-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KYrzmjDHF/CbnYWn+AyVdO/NyM5qZ6RMqVfQpvhB6QxkE22z3NWqF9iDJC2Y2nrJ 9zANUUgR3ZSfpWv6D9LvfQ== 0001144204-08-049366.txt : 20080822 0001144204-08-049366.hdr.sgml : 20080822 20080822104024 ACCESSION NUMBER: 0001144204-08-049366 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20080822 DATE AS OF CHANGE: 20080822 GROUP MEMBERS: FROST GAMMA INVESTMENTS TRUST SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Modigene Inc. CENTRAL INDEX KEY: 0001268659 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-82936 FILM NUMBER: 081033633 BUSINESS ADDRESS: STREET 1: 3 SAPIR STREET WEIZMANN SCIENCE PARK STREET 2: P.O. BOX 4101 CITY: NES ZIONA STATE: L3 ZIP: 74140 BUSINESS PHONE: (866) 644-7811 MAIL ADDRESS: STREET 1: 3 SAPIR STREET WEIZMANN SCIENCE PARK STREET 2: P.O. BOX 4101 CITY: NES ZIONA STATE: L3 ZIP: 74140 FORMER COMPANY: FORMER CONFORMED NAME: LDG INC DATE OF NAME CHANGE: 20031030 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FROST PHILLIP MD ET AL CENTRAL INDEX KEY: 0000898860 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 3055756001 MAIL ADDRESS: STREET 1: 4400 BISCAYNE BLVD CITY: MIAMI STATE: FL ZIP: 33137-3227 SC 13D/A 1 v124387_sc13da.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
 
Under the Securities Exchange Act of 1934
(Amendment No. 2)*

 
Modigene Inc.
(Name of Issuer)

Common Stock, par value $0.00001 per share
(Title of Class of Securities)

607826104
(CUSIP Number)

Shai Novik
3 Sapir Street
Weizmann Science Park
Nes-Ziona, Israel 74140
(866) 644-7811
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

August 8, 2008
(Date of Event which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
 
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
 
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent provided in a prior cover page.
 
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 

 
CUSIP No. 607826104
 
 
1.
Names of Reporting Persons.
Phillip Frost, M.D.
 
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
 o
 
 
3.
SEC Use Only
 
 
4.
Source of Funds (See Instructions)  N/A
 
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
 
 
6.
Citizenship or Place of Organization         United States of America
 
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power        -0-
 
8.
Shared Voting Power   5,059,332 (1)
 
9.
Sole Dispositive Power            -0-
 
10.
Shared Dispositive Power        5,059,332 (1)
 
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person: 5,059,332 (1)
 
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
 
 
13.
Percent of Class Represented by Amount in Row (11) 14.13%
 
 
14.
Type of Reporting Person (See Instructions) IN
(1) Consists of 4,792,666 shares of Common Stock and vested and exercisable warrants to purchase 266,666 shares of Common Stock held by Frost Gamma Investments Trust, of which the Reporting Person is the trustee and Frost Gamma, L.P. is the sole and exclusive beneficiary.   The Reporting Person is one of two limited partners of Frost Gamma, L.P.  The general partner of Frost Gamma, L.P. is Frost Gamma, Inc., and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation.  The Reporting Person is also the sole shareholder of Frost-Nevada Corporation.




CUSIP No. 607826104
 
 
1.
Names of Reporting Persons.
Frost Gamma Investments Trust
 
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
 o
 
 
3.
SEC Use Only
 
 
4.
Source of Funds (See Instructions)  WC
 
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
 
 
6.
Citizenship or Place of Organization         State of Florida
 
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power        -0-
 
8.
Shared Voting Power   5,059,332 (1)
 
9.
Sole Dispositive Power            -0-
 
10.
Shared Dispositive Power       5,059,332 (1)
 
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person: 5,059,332 (1)
 
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
 
 
13.
Percent of Class Represented by Amount in Row (11) 14.13%
 
 
14.
Type of Reporting Person (See Instructions) OO
(1) Consists of 4,792,666 shares of Common Stock and vested and exercisable warrants to purchase 266,666 shares of Common Stock held by Frost Gamma Investments Trust, of which Phillip Frost, M.D. is the trustee and Frost Gamma, L.P. is the sole and exclusive beneficiary.   Phillip Frost, M.D. is one of two limited partners of Frost Gamma, L.P.  The general partner of Frost Gamma, L.P. is Frost Gamma, Inc., and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation.  Phillip Frost, M.D. is also the sole shareholder of Frost-Nevada Corporation.



Item 1.
Security and Issuer
   
 
This Amendment No. 2 to Schedule 13D amends the Schedule 13D filed on June 21, 2007, and amended on April 7, 2008, by Phillip Frost, M.D. and Frost Gamma Investments Trust (the “Gamma Trust”) (collectively, the “Reporting Persons”), with respect to common stock, $.00001 par value (the “Common Stock”) of Modigene Inc. (the “Issuer”). The Issuer’s principal executive offices are located at 3 Sapir Street, Weizmann Science Park, Nes-Ziona, Israel 74140. Information regarding each of the Reporting Persons is set forth below.
   
Item 2.
Identity and Background
   
 
Dr. Frost’s principal occupation is Chairman and Chief Executive Officer of Opko Health, Inc., a Delaware corporation, focused on the commercialization and development of proprietary pharmaceuticals, therapeutic devices, drug delivery technology, diagnostic systems and instruments for the treatment and prevention of ophthalmic disease. Dr. Frost’s principal business address is 4400 Biscayne Boulevard, Miami, Florida 33137.
 
The Gamma Trust is a trust organized under the laws of the State of Florida. The Gamma Trust’s principal business address is 4400 Biscayne Boulevard, Miami, Florida 33137.
 
To the best knowledge of each of the Reporting Persons, neither such Reporting Person has been convicted in any criminal proceeding (excluding traffic violations and similar misdemeanors), or was a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was subject to a judgment, decree or final order enjoining future violations of, or prohibiting activity subject to, federal or state securities laws or finding any violation with respect to such laws during the last five years.
 
Dr. Frost is a citizen of the United States.
   
Item 3.
Source and Amount of Funds or Other Consideration
   
 
The source of funds for the acquisition of securities of the Issuer was from the working capital of the Gamma Trust.
   
Item 4.
Purpose of Transaction
   
 
The Reporting Persons acquired the securities of the Issuer for investment purposes only.
 
Gamma Trust has acquired 65,000 shares in open market transactions in the last 60 days at prices ranging from $ 0.90 to $1.20. 
 
On July 30, 2008, the Gamma Trust entered into a Securities Purchase Agreement with Jonathan Fleisig, pursuant to which, on August 8, 2008, the Gamma Trust purchased 263,000 shares of Common Stock from Jonathan Fleisig at a price per share of $1.10, for aggregate consideration of $289,300.
 
