Exhibit 10.2
STRATEGIC DEFERRED PAYMENT AGREEMENT
     This Strategic Deferred Payment Agreement (the “Agreement”) is made and
entered into as of August 14, 2007, by and between Cato Research Ltd., a North
Carolina corporation (“Cato Research”), and Sontra Medical Corporation, a
Minnesota corporation (“Sontra” and, together with Cato Research, the
“Parties”).
     WHEREAS, Cato Research is a global contract research and development
organization (“CRO”) providing a wide range of research, development and
regulatory services to the biotechnology and pharmaceutical industries (“CRO
Services”); and
     WHEREAS, the Parties entered into a Strategic Master Services Agreement
dated as of the date of this Agreement (the “SMSA”) with respect to CRO Services
to be provided by Cato Research to Sontra from time to time after the date of
this Agreement; and
     WHEREAS, the SMSA contains certain payment terms for the CRO Services
performed by Cato Research on behalf of Sontra thereunder; and
     WHEREAS, for strategic purposes, the Parties wish to modify the payment
terms for certain CRO Services under the SMSA to enable Sontra to defer payment
to Cato Research for those CRO Services relating to special product development
and regulatory projects generally described below (the “Strategic Deferred
Payment Projects”):

  1.   Durhalieve® for Keloid Scarring — IND preparation and submission
activities;     2.   Durhalieve® for Atopic Dermatitis — FDA Guidance Meeting
regarding NDA approval;     3.   Oversight and project management of DPT
Laboratories Durhalieve® manufacturing and process development activities;    
4.   Oversight and project management of Azone/API formulation feasibility
activities by Campbell University; and     5.   MAZ development and regulatory
activities (collectively, the “Agreement CRO Services”); and

     WHEREAS, Cato Research has agreed to accept deferred payment for the CRO
Services related to the Strategic Deferred Payment Projects on the terms and
conditions set forth in this Agreement.
     NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
     1. Until such time as Sontra has completed an equity financing or
financings with aggregate net proceeds (excluding payments made to Cato
BioVentures) to Sontra of at least five million dollars ($5,000,000) (the
“Qualified Financing”), Sontra shall have the option, on an invoice by invoice
basis, to defer payment of Cato Research invoices covering CRO Services for
Strategic Deferred Payment Projects (each such invoice hereinafter a “Strategic
Service Invoice”) for up to six (6) months from the due date of a Strategic
Service Invoice.

 

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     2. If Sontra elects to defer payment of a Strategic Service Invoice for
more than one (1) month from the due date of such invoice under this Agreement,
then with respect to each such deferred Strategic Service Invoice, Sontra shall:
     (i) pay to Cato Research in cash, in addition to the amount the Parties
agree is owed for CRO Services covered by the deferred Strategic Service
Invoice, interest equal to a ratable monthly portion of 4.79% annual interest
(the midterm annual Applicable Federal Rate in effect on the date of this
Agreement plus one percent (1%)), taking into account the number of months which
Sontra deferred payment of the Strategic Service Invoice; and
     (ii) issue to Cato BioVentures, the venture capital affiliate of Cato
Research, that number of shares of restricted Sontra common stock determined by
dividing ten percent (10%) of the amount of the deferred Strategic Service
Invoice by the closing sale price of Sontra’s common stock as reported on the
applicable stock exchange or public equity quotation service as of the date of
Sontra’s payment of such Strategic Service Invoice.
     3. The term of this Agreement shall be coincident with the initial term of
the SMSA; provided, however, that this Agreement shall terminate upon the
closing of the Qualified Financing.
     4. This Agreement may be renewed for an additional three (3) months upon
the mutual written agreement of the Parties.
     5. Capitalized terms used in this Agreement and not defined shall have the
meaning given to such terms in the SMSA.
     In witness whereof, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date set forth above.

              Cato Research Ltd.   Sontra Medical Corporation
 
           
By:
  /s/ Allen Cato   By:   /s/ Harry G. Mitchell
 
           
 
           
Name:
  Allan Cato   Name:   Harry G. Mitchell
 
           
 
           
Title:
  President   Title:   Interim CEO
 
           

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