives.

 

	VIRTUALSCOPICS, INC.	 	CONVERSE & COMPANY
	 	 	 	 	 
	By: 	/s/ Terence A. Walts	 	By: 	/s/ Eric Timothy Converse
	 	Terence A. Walts	 	 	Eric Timothy Converse
	 	Chairman, Compensation Committee to the Board of Directors	 	 	 
	 	 	 	 	 
	Dated: October 25, 2013	 	Dated: October 25, 2013

 

Eric Timothy Converse’s Acknowledgement
and Agreement:

 

I, the undersigned,
Eric Timothy Converse, hereby represent and warrant that all representations and warranties of the Service Provider hereunder shall
be deemed as my representations and warranties and I hereby undertake to comply with all undertakings of the Service Provider hereunder
as if such undertakings were provided by me.

 

	/s/ Eric Timothy Converse	 	 
	Eric Timothy Converse	 	Dated: October 25, 2013

 

    	Page 8 of 8

    	 

    

 

Schedule A

 

Company Policies

 

1. Code
of Business Conduct and Ethics

 

2. Insider
Trading Policies

 

3. Fair
Disclosure Policy

 

4. Disclosure
Controls and Procedures Policy

 

5. Related
Party Transaction Policy

 

    	 

    	 

    

 

Exhibit “A”

 

The Services

 

The Service Provider shall provide the Company
with the following services:

 

		1.	Eric Timothy Converse (the “Individual”) shall provide the Company with management
services as its interim President and Chief Executive Officer upon appointment by the Board of Directors of the Corporation as
follows: All management services customarily performed by a Chief Executive Officer and all related duties, responsibilities and
obligations customarily associated with such position.

 

		2.	During the Term of the Services Agreement, the Individual shall be available to provide services
in Rochester, New York during most business hours Monday through Friday and additional hours necessary for business-related travel,
with the exception of any Days of Absence pursuant to Section 2.3 of the Services Agreement.

 

		3.	Service Provider and the Individual shall not, without first obtaining prior approval from the
Board: (a) hire or terminate any employee at the manager level and above; (b) approve or authorize any material modification to
or material deviation from the Company’s annual budget, as approved and amended by the Board; (c) approve or authorize the
payment of any capital expenditures in excess of $100,000 during any 12-month period other than a specific identifiable line item
previously approved in the annual budget (covering the year in which such action is sought to be taken by the Company); or (d)
approve, authorize or otherwise permit any subsidiary to take any action which, if taken by the Company, would require the written
approval of the Board pursuant to this provision.

 

    	 

    	 

    

 

Exhibit “B”

 

INDEMNIFICATION AGREEMENT

 

This Indemnification
Agreement, dated as of October 25, 2013, is made by and between VirtualScopics, Inc., a Delaware corporation (the “Corporation”),
and Eric Converse (the “Indemnitee”).

 

RECITALS

 

A.          The
Corporation recognizes that competent and experienced persons are increasingly reluctant to serve or to continue to serve as directors
or officers of corporations unless they are protected by comprehensive liability insurance or indemnification, or both, due to
increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of such directors and officers;

 

B.          The
statutes and judicial decisions regarding the duties of directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors and officers with adequate, reliable knowledge of legal risks to which they are exposed
or information regarding the proper course of action to take;

 

C.          The
Corporation and Indemnitee recognize that plaintiffs often seek damages in such large amounts and the costs of litigation may be
so enormous (whether or not the case is meritorious), that the defense and/or settlement of such litigation is often beyond the
personal resources of directors and officers;

 

D.          The
Corporation believes that it is unfair for its directors and officers to assume the risk of huge judgments and other expenses which
may occur in cases in which the director or officer received no personal profit and in cases where the director or officer was
not culpable;

 

E.          The
Corporation, after reasonable investigation, has determined that the liability insurance coverage presently available to the Corporation
may be inadequate in certain circumstances to cover all possible exposure for which Indemnitee should be protected. The Corporation
believes that the interests of the Corporation and its stockholders would best be served by a combination of such insurance and
the indemnification by the Corporation of the directors and officers of the Corporation;