On March 25, 2008, the Gamma Trust and other investors entered into a Securities Purchase Agreement (the “March 2008 Securities Purchase Agreement”) with the Issuer, pursuant to which the Gamma Trust purchased 632,000 shares of Series A preferred stock, par value $0.00001 per share (the “Series A Preferred Stock”) of the Issuer for aggregate consideration of $1,580,000. A total of 800,000 shares of Series A Preferred Stock were sold by the Issuer pursuant to the March 2008 Securities Purchase Agreement.
 
The Series A Preferred Stock is convertible, at the option of each holder, beginning on March 1, 2009 and ending at 5:00 p.m., Eastern time, on March 25, 2012, without the payment of any additional consideration, into Common Stock of the issuer at the applicable conversion price discussed below. If any holder of shares of Series A Preferred Stock has not exercised the conversion right on or before March 12, 2012, then at that time all outstanding shares of Series A Preferred Stock will automatically convert, without the payment of any additional consideration, into Common Stock at the applicable conversion price discussed below. Generally, each share of Series A Preferred Stock will be convertible into Common Stock based upon a conversion ratio equal to (x) the $2.50, divided by (y) the conversion price in effect at the time of conversion, which will initially be $2.50. Accordingly, the initial conversion ratio will be one share of Common Stock for one share of Series A Preferred Stock.
 
 
 
The conversion price will change in the event that a Market Capitalization Contingency occurs. A “Market Capitalization Contingency” is defined as the aggregate market value of the Common Stock, during any forty-five (45) trading days within any consecutive ninety (90) day period, equaling or exceeding one hundred fifty million dollars ($150,000,000.00). The aggregate market value of the Common Stock is determined for these purposes by multiplying (a) the number of shares of Common Stock outstanding (on a fully-diluted basis, as follows: taking into account the shares of Common Stock issuable upon the exercise of all outstanding warrants and other convertible securities or instruments issued by the Issuer, but excluding all shares of capital stock issued, issuable or reserved for issuance pursuant to or under the Issuer’s 2005 Stock Incentive Plan and the Issuer’s 2007 Equity Incentive Plan and excluding the shares of Common Stock issuable upon conversion of the Series A Preferred Stock), by (b) the closing sale price of a share of Common Stock, as reported on the over-the-counter bulletin board, or, if the Common Stock has been admitted to trading on a nationally recognized stock exchange or market quotation system (including, without limitation, the American Stock Exchange), as reported on such exchange or market quotation system. Upon a Market Capitalization Contingency, the initial conversion ratio will be five shares of Common Stock for one share of Series A Preferred Stock. The conversion ratio is subject to adjustment for subdivisions, combinations, consolidations and similar corporate events. The rights and preferences of the Series A Preferred Stock is described in full in the Issuer’s Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock.
 
On March 25, 2008, simultaneously with the closing of the issuance of the Series A Preferred Stock described above, the Issuer entered into a Credit Agreement and a Note and Security Agreement with The Frost Group, LLC, a Florida limited liability company (“TFG”). The Gamma Trust is a member of TFG.
 
Under this line of credit, TFG may lend up to $10,000,000 to the Issuer, in such amounts as may be requested in the Issuer’s discretion from time to time. The maturity date for the line of credit is March 25, 2009, unless (i) the Issuer has borrowed any funds under the line of credit prior to March 25, 2009, or (ii) the Issuer elects to extend the line of credit. In either of such events the maturity date will be extended until March 25, 2013. Interest on outstanding borrowings under the line of credit will accrue at a 10% annual rate. In the event that the Issuer draws on the line of credit, or the Issuer extends the maturity date until March 25, 2013, the Issuer will issue to TFG warrants to purchase 1,500,000 shares of Common Stock at an exercise price of $0.99 per share. These warrants, if issued, will expire five years from the date of issuance. Under the line of credit, the Issuer granted to TFG a security interest in substantially all of the assets of the Issuer other than the Issuer’s intellectual property.
 
Except as set forth above in this Item 4, none of the Reporting Persons has any present plans or proposals which relate or would result in any of the matters set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D.
 
 
 
 
Item 5.
Interest in Securities of the Issuer
   
 
Each of the Reporting Persons is the beneficial owner of 5,059,332 shares of the Common Stock of the Issuer. This amount represents (i) 4,792,666 shares of Common Stock held by the Gamma Trust and (ii) 266,666 shares of Common Stock issuable upon exercise of currently exercisable warrants held by the Gamma Trust. Each of the Reporting Persons is the beneficial owner of 14.13% of the Issuer’s Common Stock. The percentage of beneficial ownership is calculated based upon 35,549,028 shares of Common Stock outstanding as of May 12, 2008.
 
The securities discussed above are owned of record by the Gamma Trust. As the sole trustee of the Gamma Trust, Dr. Frost may be deemed the beneficial owner of all shares owned by the Gamma Trust by virtue of his power to vote or direct the vote of such shares or to dispose or direct the disposition of such shares owned by such trust. Accordingly, solely for purposes of reporting beneficial ownership of such shares pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, each of the Reporting Persons will be deemed to be the beneficial owner of the shares held by any other Reporting Person. Except as described herein, neither of the Reporting Persons has engaged in any transaction involving any of the securities of the Issuer during the past sixty days.
   
Item 6.
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
   
 
Except as described in Item 4 above, the Reporting Persons do not have any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Issuer, including but not limited to the transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.
   
Item 7.
Material to Be Filed as Exhibits
   
 
1. Credit Agreement dated as of March 25, 2008, by and between Modigene Inc. and The Frost Group, LLC.
 
2. Note and Security Agreement dated as of March 25, 2008, by and between Modigene Inc. and The Frost Group, LLC
 
3. Securities Purchase Agreement, dated as of July 30, 2008, by and between Frost Gamma Investments Trust and Jonathan Fleisig.
 
 
Signature
 
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
 
         
Dated: August 22, 2008
 
/s/ Phillip Frost
 
 
Phillip Frost, M.D.
   
Dated: August 22, 2008
 
FROST GAMMA INVESTMENTS TRUST
     
 
 
By:
 
/s/ Phillip Frost
 
 
  
 
Phillip Frost, M.D. Trustee



EX-1 2 v124387_ex1.htm
Exhibit 1
 
CREDIT AGREEMENT
 
THIS CREDIT AGREEMENT (this “Agreement”), dated as of March 25, 2008 (the “Initial Closing Date”), is entered into by and among Modigene Inc., a Nevada corporation (“Borrower” or the “Company”), and The Frost Group, LLC, a Florida limited liability company (the “Frost Group”).
 
