8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): September 14, 2007

Sontra Medical Corporation

(Exact name of registrant as specified in its charter)

Minnesota	000-23017	41-1649949
(State or Other Jurisdiction	(Commission File Number)	(I.R.S. Employer
of Incorporation)		Identification No.)
10 Forge Parkway		02038
Franklin, Massachusetts		(Zip Code)
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (508) 553-8850

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

     Agreement and Plan of Merger and Reorganization

     On September 14, 2007, Sontra Medical Corporation (the “Company”), a Minnesota corporation, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement) with Durham Pharmaceuticals Ltd. (d/b/a Echo Therapeutics, Inc.) (“Echo”), a North Carolina corporation, and Durham Pharmaceuticals Acquisition Co. (“Acquisition Co.”), a Delaware corporation and wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, Echo merged with and into Acquisition Co., with the surviving wholly-owned subsidiary of the Company being named “Echo Therapeutics, Inc.”

     Each outstanding share of Echo common stock was canceled, extinguished and converted automatically into the right to receive 0.4356 shares of Company common stock. The Company issued an aggregate 6,250,000 shares of its common stock to the former Echo shareholders in connection with the Merger Agreement.

     The Merger Agreement contains customary representations, warranties and covenants on behalf of the Company, Echo and Acquisition Co. The Merger Agreement and the transactions contemplated by the Merger Agreement have been approved unanimously by the board of directors of the Company and the board of directors and shareholders of Echo.

     The Company was advised by Burnham Hill Partners, a division of Pali Capital, Inc., in connection with the transactions contemplated by the Merger Agreement. For its advisory services, the Company has agreed to issue Burnham Hill Partners warrants to purchase 425,000 shares of Company common stock at a per share exercise price of $2.39, and, if the Company completes a subsequent equity or equity linked financing or a combination of equity financings resulting in gross proceeds to the Company totaling at least $2,500,000, inclusive of the initial principal amount of the Notes, as discussed below (the “Qualified Financing”), the Company has agreed to pay Burnham Hill Partners $150,000 in cash payable upon the closing of any such Qualified Financing. The warrants will also provide for a five-year term, weighted-average anti-dilution protection to the holders, allow for cashless exercise, will be non-redeemable and be subject to standard piggyback registration rights. The Company is under no obligation to engage in any future equity financing nor is it currently engaged in any general solicitation for additional capital. A managing director of Burnham Hill Partners may be deemed to beneficially own directly or indirectly 11.9% of the Company’s outstanding common stock.

     As a result of the transactions contemplated by the Merger Agreement, Cato Holding Company (d/b/a Cato BioVentures) (“Cato BioVentures”), a North Carolina corporation and a former shareholder of Echo, owns 3,855,225 shares of the Company’s common stock. Allen Cato, the Chief Executive Officer and a Principal of Cato BioVentures, received 113,389 shares of the Company’s common stock in connection with the Merger Agreement. Through his control of Cato BioVentures, together with the shares of the Company’s common stock that he holds individually, Allen Cato may be deemed to beneficially control 3,968,614 shares of the Company’s common stock, or 17.2% of the Company’s outstanding common stock.

     Lynda Sutton, President and a Principal of Cato BioVentures, and Shawn Singh, Chief Operating Officer and a Principal of Cato BioVentures, received 938,861 and 625,907 shares of the Company’s common stock, respectively. Shawn Singh, a director of the Company and the Company’s Interim President and former Chairman of the Board of Echo, will continue as Chief Operating Officer and a Principal of Cato BioVentures.

     The foregoing description of the Merger Agreement and the Company’s engagement letter with Burnham Hill Partners does not purport to be complete and is qualified in its entirety by reference to the complete text of the Merger Agreement and the Company’s engagement letter with Burnham Hill Partners, which are included as Exhibit 2.1 and Exhibit 10.8, respectively, to this current report and are incorporated herein by reference.

     Strategic Master Services Agreement

     In connection with the Merger Agreement, the Company entered into a Strategic Master Services Agreement with Cato Research Ltd. (“Cato Research”), a North Carolina corporation, dated as of September 14, 2007. Pursuant to the Strategic Master Services Agreement, Cato Research is to provide contract research and development services and regulatory advice (“CRO Services”) to the Company. CRO Services to be provided by Cato Research under the Strategic Master Services Agreement will be performed pursuant to executed work orders, which will include instructions and guidelines for specific services and compensation terms. The Strategic Master Services Agreement has an initial one year term and is automatically renewable for additional one year terms unless either party provides sixty (60) days’ notice prior to the expiration of any one year term.

     Cato Research is an affiliate of Cato BioVentures, a former shareholder of Echo and a shareholder of the Company as a result of the transactions contemplated by the Merger Agreement. For additional relationships between the parties, see “Merger Agreement” above.

     The foregoing description of the Strategic Master Services Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Strategic Master Services Agreement, which is included as Exhibit 10.1 to this current report and is incorporated herein by reference.

     Strategic Deferred Payment Agreement

     In connection with the Strategic Master Services Agreement, the Company entered into a Strategic Deferred Payment Agreement with Cato Research, dated as of September 14, 2007. Pursuant to this Strategic Deferred Payment Agreement, the Company is entitled to defer payment to Cato Research for the aggregate amount of certain critical path CRO Services provided under the Strategic Master Services Agreement for the earlier of six (6) months from the due date of each invoice relating to such CRO Services or the date of the Company’s closing at least $5,000,000 in equity financing following the date of the agreement. The CRO Services to be provided relate to five (5) core drug development programs and regulatory matters related

to such development programs. This agreement may be extended for three (3) months by agreement of the parties.

     The foregoing description of the Strategic Deferred Payment Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Strategic Deferred Payment Agreement, which is included as Exhibit 10.2 to this current report and is incorporated herein by reference.

     Asset Purchase Agreement

     On September 14, 2007, the Company entered into an Asset Purchase Agreement with DP Pharmaceuticals, LLC (“DPLLC”) a North Carolina limited liability company (the “Asset Purchase Agreement”), pursuant to which the Company purchased a package of proprietary drug development and regulatory information filed with the United States Food and Drug Administration known as Drug Master File Number 4670 (“DMF 4670”), a Type V Drug Master File (non-clinical), as well as certain related trademarks and trademark applications. DMF 4670 relates to toxicology studies for the development of a product known as Azone. The aggregate purchase price paid by the Company is $60,000. The Asset Purchase Agreement contains customary representations, warranties and covenants on behalf of the Company and DPLLC. DPLLC is an affiliate of Cato BioVentures, a former shareholder of Echo and shareholder of the Company as a result of the transactions contemplated by the Merger Agreement. For additional relationships between the parties, see “Agreement and Plan of Merger and Reorganization” above.

     The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Asset Purchase Agreement, which is included as Exhibit 2.2 to this current report and is incorporated herein by reference.

     Senior Promissory Bridge Notes

     On September 14, 2007, the Company completed a financing in which it issued Senior Promissory Bridge Notes (the “Notes”) in the aggregate principal amount of $1.325 million to a select group of institutional and individual accredited investors. The Notes have a maturity date of September 15, 2008 and interest on the Notes accrues at a rate of 10% per annum. Interest is payable upon maturity. If the Company engages in a Qualified Financing, the Notes will be exchanged automatically into the equity securities issued in the Qualified Financing. The terms of the Notes reflect a 20% premium in the event of an exchange such that upon an automatic exchange of the Notes in any Qualified Financing, the holders of the Notes will be deemed to have tendered an amount equal to 120% of the outstanding principal and interest of the Notes in exchange for the equity securities issued to such holders in the Qualified Financing. The Company has agreed to pay Burnham Hill Partners a fee equal to 8% of the gross proceeds received by the Company in connection with the issuance of the Notes.

     If a Qualified Financing has not been completed on or before December 15, 2007, the Notes are convertible into shares of the Company’s common stock at a ratio determined by

dividing the outstanding principal and interest of the Note by a price per share equal to the price per share of the Company’s most recent equity or equity-linked financing at the time of conversion. The Notes also contain a provision that allows a Note holder, in the event that a Qualified Financing does not occur, to exchange its Note for securities issued in any other subsequent equity or equity-linked financing. In the event of such an exchange, the holder of the Note shall be deemed to have exchanged 120% of the outstanding principal and interest of the Note as the purchase price for the equity securities.

     If a Qualified Financing is not completed on or before December 15, 2007, the holders of the Notes shall have a single demand registration right exercisable upon the approval of a majority of the holders of the outstanding principal and interest of the Notes. The Company is under no obligation to engage in the Qualified Financing or any other future equity financing and is not currently engaged in any general solicitation for additional capital.

     Events of default under the Notes include the Company’s failure to make payment of principal or interest for a period of three business days after such payment is due, the acceleration of more than $100,000 of any other of the Company’s indebtedness prior to maturity or payment date (where such payment has not been discharged or stayed within ten business days), a judgment or order against the Company for the payment of money in excess of $100,000, a bankruptcy of the Company (whether voluntary or involuntary) or general assignment for the benefit of its creditors.

     The terms of the Notes provide that the Notes rank senior to all issued and outstanding indebtedness and equity of the Company. Furthermore, the Company is restricted from issuing any new indebtedness while the Notes are outstanding.

     The foregoing description of the Notes does not purport to be complete and is qualified in its entirety by reference to the complete text of the Notes, the form of which is included as Exhibit 10.3 to this current report and is incorporated herein by reference.

Side Letter with Cato BioVentures

     On September 14, 2007, the Company confirmed and accepted the terms of a Side Letter (the “Side Letter”) with Cato BioVentures. Pursuant to the terms of the Side Letter, Cato BioVentures has agreed to sell to select qualified purchasers, in one or more series of transactions, up to an aggregate of 907,112 of its shares of the Company’s common stock concurrently with the Company’s issuance and sale of shares of Company equity securities in one or more series of transactions, the primary purpose of which is to raise capital, if such transaction or transactions were to occur. If such sales occur up to 60 days from the date of the Side Letter, Cato BioVentures has agreed to sell its shares at a price per share of $0.882, and if after 60 days, at a price to be determined by the parties. The Company has agreed to reimburse Cato BioVentures for its reasonable legal fees associated with any third-party sales pursuant to the Side Letter. The Company is under no obligation to engage in any future equity financing and is not currently engaged in any general solicitation for additional capital.

     The foregoing description of the Side Letter does not purport to be complete and is qualified in its entirety by reference to the complete text of the Side Letter, which is included as Exhibit 10.7 to this current report and is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets

     On September 14, 2007, pursuant to the terms of the Merger Agreement, Echo merged with and into Acquisition Co. with the surviving wholly-owned subsidiary of the Company being named “Echo Therapeutics, Inc.” The information set forth in Item 1.01 (Agreement and Plan of Merger and Reorganization) is incorporated by reference into this Item 2.01.

     On September 14, 2007, pursuant to the terms of the Asset Purchase Agreement, the Company acquired certain assets of DPLLC. The information set forth in Item 1.01 (Asset Purchase Agreement) is incorporated by reference into this Item 2.01.

Item 3.02. Unregistered Sales of Equity Securities

     The information set forth in Item 1.01 under the headings “Agreement and Plan of Merger and Reorganization” and “Senior Promissory Bridge Notes” is incorporated by reference into this Item 3.02. The Company’s issuance of common stock in connection with the Merger Agreement was made in a transaction not involving any public offering pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company’s issuance of warrants to purchase shares of common stock to Burnham Hill Partners will be made in a transaction not involving any public offering pursuant to an exemption from registration under Section 4(2) of the Securities Act. The issuance and sale of the Notes by the Company was made in a transaction not involving any public offering pursuant to an exemption from registration under Section 4(2) of the Securities Act.

     On July 25, 2007, the Company agreed to issue Burnham Hill Partners warrants to purchase 60,000 shares of common stock in connection with general financial advisory services to be performed by Burnham Hill Partners. The issuance of the warrants constituted less than 5% of the number of shares of the Company’s common stock outstanding. The warrants are exercisable into shares of the Company’s common stock at a price per share of $1.63. The warrants also provide for a five-year term, weighted-average anti-dilution protection to the holders, allow for cashless exercise, will be non-redeemable and be subject to standard piggyback registration rights. The Company’s issuance of warrants to purchase shares of common stock to Burnham Hill Partners was made in a transaction not involving any public offering pursuant to an exemption from registration under Section 4(2) of the Securities Act.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

     In connection with the Merger Agreement and effective as of the effective time of the Merger Agreement, Joseph Amaral, M.D., resigned as a director of the Company. A copy of his resignation letter is included as Exhibit 17.1 to this current report and is incorporated herein by reference. Dr. Amaral will serve as a member of the Company’s Medical Advisory Board. In

connection with Dr. Amaral’s service to the Company’s Medical Advisory Board, the Company granted Dr. Amaral options to purchase 25,000 shares of common stock under its 2003 Stock Option and Incentive Plan, as amended, at an exercise price per share of $2.39.

     Pursuant to the terms of the Merger Agreement, Patrick Mooney and Shawn Singh (the “Appointees”) were appointed to the board of directors of the Company effective as of the effective time of the Merger Agreement. The Appointees have not yet been appointed to serve on any committee of the board of directors.

     Additionally, in connection with the Merger Agreement and effective as of the effective time of the Merger Agreement, the Company appointed Dr. Mooney as Chief Executive Officer, Mr. Singh as President (Interim) and Harry G. Mitchell as Chief Operating Officer and Chief Financial Officer.

     Employment Agreements

     In connection with the Merger Agreement, the Company entered into an employment agreement with each of Patrick Mooney, Shawn Singh, and Harry G. Mitchell (each an “Employee” and together, the “Employees”), dated as of September 14, 2007 (together, the “Employment Agreements”). The Employment Agreements became effective as of the effective time of the Merger Agreement.

     Patrick Mooney previously served as President, Chief Executive Officer and Director of Echo since September 2006. Prior to joining Echo, Dr. Mooney was President, Chief Executive Officer and Chairman of Aphton Corporation (Nasdaq: APHT) between January 2004 and November 2006. From August 2001 until April 2003, Dr. Mooney served as Vice President, Senior Biotechnology Analyst for Thomas Weisel Partners, LLC, a full services investment firm. Dr. Mooney graduated from the Jefferson Medical College of Thomas Jefferson University and trained as a surgical resident at Thomas Jefferson University Hospital.

     Pursuant to the Company’s employment agreement with Dr. Mooney, he will serve as the Chief Executive Officer of the Company at an annual salary of $300,000 and an initial bonus of $145,000. He is eligible to receive performance bonuses, which are determined in the sole discretion of the board of directors. Additionally, the Company granted him non-qualified stock options to purchase 500,000 shares of the Company’s common stock at an exercise price per share of $2.39. One-third of the options vested upon the employment agreement becoming effective and one-third of the options will vest on each of the first and second anniversaries of the effective date of his employment agreement.

     Shawn Singh served as President and Director of Echo since November 2004 and as its Chairman of the Board since September 2006. Mr. Singh also serves as Chief Operating Officer and a Principal of Cato BioVentures and Chief Business Officer of Cato Research (roles in which he has served since 2001), and since 2004, as Chief Executive Officer of Hemodynamic Therapeutics, a majority-owned subsidiary of Cato BioVentures. Mr. Singh has served as director of VistaGen Therapeutics since 2000, and following VistGen’s acquisition of Artemis Neurosciences (of which Mr. Singh was President at the time of the acquisition) in 2003, as its Chief Operating Officer (part-time). From 1993 until 2000, Mr. Singh served as Chief Business

Officer of SciClone Pharmaceuticals (Nasdaq: SCLN). Mr. Singh also served as Managing Director of Start-Up Law and as a corporate finance associate with Morrison & Foerster LLP.

     Pursuant to his employment agreement, Mr. Singh will serve as the President (part-time and interim) of the Company at an annual salary of $135,000 and an initial bonus of $115,000. He is eligible to receive performance bonuses, which are determined in the sole discretion of the board of directors. Additionally, the Company granted him non-qualified options to purchase 500,000 shares of the Company’s common stock at an exercise price per share of $2.39. One-third of the options vested upon the employment agreement becoming effective and one-third of the options will vest on each of the first and second anniversaries of the effective date of his employment agreement.

     Harry G. Mitchell served as the Company’s Interim Chief Financial Officer from June 2006 until September 2006, at which time he was appointed the Company’s full-time Vice President of Finance, Chief Financial Officer and Treasurer. In December of 2006, Mr. Mitchell was appointed Chief Financial Officer on a part-time consulting basis and in January of 2007, Mr. Mitchell was also appointed Interim Chief Executive Officer on a part-time consulting basis. As of January 16, 2007, Mr. Mitchell was hired as an employee by the Company as the Interim Chief Executive Officer, Chief Financial Officer and Treasurer of the Company. From 2004 until June 2006, Mr. Mitchell served as President and Chief Executive Officer of MedTech Advances, Inc. and provided financial and other consulting services to several other corporations. From 1999 to 2004, Mr. Mitchell was Senior Vice President, Chief Financial Officer and Treasurer of Boston Medical Technologies, Inc.

     Pursuant to his employment agreement, Mr. Mitchell will serve as Chief Operating Officer and Chief Financial Officer of the Company at an annual salary of $250,000. He is eligible to receive performance bonuses, which are provided in the sole discretion of the board of directors. The Company granted him non-qualified options to purchase 250,000 shares of the Company’s common stock at an exercise price per share of $2.39. One-third of the options vested upon the employment agreement becoming effective, and one-third of the options will vest on each of the first and second anniversaries of the effective date of his employment agreement.

     The Employment Agreements have initial two year terms commencing as of the effective time of the Merger Agreement and are automatically extended for one year unless a party gives 90 days notice prior to the expiration of the term. The Employees are subject to standard confidentiality provisions. Upon the death or disability of an Employee or termination of the Employee for cause, the Company is obligated to pay amounts accrued as of the date of death or disability or termination for cause. If the Employee is terminated without cause or the Employee terminates for good reason, the Company must pay all amounts accrued under the agreement, basic compensation and a lump sum cash payment equal to a bonus amount based on the average of the performance bonuses paid to the Employee with respect to the Company’s two most recent fiscal years. In addition, all outstanding stock grants will immediately vest. If a change in control of the Company occurs and the Employee is terminated for any reason other than for cause or death or disability, the Company must pay the Employee an amount equal to two times base salary and bonus amount. Except for termination for Cause, in the event the Employee is terminated for any reason, the Employee is entitled to medical benefits coverage for him, his spouse and dependents for 12 months following termination.

     The foregoing description of the Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the complete text of the Employment Agreements, which are included as Exhibits 10.4, 10.5 and 10.6 to this current report and are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(a)-(b) Financial Statements of the Business Acquired and Pro Forma Financial Information will be filed with an amendment to this Form 8-K within 71 days after the date that this initial report on Form 8-K must be filed.

(d) Exhibits.

Exhibit No.	Description
2.1	Agreement and Plan of Merger and Reorganization by and among Sontra Medical Corporation, Durham Pharmaceuticals Ltd. (d/b/a Echo Therapeutics, Inc.) and Durham Pharmaceuticals Acquisition Co. dated as of September 14, 2007 (filed herewith*).
2.2	Asset Purchase Agreement by and between Sontra Medical Corporation and DP Pharmaceuticals, LLC dated as of September 14, 2007 (filed herewith*).
10.1	Strategic Master Services Agreement by and between Sontra Medical Corporation and Cato Research Ltd. dated as of September 14, 2007.
10.2	Strategic Deferred Payment Agreement by and between Sontra Medical Corporation and Cato Research Ltd. dated as of September 14, 2007.
10.3	Form of Senior Promissory Bridge Note.
10.4	Employment Agreement by and between Sontra Medical Corporation and Patrick Mooney dated as of September 14, 2007.
10.5	Employment Agreement by and between Sontra Medical Corporation and Shawn Singh dated as of September 14, 2007.
10.6	Employment Agreement by and between Sontra Medical Corporation and Harry G. Mitchell dated as of September 14, 2007.
10.7	Side Letter from Cato Holding Company (d/b/a Cato BioVentures) to Sontra Medical Corporation dated September 14, 2007.

Exhibit No.	Description
10.8	Engagement letter between Burnham Hill Partners, a division of Pali Capital, and the Company dated September 14, 2007.
17.1	Director resignation letter from Joseph Amaral, M.D. dated September 14, 2007.
99.1	Press Release dated September 17, 2007.

* Pursuant to Item 601(b)(2) schedules and attachments have been omitted but will be provided to the Commission upon request.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	SONTRA MEDICAL CORPORATION
Dated: September 20, 2007	By:	/s/ Harry G. Mitchell
		Harry G. Mitchell
		Chief Operating Officer and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger and Reorganization by and among Sontra Medical Corporation, Durham Pharmaceuticals Ltd. (d/b/a Echo Therapeutics, Inc.) and Durham Pharmaceuticals Acquisition Co. dated as of September 14, 2007 (filed herewith*).
2.2	Asset Purchase Agreement by and between Sontra Medical Corporation and DP Pharmaceuticals, LLC dated as of September 14, 2007 (filed herewith*).
10.1	Strategic Master Services Agreement by and between Sontra Medical Corporation and Cato Research Ltd. dated as of September 14, 2007.
10.2	Strategic Deferred Payment Agreement by and between Sontra Medical Corporation and Cato Research Ltd. dated as of September 14, 2007.
10.3	Form of Senior Promissory Bridge Note.
10.4	Employment Agreement by and between Sontra Medical Corporation and Patrick Mooney dated as of September 14, 2007.
10.5	Employment Agreement by and between Sontra Medical Corporation and Shawn Singh dated as of September 14, 2007.
10.6	Employment Agreement by and between Sontra Medical Corporation and Harry G. Mitchell dated as of September 14, 2007.
10.7	Side Letter from Cato Holding Company (d/b/a Cato BioVentures) to Sontra Medical Corporation dated September 14, 2007.
10.8	Engagement letter between Burnham Hill Partners, a division of Pali Capital, and the Company dated September 14, 2007.
17.1	Director resignation letter from Joseph Amaral, M.D. dated September 14, 2007.
99.1	Press Release dated September 17, 2007.

* Pursuant to Item 601(b)(2) schedules and attachments have been omitted but will be provided to the Commission upon request.

EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the “Agreement”) is made and entered into as of September 14, 2007, by and among Sontra Medical Corporation, a Minnesota corporation (“Parent”), Durham Pharmaceuticals Acquisition Co., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), and Durham Pharmaceuticals Ltd. (d/b/a Echo Therapeutics, Inc.), a North Carolina corporation (“Company”).

R E C I T A L S

     A. The Boards of Directors of Company, Parent and Merger Sub believe it is in the best interests of their respective companies and the stockholders of their respective companies that Company and Merger Sub combine into a single company through the statutory merger of Merger Sub with and into Company (the “Merger”) and, in furtherance thereof, have approved the Merger.

     B. The stockholders of Company and of Merger Sub have duly authorized and approved the consummation of the Merger.

     C. Pursuant to the Merger, among other things, the outstanding shares of Company common stock, no par value (“Company Common Stock”) shall be converted into shares of Parent Common Stock, $.01 par value (“Parent Common Stock”) at the rate set forth herein.

     D. Company, Parent and Merger Sub desire to make certain representations and warranties and other agreements in connection with the Merger.

     E. The parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”), and to cause the Merger to qualify as a reorganization under the provisions of Section 368 of the Code.

     NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

THE MERGER

     1.1 The Merger. At the Effective Time (as defined in Section 1.2) and subject to and upon the terms and conditions of this Agreement and the Certificate of Merger attached hereto as Exhibit A and in accordance with the applicable provisions of the Delaware General Corporation Law (“Delaware Law”) and the North Carolina Business Corporation Act (“North Carolina Law”), Company shall be merged with and into Merger Sub, the separate corporate existence of Company shall cease and Merger Sub

shall continue as the surviving corporation. MergerSub as the surviving corporation after the Merger is hereinafter sometimes referred to as the “Surviving Corporation.”

     1.2 Closing; Effective Time. Subject to the conditions contained herein, the closing of the transactions contemplated hereby (the “Closing”) commenced at 9:00 A.M., local time, on the date hereof, at the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036. The date of the Closing is sometimes herein referred to as the “Closing Date” and the Closing shall be effective as of the Effective Time (defined below). In connection with the Closing, the parties hereto shall cause the Merger to be consummated by filing the Certificate of Merger with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of Delaware Law, and the Secretary of State of the State of North Carolina, in accordance with the relevant provisions of North Carolina Law (the time of the last to occur of such filings being the “Effective Time”).

     1.3 Actions at Closing. At the Closing, in addition to the other actions contemplated elsewhere herein:

     (a) Company delivered to Parent and Merger Sub the following, each in a form and substance satisfactory to Parent:

               (i) evidence of termination of those agreements and arrangements with Company and any affiliate of Company on satisfactory terms;

               (ii) evidence that all liabilities of Company to any affiliate of the Company, and all liabilities of the Company to any non-affiliates of the Company in excess of $50,000 in the aggregate, excluding federal and state withholding taxes and other taxes associated with the Company’s forgiveness of its eight (8) officer promissory notes at the Closing, have been fully paid and any liens on assets of Company have been released;

               (iii) stock certificates representing each of the outstanding shares of Company Common Stock;

               (iv) audited and interim reviewed financial statements of the Company as are required for inclusion in the Parent’s Form 8-K as a result of the Merger, with the required audit report signed by the Company’s auditors and such auditor’s consent for inclusion in the Company’s Form 8-K and its inclusion and incorporation by reference in other Parent filings under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

               (v) the Strategic Master Services Agreement, dated as of the Closing Date, between Parent and Cato Research Ltd., a North Carolina corporation;

2

               (vi) the Asset Purchase Agreement, dated as of the Closing Date, between Parent and DP Pharmaceuticals LLC, a North Carolina limited liability corporation;

               (vii) copies of resignations of each member of the board of directors of the Company; and

               (viii) such other documents or instruments as Parent and Merger Sub may reasonably request to effect the transactions contemplated hereby.

     (b) Parent and Merger Sub delivered to Company the following, each in a form and substance satisfactory to Company:

               (i) evidence satisfactory to Company of the consent or approval of those persons whose consent or approval shall be required in connection with the Merger under the contracts of Parent set forth on Schedule 1.3 of the Parent Disclosure Schedule;

               (ii) copies of resignations of Harry Mitchell as the Parent’s Interim Chief Executive Officer (but not as the Parent’s Chief Financial Officer, Treasurer or Secretary) and Joseph Amaral, M.D. from his position as a member of the board of directors of Parent, evidence of Parent having taken all necessary action for the appointment of Patrick Mooney and Shawn Singh as directors of Parent, effective as of the Closing, and evidence that, immediately upon Closing, the board of directors of Parent shall consist of Patrick Mooney, Shawn Singh, Michael Wigley, Robert Langer, and Walter Witoshkin, which parties shall be covered under Parent’s director and officer liability insurance;

               (iii) certificates representing the number of whole shares of Parent Common Stock, and the amount of cash in lieu of any fractional shares of Parent Common Stock, that each holder of Company Common Stock has a right to receive pursuant to Section 1.5; and

               (iv) such other documents or instruments as Company may reasonably request to effect the transactions contemplated hereby.

     (c) Parent shall have appointed and entered into an employment agreement, each effective as of the Closing, with (i) Patrick Mooney as its Chief Executive Officer, (ii) Shawn Singh as its interim, part-time President, and (iii) Harry G. Mitchell as its Chief Operating Officer and Chief Financial Officer.

     (d) the Parent Common Stock shall be quoted on the Over-the-Counter Bulletin Board (“OTCBB”) and there shall be no action or proceeding pending or threatened against Parent by the NASD, Inc. (“NASD”) to prohibit or terminate the quotation of Parent Common Stock on the OTCBB.

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     (e) Parent shall be in compliance with the reporting requirements under the Exchange Act, and shall have timely filed all Exchange Act reports for the twelve (12) month period preceding the Closing Date.

     1.4 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of Delaware Law and North Carolina Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     1.5 Effect on Capital Stock. By virtue of the Merger and without any action on the part of Merger Sub, Company or the holders of any of the following securities:

     (a) Conversion of Company Common Stock. At the Effective Time, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares of Company Common Stock to be canceled pursuant to Section 1.5(b) and any Dissenting Shares (as defined below)) will be canceled and extinguished and be converted automatically into the right to receive 0.4356 shares of Parent Common Stock (the “Exchange Ratio”). An aggregate of 6,250,000 shares of Parent Company Stock shall be issued to the stockholders of the Company in connection with the Merger.

     (b) Cancellation of Company Common Stock Owned by Company. At the Effective Time, all shares of Company Common Stock that are owned by Company as treasury stock and each share of Company Common Stock owned by any direct or indirect wholly owned subsidiary of Company immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof.

     (c) Intentionally Omitted.

     (d) No Fractional Shares. No fractional shares of Parent Common Stock shall be issued in connection with the Merger, and no certificates or scrip for any such fractional shares shall be issued. Any holder of Company Common Stock who would otherwise be entitled to receive a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock issuable to such holder) shall, in lieu of such fraction of a share, be paid in cash the dollar amount (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by the closing bid price of a share of Parent Common Stock on the OTC BB on the Closing Date.

     1.6 No Further Ownership Rights in Company Common Stock. All shares of Parent Common Stock issued upon the surrender for exchange of shares of Company Common Stock then outstanding in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such securities, and there

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shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock which were outstanding immediately prior to the Effective Time; provided, however, that the aggregate number of shares of Parent Common Stock issued to the stockholders of the Company in connection with the Merger shall not exceed 6,250,000 at any time.

     1.7 Tax Consequences. It is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code.

     1.8 Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of Company and Merger Sub, the officers and directors of Company and Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.

     1.9 Exemption from Registration; Blue Sky. Parent and Company intend that the shares of Parent Common Stock to be issued pursuant to Section 1.5 hereof in connection with the Merger will be issued in a transaction exempt from registration under the Securities Act by reason of Section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. Parent shall use its reasonable best efforts to comply with the securities and blue sky laws of all jurisdictions which are applicable to the issuance of the Parent Common Stock and other securities of Parent in connection with the Merger. Company shall use its reasonable best efforts to assist Parent as may be necessary to comply with the securities and blue sky laws of all jurisdictions which are applicable in connection with the issuance of Parent Common Stock and other securities of Parent in connection with the Merger.

     1.10 Shares Subject to Appraisal Rights.

     (a) Notwithstanding Section 1.5, Dissenting Shares (as hereinafter defined) shall not be converted into a right to receive Parent Common Stock and the holders thereof shall be entitled only to such rights as are granted by the North Carolina Law. Each holder of Dissenting Shares who becomes entitled to payment for such shares pursuant to North Carolina Law shall receive payment therefor from the Surviving Corporation in accordance with the North Carolina Law, provided, however, that (i) if any stockholder of Company who asserts appraisal rights in connection with the Merger (a “Dissenter”) has failed to establish entitlement to such rights as provided in North Carolina Law, or (ii) if any such Dissenter has effectively withdrawn a demand for payment for such shares or waived or lost the right to payment for such shares under the appraisal rights process under North Carolina Law the shares of Company Common Stock held by such Dissenter shall be treated as if they had been converted, as of the Effective Time, into a right to receive Parent Common Stock and as provided in Section 1.5. Company has given Parent prompt notice of any demands for payment received by Company from a person asserting appraisal rights, and

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Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settlement or offer to settle, any such demands.

     (b) As used herein, “Dissenting Shares” means any shares of Company Common Stock held by stockholders of Company who are entitled to appraisal rights under North Carolina Law, and who have properly exercised, perfected and not subsequently withdrawn or lost or waived their rights to demand payment with respect to their shares in accordance with North Carolina Law.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF COMPANY

     In this Agreement, any reference to any event, change, condition or effect being “material” with respect to any person means any material event, change, condition or effect related to the condition (financial or otherwise), properties, assets (including intangible assets), liabilities, business, operations or results of operations of such person and its subsidiaries, taken as a whole. In this Agreement, any reference to a “Material Adverse Effect” with respect to any person means any event, change or effect that is materially adverse to the condition (financial or otherwise), properties, assets (including intangible assets), liabilities, business, operations or results of operations of such person and its subsidiaries, taken as a whole.