 

F.          The
Corporation’s ByLaws require the Corporation to indemnify its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law (the “DGCL”). The ByLaws expressly provide that the indemnification provisions set
forth therein are not exclusive, and contemplate that contracts may be entered into between the Corporation and its directors and
officers with respect to indemnification;

 

    	 

    	 

    

 

G.          Section
145 of the DGCL (“Section 145”), under which the Corporation is organized, empowers the Corporation to indemnify
its officers, directors, employees and agents by agreement and to indemnify persons who serve, at the request of the Corporation,
as the directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification
provided by Section 145 is not exclusive;

 

H.          Section
102(b)(7) of the DGCL allows a corporation to include in its certificate of incorporation a provision limiting or eliminating the
personal liability of a director for monetary damages in respect of claims by shareholders and corporations for breach of certain
fiduciary duties, and the Corporation has so provided in its Certificate of Incorporation that each Director shall be exculpated
from such liability to the maximum extent permitted by law;

 

I.          The
Board of Directors of the Corporation (the “Board of Directors”) has determined that contractual indemnification as
set forth herein is not only reasonable and prudent but also promotes the best interests of the Corporation and its stockholders;

 

J.          The
Corporation desires and has requested Indemnitee to serve or continue to serve as a director or officer of the Corporation free
from undue concern for unwarranted claims for damages arising out of or related to such services to the Corporation; and

 

K.          Indemnitee
is willing to serve, continue to serve or to provide additional service for or on behalf of the Corporation on the condition that
he is furnished the indemnity provided for herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration
of the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1. Generally.

 

To the fullest extent
permitted by the laws of the State of Delaware:

 

(a) The Corporation shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Indemnitee is
or was or has agreed to serve at the request of the Corporation as a director, officer, employee or agent of the Corporation, or
while serving as a director or officer of the Corporation, is or was serving or has agreed to serve at the request of the Corporation
as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, partner or manager or similar capacity)
of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of any action
alleged to have been taken or omitted in such capacity. For the avoidance of doubt, the foregoing indemnification obligation includes,
without limitation, claims for monetary damages against Indemnitee in respect of an alleged breach of fiduciary duties, to the
fullest extent permitted under Section 102(b)(7) of the DGCL as in existence on the date hereof.

 

    	 

    	 

    

 

(b) The indemnification
provided by this Section 1 shall be from and against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such action, suit
or proceeding and any appeal therefrom, but shall only be provided if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action,
suit or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

 

(c) Notwithstanding the
foregoing provisions of this Section 1, in the case of any threatened, pending or completed action or suit by or in the right of
the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee
or agent of the Corporation, or while serving as a director or officer of the Corporation, is or was serving or has agreed to serve
at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, no indemnification shall be made in respect of any claim, issue or matter as
to which Indemnitee shall have been adjudged to be liable to the Corporation unless, and only to the extent that, the Delaware
Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem proper.

 

(d) The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

Section 2. Successful
Defense; Partial Indemnification. To the extent that Indemnitee has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 1 hereof or in defense of any claim, issue or matter therein, Indemnitee
shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith.
For purposes of this Agreement and without limiting the foregoing, if any action, suit or proceeding
is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse
to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by
Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner Indemnitee reasonably believed to be
in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that
Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful, Indemnitee shall be considered for the purposes
hereof to have been wholly successful with respect thereto.

 

    	 

    	 

    

 

If Indemnitee is entitled
under any provision of this Agreement to indemnification by the Corporation for some or a portion of the expenses (including attorneys’
fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection with any action, suit, proceeding or investigation, or in defense of any claim, issue or matter therein, and any
appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the
portion of such expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement to which Indemnitee
is entitled.

