Secured Promissory Note of OncoVista Innovative Therapies, Inc. and OncoVista, Inc

Execution Version

THIS SECURED PROMISSORY NOTE (THE “ NOTE ”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY OTHER APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AND HAS BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS, INCLUDING, WITHOUT LIMITATION, THE EXEMPTION CONTAINED IN SECTION 4(2) OF THE SECURITIES ACT.  THIS NOTE MAY NOT BE SOLD OR TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT HAS BECOME AND IS THEN EFFECTIVE WITH RESPECT TO SUCH SECURITIES, (2) THIS NOTE IS TRANSFERRED PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT (OR ANY SUCCESSOR RULE) OR (3) THE COMPANY (AS HEREINAFTER DEFINED) HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT, TO THE EFFECT THAT THE PROPOSED SALE OR TRANSFER OF SUCH SECURITIES IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ALL OTHER APPLICABLE FEDERAL OR STATE SECURITIES LAWS.

OncoVista Innovative Therapies, Inc., a Nevada corporation   (“ OIT ”), and OncoVista, Inc., a Delaware corporation (“ OncoVista ”, and collectively with OIT, the “ Company ”), for value received, hereby jointly and severally promises unconditionally to pay to the order of The Lenders identified in Annex A hereto or such person’s assigns (the “ Holders ”), at the respective address set forth in Section 12 hereof, in lawful money of the United States of America (“ Dollars ” or “ $ ”) and in immediately available funds, the principal amount of not less than US$750,000 (the “ Principal ”), in full, on the Maturity Date (as defined below), and unpaid Interest (as defined below) on Maturity Date.

The following is a statement of the rights of the Holders and the conditions to which this Note is subject, and to which the Holders hereof, by the acceptance of this Note, agrees:

1.             Definitions .  For the purposes of this Note:

“ Affiliate(s) ” means, with respect to any given Person other than a partnership or limited liability company, any other Person directly or indirectly through one or more intermediaries controlling, controlled by or under common control with such Person and with respect to a partnership, the partners of such partnership and with respect to a limited liability company, the members of such limited liability company.

“ Auditors ” shall have the meaning assigned to such term in Section 3(g).

“ Business Day ” means any day that is not a Saturday, Sunday or a legal holiday in the State of New York.

“ Change in Control ” means the occurrence of the following: any person or group (as the terms “person” and “group” are used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than the Company, any subsidiary of the Company (for purposes of this Note, the term “subsidiary” shall include all direct and indirect subsidiaries), or any employee benefit plan of the Company or any subsidiary of the Company, becomes the beneficial owner of greater than 50% or more of the combined voting power of the then outstanding securities of the Company or any subsidiary of the Company entitled to vote generally in the election of directors.

“ Closing Date ” means January 15, 2009.

“ Collateral ” means all existing and future assets of Company and its subsidiaries, tangible and intangible, including, but not limited to cash and cash equivalents, accounts receivable, inventories, other current assets, furniture, fixtures and equipment, trademarks, trade names and other assets.

“ Debtor Relief Laws ” means all liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“ Environmental Laws ” shall have the meaning assigned to such term in Section 3(r).

“ ERISA ” shall have the meaning assigned to such term in Section 3(m)(ii).

“ Event of Default ” shall have the meaning assigned to such term in Section 6.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Family Member ” means, with respect to any Person, any parent, spouse, child, brother, sister or any other relative with a relationship (by blood, marriage or adoption) not more remote than first cousin to such Person.

“ GAAP ” means United States generally accepted accounting principles applied on a consistent basis.

“ Governmental Authority ” means any United States federal, state, local, foreign or other court, governmental department, commission, board, bureau, agency, instrumentality, authority, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness of the payment or performance of such Indebtedness, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness of any other Person, whether or not such Indebtedness is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “ Guarantee ” as a verb has a corresponding meaning.

“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)          all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b)          all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c)           net obligations of such Person under any swap contract;

(d)          all obligations of such Person to pay the deferred purchase price of property or services (other than current trade accounts payable in the ordinary course of business);

(e)           indebtedness secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(f)           capital leases, operating leases and Synthetic Lease Obligations;

(g)          all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any equity interests in such Person or any other Person or any warrants, rights or options to acquire such equity interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

(h)          all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.

