EXHIBIT 10.7 SALE OF INTELLECTUAL PROPERTY AGREEMENT

This Sale of Intellectual Property Agreement (“Agreement”) is made this fifth day of April, 2002 (“Effective Date”), between the University of Rochester, an educational institution chartered by the State of New York with offices at 518 Hylan Building, P.O. Box 271040, Rochester, New York 14627 (“Rochester”), and VirtualScopics, LLC, a for-profit New York limited liability company with offices at 160 Office Parkway, Pittsford, New York 14534 (“VirtualScopics”).

Rochester and VirtualScopics are parties to a certain License Agreement, dated December 13, 2000 and amended on May 18, 2001 (“License Agreement”), pursuant to which Rochester licensed certain intellectual property to VirtualScopics. In return for a portion of the equity position in VirtualScopics held by the Research Foundation of the University of Rochester, Rochester waived any up-front license fees from VirtualScopics for the license rights granted in the License Agreement.

In connection with a proposed investment in VirtualScopics by Pfizer Corporation (“Pfizer”), VirtualScopics has requested that Rochester sell the IP (defined below) to VirtualScopics in accordance with the terms of this Agreement, and Rochester is willing to do so.

Therefore, in consideration of the premises and promises in this Agreement, the parties agree as follows:

1.      Definitions

Capitalized terms not defined elsewhere herein or in the License Agreement will have the meanings set forth below.

1.1      “ Domain Names ” means “VirtualScopics.com” and “VirtualScopic.com.”

1.2      “ Exhibit ” means an Exhibit further identified by a Section number (e.g., Exhibit 1.6 for the Patent Rights; Exhibit 2.2 for the form of Patent Assignment, Exhibit 2.3 for the form of Domain Name Assignment, etc.) which is attached to this Agreement and is hereby incorporated by reference.

1.3      " Governmental Authority " means any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether federal, state or local (domestic or foreign), including, without limitation, the U.S. Patent and Trademark Office (the "PTO").

1.4      “ IP ” means the Patent Rights and Domain Names.

1.5      “ Operating Agreement ” means the Second Amended and Restated Operating Agreement of VirtualScopics, LLC, which will be dated and executed on or before the closing of the Pfizer Transaction.

1.6      “ Patent Rights ” means all issued patents, United States provisional patent applications, United States patent applications, and Patent Cooperation Treaty patent applications listed in Exhibit 1.6 and inventions disclosed therein and any divisions, continuations, continuations-in-part (to the extent directed to subject matter specifically described in their respective parent applications), reissues, reexaminations, renewals and substitutions thereof (including, without limitation, remedies against infringements thereof and rights of protection of all interest therein under the law of all jurisdictions); and any and all foreign patents and patent applications that claim priority from any of the foregoing.

1.7      “ Pfizer Transaction ” means the execution of the Securities Purchase Agreement, dated on or before 14 days after the Effective Date, between VirtualScopics and Pfizer or an affiliate of Pfizer, which, among other things, provides for the payment by Pfizer of $2.5 Million to VirtualScopics for Series B Preferred Units of VirtualScopics.

In this Agreement, including any Exhibit, any reference to “including” means “including but not limited to,” and any reference to “and” means “and/or” unless the context clearly means otherwise.

2.      Sale of IP

2.1      In accordance with the terms of, and subject to the conditions in, this Agreement, Rochester hereby sells, transfers, and assigns all of its right, title and interest in the IP to VirtualScopics, free and clear of all liens and encumbrances.

2.2      Rochester will execute a Patent Assignment with respect to the Patent Rights in substantially the form of Exhibit  2.2, which VirtualScopics may record in the United States Patent and Trademark Office, and Rochester will, at VirtualScopics’ expense, execute all such further documents and perform all such other acts as may be reasonably requested by VirtualScopics to effect the transfer of ownership in the Patent Rights to VirtualScopics free and clear of all liens and encumbrances. A

2.3      Rochester will execute a Domain Name Assignment with respect to the Domain Names in substantially the form of Exhibit 2.3, and Rochester will, at VirtualScopics’ expense, execute all such further documents and perform all such other acts as may be reasonably requested by VirtualScopics to effect the transfer of ownership in the Domain Names to VirtualScopics free and clear of all liens and encumbrances. Rochester will not register any domain names including the mark “VirtualScopic” and, to the extent it has or will register such domain names, hereby agrees to the transfer of such registrations to VirtualScopics.