 

Section 3. Determination
That Indemnification Is Proper. Any indemnification hereunder shall (unless otherwise ordered by a court) be made by the Corporation
unless a determination is made that indemnification of such person is not proper in the circumstances because he or she has not
met the applicable standard of conduct set forth in Section 1(b) hereof. Any such determination shall be made (i) by a majority
vote of the directors who are not parties to the action, suit or proceeding in question (“disinterested directors”),
even if less than a quorum, (ii) by a majority vote of a committee of disinterested directors designated
by majority vote of disinterested directors, even if less than a quorum, (iii) by a majority vote of a quorum of the outstanding
shares of stock of all classes entitled to vote on the matter, voting as a single class, which quorum shall consist of stockholders
who are not at that time parties to the action, suit or proceeding in question, (iv) by independent legal counsel, or (v) by a
court of competent jurisdiction.

 

Section 4. Advance
Payment of Expenses; Notification and Defense of Claim.

 

(a) Expenses (including
attorneys’ fees) incurred by Indemnitee in defending a threatened or pending civil, criminal, administrative or investigative
action, suit or proceeding, or in connection with an enforcement action pursuant to Section 5(b), shall be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding within thirty (30) days after receipt by the Corporation
of (i) a statement or statements from Indemnitee requesting such advance or advances from time to time, and (ii) an undertaking
by or on behalf of Indemnitee to repay such amount or amounts, only if, and to the extent that, it shall ultimately be determined
that Indemnitee is not entitled to be indemnified by the Corporation as authorized by this Agreement or otherwise. Such undertaking
shall be accepted without reference to the financial ability of Indemnitee to make such repayment. Advances shall be unsecured
and interest-free.

 

(b) Promptly after receipt
by Indemnitee of notice of the commencement of any action, suit or proceeding, Indemnitee shall, if a claim thereof is to be made
against the Corporation hereunder, notify the Corporation of the commencement thereof. The failure to promptly notify the Corporation
of the commencement of the action, suit or proceeding, or Indemnitee’s request for indemnification, will not relieve the
Corporation from any liability that it may have to Indemnitee hereunder, except to the extent the Corporation is prejudiced in
its defense of such action, suit or proceeding as a result of such failure.

 

    	 

    	 

    

 

(c) In the event the
Corporation shall be obligated to pay the expenses of Indemnitee with respect to an action, suit or proceeding, as provided in
this Agreement, the Corporation, if appropriate, shall be entitled to assume the defense of such action, suit or proceeding, with
counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Corporation, the Corporation
will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect
to the same action, suit or proceeding, provided that (1) Indemnitee shall have the right to employ Indemnitee’s own counsel
in such action, suit or proceeding at Indemnitee’s expense and (2) if (i) the employment of counsel by Indemnitee has been
previously authorized in writing by the Corporation, (ii) counsel to the Corporation or Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position, or reasonably believes that a conflict is likely to arise, on any significant
issue between the Corporation and Indemnitee in the conduct of any such defense or (iii) the Corporation shall not, in fact, have
employed counsel to assume the defense of such action, suit or proceeding, then the fees and expenses of Indemnitee’s counsel
shall be at the expense of the Corporation, except as otherwise expressly provided by this Agreement. The Corporation shall not
be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation
or as to which counsel for the Corporation or Indemnitee shall have reasonably made the conclusion provided for in clause (ii)
above.

 

(d) Notwithstanding any
other provision of this Agreement to the contrary, to the extent that Indemnitee is, by reason of Indemnitee’s corporate
status with respect to the Corporation or any corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
which Indemnitee is or was serving or has agreed to serve at the request of the Corporation, a witness or otherwise participates
in any action, suit or proceeding at a time when Indemnitee is not a party in the action, suit or proceeding, the Corporation shall
indemnify Indemnitee against all expenses (including attorneys’ fees) actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection therewith.

 

Section 5. Procedure
for Indemnification

 

(a) To obtain indemnification,
Indemnitee shall promptly submit to the Corporation a written request, including therein or therewith such documentation and information
as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled
to indemnification. The Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors
in writing that Indemnitee has requested indemnification.