“ Indemnified Liabilities ” shall have the meaning assigned to such term in Section 12.

“Indemnitees” shall have the meaning assigned to such term in Section 12.

 “ Initial Interest Rate ” shall have the meaning assigned to such term in Section 2(b).

“ Insurance Policies ” shall have the meaning assigned to such term in Section 3(l).

“ Intellectual Property ” shall have the meaning assigned to such term in Section 3(n).

“ Interest ” shall have the meaning assigned to such term in Section 2(a).

“ Investment Company Act ” shall have the meaning assigned to such term in Section 3(o).

“ Issue Date ” means January 15, 2009.

“ Junior Debt ” shall have the meaning assigned to such term in Section 4(b)(ii).

“ Knowledge ” means the knowledge of the management and officers of the Company after due inquiry.

“ Last OIT Balance Sheet ” shall have the meaning assigned to such term in Section 3(j)(ii).

“ Lien ” means any mortgage, pledge, lien (statutory or other), security interest or other charge, encumbrance of any kind, hypothecation, assignment, deposit arrangement, preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever intended for security (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

“ Material Adverse Effect ” means (a) a material adverse effect upon the business, condition (financial or otherwise), operations, performance, properties or prospects of the Company taken as a whole; (b) a material impairment of the rights and remedies of the Holders under any Transaction Document, or of the ability of either OIT or OncoVista to perform its obligations under any Transaction Document to which it is a party; (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any of OIT or OncoVista of any Transaction Document to which it is a party; or (d) a material impairment of the Collateral.

“ Maturity Date ” means the earlier of (i) January __, 2010, (ii) the date upon which the Company consummates a Qualified Financing and (iii) the acceleration of the maturity of the Note in accordance with Section 2(b) .

“ Maximum Rate ” shall have the meaning assigned to such term in Section 15.

“ Option Plan ” shall have the meaning assigned to such term in Section 3(f).

“ OTCBB ” shall have the meaning assigned to such term in Section 3(b)(i).

“ Person ” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint stock company, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“ Proceeds ” means all proceeds of, and all other profits, products, rents or receipts, in whatever form, arising from the sale, exchange, assignment or other disposition of Collateral.

“ Qualified Financing ” means one or more financing, whether in the form of equity securities, Indebtedness, derivative securities, or otherwise, the aggregate gross proceeds of which equal or exceed $5,000,000.

“ Registration Rights Agreemen t” means the registration rights agreement between OIT and the Holders, substantially in the form attached hereto as Exhibit B , issued on the Closing Date.

“ Secured Obligations ” means all advances to, and debts, liabilities, obligations, performance obligations, covenants and duties of, the Company arising under any Transaction Document or otherwise with respect to the Note, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising, including, without limitation, (i) to pay Principal, Interest, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by the Company under any Transaction Document (including, without limitation, any Interest which accrues after the commencement of any case, proceeding or other actions relating to the bankruptcy, insolvency or reorganization of the Company and any other amounts owing hereunder) on, the Note, (ii) all other amounts payable by the Company under this Note (including expenses incurred in connection with the enforcement of this Note) and (iii) the obligation of the Company to reimburse any amount in respect of any of the foregoing obligations under the Transaction Document that any Holder, in its sole discretion, may elect to pay or advance on behalf of the Company.

“ Security Interest ” means the security interest of the Holders (including the initial Holders of this Note) in the Collateral securing the Secured Obligations.

“ Subsidiaries ” means, with respect to any specified Person, any other Person (1) whose board of directors or similar governing body, or a majority thereof, may presently by directly or indirectly elected or appointed by such specified Person, ( 2 ) whose management decisions and corporate actions are directly or indirectly subject to the present control of such specified Person, or (3) whose voting securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are more than 50% owned, directly or indirectly, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such specified Person.

“ Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so called synthetic, off-balance sheet lease in which the lessee is contractually entitled to the tax benefits of ownership of the leased assets, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the Indebtedness of such Person (without regard to accounting treatment).