2.4      The sale of the IP is contingent upon VirtualScopics entering into a Securities Purchase Agreement with Pfizer for the payment of $2.5 Million to VirtualScopics for Series B Preferred Units of VirtualScopics within fourteen (14) days of the Effective Date; (b) agreement by the parties on the form of the Security Agreement required under Section 4.7 below within fourteen (14) days of the Effective Date; and (c) amendment and restatement of the Operating Agreement to incorporate all rights of Rochester under this Agreement to the satisfaction of Rochester within thirty (30) days of the Effective Date. VirtualScopics may not file the Patent Assignment described in Section 2.2 above until Rochester provides written notice to VirtualScopics that Rochester is satisfied that the conditions of this Section 2.4 have been met.

2.5      Upon fulfillment of the conditions set forth in Section 2.4 above, and execution and delivery of (a) this Agreement and (b) the Assignment attached hereto as Exhibit 2.2, the Leased Employee Agreements among Saara Totterman, M.D. and Kevin Parker, Ph.D. on the one hand and VirtualScopics and Rochester on the other hand effective as of December 12, 2000 will terminate and be of no further force and effect, except for the provisions of Section 2 of such Leased Employee Agreements with respect to the calculation and payment of any remaining costs incurred by Rochester prior to the termination of such Leased Employee Agreements and not yet paid by VirtualScopics.

2.6      Upon fulfillment of the condition set forth in Section 2.4 above, and execution and delivery of (a) this Agreement, (b) the Assignment attached hereto as Exhibit 2.2, (c) the Domain Name Assignment attached hereto as Exhibit 2.3, (d) the Security Agreement attached hereto as Exhibit 4.7, and (e) the Warrant to Purchase attached hereto as Exhibit 4.8, the License Agreement will terminate and be of no further force or effect except for costs incurred pursuant to Section 5.2 of the License Agreement, if any.

3.      License of Patent Rights; End of License Agreement; License Back

3.1     VirtualScopics hereby grants to Rochester, subject to any rights the United States Government may possess under 37 C.F.R. §401, a limited non-exclusive, perpetual, irrevocable, royalty-free right and license to use the Patent Rights solely for the purposes of research and education.

3.2     (a)      If at any time VirtualScopics elects to phase-out its use of, or not commercialize, the IP or any part thereof that can be reasonably separated therefrom, VirtualScopics will promptly notify Rochester. Upon request of Rochester, VirtualScopics will negotiate with Rochester in good faith for Rochester’s repurchase or license of any or all of such separable but non-commercialized and/or phased out IP on reasonable terms.

(b)      Rochester acknowledges that upon payment in full of the Preferred Amount by VirtualScopics or any of its affiliates, members, shareholders or employees, Rochester shall have no rights to the IP except for the limited, non-exclusive license set forth in Section 3.1 above.

4.      Financial and Related Considerations

4.1     (a)      VirtualScopics will pay Rochester a liquidating preferred amount of $1,500,000 ("Preferred Amount").

(b)      VirtualScopics will pay Rochester two and one-quarter percent (02.25%) of VirtualScopics’ gross sales revenues (including from any licenses) actually received from any source after the Effective Date until Rochester has received the Preferred Amount pursuant to such formula.

(c)      In addition to amounts due under Section 4.1(b), if VirtualScopics licenses any of the IP to a third party, VirtualScopics will pay Rochester 25% of the amount of any “License Fee(s)” actually received from such third party(ies) by VirtualScopics until Rochester has been paid the Preferred Amount, except that the 25% payment will not apply to image-analysis software or software tools sold or licensed by VirtualScopics as is to its customers without granting them the right to make modifications thereto. For purposes of this Section 4.1(c), a “License Fee” means any payment(s), e.g., upfront or installment payments, from any such third party licensee(s) which is not based on revenues or sales and is not due on at least a quarterly basis.

4.2      Installments of the Preferred Amount due pursuant to Sections 4.1(b) and (c) will be due at the end of each calendar quarter and will be paid within 30 days after the end of each such quarter to an account identified by Rochester. Each such installment payment will be accompanied by a report setting forth in reasonable detail and in accordance with generally accepted accounting principles, as applicable (i) the amount of VirtualScopics’ gross sales revenues for the preceding quarter and/or the basis of the calculation of any License Fees, and the sources of any such revenues or License Fees, and (ii) the calculation of the installment amount due. The report due by January 30 ^th of each year will also show an annual history of the previous four quarters.

4.3      If substantially all of the assets of or ownership interests in VirtualScopics are sold, or if VirtualScopics sells the IP, in whole or in part, the Preferred Amount will immediately become due and payable to the extent VirtualScopics or its owners receive any consideration for such sale.

4.4      VirtualScopics may prepay the Preferred Amount at any time without prepayment penalty.

4.5      The Preferred Amount due Rochester will be preferred to all other amounts paid by or disbursed from VirtualScopics except taxes, and the Operating Agreement will be amended to provide that the Preferred Amount is prior and preferred to any other distribution or payment (except taxes) from VirtualScopics, including the dividend rights of Preferred Units described in Article X of the Operating Agreement.