 

(b) The Corporation’s
determination whether to grant Indemnitee’s indemnification request shall be made promptly, and in any event within 60 days
following receipt of a request for indemnification pursuant to Section 5(a). The right to indemnification as granted by Section
1 of this Agreement shall be enforceable by Indemnitee in any court of competent jurisdiction if the Corporation denies such request,
in whole or in part, or fails to respond within such 60-day period. It shall be a defense to any such action (other than an action
brought to enforce a claim for the advance of costs, charges and expenses under Section 4 hereof where the required undertaking,
if any, has been received by the Corporation) that Indemnitee has not met the standard of conduct set forth in Section 1 hereof,
but the burden of proving such defense by clear and convincing evidence shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or one of its committees, its independent legal counsel, and its stockholders) to
have made a determination prior to the commencement of such action that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct set forth in Section 1 hereof, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors or one of its committees, its independent legal counsel,
and its stockholders) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create
a presumption that Indemnitee has or has not met the applicable standard of conduct. The Indemnitee’s expenses (including
attorneys’ fees) incurred in connection with successfully establishing Indemnitee’s right to indemnification, in whole
or in part, in any such proceeding or otherwise shall also be indemnified by the Corporation.

 

    	 

    	 

    

  

(c) The Indemnitee shall
be presumed to be entitled to indemnification under this Agreement upon submission of a request for indemnification pursuant to
this Section 5, and the Corporation shall have the burden of proof in overcoming that presumption in reaching a determination contrary
to that presumption. Such presumption shall be used as a basis for a determination of entitlement to indemnification unless the
Corporation overcomes such presumption by clear and convincing evidence.

 

Section 6. Insurance
and Subrogation.

 

(a) The Corporation may
purchase and maintain insurance on behalf of Indemnitee who is or was or has agreed to serve at the request of the Corporation
as a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability
asserted against, and incurred by, Indemnitee or on Indemnitee’s behalf in any such capacity, or arising out of Indemnitee’s
status as such, whether or not the Corporation would have the power to indemnify Indemnitee against such liability under the provisions
of this Agreement. To the extent that the Corporation maintains an insurance policy or policies providing liability insurance for
directors, officers, employees, or agents or fiduciaries of the Corporation or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise that such person serves at the request of the Corporation, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any
director, officer, employee, agent or fiduciary under such policy or policies. If the Corporation has such insurance in effect
at the time the Corporation receives from Indemnitee any notice of the commencement of a proceeding, the Corporation shall give
prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the policy.
The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee,
all amounts payable as a result of such proceeding in accordance with the terms of such policy.

 

(b) In the event of any
payment by the Corporation under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee with respect to any insurance policy, who shall execute all papers required and take all action
necessary to secure such rights, including execution of such documents as are necessary to enable the Corporation to bring suit
to enforce such rights in accordance with the terms of such insurance policy. The Corporation shall pay or reimburse all expenses
actually and reasonably incurred by Indemnitee in connection with such subrogation.

 

    	 

    	 

    

  

(c) The Corporation shall
not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (including, but not limited
to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) if and to the extent that Indemnitee has
otherwise actually received such payment under this Agreement or any insurance policy, contract, agreement or otherwise.

 

Section 7. Certain
Definitions. For purposes of this Agreement, the following definitions shall apply:

 

(a) The term “action,
suit or proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed claim, action,
suit or proceeding, whether civil, criminal, administrative or investigative.

 

(b) The term “by
reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Corporation, or while serving as a director
or officer of the Corporation, is or was serving or has agreed to serve at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise” shall
be broadly construed and shall include, without limitation, any actual or alleged act or omission to act.