“ Taxes ” shall have the meaning assigned to such term in Section 3(k)

“ Transaction Documents ” means the Warrants and the Registration Rights Agreement.

“ UCC ” means the Uniform Commercial Code as in effect on the date hereof in the State of Nevada (in the case of OIT), or the State of Delaware (in the case of OncoVista); provided, that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the Security Interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than such jurisdiction, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.

“ Warrants ” means the common stock purchase warrants, substantially in the form attached hereto as Exhibit A , issued on the Closing Date.

“ Warrant Securities ” shall have the meaning assigned to such term in the Warrants.

“ Warrant Shares ” shall have the meaning assigned to such term in the Warrants.

2.            Payment of Principal and Interest; Interest Rate and Prepayment .

(a)            Payment of Principal and Interest .  Upon the execution hereof, the Holders shall fund an aggregate of $750,000 of the loan contemplated hereby.  On the Maturity Date, the Company shall repay the Principal and all accrued and unpaid Interest on the Note (“ Interest ”).  The entire unpaid Principal and all accrued and unpaid Interest shall be paid in Dollars on the Maturity Date.  Upon the payment in full of this Note, including, without limitation, the Principal and all accrued and unpaid Interest and any other amounts owing hereunder, the Holders shall surrender this Note to the Company for cancellation.  Any amount borrowed under this Section 2 and subsequently repaid or prepaid may not be reborrowed.

(b)            Interest Rate .  Subject to Section 2(c) hereof, Interest, during the period from the Issue Date through the Maturity Date, shall accrue on the Principal of the Note at a rate equal to 10.0% per annum (“ Initial Interest Rate ”).  Interest shall be computed on the basis of a 360-day year applied to actual days elapsed.  Notwithstanding the foregoing anything in this Note to the contrary, upon the occurrence, and during the continuation, of an Event of Default, the Initial Interest Rate shall be increased by 8.0% per annum to 18.0% per annum and shall be payable by the Holders on demand.

(c)            Prepayment .

(i)            Optional . Upon written notice to the Holders, the Principal may be prepaid by the Company at any time without penalty, with Interest accrued hereunder to the date of such prepayment without the consent of the Holder; provided, that such notice must be received by the Holders not later than 11:00 a.m. EST ten (10) Business Days prior to the date of prepayment; provided, further that the aggregate Principal and Interest under the Note must be prepaid in full and not in part.  Each such notice shall specify the date and amount of such prepayment.  The Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

3.             Representations, Warranties and Covenants of the Company .  Except as set forth in any SEC Document and the Disclosure Schedule attached as Exhibit C hereto, OIT and OncoVista jointly and severally represent and warrant to the Holders as follows:

(a)           (i)            The Common Stock has been registered under Section 12(g) of the Exchange Act and OIT is subject to the periodic reporting requirements of Section 13 of the Exchange Act.  The Company has made available to the Holders true, complete, and correct copies of all forms, reports, schedules, statements, and other documents required to be filed by OIT under the Exchange Act, as such documents have been amended since the time of the filing thereof (collectively, including all forms, reports, schedules, statements, exhibits, and other documents filed by OIT therewith, the “ SEC Documents ”).  The SEC Documents, including, without limitation, any financial statements and schedules included therein, at the time filed or, if subsequently amended, as so amended, (i) did not contain any untrue statement of a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) complied in all respects with the applicable requirements of the Exchange Act and the applicable rules and regulations thereunder.  Except as set forth in the Disclosure Schedule, each current director and executive officer thereof has filed with the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations thereunder.

(ii)           The Company maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that:

(A)         all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of OIT’s filings with the SEC and other public disclosure documents;

(B)          transactions are executed in accordance with management’s general or specific authorizations;

(C)          transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain asset accountability;

(D)          access to assets is permitted only in accordance with management’s general or specific authorization; and

(E)           the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

The Company has made available or delivered to the Holders copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures.  The books, records and accounts of the Company accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company all to the extent required by GAAP.