4.6      Provided Rochester first executes a reasonable Non-Disclosure Agreement, Rochester will have the right to have its representative annually audit all books and records of VirtualScopics (and to make copies thereof) during normal business hours and upon reasonable notice to verify the amounts due Rochester. To the extent Rochester receives or learns of such accounting information pursuant to this Agreement, Rochester will treat such information as confidential information of VirtualScopics and use it solely to verify and, if necessary, to enforce its right to receive the Preferred Amount. If any amount is not paid when due, it will be subject to a late charge equal to one percent (1%) per month until paid. The presence or payment of any late charge will not prevent Rochester from exercising any other rights it may be entitled to as a result of any late payment, all of which rights are cumulative. Furthermore, if any audit reveals an underpayment (excluding any late payment charges) of more than ten percent (10%) of the amount otherwise due, in addition to any late payment charge, VirtualScopics will also pay Rochester’s reasonable costs incurred in connection with the audit.

4.7      VirtualScopics will grant Rochester a security interest, substantially in the form of the Security Agreement that shall be attached to this Agreement as Exhibit 4.7, within fourteen (14) calendar days of execution of this Agreement, in the Patent Rights for the payment of the Preferred Amount. Upon payment of the Preferred Amount, Rochester's security interest shall terminate.

4.8      VirtualScopics will also grant Rochester a warrant to purchase 375,000 of the Common Units of VirtualScopics. The warrant will be substantially in the form of Exhibit 4.8. The exercise price for the Units will be $0.70 per Unit, subject to such adjustments of such price or other terms of the warrant as may be set forth in the warrant; provided, however (a) the warrant will be effective as of the Effective Date and will terminate ten years thereafter; and (b) the warrant may be assigned by Rochester to any corporation or other legal entity of which Rochester is the sole shareholder or sole member.

5.       Rochester's Representations and Warranties

5.1     Rochester represents and warrants to VirtualScopics the following:

(a)      that before the closing of the sale of the IP hereunder Rochester is the sole owner of the IP, particularly including the Patent Rights, but excluding those inventions not included within the scope of valid claims ultimately issued on the Patent Rights;

(b)      that to the best of Rochester’s knowledge, no third party has any rights to the IP except those of VirtualScopics as set forth in the License Agreement and those of the inventors of the applicable IP who were employees of Rochester at the time of such inventions, provided, however, that all such rights shall terminate upon the sale of the IP to VirtualScopics hereunder;

(c)      that this Agreement, the Patent Assignment and the Domain Name Assignment (together with all other documents executed and delivered herewith and therewith) are within Rochester’s legal powers, have been duly executed and delivered and constitute the valid and binding agreements of Rochester;

(d)      that the execution, delivery and performance by Rochester of this Agreement, the Patent Assignment, Domain Name Assignment (together with all other documents executed and delivered herewith and therewith) do not require any notice to, action or consent by or in respect of, or filing with, any Governmental Authority (other than the filing of the Patent Assignments with the PTO and any other applicable Governmental Authority, and the filing of the Domain Name Assignment with Network Solutions, Inc.);

(e)      that there is no action, suit, investigation or proceeding (or any basis thereof), of which Rochester has received written notice, pending or, to the knowledge of Rochester, threatened, before any Governmental Authority or arbitrator that has or could materially affect the IP; Rochester has not received written notice of any claims made by any person or entity with respect to, or any actions, suits or other proceedings relating to, the IP which would have a material adverse effect on the proposed or intended use of the IP;

(f)      that except for the License Agreement and the Leased Employee Agreements referenced in Section 2.5 above, Rochester has not granted any licenses, sublicenses or other rights relating to the IP, and that, prior to the date of this Agreement, Rochester has not granted any license or covenant not to sue with respect to the IP to any third party; and

(g)      that to its knowledge Rochester and each inventor listed in any patent or patent application and the attorneys of record thereto have complied with the PTO duty of candor and good faith in dealing with the PTO, including the duty to disclose to the PTO all information known to be material to the patentability of each of the patent applications.

In Sections 5.1(b), 5.1(e), and 5.1(g) of this Agreement and Section 1.3 of Exhibit 2.3 to this Agreement only, for the purposes of Rochester’s “knowledge,”“Rochester” shall mean the University of Rochester Office of Technology Transfer and Office of Counsel to the Medical Center, University of Rochester and Strong Health.

The representation and warranty set forth in Section 5.1(a) shall survive the closing of the sale of IP.