 

(c) The term “expenses”
shall be broadly and reasonably construed and shall include, without limitation, all direct and indirect costs of any type or nature
whatsoever (including, without limitation, all attorneys’ fees and related disbursements, appeal bonds, other out-of-pocket
costs and reasonable compensation for time spent by Indemnitee for which Indemnitee is not otherwise compensated by the Corporation
or any third party, provided that the rate of compensation and estimated time involved is approved by the Board, which approval
shall not be unreasonably withheld), actually and reasonably incurred by Indemnitee in connection with either the investigation,
defense or appeal of a proceeding or establishing or enforcing a right to indemnification under this Agreement, Section 145 of
the General Corporation Law of the State of Delaware or otherwise.

 

(d) The term “judgments,
fines and amounts paid in settlement” shall be broadly construed and shall include, without limitation, all direct and indirect
payments of any type or nature whatsoever (including, without limitation, all penalties and amounts required to be forfeited or
reimbursed to the Corporation), as well as any penalties or excise taxes assessed on a person with respect to an employee benefit
plan.

 

(e) The term “Corporation”
shall include, without limitation and in addition to the resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation
as he or she would have with respect to such constituent corporation if its separate existence had continued.

 

    	 

    	 

    

 

(f) The term “other
enterprises” shall include, without limitation, employee benefit plans.

 

(g) The term “serving
at the request of the Corporation” shall include, without limitation, any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries.

 

(h) A person who acted
in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation”
as referred to in this Agreement.

 

Section 8. Limitation
on Indemnification. Notwithstanding any other provision herein to the contrary, the Corporation shall not be obligated pursuant
to this Agreement:

 

(a) Claims Initiated
by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to an action, suit or proceeding (or part thereof)
initiated by Indemnitee, except with respect to an action, suit or proceeding brought to establish or enforce a right to indemnification
(which shall be governed by the provisions of Section 8(b) of this Agreement), unless such action, suit or proceeding (or part
thereof) was authorized or consented to by the Board of Directors of the Corporation.

 

(b) Action for Indemnification.
To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any action, suit or proceeding instituted by Indemnitee
to enforce or interpret this Agreement, unless Indemnitee is successful in establishing Indemnitee’s right to indemnification
in such action, suit or proceeding, in whole or in part, or unless and to the extent that the court in such action, suit or proceeding
shall determine that, despite Indemnitee’s failure to establish their right to indemnification, Indemnitee is entitled to
indemnity for such expenses; provided, however, that nothing in this Section 8(b) is intended to limit the Corporation’s
obligation with respect to the advancement of expenses to Indemnitee in connection with any such action, suit or proceeding instituted
by Indemnitee to enforce or interpret this Agreement, as provided in Section 4 hereof.

 

(c) Section 16 Violations.
To indemnify Indemnitee on account of any proceeding with respect to which final judgment is rendered against Indemnitee for payment
or an accounting of profits arising from the purchase or sale by Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or any similar successor statute.

 

    	 

    	 

    

 

(d) Non-compete and
Non-disclosure. To indemnify Indemnitee in connection with proceedings or claims involving the enforcement of non-compete and/or
non-disclosure agreements or the non-compete and/or non-disclosure provisions of employment, consulting or similar agreements the
Indemnitee may be a party to with the Corporation, or any subsidiary of the Corporation or any other applicable foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, if any.

 

Section 9. Certain
Settlement Provisions. The Corporation shall have no obligation to indemnify Indemnitee under this Agreement for amounts paid
in settlement of any action, suit or proceeding without the Corporation’s prior written consent, which shall not be unreasonably
withheld. The Corporation shall not settle any action, suit or proceeding in any manner that would impose any fine or other obligation
on Indemnitee without Indemnitee’s prior written consent, which shall not be unreasonably withheld.

 

Section 10. Savings
Clause. If any provision or provisions of this Agreement shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify Indemnitee as to costs, charges and expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative
or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion
of this Agreement that shall not have been invalidated and to the full extent permitted by applicable law.