RECITALS
 
WHEREAS, the Company desires to obtain a $10,000,000 (the “Available Amount”) line of credit to Borrower for general business purposes (the “Line of Credit”), and the Frost Group is willing to make available to the Company the Line of Credit, all on the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly and mutually acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
 
ARTICLE I
LINE OF CREDIT
 
Section 1.1. The Line of Credit. From time to time prior to the Maturity Date (as defined in the Note (as hereafter defined)), subject to the provisions below, the Frost Group shall make Advances (as hereafter defined) to Borrower, which Borrower shall pay and may reborrow, so long as the aggregate amount of Advances outstanding at any one time shall not exceed the Available Amount.
 
Section 1.2. Note. The indebtedness of Borrower to the Frost Group will be evidenced by a note and security agreement in substantially the form of Exhibit A (the “Note”). The original principal amount of the Note will be $10,000,000; provided, however, that notwithstanding the face amount of the Note, Borrower’s liability under the Note shall be limited at all times to its actual indebtedness, principal, interest, fees, charges, expenses and reasonable attorneys’ fees and costs owing by Borrower to the Frost Group (or any permitted assignee) pursuant to or evidenced by the Note or this Agreement, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including Lender’s Expenses (collectively, the “Obligations”), in each case as then outstanding hereunder and under the Note. As used herein, “Lender’s Expenses” means all reasonable attorneys’ fees, costs and expenses incurred in amending, enforcing or defending the Note (including fees and expenses of appeal or review), including the exercise of any rights or remedies afforded under the Note or under applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency, including without limitation all fees and costs incurred by the Frost Group in connection with the Frost Group’s enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower or its property.


Section 1.3. Use of Proceeds. Funds advanced under the Line of Credit shall be used for working capital or general corporate purposes of Borrower, as approved by the Company’s Board of Directors.
 
Section 1.4. Payment of Outstanding Amount. The aggregate Obligations outstanding on the Maturity Date shall be due and payable in arrears on the Maturity Date in accordance with the terms of the Note.
 
Section 1.5. Interest. Interest on the outstanding principal amount of the Line of Credit shall accrue at a rate equal to ten percent (10%) per annum, compounded quarterly (the “Interest Rate”), and shall be payable on the last day of each calendar month until the repayment in full of all Obligations, the termination of this Agreement and cancellation of the Note.
 
Section 1.6. Default Rate. Upon the Maturity Date, whether by acceleration, demand or otherwise, and at the Frost Group’s option upon the occurrence of any Event of Default (as defined in the Note) and during the continuance thereof, the Note shall bear interest at a rate that shall be five percent (5.0%) in excess of the Interest Rate but not more than the maximum rate allowed by law (the “Default Rate”). The Default Rate shall continue to apply whether or not judgment shall be entered on the Note. The Default Rate is imposed as liquidated damages for the purpose of defraying the Frost Group’s expenses incident to the handling of delinquent payments, but are in addition to, and not in lieu of, the Frost Group’s exercise of any rights and remedies hereunder or under applicable law, and any fees and expenses of any agents or attorneys which the Frost Group may employ. In addition, the Default Rate reflects the increased credit risk to the Frost Group of carrying a loan that is in default. Borrower agrees that the Default Rate is a reasonable forecast of just compensation for anticipated and actual harm incurred by the Frost Group, and that the actual harm incurred by the Frost Group cannot be estimated with certainty and without difficulty.
 
Section 1.7. Advances. Borrower shall give the Frost Group prior written notice not later than 3:00 p.m., Eastern Time, on the third business day prior to the date of any advance of credit pursuant to the Line of Credit hereunder (an “Advance”). Any such notice shall be in the form of the Borrowing Notice set forth as Exhibit B (the “Borrowing Notice”), shall be certified by the president of Borrower, and shall set forth the aggregate amount of the requested Advance. Upon receiving a request for an Advance to which Borrower is entitled hereunder and under the Note, and provided there is no Event of Default, the Frost Group shall make available to Borrower the amount of the requested Advance by wire transfer of immediately available funds to a bank account designated by Borrower on the third business day after receipt of such Borrowing Notice.
 
Section 1.8. Prepayment. Borrower may prepay the outstanding Obligations under the Line of Credit at any time without premium or penalty. Prepayments of all or any portion of the Obligations shall not reduce the Available Amount, and funds may be reborrowed hereunder up to the Available Amount, subject to the provision hereof and the Note.
 
Section 1.9. Payment Application. Any and all payments on account of the Obligations will be applied first to accrued and unpaid interest and second to outstanding principal and other sums due hereunder. If Borrower makes a payment or payments and such payment or payments, or any part thereof, are subsequently invalidated, declared to be fraudulent or preferential, set aside or are required to be repaid to a trustee, receiver, or any other person under any bankruptcy act, state, provincial or federal law, common law or equitable cause, then to the extent of such payment or payments, the Obligations or part thereof hereunder intended to be satisfied shall be revived and continued in full force and effect as if said payment or payments had not been made.

- 2 -

Section 1.10. Conditions to First Advance. The obligation of the Frost Group to make the first Advance shall be subject to the Frost Group’s receipt of the following documents, each in form and substance reasonably satisfactory to the Frost Group:
 
(a) This Agreement. This Agreement duly executed by Borrower.
 
(b) Secured Promissory Note. The Note duly executed by Borrower.
 
(c) Borrowing Notice. A completed Borrowing Notice required under Section 1.7 hereof.
 
(d) Borrower Secretary’s Certificate. The duly authorized Secretary of Borrower shall have delivered a certified copy of Borrower’s Certificate of Incorporation, and a certificate as to its Bylaws and resolutions adopted by its board of directors authorizing this Agreement and the transactions contemplated hereby.
 
(e) Third-Party Consents. Borrower shall have procured all of the third-party consents specified in the schedules to the Stock Purchase Agreement which are required to be procured by Borrower before it can incur the indebtedness evidenced by the Note and otherwise commit itself to its obligations hereunder.
 
(f) Warrant Certificate. A Warrant Certificate duly executed by Borrower representing the Warrants issuable upon the first Advance in accordance with Section 1.12 below.
 
(g) Other Documents. Such additional documents as the Frost Group reasonably may request.
 
Section 1.11. Subsequent Advances. The obligation of the Frost Group to make additional Advances shall be subject to the Frost Group’s receipt of a completed Borrowing Notice and such additional documents as the Frost Group reasonably may request and the absence of any Event of Default.
 
Section 1.12. Warrants. In consideration of the extension of credit hereunder, upon the first Advance, Borrower will grant to the Frost Group Warrants (the“Warrants”), which warrants will be issued substantially in the form attached hereto as Exhibit C (the “Warrant Certificate”), with an exercise price equal to $0.99 per share and will provide such parties the right to buy One Million Five Hundred Thousand (1,500,000) shares of Common Stock (as hereafter defined).