     In this Agreement, any reference to the Company’s “knowledge” means the Company’s actual knowledge after reasonable inquiry of the Company’s directors and executive officers (within the meaning of Rule 405 under the Securities Act).

     Except as disclosed in that section of the document of even date herewith delivered by Company to Parent prior to the execution and delivery of this Agreement (the “Company Disclosure Schedule”) corresponding to the Section of this Agreement to which any of the following representations and warranties specifically relate or as disclosed in another section of the Company Disclosure Schedule if it is reasonably apparent from the nature of the disclosure that it is applicable to another Section of this Agreement, Company represents and warrants to Parent and Merger Sub as follows:

     2.1 Organization, Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under North Carolina Law, and no certificate of dissolution has been filed under North Carolina Law. The Company has the power to own its properties and to carry on its business as now being conducted and as presently proposed to be conducted and is duly authorized and qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified and in good standing would have a Material Adverse Effect on Company. Company has delivered or made available to Parent a true and correct copy of the Articles of Incorporation, as amended (the “Articles of Incorporation”), and the Bylaws, or other charter documents, as applicable, of Company, each as amended to date. The Company is not in violation of any of the provisions of its charter or bylaws or equivalent

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organization documents. Except as set forth on Schedule 2.1. of the Company Disclosure Schedule, there are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements of any character relating to the issued or unissued capital stock of the Company or otherwise obligating Company to issue, transfer, sell, purchase, redeem or otherwise acquire any such securities. Company does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity.

     2.2 Capital Structure. The authorized capital stock of Company consists of 17,500,000 shares of common stock, no par value, and no shares of preferred stock, of which there were issued and outstanding as of the close of business on September 14, 2007, 13,780,000 shares of common stock. Schedule 2.2 sets forth the names of each stockholder of the Company, the number of shares of the Company’s Common Stock held by each stockholder and the stock certificate number of each certificate held by each person listed on Schedule 2.2. There are no other outstanding shares of capital stock or voting securities and no outstanding commitments to issue any shares of capital stock or voting securities after the date hereof. All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid and non-assessable and, as of the date of this Agreement, are free of any liens or encumbrances, and are not subject to preemptive rights or rights of first refusal created by statute, the Articles of Incorporation or Bylaws of Company or any agreement to which Company is a party or by which it is bound. As of the date of this Agreement, Company has reserved 6,580,000 shares of its common stock for issuance to employees, consultants and directors pursuant to restricted stock purchase agreements and stock option agreements under its 2006 Stock Award Plan, of which 4,580,000 shares have been issued pursuant to restricted stock purchase agreements, no shares have been issued pursuant to option exercises and no shares are subject to outstanding, unexercised options. Except as set forth on Schedule 2.2 of the Company Disclosure Schedule and except for the rights created pursuant to this Agreement and as of the date of this Agreement, there are no other options, warrants, calls, rights, commitments or agreements of any character to which Company is a party or by which it is bound obligating Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of capital stock of Company or obligating Company to grant, extend, accelerate the vesting and/or repurchase rights of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. Except as created pursuant to this Agreement and as of the date of this Agreement, there are no contracts, commitments or agreements relating to voting, purchase or sale of Company’s capital stock (including without limitation agreements relating to preemptive rights, rights of first refusal, co-sale rights or “drag-along” rights), or registration of securities of Company under the Securities Act to which Company is a party or by which it is bound.

     2.3 Authority. Company has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated

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hereby have been duly authorized by all necessary corporate action on the part of Company. This Agreement has been duly executed and delivered by Company and constitutes the valid and binding obligation of Company enforceable against Company in accordance with its terms, except as enforceability may be limited by bankruptcy, antitrust laws, and other laws affecting the rights and remedies of creditors generally and general principles of equity. The execution and delivery of this Agreement by Company does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under (i) any provision of the Articles of Incorporation or Bylaws of Company, as amended, or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Company or any of its properties or assets, except where such conflict, violation, default, termination, cancellation or acceleration with respect to the foregoing provisions of (ii) could not have had and could not reasonably be expected to have a Material Adverse Effect on Company. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality (“Governmental Entity”) is required by or with respect to Company in connection with the execution and delivery of this Agreement, or the consummation of the transactions contemplated hereby and thereby, except for (i) the filing of the Certificate of Merger as provided in Section 1.2; (ii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state securities laws and the securities laws of any foreign country; and (iii) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a Material Adverse Effect on Company and would not prevent, or materially alter or delay any of the transactions contemplated by this Agreement. The Company does not have any subsidiaries or own any securities of any other entity.

     2.4 Financial Statements.

     (a) Company has provided to Parent a correct and complete copy of its audited combined financial statements (including any related notes thereto) of Company for the fiscal years ended December 31, 2006, 2005 and 2004 (the “Audited Financial Statements”). The Audited Financial Statements were prepared in accordance with generally accepted accounting principles of the United States (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and each fairly presents in all material respects the financial position of Company at the respective dates thereof and the results of its operations and cash flows for the periods indicated.

     (b) Company has provided to Parent a correct and complete copy of the reviewed combined financial statements (including any related notes thereto) of Company for the six months ended June 30, 2007 (the “Reviewed Financial Statements”). The Reviewed Financial Statements were prepared in accordance

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with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and each fairly presents in all material respects the financial position of Company at the respective dates thereof and the results of its operations and cash flows for the periods indicated.

     (c) Company has provided to Parent a correct and complete copy of the unaudited combined financial statements of the Company for the seven month period ended July 31, 2007 (the “Unaudited Financial Statements”). The Unaudited Financial Statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved, and fairly present in all material respects the financial position of the Company at the date thereof and the results of its operations and cash flows for the period indicated, except that such statements do not contain notes and are subject to normal adjustments that are not expected to have a Material Adverse Effect on Company.

     2.5 Absence of Certain Changes. Except as set forth on Schedule 2.5 of the Company Disclosure Schedule, since July 31, 2007 (the “Company Balance Sheet Date”), Company has conducted its business in the ordinary course consistent with past practice and there has not occurred: (i) any change, event or condition (whether or not covered by insurance) that has resulted in, or is reasonably likely to result in, or to the best of Company’s knowledge any event beyond Company’s control that is reasonably likely to result in, a Material Adverse Effect to Company; (ii) any acquisition, sale or transfer of any material asset of Company other than in the ordinary course of business and consistent with past practice; (iii) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by Company or any revaluation by Company of any of its assets; (iv) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of Company, or any direct or indirect redemption, purchase or other acquisition by Company of any of its shares of capital stock; (v) any material contract entered into by Company, other than in the ordinary course of business and as provided to Parent, or any amendment or termination of, or default under, any material contract to which Company is a party or by which it is bound; (vi) any amendment or change to Company’s Articles of Incorporation or Bylaws; or (vii) any increase in or modification of the compensation or benefits payable, or to become payable, by Company to any of its directors or employees, other than pursuant to scheduled annual performance reviews, provided that any resulting modifications are in the ordinary course of business and consistent with Company’s past practices. Company has not agreed since July 31, 2007 to take any of the actions described in the preceding clauses (i) through (vii) and is not currently involved in any negotiations to do any of the things described in the preceding clauses (i) through (vii) (other than negotiations with Parent and its representatives regarding the transactions contemplated by this Agreement and the forgiveness of all loans to officers and directors of the Company as set forth on Schedule 2.5 of the Company Disclosure Schedule).

     2.6 Absence of Undisclosed Liabilities. Except as set forth on Schedule 2.6 of the Company Disclosure Schedule, Company has no material obligations or liabilities of any nature (matured or unmatured, fixed or contingent) other than (i) those set forth or adequately provided for in its balance sheet included in its unaudited financial statements

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for the seven months ended July 31, 2007 (the “Company Balance Sheet”), (ii) those incurred in the ordinary course of business, not required to be set forth in the Company Balance Sheet under GAAP and not reasonably likely to have a Material Adverse Effect on Company, (iii) those incurred in the ordinary course of business since the Company Balance Sheet Date and not reasonably likely to have a Material Adverse Effect on Company; and (iv) those incurred in connection with the execution of this Agreement.

     2.7 Litigation. There is no private or governmental action, suit, proceeding, claim, arbitration, audit or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Company, threatened against Company or any of its properties or any of its officers or directors (in their capacities as such). There is no injunction, judgment, decree, order or regulatory restriction imposed upon Company or any of its assets or business, or, to the knowledge of Company, any of its respective directors or officers (in their capacities as such), that would prevent, enjoin, alter or materially delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse Effect on Company.

     2.8 Restrictions on Business Activities. There is no agreement, judgment, injunction, order or decree binding upon Company which has or reasonably could be expected to have the effect of prohibiting or materially impairing any business practice of Company, any acquisition of property by Company or the conduct of business by Company.

     2.9 Governmental Authorization. The Company has obtained each federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a Governmental Entity (i) pursuant to which Company currently operates or holds any interest in any of its properties or (ii) that is required for the operation of Company’s business or the holding of any such interest ((i) and (ii) herein collectively called “Company Authorizations”), and all of such Company Authorizations are in full force and effect, except where the failure to obtain or have any of such Company Authorizations or where the failure of such Company Authorizations to be in full force and effect could not reasonably be expected to have a Material Adverse Effect on Company.

     2.10 Title to Property. Company has good and valid title to all of its properties, interests in properties and assets, real and personal, reflected in the Company Balance Sheet or acquired after the Company Balance Sheet Date (except properties, interests in properties and assets sold or otherwise disposed of since the Company Balance Sheet Date in the ordinary course of business), or in the case of leased properties and assets, valid leasehold interests in, free and clear of all mortgages, liens, pledges, charges or encumbrances of any kind or character, except (i) the lien of current taxes not yet due and payable, (ii) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties, (iii) liens securing debt which is reflected on the Company Balance Sheet, and (iv) liens that in the aggregate would not have a Material Adverse Effect on Company. The plants, property and equipment of Company that are used in the operations of their

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businesses are in good operating condition and repair, except where the failure to be in good operating condition or repair would not have a Material Adverse Effect. All properties used in the operations of Company are reflected in the Company Balance Sheet to the extent GAAP requires the same to be reflected. The Company does not own or lease any real property.

     2.11 Intellectual Property.

     (a) Except as set forth on Schedule 2.11(a) of the Company Disclosure Schedule, Company owns, or is licensed or otherwise possess legally enforceable and unencumbered rights to use, all patents, trademarks, trade names, service marks, domain names, copyrights, and any applications therefor, maskworks, schematics, trade secrets, computer software programs (in both source code, except in circumstances where Company only possesses a license to the object code form, and object code form), and tangible or intangible proprietary information or material (“Intellectual Property”) that are used in the business of Company (“Company Intellectual Property”). Company has not entered into any exclusive agreements relating to Company Intellectual Property. No royalties or other continuing payment obligations are due in respect of Third Party Intellectual Property Rights (as defined below).

     (b) Schedule 2.11(b) of the Company Disclosure Schedule lists (i) all patents and patent applications and all registered trademarks, trade names and service marks, registered copyrights, and maskworks included in the Company Intellectual Property, including the jurisdictions in which each such Intellectual Property right has been issued or registered or in which any application for such issuance and registration has been filed, (ii) all material non-registered Intellectual Property, (iii) all licenses, sublicenses and other agreements as to which Company is a party and pursuant to which any person is authorized to use any Company Intellectual Property (except for non-material licenses entered into by Company in the ordinary course of business), and (iv) all licenses, sublicenses and other agreements as to which Company is a party and pursuant to which Company is authorized to use any third party patents, trademarks or copyrights, including software (“Third Party Intellectual Property Rights”) which are incorporated in, are, or form a part of any Company product, other than commercially available, off-the-shelf software.

     (c) Except as set forth on Schedule 2.11(c) of the Company Disclosure Schedule, to Company’s knowledge, there is no unauthorized use, disclosure, infringement or misappropriation of any Company Intellectual Property rights, or any Intellectual Property right of any third party to the extent licensed by or through Company, to any third party, including any employee or former employee of Company. The Company has not entered into any agreement to indemnify any entity against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in purchase orders, license agreements, and distribution and other customer agreements.

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     (d) Company is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any license, sublicense or other agreement relating to the Company Intellectual Property or Third Party Intellectual Property Rights.

     (e) Except as set forth on Schedule 2.11(e) of the Company Disclosure Schedule, to Company’s knowledge, all patents, trademarks, service marks and copyrights held by Company are valid and subsisting. Company (i) has not been sued in any suit, action or proceeding (or received any notice or, to Company’s knowledge, threat) which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right of any third party and (ii) has not brought any action, suit or proceeding for infringement of Company Intellectual Property or breach of any license or agreement involving Company Intellectual Property against any third party. To Company’s knowledge, the manufacture, use, marketing, licensing or sale of Company’s products does not infringe any patent, trademark, service mark, copyright, trade secret or other proprietary right of any third party.

     (f) Company has secured valid written assignments from all consultants and employees of the Company and its affiliates and all other parties who are known by the Company to have contributed to the creation or development of Company Intellectual Property or the rights to such contributions that Company does not already own by operation of law.

     (g) Company has taken all reasonably necessary steps to protect and preserve the confidentiality of all Company Intellectual Property not otherwise protected by patents or copyright (“Confidential Information”). All use, disclosure or appropriation of Confidential Information owned by Company by or to a third party has been pursuant to the terms of a written agreement between Company and such third party. All use, disclosure or appropriation of Confidential Information not owned by Company has been pursuant to the terms of a written agreement between Company and the owner of such Confidential Information, or is otherwise lawful.

     (h) There are no actions that, to the Company’s knowledge, must be taken by Company within sixty (60) days of the Closing Date that, if not taken, will result in the loss of any Company Intellectual Property, including the payment of any material registration, maintenance or renewal fees or the filing of any responses to the U.S. Patent and Trademark Office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Company Intellectual Property.

     (i) Except as set forth on Schedule 2.11(i) of the Company Disclosure Schedule, Company has not received any opinion of counsel, written or oral, addressing: (i) the unauthorized use, disclosure, infringement, or misappropriation of any Company Intellectual Property; (ii) the validity or enforceability of any Company Intellectual Property; or (iii) the unauthorized use, disclosure,

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infringement, or misappropriation of any third party intellectual property by Company.

     2.12 [INTENTIONALLY OMITTED].

     2.13 Taxes.

     (a) For purposes of this Agreement, the following terms have the following meanings: “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means (i) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental entity (a “Tax authority”) responsible for the imposition of any such tax (domestic or foreign); (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member or a former member of an affiliated, consolidated, combined or unitary group for any Taxable period; and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of being a transferee of or successor to any person or as a result of any express or implied obligation to indemnify any other person, including pursuant to any Tax sharing or Tax allocation agreement. “Tax Return” means any return, statement, report or form (including, without limitation estimated Tax returns and reports, withholding Tax returns and reports and information reports and returns) required to be filed with respect to Taxes.

     (b) Company, and any consolidated, combined, unitary or aggregate group for Tax purposes of which Company is or has been a member, have properly completed and timely filed all Tax Returns required to be filed by them and have paid all Taxes required to be paid, whether or not shown on any Tax Return. All unpaid Taxes of Company and its subsidiaries for periods through July 31, 2007, are reflected in the Company Balance Sheet. Company has no liability for unpaid Taxes accruing after July 31, 2007.

     (c) There is (i) no claim for Taxes that is a lien against the property of Company being asserted against Company other than liens for Taxes not yet due and payable; (ii) no audit of any Tax Return of Company that is being conducted by a Tax authority that is currently pending or threatened, and Company has not been notified of any proposed Tax claims or assessments against Company; (iii) no extension of the statute of limitations on the assessment of any Taxes that has been granted by Company and that is currently in effect; and (iv) no agreement, contract or arrangement to which Company is a party obligates the Company to make a payment of any amount that would not be deductible by reason of Section 280G, 162 or 404 of the Code. Company has not been nor will it be required to include any material adjustment in Taxable income for any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or any

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comparable provision under state or foreign Tax laws as a result of transactions, events or accounting methods employed prior to the Merger.

     (d) There are no Tax sharing or Tax allocation agreements to which Company is a party or to which it is bound. Company has not filed any disclosures under Section 6662 or comparable provisions of state, local or foreign law to prevent the imposition of penalties with respect to any Tax reporting position taken on any Tax Return. Company has in its possession receipts for any Taxes paid to foreign Tax authorities.

     (e) Company has not been either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (x) in the two years prior to the date of this Agreement or (y) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger.

     (f) Except as set forth on Section 2.13 of the Company Disclosure Schedule, Company has withheld (and paid over to the appropriate governmental authorities) with respect to either its employees or any third party all Taxes required to be withheld, including, but not limited to, FICA and FUTA.

     (g) Company has not ever been a United States real property holding corporation within the meaning of Section 897 of the Code.

     2.14 Employee Benefit Plans.

     (a) Schedule 2.14 of the Company Disclosure Schedule lists each deferred compensation and each bonus or other incentive compensation, stock option, stock appreciation right and other equity compensation plan, program or arrangement; each severance, medical, surgical, hospitalization, life insurance and other “welfare” plan, fund or program (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)); each profit-sharing, 401(k) savings or other “pension” plan, fund or program (within the meaning of Section 3(2) of ERISA); each employment, retention or severance agreement (except employment, retention or severance agreements in each case involving annual payment to any one individual of less than $50,000); and each other employee benefit plan, program, policy or agreement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by Company or by any trade or business, whether or not incorporated (an “ERISA Affiliate”), that together with Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA, for the benefit of any employee or former employee of Company (collectively, the “Company Plans”) have been maintained and administered in all material respects in compliance with their respective terms and with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Company Plans, and all liabilities with respect to the Company Plans have been properly reflected in the

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financial statements and records of Company. No suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Company Plan activities) has been brought, or, to the knowledge of Company, is threatened, against or with respect to any Company Plans. There are no audits, inquiries or proceedings pending or, to the knowledge of Company, threatened by any governmental agency with respect to any Company Plan. All contributions, reserves or premium payments required to be made or accrued as of the date hereof to the plans have been timely made or accrued. Company does not have any plan or commitment to establish any new Company Plan, to modify any Company Plan (except to the extent required by law or to conform any such Company Plan to the requirements of any applicable law, in each case as previously disclosed to Parent in writing, or as required by this Agreement), or to enter into any new plan. Each Company Plan can be amended, terminated or otherwise discounted after the Closing in accordance with its terms, without liability to Parent or Company (other than ordinary administration expenses and expenses for benefits accrued but not yet paid). Accurate and complete copies of all such Company Plans have been made available or delivered to Parent.

     (b) Except as disclosed in Schedule 2.14 of the Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any stockholder, director, employee or affiliate of the Company under any Company Plan or otherwise, (ii) materially increase any benefits otherwise payable under any Company Plan, or (iii) result in the acceleration of the time of payment or vesting of any such benefits.

     (c) Neither the Company, any Company Plans, nor any trustee or administrator thereof has engaged in a transaction in connection with which the Company, any Company Plans, or any trustee or administrator thereof, could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Internal Revenue Code of 1986, as amended.

     2.15 Labor Matters. Except as set forth in Schedule 2.15 of the Company Disclosure Schedule, the Company does not have any full-time employees. Company is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by Company nor does Company know of any activities or proceedings of any labor union to organize any such employees. There is no employment-related private or governmental action, suit, proceeding, claim, arbitration, audit or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Company, threatened against Company or any of its properties or any of its officers or directors (in their capacities as such), arising or occurring against Company or any of its properties or any of its officers or directors (in their capacities as such) by any current or former employee of Company alleging a violation or breach of any law, regulation or contract, including any claim relating to worker’s compensation, employee disability or similar matters.

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     2.16 Interested Party Transactions. Except as disclosed in Schedule 2.16 of the Company Disclosure Schedule, Company is not indebted to any director or officer of Company (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses) or Company Affiliate (as defined below), and no such person or Company Affiliate is indebted to Company. Except as disclosed in Schedule 2.16 of the Company Disclosure Schedule, since January 1, 2003 there have been no transactions, including loans, leases, agreements, transactions, arrangements or relationships between the Company, on the one hand, and any present or former stockholder, director, officer or full-time employee of any Company, or any person controlling, controlled by or under common control with the Company (collectively, “Company Affiliates”), on the other hand. Except as disclosed in Schedule 2.16 of the Company Disclosure Schedule, no Company Affiliate is directly or indirectly interested in any material contract of the Company or has or claims to have any interest in the Intellectual Property of the Company.

     2.17 Insurance. Company has policies of insurance and bonds of the type and in amounts customarily carried by persons conducting businesses or owning assets similar to those of Company. There is no material claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and Company is otherwise in compliance in all material respects with the terms of such policies and bonds. Company has no knowledge of any threatened termination of, or material premium increase with respect to, any of such policies.

     2.18 Compliance With Laws. To the Company’s knowledge, the Company has complied with, is not in violation of, and has not received any notices of violation with respect to, any federal, state, local or foreign statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply as could not be reasonably expected to have a Material Adverse Effect on Company.

     2.19 Minute Books. The minute books of Company made available to Parent contain in all material respects a complete and accurate summary of all meetings of directors and stockholders or actions by written consent of Company during the past three years and through the date of this Agreement, and reflect all transactions referred to in such minutes accurately in all material respects.

     2.20 Brokers’ and Finders’ Fees. Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transaction contemplated hereby.

     2.21 Vote Required. The affirmative vote of the Company’s stockholders holding a majority of the outstanding shares of Company Common Stock is the only vote of the holders of any of Company’s capital stock necessary to approve this Agreement and the transactions contemplated hereby.

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     2.22 Board Approval. The Board of Directors of Company has (i) approved this Agreement and the Merger, (ii) determined that this Agreement and the Merger are advisable and in the best interests of the stockholders of Company and are on terms that are fair to such stockholders and (iii) recommended that the stockholders of Company approve this Agreement and consummation of the Merger. The stockholders of the Company holding all of the issued and outstanding stock of the Company have approved this Agreement and the consummation of the Merger.

     2.23 Representations Complete. None of the representations or warranties made by Company herein or in any Schedule hereto, including the Company Disclosure Schedule, or certificate furnished by Company pursuant to this Agreement, when all such documents are read together in their entirety, contains or will contain at the Effective Time any untrue statement of a material fact, or omits or will omit at the Effective Time to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     In this Agreement, any reference to the Parent’s, its subsidiaries’, and/or Merger Sub’s knowledge means such party’s actual knowledge after reasonable inquiry of such party’s executive officers and directors (within the meaning of Rule 405 under the Securities Act.)

     Except as disclosed in that section of the document of even date herewith delivered by Parent to Company prior to the execution and delivery of this Agreement (the “Parent Disclosure Schedule”) corresponding to the Section of this Agreement to which any of the following representations and warranties specifically relate or as disclosed in another section of the Parent Disclosure Schedule if it is reasonably apparent from the nature of the disclosure that it is applicable to another Section of this Agreement, Parent represents and warrants to Company as follows:

     3.1 Organization, Standing and Power. Each of Parent, its subsidiaries, and Merger Sub is a corporation duly organized, validly existing and in good standing, and no certificates of dissolutions have been filed under the laws of its jurisdiction of organization. Each of Parent and its subsidiaries has the corporate power to own its properties and to carry on its business as now being conducted and as proposed to be conducted and is duly authorized and qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified and in good standing would have a Material Adverse Effect on Parent. Parent has delivered or made available to Company a true and correct copy of the Certificate of Incorporation (the “Certificate of Incorporation”), and the Bylaws, or other charter documents, as applicable, of Parent, each of its subsidiaries and Merger Sub, each as amended to date. Neither Parent nor any of its subsidiaries or Merger Sub is in violation of any of the provisions of its respective charter or bylaws or equivalent organization documents. Parent is the owner of all outstanding shares of capital stock of Merger Sub and each of its other subsidiaries, and all such shares are duly authorized, validly issued, fully paid and nonassessable. All of

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the outstanding shares of capital stock of Merger Sub and each of Parent’s other subsidiaries are owned by Parent free and clear of all liens, charges, claims or encumbrances or rights of others. Except as set forth on Schedule 3.1 of the Parent Disclosure Schedule, there are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements of any character relating to the issued or unissued capital stock or other securities of Parent, Merger Sub or any other of Parent’s subsidiaries, or otherwise obligating Parent, Merger Sub, or any other of Parent’s subsidiaries to issue, transfer, sell, purchase, redeem or otherwise acquire any such securities. Except as disclosed in Schedule 3.1 of the Parent Disclosure Schedule, Parent does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. Schedule 3.1 of the Parent Disclosure Schedule lists, and Parent has delivered to Company copies of, the charters of each committee of Parent’s Board of Directors and any code of conduct or similar policy adopted by Parent.

     3.2 Capital Structure. The authorized capital stock of Parent consists of 60,000,000 shares of common stock, $.01, par value, and 7,000,000 shares of preferred stock, $.01 par value, of which there were issued and outstanding as of the close of business on the date hereof, 11,497,679 shares of common stock and no shares of preferred stock. The shares of Parent Common Stock to be issued pursuant to the Merger will be duly authorized, validly issued, fully paid, and non-assessable, free of any liens or encumbrances. Except as set forth on Schedule 3.2 of the Parent Disclosure Schedule, there are no other outstanding shares of capital stock or voting securities and no outstanding commitments to issue any shares of capital stock or voting securities after the date hereof, other than pursuant to the exercise of options outstanding as of such date under Parent’s 1997 Long-Term Incentive and Stock Option Plan, as amended, 1999 Stock Option and Incentive Plan, and 2003 Stock Option and Incentive Plan, as amended (collectively, the “Parent Stock Option Plan”). All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and non-assessable and are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof, and are not subject to preemptive rights or rights of first refusal created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement to which Parent is a party or by which it is bound. All of the issued and outstanding shares of Parent Common Stock were issued in compliance with applicable federal and state securities laws. As of the date hereof, Parent has reserved 1,818,138 shares of common stock for issuance to employees, consultants and directors pursuant to the Parent Stock Option Plan, of which 44,418 shares have been issued pursuant to option exercises or direct stock purchases, 744,771 shares are subject to outstanding, unexercised options, no shares are subject to outstanding stock purchase rights, and 1,028,949 shares are available for issuance thereunder. Except as set forth on Schedule 3.2 of the Parent Disclosure Schedule, since June 30, 2007, Parent has not issued or granted additional options under the Parent Stock Option Plan. Except for (i) the rights created pursuant to this Agreement, and the Parent Stock Option Plan and (ii) Parent’s rights to repurchase any unvested shares under the Parent Stock Option Plan or the stock option agreements thereunder, and (iii) warrants and convertible securities listed on Schedule 3.2 of the

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Parent Disclosure Schedule, there are no other options, warrants, calls, rights, commitments or agreements of any character to which Parent is a party or by which it is bound obligating Parent to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of capital stock of Parent or obligating Parent to grant, extend, accelerate the vesting and/or repurchase rights of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. Schedule 3.2 of the Parent Disclosure Schedule sets forth (i) for each of Parent’s outstanding warrants and convertible securities, the price at which any such securities or rights are exercisable, exchangeable or convertible into shares of capital stock of Parent and the term of expiration of such securities or rights, and (ii) all of the securities or instruments issued by Parent that contain anti-dilution or similar provisions, and, except as and to the extent set forth thereon, the issuance of the Parent Common Stock in connection with the transactions contemplated hereby will not trigger any anti-dilution adjustments to any such securities or instruments. Parent has fully complied with the terms of each of its securities and instruments, and each agreement, contract, and understanding, pursuant to which Parent has been required to issue any person (including, without limitation, Massachusetts Institute of Technology), additional shares of Parent Common Stock or other capital stock of Parent as a result of anti-dilution or similar provisions, and the number of issued and outstanding shares of Parent Common Stock provided above in this Section 3.2 reflects all such issuance of Parent Common Stock which Parent has been required to issue by the terms of any such provisions. Except as created pursuant to this Agreement and except as set forth in Schedule 3.2 of the Parent Disclosure Schedule, there are no contracts, commitments or agreements relating to voting, purchase or sale of Parent’s capital stock (including without limitation agreements relating to preemptive rights, rights of first refusal, co-sale rights or “drag-along” rights), or registration of securities of Parent under the Securities Act (i) to which Parent is a party or by which it is bound and (ii) to the best of Parent’s knowledge, to which Parent is not a party and by which it is not bound. True and complete copies of all agreements and instruments relating to or issued under the Parent Stock Option Plan have been made available to Company and such agreements and instruments have not been amended, modified or supplemented, and there are no agreements to amend, modify or supplement such agreements or instruments in any case from the form made available to Company. The shares of Parent Common Stock issued under the Parent Stock Option Plan have either been registered under the Securities Act or were issued in transactions which qualified for exemptions under, either Section 4(2) of, or Rule 701 under, the Securities Act for stock issuances under compensatory benefit plans.

     3.3 Authority. Parent and Merger Sub have all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Merger Sub. This Agreement has been duly executed and delivered by Parent and Merger Sub and constitutes the valid and binding obligations of Parent and Merger Sub enforceable against Parent and Merger Sub in accordance with its terms, except as enforceability may be limited by bankruptcy, antitrust laws, and other laws

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affecting the rights and remedies of creditors generally and general principles of equity. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under (i) any provision of the Certificate of Incorporation or Bylaws of Parent or any of its subsidiaries, as amended (including, without limitation, the triggering of any anti-dilution provisions), or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent or any of its subsidiaries or their properties or assets, except where such conflict, violation, default, termination, cancellation or acceleration with respect to the foregoing provisions of (ii) could not have had and could not reasonably be expected to have a Material Adverse Effect on Parent. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required by or with respect to Parent or any of its subsidiaries in connection with the execution and delivery of this Agreement by Parent and Merger Sub or the consummation by Parent and Merger Sub of the transactions contemplated hereby, except for (i) the filing of the Certificate of Merger as provided in Section 1.2; (ii) the filing with the SEC of Form D; (iii) the filing of a Form 8-K with the SEC within four (4) business days after the Closing Date (including the filing of required audited and interim period financial statements and pro forma financial information after giving effect to the transaction contemplated by this Agreement within 71 days after the filing of the initial Form 8-K); (iv) any filings as may be required under applicable state securities laws and the securities laws of any foreign country; (v) any filings required with the OTC BB with respect to the shares of Parent Common Stock issuable upon exchange of the Company Common Stock in the Merger and upon exercise of the options to purchase Parent Common Stock issued by Parent upon the exchange of the outstanding options to purchase Company Common Stock; and (vi) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a Material Adverse Effect on Parent and would not prevent or materially alter or delay any of the transactions contemplated by this Agreement.

     3.4 SEC Documents; Financial Statements. Parent has made available to Company a true and complete copy of each statement, report, registration statement (with the prospectus in the form filed pursuant to Rule 424(b) of the Securities Act), definitive proxy statement, and other filings filed with the SEC by Parent since August 15, 2006, and, prior to the Effective Time, Parent will have furnished or made available to Company true and complete copies of any additional documents filed with the SEC by Parent prior to the Effective Time (collectively, the “Parent SEC Documents”). Parent has timely filed all forms, statements and documents required to be filed by it with the SEC since August 15, 2006. In addition, Parent has made available to Company all exhibits to the Parent SEC Documents filed prior to the date hereof, and will promptly make available to Company all exhibits to any additional Parent SEC Documents filed prior to the Effective Time. All documents required to be filed as exhibits to the Parent SEC Documents have been so filed, and all material contracts so filed as exhibits are in full force and effect, except those that have expired in accordance with their terms, and

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neither Parent nor any of its subsidiaries is in material default thereunder. As of their respective filing dates, the Parent SEC Documents complied in all material respects with the requirements of the Exchange Act and the Securities Act, and none of the Parent SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a subsequently filed Parent SEC Document. None of Parent’s subsidiaries is required to file any forms, reports or other documents with the SEC. The financial statements of Parent, including the notes thereto, included in the Parent SEC Documents (the “Parent Financial Statements”) were complete and correct in all material respects as of their respective dates, complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates, and have been prepared in accordance with GAAP applied on a basis consistent throughout the periods indicated and consistent with each other (except as may be indicated in the notes thereto or, in the case of unaudited statements included in Quarterly Reports on Form 10-QSB, as permitted by Form 10-QSB of the SEC) and are consistent with the books and records of Parent. The Parent Financial Statements fairly present the consolidated financial condition and operating results of Parent and its subsidiaries at the dates and during the periods indicated therein (subject, in the case of unaudited statements, to normal, recurring year-end adjustments).