 

Section 11. Contribution.
In order to provide for just and equitable contribution in circumstances in which the indemnification provided for herein is held
by a court of competent jurisdiction to be unavailable to Indemnitee in whole or in part, it is agreed that, in such event, the
Corporation shall, to the fullest extent permitted by law, contribute to the payment of Indemnitee’s costs, charges and expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, in an amount that is just and equitable in the circumstances, taking
into account, among other things, contributions by other directors and officers of the Corporation or others pursuant to indemnification
agreements or otherwise; provided, that, without limiting the generality of the foregoing, such contribution shall not be required
where such holding by the court is due to (i) the failure of Indemnitee to meet the standard of conduct set forth in Section 1
hereof, or (ii) any limitation on indemnification set forth in Section 6(c), 8 or 9 hereof.

 

Section 12. Form
and Delivery of Communications. Any notice, request or other communication required or permitted to be given to the parties
under this Agreement shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or
courier service, or certified or registered mail, return receipt requested, postage prepaid, to the parties at the following addresses
(or at such other addresses for a party as shall be specified by like notice):

 

	 	If to the Corporation:
	 	 
	 	VirtualScopics, Inc.
	 	350 Linden Oaks
	 	Rochester, New York 14625

 

    	 

    	 

    

 

	 	Attn: L. Jeffrey Markin, Chief Executive Officer 
	 	Facsimile: (585) 218-7350
	 	 
	 	If to Indemnitee:
	 	 
	 	Eric Converse
	 	_______________________
	 	_______________________
	 	_______________________
	 	Facsimile: ______________

 

Section 13. Subsequent
Legislation. If the General Corporation Law of Delaware is amended after adoption of this Agreement to expand further the indemnification
permitted to directors or officers, then the Corporation shall indemnify Indemnitee to the fullest extent permitted by the General
Corporation Law of Delaware, as so amended.

 

Section
14. Nonexclusivity. The provisions for indemnification and advancement of expenses set forth in this Agreement shall
not be deemed exclusive of any other rights which Indemnitee may have under any provision of law, the Corporation’s Certificate
of Incorporation or ByLaws, in any court in which a proceeding is brought, the vote of the Corporation’s stockholders or
disinterested directors, other agreements or otherwise, and Indemnitee’s rights hereunder shall continue after Indemnitee
has ceased acting as an agent of the Corporation and shall inure to the benefit of the heirs, executors and administrators of Indemnitee.
However, no amendment or alteration of the Corporation’s Certificate of Incorporation or ByLaws or any other agreement shall
adversely affect the rights provided to Indemnitee under this Agreement

 

Section 15. Enforcement.
The Corporation shall be precluded from asserting in any judicial proceeding that the procedures and presumptions of this Agreement
are not valid, binding and enforceable. The Corporation agrees that its execution of this Agreement shall constitute a stipulation
by which it shall be irrevocably bound in any court of competent jurisdiction in which a proceeding by Indemnitee for enforcement
of his rights hereunder shall have been commenced, continued or appealed, that its obligations set forth in this Agreement are
unique and special, and that failure of the Corporation to comply with the provisions of this Agreement will cause irreparable
and irremediable injury to Indemnitee, for which a remedy at law will be inadequate. As a result, in addition to any other right
or remedy Indemnitee may have at law or in equity with respect to breach of this Agreement, Indemnitee shall be entitled to injunctive
or mandatory relief directing specific performance by the Corporation of its obligations under this Agreement.

 

Section 16. Interpretation
of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to Indemnitee to the fullest extent now or hereafter permitted by law.

 

    	 

    	 

    

 

Section 17. Entire
Agreement. This Agreement and the documents expressly referred to herein constitute the entire agreement between the parties
hereto with respect to the matters covered hereby, and any other prior or contemporaneous oral or written understandings or agreements
with respect to the matters covered hereby are expressly superceded by this Agreement.

 

Section 18. Modification
and Waiver. No supplement, modification, waiver or amendment of this Agreement shall be binding unless executed in writing
by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

Section 19. Successor
and Assigns. All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall
be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives.
The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of the Corporation, by written agreement in form and substance reasonably
satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform if no such succession had taken place.