(iii)          The Chief Executive Officer and the Chief Financial Officer of OIT have signed, and OIT has furnished to the SEC, all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn (except as permitted by applicable laws or regulations); and neither OIT nor any of its officers has received notice from any governmental entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

(iv)         OIT has made available to the Holders complete and correct copies of all certifications filed with the SEC pursuant to Sections 302 and 906 of Sarbanes-Oxley Act of 2002 and hereby reaffirms, represents and warrants to the Holders the matters and statements made in such certificates.

(b)          At the date hereof:

(i)           the Common Stock is eligible to trade and be quoted on, and is quoted on,  the over-the-counter Bulletin Board market maintained by The Nasdaq Stock Market (the “ OTCBB ”) and has received no notice or other communication indicating that such eligibility is subject to challenge or review by the any applicable regulatory agency, electronic market administrator, or exchange;

(ii)          OIT has and shall have performed or satisfied all of its undertakings to, and of its obligations and requirements with, the SEC; and

(iii)         OIT has not, and shall not have taken any action that would preclude, or otherwise jeopardize, the inclusion of the Common Stock for quotation on the OTCBB.

(c)           Except as described in the SEC Documents, other than OncoVista, OIT has no Subsidiaries or Affiliated corporations, nor does it own any interest in any other enterprise (whether or not such enterprise is a corporation).  Each of OIT and OncoVista has been duly organized and is validly existing as a corporation in good standing under the laws of its respective jurisdiction of incorporation with all requisite power and authority (corporate and other) to own, lease and operate its respective properties and conduct its respective business as described in the SEC Documents; except as otherwise disclosed in the SEC Documents, the Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing could not reasonably be expected to have a Material Adverse Effect on its business, prospects, condition (financial or otherwise), and results of operations of the Company; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification; the Company is in possession of, and operating in compliance with, all requisite authorizations, licenses, certificates, consents, orders and permits from state, federal, foreign and other regulatory authorities where its ownership, lease or operation of properties or the conduct of its business requires such authorizations, licenses, certificates, consents, orders and permits, all of which are valid and in full force and effect; neither OIT nor OncoVista is in violation of its charter or bylaws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of Indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which it is a party or by which it or its properties or assets may be bound, which violation or default could reasonably be expected to have a Material Adverse Effect on the business, prospects, financial condition or results of operations of the Company; and neither OIT nor OncoVista is in violation of any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over OIT or OncoVista or over its respective properties or assets, which violation could reasonably be expected to have a Material Adverse Effect on the business, prospects, financial condition or results of operations of the Company taken as a whole.  The SEC Documents accurately describe any corporation, association or other entity owned or controlled, directly or indirectly, by OIT.

(d)          Each of OIT and OncoVista has all requisite power and authority to execute, deliver, and perform each of this Note and the Transaction Documents.  All necessary proceedings of each of OIT and OncoVista have been duly taken to authorize the execution, delivery, and performance of this Note and the Transaction Documents thereby.  Each of this Note and the Transaction Documents has been duly authorized, executed, and delivered by OIT and OncoVista, as applicable, constitutes the legal, valid, and binding obligation of OIT and OncoVista, as applicable, and is enforceable as to OIT and OncoVista, as applicable, in accordance with its terms.  Except as otherwise set forth in this Note, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or other tribunal is required by the Company for the execution, delivery, or performance of this Note or the Transaction Documents thereby, other than compliance with applicable securities laws following the consummation of the transactions contemplated hereby.  No consent, approval, authorization or order of, or qualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over OIT or OncoVista or over its respective properties or assets is required for the execution and delivery of this Note and the Transaction Documents and the consummation by the Company of the transactions herein and therein contemplated, except such as may be required under the Securities Act or under state or other securities or blue sky laws, all of which requirements have been, or in accordance therewith will be, satisfied in all material respects.  No consent of any party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which the OIT or OncoVista is a party, or to which its or any of its respective businesses, properties, or assets are subject, is required for the execution, delivery, or performance of this Note; and except as set forth in the SEC Documents, the execution, delivery, and performance of this Note and the Transaction Documents will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle any party to receive rights or privileges that such party was not entitled to receive immediately before this Note was executed under, or except as set forth in the SEC Documents or the Disclosure Schedule create any obligation on the part of OIT or OncoVista to which it was not subject immediately before this Note was executed under, any term of any such material contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of the respective certificate of incorporation or respective by-laws of OIT or  OncoVista (if the provisions of this Note are satisfied) violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over OIT or OncoVista or over its respective properties or assets.