- 3 -
 
ARTICLE II
CLOSINGS
 
Section 2.1. Initial Closing. The closing of this Agreement (the “Initial Closing”) shall take place at the offices of The Frost Group, in Miami, Florida, or at such other location(s) as the parties may agree commencing at 2:00 p.m. local time on the Closing Date (as defined in the Stock Purchase Agreement (as hereafter defined)). At the Initial Closing:
 
(a) Borrower shall deliver to the Frost Group a fully executed copy of this Agreement, the Note and the other documents described in Section 1.10.
 
(b) The Frost Group shall deliver to Borrower a fully executed copy of this Agreement.
 
Section 2.2. Subsequent Closings. The closing of any subsequent advance under this Agreement shall take place at the offices of The Frost Group, in Miami, Florida, or at such other location(s) as the parties may agree commencing at 2:00 p.m. local time on the date set forth in the Borrowing Notice. At each such subsequent closing, the Frost Group shall have timely received a completed Borrowing Notice and such additional documents as the Frost Group reasonably may request.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
 
Borrower represents and warrants to the Frost Group as of the date of this Agreement as follows:
 
Section 3.1. Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and duly authorized to carry on the business presently conducted by it. The Company is qualified to do business in every other jurisdiction in which the nature of its business or location of its properties requires such qualification, except where the failure to so qualify could not reasonably be expected to have a material adverse effect upon the business, operations, assets, liabilities or condition (financial or otherwise) of the Company taken as a whole (“Material Adverse Effect”). The copies of the Company’s articles of incorporation and by-laws, which have been furnished to the Frost Group are correct and complete and reflect all amendments made thereto at any time prior to the date of this Agreement. The Company has one wholly-owned subsidiary, Modigene Inc., a Delaware corporation (“Modigene DE”), and Modigene DE has one wholly-owned subsidiary, Modigene Ltd., an Israeli corporation (“Modigene Ltd.”).
 
Section 3.2. Capitalization.
 
(a) As of the date of this Agreement, the authorized capital stock of the Company consists of:
 
(i) Three Hundred Million (300,000,000) shares of common stock, $0.0001 par value per share (“Common Stock”), of which Thirty-five Million, Five Hundred Forty-nine Thousand and Twenty-eight (35,549,028) shares are issued and outstanding; and

- 4 -

(ii) Ten Million (10,000,000) shares of preferred stock, $0.0001 par value per share (“Preferred Stock”), Eight Hundred Thousand (800,000) of which have been designated Series A Preferred Stock (the “Series A Preferred”), all of which are issued and outstanding.
 
(b) As of the date of this Agreement, the Company has reserved:
 
(i) the Series A Preferred for issuance pursuant to that certain Series A Preferred Stock Purchase Agreement between Frost Gamma Investments Trust, Jane Hsiao, Subbarao Uppaluri and Steven D. Rubin (collectively, “Purchasers”) and the Company (the “Stock Purchase Agreement”);
 
(ii) sufficient shares of Common Stock for issuance upon conversion of the Series A Preferred;
 
(iii) One Million Nine Hundred Forty-nine Thousand Six Hundred Seventy-Five (1,949,675) shares of Common Stock issuable to employees, consultants and directors upon the exercise of options (“Options”) to purchase Common Stock originally granted pursuant to the Modigene Inc. Stock Incentive Plan as adopted by Modigene DE on December 15, 2005 (the “2005 Stock Plan”) and assumed by the Company, all of which Options have been granted as of the date of this Agreement;
 
(iv) Three Million (3,000,000) shares of Common Stock issuable to employees, consultants and directors upon the exercise of Options to Purchase Common Stock granted pursuant to the Modigene Inc. Equity Incentive Plan (the “2007 Stock Plan”), of which Options to purchase an aggregate of Two Million Five Hundred and Ninety Thousand (2,590,000) shares of Common Stock have been granted as of the date of this Agreement; and
 
(v) Three Million Four Hundred Ninety-Five Thousand Four Hundred and Twelve (3,495,412) shares of Common Stock issuable upon the exercise of warrants that are issued and outstanding as of the date of this Agreement.
 
(vi) One Million Five Hundred Thousand (1,500,000) shares of Common Stock issuable upon the exercise of the maximum number of Warrants issuable pursuant to the terms of Section 1.12 and the Note.
 
(c) Except as set forth in this Section 3.2 and in any registration statements, reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated by reference) required to be filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) since May 9, 2007 (the foregoing materials, together with any other materials filed by the Company under the Exchange Act, whether or not required, being collectively referred to herein as the “SEC Reports”), there are no outstanding options, warrants, agreements, conversion rights, preemptive rights, or other rights issued by the Company which may permit or require any individual, corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, Governmental Authority (as defined below), or other entity of any kind (“Person”), now or in the future to subscribe for, purchase or otherwise acquire any other securities of the Company.

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Section 3.3. Authorization and Enforceability. The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company, the performance of its obligations hereunder, and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the Frost Group) constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. The Warrants, when and if issued pursuant to the terms of the Note, have been duly issued and authorized and any share of Common Stock issued upon the exercise thereof according to their respective terms, as applicable, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens and shall not be subject to preemptive or similar rights of stockholders.
 
Section 3.4. No Conflict. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not (i) conflict with or violate any provisions of its articles of incorporation or by-laws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to any other Person any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party, or by which any property or asset of the Company is bound, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any Governmental Authority to which the Company is subject, or by which any property or asset of the Company is bound, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
 
Section 3.5. Consents and Approvals. Except as set forth on Schedule 3.5, and such other consents, authorizations, filings, approvals, notifications and registrations which, if not obtained or made, could not reasonably be expected to have a Material Adverse Effect, the execution, delivery and performance of this Agreement by the Company does not require any consent, authorization, filing with, approval, notification or registration to or with any Person by the Company.
 
Section 3.6. Financial Information. Each of the financial statements of the Company set forth in the SEC Reports (collectively, the “Financial Statements”) is accurate and complete in all material respects and is consistent with the books and records of the Company. Such financial statements present fairly in all material respects the financial condition and results of operations of the Company as of the dates thereof or for the periods covered thereby.

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Section 3.7. Absence of Changes. Except as set forth in Schedule 3.7 or as otherwise expressly provided by this Agreement and the Stock Purchase Agreement or the SEC Reports, since December 31, 2007, there has not been:
 
(a) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the capital stock of the Company, or any purchase, redemption or other acquisition by the Company of any of the Company’s capital stock or any other securities of the Company, or any issuance of any options, warrants, calls or rights to acquire any such shares or other securities, except for the issuance of shares pursuant to the exercise of Options;
 
(b) any split, combination or reclassification of any of the capital stock of the Company;
 
(c) any material change or alteration in the policy of the Company relating to the granting of stock options to its employees, directors and consultants;
 
(d) any purchase or sale or other disposition, or any agreement or other legally binding arrangement for the purchase, sale or other disposition, of any of the material properties or assets of the Company, other than in the ordinary course of business;
 
(e) any change by the Company in its accounting methods, principles or practices;
 
(f) any damage, destruction or loss, not covered by insurance, which could reasonably be expected to have a Material Adverse Effect; or
 
(g) any agreement or understanding whether in writing or otherwise, by the Company to take any of the actions specified in subparagraphs (a) through (e) above.
 