     3.5 Intentionally Left Blank.

     3.6 Absence of Certain Changes. Except as set forth on Schedule 3.6 of the Parent Disclosure Schedule, and except as is disclosed in the Parent’s quarterly report on Form 10-QSB for its quarter ending June 30, 2007, since June 30, 2007 (the “Parent Balance Sheet Date”), Parent has conducted its business in the ordinary course consistent with past practice and there has not occurred: (i) any change, event or condition (whether or not covered by insurance) that has resulted in, or is reasonably likely to result in, or to the best of Parent’s knowledge any event beyond Parent’s control that is reasonably likely to result in, a Material Adverse Effect to Parent; (ii) any acquisition, sale or transfer of any material asset of Parent or any of its subsidiaries other than in the ordinary course of business and consistent with past practice; (iii) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by Parent or any revaluation by Parent of any of its or any of its subsidiaries’ assets; (iv) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of Parent, or any direct or indirect redemption, purchase or other acquisition by Parent of any of its shares of capital stock; (v) any material contract entered into by Parent or any of its subsidiaries, other than in the ordinary course of business and as provided to Company, or any amendment or termination of, or default under, any material contract to which Parent or any of its subsidiaries is a party or by which it is bound; (vi) any amendment or change to Parent’s Certificate of Incorporation or Bylaws; or (vii) any increase in or modification of the compensation or benefits payable, or to become payable, by Parent to any of its directors or employees, other than pursuant to scheduled annual performance reviews, provided that any resulting

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modifications are in the ordinary course of business and consistent with Parent’s past practices. Parent has not agreed since June 30, 2007 to do any of the things described in the preceding clauses (i) through (vii) and is not currently involved in any negotiations to take any of the actions described in the preceding clauses (i) through (vii) (other than negotiations with the Company and its representatives regarding the transactions contemplated by this Agreement).

     3.7 Absence of Undisclosed Liabilities. Except as set forth on Schedule 3.7 of the Parent Disclosure Schedule, Parent has no material obligations or liabilities of any nature (matured or unmatured, fixed or contingent) other than (i) those set forth or adequately provided for in the Balance Sheet included in Parent’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2007 (the “Parent Balance Sheet”), (ii) those incurred in the ordinary course of business, not required to be set forth in the Parent Balance Sheet under GAAP and not reasonably likely to have a Material Adverse Effect on Company, (iii) those incurred in the ordinary course of business since the Parent Balance Sheet date and not reasonably likely to have a Material Adverse Effect on Parent, and (iv) those incurred in connection with this Agreement.

     3.8 Litigation. Schedule 3.8 of the Parent Disclosure Schedule lists all actions, suits, proceedings, claims, arbitrations, audits and investigations pending before any agency, court or tribunal that involve Parent or any of its subsidiaries. There is no private or governmental action, suit, proceeding, claim, arbitration, audit or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Parent or any of its subsidiaries, threatened against Parent or any of its subsidiaries or any of their respective properties or any of their respective officers or directors (in their capacities as such). There is no injunction, judgment, decree, order or regulatory restriction imposed upon Parent or any of its subsidiaries or any of their respective assets or business, or, to the knowledge of Parent and its subsidiaries, any of their respective directors or officers (in their capacities as such), that would prevent, enjoin, alter or materially delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse Effect on Parent.

     3.9 Restrictions on Business Activities. Except as set forth on Schedule 3.9 of the Parent Disclosure Schedule, there is no agreement, judgment, injunction, order or decree binding upon Parent or any of its subsidiaries which has or reasonably could be expected to have the effect of prohibiting or materially impairing any business practice of Parent or any of its subsidiaries, any acquisition of property by Parent or any of its subsidiaries or the conduct of business by Parent or any of its subsidiaries.

     3.10 Governmental Authorization. Parent and each of its subsidiaries have obtained each federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a Governmental Entity (i) pursuant to which Parent or any of its subsidiaries currently operates or holds any interest in any of its properties or (ii) that is required for the operation of Parent’s or any of its subsidiaries’ business or the holding of any such interest ((i) and (ii) herein collectively called “Parent Authorizations”), and all of such Parent Authorizations are in full force and effect, except where the failure to obtain or have any of such Parent Authorizations or where the failure

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of such Parent Authorizations to be in full force and effect could not reasonably be expected to have a Material Adverse Effect on Company.

     3.11 Title to Property. Parent and its subsidiaries have good and valid title to all of their respective properties, interests in properties and assets, real and personal, reflected in the Parent Balance Sheet or acquired after the Parent Balance Sheet Date (except properties, interests in properties and assets sold or otherwise disposed of since the Parent Balance Sheet Date in the ordinary course of business), or in the case of leased properties and assets, valid leasehold interests in, free and clear of all mortgages, liens, pledges, charges or encumbrances of any kind or character, except (i) the lien of current taxes not yet due and payable, (ii) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties, (iii) liens securing debt which is reflected on the Parent Balance Sheet, and (iv) liens that in the aggregate would not have a Material Adverse Effect on Parent or Merger Sub. The plants, property and equipment of Parent and its subsidiaries that are used in the operations of their businesses are in good operating condition and repair, except where the failure to be in good operating condition or repair would not have a Material Adverse Effect. All properties used in the operations of Parent and its subsidiaries are reflected in the Parent Balance Sheet to the extent GAAP requires the same to be reflected. Schedule 3.11 of the Parent Disclosure Schedule identifies each parcel of real property owned or leased by Parent or any of its subsidiaries. No lease relating to a foreign parcel contains any extraordinary payment obligation.

     3.12 Intellectual Property.

     (a) Except as set forth on Schedule 3.12(a) of the Parent Disclosure Schedule, Parent and its subsidiaries own, or are licensed or otherwise possess legally enforceable and unencumbered rights to use all Intellectual Property that is used in the business of Parent and its subsidiaries (“Parent Intellectual Property”). Except as set forth on Schedule 3.12(a) of the Parent Disclosure Schedule, Parent has not entered into any exclusive agreements relating to Parent Intellectual Property. No royalties or other continuing payment obligations are due in respect of Parent Third Party Intellectual Property Rights (as defined below).

     (b) Schedule 3.12(b) of the Parent Disclosure Schedule lists (i) all patents and patent applications and all registered trademarks, trade names and service marks, registered copyrights, and maskworks included in the Parent Intellectual Property, including the jurisdictions in which each such Intellectual Property right has been issued or registered or in which any application for such issuance and registration has been filed, (ii) all material non-registered Intellectual Property, (iii) all licenses, sublicenses and other agreements as to which Parent is a party and pursuant to which any person is authorized to use any Parent Intellectual Property (except for non-material licenses entered into by Parent in the ordinary course of business), and (iv) all licenses, sublicenses and other agreements as to which Parent is a party and pursuant to which Parent is authorized to use any third party patents, trademarks or copyrights, including

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software (“Parent Third Party Intellectual Property Rights”) which are incorporated in, are, or form a part of any Parent product, other than commercially available, off-the-shelf software.

     (c) To Parent’s knowledge, there is no unauthorized use, disclosure, infringement or misappropriation of any Parent Intellectual Property rights, or any Intellectual Property right of any third party to the extent licensed by or through Parent or any of its subsidiaries, to any third party, including any employee or former employee of Parent or any of its subsidiaries. Neither Parent nor any of its subsidiaries has entered into any agreement to indemnify any entity against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in purchase orders, license agreements, and distribution and other customer agreements.

     (d) Parent is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any license, sublicense or other agreement relating to the Parent Intellectual Property or Parent Third Party Intellectual Property Rights.

     (e) To Parent’s knowledge, all patents, trademarks, service marks and copyrights held by Parent are valid and subsisting. Parent (i) has not been sued in any suit, action or proceeding (or received any notice or, to Parent’s knowledge, threat) which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right of any third party and (ii) has not brought any action, suit or proceeding for infringement of Parent Intellectual Property or breach of any license or agreement involving Parent Intellectual Property against any third party. To Parent’s knowledge, the manufacture, use, marketing, licensing or sale of Parent’s products does not infringe any patent, trademark, service mark, copyright, trade secret or other proprietary right of any third party.

     (f) Parent has secured valid written assignments from all consultants and employees who contributed to the creation or development of Parent Intellectual Property of the rights to such contributions that Parent does not already own by operation of law.

     (g) Parent has taken all reasonably necessary steps to protect and preserve the confidentiality of all Parent Intellectual Property not otherwise protected by patents or copyright (“Parent Confidential Information”). All use, disclosure or appropriation of Parent Confidential Information owned by Parent by or to a third party has been pursuant to the terms of a written agreement between Parent and such third party. All use, disclosure or appropriation of Parent Confidential Information not owned by Parent has been pursuant to the terms of a written agreement between Parent and the owner of such Parent Confidential Information, or is otherwise lawful.

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     (h) There are no actions that, to Parent’s knowledge, must be taken by Parent or any subsidiary within sixty (60) days of the Closing Date that, if not taken, will result in the loss of any Parent Intellectual Property, including the payment of any registration, maintenance or renewal fees or the filing of any responses to the U.S. Patent and Trademark Office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Parent Intellectual Property.

     (i) Except as set forth on Schedule 3.12(i) of the Parent Disclosure Schedule, Parent and its subsidiaries have not received any opinion of counsel, written or oral, addressing: (i) the unauthorized use, disclosure, infringement, or misappropriation of any Parent Intellectual Property; (ii) the validity or enforceability of any Parent Intellectual Property; or (iii) the unauthorized use, disclosure, infringement, or misappropriation of any third party intellectual property by Parent or any of its subsidiaries.

     3.13 Taxes.

     (a) Parent and each of its subsidiaries, and any consolidated, combined, unitary or aggregate group for Tax purposes of which Parent is or has been a member, have properly completed and timely filed all Tax Returns required to be filed by them and have paid all Taxes required to be paid, whether or not shown on any Tax Return. All unpaid Taxes of Parent for periods through June 30, 2007, are reflected in the Parent Balance Sheet. Parent has no liability for unpaid Taxes accruing after June 30, 2007, other than Taxes arising in the ordinary course of its business subsequent to June 30, 2007.

     (b) There is (i) no claim for Taxes that is a lien against the property of Parent or any of its subsidiaries being asserted against Parent or any of its subsidiaries other than liens for Taxes not yet due and payable; (ii) no audit of any Tax Return of Parent or any of its subsidiaries that is being conducted by a Tax authority that is currently pending or threatened, and Parent has not been notified of any proposed Tax claims or assessments against Parent or any of its subsidiaries; (iii) no extension of the statute of limitations on the assessment of any Taxes that has been granted by Parent or any of its subsidiaries and that is currently in effect; and (iv) no agreement, contract or arrangement to which Parent or any of its subsidiaries is a party that may result in the payment of any amount that would not be deductible by reason of Sections 280G, 162 or 404 of the Code. Neither Parent nor any of its subsidiaries has been or will be required to include any material adjustment in Taxable income for any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or any comparable provision under state or foreign Tax laws as a result of transactions, events or accounting methods employed prior to the Merger.

     (c) There are no Tax sharing or Tax allocation agreements to which Parent or any of its subsidiaries is a party or to which any of them is bound. Neither Parent nor any of its subsidiaries has filed any disclosures under

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Section 6662 or comparable provisions of state, local or foreign law to prevent the imposition of penalties with respect to any Tax reporting position taken on any Tax Return. Parent and each of its subsidiaries has in its possession receipts for any Taxes paid to foreign Tax authorities.

     (d) Parent has not been either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (x) in the two years prior to the date of this Agreement or (y) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger.

     (e) Parent and each of its subsidiaries has withheld (and paid over to the appropriate governmental authorities) with respect to either its employees or any third party all Taxes required to be withheld, including, but not limited to, FICA and FUTA.

     (f) Parent and each of its subsidiaries have never been a United States real property holding corporation within the meaning of Section 897 of the Code.

     3.14 Employee Benefit Plans.

     (a) All deferred compensation and each bonus or other incentive compensation, stock option, stock appreciation right and other equity compensation plan, program or arrangement; each severance, medical, surgical, hospitalization, life insurance and other “welfare” plan, fund or program (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)); each profit-sharing, 401(k) savings or other “pension” plan, fund or program (within the meaning of Section 3(2) of ERISA); each employment, retention or severance agreement (except employment, retention or severance agreements in each case involving annual payment to any one individual of less than $50,000); and each other employee benefit plan, program, policy or agreement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by Parent or any of its subsidiaries or by any trade or business, whether or not incorporated (an “ERISA Affiliate”), that together with the Parent or any of its subsidiaries would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA, for the benefit of any employee or former employee of the Parent or any of its subsidiaries (collectively, the “Parent Plans”) have been maintained and administered in all material respects in compliance with their respective terms and with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Plans, and all liabilities with respect to the Parent Plans have been properly reflected in the financial statements and records of Parent. No suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Parent Plan activities) has been brought, or, to the knowledge of Parent, is threatened, against or with respect to any Parent Plan. There are no audits, inquiries or proceedings pending or, to the knowledge of

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Parent, threatened by any governmental agency with respect to any Parent Plan. All contributions, reserves or premium payments required to be made or accrued as of the date hereof to the Parent Plans have been timely made or accrued. Parent does not have any plan or commitment to establish any new Parent Plan, to modify any Parent Plan (except to the extent required by law or to conform any such Parent Plan to the requirements of any applicable law, in each case as previously disclosed to Parent in writing, or as required by this Agreement), or to enter into any new plan. Each Parent Plan can be amended, terminated or otherwise discounted after the Closing in accordance with its terms, without liability to Parent (other than ordinary administration expenses and expenses for benefits accrued but not yet paid). Accurate and complete copies of all such Parent Plans have been made available or delivered to Company.

     (b) Except as disclosed in Schedule 3.14 of the Parent Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any stockholder, director or employee of Parent under any Parent Plan or otherwise, (ii) materially increase any benefits otherwise payable under any Parent Plan, or (iii) result in the acceleration of the time of payment or vesting of any such benefits.

     (c) Neither Parent or any of its subsidiaries, any Parent Plans, nor any trustee or administrator thereof has engaged in a transaction in connection with which the Parent or any of its subsidiaries, any Parent Plans, or any trustee or administrator thereof, could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Internal Revenue Code of 1986, as amended.

     3.15 Labor Matters. Parent is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by Parent nor does Parent know of any activities or proceedings of any labor union to organize any such employees. There is no employment-related private or governmental action, suit, proceeding, claim, arbitration, audit or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Parent or any of its subsidiaries, threatened against Parent or any of its subsidiaries or any of their respective properties or any of their respective officers or directors (in their capacities as such), arising or occurring against Parent or any of its subsidiaries or any of their respective properties or any of their respective officers or directors (in their capacities as such) by any current or former employee of Parent or any of its subsidiaries alleging a violation or breach of any law, regulation or contract, including any claim relating to worker’s compensation, employee disability or similar matters. Parent has no liability under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101, et. seq., in connection with its termination of employees in December 2006.

     3.16 Interested Party Transactions. Except as disclosed in the Parent SEC Documents, neither Parent nor any of its subsidiaries is indebted to any director or officer

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of Parent or its subsidiaries (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such person is indebted to Parent or any of its subsidiaries, and there are no other transactions of the type required to be disclosed pursuant to Items 402 or 404 of Regulation S-K under the Securities Act and the Exchange Act.

     3.17 Insurance. Parent and its subsidiaries have policies of insurance and bonds of the type and in amounts customarily carried by persons conducting businesses or owning assets similar to those of Parent and its subsidiaries, including directors and officers liability insurance. There is no material claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and Parent and its subsidiaries are otherwise in compliance in all material respects with the terms of such policies and bonds. Parent has no knowledge of any threatened termination of, or material premium increase with respect to, any of such policies.

     3.18 Compliance With Laws. Parent and each of its subsidiaries has complied with, is not in violation of, and has not received any notices of violation with respect to, any federal, state, local or foreign statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply as would not be reasonably expected to have a Material Adverse Effect on Parent.

     3.19 Broker’s and Finders’ Fees. Parent has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transaction contemplated hereby, except as disclosed on Schedule 3.19 of the Parent Disclosure Schedule.

     3.20 Minute Books. The minute books of Parent made available to Company contain in all material respects a complete and accurate summary of all meetings of directors and stockholders or actions by written consent of Parent during the past three years and through the date of this Agreement, and reflect all transactions referred to in such minutes accurately in all material respects.

     3.21 Vote Required. The approval of Parent’s and Merger Sub’s Board of Directors and the affirmative vote of Parent as sole stockholder of Merger Sub are the only approvals or votes necessary to approve this Agreement and the transactions contemplated hereby.

     3.22 Board Approval. The Board of Directors of Parent has (i) approved this Agreement and the Merger, and (ii) approved the issuance of the shares of Parent Common Stock pursuant to Article I. The Board of Directors of Merger Sub has approved this Agreement and the Merger, and recommended that the sole stockholder of Merger Sub approve this Agreement and the Merger.

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     3.23 Over-the-Counter Bulletin Board Quotation. Parent Common Stock is quoted on the OTC BB. There is no action or proceeding pending or, to Parent’s knowledge, threatened against Parent by Nasdaq or NASD with respect to any intention by such entities to prohibit or terminate the quotation of Parent Common Stock on the OTC BB.

     3.24 Anti-Takeover Provisions.

     (a) Parent has either

               (i) taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under its Certificate of Incorporation or the laws of the state of its incorporation (“Anti-takeover Provision’), or

               (ii) complied with the terms and provisions of each Anti-Takeover Provision,

in the case of each of (i) and (ii), which is or could have become applicable to Parent or any of its stockholders as the result of any capital raising activities of Parent within the last three years, including without limitation, any issuance by Parent of shares of Parent Common Stock.

     (b) Parent has taken all necessary action, if any, in order to render inapplicable any Anti-Takeover Provision which is or could become applicable to any stockholder of Company as a result of the transactions contemplated by this Agreement, including, without limitation, Parent’s issuance of the shares of Parent Common Stock and options to purchase Parent Common Stock and any and all ownership of the shares of Parent Common Stock issued in connection with the Merger by the stockholders of the Company.

     3.25 Representations Complete. None of the representations or warranties made by Parent or Merger Sub herein or in any Schedule hereto, including the Parent Disclosure Schedule, or certificate furnished by Parent or Merger Sub pursuant to this Agreement, or the Parent SEC Documents, when all such documents are read together in their entirety, contains or will contain at the Effective Time any untrue statement of a material fact, or omits or will omit at the Effective Time to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

ARTICLE IV

ADDITIONAL AGREEMENTS

     4.1 Confidential Information. Except in connection with any dispute between the parties and subject to any obligation to comply with (i) any applicable law, (ii) any rule or regulation of any governmental authority or securities exchange, or

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(iii) any subpoena or other legal process to make information available to the persons entitled thereto, whether or not the transactions contemplated herein shall be concluded, all information obtained by any party about any other, and all of the terms and conditions of this Agreement, shall be kept in confidence by each party, and each party shall cause its stockholders, directors, officers, managers, employees, agents and attorneys to hold such information confidential. Such confidentiality shall be maintained to the same degree as such party maintains its own confidential information and shall be maintained until such time, if any, as any such data or information either is, or becomes, published or a matter of public knowledge; provided, however, that the foregoing shall not apply to any information obtained by a party through its own independent investigations of the other party or received by a party from a source not known by such party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the other party, nor to any information obtained by a party which is generally known to others engaged in the trade or business of such party. In the event a party to this Agreement becomes legally compelled to disclose any such information, it shall promptly provide the others with written notice of such requirement so that the other parties to this Agreement may seek a protective order or other remedy.

     4.2 Form 8-K. Parent shall prepare and file a Current Report on Form 8-K announcing the Closing and other matters required by such Form 8-K as a result of the Merger, together with the required financial statements prepared by Company and its auditors, and such other information that may be required to be disclosed with respect to the Merger in any report or form to be filed with the SEC. Parent and Company will prepare the press release announcing the consummation of the Merger.

     4.3 Indemnification.

     (a) After the Effective Time, Parent will fulfill and honor in all respects the obligations of Company pursuant to the indemnification provisions of Company’s Articles of Incorporation and Bylaws or any indemnification agreement with Company officers and directors to which Company is a party, in each case in effect on the date hereof; provided that such indemnification shall be subject to any limitation imposed from time to time under applicable law. Without limitation of the foregoing, in the event any person so indemnified (an “Indemnified Party”) is or becomes involved in any capacity in any action, proceeding or investigation in connection with any matter relating to this Agreement or the transactions contemplated hereby occurring on or prior to the Effective Time, Parent shall, or shall cause the Surviving Corporation to, pay as incurred such Indemnified Party’s reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith to the fullest extent permitted by the North Carolina Law upon receipt of any undertaking contemplated by Section 55-8-53 of the North Carolina Law. Any Indemnified Party wishing to claim indemnification under this Section 4.4, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Parent and the Surviving Corporation, and shall deliver to Parent and the Surviving Corporation the undertaking contemplated by Section 55-8-53 of the North Carolina Law.

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     (b) To the extent there is any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time) against an Indemnified Party that arises out of or pertains to any action or omission in his or her capacity as director, officer, employee, fiduciary or agent of Company occurring prior to the Effective Time, or arises out of or pertains to the transactions contemplated by this Agreement for a period lasting until the expiration of five years after the Effective Time (whether arising before or after the Effective Time), in each case for which such Indemnified Party is indemnified under this Section 4.4, such Indemnified Party shall be entitled to be represented by counsel, which counsel shall be counsel of Parent (provided that if use of counsel of Parent would be expected under applicable standards of professional conduct to give rise to a conflict between the position of the Indemnified Person and of Parent, the Indemnified Party shall be entitled instead to be represented by counsel selected by the Indemnified Party and reasonably acceptable to Parent) and following the Effective Time the Surviving Corporation and Parent shall pay the reasonable fees and expenses of such counsel, promptly after statements therefor are received and the Surviving Corporation and Parent will cooperate in the defense of any such matter; provided, however, that neither the Surviving Corporation nor Parent shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld); and provided, further, that, in the event that any claim or claims for indemnification are asserted or made prior to the expiration of such five year period, all rights to indemnification in respect to any such claim or claims shall continue until the final disposition of any and all such claims. The Indemnified Parties as a group may retain only one law firm (in addition to local counsel) to represent them with respect to any single action unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the position of any two or more Indemnified Parties.

     (c) The provisions of this Section 4.4 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, his or her heirs and representatives.

     4.4 Tax Treatment. For U.S. federal income tax purposes, it is intended that the Merger qualify as a reorganization within the meaning of the Code, and the parties hereto intend that this Agreement shall constitute a “plan of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a). Parent will report the Merger on its income tax returns in a manner consistent with treatment of the Merger as a Code Section 368(a) reorganization. Neither Parent, Company nor any of their respective affiliates has taken any action, nor will they take any action, that could reasonably be expected to prevent or impede the Merger from qualifying as a reorganization under Section 368 of the Code. After the Closing, Parent shall cause Company to continue its historic business or use a significant portion of its historic business assets in a business, in accordance with Treasury Regulations Section 1.368-1(d).

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     4.5 Best Efforts and Further Assurances. Each party hereto, at the reasonable request of another party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby.

     4.6 Subsequent Merger. Following the Closing, as determined by the then Board of Directors of Parent in its sole discretion, Parent and Company shall each merge into a single Delaware corporation separate from Parent and Company.

     4.7 Change of Name. Promptly following the Closing, Parent shall amend Parent’s Certificate of Incorporation and bylaws, and take such other actions as are necessary, to change its name to “Echo Therapeutics, Inc.” or such other name as determined by the Board of Directors.

     4.8 Piggyback Registration Rights. If Parent enters into a Qualified Financing (as defined below) and grants registration rights with respect to the securities or instruments issued to investors or other participants in the Qualified Financing, Parent hereby covenants and agrees to provided registration rights to holders of shares of Parent Common Stock received pursuant to Section 1.5 of this Agreement having the same terms and conditions as those provided to the investors or other participants in the Qualified Financing. For purposes of this Section 4.8, “Qualified Financing” means any equity financing providing for the sale and issuance of any equity securities of Parent, or securities or other instruments convertible into equity securities of Parent, except for (i) the grant of options to purchase Parent Common Stock, with exercise prices not less than the market price of the Parent Common Stock on the date of grant, which are issued to employees, officers, directors or consultants of Parent for the primary purpose of soliciting or retaining their employment or service pursuant to an equity compensation plan approved by the Parent’s Board of Directors, and the issuance of Parent Common Stock upon the exercise thereof, (ii) the exercise or conversion of warrants to purchase shares of Parent Common Stock issued and outstanding as of the date of this Agreement and disclosed on Schedule 3.1 of Parent’s Disclosure Schedule, (iii) the issuance of securities in connection with strategic business partnerships or joint ventures, the primary purpose of which, in the reasonable judgment of Parent’s Board of Directors, is not to raise additional capital, or (iv) the issuance of securities pursuant to any equipment financing from a bank or similar financial or lending institution approved by Parent’s Board of Directors.

ARTICLE V

GENERAL PROVISIONS

     5.1 Survival. The representations, warranties and agreements set forth in this Agreement shall terminate at the Effective Time, except that the agreements set forth in Article I, Article IV, and this Article V shall survive the Effective Time.

     5.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery

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service, or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with confirmation of receipt) to the parties at the following address (or at such other address for a party as shall be specified by like notice):

(a) if to Parent or Merger Sub, to:

Sontra Medical Corporation
10 Forge Parkway
Franklin, Massachusetts 02038
Attention: Chief Executive Officer
Facsimile No.: (508) 553-8760
Telephone No.: (508) 530-0311

with a copy (which shall not constitute notice to Parent) to:

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10036
Attention: Christopher S. Auguste, Esq.
Facsimile No.: (212) 715-8000
Telephone No.: (212) 715-9100

(b) if to Company, to:

Durham Pharmaceuticals Ltd.
c/o Drinker Biddle & Reath LLP
One Logan Square
18^th & Cherry Streets
Philadelphia, PA 19103-6996
Attention: Patrick Mooney, Chief Executive Officer
Facsimile No.: 215-988-2757
Telephone No.: 215-988-2700

with a copy (which shall not constitute notice to Company) to:

Drinker Biddle & Reath LLP
One Logan Square
18^th & Cherry Streets
Philadelphia, PA 19103-6996
Attention: Stephen T. Burdumy, Esq.
Facsimile No.: 215-988-2757
Telephone No.: 215-988-2700

     5.3 Interpretation. When a reference is made in this Agreement to Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this Agreement unless otherwise indicated. The words “include,” “includes” and “including” when used herein

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shall be deemed in each case to be followed by the words “without limitation.” The phrase “made available” in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available. The phrases “the date of this Agreement”, “the date hereof”, and terms of similar import, unless the context otherwise requires, shall be deemed to refer to September 14, 2007. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

     5.4 Counterparts. This Agreement may be executed in one or more counterparts, including by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

     5.5 Entire Agreement; Nonassignability; Parties in Interest. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the Exhibits, the Schedules, including the Company Disclosure Schedule and the Parent Disclosure Schedule (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; (b) are not intended to confer upon any other person any rights or remedies hereunder, except as set forth in Sections 1.5, 1.7, 1.9, and 4.4; and (c) shall not be assigned by operation of law or otherwise except as otherwise specifically provided. No representations, warranties, inducements, promises or agreements, oral or written, by or among the parties not contained herein shall be of any force or effect.

     5.6 Severability. If any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

     5.7 Remedies Cumulative. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

     5.8 Governing Law. Except as otherwise provided in this Agreement, this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the laws that might otherwise govern under applicable principles of conflicts of law. Each of the parties hereto irrevocably consents to the

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exclusive jurisdiction of any court located within the State of New York in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction and such process.

     5.9 Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, Parent, Merger Sub and Company have caused this Agreement and Plan of Merger and Reorganization to be executed and delivered by their respective officers thereunto duly authorized, all as of the date first written above.

SONTRA MEDICAL CORPORATION
By:	/s/ Harry G. Mitchell
	Harry Mitchell, Interim Chief Executive
	Officer, Chief Financial Officer and Treasurer
DURHAM PHARMACEUTICALS ACQUISITION CO.
By:	/s/ Harry G. Mitchell
	Harry Mitchell, Chief Executive Officer
DURHAM PHARMACEUTICALS LTD. (d/b/a Echo Therapeutics, Inc.)
By:	/s/ Patrick Mooney
	Patrick Mooney, Chief Executive Officer

Exhibits to Agreement and Plan of Merger and Reorganization
Exhibit A	Certificate of Merger of Durham Pharmaceuticals Ltd. with and into Durham Pharmaceuticals Acquisition Co. and Articles of Merger of Durham Pharmaceuticals Ltd. with and into Durham Pharmaceuticals Acquisition Co.
Parent Schedules to Agreement and Plan of Merger and Reorganization
Schedule 3.1	Outstanding Subscriptions, Options, Warrants, Puts, Calls, Rights, Etc. for Capital Stock; Interests in Other Entities; Charters and Policies
Schedule 3.2	Outstanding Shares and Commitments to Issue Shares; Additional Options under the Parent Stock Option Plan Since June 30, 2007; Warrants and Convertible Securities; Additional Contracts, Commitments or Agreements relating to Voting, Purchase or Sale of Stock
Schedule 3.6	Business not in the Ordinary Course since June 30, 2007
Schedule 3.7	Additional Material Obligations or Liabilities
Schedule 3.8	Litigation
Schedule 3.9	Restrictions on Business Activities
Schedule 3.11	Owned or Leased Properties
Schedule 3.12(a)	Intellectual Property
Schedule 3.12(b)	Other Intellectual Property
Schedule 3.12(i)	Legal Opinions Regarding Intellectual Property
Schedule 3.14	Payments or Acceleration of Benefits Triggered by Transaction
Schedule 3.19	Brokers’, Finders’ or Similar Fees
Company Schedules to Agreement and Plan of Merger and Reorganization
Schedule 2.1	Restricted Stock Agreements
Schedule 2.2	Issued and Outstanding Shares
Schedule 2.5	Material Agreements
Schedule 2.6	Commitments and Contingencies
Schedule 2.11	Trademarks & Patents
Schedule 2.13	Withholding Tax Obligations
Schedule 2.14	Stock Agreements
Schedule 2.15	Employees
Schedule 2.16	Material Agreements

EX-2.2

Exhibit 2.2

ASSET PURCHASE AGREEMENT

     ASSET PURCHASE AGREEMENT dated as of the 14th day of September, 2007, by and between Sontra Medical Corporation, a Minnesota Corporation having its principal office at 10 Forge Parkway, Franklin, Massachusetts 02038 (“Buyer”), and DP Pharmaceuticals, LLC, a North Carolina limited liability company, having its principal office at 4364 South Alston Avenue, Durham, North Carolina 27713 (“Seller”).

     WHEREAS, Seller is the owner of a package of proprietary information which has been filed with the United States Food and Drug Administration (the “FDA”) known as Drug Master File No. 4670 (“DMF 4670”), a Type V Drug Master File (non-clinical), related to toxicology studies for the development of a product known as Azone (the “Product”) and certain trademarks and trademark applications, set forth on Schedule A attached hereto, related to the Product (together with DMF 4670, the “Assets”); and

     WHEREAS, Seller desires to sell and Buyer desires to purchase all of Seller’s right, title and interest in and to the Assets, on the terms and subject to the conditions herein set forth;

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

ARTICLE I
DEFINITIONS

     Section 1.1 Definition of Terms: Except where otherwise expressly indicated, the terms defined in this Section 1.1, whenever used in this Agreement, shall have the respective meanings indicated below.