(e)           Except as set forth in the SEC Documents, there is not any pending or, to the best of the Company’s Knowledge, threatened, action, investigation, suit, claim or proceeding against OIT or any Subsidiaries thereof, or any of the officers of OIT or any Subsidiaries or any of the respective properties, assets or rights of OIT or any of its Subsidiaries, before any court, government or governmental agency or body, domestic or foreign, having jurisdiction over OIT or any Subsidiaries or over OIT’s or any Subsidiary’s respective officers or the respective properties of OIT or any Subsidiaries, or otherwise that (i) could reasonably be expected, either individually or in the aggregate, to result in a Material Adverse Effect or might materially and adversely affect the properties, assets or rights of OIT and its Subsidiaries taken as a whole, (ii) might prevent OIT or OncoVista from entering into or consummating the transactions contemplated by this Note or the Transaction Documents, (iii) questions the validity of this Note or any of the other Transaction Documents or the right of OIT or OncoVista to enter into such agreements or (iv) alleging violation of any federal or state securities laws. Neither OIT nor OncoVista is a party to or named in or subject to any order, writ, injunction, judgment, or decree of any court, government agency or instrumentality.  There is no action, suit, proceeding or investigation by OIT or any Subsidiaries currently pending or that OIT or any Subsidiaries intends to initiate.

(f)           As of December 24, 2008, the authorized capital stock of OIT consists of 147,397,390 shares of Common Stock, of which 20,316,475 shares of Common Stock are issued and outstanding (after giving effect to the issuance of 20,000 shares of Common Stock pursuant to stock options held by an employee that have been exercised), of which 3,500,000 shares are reserved for issuance pursuant to OIT’s 2007 Stock Option Plan and 2007 Stock Option Plan for Independent and Non-Employee Directors (collectively the “ Option Plans ”), and 2,942,706 shares as reserved for issuances upon exercise of warrants and a convertible note.  Each of such outstanding shares of Common Stock is duly authorized and validly issued in compliance with applicable laws, and is fully paid, and non-assessable, has not been issued and is not owned or held in violation of any preemptive, subscription or similar right of stockholders.  The outstanding shares of Common Stock and capital stock of each of the Subsidiaries is duly and validly authorized, validly issued, fully paid, and non-assessable, has not been issued and is not owned or held in violation of any preemptive or similar right of stockholders.  Except as set forth in the SEC Documents and in the Disclosure Schedule, there is no commitment, plan, or arrangement to issue, and no outstanding option, warrant, or other right calling for the issuance of, any share of capital stock of, or any security or other instrument convertible into, exercisable for, or exchangeable for capital stock of, OIT or any Subsidiary, and, except as set forth in the SEC Documents, there is outstanding no security or other instrument convertible into or exchangeable for capital stock of OIT or any Subsidiary thereof.  The description of the OIT’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted and exercised thereunder, set forth in the SEC Documents accurately and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights under the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder.  Except as described in the SEC Documents, there are no options or warrants or convertible or exchangeable securities of OIT or any of its Subsidiaries outstanding at the Closing Date.  All capital stock of the Company has been issued in compliance with all applicable federal and state securities laws.