 

Section
20. Service of Process and Venue. For purposes of any claims or proceedings to enforce this agreement, the Corporation
consents to the jurisdiction and venue of any federal or state court of competent jurisdiction in the states of Delaware and New
York, and waives and agrees not to raise any defense that any such court is an inconvenient forum or any similar claim.

 

Section 21. Supersedes
Prior Agreement. This Agreement supercedes any prior indemnification agreement between Indemnitee and the Corporation or its
predecessors.

 

Section 22. Governing
Law. This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware, as applied
to contracts between Delaware residents entered into and to be performed entirely within Delaware. If a court of competent jurisdiction
shall make a final determination that the provisions of the law of any state other than Delaware govern indemnification by the
Corporation of its officers and directors, then the indemnification provided under this Agreement shall in all instances be enforceable
to the fullest extent permitted under such law, notwithstanding any provision of this Agreement to the contrary.

 

Section 23. Employment
Rights. Nothing in this Agreement is intended to create in Indemnitee any right to employment or continued employment.

 

Section 24. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument, notwithstanding that both parties are not signatories to the original or same
counterpart.

 

    	 

    	 

    

 

Section 25. Headings.
The section and subsection headings contained in this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

 

IN WITNESS WHEREOF,
this Agreement has been duly executed and delivered to be effective as of the date first above written.

 

	 	VirtualScopics, Inc.
	 	 	 
	 	By	 
	 	Name:  	James Groff
	 	Title:  	Acting Chief Financial Officer
	 	 	 
	 	INDEMNITEE:
	 	 	 
	 	 
	 	Eric Converse

 

    	 

    	 

    

 

Exhibit “C”

 

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

 

THIS CONFIDENTIALITY
AND NON-COMPETITION AGREEMENT (this "Agreement") is made as of this 25th day of October, 2013, by and between
VIRTUALSCOPICS, INC., a Delaware corporation with its principal office at 500 Linden Oaks, Rochester, NY 14625 (the "Company"),
and Converse & Company, a
New Jersey corporation with its principal office at P.O. Box 15, Mechanicsville, PA 18934 ("Contractor"), and
Eric TIMOTHY Converse, a principal
and executive of Contractor with a mailing address of P.O. Box 15, Mechanicsville, PA 18934 ("Principal").

 

RECITALS:

 

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

 

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

 

WHEREAS, the Company
and Contractor are parties to that certain Services Agreement of even date herewith (the "Services Agreement"),
pursuant to which the Company has engaged Contractor to provide certain management services to the Company, and Principal will
be the primary representative of Contractor performing such services;

 

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

 

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

 

PROVISIONS:

 

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

 

    	 

    	 

    

  

1.           Confidential
Information. 

 

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

 

(b)          Confidentiality
Obligations. Contractor and Principal acknowledge 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 Contractor's and Principal’s performance
of their respective obligations under the Services Agreement. Contractor and Principal agree, indefinitely:

 

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

 

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

 

(iii)          Not
to make or use any copies, synopses or summaries of oral or written material made available by Company to Contractor and/or Principal,
except as are necessary to carry out their respective duties and/or obligations under the Services Agreement.

 

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

 

(v)          In
the event Contractor and/or Principal are 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 or upon any termination or expiration of the engagement of Contractor and
Principal by Company, Contractor and Principal will promptly return to Company all written material and other documentation which
includes any of the Confidential Information, and will, at Company's request, provide Company with a written certification that
they have done so.

 

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

 

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

 

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

 

Contractor
and Principal further acknowledge that they owe a fiduciary duty to the Company because of the Confidential Information
they will create or be exposed to. This duty encompasses a duty to act in good faith and to faithfully serve and be mindful of
Company's interests. It is also understood that Contractor and Principal upon any termination
of their engagement by the Company would be in an advantageous position, because of the Confidential Information and proprietary
business information known to them, to obtain the business of and to serve the Company’s customers; it is further agreed
that the use of such Confidential Information and other proprietary information to obtain the business of the Company’s customers
would be a breach of Contractor's and Principal's fiduciary responsibilities to the Company and
of this Agreement.