     “Agreement”: means this Asset Purchase Agreement.

     “Consent”: means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing by or with, or report or notice to, any Person, including any governmental authority.

     “Encumbrance”: means any mortgage, pledge, deed of trust, hypothecation, right of others, claim, security interest, encumbrance, grant, assignment, transfer, set over, conveyance, sale, lease, sublease, license, sublicense, agreement, adverse claim, right, title or interest, imperfection or defect in title, easement, assessment, covenant, encroachment, burden, title retention agreement, voting trust agreement, interest, equity, option, lien, right of first refusal, charge, liability, debt, duty or obligation or other restriction or limitation of any kind.

     “Person”: means any natural person, firm, partnership, association, corporation, company, limited liability company, trust, business trust, governmental authority or other entity.

ARTICLE 2
SALE AND PURCHASE OF ASSETS

     Section 2.1 Assets. Upon the terms and subject to the conditions set forth in this Agreement, Seller hereby sells, assigns, grants, conveys, delivers or otherwise transfers to Buyer, and Buyer hereby purchases from Seller, all of Seller’s right, title and interest in the Assets.

     Section 2.2 Effective Date and Closing Date. The Effective Date of this Agreement and the Closing Date of this Agreement shall be the date this Agreement is fully executed by the Buyer and the Seller.

ARTICLE 3
CONVEYANCES AND TRANSFER

     Section 3.1 FDA Notification. The Seller shall provide the necessary regulatory documents to the FDA, in the form generally required by the FDA, informing the FDA of the transfer of ownership in connection with the transactions contemplated by this Agreement, including, but not limited to, a letter signed by an authorized representative of Seller with substantially the following information:

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(a)	Name of Buyer or its designee as transferee;
(b)	Address of Buyer or its designee transferee;
(c)	Name of responsible official or representative of Buyer or its designee as transferee;
(d)	Effective date of transfer pursuant to this Agreement;
(e)	Signature of the authorized representative of Seller effecting the transfer; and
(f)	Typewritten name and title of the authorized representative of Seller effecting the transfer.

     Section 3.2 Trademarks, Etc. The Seller shall file the Assignment of Trademarks, in substantially the form attached hereto as Exhibit A, with the United States Patent and Trademark Office (“PTO”) and shall make such other filings and take such other actions as is generally required by the PTO to transfer and assign the ownership of the trademarks and trademark applications set forth on Schedule I.

     Section 3.3 Conveyances. At any time and from time to time after the Closing Date, Seller will, upon the request of Buyer and at Buyer’s expense, do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged or delivered, all such further acts, deeds, assignments, grants, transfers, conveyances, powers of attorney or assurances as may reasonably be required by Buyer to confirm in Buyer the assignment, transfer, grant or conveyance of the Assets to Buyer.

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ARTICLE 4
THE PURCHASE PRICE AND PAYMENT THEREOF

     Section 4.1 Purchase Price. The purchase price to be paid by Buyer to Seller for the Assets shall be Sixty Thousand US Dollars (US $60,000.00). The Purchase Price shall be paid in cash to Seller on the Closing Date by wire transfer or such other means as may be agreed to by the parties.

     Section 4.2 No Liabilities. Except as otherwise provided in Section 7.2, Buyer will not assume, and shall not be responsible for, any debt, commitment, liability or obligation of, or claim against the Assets or Seller, whether in the past, present or future.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Buyer as follows:

     Section 5.1 Corporate Status. Seller is a limited liability company validly formed, duly subsisting and in good standing under the laws of the State of North Carolina.

     Section 5.2 Authorization. Seller has the power and authority to execute and deliver this Agreement, to perform fully its obligations hereunder, and to consummate the transactions contemplated hereby.

     Section 5.3 No Conflicts. Except as contemplated in Section 3.1 and Section 3.2, the execution, delivery and performance of this Agreement by Seller, and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in the breach of, or a default by Seller under, any agreement or result in the acceleration of or give rise to the right of any Person to terminate, modify or cancel, or result in the loss of any rights, privileges, or options in, or result in the creation of any Encumbrance on, any of the Assets. Except as contemplated in Section 3.1 and Section 3.2, no Consent is required to be obtained or made by Seller in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby.

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     Section 5.4 Title and No Encumbrances.

          (a) To Seller’s knowledge, none of its affiliates owns, controls or otherwise has right to any Assets.

          (b) Seller has good and valid title to DMF 4670, and such title is free and clear of any and all Encumbrances and no other party has ownership rights therein.

          (c) To Seller’s knowledge, except as set forth on Schedule 5.4, Seller has good and valid title to the trademarks and trademark applications set forth on Schedule A attached hereto.

     Section 5.5 Non-Infringement. To Seller’s knowledge, none of the Assets (excluding any third-party rights or products incorporated into such Assets for which the Seller has a valid license) infringe or are alleged to infringe any patent, trademark, service mark, trade name, copyright or other proprietary right or are derivative works based on the work of any other person and the Seller has no knowledge of any facts that would form the basis for any such claim by a third party.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller as follows:

     Section 6.1 Corporate Status. Buyer is a corporation, validly existing and in good standing under the laws of the State of Minnesota.

     Section 6.2 Authorization. Buyer has the power and authority to execute and deliver this Agreement, to perform fully its obligations hereunder, and to consummate the transactions contemplated hereby.

     Section 6.3 No Conflicts. The execution, delivery and performance by Buyer of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in the breach of, or default by Buyer under, any agreement. No Consent is

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required to be obtained or made by Buyer in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

ARTICLE 7
INDEMNIFICATION

     Section 7.1 By Seller. Seller covenants and agrees to defend, indemnify and hold harmless Buyer, its affiliates and their respective officers, directors, shareholders, employees, agents and representatives from and against any and all claims by third parties, liabilities, obligations, losses, fines, expenses, costs or proceedings, resulting from or arising out of any misrepresentation or breach of any representation, warranty or covenant of Seller made or contained in this Agreement.

     Section 7.2 By Buyer. Buyer covenants and agrees to defend, indemnify and hold harmless Seller, its affiliates and their respective officers, directors, shareholders, employees, agents and representatives from and against any and all claims by third parties, liabilities, obligations, losses, fines, expenses, costs or proceedings, resulting from or arising out of any misrepresentation or breach of warranty of Buyer made or contained in this Agreement.

     Section 7.3 Expiration of Representations and Warranties. All representations and warranties contained in this Agreement shall continue for a period of three (3) years after the Closing Date.

ARTICLE 8
MISCELLANEOUS

     Section 8.1 Expenses. Seller, on the one hand, and Buyer, on the other hand, shall bear their respective expenses, costs and fees in connection with the transactions contemplated hereby, including their compliance herewith, whether or not the transactions contemplated hereby are consummated.

     Section 8.2 Severability. If any provision of this Agreement, including any phrase, sentence, clause, Section or subsection is inoperative or unenforceable for any reason, such

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circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever.

     Section 8.3 Notices. All notices, requests, demands, approvals, consents, waivers and other communications required or permitted to be given under this Agreement (each, a “Notice”) shall be in writing and shall be (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, (c) sent by next-day or overnight mail or delivery, or (d) sent by facsimile transmission, provided that the original copy thereof also is sent by pre-paid, first class, certified or registered mail,

if to Buyer, to:

DP Pharmaceuticals, LLC
Westpark Corporate Center
4364 South Alston Avenue
Durham, North Carolina 27713-2280
Attention: Allen Cato, MD, PhD
Telephone: (919) 361-2286
Facsimile: (919) 361-2290

with a copy to:

Cato BioVentures
4364 South Alston Avenue
Durham, North Carolina 27713
Attention: Kimberly Burke, Esq.
Telephone: (919) 361-2286
Facsimile: (919) 361-2290

if to Seller, to:

Sontra Medical Corporation
10 Forge Parkway
Franklin, Massachusetts 02038
Attention: Chief Executive Officer
Telephone: (508) 553-8760
Facsimile: (508) 530-0311

with a copy to:

Kramer Levin Naftalis & Frankel LLP

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1177 Avenue of the Americas
New York, New York 10036
Attention: Christopher S. Auguste
Telephone: (212) 715-8000
Facsimile: (212) 715-9100

or, in each case, at such other address as may be specified in a Notice to the other party. Every Notice shall be deemed effective and given upon receipt or refusal of receipt.

     Section 8.4 Entire Agreement. This Agreement (including the Schedules and Exhibits hereto) constitutes the entire agreement and supersedes all prior and contemporaneous agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

     Section 8.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the laws that might otherwise govern under applicable principles of conflicts of law.

     Section 8.6 Counterparts. This Agreement may be executed with counterpart signature pages or in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be

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deemed the same as delivery of an original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document.

     Section 8.7 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.

     IN WITNESS WHEREOF, the parties, by their duly authorized representatives, have executed this Agreement as of the date first above written.

	DP PHARMACEUTICALS, LLC (Seller)
By:	/s/ Lynda Sutton
	Name:	Lynda Sutton
	Title:	President
	SONTRA MEDICAL CORPORATION (Buyer)
By:	/s/ Harry G. Mitchell
	Name:	Harry G. Mitchell
	Title:	Interim CEO

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Schedules to Asset Purchase Agreement

Schedule A – Trademarks and Trademark Applications

Schedule 5.4 – Trademarks Not Owned by Seller

EX-10.1

Exhibit 10.1

STRATEGIC MASTER SERVICES AGREEMENT

     THIS STRATEGIC MASTER SERVICES AGREEMENT (the “Agreement”) is made as of September 14, 2007 (the “Effective Date”) by and between Cato Research Ltd., a North Carolina corporation (“CATO RESEARCH”), and Sontra Medical Corporation, a Minnesota corporation (“CLIENT”). Each of CATO RESEARCH and CLIENT may be referred to herein separately as a “Party” and collectively as the “Parties.” As used in this Agreement, “Affiliates” means any corporation, firm, partnership, or other entity which is controlled by or is under common control with a Party. For the purpose of this definition, “control” shall mean the power to direct, or cause the direction of, the management and policies of an entity through the ownership of at least fifty percent (50%) of the voting share capital of such entity or any other comparable equity, by contract, or by ownership interest.

     WHEREAS, CLIENT is engaged in the evaluation and development of new biologics, pharmaceutical agents, medical devices and/or other life sciences technologies (collectively, “Products”); and

     WHEREAS, CATO RESEARCH is a contract research and development organization (“CRO”) providing a broad range of services for the evaluation, development and commercialization of Products (“CRO Services”); and

     WHEREAS, CLIENT wishes to hire CATO RESEARCH, and CATO RESEARCH wishes to be hired by CLIENT, to assist CLIENT with certain aspects of the evaluation and development of CLIENT’s Products as specified by CLIENT from time to time.

     NOW, THEREFORE, in consideration of the foregoing premises and the promises, benefits, rights, and obligations set forth below, the Parties agree as follows:

1. CRO Services. CATO RESEARCH shall provide CRO Services to CLIENT, as reasonably requested by CLIENT from time to time, in accordance with this Agreement.

2. Request for CRO Services.

     2.1 If CLIENT wants CATO RESEARCH to perform CRO Services, CLIENT shall provide CATO RESEARCH with sufficient information to enable CATO RESEARCH to understand the CRO Services being requested and time limitations or other constraints on the project. Within ten (10) business days of its receipt of this information, CATO RESEARCH shall determine in its sole discretion whether it wishes to perform the CRO Services requested by CLIENT and, if it wishes to perform such CRO Services, then CATO RESEARCH shall submit to CLIENT a written “Work Order Request” setting forth the CRO Service specifications and estimated fees and expenses. CLIENT shall have ten (10) business days from its receipt of the Work Order Request to review, approve, and return it to CATO RESEARCH. If CLIENT does not sign and return the Work Order Request to CATO RESEARCH within ten (10) business days, CATO RESEARCH shall not be obligated to perform the CRO Services described in the Work Order Request.

     2.2 If, from time to time, CATO RESEARCH considers information from CLIENT concerning requested CRO Services to be inadequate, or if CLIENT considers the CRO Service specifications, fees, expenses or other terms presented by CATO RESEARCH in a proposed Work Order Request to be unacceptable, then CLIENT and CATO RESEARCH shall use reasonable efforts to negotiate in good faith and in a timely manner to reach a mutually acceptable exchange of information and terms of the Work Order Request.

     2.3 Upon execution and delivery of a Work Order Request by authorized representatives of each of CATO RESEARCH and CLIENT, the Work Order Request shall become part of this Agreement and shall be known as a “Work Order.” In the event of a conflict between a Work Order and this Agreement, the terms of this Agreement shall control unless otherwise specifically stated in the Work Order.

     2.4 Unless otherwise notified by CLIENT, the Parties agree that CATO RESEARCH may assume that any officer of CLIENT signing a Work Order Request on behalf of CLIENT is authorized to do so.

3. Specification and Amendment of CRO Services.

     3.1 CATO RESEARCH shall use commercially reasonable efforts to perform CRO Services in accordance with the specifications, instructions, and guidelines in each Work Order and this Agreement in all material respects. The Parties shall work together in good faith to ensure that each Work Order clearly describes all methods, requirements, and obligations (other than those set forth in this Agreement) related to the CRO Services to be performed. In the event that a Work Order is unclear, ambiguous, or permits different understandings of the CRO Services to be performed, the Parties shall use good faith efforts to resolve such ambiguity.

     3.2 A Work Order may only be amended in writing with the signature of both Parties.

4. Compensation.

     4.1 CLIENT shall pay CATO RESEARCH for its CRO Services and expenses in accordance with its current rates on either a time and materials basis or in accordance with a fixed fee, as specified in the Work Order governing such CRO Services. For CRO Services provided to CLIENT on a time and materials basis, CATO RESEARCH shall apply a twenty-five percent (25%) strategic discount to the aggregate cost of such CRO Services as reflected on each monthly invoice for CRO Services during the term of this Agreement (the “Strategic Discount”). The Parties hereby acknowledge and agree that the Strategic Discount shall not be applied to CRO Services provided on a fixed fee basis during the term of this Agreement. For strategic business development purposes, CATO RESEARCH agrees to provide the initial eighty thousand dollars ($80,000) of CRO Services to CLIENT under this Agreement, on either a time and materials basis or a fixed fee basis, at no charge to CLIENT, CLIENT shall reimburse CATO RESEARCH for out-of-pocket expenses reasonably incurred and documented by CATO RESEARCH while performing CRO Services under this Agreement including, but not limited to, telephone, facsimile, messenger, postage and other communication costs, document copying and retrieval, on-site and off-site storage fees, computer research fees and filing fees, reasonable transportation, lodging, and meal expenses for travel to sites away from CATO RESEARCH’s office, and travel between CATO RESEARCH offices (collectively, “Expenses”). The Strategic Discount shall not be applied to Expenses. Travel time shall be billed as work time, with the understanding that, to the extent practical, CATO RESEARCH shall utilize travel time to perform CRO Services for CLIENT.

     4.2 All payments shall be sent to Cato Research Ltd., Attn: Finance, 4364 South Alston Avenue, Durham, NC 27713. CLIENT shall pay CATO RESEARCH for all CRO Service fees and Expenses within thirty (30) days of the date of CLIENT’s receipt of the invoice for such fees and Expenses. If CLIENT disputes the amount due, then CLIENT must notify CATO RESEARCH of such dispute by the payment due date. Both parties will act in good faith to promptly resolve such dispute. If all or any portion of an invoice remains unpaid thirty (30) days after the date of CLIENT’s receipt of the invoice, then CATO RESEARCH may assess an administration fee

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on the unpaid and undisputed amount of 0.75% per month from the date of the invoice until paid. CLIENT shall reimburse CATO RESEARCH on demand for all reasonable out-of-pocket costs and expenses CATO RESEARCH incurs in enforcing payment of an overdue invoice, including, without limitation, attorneys’ fees and expenses. Payments received from CLIENT by CATO RESEARCH on an overdue invoice shall be first applied to costs of collection, then to accrued administration fees, if any, and then to the unpaid balance of the invoice. If CLIENT has more than one overdue invoice, CATO RESEARCH may, in its discretion, allocate collection costs among the invoices and apply payments against the invoices.

     4.3 CATO RESEARCH may in its sole discretion suspend its performance of CRO Services if an undisputed invoice is one hundred twenty (120) days or more overdue and CATO RESEARCH may refrain from resuming performance of CRO Services until all overdue undisputed invoices have been paid in full.

     4.4 Except as otherwise set forth herein, any and all payments made hereunder are nonrefundable.

5. Term and Termination.

     5.1 The term of this Agreement shall be one (1) year from the Effective Date and the Agreement shall automatically renew for additional one (1) year terms unless, at least sixty (60) days before the expiration of any one (1) year term, a Party gives written notice to the other Party that it does not want to renew this Agreement; provided, however, that if the term of a Work Order extends beyond the term of this Agreement, then this Agreement will continue in effect until the completion or termination of such Work Order and all wind-down CRO Services related to such Work Order.

     5.2 Either Party may terminate a Work Order upon the other Party’s material default under this Agreement with respect to such Work Order, provided that the terminating Party has given the defaulting Party no less than thirty (30) days’ prior written notice of such default and the defaulting Party has not cured such default by the end of the notice period.

     5.3 Either party may terminate a Work Order at any time upon no less than forty-five (45) days’ prior written notice to the other party.

     5.4 Upon early termination of a Work Order, CLIENT shall pay CATO RESEARCH for all CRO Services rendered and Expenses incurred through the date of termination in accordance with Section 4 above. In the event of early termination, CATO RESEARCH’s compensation under fixed fee arrangements or for partially completed milestones shall be made on a time and materials basis in accordance with its current rates and CATO RESEARCH shall be paid for all CRO Services performed and Expenses incurred through the date of termination.

     5.5 If a Work Order is terminated by CATO RESEARCH pursuant to Section 5.2 or if CLIENT terminates a Work Order pursuant to Section 5.3, then, in addition to payments made under Section 5.4, CLIENT shall reimburse CATO RESEARCH for any and all non-cancelable obligations of CATO RESEARCH to third parties related to the terminated Work Order.

     5.6 Upon early termination of a Work Order, CATO RESEARCH shall inform CLIENT of the extent to which it expects work in progress to be completed as of the termination date and CATO RESEARCH shall (unless otherwise instructed by CLIENT) take steps to wind down work in progress in an orderly fashion. In addition to all other amounts payable to CATO RESEARCH, CLIENT shall pay CATO RESEARCH for such wind-down CRO Services on a time and materials basis at CATO RESEARCH’s current rates, less any applicable discount, for all

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reasonable and customary wind-down CRO Services performed and Expenses incurred by CATO RESEARCH. If CLIENT instructs CATO RESEARCH not to complete such wind-down CRO Services, CATO RESEARCH shall, upon notification of the termination of the Work Order, promptly cease providing CRO Services and incurring costs to the extent practicable. In any such event, CLIENT shall be deemed to have released CATO RESEARCH from all legal liability and to have covenanted not to sue CATO RESEARCH on any claims related to failure to perform and the failure to complete reasonable and customary wind-down CRO Services.

     5.7 In addition to termination of this Agreement under Sections 5.1-5.3, at any time CRO Services under all Work Orders have been completed and there is no request for CRO Services pending, either Party may terminate this Agreement by giving written notice of termination to the other Party.

     5.8 Upon early termination or expiration of a Work Order, CATO RESEARCH may return all files and other materials in its possession related to such Work Order to CLIENT at CLIENT’s reasonable expense.

     5.9 The remedies provided in Section 5.4 are not meant to limit any additional remedies, to the extent that they are not inconsistent with such Sections, available to a Party for breach of this Agreement by the other Party.

6. Location of CRO Services. CATO RESEARCH shall perform the CRO Services at CATO RESEARCH’s facilities or at such other places as are mutually agreed upon by CATO RESEARCH and CLIENT.

7. Confidential Information.

     7.1 For purposes of this Section, the Party disclosing Confidential Information is known as “Disclosing Party” and the Party receiving information is known as “Receiving Party.”

     7.2 “Confidential Information” of the Disclosing Party is defined as all disclosures by the Disclosing Party or its Affiliates, whether written or oral, including, but not limited to, Disclosing Party’s business plans, financial data, proprietary software, technology under development, and marketing information, and any information, software, or other materials created by Receiving Party using, reflecting or including any part of the Confidential Information. Disclosing Party shall mark all tangible embodiments of Confidential Information as such prior to providing it to Receiving Party. Confidential Information does not include information that, as evidenced by Receiving Party’s written records: (a) is in the public domain when Disclosing Party discloses it to Receiving Party; (b) enters the public domain after Disclosing Party’s disclosure to Receiving Party and without any fault of Receiving Party; (c) was known to Receiving Party prior to the disclosure by Disclosing Party, free of any obligation of confidence; (d) is independently developed by Receiving Party without reference to the Confidential Information; or (e) is communicated by a third party to Receiving Party free of any obligation of confidence.

     7.3 Receiving Party shall neither use nor reproduce Disclosing Party’s Confidential Information except as necessary for: (a) negotiations, discussions and consultations with the personnel or authorized representatives of Disclosing Party; or (b) for the purpose of performing its obligations under this Agreement. Upon completion of the obligations under this Agreement that use the Confidential Information, or upon termination of this Agreement, Receiving Party shall, when requested by Disclosing Party in writing, promptly return to Disclosing Party all of the Confidential Information provided by Disclosing Party, except that Receiving Party may retain one (1) copy solely for recordkeeping purposes.

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     7.4 Receiving Party shall not disclose, without the prior written consent of Disclosing Party, any of Disclosing Party’s Confidential Information to any third party other than Receiving Party’s, and its Affiliates’, directors, officers, employees, agents and consultants, hospital authorities, Institutional Review Board members, clinical investigators, and others who must be involved in fulfilling Receiving Party’s obligations under this Agreement and who, in each case, (a) need to know such information for the purposes of performing such obligations and (b) are bound by obligations of confidentiality and non-use at least as restrictive as those set forth herein. Receiving Party shall take commercially reasonable steps to prevent the disclosure or use of any such Confidential Information by Receiving Party’s, and its Affiliates’, directors, officers, employees, agents or consultants except as provided in this Agreement.

     7.5 If any Disclosing Party Confidential Information is required to be disclosed by Receiving Party to any government or regulatory authority or court entitled by law to disclosure of the same, Receiving Party shall promptly notify Disclosing Party thereof, and Receiving Party shall cooperate with Disclosing Party so as to enable Disclosing Party to: (a) seek an appropriate protective order; (b) make the confidential nature of the Confidential Information known to such governmental or regulatory authority or court; and (c) make any applicable claim of confidentiality in respect of the Confidential Information.

     7.6 For purposes of this Agreement, the Parties hereby acknowledge and agree that, subject to the exceptions set forth in Section 7.1, this Agreement shall be considered CLIENT’s Confidential Information; provided, however, that either Party may disclose the terms of this Agreement to advisors, investors and others on a need-to-know basis under circumstances that reasonably ensure the confidentiality thereof.

     7.7 Receiving Party’s obligations under this Section 7 shall terminate with respect to any Confidential Information of Disclosing Party seven (7) years after the date of disclosure.

8. Protected Health Information. The Parties recognize that the Federal Health Insurance Portability and Accountability Act of 1996 and implementing regulations (“HIPAA”) require written confidentiality agreements to protect the privacy and security of protected health information (as defined under HIPAA) that may be acquired in the course of performing this Agreement. The parties agree to comply with HIPAA and other applicable laws and governmental regulations governing protected health information.

9. Ownership.

     9.1 CLIENT Proprietary Rights. CLIENT shall own all right, title, and interest in and to all data, information, improvements, discoveries, inventions, printed materials, and other works, products, and deliverables that CLIENT provides to CATO RESEARCH hereunder; as well as all right, title, and interest in and to all data, databases, records, reports, works, products, deliverables, information, improvements, discoveries or inventions that result, or are generated, from the CRO Services rendered by CATO RESEARCH to CLIENT hereunder (collectively, the “Materials”). CATO RESEARCH hereby assigns to CLIENT all of its copyright, trade secret, trademark, patent, and other propriety right in such Materials. CATO RESEARCH shall, at CLIENT’s request and expense, assist CLIENT or its nominees to obtain United States and foreign copyright registrations, trademarks, patents, and other legal protection for the Materials. CATO RESEARCH shall execute all papers and give all facts known to it that are necessary to secure such United States or foreign copyright registrations, trademarks, patents, or other legal protection for the Materials and to transfer to CLIENT all right, title, and interest in and to the Materials.

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     9.2 CATO RESEARCH Proprietary Rights. Notwithstanding the foregoing, CLIENT acknowledges that within the scope of CATO RESEARCH’s business practice, CATO RESEARCH possesses certain inventions, processes, know-how, trade secrets, improvements, other intellectual properties and assets, including analytical methods, procedures and techniques, computer technical expertise and software, independently developed by CATO RESEARCH that are not related to CLIENT Proprietary Rights, including any of the foregoing developed during or incidental to performance of the CRO Services herein, which shall be deemed CATO RESEARCH Proprietary Rights (collectively, “CATO RESEARCH Proprietary Rights”). CLIENT and CATO RESEARCH agree that any of CATO RESEARCH’s Proprietary Rights which are used, improved or modified by CATO RESEARCH under or during the term of this Agreement shall be deemed CATO RESEARCH Proprietary Rights. CLIENT hereby assigns to CATO RESEARCH all of its copyright, trade secret, trademark, patent, and other rights in such CATO RESEARCH Proprietary Rights.

10. Representations and Warranties.

     10.1 CATO RESEARCH represents and warrants that it has the experience, capability, personnel and resources necessary to perform CRO Services under this Agreement in a commercially reasonable manner. CATO RESEARCH shall be deemed to make this representation and warranty each time it executes a Work Order Request.

     10.2 CLIENT represents and warrants that it has the ability to comply with and perform all financial obligations under this Agreement. CLIENT shall be deemed to make this representation and warranty each time it executes a Work Order Request.

     10.3 Each Party represents and warrants that (a) it has the corporate power and authority to enter into and perform its obligations under this Agreement and any Work Order; and (b) entering into and performing this Agreement and any Work Order will not conflict with or result in a violation of any of the terms or provisions, or constitute a default under any of its organizational documents, any mortgage, indenture, lease, contract or other agreement or instrument binding upon it or by which any of its properties are bound, or any permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to it or its properties. Each Party shall be deemed to make this representation and warranty upon entering into this Agreement and each time it executes a Work Order Request.

11. Cato Research Personnel.

     11.1 CATO RESEARCH is responsible for all aspects of the labor relations of its personnel including, but not limited to, wages, benefits, discipline, hiring, firing, promotions, pay raises, overtime, and job assignments. CLIENT shall have no power or authority in these areas. CATO RESEARCH agrees to pay all contributions and taxes imposed by any federal or state governmental authority with respect to or measured by wages, salaries, or other compensation paid by CATO RESEARCH to persons employed by CATO RESEARCH.

     11.2 CLIENT understands that the performance of CRO Services requires special skills, training and experience. CLIENT further understands that CATO RESEARCH has expended considerable sums to train its personnel to perform the CRO Services requested by CLIENT from time to time under this Agreement, given them access to experienced and highly skilled practitioners at CATO RESEARCH to enable such personnel to acquire new skills and develop existing skills, and provided its personnel with opportunities to gain valuable experience in performing CRO Services. When CATO RESEARCH loses a member of its personnel, it incurs significant expenses in hiring and training his or her replacement. Accordingly, during the term of this Agreement

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and for a period of one (1) year after the termination or expiration of this Agreement, CLIENT agrees that it will not hire as an employee or independent contractor any member of CATO RESEARCH’s personnel that has participated in the performance of CRO Services under this Agreement without CATO RESEARCH’s written permission and payment of a fee. CLIENT will pay CATO RESEARCH a fee equal to the hired person’s annual salary in effect at the time of the violation to reimburse the estimated costs of hiring and training replacement personnel. Such fee shall be paid to CATO RESEARCH in cash no later than thirty (30) days after the date on which such employee begins employment or contractual work with CLIENT.

12. Indemnification.

     12.1 CLIENT shall indemnify, defend and hold harmless CATO RESEARCH and its Affiliates, and the directors, officers, employees and agents of CATO RESEARCH and its Affiliates (each a “CATO RESEARCH Indemnified Party”), from and against all liability, loss, costs, claims, damages, expenses, judgments, awards, and settlements, including, without limitation, actual attorneys’ fees or expenses charged by counsel of the Indemnified Party’s choosing (whether or not these are covered by insurance), whether in tort or in contract, law or equity, that a CATO RESEARCH Indemnified Party may incur by reason of or arising out of any claim made or response in any legal proceeding directly or indirectly resulting from or related to (a) CATO RESEARCH’s CRO Services, including deliverables, under this Agreement; (b) infringement of, or related to, any intellectual property or proprietary rights of a third party in relation to CLIENT’s Products, programs, procedures, materials, data, or other information used by or on behalf of, or furnished by or on behalf of, CLIENT in connection with this Agreement or CATO RESEARCH’s CRO Services under this Agreement; (c) material breach of this Agreement by CLIENT or any other person for whose actions CLIENT is liable under applicable law; (d) the negligence, intentional misconduct or intentional omission of CLIENT or any employee, contractor, agent or representative of CLIENT; and (e) any request for deposition, documents, or other information legally compelled, including, without limitation, by subpoena or by agreement made in lieu of subpoena, in connection with CLIENT’s litigation, arbitration or other proceeding with any third party; provided, however, that this indemnification shall not extend to any claims arising out of (i) breach of this Agreement by CATO RESEARCH or any other person for whose actions CATO RESEARCH is liable under applicable law, (ii) the violation by CATO RESEARCH, its directors, officers, employees or agents, of applicable law or other governmental requirement, or (iii) the negligence, intentional misconduct or intentional omission of CATO RESEARCH or its directors, officers, employees, contractors, agents or representatives.

     12.2 CATO RESEARCH shall indemnify, defend and hold harmless CLIENT, its Affiliates, and the directors, officers, employees and agents of CLIENT and its Affiliates (each a “CLIENT Indemnified Party”) from and against all liability, loss, costs, claims, damages, expenses, judgments, awards, and settlements, including, without limitation, actual attorneys’ fees and expenses (whether or not covered by insurance), whether in tort or in contract, law or equity, that a CLIENT Indemnified Party may reasonably incur by reason of or arising out of any claim made by a third party resulting from or related to (a) the negligence, intentional misconduct or intentional omission of CATO RESEARCH or any employee, contractor, agent or representative of CATO RESEARCH; (b) the material breach of this Agreement by CATO RESEARCH or any other person for whose actions CATO RESEARCH is liable under applicable law; or (c) the violation by CATO RESEARCH, its directors, officers, employees or agents, of applicable law or other governmental requirement; provided, however, that this indemnification shall not extend to any claims arising out of: (i) breach of this Agreement by CLIENT or any other person for whose actions CLIENT is liable under applicable law; (ii) the violation by CLIENT, its directors, officers, employees or agents, of applicable law or other governmental requirement; or (iii) the negligence, intentional misconduct or intentional omission of CLIENT or its directors, officers, employees, contractors, agents or representatives. Notwithstanding the foregoing, the Parties hereby acknowledge and agree that CATO

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RESEARCH shall not be liable for, and this Section 12.2 shall not require CATO RESEARCH to provide indemnification with respect to, the actions or omissions of any third party whom CATO RESEARCH hires at CLIENT’s request to provide services hereunder.

13. Insurance.

     13.1 CLIENT shall secure and maintain in full force and effect, at no cost to CATO RESEARCH, its Affiliates, and their respective officers, directors and employees (collectively, “CATO RESEARCH Insureds”), customary insurance coverage for all CLIENT Products and clinical trials or other projects related to CRO Services, including, without limitation, products liability, general liability, and related insurance coverage with policy limits in an amount CLIENT’s senior management reasonably determines to be sufficient to support CLIENT’s indemnification obligations hereunder. Upon completing each clinical trial for which CATO RESEARCH provides CRO Services (each, an “Agreement Clinical Trial”), CLIENT also shall maintain in full force and effect, at no cost to the CATO RESEARCH Insureds, an extended reporting policy for a term of no less than three (3) years after completion of each Agreement Clinical Trial, which policy shall cover claims first made and/or reported after completion of such Agreement Clinical Trial.