Section 3.8. Employment Contracts. The SEC Reports contain an accurate description in all material respects of all employment and consulting agreements with the Company’s executive officers.
 
Section 3.9. Sales Representatives, Dealers and Distributors. Except as set forth in Schedule 3.9, the Company is not a party to any contract or agreement with any Person under which such other Person is a sales agent, representative, dealer or distributor of any of the products or services of the Company which by its terms cannot be terminated on less than ninety (90) days prior notice without requiring an additional payment as a result of termination.
 
Section 3.10. Brokers. No broker, finder or investment bank is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.
 
Section 3.11. Litigation. There is no action, suit, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company before or by any United States federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission, or any court, tribunal, or judicial or arbitral body (“Governmental Authority”). As of the date hereof, the Company is not subject to any outstanding governmental order which has not been disclosed to the Frost Group.

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Section 3.12. Title to Properties. Except as set forth on Schedule 3.12, the Company has good and marketable title, free and clear of all Liens, to its respective personal property and assets (other than the real property and Leases which are addressed in Section 3.26) shown on the most recent balance sheet included in the Financial Statements (the “Recent Balance Sheet”) or acquired after the date of the Recent Balance Sheet, except for (i) assets that have been disposed of since the date of the Recent Balance Sheet in the ordinary course of business, and (ii) Liens reflected in the Recent Balance Sheet. For purposes of this Agreement, “Lien” means any encumbrance, hypothecation, infringement, lien, mortgage, pledge, restriction, security interest, title retention or other security arrangement, or any other adverse right or interest, charge or claim of a similar nature of or on any asset, property or property interest; provided, however, that such term shall not include (a) liens for Taxes or assessments which are not delinquent or being contested in good faith and for which adequate reserves have been established on the Recent Balance Sheet; (b) mechanics’, warehousemen’s, materialmen’s, contractors’, workmen’s, repairmen’s and carriers’ liens, and other similar liens arising or incurred in the ordinary course of business; (c) the rights of third-party suppliers or other vendors having possession of manufacturing equipment; (d) rights of lessees, licensees and other third parties having a right to possess or use assets in the ordinary course of business; (e) rights of lessors, licensors and other third parties in property owned by them which is leased to another Person or which another Person has a right to use or possess; (f) with respect to real property, easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the use of such real property in the ordinary course of business; (g) liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business; and (h) liens for water and sewer charges.
 
Section 3.13. Personal Property Leases. Except as set forth in Schedule 3.13, all of the personal property leased to the Company is subject to leases which, to the knowledge of the Company, are valid and in full force and effect, and to the knowledge of the Company no event has occurred which, with notice or lapse of time or both, would constitute a material default under any of these leases.
 
Section 3.14. Intentionally Omitted.
 
Section 3.15. Intentionally Omitted.
 
Section 3.16. Contracts. 
 
(a) The SEC Reports contain an accurate list of all material contracts, agreements and arrangements to which the Company is a party and required to be disclosed therein (“Material Contracts”).
 
(b) Other than as set forth on Schedule 3.16, the Company is not in violation or in default of, in any material respect, or has failed to perform any material obligation under, any Material Contract, and nothing has occurred that with lapse of time or the giving of notice or both would constitute a material breach or default of a Material Contract by the Company.

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(c) The Company has no powers of attorney outstanding (other than those issued in the ordinary course of business with respect to tax matters and securities filings).
 
Section 3.17. Permits. All material permits, authorizations, variances, notices, approvals, registrations, certificates of completion or legal status, certificates of occupancy, orders or other approvals or licenses granted by any Governmental Authority (“Permits”) required as of the date hereof for the Company to conduct its business as currently conducted have been issued to the Company and are in effect. There are no material defaults existing under such Permits and the Company has not received any notice and the Company has no knowledge that the issuer of any such Permit intends to suspend, withdraw, limit in any form or terminate any such Permit.
 
Section 3.18. Intentionally Omitted.
 
Section 3.19. Environmental Matters. To the knowledge of the Company, and except as set forth in Schedule 3.19:
 
(a) the properties, facilities and assets owned and leased by the Company, respectively, and the operations conducted thereon by the Company and the use, maintenance, or operation of such properties, facilities and assets: 
 
(i) have been and are in compliance in all material respects with any applicable federal, state, local or foreign laws, regulations and ordinances concerning health and safety, pollution or protection of the environment, including by way of illustration and not by way of limitation, if applicable, the Clean Air Act, 42 U.S.C. § 7401 et seq. the Federal Water Pollution Control Act of 1972, 33  U.S.C. § 1251 et seq. (the “Clean Water Act”); the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. § 6901 et seq. (“RCRA”); the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq. (“CERCLA”); the Toxic Substances Control Act, 15 U.S.C. §2601 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. §2701 et seq.; the Emergency Planning and Community Right- to-Know Act, 42 U.S.C. § 11001 et seq.; the Pollution Prevention Act of 1990, 42 U.S.C. § 1301 et seq.; the Federal Hazardous Materials Transportation Law, 49 U.S.C. §5101 et seq.; and the Safe Drinking Water Act, 42 U.S.C. §§ 300(f) through 300(j); the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq. (including any amendments or extensions thereof, and rules, regulations, standards or guidelines pursuant to any of the foregoing) (each hereinafter an “Environmental Law”); and
 
(ii) are not subject to any existing, pending or threatened, investigation, inquiry or proceeding by any Governmental Authority for any material liability (absolute, contingent or otherwise) or obligations under any Environmental Law.
 
(b) no toxic, hazardous or noxious substance, material or waste, the treatment, handling, storage, transportation or Release (as defined below) of which is regulated by any Governmental Authority, including, but not limited to, petroleum or constituents thereof, asbestos or any asbestos-containing material of any kind or character which is now or may become friable and polychlorinated biphenyls, or any other materials or substances designated as “hazardous substances” pursuant to Section 311 of the Clean Water Act, defined as “hazardous waste” pursuant to Section 1004 of RCRA, or defined as “hazardous substances” pursuant to Section 101 of CERCLA (“Hazardous Substances”) have been disposed of or otherwise Released by the Company except in compliance in all material respects with Environmental Laws and in a manner which has not and is not reasonably likely to give rise to any material liability (absolute, contingent or otherwise) under Environmental Law; 

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(c) the Company has no material liability (absolute, contingent or otherwise) in connection with any Release of any Hazardous Substances into the environment or arising under Environmental Law;
 
(d) (i) no request for information or notice of any liability, potential liability or obligation under any violation of any Environmental Law has been received by the Company, and (ii) the Company has not been named as a “potentially responsible party” or received a request for information in connection with any litigation, investigation or similar matter arising under Environmental Laws. The term “Released” hereunder means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment of Hazardous Substances (including without limitation, the abandonment or disposal of barrels, containers or other receptacles containing any Hazardous Substances).
 