 

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

 

    	 

    	 

    

 

3.           Restrictive
Covenants.

 

(a)          Based
on the information in Section 2 of this Agreement, and in consideration of the Company entering into the Services Agreement and
engaging Contractor and Principal to perform services thereunder, it is agreed that for so long
as Contractor and/or Principal are performing the management services for the Company under the
Services Agreement and for a period of twelve (12) months thereafter (the “Restrictive Period”), neither Contractor
nor Principal shall, except on behalf of the Company, directly or indirectly, by itself or himself, or through or on behalf
of, or in conjunction with, any other person, persons, company, partnership or other entity which Contractor
and/or Principal is directly or indirectly associated, own, operate, participate in the management or control of, be employed
by, or act as a consultant to any enterprise in the United States or Europe engaged in the business of performing services or producing
and/or selling products which compete directly with the Business, products or services of Company.

 

(b)          Contractor
and Principal agree that during the Restrictive Period, neither Contractor nor Principal shall directly or indirectly solicit or
induce or attempt to solicit or induce any employee, current or future, of the Company to leave the Company for any reason whatsoever
or hire any current or future employees of the Company.

 

(c)          Contractor
and Principal agree that during the Restrictive Period, neither Contractor nor Principal shall directly or indirectly solicit the
trade of or trade with any customer or prospective customer of the Company, except that during his period of engagement Contractor
and Principal may solicit customers for legitimate business purposes for the benefit of the Company.

 

(d)          Contractor
and Principal agree not to take advantage of, use, acquire, or usurp any business opportunities of which Contractor and/or Principal
are made aware during their engagement by the Company. All such business opportunities shall be for the sole benefit of the Company,
and Contractor and Principal may not pursue such business opportunities for anyone other than the Company, unless the Company expressly
consents in writing or until one (1) year after termination of Contractor's and Principal's engagement by the Company under the
Services Agreement.

 

(e)          Contractor
and Principal represent and warrant that their experience and capabilities are such that the restrictive covenants set forth herein
will not prevent either of them from earning a livelihood and that Contractor and Principal will be fully able to earn an adequate
livelihood for itself and himself if any of such provisions should be specifically enforced against Contractor and/or Principal.

 

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

 

    	 

    	 

    

 

4.           Intellectual
Property Rights.

 

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

 

(b)          Assignment
of Inventions. Contractor and Principal agree that neither Contractor
nor Principal shall have any proprietary interest in any work product developed or used by Contractor
and/or Principal and arising out of their engagement by the Company. Contractor and Principal
shall, from time to time, as may be requested by the Company, do all things which may be necessary to establish or document
the Company’s ownership in any such work product including, but not limited to, execution of appropriate copyright applications
or assignments.

 

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

 

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

 

    	 

    	 

    

 

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

 

Further, Contractor
and Principal agree, upon the request of the Company, to take all steps necessary to cause any third party to promptly and
fully disclose and assign all patents, copyrights and other intellectual property created by Contractor
and/or Principal and such third party during the period of Contractor's and Principal's
engagement by Company.

 

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

 

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

 

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

 

7.         General.

 

(a)          This
Agreement:

 

    	 

    	 

    

 

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

 

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

 

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

 

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

 

(v)          may
not be assigned by Contractor or Principal, but may be assigned by the Company.

 

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

 

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

 

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

 

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

 

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

 

	VIRTUALSCOPICS, INC.	 	CONVERSE & COMPANY
	 	 	 	 	 
	By: 	 	 	By: 	 
	 	Terence A. Walts	 	 	Eric Timothy Converse
	 	Chairman, Compensation Committee	 	 	 
	 	to the Board of Directors	 	 	 
	 	 	 	 	 
	Dated: _____________, 2013	 	Dated: ____________________, 2013

 

	 	 
	 	ERIC TIMOTHY CONVERSE
	 	 
	 	 
	 	 
	 	Dated: ____________________, 2013

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