     13.2 CLIENT’s shall use reasonable efforts to cause CLIENT’s insurance policy(ies) to name the CATO RESEARCH Insureds as additional named insureds and shall indicate that the policy will not be canceled or changed until thirty (30) days after written notice of such cancellation or change is delivered to CATO RESEARCH.

14. Limitation of Liability. Except as set forth in this Agreement, CATO RESEARCH makes no warranty, either express or implied, including the warranties of merchantability, fitness for a particular purpose, title and non-infringement as to any matter, including, but not limited to, the CRO Services, results of CRO Services, deliverables, reports, analyses, documents, memoranda, or other matter produced or provided under this Agreement. CLIENT agrees that, regardless of the form of any claim, CLIENT’s sole remedy and CATO RESEARCH’s sole obligation with respect to any claims made related to or arising out of this Agreement shall be governed by this Agreement and, in all cases, CLIENT’s remedies shall be limited to, at CATO RESEARCH’s option, correction of the non-conforming CRO Services or reimbursement of payments (excluding payments for Expenses) made by CLIENT to CATO RESEARCH for such non-conforming CRO Services under the applicable Work Order during the six (6) month period immediately preceding the event for which the claim is made. It is expressly agreed that in no event shall CATO RESEARCH or anyone else who has been involved in the performance of this Agreement on behalf of CATO RESEARCH be liable for any indirect, consequential, incidental, special, punitive, or exemplary damages arising from any legal theory, even if such person had been apprised of the likelihood of such damages occurring; provided that this shall not limit CATO RESEARCH’s obligations under Section 12 hereof.

15. Investigator Funds.

     15.1 CATO RESEARCH may, at CLIENT’s request, disburse payments to investigators conducting a clinical study (each, an “Investigator”) for which CATO RESEARCH is providing CRO Services to CLIENT. CATO RESEARCH will disburse all such payments (each, an “Investigator Fee”) in accordance with the provisions of the agreement between CLIENT and the Investigator (each, an “Investigator Agreement”). CATO RESEARCH agrees that it will not unreasonably withhold any Investigator Fee and it will not impose additional restrictions on the terms of payment for the Investigator Fee set forth in the Investigator Agreement.

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     15.2 CLIENT shall provide CATO RESEARCH with the funds to pay each Investigator Fee prior to the date on which CATO RESEARCH is scheduled to disburse such Investigator Fee. If CLIENT does not provide the funds to CATO RESEARCH, then CATO RESEARCH will not disburse such Investigator Fee until it receives the funds from CLIENT. In such event, CLIENT shall be deemed to have released CATO RESEARCH from all legal liability and to have covenanted not to sue CATO RESEARCH on any claims related to failure to disburse the Investigator Fee.

     15.3 If CLIENT provides CATO RESEARCH with funds in excess of the total Investigator Fees disbursed by CATO RESEARCH, then CATO RESEARCH shall prepare and send a reconciliation of such funds to CLIENT within ninety (90) days after the early termination or expiration of the Work Order under which CATO RESEARCH was disbursing such Investigator Fees and, upon CLIENT’s approval of the reconciliation, CATO RESEARCH shall return all excess funds to CLIENT.

16. Regulatory Audits. CATO RESEARCH will, on no less than two (2) weeks’ notice, during regular business hours, permit a regulatory auditor qualified by education, training, and experience, and who is acceptable to CATO RESEARCH, to have access to CATO RESEARCH’s records pertaining to the CRO Services provided pursuant to this Agreement for the purpose of auditing and verifying such CRO Services. The auditor shall report to CLIENT only those facts and conclusions from the audit that are directly related to CLIENT’s interests. CLIENT shall bear the cost of any audit and CLIENT shall, in addition to any other payment obligations under this Agreement, pay CATO RESEARCH on a time and materials basis at its current rates for the CATO RESEARCH personnel assigned to supervise such audit and any other CATO RESEARCH personnel who are required to participate in such audit. All information obtained from an audit shall be Confidential Information.

17. Force Majeure; Other Delays.

     17.1 In the event that either party shall be delayed in, hindered in, or prevented from the performance of any act required under this Agreement by reason of strike, lockout, labor problems, restrictions of government, judicial orders or decrees, riots, insurrection, terrorism, war, acts of God, inclement weather, or other causes that are beyond the reasonable control of such party, then performance of such act shall be excused until the cause is remedied. The delayed party shall use commercially reasonable efforts to resume performance as soon as possible.

     17.2 CATO RESEARCH will not be liable to CLIENT nor be deemed to have breached this Agreement for errors, delays or other consequences arising from the failure of CLIENT or any third party not under CATO RESEARCH’s direct control to provide documents, materials or information in a timely manner or to otherwise cooperate in order for CATO RESEARCH to perform its obligations, and any such failure by CLIENT or any third party not under CATO RESEARCH’s direct control shall automatically extend any timelines affected by such failure to provide documents, materials, information or cooperation by the period of the delay, unless CLIENT agrees in writing to pay any additional costs that would be required to meet the original timeline. If CLIENT or any third party providing services to CLIENT delays or suspends a project hereunder then, at CATO RESEARCH’s election, either (a) CLIENT will pay the standard daily rate of the CATO RESEARCH personnel assigned to the project, based on the percentage of their time allocated to the project, for the period of the delay, in order to keep the then-current team members; or (b) CATO RESEARCH may re-allocate such personnel at its discretion, and CLIENT will pay the costs of retraining or reallocating new personnel. In addition, CLIENT will reimburse CATO

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RESEARCH for all non-cancelable costs and Expenses incurred due to the delay and all timelines will automatically be adjusted to reflect additional time required due to the delay.

18. Independent Contractor. CATO RESEARCH shall perform CRO Services as an independent contractor and not as CLIENT’s agent, representative or employee. Neither Party has authority to make any statement, representation, or commitment of any kind nor to take any action binding on the other Party without the other Party’s prior written consent.

19. Use of CLIENT’s Name. CLIENT agrees that CATO RESEARCH may use CLIENT’s name as a reference for prospective clients or in literature relating to CATO RESEARCH’s capabilities, provided that such use does not violate Section 7 above.

20. Notification. Any notices given hereunder shall be in writing and shall be deemed to have been given on the earlier of personal receipt by an authorized representative of the Party, or receipt at the Party’s notice address. Notice may be given by any reliable means including, without limitation, by mail, overnight courier, facsimile, electronic mail, or personal delivery. All notices shall be sent to a Party at its address set forth on the signature page of this Agreement, or to such other address as is given by notice to the other Party.

21. Waiver. No waiver of any right or remedy with respect to any occurrence or event shall be valid unless it is in writing and executed by the waiving Party. No such valid waiver shall be deemed a waiver of such right or remedy with respect to such occurrence or event on a continuing basis or in the future unless the waiver states that it is intended to apply continuously or to future events. A waiver shall not excuse a subsequent breach of the same term, unless the waiver so states.

22. Severability. If any provisions of this Agreement are determined to be invalid or unenforceable, those provisions shall be reformed to the extent necessary to comply with law and the parties’ intent, or struck if necessary, and the validity and effect of the other provisions of this Agreement shall not be affected.

23. Governing Law; Jurisdiction. This Agreement shall be governed by, construed and interpreted in accordance with the laws of the State of Delaware. No conflict-of-laws provision shall be invoked to permit application of the laws of any other jurisdiction. All claims under this Agreement shall be brought in a judicial district that includes New Castle County, Delaware and the Parties consent to the jurisdiction of such court.

24. Dispute Resolution. Any controversy, claim or dispute arising out of, in connection with or relating to this Agreement shall be resolved by binding arbitration pursuant to Exhibit A, with the arbitrator following the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) (the “Rules”) in effect as of the day the arbitration demand is made. It is the intention of the Parties to resolve any such controversy, claim or dispute by private arbitration without submitting the matter to the AAA. In the event of any inconsistency between the Rules and Exhibit A, Exhibit A shall control. Notwithstanding the foregoing, if damages for a breach are not likely to be an adequate remedy, then either Party shall bring an injunction proceeding before a court of equity in a judicial district that includes New Castle County, Delaware. The Parties hereby consent to the jurisdiction of such court.

25. Survival. The representations and warranties of the Parties in Section 10 shall survive the events to which they relate and survive the expiration or earlier termination of this Agreement and the rights and obligations of the Parties set forth in Sections 4, 5, 7, 8, 9, 11, 12, 13, 14, 19, 23, 24, 25 and 26 shall survive expiration or earlier termination of this Agreement.

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26. Client Obligations. CLIENT shall undertake the following obligations with respect to the performance of this Agreement, in addition to any other obligations outlined in the applicable Work Order, and failure to perform such obligations shall constitute a material breach of this Agreement.

     (a) CLIENT shall use commercially reasonable efforts to deliver all information and materials required for CATO RESEARCH’s performance of CRO Services in accordance with mutually agreed upon timelines.

     (b) CLIENT shall immediately apprise CATO RESEARCH of any safety concerns or serious adverse events related to a Product that is the subject of the CRO Services.

     (c) CLIENT shall use commercially reasonable efforts to not take any actions or participate in any activities that are intended to or can be reasonably expected to disrupt or interfere with CATO RESEARCH’s obligations under this Agreement.

27. Assignment. This Agreement may not be assigned by either Party without the prior written consent of the other Party, which shall not be unreasonably withheld; provided, however, that either Party may assign this Agreement in connection with a merger or the sale of all or substantially all of the assigning Party’s assets or stock on the condition that such assignment shall be solely to the acquirer or purchaser of the assigning Party and such acquirer or purchaser must assume the assigning Party’s obligations under this Agreement. Notwithstanding the foregoing, CATO RESEARCH may arrange for its Affiliates to perform CRO Services under this Agreement, with the understanding that CATO RESEARCH will remain legally responsible for such CRO Services.

28. Freedom to Contract. Except with respect to CRO Services for which CLIENT specifically hires CATO RESEARCH to perform under this Agreement, (a) CLIENT is not required to use CATO RESEARCH for any specific work; (b) CLIENT is free to retain others to perform the same or similar CRO Services as offered by CATO RESEARCH; (c) CATO RESEARCH is not required to provide any CRO Services to CLIENT; and (d) CATO RESEARCH is free to provide CRO Services to other clients that are similar to CRO Services provided to CLIENT.

29. Entire Agreement. Exhibits to this Agreement and Work Orders are incorporated into and made a part of this Agreement. This Agreement, including the incorporated Exhibits and Work Orders, constitutes the entire agreement between the Parties relating to the subject matter hereof and supersedes all prior agreements, whether written or oral, relating to the subject matter hereof. Except as otherwise authorized herein, changes, modifications, and amendments shall be valid only if made in writing and signed by both Parties. To be effective, any agreement between the Parties purporting to amend a term of this Agreement must specifically identify that term’s Section number and state the Parties’ specific intent to amend that term. CATO RESEARCH’s entry into this Agreement is expressly made conditional on CLIENT’s agreement to the terms set forth herein, not those in any purchase order, confirmation, or similar form, and CLIENT agrees that any additional or different terms in any such form, now or in the future, are void even if the form indicates that it shall control.

30. Execution of Agreement. This Agreement shall be void if it is not signed and returned to CATO RESEARCH within thirty (30) days after the date written above. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

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31. Facsimile Signatures. Facsimile signatures shall be accepted as originals for the purposes of this Agreement and any and all Work Orders executed hereunder.

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The Parties have executed this Agreement as of the date first written above.

CATO RESEARCH:		CLIENT:
	Cato Research Ltd.		Sontra Medical Corporation
	4364 South Alston Avenue		10 Forge Parkway
	Durham, North Carolina 27713-2280		Franklin, Massachusetts 02141
By:	/s/ Allen Cato	By:	/s/ Harry G. Mitchell
Name:	Allen Cato	Name:	Harry G. Mitchell
Title:	President	Title:	Interim CEO

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EXHIBIT A

ARBITRATION PROCEDURES

In the event of arbitration under Section 23, the following rules shall apply:

1. Location and Language. The location of the arbitration shall be in New Castle County, Delaware. The arbitration shall be conducted in English and any findings and/or decisions shall be rendered in English.

2. Selection of Arbitrator. The arbitration shall be conducted by one arbitrator who is independent and disinterested with respect to the parties, this Agreement, and the outcome of the arbitration (a “neutral arbitrator”). If the parties can not agree on a neutral arbitrator, then each party shall select a neutral arbitrator, who together shall select a third neutral arbitrator to conduct the arbitration. The arbitrator will be selected with consideration given to his or her experience with disputes of the type being submitted (e.g., the nature of the claim and the technology involved) and will, if possible, be a former judge. It is the intent of the parties that the final arbitrator be selected within thirty (30) days after the arbitration demand is first made.

3. Case Management. Prompt resolution of any dispute is important to both parties and the parties agree that the arbitration of any dispute shall be conducted expeditiously. The arbitrator is instructed and directed to assume case management initiative and control over the arbitration process (including scheduling of events, pre-hearing discovery and activities, and the conduct of the hearing), in order to complete the arbitration as expeditiously as is reasonably practical to obtain a just resolution of the dispute.

4. Remedies. The arbitrator shall follow and apply the applicable law. The arbitrator shall grant such legal or equitable remedies and relief in compliance with applicable law that the arbitrator deems just and equitable, but only to the extent that such remedies or relief could be granted by a state or federal court and as otherwise limited by the terms in this Agreement. No punitive damages may be awarded by the arbitrator. No court action may be maintained seeking punitive damages.

5. Expenses. The expenses of the arbitration, including the arbitrator’s fees, expert witness fees, and attorney’s fees, may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

6. Confidentiality. The parties shall keep confidential the fact of the arbitration, the dispute being arbitrated, and the decision of the arbitrator. Notwithstanding the foregoing, (a) the parties may disclose information about the arbitration to persons who have a need to know, such as directors, trustees, management employees, witnesses, experts, investors, attorneys, lenders, insurers, and others who may be directly affected; (b), if a party has stock that is publicly traded, the party may make such disclosures as are required by applicable securities laws or listing rules; and (c) if a party is expressly asked by a third party about the dispute or the arbitration, the party may disclose and acknowledge in general and limited terms that there is a dispute with the other party which is being (or has been) arbitrated.

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EX-10.2

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.

     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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EX-10.3

Exhibit 10.3

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR SONTRA MEDICAL CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

SONTRA MEDICAL CORPORATION
Senior Promissory Bridge Note

U.S.	Issuance Date: September ___, 2007
No.: 07-	Maturity Date: September 15, 2008

FOR VALUE RECEIVED, the undersigned, Sontra Medical Corporation, a Minnesota corporation (the “Company”), hereby promises to pay to the order of [           Investor Name          ] or any future permitted holder of this Senior Promissory Bridge Note (the “Payee”), at the principal office of the Payee set forth herein, or at such other place as the holder may designate in writing to the Company, the principal sum of                                          ($                    ) or such other amount as may be outstanding hereunder, together with all accrued but unpaid interest, in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts and in immediately available funds, as provided in this Senior Promissory Bridge Note (the “Note”).

          1. Automatic Exchange of Principal and Interest into Qualified Financing. The outstanding principal amount of this Note together with all accrued but unpaid interest hereunder (the “Outstanding Balance”), shall automatically be exchanged into securities issued in an equity or equity linked financing or a combination of equity financings following the Issuance Date with gross proceeds totaling at least $2,500,000 (the “Qualified Financing”); provided, however, the Qualified Financing shall be reduced by the principal amount represented by this Note, and the Other Notes (as defined below in Section 3) up to a maximum of $1,500,000 issued by the Company; provided, further, that for purposes of determining the number of equity securities, including warrants issued in such Qualified Financing, to be received by the Payee upon such exchange, the Payee shall be deemed to have tendered 120% of the Outstanding Balance of the Note as payment of the purchase price in the Qualified Financing. Upon such exchange pursuant to a Qualified Financing, the Payee shall be deemed to be a purchaser in such Qualified Financing and shall be granted all rights afforded a purchaser in the Qualified Financing.

          2. Voluntary Conversion of Principal and Interest. Subject to the terms of this Section 2, and provided that the Qualified Financing has not been completed on or before December 15, 2007 (the “Conversion Option Date”), the Payee shall have the right, prior to the Maturity Date, at the Payee’s sole option, to convert the Outstanding Balance (the “Conversion Option”) into such number of fully paid and non-assessable shares of the Company’s common stock (the “Conversion Shares”) as is determined in accordance with the following formula: the Outstanding Balance as of the date of the exercise of the Conversion Option)/ the price per share of the most recent Equity or Equity Linked Financing (as defined below). If the Payee desires to exercise the Conversion Option, the Payee shall,

by personal delivery or nationally-recognized overnight carrier, surrender the original of this Note and give written notice to the Company (the “Conversion Notice”), which Conversion Notice shall (a) state the Payee’s election to exercise the Conversion Option, and (b) provide for a representation and warranty of the Payee to the Company that, as of the date of the Conversion Notice, the Payee has not assigned or otherwise transferred all or any portion of the Payee’s rights under this Note to any third parties. The Company shall, as soon as practicable thereafter, issue and deliver to the Payee the number of Conversion Shares to which the Payee shall be entitled upon exercise of the Conversion Option. Notwithstanding anything to the contrary contained in this Section 2, the Company shall have the right, at the Company’s option, to pay all or a portion of the accrued and unpaid interest due and payable to Payee upon Payee’s exercise of the Conversion Option in cash. For purposes of this Agreement, “Equity and Equity Linked Financing” shall mean the issuance and sale by the Company of its equity securities, the primary purpose of which is to raise capital for the Company, provided, however, that an Equity and Equity Linked Financing shall not be deemed to include the following issuances: (1) shares of common stock issuable or issued to employees, independent contractors, consultants, directors or vendors of this Company directly or pursuant to a stock option plan, restricted stock plan or other agreement approved by the Board of Directors of this Company; (2) shares of common stock issued for the purpose of (I) a joint venture, technology licensing or research and development activity, (II) distribution or manufacture of the Company’s products or services, or (III) any other transaction involving a corporate partner that is primarily for a purpose other than raising capital through the sale of equity securities; (3) shares of common stock issuable upon conversion of shares of preferred stock; (4) securities issued for the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets of such corporation or other reorganization; (5) securities issued as a dividend or distribution on preferred stock; (6) securities issued as a dividend on common stock where the Company declares or pays a common stock dividend on the preferred stock in the same manner as declared or paid on the common stock; (7) shares of common stock issued or issuable (I) in a public offering before or in connection with which all outstanding shares of preferred stock will be converted to common stock or (II) upon exercise of warrants or rights granted to underwriters in connection with such public offering; (8) shares of common stock issuable or shares of preferred stock issuable upon conversion or exercise of options, warrants, notes or other securities or rights granted pursuant to a loan or commercial lease transaction; or (9) by way of dividend or other distribution on shares of common stock excluded from the definition of additional stock by the foregoing clauses (1), (2), (3), (4), (5), (6), (7), (8) or this clause (9).

          3. Seniority and Ranking. This Note shall rank senior to the Company’s currently issued and outstanding indebtedness and equity securities; provided, however, this Note shall rank pari-passu with respect to certain other senior promissory bridge notes of the Company of like tenor herewith (the “Other Notes”), in an aggregate principal amount not to exceed $1,500,000, inclusive of this Note (this Note together with the Other Notes shall be referred to as the “Notes”). The Company may not issue any new indebtedness while the Notes are outstanding.

          4. Principal and Interest Payments.

               (a) In the event the Company does not complete the Qualified Financing, the Company shall repay the entire Outstanding Balance then outstanding on September 15, 2008 (the “Maturity Date”).

               (b) Interest on the outstanding principal balance of this Note shall accrue at a rate of ten percent (10%) per annum. Interest on the outstanding principal balance of the Note shall be computed on the basis of the actual number of days elapsed and a year of three hundred and sixty-five (365) days and shall be payable on the Maturity Date by the Company in cash. Furthermore, upon the occurrence of an Event of Default, then to the extent permitted by law, the Company will pay interest to

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the Payee, payable on demand, on the outstanding principal balance of the Note from the date of the Event of Default until payment in full at the rate of twelve percent (12%) per annum.

               (c) At any time following the Conversion Option Date but prior to the Maturity Date, the Company, at its sole option, may prepay the Notes in cash for an amount equal to 120% of the outstanding principal balance of the Notes plus 100% of all accrued but unpaid interest on such Notes. All payments made on account of the indebtedness evidenced by this Note shall be applied first to accrued but unpaid interest, if any, and the remainder shall be applied to principal.

          5. Most Favored Nations Exchange Right. So long as this Note remains outstanding, if the Company enters into any Equity or Equity Linked Financing that is not a Qualified Financing, then the Payee in its sole discretion may exchange this Note for the securities issued or to be issued in such Equity or Equity Linked Financing. In the event of such exchange, the Payee shall be deemed to have tendered 120% of the Outstanding Balance of the Note as payment of the purchase price in such financing.

          6. Registration Rights. Provided that the Qualified Financing has not been completed on or before the Conversion Option Date, the holders of the Notes together as a class (subject to majority approval of the then Outstanding Balance of the Notes) shall have a one-time demand registration right covering the Conversion Shares (the “Demand Registration Right”). If such majority of the holders desire to exercise the Demand Registration Right, a representative of the holders as a class shall, by personal delivery or nationally-recognized overnight carrier, give written notice to the Company (the “Demand Registration Notice”), which Demand Registration Notice shall state the holders election to exercise the Demand Registration Right. The Company shall, within thirty (30) days of receiving the Demand Registration Notice, file a registration statement covering the Conversion Shares to which the holders shall be entitled upon exercise of the Conversion Option.

          7. Non-Business Days. Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

          8. Representations and Warranties of the Company. The Company represents and warrants to the Payee as follows:

               (a) The Company has been duly incorporated and is validly existing and in good standing under the laws of the state of Minnesota, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted.

               (b) This Note has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally, and the Company has full power and authority to execute and deliver this Note and to perform its obligations hereunder.

               (c) The execution, delivery and performance of this Note will not (i) conflict with or result in a breach of or a default under any of the terms or provisions of, (A) the Company’s certificate of incorporation or by-laws, or (B) any material provision of any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of

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its material properties or assets is bound, (ii) result in a violation of any material provision of any law, statute, rule, regulation, or any existing applicable decree, judgment or order by any court, Federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company, or any of its material properties or assets or (iii) result in the creation or imposition of any material lien, charge or encumbrance upon any material property or assets of the Company or any of its subsidiaries pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of their property or any of them is subject.

               (d) No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Note.

          9. Events of Default. The occurrence of any of the following events shall be an “Event of Default” under this Note:

               (a) the Company shall fail to make the payment of any amount of any principal outstanding for a period of three (3) business days after the date such payment shall become due and payable hereunder; or

               (b) the Company shall fail to make any payment of interest for a period of three (3) business days after the date such interest shall become due and payable hereunder; or

               (c) any representation, warranty or certification made by the Company herein or in any certificate or financial statement shall prove to have been materially false or incorrect or breached in a material respect on the date as of which made; or

               (d) the holder of any indebtedness of the Company or any of its subsidiaries shall accelerate any payment of any amount or amounts of principal or interest on any indebtedness (the “Indebtedness”) (other than the Indebtedness hereunder) prior to its stated maturity or payment date the aggregate principal amount of which Indebtedness of all such persons is in excess of $100,000, whether such Indebtedness now exists or shall hereinafter be created, and such accelerated payment entitles the holder thereof to immediate payment of such Indebtedness which is due and owing and such indebtedness has not been discharged in full or such acceleration has not been stayed, rescinded or annulled within ten (10) business days of such acceleration; or

               (e) A judgment or order for the payment of money shall be rendered against the Company or any of its subsidiaries in excess of $100,000 in the aggregate (net of any applicable insurance coverage) for all such judgments or orders against all such persons (treating any deductibles, self insurance or retention as not so covered) that shall not be discharged, and all such judgments and orders remain outstanding, and there shall be any period of sixty (60) consecutive days following entry of the judgment or order in excess of $100,000 or the judgment or order which causes the aggregate amount described above to exceed $100,000 during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

               (f) the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce

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in writing to any petition filed against it in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic), or (vi) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

               (g) a proceeding or case shall be commenced in respect of the Company or any of its subsidiaries without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) consecutive days or any order for relief shall be entered in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any of its subsidiaries or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Company or any of its subsidiaries and shall continue undismissed, or unstayed and in effect for a period of thirty (30) consecutive days.

          10. Remedies Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Payee of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable; provided, however, that upon the occurrence of an Event of Default described in (i) Sections 9(f) and (g), without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Company, the outstanding principal balance and accrued interest hereunder shall be automatically due and payable, and (ii) Sections 9(a) through (e), the Payee may exercise or otherwise enforce any one or more of the Payee’s rights, powers, privileges, remedies and interests under this Note or applicable law. No course of delay on the part of the Payee shall operate as a waiver thereof or otherwise prejudice the right of the Payee. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. Notwithstanding the foregoing, Payee agrees that its rights and remedies hereunder are limited to receipt of cash or shares of the Company’s equity securities in the amounts described herein.

          11. Replacement. Upon receipt by the Company of (i) evidence of the loss, theft, destruction or mutilation of any Note and (ii) (y) in the case of loss, theft or destruction, of indemnity (without any bond or other security) reasonably satisfactory to the Company, or (z) in the case of mutilation, the Note (surrendered for cancellation), the Company shall execute and deliver a new Note of like tenor and date. However, the Company shall not be obligated to reissue such lost, stolen, destroyed or mutilated Note if the Payee contemporaneously requests the Company to convert such Note.

          12. Parties in Interest, Transferability. This Note shall be binding upon the Company and its successors and assigns and the terms hereof shall inure to the benefit of the Payee and its successors and permitted assigns. This Note may be transferred or sold, subject to the provisions of Section 21 of this Note, or pledged, hypothecated or otherwise granted as security by the Payee.

          13. Amendments. This Note may not be modified or amended in any manner except in writing executed by the Company and the Payee.

          14. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during

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normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The Company will give written notice to the Payee at least thirty (30) days prior to the date on which the Company closes its books or takes a record (x) with respect to any dividend or distribution upon the common stock of the Company, (y) with respect to any pro rata subscription offer to holders of common stock of the Company or (z) for determining rights to vote with respect to a Major Transaction, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Company will also give written notice to the Payee at least twenty (20) days prior to the date on which dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to the Payee prior to such information being made known to the public.

Address of the Payee:
	Attention:
	Tel. No.:
	Fax No.:
Address of the Company:	Sontra Medical Corporation.
	10 Forge Parkway
	Franklin, MA 02038
	Attention: Chief Executive Officer
	Tel. No.: (508) 553-8850
	Fax No.: (508) 553-8760

          15. Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

          16. Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

          17. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Payee’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Payee and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Payee and that the remedy at law for any such breach may be inadequate. Therefore the Company agrees that, in the event of any such breach or threatened breach, the Payee shall be entitled, in addition to all other

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available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

          18. Failure or Indulgence Not Waiver. No failure or delay on the part of the Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

          19. Enforcement Expenses. The Company agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’ fees and expenses.

          20. Binding Effect. The obligations of the Company and the Payee set forth herein shall be binding upon the successors and assigns of each such party, whether or not such successors or assigns are permitted by the terms hereof.

          21. Compliance with Securities Laws. The Payee of this Note acknowledges that this Note is being acquired solely for the Payee’s own account and not as a nominee for any other party, and for investment, and that the Payee shall not offer, sell or otherwise dispose of this Note other than in compliance with the laws of the United States of America and as guided by the rules of the Securities and Exchange Commission. This Note and any Note issued in substitution or replacement therefore shall be stamped or imprinted with a legend in substantially the following form:

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR SONTRA MEDICAL CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

          22. Severability. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

          23. Consent to Jurisdiction. Each of the Company and the Payee (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Payee consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address set forth in Section 14 hereof and agrees that such service shall constitute good and sufficient

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service of process and notice thereof. Nothing in this Section 23 shall affect or limit any right to serve process in any other manner permitted by law.

          24. Company Waivers. Except as otherwise specifically provided herein, the Company and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Company liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

               (a) No delay or omission on the part of the Payee in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Payee, nor shall any waiver by the Payee of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

               (b) THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the date first written above.

SONTRA MEDICAL CORPORATION
By:
	Name:	Harry G. Mitchell
	Title:	Interim Chief Executive Officer, CFO and Treasurer
ACCEPTED AND AGREED: PAYEE
By:
	Name:
	Title:

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EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT dated as of September 14^th, 2007 between Sontra Medical Corporation, a Minnesota corporation (“Company”), and Patrick Mooney (“Executive”).

BACKGROUND

          Company and Durham Pharmaceuticals Acquisition Co., a wholly owned subsidiary of Company, are parties to an Agreement and Plan of Merger and Reorganization dated as of September 14^th, 2007 (the “Merger Agreement”). It is a condition precedent to the closing of the transactions contemplated by the Merger Agreement that Company and Executive enter into this Agreement providing for the employment of Executive by Company and certain other matters.

          Pursuant to the foregoing, Company desires to employ Executive, and Executive desires to enter into the employ of Company, effective as of the closing of the transactions contemplated by the Merger Agreement and on the terms and conditions contained in this Agreement. If the closing of the transactions contemplated by the Merger Agreement does not occur on or before September 30, 2007, this Agreement shall become null and void.

          Executive will be substantially involved with Company’s operations and management and will learn trade secrets and other confidential information relating to Company and its customers; accordingly, the restrictive covenants contained in Section 5 of this Agreement constitute essential elements hereof.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and intending to be legally bound hereby, the parties hereto agree as follows:

TERMS

SECTION 1. CAPACITY AND DUTIES

     1.1 Employment; Acceptance of Employment. Company hereby employs Executive and Executive hereby accepts employment by Company for the period and upon the terms and conditions hereinafter set forth.

     1.2 Capacity and Duties.

           (a) Executive shall initially serve as Chief Executive Officer of Company. Executive shall perform such other duties and shall have such authority

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consistent with his position as may from time to time reasonably be specified by the Board of Directors of Company. Executive shall report directly to the Board of Directors.

          (b) Executive shall devote his full working time, energy, skill and best efforts to the performance of his duties hereunder, in a manner that will comply with Company’s rules and policies and will faithfully and diligently further the business and interests of Company. Executive shall not be employed by or participate or engage in or in any manner be a part of the management or operation of any business enterprise other than Company without the prior written consent, which consent may be granted or withheld in the sole discretion, of the Board of Directors of Company.

SECTION 2. TERM OF EMPLOYMENT

     2.1 Term. The term of Executive’s employment hereunder shall be two years commencing on the closing of the transactions contemplated by the Merger Agreement, as further extended or unless sooner terminated in accordance with the other provisions hereof (the “Term”). Except as hereinafter provided, on the second anniversary of the commencement date and on each subsequent anniversary thereof, the Term shall be automatically extended for one year unless either party shall have given to the other party written notice of termination of this Agreement at least 90 days prior to such anniversary. If written notice of termination is given as provided above, Executive’s employment under this Agreement shall terminate on the last day of the Term.

SECTION 3. COMPENSATION

     3.1 Basic Compensation. As compensation for Executive’s services during the first 12 months of the Term, Company shall pay to Executive a salary at the annual rate of $300,000, payable in periodic installments in accordance with Company’s regular payroll practices in effect from time to time. For each subsequent 12 month period of Executive’s employment hereunder, Executive’s salary shall be in the amount of his initial annual salary with such increases, if any, as may be established by the Board of Directors of Company. Executive’s annual salary, as determined in accordance with this Section 3.1, is hereinafter referred to as his “Base Salary.”

     3.2 Initial Bonus. In addition to the other amounts provided for in this Section 3, Company shall make a one time cash payment of $145,000 to Executive within five business days following the commencement of the Term, which amount shall be applied toward applicable withholding tax obligations.