(g)          Berman & Company P.A. examined the financial statements of OIT, together with the related schedules and notes for the period from January 1, 2007 through December 31, 2007,  Stan J.H. Lee, CPA   examined the financial statements of OIT, together with the related schedules and notes, for the period from January 1, 2006 through December 31, 2006, and Armando C. Ibarra, CPA examined the financial statements of OIT, together with the related schedules and notes, for the period from January 1, 2005 through December 31, 2005 (collectively, the “ Auditors ”), filed with the SEC as a part of the SEC Documents, are independent accountants within the meaning of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder; and except as disclosed in the SEC Documents, the consolidated audited financial statements of OIT, together with the related schedules and notes, and the unaudited financial information, forming part of the SEC Documents, fairly present and will fairly present the consolidated financial condition, results of operations and cash flows of OIT at the respective dates and for the respective periods to which they apply; and all audited consolidated financial statements of OIT, together with the related schedules and notes, and the unaudited consolidated financial information, filed with the SEC as part of the SEC Documents, are in accordance with the books and records of the OIT and complied and will comply as to form in all material respects with applicable accounting requirements and with the rules and regulations of the SEC with respect hereto when filed, have been and will be prepared in accordance with GAAP consistently applied throughout the periods involved except as may be otherwise stated therein (except as may be indicated in the notes thereto or as permitted by the rules and regulations of the SEC) and fairly present and will fairly present, subject in the case of the unaudited consolidated financial statements, to customary year end audit adjustments, the consolidated financial condition, results of its operations and cash flows of OIT as at the dates thereof.  The procedures pursuant to which the aforementioned financial statements have been audited are compliant with GAAP. The selected and summary financial and statistical data included in the SEC Documents present and will present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presented therein.  No other financial statements or schedules are required to be included in the SEC Documents.   The financial statements referred to in this Section 3(g) contain all certifications and statements required under the SEC’s Order, dated June 27, 2002, pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350 (Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) with respect to the report relating thereto.  The forecasts and projections previously delivered to the Holders by the Company and attached hereto as Schedule 3(g) have been prepared in good faith and on the basis of assumptions that are fair and reasonable in light of current and reasonably foreseeable circumstances.

(h)          Since September 30, 2008 and except as disclosed in the SEC Documents and the Disclosure Schedule:

(i)           There has not been any event, violation or other matter that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(ii)          Neither OIT nor any Subsidiary thereof has authorized, declared, paid, set aside or effected any dividend or liquidating or other distribution in respect of its capital stock or any direct or indirect redemption, purchase, or other acquisition of any stock of OIT or any Subsidiary thereof;

(iii)         There has not been any sale, assignment, pledge, encumbrance, transfer or other disposition of any tangible asset of the Company (other than in the ordinary course of business consistent with past practice), or any sale, assignment, transfer or other disposition of any Intellectual Property of the Company (other than in the ordinary course of business and consistent with past practice);

(iv)         There has not been any resignation or termination of any key employee or group of employees of the OIT or any of its Subsidiaries;

(v)          There has not been any creation of any Lien on any property of the OIT or any of its Subsidiaries except for Liens in existence on the date of this Note that have been incurred in the ordinary course of business;

(vi)         There has not been any write-downs of the value of any asset of the OIT or any of its Subsidiaries or any write-off as uncollectible of any accounts or notes receivable or any portion thereof except in the ordinary course of business and in a magnitude consistent with historical practice;

(vii)        There has not been any cancellation of any debts or claims or any amendment, termination or waiver of any rights of OIT or any of its Subsidiaries except for those that could not reasonably be expected to have a Material Adverse Effect;

(viii)       There has not been any capital expenditure or commitment or addition to property, plant or equipment of OIT or any of its Subsidiaries in excess of $50,000 individually or $100,000 in the aggregate except, in the case of OIT, to its Subsidiaries; and

(vix)       The operations and businesses of OIT and its Subsidiaries have been conducted in all respects only in the ordinary course.

(i)           Subsequent to the respective dates as of which information is given in the SEC Documents, there has not been (i) any material adverse change in the consolidated business, prospects, financial condition or results of operations of OIT and its Subsidiaries taken as a whole, (ii) any transaction committed to or consummated that is material to OIT and its Subsidiaries taken as a whole, (iii) any obligation, direct or contingent, that is material to OIT and its Subsidiaries taken as a whole incurred thereby, (iv) any change in the capital stock or outstanding Indebtedness of OIT or any of its Subsidiaries that is material to OIT and the Subsidiaries taken as a whole, (v) any dividend or distribution of any kind declared, paid, or made on the capital stock of OIT, or (vi) any loss or damage (whether or not insured) to the property of OIT or any Subsidiary which has a Material Adverse Effect.