Section 3.20. Intellectual Property.
 
(a) The Company owns or licenses or, to the knowledge of the Company, otherwise possesses legally enforceable rights to use, all patents, trademarks, trade names, service marks, copyrights, and any applications therefor, technology, know-how, trade secrets, ideas, algorithms, processes, computer software programs or applications, and tangible or intangible proprietary information or material (collectively the “Intellectual Property”) that are used by the Company in and are material to its business as currently conducted.
 
(b) Except as set forth in Schedule 3.20, to the knowledge of the Company, all grants, registrations and applications for Intellectual Property owned by the Company that are used in and are material to the conduct of its business as currently conducted (i) are valid, subsisting, in proper form and enforceable, and have been duly maintained, including the submission of all necessary filings and fees in accordance with the legal and administrative requirements of the appropriate jurisdictions, and (ii) have not lapsed, expired or been abandoned, and no application or registration therefor is the subject of any legal or administrative proceeding before any Governmental Authority in any jurisdiction.
 
(c) To the knowledge of the Company, the Intellectual Property owned by the Company is not being infringed by any third party. To the knowledge of the Company, the conduct of its business as currently conducted does not conflict with or infringe in any way on any proprietary right of any third party. There is no claim, suit, action or proceeding pending or, to the knowledge of the Company, threatened against the Company (i) alleging any such conflict or infringement with any third party’s proprietary rights, or (ii) challenging the ownership, use, validity or enforceability of the Intellectual Property. 

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(d) To the knowledge of the Company, the 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 Intellectual Property.
 
Section 3.21. Tax Matters. Except as set forth in Schedule 3.21:
 
(a) The Company has timely filed with the Internal Revenue Service and any other domestic or foreign Governmental Authority responsible for the administration of any Taxes (“Tax Authority”), as appropriate, all material returns, declarations, reports, claims for refund, or information returns or statements relating to Taxes, including any schedule or attachment thereto, and including any amendments thereof (“Tax Returns”) that it was required to file, and such Tax Returns are true, correct and complete in all material respects. All material federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not (“Taxes”) due and owing by the Company have been paid.
 
(b) The Company has not been, and is not now subject to, any audits with regard to any Taxes or Tax Returns of the Company and there are no outstanding deficiencies or assessments asserted in writing by any Tax Authority.
 
(c) There are no outstanding agreements, consents or waivers extending the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against the Company, and the Company is not a party to any agreement providing for the allocation or sharing of Taxes.
 
(d) The Company has not filed a consent to the application of Section 341(f) of the Internal Revenue Code of 1986, as amended through the date hereof, and the rulings and regulations promulgated thereunder (“Code”). 
 
(e) The Company is not nor has it been a United States real property holding company (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(ii) of the Code.
 
(f) The unpaid (but not yet due) Taxes of the Company did not, as of the Recent Balance Sheet, exceed the reserve for tax liability set forth on the face of the Recent Balance Sheet.
 
(g) There are no Liens for Taxes upon any of the assets of the Company, except for Liens for Taxes not yet due and payable (or for Taxes that the Company is contesting in good faith through appropriate proceedings) for which adequate reserves have been established on the Recent Balance Sheet.

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Section 3.22. Employment Matters. The Company has not experienced any material strikes, collective labor grievances or other collective bargaining disputes in the last five (5) years. The Company is not and has not been a party to any collective bargaining agreements. To the Company’s knowledge, there is no organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Company. The Company has complied with all applicable laws relating to employment, employment discrimination and employment practices, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.
 
Section 3.23. Employee Benefit Matters.
 
(a) Schedule 3.23 lists all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended through the date hereof, and the rulings and regulations promulgated thereunder (“ERISA”)) and all bonus, stock option, stock purchase, profit sharing, savings, disability, incentive, deferred compensation, retirement, severance or other employee benefit plans, programs or arrangements, and all employment or compensation agreements, in each case for the benefit of, or relating to, current employees and former employees of the Company (collectively, the “Plans”).
 
(b) With respect to each Plan, the Company has made available to the Frost Group true and complete copies of (i) all plan documents, as in effect on the date hereof, (ii) the latest Internal Revenue Service determination letter, if applicable, (iii) the last filed Form 5500, if applicable, and (iv) summary plan descriptions, if any, and all modifications thereto communicated to employees.
 
(c) To the knowledge of the Company, all Plans are in compliance in all material respects with the requirements prescribed by applicable statutes, orders or governmental rules or regulations currently in effect with respect thereto, and the Company has performed all material obligations required to be performed by them under, and are not in any material respect in default under or in violation of, any of the Plans.
 
(d) To the knowledge of the Company, neither the Company nor any of its directors, officers, employees or agents has, with respect to any Plan, engaged in or been a party to any “prohibited transaction”, as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which could result in the imposition of either a penalty assessed pursuant to Section 502(i) of ERISA or a Tax imposed by Section 4975 of the Code, in each case applicable to the Company or any Plan.
 
(e) There are no pending or, to the knowledge of the Company, threatened claims, lawsuits or arbitrations (other than routine claims for benefits), relating to any of the Plans, which have been asserted or instituted against the Company, any Plan or the assets of any trust for any Plan. No Plan is a “multiemployer plan” (as defined in Section 3(37) of ERISA) or is subject to Title IV of ERISA. The Company has complied in all material respects with the provisions of Section 4980B of the Code and Part 6 of Title I of ERISA, if applicable.
 
Section 3.24. Insurance. Set forth on Schedule 3.24 is a true and complete list of all policies of fire, liability, workmen’s compensation and other similar forms of insurance owned or held by the Company, which policies are in full force and effect, and no notice of cancellation or termination has been received with respect to any such policy.

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Section 3.25. Compliance with Laws. Except as set forth in Schedule 3.25, the Company has complied and remains in compliance with all applicable laws, regulations and zoning ordinances of any Governmental Authority, except for those instances of non-compliance that could not reasonably be expected to have a Material Adverse Effect, and the Company has no knowledge of and has not received any notice alleging any such violation of any such laws, regulations or zoning ordinances.
 
Section 3.26. Real Estate.
 
(a) Owned Properties. The Company does not own any real property.
 