     3.3 Performance Bonus. In the sole discretion of the Board of Directors of Company, Executive shall, following the completion of each fiscal year of Company during the Term, be entitled to receive a performance bonus in accordance with the policies and plans of Company in place from time to time with respect to the payment of bonuses to executive officers.

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     3.4 Stock Options. Upon the execution and delivery of this Agreement by the parties hereto, Company shall grant to Executive options to purchase 500,000 shares of Company’s Common Stock at an exercise price per share of $2.39, on the terms and conditions set forth in the form of Nonqualified Stock Option Agreement between Company and Executive attached hereto as Exhibit A.

     3.5 Employee Benefits. During the Term, Executive shall be entitled to participate in such of Company’s employee benefit plans and benefit programs, including medical benefit programs, as may from time to time be provided by Company for its executive officers.

     3.6 Vacation. During the Term, Executive shall be entitled to a paid vacation commensurate with vacations as may from time to time be provided by Company for its executive officers.

     3.7 Expense Reimbursement. Company shall reimburse Executive for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with its regular reimbursement policies as in effect from time to time.

SECTION 4. TERMINATION OF EMPLOYMENT

     4.1 Death of Executive. If Executive dies during the Term, Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of Executive’s death. Executive’s spouse and dependents (if any) shall be entitled for a period of 12 months after Executive’s death to continue to receive medical benefits coverage at the Company’s expense if and to the extent Company was paying for such benefits for Executive’s spouse and dependents at the time of Executive’s death.

     4.2 Disability of Executive. If Executive is or has been materially unable for any reason to perform his duties hereunder for a period of 90 consecutive days, then the Board of Directors shall have the right to terminate Executive’s employment upon 30 days’ prior written notice to Executive at any time during the continuation of such inability; provided that if Executive is able to resume his duties hereunder during such 30 day notice period, Executive shall not be deemed to be disabled for purposes of this Section 4.2 and such notice of termination shall be null and void. In the event Executive is terminated pursuant to this Section 4.2, Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination; provided, however, that for a period of 12 months following such termination, Executive shall be entitled to continue to receive medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

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     4.3 Termination for Cause. Executive’s employment hereunder shall terminate immediately upon notice that the Board of Directors of Company is terminating Executive for Cause (as defined herein), in which event Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination. “Cause” shall mean the following:

               (i) fraud or dishonesty in connection with Executive’s employment or theft, misappropriation or embezzlement of Company’s funds or property;

               (ii) conviction of any felony or crime involving fraud or misrepresentation;

               (iii) material breach of Executive’s obligations under this Agreement;

               (iv) willful violation of any express lawful direction or requirement established by the Board of Directors of Company; or

               (v) use of alcohol or other drugs that interfere with the performance by Executive of his duties, or use of any illegal drugs or narcotics.

     4.4 Termination without Cause or for Good Reason.

          (a) If (1) Executive’s employment is terminated by Company for any reason other than Cause or the death or disability of Executive, or (2) Executive’s employment is terminated by Executive for Good Reason (as defined herein):

               (i) Company shall pay Executive all amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination;

               (ii) Company shall continue to pay Executive all of the compensation provided for in Section 3.1 during the remainder of the then-current Term, but not less than 12 months;

               (iii) Company shall pay to Executive a lump sum cash payment equal to the Bonus Amount (as defined herein);

               (iv) anything to the contrary in Section 3.4 above (or any other agreement or document relating to stock grants or options) notwithstanding, all stock grants and outstanding stock options granted to Executive shall become immediately vested and exercisable on the date of such termination and shall remain exercisable as provided therein; and

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               (v) Executive shall be entitled to continue to receive for the remainder of the then-current Term, but not less than 12 months, medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at the Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

          (b) For purposes of this Agreement, “Bonus Amount” shall mean an amount equal to the average of the performance bonuses paid to Executive with respect to Company’s two most recent fiscal years.

          (c) Except for the provisions of this Section 4.4, Company shall have no further obligation to Executive hereunder.

          (d) “Good Reason” shall mean the following:

               (i) material breach of Company’s obligations hereunder if such breach is not remedied by Company within 15 days after receiving notice of such violation from the Executive;

               (ii) any decrease in Executive’s salary as increased during the Term (except for decreases that are in conjunction with decreases in executive salaries generally); or

               (iii) any material reduction in Executive’s duties or authority.

          (e) Notwithstanding the foregoing, Company shall not be obligated to make any payments under this Section 4.4 unless Executive has executed and delivered to Company a further agreement, to be prepared at the time of Executive’s termination of employment, that shall provide (i) an unconditional release of all claims, charges, complaints and grievances, whether known or unknown to Executive, against Company or any of its affiliates, through date of Executive’s termination of employment; (ii) an obligation to maintain the confidentiality of such agreement; and (iii) an obligation to indemnify Company if Executive breaches such agreement.

     4.5 Change in Control.

          (a) If, during the Term, there should be a Change of Control (as defined herein), anything to the contrary in Section 3.4 above (or any other agreement or document relating to stock grants or options) notwithstanding, all stock grants and outstanding stock options granted to Executive shall become immediately vested and exercisable on the date of such termination and shall remain exercisable as provided therein.

          (b) If, during the Term, there should be a Change of Control (as defined herein), and within 3 months before or 12 months thereafter either (i) Executive’s employment is terminated by the Company for any reason other than Cause or the death

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or disability of Executive or (ii) Executive terminates his employment for Good Reason, then Company shall, on or before Executive’s last day of full-time employment hereunder, pay to Executive, in lieu of any other rights to cash compensation he may have under this Agreement which have not accrued by such date, a lump sum cash payment equal to two times (x) Executive’s then current Base Salary and (y) the Bonus Amount. Notwithstanding the foregoing, Company shall not be obligated to make any payments under this Section 4.5 unless Executive has executed and delivered to Company a further agreement, to be prepared at the time of Executive’s termination of employment, that shall provide (i) an unconditional release of all claims, charges, complaints and grievances, whether known or unknown to Executive, against Company or any of its affiliates, through date of Executive’s termination of employment; (ii) an obligation to maintain the confidentiality of such agreement; and (iii) an obligation to indemnify Company if Executive breaches such agreement.

          (c) It is the intention of the parties that the payments under this Section 4.5 shall not constitute “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended. Accordingly, notwithstanding anything in this Section 4.5 to the contrary, if any of the amounts otherwise payable under this Section would constitute “excess parachute payments,” or if the independent accountants acting as auditors for Company on the date of the Change in Control determine that such payments may constitute “excess parachute payments,” then the amounts otherwise payable under this Section 4.5 shall be reduced to the maximum amounts that may be paid without any such payments constituting, or potentially constituting, “excess parachute payments.”

          (d) Following any termination of Executive’s employment under this Section 4.5 after a Change in Control, Executive shall be entitled to continue to receive for the remainder of the then-current Term, but not less than 12 months, medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at the Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

          (e) Upon making the payments described in this Section 4.5, Company shall have no further obligation to Executive under this Agreement.

          (f) A “Change in Control” of Company shall mean:

               (1) the acquisition by any person, entity or “group” required to file a Schedule 13D or Schedule 14D-1 under the Securities Exchange Act of 1934 (the “1934 Act”) (excluding, for this purpose, Company, its subsidiaries, or any employee benefit plan of Company or its subsidiaries which acquires ownership of voting securities of Company) of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 40% or more of either the then outstanding shares of common stock or the combined voting power of Company’s then outstanding voting securities entitled to vote generally in the election of directors; provided that any such acquisition by any person, entity or “group” that beneficially owns 20% or more of such outstanding common stock

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or voting securities as of the effective date of this Agreement shall not be considered a Change of Control under this Agreement;

          (2) the election or appointment to the Board of Directors of Company, or resignation of or removal from the Board, of directors with the result that the individuals who immediately following the effective date hereof constitute the Board (the “Incumbent Board”) no longer constitute at least a majority of the Board, provided that any person who becomes a director subsequent to the date hereof whose appointment, election, or nomination for election by Company’s stockholders, was approved by (i) Executive (if a director) or (ii) a vote of at least a majority of the Incumbent Board (other than an appointment, election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

          (3) consummation by the Company of: (i) a reorganization, merger or consolidation by reason of which persons who were the stockholders of Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors, or (ii) a liquidation or dissolution of Company or the sale, transfer, lease or other disposition of all or substantially all of the assets of Company (whether such assets are held directly or indirectly), that is not, in each case, undertaken in connection with any voluntary or involuntary bankruptcy proceedings involving the Company.

     4.6 Voluntary Termination. In the event Executive’s employment is voluntarily terminated by Executive without Good Reason, Company shall not be obligated to make any further payments to Executive under this Agreement other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of Executive’s termination.

SECTION 5. RESTRICTIVE COVENANTS

     5.1 Confidentiality. Executive acknowledges a duty of confidentiality owed to Company and shall not, at any time during or after his employment by Company, retain in writing, use, divulge, furnish, or make accessible to any person or entity, without the express authorization of the Board of Directors, any trade secret, private or confidential information or knowledge of Company obtained or acquired by him while so employed. All computer software, address books, rolodexes, business cards, telephone lists, customer lists, price lists, contract forms, catalogs, books, records, files and know-how acquired while an employee of Company are acknowledged to be the property of Company and shall not be duplicated, removed from Company’s possession or premises or made use of other than in pursuit of Company’s business and, upon termination of employment for any reason, Executive shall deliver to Company, without further demand, all copies thereof which are then in his possession or under his control.

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     5.2 Inventions and Improvements. Executive shall promptly communicate to Company all ideas, discoveries, inventions and business opportunities which are or may be useful to Company or its business. Executive acknowledges that all such ideas, discoveries, inventions, and improvements which heretofore have been or are hereafter made, conceived, or reduced to practice by him at any time during his employment with Company and every item of knowledge relating to Company’s business interests (including business opportunities) heretofore or hereafter gained by him at any time during his employment with Company are the property of Company, and Executive hereby irrevocably assigns all such ideas, discoveries, inventions, improvements, and knowledge to Company for its sole use and benefit, without additional compensation. The provisions of this Section 5.2 shall apply whether such ideas, discoveries, inventions, improvements or knowledge were or are conceived, made or gained by him alone or with others, whether during or after usual working hours, whether on or off the job, whether applicable to matters directly or indirectly related to Company’s business interests (including potential business interests), and whether or not within the specific realm of his duties. Executive shall, upon request of Company, but at no expense to Executive, at any time during or after his employment with Company, sign all instruments and documents reasonably requested by Company and otherwise cooperate with Company to protect its right to such ideas, discoveries, inventions, improvements, and knowledge, including applying for, obtaining, and enforcing patents and copyrights thereon in such countries as Company shall determine.

     5.3 Injunctive and Other Relief. Executive acknowledges and agrees that the covenants contained herein are fair and reasonable in light of the consideration paid hereunder, and that damages alone shall not be an adequate remedy for any breach by Executive of his covenants contained herein and accordingly expressly agrees that, in addition to any other remedies which Company may have, Company shall be entitled to injunctive or other equitable relief in any court of competent jurisdiction for any breach or threatened breach of any such covenants by Executive.

     5.4 Definition of “Company.” “Company” as used in Section 5 includes all affiliates of Company.

SECTION 6. MISCELLANEOUS

     6.1 Prior Employment. Executive represents and warrants that his acceptance of employment at Company and his execution of this Agreement has not breached, and the performance of his duties hereunder will not breach, any obligation owed by him to, or any agreement with, any prior employer or other person.

     6.2 Litigation. At the request of Company, Executive shall during and after the Term render reasonable assistance to Company in connection with any litigation or other proceeding involving the Company or any of its affiliates. Company shall provide reasonable compensation to Executive for such assistance rendered after the Term.

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     6.3 Assignment; Benefit. This Agreement shall not be assignable by Executive, and shall be assignable by Company only to any person or entity which may become a successor in interest (by purchase of assets or stock, or by merger, or otherwise) to Company in the business or substantially all of the business presently operated by it. Subject to the foregoing, this Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto and each of their respective permitted successors, assigns, heirs, executors and administrators.

     6.4 Notices. All notices hereunder shall be in writing and shall be sufficiently given if hand-delivered, sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested or by facsimile (confirmed by U.S. mail), receipt acknowledged, addressed as set forth below or to such other person and/or at such other address as may be furnished in writing by any party hereto to the other. Any such notice shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor, in all other cases. Any and all service of process and any other notice in any action, suit or proceeding shall be effective against any party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve process in any other manner permitted by law.

(a)	If to Company:
	Sontra Medical Corporation
	10 Forge Parkway
	Franklin, Massachusetts 02038
	Attention: Chairman, Board of Directors
	Facsimile No.: (508) 530-0311
(b)	If to Executive:
	Patrick Mooney
	625 Clinton Avenue
	Haddonfield, New Jersey 08033

     6.5 Entire Agreement; Modification; Advice of Counsel.

          (a) This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. No amendment, modification, or waiver of this Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy with respect to such occurrence or with respect to any other occurrence.

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          (b) Executive acknowledges that he has been afforded an opportunity to consult with his counsel with respect to this Agreement.

     6.6 Governing Law. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania and the federal laws of the United States of America, to the extent applicable, without giving effect to otherwise applicable principles of conflicts of law.

     6.7 Headings; Counterparts. The headings of paragraphs in this Agreement are for convenience only and shall not affect its interpretation. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute the same Agreement.

     6.8 Further Assurances. Each of the parties hereto shall execute such further instruments and take such additional actions as the other party shall reasonably request in order to effectuate the purposes of this Agreement.

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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

SONTRA MEDICAL CORPORATION
By:	/s/ Harry G. Mitchell
Name: Harry G. Mitchell
Title: Interim Chief Executive Officer and Chief
Financial Officer
EXECUTIVE:
/s/ Patrick Mooney
Patrick Mooney

SONTRA MEDICAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT

          This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the 14^th day of September, 2007 (the “Grant Date”), is between Sontra Medical Corporation, a Minnesota corporation (the “Company”), and Patrick Mooney (the “Optionee”), an employee of the Company.

          WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company (“Common Stock”) as hereinafter provided;

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

          1. Grant of Option. The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of 500,000 shares of Common Stock. The Option is in all respects limited and conditioned as hereinafter provided. It is intended that the Option granted hereunder be a nonqualified stock option (“NQSO”) and not an incentive stock option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

          2. Exercise Price. The exercise price of the shares of Common Stock covered by this Option shall be $2.39 per share. It is the determination of the Board of Directors of the Company (the “Board”) that on the Grant Date the exercise price was not less than the greater of (i) 100% of the “Fair Market Value,” or (ii) the par value of the Common Stock. The term “Fair Market Value” for purposes of this Option Agreement means the closing price of a share of Common Stock on the trading day before the Grant Date.

          3. Term. Except as otherwise provided in Paragraph 8 or Paragraph 11, this Option shall expire on September 14, 2017 (the “Expiration Date”), which date is not more than 10 years from the Grant Date. This Option shall not be exercisable on or after the Expiration Date.

          4. Exercise of Option. The Optionee shall have the right to purchase from the Company, on and after the following dates, the following number of Shares:

Date Installment Becomes
Exercisable	Number of Option Shares
Grant Date	166,667 Shares
September 14, 2008	166,667 Shares
September 14, 2009	166,666 Shares

Once options become exercisable, they will remain exercisable until they are exercised or until they terminate.

          5. Method of Exercising Option. Subject to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Company at its principal office, which is presently located at 10 Forge Parkway, Franklin, Massachusetts 02038, Attn: Chief Executive Officer. Such notice (a suggested form of which is attached hereto) shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; shall, unless the Company otherwise notifies the Optionee, be accompanied by the investment certificate referred to in Paragraph 6; and shall be accompanied by payment of the full exercise price of such shares. Only full shares will be issued.

          The exercise price shall be paid to the Company –

          (a) in cash, or by certified check, bank draft, or postal or express money order;

          (b) through the delivery of shares of Common Stock which shall be valued at their Fair Market Value on the date of exercise;

          (c) by having the Company withhold shares of Common Stock at their Fair Market Value on the date of exercise;

          (d) by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount of sale or loan proceeds necessary to pay the exercise price of the Option; or

          (e) in any combination of (a), (b), (c) or (d) above.

          In the event the exercise price is paid, in whole or in part, with shares of Common Stock, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Stock surrendered on the date of exercise.

          Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the shares with respect to which the Option is so exercised. Such certificate(s) shall be registered in the name of the person or persons so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the

notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s spouse, jointly, with right of survivorship) and shall be delivered as provided above to, or upon the written order of, the person or persons exercising the Option. In the event the Option is exercised by any person or persons after the death or disability of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that are purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable.

          6. Shares to be Purchased for Investment. Unless the Company has theretofore notified the Optionee that a registration statement covering the shares to be acquired upon the exercise of the Option has become effective under the Securities Act of 1933, as amended (the “1933 Act”), and the Company has not thereafter notified the Optionee that such registration statement is no longer effective, it shall be a condition to any exercise of this Option that the shares acquired upon such exercise be acquired for investment and not with a view to distribution, and the person effecting such exercise shall submit to the Company a certificate of such investment intent, together with such other evidence supporting the same as the Company may request. The Company shall be entitled to restrict the transferability of the shares issued upon any such exercise to the extent necessary to avoid a risk of violation of the 1933 Act (or of any rules or regulations promulgated thereunder), or of any state laws or regulations. Such restrictions may, in the discretion of the Company, be noted or set forth in full on the share certificates.

          7. Transferability of Option. This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution. During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.

          8. Termination of Service. If the Optionee’s service with the Company is terminated for any reason prior to the Expiration Date, this Option may be exercised, to the extent of the number of shares with respect to which the Optionee could have exercised it on the date of such termination of service, or to any greater extent permitted by the Company, by the Optionee at any time prior to the earlier of (i) the Expiration Date, or (ii) three months after the date of such termination of service.

          9. Withholding of Taxes. The obligation of the Company to deliver shares of Common Stock upon the exercise of this Option shall be subject to applicable federal, state and local tax withholding requirements. If the exercise of the Option is subject to the withholding requirements of applicable federal, state and/or local tax law, the Optionee, subject to such additional withholding rules (the “Withholding Rules”) as shall be adopted by the Company, may satisfy the withholding tax, in whole or in part, by electing to have the Company withhold (or by returning to the Company) shares of Common Stock, which shares shall be valued, for this purpose, at their Fair Market Value on the date the amount attributable to the exercise of the Option is includable in income by the Optionee under section 83 of the Code. Such election must be made in compliance with and subject to the Withholding Rules, and the Company may limit the number of withheld shares to the extent necessary to avoid adverse accounting consequences.

          10. Adjustment in Case of Changes in Common Stock. The maximum number of shares with respect to which Options may be granted under this Agreement, and the number of shares issuable upon the exercise of outstanding Options under this Agreement (Paragraph 4), as well as the option price per share of such outstanding Options (Paragraph 2), shall be adjusted, as may be deemed appropriate by the Company, to reflect any stock dividend, stock split, spin-off, share combination or similar change in the capitalization of the Company. In the event any such change in capitalization cannot be reflected in a straight mathematical adjustment of the number of shares issuable upon the exercise of outstanding Options (and a straight mathematical adjustment of the exercise price thereof), the Committee shall make such adjustments as are appropriate to reflect most nearly such straight mathematical adjustment. Such adjustments shall be made only as necessary to maintain the proportionate interest of Optionees, and preserve, without exceeding, the value of Options.

          11. Certain Corporate Transactions. In the event of a corporate transaction (such as, for example, a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation), the surviving or successor corporation shall assume each outstanding Option or substitute a new option for each outstanding Option; provided, however, that, in the event of a proposed corporate transaction, the Company may terminate all or a portion of the outstanding Options, effective upon the closing of the corporate transaction, if it determines that such termination is in the best interests of the Company. If the Company decides so to terminate outstanding Options, the Company shall give the Optionee not less than seven days’ notice prior to any such termination, and any Option which is to be so terminated may be exercised (if and only to the extent that it is then exercisable) up to, and including the time of, such termination.

          Further, the Company, in its discretion, may accelerate, in whole or in part, the date on which any or all Options become exercisable. The Company also may, in its discretion, change the terms of any outstanding Option to reflect any such corporate transaction.

          12. Governing Law. This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible. Otherwise, the laws of the State of Minnesota (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, this Option Agreement.

[Signature page follows]

     IN WITNESS WHEREOF, the Company has caused this Nonqualified Stock Option Agreement to be duly executed by its duly authorized officer and the Optionee has hereunto set his hand and seal, all as of the day and year first above written.

SONTRA MEDICAL CORPORATION
By:	/s/ Harry G. Mitchell
	Harry G. Mitchell
/s/ Patrick Mooney
Optionee

SONTRA MEDICAL CORPORATION

Notice of Exercise of Nonqualified Stock Option

     I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified Stock Option Agreement dated as of September 14, 2007 by Sontra Medical Corporation (the “Company”), with respect to the following number of shares of the Company’s common stock (“Shares”), par value $.01 per Share, covered by said option:

	Number of Shares to be purchased
	Exercise price per Share		$
	Total exercise price		$
	A.	Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $                     in full/partial [circle one] payment for such Shares;
		and/or
	B.	Enclosed is/are                      Share(s) with a total Fair Market Value of $                     on the date hereof in full/partial [circle one] payment for such Shares;
		and/or
	C.	Please withhold                      Shares with a total Fair Market Value of $                     on the date hereof in full/partial [circle one] payment for such Shares;
		and/or
	D.	I have provided notice to                                          [insert name of broker], a broker, who will render
full/partial [circle one] payment for such Shares. [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full exercise price for the number of Shares purchased in this method.]

     Please have the certificate or certificates representing the purchased Shares registered in the following name or names^*                                         and sent to:                                                                            

     If the condition in Paragraph 6 (“Shares to be Purchased for Investment”) of the Nonqualified Stock Option Agreement related to the Shares purchased hereby is applicable, the undersigned hereby certifies that the Shares purchased hereby are being acquired for investment and not with a view to the distribution of such Shares.

DATED:
	Optionee’s Signature

^* Certificates may be registered in the name of the Optionee alone or in the joint names (with right of survivorship) of the Optionee and his or her spouse.

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT dated as of September 14, 2007 between Sontra Medical Corporation, a Minnesota corporation (“Company”), and Shawn Singh (“Executive”).

BACKGROUND

          Company and Durham Pharmaceuticals Acquisition Co., a wholly owned subsidiary of Company, are parties to an Agreement and Plan of Merger and Reorganization dated as of September 14, 2007 (the “Merger Agreement”). It is a condition precedent to the closing of the transactions contemplated by the Merger Agreement that Company and Executive enter into this Agreement providing for the employment of Executive by Company and certain other matters.

          Pursuant to the foregoing, Company desires to employ Executive, and Executive desires to enter into the employ of Company, effective as of the closing of the transactions contemplated by the Merger Agreement and on the terms and conditions contained in this Agreement. If the closing of the transactions contemplated by the Merger Agreement does not occur on or before September 30, 2007, this Agreement shall become null and void.

          Executive will be substantially involved with Company’s operations and management and will learn trade secrets and other confidential information relating to Company and its customers; accordingly, the restrictive covenants contained in Section 5 of this Agreement constitute essential elements hereof.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and intending to be legally bound hereby, the parties hereto agree as follows:

TERMS

SECTION 1. CAPACITY AND DUTIES

     1.1 Employment; Acceptance of Employment. Company hereby employs Executive and Executive hereby accepts employment by Company for the period and upon the terms and conditions hereinafter set forth.

     1.2 Capacity and Duties.

          (a) Executive shall initially serve as President (Interim) of Company. Executive shall perform such other duties and shall have such authority consistent with

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his position as may from time to time reasonably be specified by the Board of Directors or the Chief Executive Officer of Company. Executive shall report directly to the Chief Executive Officer of Company.

          (b) Company acknowledges and agrees that Executive shall serve in an interim, part-time capacity, and that Executive may engage in and possess interests in other business ventures of any and every type and description, independently or with others, with no obligation to offer to Company the right to participate therein. It is the intention of the parties that Executive shall devote approximately 80 hours per month to his duties hereunder, other than in months in which vacation time is used by Executive or during which Company holidays occur, in which case the hours expectations for such months shall be appropriately reduced. Subject to the foregoing, Executive shall devote his energy, skill and best efforts to the performance of his duties hereunder, in a manner that will comply with Company’s rules and policies and will faithfully and diligently further the business and interests of Company.

SECTION 2. TERM OF EMPLOYMENT

     2.1 Term. The term of Executive’s employment hereunder shall be two years commencing on the closing of the transactions contemplated by the Merger Agreement, as further extended or unless sooner terminated in accordance with the other provisions hereof (the “Term”). Except as hereinafter provided, on the second anniversary of the commencement date and on each subsequent anniversary thereof, the Term shall be automatically extended for one year unless either party shall have given to the other party written notice of termination of this Agreement at least 90 days prior to such anniversary. If written notice of termination is given as provided above, Executive’s employment under this Agreement shall terminate on the last day of the Term.

SECTION 3. COMPENSATION

     3.1 Basic Compensation. As compensation for Executive’s services during the first 12 months of the Term, Company shall pay to Executive a salary at the annual rate of $135,000, payable in periodic installments in accordance with Company’s regular payroll practices in effect from time to time. For each subsequent 12 month period of Executive’s employment hereunder, if any, Executive’s salary shall be in the amount of his initial annual salary with such increases, if any, as may be established by the Board of Directors of Company. Executive’s annual salary, as determined in accordance with this Section 3.1, is hereinafter referred to as his “Base Salary.”

     3.2 Initial Bonus. In addition to the other amounts provided for in this Section 3, Company shall make a one time cash payment of $115,000 to Executive within five business days following the commencement of the Term, which amount shall be applied toward applicable withholding tax obligations.

     3.3 Performance Bonus. In the sole discretion of the Board of Directors of Company, Executive shall, following the completion of each fiscal year of Company

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during the Term, be entitled to receive a performance bonus in accordance with the policies and plans of Company in place from time to time with respect to the payment of bonuses to executive officers.

     3.4 Stock Options. Upon the execution and delivery of this Agreement by the parties hereto, Company shall grant to Executive options to purchase 500,000 shares of Company’s Common Stock at an exercise price per share of $2.39, on the terms and conditions set forth in the form of Nonqualified Stock Option Agreement between Company and Executive attached hereto as Exhibit A.

     3.5 Employee Benefits. During the Term, Executive shall be entitled to participate in such of Company’s employee benefit plans and benefit programs (excluding Company’s medical benefit programs) as may from time to time be provided by Company for its executive officers.

     3.6 Vacation. During the Term, Executive shall be entitled to a paid vacation commensurate with vacations as may from time to time be provided by Company for its executive officers, as may be pro-rated as appropriate in light of Executive’s part-time status.

     3.7 Expense Reimbursement. Company shall reimburse Executive for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with its regular reimbursement policies as in effect from time to time.

SECTION 4. TERMINATION OF EMPLOYMENT

     4.1 Death of Executive. If Executive dies during the Term, Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of Executive’s death. Executive’s spouse and dependents (if any) shall be entitled for a period of 12 months after Executive’s death to continue to receive medical benefits coverage at the Company’s expense if and to the extent Company was paying for such benefits for Executive’s spouse and dependents at the time of Executive’s death.

     4.2 Disability of Executive. If Executive is or has been materially unable for any reason to perform his duties hereunder for a period of 90 consecutive days, then the Board of Directors shall have the right to terminate Executive’s employment upon 30 days’ prior written notice to Executive at any time during the continuation of such inability; provided that if Executive is able to resume his duties hereunder during such 30 day notice period, Executive shall not be deemed to be disabled for purposes of this Section 4.2 and such notice of termination shall be null and void. In the event Executive is terminated pursuant to this Section 4.2, Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination; provided, however, that for a period of 12 months following such termination, Executive

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shall be entitled to continue to receive medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

     4.3 Termination for Cause. Executive’s employment hereunder shall terminate immediately upon notice that the Board of Directors of Company is terminating Executive for Cause (as defined herein), in which event Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination. “Cause” shall mean the following:

               (i) fraud or dishonesty in connection with Executive’s employment or theft, misappropriation or embezzlement of Company’s funds or property;

               (ii) conviction of any felony or crime involving fraud or misrepresentation;

               (iii) material breach of Executive’s obligations under this Agreement;

               (iv) willful violation of any express lawful direction or requirement established by the Board of Directors of Company or the Chief Executive Officer of the Company; or

               (v) use of alcohol or other drugs that interfere with the performance by Executive of his duties, or use of any illegal drugs or narcotics.

     4.4 Termination without Cause or for Good Reason.

          (a) If (1) Executive’s employment is terminated by Company for any reason other than Cause or the death or disability of Executive, or (2) Executive’s employment is terminated by Executive for Good Reason (as defined herein):

               (i) Company shall pay Executive all amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination;

               (ii) Company shall continue to pay Executive all of the compensation provided for in Section 3.1 during the remainder of the then-current Term, but not less than 12 months;

               (iii) Company shall pay to Executive a lump sum cash payment equal to the Bonus Amount (as defined herein);

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               (iv) anything to the contrary in Section 3.4 above (or any other agreement or document relating to stock grants or options) notwithstanding, all stock grants and outstanding stock options granted to Executive shall become immediately vested and exercisable on the date of such termination and shall remain exercisable as provided therein; and

               (v) Executive shall be entitled to continue to receive for the remainder of the then-current Term, but not less than 12 months, medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at the Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

          (b) For purposes of this Agreement, “Bonus Amount” shall mean an amount equal to the average of the performance bonuses paid to Executive with respect to Company’s two most recent fiscal years.

          (c) Except for the provisions of this Section 4.4, Company shall have no further obligation to Executive hereunder.

          (d) “Good Reason” shall mean the following:

               (i) material breach of Company’s obligations hereunder if such breach is not remedied by Company within 15 days after receiving notice of such violation from the Executive;

               (ii) any decrease in Executive’s salary as increased during the Term (except for decreases that are in conjunction with decreases in executive salaries generally); or

               (iii) any material reduction in Executive’s duties or authority.

          (e) Notwithstanding the foregoing, Company shall not be obligated to make any payments under this Section 4.4 unless Executive has executed and delivered to Company a further agreement, to be prepared at the time of Executive’s termination of employment, that shall provide (i) an unconditional release of all claims, charges, complaints and grievances, whether known or unknown to Executive, against Company or any of its affiliates, through date of Executive’s termination of employment; (ii) an obligation to maintain the confidentiality of such agreement; and (iii) an obligation to indemnify Company if Executive breaches such agreement.

     4.5 Change in Control.

          (a) If, during the Term, there should be a Change of Control (as defined herein), anything to the contrary in Section 3.4 above (or any other agreement or document relating to stock grants or options) notwithstanding, all stock grants and outstanding stock options granted to Executive shall become immediately vested and

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exercisable on the date of such termination and shall remain exercisable as provided therein.

     (b) If, during the Term, there should be a Change of Control (as defined herein), and within 3 months before or 12 months thereafter either (i) Executive’s employment is terminated by the Company for any reason other than Cause or the death or disability of Executive or (ii) Executive terminates his employment for Good Reason, then Company shall, on or before Executive’s last day of full-time employment hereunder, pay to Executive, in lieu of any other rights to cash compensation he may have under this Agreement which have not accrued by such date, a lump sum cash payment equal to two times (x) Executive’s then current Base Salary and (y) the Bonus Amount. Notwithstanding the foregoing, Company shall not be obligated to make any payments under this Section 4.5 unless Executive has executed and delivered to Company a further agreement, to be prepared at the time of Executive’s termination of employment, that shall provide (i) an unconditional release of all claims, charges, complaints and grievances, whether known or unknown to Executive, against Company or any of its affiliates, through date of Executive’s termination of employment; (ii) an obligation to maintain the confidentiality of such agreement; and (iii) an obligation to indemnify Company if Executive breaches such agreement.