(j)           (i)            Neither OncoVista, nor any Subsidiary, owns any legal or equitable interest in any real property.  OncoVista and each Subsidiary has good title to all other properties and assets material thereto, used in its business or owned by it (except real and other properties and assets as are held pursuant to leases or licenses described in the SEC Documents), free and clear of all Liens, mortgages, security interests, pledges, charges, and encumbrances.

(ii)          All accounts and notes receivable reflected in the OIT consolidated balance sheet as of September 30, 2008 (“ Last OIT Balance Sheet ”), or arising since the date of the Last OIT Balance Sheet, have been collected, or are and will be good and collectible, in each case at the aggregate recorded amounts thereof without right of recourse, defense, deduction, return of goods, counterclaim, offset, or set off on the part of the obligor, and, if not collected, can reasonably be anticipated to be paid within 60 days of the date incurred.

(iii)         All inventory of raw materials and work in process of OIT and its Subsidiaries is usable, and all inventory of finished goods is good and marketable, on a normal basis in the existing product lines of OIT and its Subsidiaries.  All inventory is merchantable and fit for the particular purpose for which it is intended.

(iv)         All properties and assets owned by OIT and its Subsidiaries are reflected on the Last OIT Balance Sheet (except for acquisitions subsequent to the Last OIT Balance Sheet Date and prior to the date hereof).  All real and other tangible properties and assets owned by OIT or any Subsidiary or leased or licensed thereby from or to a third party are in good and usable condition (reasonable wear and tear which is not such as to affect adversely the operation of the business of OIT and its Subsidiaries excepted).

(v)          To the best of the Company’s Knowledge, no real property owned by OIT or any Subsidiary thereof or leased or licensed thereby from or to a third party lies in an area which is, or will be, subject to zoning, use, or building code restrictions which would prohibit, and, to the best of the Company’s Knowledge, no state of facts relating to the actions or inaction of another person or entity or his or its ownership, leasing, or licensing of any real or personal property exists or will exist which would prevent, the continued effective ownership, leasing, or licensing of such real property in the businesses in which OIT and its Subsidiaries is now engaged or the respective businesses in which it contemplates engaging. Each of OIT and its Subsidiaries has valid leasehold interest in all real property and interests in real property leased by it free and clear of all Liens. There exists no default, or any event which upon notice or the passage of time, or both, would give rise to any default, in the performance of the Company or, to the Knowledge of the Company, by any lessor under any lease of real property.

(vi)         The properties and assets owned by OIT and its Subsidiaries (other than those leased or licensed thereby to a third party) or leased or licensed thereby from a third party constitute all such properties and assets which are necessary to the respective businesses of OIT and its Subsidiaries as presently conducted or as it contemplates conducting.

(k)           Neither OIT nor OncoVista has any liability of any nature, accrued or contingent, including, without limitation, liabilities for federal, state, local, or foreign taxes and penalties, interest, and additions to tax (“ Taxes ”).  Without limiting the generality of the foregoing, the amounts set up as provisions for Taxes, if any, in the Last OIT Balance Sheet are sufficient for all accrued and unpaid Taxes of OIT, whether or not due and payable and whether or not disputed, under tax laws, as in effect on the date of the Last OIT Balance Sheet or now in effect, for the period ended on such date and for all fiscal periods prior thereto.  The execution, delivery, and performance of this Note and the Transaction Documents by OIT and OncoVista, as applicable, will not cause any Taxes to be payable or cause any Lien, charge, or encumbrance to secure any Taxes to be created either immediately or upon the nonpayment of any Taxes.  The Internal Revenue Service has audited and settled or the statute of limitations has run upon all federal income tax returns of OIT and OncoVista for all taxable years up to and including the taxable year ended December 31, 2001.  OIT has filed all federal, state, local, and foreign tax returns required to be filed by it; has made available to the Holders a true and correct copy of each such return which was filed in the past six years; has paid (o