5.2      EXCEPT AS SET FORTH IN SECTION 5.1 ABOVE, ROCHESTER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, OR STATUTORY WITH RESPECT TO THE IP, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND THE VALIDITY OF ANY PART OF THE IP, INCLUDING BUT NOT LIMITED TO ISSUED OR PENDING CLAIMS OF THE PATENT RIGHTS AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERED OR DISCOVERABLE. NOTHING IN THIS AGREEMENT OR ANY OTHER AGREEMENT TO WHICH ROCHESTER AND VIRTUALSCOPICS ARE PARTIES WILL BE CONSTRUED AS A REPRESENTATION OR WARRANTY THAT THE PRACTICE OF THE PATENT RIGHTS OR ANY OTHER USE OF THE IP WILL NOT INFRINGE UPON AN INTELLECTUAL PROPERTY RIGHT OF ANY OTHER PERSON.

6.      Rochester's Covenants

6.1     Confidentiality . Rochester will hold, and will use reasonable commercial efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, all confidential documents and information concerning the IP, and such information which is identified in writing as confidential or, if delivered orally, if confirmed in writing as confidential within 30 days after oral delivery. Such obligation of confidentiality shall not apply to information that (a) is publicly known as of the date of the disclosure; (b) becomes publicly known after the date of disclosure through no fault of Rochester or any person or entity to whom Rochester has disclosed the information pursuant to the terms of this Section 6.1; (c) is received after the date of this Agreement, from a third party who is not known to Rochester to have any obligation of confidentiality to VirtualScopics; (d) is disclosed by Rochester in accordance with and subject to any limitations set forth in any written consent granted by VirtualScopics; or (e) is requested to be disclosed by Rochester pursuant to a judicial or administrative process, provided that Rochester shall use its best efforts to minimize such disclosure, and provided further that Rochester shall notify VirtualScopics of the disclosure request or order and cooperate with VirtualScopics in obtaining a protective order if VirtualScopics opts to seek one, which efforts shall be communicated to Rochester prior to the date the disclosure is due and shall be at VirtualScopics’ sole expense.

6.2       Patent Documentation . Upon request of VirtualScopics, Rochester shall promptly advise its patent counsel of the existence of this Agreement and request that patent counsel transfer the ownership of its files concerning the IP from Rochester to VirtualScopics and, to the extent it has the authority to do so, will provide VirtualScopics or its representative Power to Inspect any pending U.S. or foreign patent application as set forth in the Patent Rights.

7.      Indemnity; Limitation of Liability

7.1     VirtualScopics will at all times defend, indemnify and hold harmless Rochester, its trustees, directors, officers, employees, and affiliates from and against all claims, proceedings, demands, losses, expenses (including attorney fees and expenses, whether incurred as the result of a third party claim or a claim to enforce this Agreement), liabilities, and damages (collectively, “Claim”) to the extent arising out of the exercise of VirtualScopics’ rights hereunder with respect to VirtualScopics’ intellectual property, including the IP, or any part thereof, including a Claim associated with injury or death to any person(s), damage to property, and the research, production, manufacture, testing, sale, use, marketing, consumption, and advertising related to the exercise and exploitation of VirtualScopics’ intellectual property in any form. Rochester shall promptly notify VirtualScopics of any Claim of which it becomes aware and, at VirtualScopics’ expense, will cooperate in the defense and settlement thereof. Failure to provide such notice will not absolve VirtualScopics from its indemnity obligation except to the extent of actual prejudice and additional expenses caused by such failure. Except at its own cost, Rochester will not compromise or settle any Claim without the prior written consent of VirtualScopics, which will not be unreasonably withheld or delayed.

7.2     Rochester will at all times defend, indemnify and hold harmless VirtualScopics, its trustees, directors, officers, employees and affiliates from and against all claims, proceedings, demands, losses, expenses (including attorneys' fees and expenses, whether incurred as a result of a third-party claim or a claim to enforce this Agreement), liabilities and damages (collectively, "Claim") to the extent arising out of a breach of a representation, warranty or covenant by Rochester hereunder or as a result of Rochester's use or exploitation of the IP. VirtualScopics will endeavor to properly notify Rochester of any Claim of which it becomes aware and, at Rochester's expense, will cooperate in defense and settlement thereof. Failure to provide such notice will absolve Rochester from its indemnity obligation to the extent of actual prejudice and additional expense caused by such failure. Except at its own cost, VirtualScopics will not compromise or settle any Claim without the prior written consent of Rochester, which will not be unreasonably delayed or withheld.

7.3     Rochester’s sole liability, monetary or otherwise, to VirtualScopics or anyone claiming under or through VirtualScopics hereunder shall in no event exceed the amounts actually paid to Rochester pursuant to Section 4.1(a). VirtualScopics shall have no right to claim any such amount except solely as a result of a successful Claim by VirtualScopics pursuant to Rochester’s indemnity obligation under Section 7.2 above. These limitations shall apply regardless whether such Claim is based in contract, warranty, tort (including negligence), strict liability, or any other legal theory, and, for the purposes of this Section, all Claims will