     (c) It is the intention of the parties that the payments under this Section 4.5 shall not constitute “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended. Accordingly, notwithstanding anything in this Section 4.5 to the contrary, if any of the amounts otherwise payable under this Section would constitute “excess parachute payments,” or if the independent accountants acting as auditors for Company on the date of the Change in Control determine that such payments may constitute “excess parachute payments,” then the amounts otherwise payable under this Section 4.5 shall be reduced to the maximum amounts that may be paid without any such payments constituting, or potentially constituting, “excess parachute payments.”

     (d) Following any termination of Executive’s employment under this Section 4.5 after a Change in Control, Executive shall be entitled to continue to receive for the remainder of the then-current Term, but not less than 12 months, medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at the Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

     (e) Upon making the payments described in this Section 4.5, Company shall have no further obligation to Executive under this Agreement.

     (f) A “Change in Control” of Company shall mean:

          (1) the acquisition by any person, entity or “group” required to file a Schedule 13D or Schedule 14D-1 under the Securities Exchange Act of 1934 (the “1934 Act”) (excluding, for this purpose, Company, its subsidiaries, or any employee

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benefit plan of Company or its subsidiaries which acquires ownership of voting securities of Company) of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 40% or more of either the then outstanding shares of common stock or the combined voting power of Company’s then outstanding voting securities entitled to vote generally in the election of directors; provided that any such acquisition by any person, entity or “group” that beneficially owns 20% or more of such outstanding common stock or voting securities as of the effective date of this Agreement shall not be considered a Change of Control under this Agreement;

          (2) the election or appointment to the Board of Directors of Company, or resignation of or removal from the Board, of directors with the result that the individuals who immediately following the effective date hereof constitute the Board (the “Incumbent Board”) no longer constitute at least a majority of the Board, provided that any person who becomes a director subsequent to the date hereof whose appointment, election, or nomination for election by Company’s stockholders, was approved by (i) Executive (if a director) or (ii) a vote of at least a majority of the Incumbent Board (other than an appointment, election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

          (3) consummation by the Company of: (i) a reorganization, merger or consolidation by reason of which persons who were the stockholders of Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors, or (ii) a liquidation or dissolution of Company or the sale, transfer, lease or other disposition of all or substantially all of the assets of Company (whether such assets are held directly or indirectly), that is not, in each case, undertaken in connection with any voluntary or involuntary bankruptcy proceedings involving the Company.

     4.6 Voluntary Termination. In the event Executive’s employment is voluntarily terminated by Executive without Good Reason, Company shall not be obligated to make any further payments to Executive under this Agreement other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of Executive’s termination.

SECTION 5. RESTRICTIVE COVENANTS

     5.1 Confidentiality. Executive acknowledges a duty of confidentiality owed to Company and shall not, at any time during or after his employment by Company, retain in writing, use, divulge, furnish, or make accessible to any person or entity, without the express authorization of the Board of Directors, any trade secret, private or confidential information or knowledge of Company obtained or acquired by him while so employed. All computer software, address books, rolodexes, business cards, telephone

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lists, customer lists, price lists, contract forms, catalogs, books, records, files and know-how acquired while an employee of Company are acknowledged to be the property of Company and shall not be duplicated, removed from Company’s possession or premises or made use of other than in pursuit of Company’s business and, upon termination of employment for any reason, Executive shall deliver to Company, without further demand, all copies thereof which are then in his possession or under his control.

     5.2 Inventions and Improvements. Subject to Section 1.2, Executive shall promptly communicate to Company all ideas, discoveries, inventions and business opportunities which are or may be useful to Company or its business. Executive acknowledges that all such ideas, discoveries, inventions, and improvements which heretofore have been or are hereafter made, conceived, or reduced to practice by him at any time during his employment with Company and every item of knowledge relating to Company’s business interests (including business opportunities) heretofore or hereafter gained by him at any time during his employment with Company are the property of Company, and Executive hereby irrevocably assigns all such ideas, discoveries, inventions, improvements, and knowledge to Company for its sole use and benefit, without additional compensation. The provisions of this Section 5.2 shall apply whether such ideas, discoveries, inventions, improvements or knowledge were or are conceived, made or gained by him alone or with others, whether during or after usual working hours, whether on or off the job, whether applicable to matters directly or indirectly related to Company’s business interests (including potential business interests), and whether or not within the specific realm of his duties. Executive shall, upon request of Company, but at no expense to Executive, at any time during or after his employment with Company, sign all instruments and documents reasonably requested by Company and otherwise cooperate with Company to protect its right to such ideas, discoveries, inventions, improvements, and knowledge, including applying for, obtaining, and enforcing patents and copyrights thereon in such countries as Company shall determine.

     5.3 Injunctive and Other Relief. Executive acknowledges and agrees that the covenants contained herein are fair and reasonable in light of the consideration paid hereunder, and that damages alone shall not be an adequate remedy for any breach by Executive of his covenants contained herein and accordingly expressly agrees that, in addition to any other remedies which Company may have, Company shall be entitled to injunctive or other equitable relief in any court of competent jurisdiction for any breach or threatened breach of any such covenants by Executive.

     5.4 Definition of “Company.” “Company” as used in Section 5 includes all affiliates of Company.

SECTION 6. MISCELLANEOUS

     6.1 Prior Employment. Executive represents and warrants that his acceptance of employment at Company and his execution of this Agreement has not breached, and the performance of his duties hereunder will not breach, any obligation owed by him to, or any agreement with, any prior employer or other person.

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     6.2 Litigation. At the request of Company, Executive shall during and after the Term render reasonable assistance to Company in connection with any litigation or other proceeding involving the Company or any of its affiliates. Company shall provide reasonable compensation to Executive for such assistance rendered after the Term.

     6.3 Assignment; Benefit. This Agreement shall not be assignable by Executive, and shall be assignable by Company only to any person or entity which may become a successor in interest (by purchase of assets or stock, or by merger, or otherwise) to Company in the business or substantially all of the business presently operated by it. Subject to the foregoing, this Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto and each of their respective permitted successors, assigns, heirs, executors and administrators.

     6.4 Notices. All notices hereunder shall be in writing and shall be sufficiently given if hand-delivered, sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested or by facsimile (confirmed by U.S. mail), receipt acknowledged, addressed as set forth below or to such other person and/or at such other address as may be furnished in writing by any party hereto to the other. Any such notice shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor, in all other cases. Any and all service of process and any other notice in any action, suit or proceeding shall be effective against any party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve process in any other manner permitted by law.

          (a) If to Company:

Sontra Medical Corporation
10 Forge Parkway
Franklin, Massachusetts 02038
Attention: Chief Executive Officer
Facsimile No.: (508) 530-0311

          (b) If to Executive:

Shawn Singh
1737 Elizabeth Street
San Carlos, CA 94070

     6.5 Entire Agreement; Modification; Advice of Counsel.

          (a) This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. No amendment, modification, or

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waiver of this Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy with respect to such occurrence or with respect to any other occurrence.

          (b) Executive acknowledges that he has been afforded an opportunity to consult with his counsel with respect to this Agreement.

     6.6 Governing Law. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania and the federal laws of the United States of America, to the extent applicable, without giving effect to otherwise applicable principles of conflicts of law.

     6.7 Headings; Counterparts. The headings of paragraphs in this Agreement are for convenience only and shall not affect its interpretation. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute the same Agreement.

     6.8 Further Assurances. Each of the parties hereto shall execute such further instruments and take such additional actions as the other party shall reasonably request in order to effectuate the purposes of this Agreement.

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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

SONTRA MEDICAL CORPORATION
By:	/s/ Harry G. Mitchell
Name:	Harry G. Mitchell
Title:	Interim Chief Executive Officer and Chief Financial Officer
EXECUTIVE:
/s/ Shawn Singh
Shawn Singh

SONTRA MEDICAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT

          This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the 14^th day of September, 2007 (the “Grant Date”), is between Sontra Medical Corporation, a Minnesota corporation (the “Company”), and Shawn Singh (the “Optionee”), an employee of the Company.

          WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company (“Common Stock”) as hereinafter provided;

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

          1. Grant of Option. The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of 500,000 shares of Common Stock. The Option is in all respects limited and conditioned as hereinafter provided. It is intended that the Option granted hereunder be a nonqualified stock option (“NQSO”) and not an incentive stock option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

          2. Exercise Price. The exercise price of the shares of Common Stock covered by this Option shall be $2.39 per share. It is the determination of the Board of Directors of the Company (the “Board”) that on the Grant Date the exercise price was not less than the greater of (i) 100% of the “Fair Market Value,” or (ii) the par value of the Common Stock. The term “Fair Market Value” for purposes of this Option Agreement means the closing price of a share of Common Stock on the trading day before the Grant Date.

          3. Term. Except as otherwise provided in Paragraph 8 or Paragraph 11, this Option shall expire on September 14, 2017 (the “Expiration Date”), which date is not more than 10 years from the Grant Date. This Option shall not be exercisable on or after the Expiration Date.

          4. Exercise of Option. The Optionee shall have the right to purchase from the Company, on and after the following dates, the following number of Shares:

Date Installment Becomes
Exercisable	Number of Option Shares
Grant Date	166,667 Shares
September 14, 2008	166,667 Shares
September 14, 2009	166,666 Shares

Once options become exercisable, they will remain exercisable until they are exercised or until they terminate.

          5. Method of Exercising Option. Subject to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Company at its principal office, which is presently located at 10 Forge Parkway, Franklin, Massachusetts 02038, Attn: Chief Executive Officer. Such notice (a suggested form of which is attached hereto) shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; shall, unless the Company otherwise notifies the Optionee, be accompanied by the investment certificate referred to in Paragraph 6; and shall be accompanied by payment of the full exercise price of such shares. Only full shares will be issued.

          The exercise price shall be paid to the Company –

          (a) in cash, or by certified check, bank draft, or postal or express money order;

          (b) through the delivery of shares of Common Stock which shall be valued at their Fair Market Value on the date of exercise;

          (c) by having the Company withhold shares of Common Stock at their Fair Market Value on the date of exercise;

          (d) by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount of sale or loan proceeds necessary to pay the exercise price of the Option; or

          (e) in any combination of (a), (b), (c) or (d) above.

          In the event the exercise price is paid, in whole or in part, with shares of Common Stock, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Stock surrendered on the date of exercise.

          Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the shares with respect to which the Option is so exercised. Such certificate(s) shall be registered in the name of the person or persons so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the

notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s spouse, jointly, with right of survivorship) and shall be delivered as provided above to, or upon the written order of, the person or persons exercising the Option. In the event the Option is exercised by any person or persons after the death or disability of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that are purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable.

          6. Shares to be Purchased for Investment. Unless the Company has theretofore notified the Optionee that a registration statement covering the shares to be acquired upon the exercise of the Option has become effective under the Securities Act of 1933, as amended (the “1933 Act”), and the Company has not thereafter notified the Optionee that such registration statement is no longer effective, it shall be a condition to any exercise of this Option that the shares acquired upon such exercise be acquired for investment and not with a view to distribution, and the person effecting such exercise shall submit to the Company a certificate of such investment intent, together with such other evidence supporting the same as the Company may request. The Company shall be entitled to restrict the transferability of the shares issued upon any such exercise to the extent necessary to avoid a risk of violation of the 1933 Act (or of any rules or regulations promulgated thereunder), or of any state laws or regulations. Such restrictions may, in the discretion of the Company, be noted or set forth in full on the share certificates.

          7. Transferability of Option. This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution. During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.

          8. Termination of Service. If the Optionee’s service with the Company is terminated for any reason prior to the Expiration Date, this Option may be exercised, to the extent of the number of shares with respect to which the Optionee could have exercised it on the date of such termination of service, or to any greater extent permitted by the Company, by the Optionee at any time prior to the earlier of (i) the Expiration Date, or (ii) three months after the date of such termination of service.

          9. Withholding of Taxes. The obligation of the Company to deliver shares of Common Stock upon the exercise of this Option shall be subject to applicable federal, state and local tax withholding requirements. If the exercise of the Option is subject to the withholding requirements of applicable federal, state and/or local tax law, the Optionee, subject to such additional withholding rules (the “Withholding Rules”) as shall be adopted by the Company, may satisfy the withholding tax, in whole or in part, by electing to have the Company withhold (or by returning to the Company) shares of Common Stock, which shares shall be valued, for this purpose, at their Fair Market Value on the date the amount attributable to the exercise of the Option is includable in income by the Optionee under section 83 of the Code. Such election must be made in compliance with and subject to the Withholding Rules, and the Company may limit the number of withheld shares to the extent necessary to avoid adverse accounting consequences.

          10. Adjustment in Case of Changes in Common Stock. The maximum number of shares with respect to which Options may be granted under this Agreement, and the number of shares issuable upon the exercise of outstanding Options under this Agreement (Paragraph 4), as well as the option price per share of such outstanding Options (Paragraph 2), shall be adjusted, as may be deemed appropriate by the Company, to reflect any stock dividend, stock split, spin-off, share combination or similar change in the capitalization of the Company. In the event any such change in capitalization cannot be reflected in a straight mathematical adjustment of the number of shares issuable upon the exercise of outstanding Options (and a straight mathematical adjustment of the exercise price thereof), the Committee shall make such adjustments as are appropriate to reflect most nearly such straight mathematical adjustment. Such adjustments shall be made only as necessary to maintain the proportionate interest of Optionees, and preserve, without exceeding, the value of Options.

          11. Certain Corporate Transactions. In the event of a corporate transaction (such as, for example, a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation), the surviving or successor corporation shall assume each outstanding Option or substitute a new option for each outstanding Option; provided, however, that, in the event of a proposed corporate transaction, the Company may terminate all or a portion of the outstanding Options, effective upon the closing of the corporate transaction, if it determines that such termination is in the best interests of the Company. If the Company decides so to terminate outstanding Options, the Company shall give the Optionee not less than seven days’ notice prior to any such termination, and any Option which is to be so terminated may be exercised (if and only to the extent that it is then exercisable) up to, and including the time of, such termination.

          Further, the Company, in its discretion, may accelerate, in whole or in part, the date on which any or all Options become exercisable. The Company also may, in its discretion, change the terms of any outstanding Option to reflect any such corporate transaction.

          12. Governing Law. This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible. Otherwise, the laws of the State of Minnesota (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, this Option Agreement.

[Signature page follows]

     IN WITNESS WHEREOF, the Company has caused this Nonqualified Stock Option Agreement to be duly executed by its duly authorized officer and the Optionee has hereunto set his hand and seal, all as of the day and year first above written.

SONTRA MEDICAL CORPORATION
By:	/s/ Harry G. Mitchell
	Harry G. Mitchell
/s/ Shawn Singh
Optionee

SONTRA MEDICAL CORPORATION

Notice of Exercise of Nonqualified Stock Option

     I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified Stock Option Agreement dated as of September 14, 2007 by Sontra Medical Corporation (the “Company”), with respect to the following number of shares of the Company’s common stock (“Shares”), par value $.01 per Share, covered by said option:

	Number of Shares to be purchased
	Exercise price per Share		$
	Total exercise price		$
	A.	Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $                     in full/partial [circle one] payment for such Shares;
		and/or
	B.	Enclosed is/are                      Share(s) with a total Fair Market Value of $                     on the date hereof in full/partial [circle one] payment for such Shares;
		and/or
	C.	Please withhold                      Shares with a total Fair Market Value of $                     on the date hereof in full/partial [circle one] payment for such Shares;
		and/or
	D.	I have provided notice to                                          [insert name of broker], a broker, who will render
full/partial [circle one] payment for such Shares. [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full exercise price for the number of Shares purchased in this method.]

     Please have the certificate or certificates representing the purchased Shares registered in the following name or names^*                                         and sent to:                                                                                  

     If the condition in Paragraph 6 (“Shares to be Purchased for Investment”) of the Nonqualified Stock Option Agreement related to the Shares purchased hereby is applicable, the

^* Certificates may be registered in the name of the Optionee alone or in the joint names (with right of survivorship) of the Optionee and his or her spouse.

undersigned hereby certifies that the Shares purchased hereby are being acquired for investment and not with a view to the distribution of such Shares.

DATED:
	Optionee’s Signature

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT dated as of September 14, 2007 between Sontra Medical Corporation, a Minnesota corporation (“Company”), and Harry Mitchell (“Executive”).

BACKGROUND

          Company and Durham Pharmaceuticals Acquisition Co., a wholly owned subsidiary of Company, are parties to an Agreement and Plan of Merger and Reorganization dated as of September 14, 2007 (the “Merger Agreement”). It is a condition precedent to the closing of the transactions contemplated by the Merger Agreement that Company and Executive enter into this Agreement providing for the employment of Executive by Company and certain other matters.

          Pursuant to the foregoing, Company desires to continue to employ Executive, and Executive desires to remain in the employ of Company, on the terms and conditions contained in this Agreement, effective as of the closing of the transactions contemplated by the Merger Agreement. If the closing of the transactions contemplated by the Merger Agreement does not occur on or before September 30, 2007, this Agreement shall become null and void.

          Executive will be substantially involved with Company’s operations and management and will learn trade secrets and other confidential information relating to Company and its customers; accordingly, the restrictive covenants contained in Section 5 of this Agreement constitute essential elements hereof.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and intending to be legally bound hereby, the parties hereto agree as follows:

TERMS

SECTION 1. CAPACITY AND DUTIES

     1.1 Employment; Acceptance of Employment. Company hereby employs Executive and Executive hereby agrees to continue employment by Company for the period and upon the terms and conditions hereinafter set forth. Upon the effectiveness of this Agreement, that certain offer letter between Company and Executive, dated as of August 29, 2006, shall be terminated, and the rights and obligations of each party shall be governed solely by this Agreement.

     1.2 Capacity and Duties.

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          (a) Executive shall serve as Chief Operating Officer and Chief Financial Officer of Company. Executive shall perform such other duties and shall have such authority consistent with his position as may from time to time reasonably be specified by the Board of Directors or the Chief Executive Officer of Company. Executive shall report directly to the Chief Executive Officer of Company.

          (b) Executive shall devote his full working time, energy, skill and best efforts to the performance of his duties hereunder, in a manner that will comply with Company’s rules and policies and will faithfully and diligently further the business and interests of Company. Executive shall not be employed by or participate or engage in or in any manner be a part of the management or operation of any business enterprise other than Company without the prior written consent, which consent may be granted or withheld in the sole discretion, of the Board of Directors of Company.

SECTION 2. TERM OF EMPLOYMENT

     2.1 Term. The term of Executive’s employment hereunder shall be two years commencing on the closing of the transactions contemplated by the Merger Agreement, as further extended or unless sooner terminated in accordance with the other provisions hereof (the “Term”). Except as hereinafter provided, on the second anniversary of the commencement date and on each subsequent anniversary thereof, the Term shall be automatically extended for one year unless either party shall have given to the other party written notice of termination of this Agreement at least 90 days prior to such anniversary. If written notice of termination is given as provided above, Executive’s employment under this Agreement shall terminate on the last day of the Term.

SECTION 3. COMPENSATION

     3.1 Basic Compensation. As compensation for Executive’s services during the first 12 months of the Term, Company shall pay to Executive a salary at the annual rate of $250,000, payable in periodic installments in accordance with Company’s regular payroll practices in effect from time to time. For each subsequent 12 month period of Executive’s employment hereunder, Executive’s salary shall be in the amount of his initial annual salary with such increases, if any, as may be established by the Board of Directors of Company. Executive’s annual salary, as determined in accordance with this Section 3.1, is hereinafter referred to as his “Base Salary.”

     3.2 Performance Bonus. In the sole discretion of the Board of Directors of Company, Executive shall, following the completion of each fiscal year of Company during the Term, be entitled to receive a performance bonus in accordance with the policies and plans of Company in place from time to time with respect to the payment of bonuses to executive officers.

     3.3 Employee Benefits. During the Term, Executive shall be entitled to participate in such of Company’s employee benefit plans and benefit programs, including

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medical benefit programs, as may from time to time be provided by Company for its executive officers.

     3.4 Stock Options. Upon the execution and delivery of this Agreement by the parties hereto, Company shall grant to Executive options to purchase 250,000 shares of Company’s Common Stock at an exercise price per share of $2.39, on the terms and conditions set forth in the form of Nonqualified Stock Option Agreement between Company and Executive attached hereto as Exhibit A.

     3.5 Vacation. During the Term, Executive shall be entitled to a paid vacation commensurate with vacations as may from time to time be provided by Company for its executive officers.

     3.6 Expense Reimbursement. Company shall reimburse Executive for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with its regular reimbursement policies as in effect from time to time.

SECTION 4. TERMINATION OF EMPLOYMENT

     4.1 Death of Executive. If Executive dies during the Term, Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of Executive’s death. Executive’s spouse and dependents (if any) shall be entitled for a period of 12 months after Executive’s death to continue to receive medical benefits coverage at the Company’s expense if and to the extent Company was paying for such benefits for Executive’s spouse and dependents at the time of Executive’s death.

     4.2 Disability of Executive. If Executive is or has been materially unable for any reason to perform his duties hereunder for a period of 90 consecutive days, then the Board of Directors shall have the right to terminate Executive’s employment upon 30 days’ prior written notice to Executive at any time during the continuation of such inability; provided that if Executive is able to resume his duties hereunder during such 30 day notice period, Executive shall not be deemed to be disabled for purposes of this Section 4.2 and such notice of termination shall be null and void. In the event Executive is terminated pursuant to this Section 4.2, Company shall not thereafter be obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination; provided, however, that for a period of 12 months following such termination, Executive shall be entitled to continue to receive medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

     4.3 Termination for Cause. Executive’s employment hereunder shall terminate immediately upon notice that the Board of Directors of Company is terminating Executive for Cause (as defined herein), in which event Company shall not thereafter be

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obligated to make any further payments hereunder other than amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination. “Cause” shall mean the following:

               (i) fraud or dishonesty in connection with Executive’s employment or theft, misappropriation or embezzlement of Company’s funds or property;

               (ii) conviction of any felony or crime involving fraud or misrepresentation;

               (iii) material breach of Executive’s obligations under this Agreement;

               (iv) willful violation of any express lawful direction or requirement established by the Board of Directors of Company or the Chief Executive Officer of the Company; or

               (v) use of alcohol or other drugs that interfere with the performance by Executive of his duties, or use of any illegal drugs or narcotics.

     4.4 Termination without Cause or for Good Reason.

          (a) If (1) Executive’s employment is terminated by Company for any reason other than Cause or the death or disability of Executive, or (2) Executive’s employment is terminated by Executive for Good Reason (as defined herein):

               (i) Company shall pay Executive all amounts (including salary, expense reimbursement, etc.) accrued under this Agreement as of the date of such termination;

               (ii) Company shall continue to pay Executive all of the compensation provided for in Section 3.1 during the remainder of the then-current Term, but not less than 12 months;

               (iii) Company shall pay to Executive a lump sum cash payment equal to the Bonus Amount (as defined herein);

               (iv) anything to the contrary in Section 3.4 above (or any other agreement or document relating to stock grants or options) notwithstanding, all stock grants and outstanding stock options granted to Executive shall become immediately vested and exercisable on the date of such termination and shall remain exercisable as provided therein; and

               (v) Executive shall be entitled to continue to receive for the remainder of the then-current Term, but not less than 12 months, medical benefits

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coverage for Executive and Executive’s spouse and dependents (if any) at the Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

          (b) For purposes of this Agreement, “Bonus Amount” shall mean an amount equal to the average of the performance bonuses paid to Executive with respect to Company’s two most recent fiscal years.

          (c) Except for the provisions of this Section 4.4, Company shall have no further obligation to Executive hereunder.

          (d) “Good Reason” shall mean the following:

               (i) material breach of Company’s obligations hereunder if such breach is not remedied by Company within 15 days after receiving notice of such violation from the Executive;

               (ii) any decrease in Executive’s salary as increased during the Term (except for decreases that are in conjunction with decreases in executive salaries generally); or

               (iii) any material reduction in Executive’s duties or authority.

          (e) Notwithstanding the foregoing, Company shall not be obligated to make any payments under this Section 4.4 unless Executive has executed and delivered to Company a further agreement, to be prepared at the time of Executive’s termination of employment, that shall provide (i) an unconditional release of all claims, charges, complaints and grievances, whether known or unknown to Executive, against Company or any of its affiliates, through date of Executive’s termination of employment; (ii) an obligation to maintain the confidentiality of such agreement; and (iii) an obligation to indemnify Company if Executive breaches such agreement.

     4.5 Change in Control.

          (a) If, during the Term, there should be a Change of Control (as defined herein), anything to the contrary in Section 3.4 above (or any other agreement or document relating to stock grants or options) notwithstanding, all stock grants and outstanding stock options granted to Executive shall become immediately vested and exercisable on the date of such termination and shall remain exercisable as provided therein.

          (b) If, during the Term, there should be a Change of Control (as defined herein), and within 3 months before or 12 months thereafter either (i) Executive’s employment is terminated by the Company for any reason other than Cause or the death or disability of Executive or (ii) Executive terminates his employment for Good Reason, then Company shall, on or before Executive’s last day of full-time employment

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hereunder, pay to Executive, in lieu of any other rights to cash compensation he may have under this Agreement which have not accrued by such date, a lump sum cash payment equal to two times (x) Executive’s then current Base Salary and (y) the Bonus Amount. Notwithstanding the foregoing, Company shall not be obligated to make any payments under this Section 4.5 unless Executive has executed and delivered to Company a further agreement, to be prepared at the time of Executive’s termination of employment, that shall provide (i) an unconditional release of all claims, charges, complaints and grievances, whether known or unknown to Executive, against Company or any of its affiliates, through date of Executive’s termination of employment; (ii) an obligation to maintain the confidentiality of such agreement; and (iii) an obligation to indemnify Company if Executive breaches such agreement.

          (c) It is the intention of the parties that the payments under this Section 4.5 shall not constitute “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended. Accordingly, notwithstanding anything in this Section 4.5 to the contrary, if any of the amounts otherwise payable under this Section would constitute “excess parachute payments,” or if the independent accountants acting as auditors for Company on the date of the Change in Control determine that such payments may constitute “excess parachute payments,” then the amounts otherwise payable under this Section 4.5 shall be reduced to the maximum amounts that may be paid without any such payments constituting, or potentially constituting, “excess parachute payments.”

          (d) Following any termination of Executive’s employment under this Section 4.5 after a Change in Control, Executive shall be entitled to continue to receive for the remainder of the then-current Term, but not less than 12 months, medical benefits coverage for Executive and Executive’s spouse and dependents (if any) at the Company’s expense if and to the extent Company was paying for such benefits at the time of such termination.

          (e) Upon making the payments described in this Section 4.5, Company shall have no further obligation to Executive under this Agreement.

          (f) A “Change in Control” of Company shall mean:

               (1) the acquisition by any person, entity or “group” required to file a Schedule 13D or Schedule 14D-1 under the Securities Exchange Act of 1934 (the “1934 Act”) (excluding, for this purpose, Company, its subsidiaries, or any employee benefit plan of Company or its subsidiaries which acquires ownership of voting securities of Company) of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 40% or more of either the then outstanding shares of common stock or the combined voting power of Company’s then outstanding voting securities entitled to vote generally in the election of directors; provided that any such acquisition by any person, entity or “group” that beneficially owns 20% or more of such outstanding common stock or voting securities as of the effective date of this Agreement shall not be considered a Change of Control under this Agreement;

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               (2) the election or appointment to the Board of Directors of Company, or resignation of or removal from the Board, of directors with the result that the individuals who immediately following the effective date hereof constitute the Board (the “Incumbent Board”) no longer constitute at least a majority of the Board, provided that any person who becomes a director subsequent to the date hereof whose appointment, election, or nomination for election by Company’s stockholders, was approved by (i) Executive (if a director) or (ii) a vote of at least a majority of the Incumbent Board (other than an appointment, election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

               (3) consummation by the Company of: (i) a reorganization, merger or consolidation by reason of which persons who were the stockholders of Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors, or (ii) a liquidation or dissolution of Company or the sale, transfer, lease or other disposition of all or substantially all of the assets of Company (whether such assets are held directly or indirectly), that is not, in each case, undertaken in connection with any voluntary or involuntary bankruptcy proceedings involving the Company.

     4.6 Voluntary Termination. In the event Executive’s employment is voluntarily terminated by Executive without Good Reason, Company shall not be obligated to make any further payments to Executive under this Agreement other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of Executive’s termination.

SECTION 5. RESTRICTIVE COVENANTS

     5.1 Confidentiality. Executive acknowledges a duty of confidentiality owed to Company and shall not, at any time during or after his employment by Company, retain in writing, use, divulge, furnish, or make accessible to any person or entity, without the express authorization of the Board of Directors, any trade secret, private or confidential information or knowledge of Company obtained or acquired by him while so employed. All computer software, address books, rolodexes, business cards, telephone lists, customer lists, price lists, contract forms, catalogs, books, records, files and know-how acquired while an employee of Company are acknowledged to be the property of Company and shall not be duplicated, removed from Company’s possession or premises or made use of other than in pursuit of Company’s business and, upon termination of employment for any reason, Executive shall deliver to Company, without further demand, all copies thereof which are then in his possession or under his control.

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     5.2 Inventions and Improvements. Executive shall promptly communicate to Company all ideas, discoveries, inventions and business opportunities which are or may be useful to Company or its business. Executive acknowledges that all such ideas, discoveries, inventions, and improvements which heretofore have been or are hereafter made, conceived, or reduced to practice by him at any time during his employment with Company and every item of knowledge relating to Company’s business interests (including business opportunities) heretofore or hereafter gained by him at any time during his employment with Company are the property of Company, and Executive hereby irrevocably assigns all such ideas, discoveries, inventions, improvements, and knowledge to Company for its sole use and benefit, without additional compensation. The provisions of this Section 5.2 shall apply whether such ideas, discoveries, inventions, improvements or knowledge were or are conceived, made or gained by him alone or with others, whether during or after usual working hours, whether on or off the job, whether applicable to matters directly or indirectly related to Company’s business interests (including potential business interests), and whether or not within the specific realm of his duties. Executive shall, upon request of Company, but at no expense to Executive, at any time during or after his employment with Company, sign all instruments and documents reasonably requested by Company and otherwise cooperate with Company to protect its right to such ideas, discoveries, inventions, improvements, and knowledge, including applying for, obtaining, and enforcing patents and copyrights thereon in such countries as Company shall determine.

     5.3 Injunctive and Other Relief. Executive acknowledges and agrees that the covenants contained herein are fair and reasonable in light of the consideration paid hereunder, and that damages alone shall not be an adequate remedy for any breach by Executive of his covenants contained herein and accordingly expressly agrees that, in addition to any other remedies which Company may have, Company shall be entitled to injunctive or other equitable relief in any court of competent jurisdiction for any breach or threatened breach of any such covenants by Executive.

     5.4 Definition of “Company.” “Company” as used in Section 5 includes all affiliates of Company.

SECTION 6. MISCELLANEOUS

     6.1 Prior Employment. Executive represents and warrants that his acceptance of employment at Company and his execution of this Agreement has not breached, and the performance of his duties hereunder will not breach, any obligation owed by him to, or any agreement with, any prior employer or other person.

     6.2 Litigation. At the request of Company, Executive shall during and after the Term render reasonable assistance to Company in connection with any litigation or other proceeding involving the Company or any of its affiliates. Company shall provide reasonable compensation to Executive for such assistance rendered after the Term.

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     6.3 Assignment; Benefit. This Agreement shall not be assignable by Executive, and shall be assignable by Company only to any person or entity which may become a successor in interest (by purchase of assets or stock, or by merger, or otherwise) to Company in the business or substantially all of the business presently operated by it. Subject to the foregoing, this Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto and each of their respective permitted successors, assigns, heirs, executors and administrators.

     6.4 Notices. All notices hereunder shall be in writing and shall be sufficiently given if hand-delivered, sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested or by facsimile (confirmed by U.S. mail), receipt acknowledged, addressed as set forth below or to such other person and/or at such other address as may be furnished in writing by any party hereto to the other. Any such notice shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor, in all other cases. Any and all service of process and any other notice in any action, suit or proceeding shall be effective against any party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve process in any other manner permitted by law.