(b) Leased Properties. Schedule 3.26 sets forth a list of all of the leases and subleases for real property and all amendments, modifications and supplements thereto, if any (“Leases”), in which the Company has a leasehold or subleasehold interest. The Company has delivered, or caused to be delivered, to the Frost Group true and complete copies of each of the Leases described in Schedule 3.26. With respect to each Lease listed in Schedule 3.26 and except as set forth in Schedule 3.26, (i) to the knowledge of the Company, each Lease is legal, valid, binding, and enforceable, and in full force and effect; (ii)  the Company is not in violation or in default of, in any material respect, or has failed to perform any material obligation under, any Lease, and nothing has occurred that with lapse of time or the giving of notice or both would constitute a material breach or default of any Lease by the Company; and (iii)  the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in any Lease. 
 
Section 3.27. Disclosure. The Company has provided the Frost Group with all information requested by Frost Group in connection with its decision to enter into this Agreement. To the Company’s knowledge, neither this Agreement, the exhibits and schedules hereto nor any other document delivered by the Company to Frost Group or their attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, contain any untrue statement of a material fact nor, to the best of the Company’s knowledge, omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. The Company does not represent or warrant that it will achieve any financial projections provided to Frost Group.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FROST GROUP
 
The Frost Group represents and warrants to Borrower as of the date of this Agreement, and as of the date of the issuance of the Warrants, if any, as follows:
 
Section 4.1. Capacity; Execution of Agreement. The Frost Group has all requisite power, authority, and capacity to enter into this Agreement and to perform the transactions and obligations to be performed by it hereunder. The execution and delivery of this Agreement, and the performance by the Frost Group of the transactions and obligations contemplated hereby have been duly authorized by all requisite corporate action of the Frost Group. This Agreement has been duly executed and delivered by the Frost Group and constitutes a valid and legally binding agreement of the Frost Group, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws, both state and federal, affecting the enforcement of creditors’ rights or remedies in general from time to time in effect and the exercise by courts of equity powers or their application of principles of public policy.

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Section 4.2. Formation and Standing. The Frost Group is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Florida. The Frost Group has the requisite power and authority to own and operate its properties and assets, and to carry on its business as currently conducted.
 
Section 4.3. Power and Authority. The Frost Group has all requisite legal and other power and authority to execute and deliver this Agreement and to carry out and perform its other obligations hereunder.
 
Section 4.4. Brokers or Finders. The Frost Group has not engaged any brokers, finders or agents, or incurred, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement and the transactions contemplated hereby.
 
Section 4.5. Knowledge of Investment and its Risks. The Frost Group has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Warrants and in the Common Stock underlying the Warrants (the “Underlying Common Stock”). The Frost Group understands that an investment in Borrower represents a high degree of risk and there is no assurance that the Borrower’s business or operations will be successful.
 
Section 4.6. Investment Intent. The Frost Group hereby represents and warrants that (i) the Warrants and the Underlying Common Stock are being acquired for investment for the Frost Group’s own account, and not as a nominee or agent and not with a view to the resale or distribution of all or any part of the Warrants or the Underlying Common Stock, and the Frost Group has no present intention of selling, granting any participation in, or otherwise distributing any of the Warrants and the Underlying Common Stock within the meaning of the Securities Act of 1933 (as amended, the “1933 Act”), (ii) the Warrants and the Underlying Common Stock are being acquired in the ordinary course of the Frost Group’s business, and (iii) the Frost Group does not have any contracts, understandings, agreements, or arrangements, directly or indirectly, with any person and/or entity to distribute, sell, transfer, or grant participations to such person and/or entity with respect to, any of the Warrants and the Underlying Common Stock. The Frost Group is not purchasing the Warrants and the Underlying Common Stock as a result of any advertisement, article, notice or other communication regarding the Warrants and the Underlying Common Stock published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

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Section 4.7. Frost Group Status. The Frost Group is an “accredited investor” as that term is defined by Rule 501 of Regulation D promulgated under the 1933 Act. The Frost Group is not registered as a broker-dealer under Section 15 of the Exchange Act or an affiliate of such broker-dealer.
 
Section 4.8. Disclosure. The Frost Group has reviewed the information provided to the Frost Group by Borrower in connection with the Frost Group’s decision to purchase the Warrants and the Underlying Common Stock, including but not limited to, Borrower’s publicly available filings with the SEC and the information contained therein. Borrower has provided the Frost Group with all the information that the Frost Group has requested in connection with the decision to purchase the Warrants and the Underlying Common Stock. The Frost Group further represents that the Frost Group has had an opportunity to ask questions and receive answers from Borrower regarding the business, properties, prospects, and financial condition of Borrower. All such questions have been answered to the full satisfaction of the Frost Group. Neither such inquiries nor any other investigation conducted by or on behalf of the Frost Group or its representatives or counsel shall modify, amend, or affect the Frost Group’s right to rely on the truth, accuracy, and completeness of the disclosure materials and Borrower’s representations and warranties contained herein.
 
Section 4.9. No Registration. The Frost Group further understands that (i) neither the offering nor the sale of the Warrants or the Underlying Common Stock has been registered under the 1933 Act or any applicable state securities laws in reliance upon exemptions from the registration requirements of such laws, (ii) the Warrants and the Underlying Common Stock must be held by the Buyer indefinitely unless the sale or transfer thereof is subsequently registered under the 1933 Act and any applicable state securities laws, or an exemption from such registration requirements is available, (iii) Borrower is under no obligation to register any of the Warrants or any share of the Underlying Common Stock on the Frost Group’s behalf or to assist the Frost Group in complying with any exemption from registration, and (iv) Borrower will rely upon the representations and warranties made by the Frost Group in this Agreement in order to establish such exemptions from the registration requirements of the 1933 Act and any applicable state securities laws.
 
Section 4.10. Transfer Restrictions. The Frost Group will not transfer any of the Warrants unless such transfer is permitted under the Warrant Certificate and will not transfer any of the Underlying Common Stock unless such transfer is registered or exempt from registration under the 1933 Act and such state securities laws, and, if requested by Borrower in the case of an exempt transaction, the Frost Group has furnished an opinion of counsel reasonably satisfactory to Borrower that such transfer is so exempt. The Frost Group understands and agrees that (i) the certificates evidencing the Warrants and the Underlying Common Stock will bear appropriate legends indicating such transfer restrictions placed upon such securities, (ii) Borrower shall have no obligation to honor transfers of any of the Warrants or the Underlying Common Stock in violation of such transfer restrictions, and (iii) Borrower shall be entitled to instruct any transfer agent or agents for the securities of Borrower to refuse to honor such transfers.
 
Section 4.11. No Solicitation. The Frost Group (i) did not receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available, with respect to the Warrants or the Underlying Common Stock or (ii) was not solicited by any person, other than by representatives of Borrower, with respect to a purchase of the Warrants or the Underlying Common Stock.

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Section 4.12. Principal Address. The Frost Group’s principal executive office is set forth in Section 5.6 below.
 
ARTICLE V
MISCELLANEOUS
 
Section 5.1. Survival of Representations and Warranties; Indemnification.
 