(a)	If to Company:
	Sontra Medical Corporation
	10 Forge Parkway
	Franklin, Massachusetts 02038
	Attention: Chief Executive Officer
	Facsimile No.: (508) 530-0311
(b)	If to Executive:
	Harry Mitchell
	47 Wampanoag Drive
	Franklin, Massachusetts 02038

     6.5 Entire Agreement; Modification; Advice of Counsel.

             (a) This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. No amendment, modification, or waiver of this Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy with respect to such occurrence or with respect to any other occurrence.

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          (b) Executive acknowledges that he has been afforded an opportunity to consult with his counsel with respect to this Agreement.

     6.6 Governing Law. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania and the federal laws of the United States of America, to the extent applicable, without giving effect to otherwise applicable principles of conflicts of law.

     6.7 Headings; Counterparts. The headings of paragraphs in this Agreement are for convenience only and shall not affect its interpretation. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute the same Agreement.

     6.8 Further Assurances. Each of the parties hereto shall execute such further instruments and take such additional actions as the other party shall reasonably request in order to effectuate the purposes of this Agreement.

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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

SONTRA MEDICAL CORPORATION
By:	/s/ Michael R. Wigley
Name: Michael R. Wigley
Title: Chairman, Board of Directors
EXECUTIVE:
/s/ Harry Mitchell
	Harry Mitchell

SONTRA MEDICAL CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT

          This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the 14^th day of September, 2007 (the “Grant Date”), is between Sontra Medical Corporation, a Minnesota corporation (the “Company”), and Harry G. Mitchell (the “Optionee”), an employee of the Company.

          WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company (“Common Stock”) as hereinafter provided;

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

          1. Grant of Option. The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of 250,000 shares of Common Stock. The Option is in all respects limited and conditioned as hereinafter provided. It is intended that the Option granted hereunder be a nonqualified stock option (“NQSO”) and not an incentive stock option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

          2. Exercise Price. The exercise price of the shares of Common Stock covered by this Option shall be $2.39 per share. It is the determination of the Board of Directors of the Company (the “Board”) that on the Grant Date the exercise price was not less than the greater of (i) 100% of the “Fair Market Value,” or (ii) the par value of the Common Stock. The term “Fair Market Value” for purposes of this Option Agreement means the closing price of a share of Common Stock on the trading day before the Grant Date.

          3. Term. Except as otherwise provided in Paragraph 8 or Paragraph 11, this Option shall expire on September 14, 2017 (the “Expiration Date”), which date is not more than 10 years from the Grant Date. This Option shall not be exercisable on or after the Expiration Date.

          4. Exercise of Option. The Optionee shall have the right to purchase from the Company, on and after the following dates, the following number of Shares:

Date Installment Becomes
Exercisable	Number of Option Shares
Grant Date	83,334 Shares
September 14, 2008	83,333 Shares
September 14, 2009	83,333 Shares

Once options become exercisable, they will remain exercisable until they are exercised or until they terminate.

          5. Method of Exercising Option. Subject to the terms and conditions of this Option Agreement, the Option may be exercised by written notice to the Company at its principal office, which is presently located at 10 Forge Parkway, Franklin, Massachusetts 02038, Attn: Chief Executive Officer. Such notice (a suggested form of which is attached hereto) shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; shall, unless the Company otherwise notifies the Optionee, be accompanied by the investment certificate referred to in Paragraph 6; and shall be accompanied by payment of the full exercise price of such shares. Only full shares will be issued.

          The exercise price shall be paid to the Company –

          (a) in cash, or by certified check, bank draft, or postal or express money order;

          (b) through the delivery of shares of Common Stock which shall be valued at their Fair Market Value on the date of exercise;

          (c) by having the Company withhold shares of Common Stock at their Fair Market Value on the date of exercise;

          (d) by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount of sale or loan proceeds necessary to pay the exercise price of the Option; or

          (e) in any combination of (a), (b), (c) or (d) above.

          In the event the exercise price is paid, in whole or in part, with shares of Common Stock, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Stock surrendered on the date of exercise.

          Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the shares with respect to which the Option is so exercised. Such certificate(s) shall be registered in the name of the person or persons so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the

notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s spouse, jointly, with right of survivorship) and shall be delivered as provided above to, or upon the written order of, the person or persons exercising the Option. In the event the Option is exercised by any person or persons after the death or disability of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that are purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable.

          6. Shares to be Purchased for Investment. Unless the Company has theretofore notified the Optionee that a registration statement covering the shares to be acquired upon the exercise of the Option has become effective under the Securities Act of 1933, as amended (the “1933 Act”), and the Company has not thereafter notified the Optionee that such registration statement is no longer effective, it shall be a condition to any exercise of this Option that the shares acquired upon such exercise be acquired for investment and not with a view to distribution, and the person effecting such exercise shall submit to the Company a certificate of such investment intent, together with such other evidence supporting the same as the Company may request. The Company shall be entitled to restrict the transferability of the shares issued upon any such exercise to the extent necessary to avoid a risk of violation of the 1933 Act (or of any rules or regulations promulgated thereunder), or of any state laws or regulations. Such restrictions may, in the discretion of the Company, be noted or set forth in full on the share certificates.

          7. Transferability of Option. This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution. During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.

          8. Termination of Service. If the Optionee’s service with the Company is terminated for any reason prior to the Expiration Date, this Option may be exercised, to the extent of the number of shares with respect to which the Optionee could have exercised it on the date of such termination of service, or to any greater extent permitted by the Company, by the Optionee at any time prior to the earlier of (i) the Expiration Date, or (ii) three months after the date of such termination of service.

          9. Withholding of Taxes. The obligation of the Company to deliver shares of Common Stock upon the exercise of this Option shall be subject to applicable federal, state and local tax withholding requirements. If the exercise of the Option is subject to the withholding requirements of applicable federal, state and/or local tax law, the Optionee, subject to such additional withholding rules (the “Withholding Rules”) as shall be adopted by the Company, may satisfy the withholding tax, in whole or in part, by electing to have the Company withhold (or by returning to the Company) shares of Common Stock, which shares shall be valued, for this purpose, at their Fair Market Value on the date the amount attributable to the exercise of the Option is includable in income by the Optionee under section 83 of the Code. Such election must be made in compliance with and subject to the Withholding Rules, and the Company may limit the number of withheld shares to the extent necessary to avoid adverse accounting consequences.

          10. Adjustment in Case of Changes in Common Stock. The maximum number of shares with respect to which Options may be granted under this Agreement, and the number of shares issuable upon the exercise of outstanding Options under this Agreement (Paragraph 4), as well as the option price per share of such outstanding Options (Paragraph 2), shall be adjusted, as may be deemed appropriate by the Company, to reflect any stock dividend, stock split, spin-off, share combination or similar change in the capitalization of the Company. In the event any such change in capitalization cannot be reflected in a straight mathematical adjustment of the number of shares issuable upon the exercise of outstanding Options (and a straight mathematical adjustment of the exercise price thereof), the Committee shall make such adjustments as are appropriate to reflect most nearly such straight mathematical adjustment. Such adjustments shall be made only as necessary to maintain the proportionate interest of Optionees, and preserve, without exceeding, the value of Options.

          11. Certain Corporate Transactions. In the event of a corporate transaction (such as, for example, a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation), the surviving or successor corporation shall assume each outstanding Option or substitute a new option for each outstanding Option; provided, however, that, in the event of a proposed corporate transaction, the Company may terminate all or a portion of the outstanding Options, effective upon the closing of the corporate transaction, if it determines that such termination is in the best interests of the Company. If the Company decides so to terminate outstanding Options, the Company shall give the Optionee not less than seven days’ notice prior to any such termination, and any Option which is to be so terminated may be exercised (if and only to the extent that it is then exercisable) up to, and including the time of, such termination.

          Further, the Company, in its discretion, may accelerate, in whole or in part, the date on which any or all Options become exercisable. The Company also may, in its discretion, change the terms of any outstanding Option to reflect any such corporate transaction.

          12. Governing Law. This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible. Otherwise, the laws of the State of Minnesota (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, this Option Agreement.

[Signature page follows]

          IN WITNESS WHEREOF, the Company has caused this Nonqualified Stock Option Agreement to be duly executed by its duly authorized officer and the Optionee has hereunto set his hand and seal, all as of the day and year first above written.

SONTRA MEDICAL CORPORATION
By:	/s/ Michael R. Wigley
	Michael R. Wigley
/s/ Harry G. Mitchell
Optionee

SONTRA MEDICAL CORPORATION

Notice of Exercise of Nonqualified Stock Option

     I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified Stock Option Agreement dated as of September 14, 2007 by Sontra Medical Corporation (the “Company”), with respect to the following number of shares of the Company’s common stock (“Shares”), par value $.01 per Share, covered by said option:

	Number of Shares to be purchased
	Exercise price per Share		$
	Total exercise price		$
	A.	Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $                     in full/partial [circle one] payment for such Shares;
		and/or
	B.	Enclosed is/are                      Share(s) with a total Fair Market Value of $                     on the date hereof in full/partial [circle one] payment for such Shares;
		and/or
	C.	Please withhold                      Shares with a total Fair Market Value of $                     on the date hereof in full/partial [circle one] payment for such Shares;
		and/or
	D.	I have provided notice to                                          [insert name of broker], a broker, who will render
full/partial [circle one] payment for such Shares. [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full exercise price for the number of Shares purchased in this method.]

     Please have the certificate or certificates representing the purchased Shares registered in the following name or names^*                                         and sent to:                                                                                  

     If the condition in Paragraph 6 (“Shares to be Purchased for Investment”) of the Nonqualified Stock Option Agreement related to the Shares purchased hereby is applicable, the

^* Certificates may be registered in the name of the Optionee alone or in the joint names (with right of survivorship) of the Optionee and his or her spouse.

undersigned hereby certifies that the Shares purchased hereby are being acquired for investment and not with a view to the distribution of such Shares.

DATED:
	Optionee’s Signature

EX-10.7

Exhibit 10.7

September 14, 2007

Cato Holding Company (d/b/a Cato BioVentures)
Westpark Corporate Center
4364 South Alston Avenue
Durham, North Carolina 27713-2280

Sontra Medical Corporation
10 Forge Parkway
Franklin, Massachusetts 02038
Attention: Harry Mitchell, Interim Chief Executive Officer

Dear Mr. Mitchell:

     Reference is made to that certain Agreement and Plan of Merger and Reorganization, made and entered as of the date hereof, by and among Sontra Medical Corporation (the “Company”), Durham Pharmaceuticals Acquisition Co., and Durham Pharmaceuticals Ltd. (d/b/a Echo Therapeutics, Inc.) (the “Merger Agreement”). In connection with the transactions contemplated by the Merger Agreement, Cato Holding Company (d/b/a Cato BioVentures) (“Cato”) is the owner of 3,855,225 shares of the Company’s common stock.

     Cato hereby agrees to sell, in one or more series of transactions, up to an aggregate of 907,112 of Cato’s shares of the Company’s common stock (the “Cato Shares”) to certain accredited investors (as such term is defined by applicable federal securities laws) concurrently with the Company’s issuance and sale of shares of its equity securities to such accredited investors in one or more series of transactions, the primary purpose of which is to raise capital. Cato agrees to sell such Cato Shares at a price per share of $0.882 if and to the extent such sales occur prior to sixty (60) days from the date of this letter, and at a price to be determined by the parties if such sales occur after sixty (60) days from the date of this letter. The sales by Cato will be made to third party purchasers identified to Cato by the representative(s) of such purchasers. The Company hereby agrees to reimburse Cato for its reasonable legal fees associated with the concurrent sales of the Cato Shares contemplated by this letter.

     Please acknowledge your understanding of the same by executing the copy of this letter below on behalf of the Company.

CATO HOLDING COMPANY (d/b/a CATO BIOVENTURES)
By:	/s/ Daniel Cato
Name:		Daniel Cato
Title:		Assistant Secretary

The foregoing is hereby confirmed and accepted as of the date first set forth above.

SONTRA MEDICAL CORPORATION
By:	/s/ Harry G. Mitchell
Name:		Harry G. Mitchell
Title:		Interim Chief Executive Officer

EX-10.8

Exhibit 10.8

BURNHAM HILL PARTNERS

A DIVISION OF PALI CAPITAL INC.

590 MADISON AVENUE
NEW YORK, NEW YORK 10022 TEL 212-980-2200
FAX 212-980-9466

September 14, 2007

Mr. Harry G. Mitchell
Interim Chief Executive Officer, CFO and Treasurer
Sontra Medical Corporation
10 Forge Parkway
Franklin, MA 02038

Dear Mr. Mitchell:

This letter Agreement (the “Agreement”) confirms the engagement of Burnham Hill Partners (“BHP”), a division of Pali Capital, Inc., by Sontra Medical Corporation (the “Company”) to act as (i) its exclusive financial advisor in connection with a strategic transaction with Durham Pharmaceuticals Ltd. d/b/a Echo Therapeutics, Inc. (“Echo”), which may include an acquisition, partnership, strategic alliance, technology licensing or merger with Echo (a “Strategic Transaction”) and (ii) its exclusive placement agent in connection with an equity and/or debt financing through a transaction or transactions exempt from registration under the Securities Act of 1933, as amended and in compliance with the applicable securities laws and regulations, in connection with a Strategic Transaction (a “Financing”).

As part of BHP’s engagement, at the Company’s request, BHP will use its commercially reasonable best efforts to:

(a)	assist the Company in analyzing and evaluating the business, operations and financial position of Echo;
(b)	assist the Company with its due diligence efforts related to a Strategic Transaction;
(c)	assist the Company in structuring and negotiating a Strategic Transaction; be available at the Company’s request to meet with its Board of Directors to discuss a Strategic Transaction and its financial implications;
(d)	assist the Company in identifying potential sources of funding in connection with a Strategic Transaction; and
(e)	assist the Company with ongoing financial advisory, integration and consulting services in connection with a Strategic Transaction through the Authorization Period (as defined below).

In connection with BHP’s engagement hereunder, the Company shall compensate BHP as set forth below:

(a) In connection with the closing of a Strategic Transaction, a transaction fee shall be paid to BHP, in accordance with the following (the “Transaction Fee”):

1.

$150,000 in cash, payable upon the completion of a Qualified Financing (as defined below) by the Company. For the purposes of this Agreement, “Qualified Financing” shall be defined as any equity or equity linked financing or a combination of such financings following the first date written above with gross proceeds to the Company totaling at least $2,500,000; provided, however, the Qualified Financing shall be reduced by the aggregate principal amount represented by the Senior Promissory Bridge Notes issued by the Company prior to the completion of such Qualified Financing.

2.

Upon the closing of a Strategic Transaction, the Company shall issue BHP and/or its designees and assignees warrants to purchase an aggregate of 425,000 shares of the

1

Company’s Common Stock (the “Warrants”). The Warrants shall have an exercise price equal to the last closing sale price for the Company’s Common Stock immediately prior to the closing of the Strategic Transaction, be exercisable immediately after the date of issuance and expire five (5) years after the date of issuance, unless extended by the Company. The shares underlying the Warrants shall have standard piggyback registration rights and be included in any registration statement covering the shares issued to Echo stockholders in connection with a Strategic Transaction. The Warrants shall also be exercisable pursuant to a cashless exercise provision, be non-redeemable and include customary weighted-average anti-dilution protection, including protection against the issuance of securities at prices (or in the case of convertible securities, at conversion prices) below the exercise price of the Warrants then in effect.

(b) In connection with the closing of a Financing, the Company shall pay BHP a fee equal to eight percent (8%) of the gross proceeds received by the Company (the “Placement Fee”). In addition, the Company shall issue 5-year warrants equal to ten percent (10%) of the number of shares issued (or, in the case of convertible securities, the number of shares issuable on an as converted basis) in such financing to BHP and/or its designees or assignees (the “Placement Warrants”). The Placement Warrants shall be exercisable at 110% of the purchase price of the common stock issued, or, in the case of convertible securities, 110% of the conversion price of the securities issued. The shares underlying the Placement Warrants shall have standard piggyback registration rights, be exercisable pursuant to a cashless exercise provision, be non-redeemable and be included in any registration statement covering the shares issued pursuant to any financing activity under this Agreement.

In connection with this Agreement, the Company will furnish BHP with all information concerning the Company which BHP reasonably deems appropriate and will provide BHP with access to its officers, directors, employees, accountants, counsel and other representatives (collectively, the “Representatives”), it being understood that BHP will rely solely upon such information supplied by the Company and its Representatives without assuming any responsibility for the independent investigation or verification thereof. All non-public information concerning the Company that is given to BHP will be used solely in the course of the performance of our services hereunder and will be treated confidentially by us for so long as it remains non-public. Except as otherwise required by law, BHP will not disclose any information to any third party without the consent of the Company. If we are requested to render an opinion from a financial point of view regarding any aspect of this Agreement, the nature, scope and fees associated with our analysis as well as the form and substance of our opinion shall be such as we deem appropriate and will be covered under a separate letter agreement.

BHP’s engagement relating to the potential Strategic Transaction and Financing shall expire on January 31, 2008 (the “Authorization Period”). Either party may, upon ten (10) days written notice to the other party, terminate this Agreement. BHP will continue to be entitled to its full fees provided for herein in the event that at any time prior to the expiration of twelve (12) months after the closing of the Qualified Financing (the “Tail Period”), the Company completes a Strategic Transaction or Financing involving investors specifically identified on a list prepared and mutually agreed to by the Company and BHP within ten (10) days following the closing of the Qualified Financing.

Notice given pursuant to any of the provisions of this Agreement shall be given in writing and shall be sent by overnight courier or personally delivered (a) if to the Company, to the Company’s Interim Chief Executive Officer at the address listed above; and (b) if to BHP, to its offices at 590 Madison Avenue, 5th floor, New York, NY 10022, Attention: Jason Adelman, Managing Director.

No advice or opinion rendered by BHP, whether formal or informal, may be disclosed, in whole or in part, or summarized, excerpted from or otherwise referred to without our prior written consent. In addition, BHP may not be otherwise referred to without its prior written consent. BHP will be acting on behalf of the Company in connection with its engagement hereunder, and has previously entered into a separate letter agreement, dated July 25, 2007, providing for the indemnification by the Company of BHP and certain related persons and entities, attached hereto as Exhibit A, the provisions of which are incorporated herein by reference.

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BHP is a division of Pali Capital, Inc., a registered broker dealer. This Agreement shall remain in full force and effect as to BHP and the Company, and shall be deemed fully assigned, in the event that either (i) BHP becomes an independent entity or (ii) the Company completes a Strategic Transaction. Our engagement is for the limited purposes set forth under this Agreement, and the rights and obligations of each of BHP and the Company are herein defined. Each of BHP and the Company agrees that the other party has no fiduciary duty to it or its stockholders, officers and directors as a result of the engagement described in this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of law principles thereof. This Agreement may not be amended or modified except in writing signed by each of the parties hereto.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement or the indemnification, which shall remain in full force and effect.

We are delighted to accept this engagement and look forward to working with you on this assignment. Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the enclosed duplicate of this Agreement.

Very truly yours, Burnham Hill Partners
By:
	Name:
	Title:

Accepted and agreed to as of the date first written above:

Sontra Medical Corporation

By:

Name:

Title:

3

Exhibit A

TO:	Burnham Hill Partners	Date: July 25, 2007
	A division of Pali Capital Inc.
	590 Madison Avenue
	New York, NY 10022

          In connection with your engagement pursuant to our letter Agreement of even date herewith (the “Engagement”), we agree to indemnify and hold harmless Burnham Hill Partners, a division of Pali Capital Inc. (“BHP”) and its affiliates, the respective directors, officers, partners, agents and employees of BHP and its affiliates, and each other person, if any, controlling BHP or any of its affiliates or successor in interest (collectively, “Indemnified Persons”), from and against, and we agree that no Indemnified Person shall have any liability to us or our owners, parents, affiliates, security holders or creditors for, any losses, claims, damages or liabilities (including actions or proceedings in respect thereof) (collectively “Losses”) (A) related to or arising out of (i) our actions or failures to act (including statements or omissions made, or information provided, by us or our agents) or (ii) actions or failures to act by an Indemnified Person with our consent or in reliance on our actions or failures to act, or (B) otherwise related to or arising out of the Engagement or your performance thereof, except that this clause (B) shall not apply to any Losses that are finally judicially determined to have resulted primarily from your bad faith or gross negligence or breach of the letter Agreement. If such indemnification is for any reason not available or insufficient to hold you harmless, we agree to contribute to the Losses involved in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by us and by you with respect to the Engagement or, if such allocation is judicially determined unavailable, in such proportion as is appropriate to reflect other equitable considerations such as the relative fault of us on the one hand and of you on the other hand; provided, however, that, to the extent permitted by applicable law, the Indemnified Persons shall not be responsible for amounts which in the aggregate are in excess of the amount of all fees actually received by you from us in connection with the Engagement. Relative benefits to us, on the one hand, and you, on the other hand, with respect to the Engagement shall be deemed to be in the same proportion as (i) the total value paid or proposed to be paid or received or proposed to be received by us or our security holders, as the case may be, pursuant to the transaction(s), whether or not consummated, contemplated by the Engagement bears to (ii) all fees paid or proposed to be paid to you by us in connection with the Engagement.

          We will reimburse each Indemnified Person for all expenses (including reasonable fees and disbursements of counsel) as they are incurred by such Indemnified Person in connection with investigating, preparing for or defending any action, claim, investigation, inquiry, arbitration or other proceeding (“Action”) referred to above (or enforcing this Agreement or any related engagement Agreement), whether or not in connection with pending or threatened litigation in which any Indemnified Person is a party, and whether or not such Action is initiated or brought by you. We further agree that we will not settle or compromise or consent to the entry of any judgment in any pending or threatened Action in respect of which indemnification may be sought hereunder (whether or not an Indemnified Person is a party therein) unless we have given you reasonable prior written notice thereof and used all reasonable efforts, after consultation with you, to obtain an unconditional release of each Indemnified Person from all liability arising therefrom. In the event we are considering entering into one or a series of transactions involving a merger or other business combination or a dissolution or liquidation of all or a significant portion of our assets, we shall promptly notify you in writing. If requested by BHP, we shall then establish alternative means of providing for our obligations set forth herein on terms and conditions reasonably satisfactory to BHP.

          If multiple claims are brought against you in any Action with respect to at least one of which indemnification is permitted under applicable law and provided for under this Agreement, we agree that any judgment, arbitration award or other monetary award shall be conclusively deemed to be based on claims as to which indemnification is permitted and provided for. In the event that you are called or subpoenaed to give testimony in a court of law, we agree to pay your expenses related thereto and for every day or part thereof that we are required to be there or in preparation thereof. Our obligations hereunder shall be in addition to any rights that any Indemnified Person may have at common law or otherwise. Solely for the purpose of enforcing this Agreement, we hereby consent to personal jurisdiction and to service and venue in any court in which any claim which is subject to this Agreement is brought by or against any Indemnified Person. We acknowledge that in connection with the Engagement you are acting as an independent contractor with duties owing solely to us. YOU HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR THIS AGREEMENT.

          The provisions of this Agreement shall apply to the Engagement (including related activities prior to the date hereof) and any modification thereof and shall remain in full force and effect regardless of the completion or termination of the Engagement. This Agreement and any other Agreements relating to the Engagement shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflicts of law principles thereof.

			Very truly yours,
Accepted and Agreed:
Burnham Hill Partners			Sontra Medical Corporation
By:		By:
	Name:		Name:
	Title: Managing Director		Title: Interim Chief Executive Officer, CFO and Treasurer

4

EX-17.1

Exhibit 17.1

September 14, 2007

To the Board of Directors of Sontra Medical Corporation:

     I hereby tender my resignation as a member of the Board of Directors of Sontra Medical Corporation, effective as of the Closing Date as defined under that certain Agreement and Plan of Merger and Reorganization dated as of September 14, 2007 by and among Sontra Medical Corporation, Durham Pharmaceuticals Acquisition Co. and Durham Pharmaceuticals Ltd. (d/b/a Echo Therapeutics, Inc.).

Sincerely,
 

/s/ Joseph Amaral  

Joseph Amaral, M.D. 

EX-99.1

Exhibit 99.1

Press Release          September 17, 2007

Investor Relations Contacts:
Patrick T. Mooney, M.D., CEO
508-530-0329
pmooney@echotx.com

FOR IMMEDIATE RELEASE

Sontra Medical and Echo Therapeutics Announce Merger

Combined Company Boasts Complementary Suite of Transdermal Drug Delivery
Technologies and Strategic Relationship with Cato Research

FRANKLIN, MA, and DURHAM, NC, Sept. 17, 2007 — Sontra Medical Corporation (OTC Bulletin Board: SONT.OB), a leader in transdermal technology, and Echo Therapeutics, Inc., a privately held specialty transdermal therapeutics company, jointly announced today that they have merged to form a single, publicly held company to operate under the name Echo Therapeutics, Inc. Pursuant to the parties’ definitive merger agreement, Sontra acquired all of the outstanding shares of Echo common stock in exchange for an aggregate of 6,250,000 shares of Sontra common stock. The stockholders of Sontra and former stockholders of Echo hold approximately 65 percent (65%) and 35 percent (35%) of the combined company’s outstanding common stock, respectively. The newly combined company will have corporate offices in Philadelphia and research and development facilities in Franklin, MA and Durham, NC. Patrick T. Mooney, M.D. and Shawn K. Singh, J.D., both formerly of Echo, will serve as Chief Executive Officer and Interim President of the combined company, respectively. Harry G. Mitchell, CPA, of Sontra, will continue to serve as Chief Operating Officer and Chief Financial Officer of the combined company. Burnham Hill Partners, a division of Pali Capital, Inc., served as financial advisor to Sontra in connection with the merger and in connection with a separate $1.325 million bridge note financing to a limited group of strategic institutional and accredited investors.

“This merger is a timely combination of two late-stage and powerful transdermal drug penetration technologies,” said Patrick Mooney, M.D., Echo’s Chief Executive Officer. “Together, we are now ideally positioned to leverage and monetize both technologies through a continuing stream of strategic drug development and marketing partnerships. Our long-term strategic relationship with Cato Research, a highly-respected global contract research organization, will enable the combined company to maximize the output of its two core technology platforms and minimize the clinical development and regulatory risks.”

“We entered into this merger based on the strategic rationale that a second and complementary platform technology would expand our opportunities for long-term growth,” said Michael Wigley, Sontra’s Chairman. “The merger with Echo validates and

supports Sontra’s strategy over the last nine months which has been focused on stabilizing our financial condition, capitalizing the company for future growth, and continuing development and commercialization programs that are strategically relevant to our long term plan.”

Highlights of the Transaction

The merger created a leading, platform-enabled transdermal therapeutics and diagnostics company focused on multiple large markets for improved formulations of specialty pharmaceuticals and new applications of next generation transdermal diagnostics. The combined company is marked by the following key attributes and capabilities:

• Two transdermal drug penetration technologies, with emphasis on development and commercialization of improved formulations of well-established, FDA-approved products in concert with a 505(b)(2) regulatory strategy

• Diverse, late-stage pipeline, with one FDA-approved product, a second product candidate covered by a pending NDA filed with the FDA and seven (7) pipeline candidate programs in development covering eight (8) different indications

• Experienced management team and Board of Directors with public company expertise and critical competencies necessary to capitalize on the value inherent in each technology platform

• Long-term strategic development and regulatory partnership with Cato Research, an established global contract research organization, to maximize development efficiencies and reduce clinical development and regulatory risks

• Expertise from Cato Research will strengthen and expand the reach of ongoing late-stage clinical development programs in continuous transdermal glucose monitoring (CTGM) for the diabetes home use and hospital intensive and critical care settings

About Sontra Medical Corporation

Sontra Medical Corporation owns technology in ultrasound and skin permeation methods used in transdermal science for therapeutic and diagnostic applications, and are developing a non-invasive CTGM for use in the large diabetes home use and hospital intensive and critical care markets. Sontra’s CTGM device leverages its FDA-approved SonoPrep^® ultrasound-mediated skin permeation system.

About Echo Therapeutics, Patrick T. Mooney, MD and Shawn K. Singh, JD

Echo Therapeutics is a platform-enabled specialty transdermal therapeutics company developing a broad portfolio of advanced topical formulations of well established, FDA-approved products using its proprietary Azone dermal penetration technology. Echo has submitted a new drug application (NDA) to the FDA for the approval of its lead product, Durhalieve, for treatment of corticosteroid responsive dermatoses.

Dr. Mooney will serve as Chief Executive Officer and director of the combined company. He joined Echo in September 2006 as President, Chief Executive Officer and director. Prior to joining Echo, Dr. Mooney was President, Chief Executive Officer and Chairman of Aphton Corporation (Nasdaq: APHT), where he also served as Chief Medical Officer. Prior to Aphton Dr. Mooney served as Vice President, Senior Biotechnology Analyst for Thomas Weisel Partners, LLC, a full service merchant banking firm. Dr. Mooney received his medical degree from the Jefferson Medical College of Thomas Jefferson University and trained in surgery at Thomas Jefferson University Hospital.

Mr. Singh will serve as interim, part-time President and director of the combined company. He joined Echo in 2004 and served as President and director prior to his appointment as Chairman of the Board in 2006. He has been working with life science companies for nearly 20 years. In addition to his role with Echo, Mr. Singh serves as a Principal of Cato BioVentures, the venture capital affiliate of Cato Research, a contract research organization of which he serves as Chief Business Officer, and interim Chief Operating Officer and director of VistaGen Therapeutics. Prior to joining Echo, Mr. Singh served as Chief Business Officer of SciClone Pharmaceuticals (Nasdaq: SCLN), President of Artemis Neuroscience and Corporate Finance Associate in the Silicon Valley offices of Morrison & Foerster. Mr. Singh also serves as part-time Chief Executive Officer of Hemodynamic Therapeutics, a majority-owned subsidiary of Cato BioVentures.

About Cato Research Ltd.

Founded in 1988 by Dr. Allen Cato and Lynda Sutton and headquartered near Research Triangle Park, NC, Cato Research is a privately held, full-service contract research and development organization providing strategic and tactical support for clients in the pharmaceutical, biotechnology, medical device, and medical diagnostic industries. With a staff of more than 300 and offices located in the United States, Canada, Europe, Israel and South Africa, Cato Research’s services range from design and management of preclinical and clinical studies to submission of regulatory documents required for marketing approval.

About Burnham Hill Partners

Burnham Hill Partners, based in New York City, was formed in August 2003 and is a division of Pali Capital Inc., a NASD registered broker dealer. The professionals at Burnham Hill Partners have extensive experience providing comprehensive financing and financial advisory services to publicly traded companies with market capitalizations up to $250 million. Burnham Hill Partners’ sector expertise includes telecommunications, electronics equipment and services, network security and software as well as medical devices and life sciences.

^© 2007 Sontra Medical Corporation, SonoPrep is a registered trademark of Sontra Medical Corporation. All other company, product or service names mentioned herein are the trademarks or registered trademarks of their respective owners.

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties. The factors that could cause actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties relating to the Company’s ability to sell additional shares of common stock and warrants to purchase common stock at additional closings, the Company’s ability to develop, market and sell products based on its technology, including a continuous transdermal glucose monitor for the diabetes and hospital ICU market; the expected benefits and efficacy of the SonoPrep device in connection with diagnostics, glucose monitoring and transdermal science; the availability of substantial additional funding for the Company to continue its operations and to conduct research and development, clinical studies and future product commercialization; and, the Company’s business, research, product development, regulatory approval, marketing and distribution plans and strategies. These and other factors are identified and described in more detail in our filings with the SEC, including, without limitation, our respective annual reports on Form 10-KSB for the year ended December 31, 2006, our respective quarterly reports on Form 10-QSB, and our current reports on Form 8-K. We do not undertake to update these forward-looking statements made by us.

10 Forge Parkway
Franklin, MA 02038, USA
Tel: 1+ 877-4-SONTRA (766878)
Fax: 1+ 508-553-8760
www.sontra.com

^© 2002 — 2007 Sontra Medical Corporation. All rights reserved worldwide.