(a) The representations and warranties of Borrower and the Frost Group contained in or made pursuant to this Agreement will survive the execution and delivery of this Agreement and the Initial Closing, and for an additional 12 months subsequent to the Initial Closing, and with respect to the representations and warranties of Borrower only, for the longer of an additional 12 months subsequent to any subsequent Advance and the time period during which any Obligations are outstanding, and with respect to the representations and warranties of the Frost Group, for an additional 12 months subsequent to any issuance of Warrants.
 
(b) Borrower hereby agrees to indemnify and hold harmless the Frost Group and, as applicable, its officers, directors, stockholders, agents and representatives from and against any and all claims, demands, losses, damages, expenses or liabilities (including reasonable attorneys’ fees) due to or arising out of a material breach of any representation, warranty or covenant provided, made or agreed to by Borrower hereunder or under the Note.
 
(c) The Frost Group hereby agrees to indemnify and hold harmless Borrower and, as applicable, its officers, managers, directors, stockholders, members, agents and representatives from and against any and all claims, demands, losses, damages, expenses or liabilities (including reasonable attorneys’ fees) due to or arising out of a material breach of any representation, warranty or covenant provided, made or agreed to by the Frost Group hereunder.
 
Section 5.2. Successors and Assigns. This Agreement is binding upon and inures to the benefit of the parties and their successors and assigns. Borrower may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Frost Group. The Frost Group may assign its rights and obligations hereunder to an entity directly or indirectly controlled by or under common control with the Frost Group.
 
Section 5.3. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument.
 
Section 5.4. Facsimile. A facsimile copy of an original written signature shall be deemed to have the same effect as an original written signature.

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Section 5.5. Captions and Headings. The captions and headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
 
Section 5.6. Notices. Unless otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement will be in writing and will be conclusively deemed to have been duly given (i) when hand delivered to the other party; (ii) upon receipt, when sent by facsimile to the number set forth below or email to the address set forth below; (iii) five business days after deposit in the U.S. mail, postage prepaid and addressed to the other party at the address set forth below; or (iv) the next business day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as set forth below with next business day delivery guaranteed. Each person making a communication hereunder by facsimile or email will promptly confirm by telephone to the person to whom such communication was addressed each communication made by it by facsimile or email pursuant hereto but the absence of such confirmation will not affect the validity of any such communication. A party may change or supplement the addresses given below, or designate additional addresses for purposes of this Section 5.6, by giving the other party written notice of the new address in the manner set forth above.
 
If to Borrower:
 
Modigene Inc.
3 Sapir Street
Weizmann Science Park
Nes-Ziona, Israel 74170
Attention: Chief Executive Officer
Phone: (972) 8 930-0051
Facsimile: (972) 8 930-0091
 
with a copy to:
 
Barack Ferrazzano Kirschbaum & Nagelberg LLP
200 West Madison, Suite 3900
Chicago, Illinois 60606
Attention: Gretchen Anne Trofa, Esq.
Phone: 312-984-3100
Facsimile: 312-984-3150
 
If to the Frost Group:
 
The Frost Group, LLC
4400 Biscayne Blvd.
15th Floor
Miami, FL 33137
Attention: Steven D. Rubin
Phone: 305-575-6015
Facsimile: 305-575-6444

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Section 5.7. Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Borrower and the Frost Group.
 
Section 5.8. Enforceability; Severability. The parties hereto agree that each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law. If one or more provisions of this Agreement are nevertheless held to be prohibited, invalid or unenforceable under applicable law, such provision will be effective to the fullest extent possible excluding the terms affected by such prohibition, invalidity or unenforceability, without invalidating the remainder of such provision or the remaining provisions of this Agreement. If the prohibition, invalidity or unenforceability referred to in the prior sentence requires such provision to be excluded from this Agreement in its entirety, the balance of the Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms.
 
Section 5.9. Governing Law. This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State of Florida.
 
Section 5.10. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY FURTHER ACKNOWLEDGES AND AGREES THAT EACH HAS REVIEWED OR HAD THE OPPORTUNITY TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
 
Section 5.11. Further Assurances; Access. The Frost Group and Borrower will from time to time and at all times hereafter make, do, execute, or cause or procure to be made, done and executed such further acts, deeds, conveyances, consents and assurances without further consideration, which may reasonably be required to effect the transactions contemplated by this Agreement. Upon reasonable written notice, Borrower shall afford the officers, employees and authorized agents and representatives of the Frost Group reasonable access, during normal business hours, to the offices, properties, books, records and such additional financial and operating data and other information regarding the assets, goodwill and business of the Borrower as the Frost Group may from time to time reasonably request.

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Section 5.12. Entire Agreement. This Agreement and all exhibits hereto and thereto constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and no party will be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.
 
Section 5.13. Delays or Omissions. No delay or omission to exercise any right power or remedy accruing to any party under this Agreement, or upon any breach or default of any other party under this Agreement, will impair any such right, power or remedy of such non-breaching or non-defaulting party nor will it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor will any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any provisions or conditions of this Agreement, must be in writing and will be effective only to the extent specifically set forth in such writing. Except as otherwise set forth herein, all remedies, either under this Agreement or by law or otherwise afforded to any party, will be cumulative and not alternative.
 
Section 5.14. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person or entity.
 
Section 5.15. Equitable Relief. The parties hereto recognize that, if such party fails to perform or discharge any of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the other parties. Each party hereto therefore agrees that the other parties are entitled to seek temporary and permanent injunctive relief and any other equitable remedy a court of competent jurisdiction may deem appropriate in any such case.
 
Section 5.16. No Strict Construction. The language used in this Agreement is deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
 
Section 5.17. Public Announcements. No public announcements shall be made by any party hereto relating to the transactions contemplated by this Agreement without the prior written consent of Borrower and the Frost Group, such consent not to be unreasonably withheld, except where required by applicable law; provided, however, that in the event of such a legally required disclosure, the disclosing party will consult with the other consenting party with respect to the text of such disclosure and will provide the other consenting party with a copy of the disclosure prior to its publication.
 
Section 5.18. Expenses. Each party shall bear its own costs and expenses in connection with the transactions contemplated hereby, except to the extent that Lender’s Expenses shall be Obligations subject to the provisions hereof.

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Section 5.19. Exhibits and Schedules. All exhibits, annexes and schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. A disclosure in any particular Schedule to this Agreement or otherwise in this Agreement shall be deemed a disclosure for each and every other Schedule where such disclosure is relevant.
 
[Signatures begin on next page.]

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IN WITNESS THEREOF, this Agreement has been executed by the undersigned as of the day, month and year first above written.
 
Modigene Inc.
 
By:
/s/ Shai Novik
 
Name: Shai Novik
Title: President
 
The Frost Group, LLC
 
By:
/s/ Phillip Frost  
 
Name: Phillip Frost, M.D.
Title: President

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 EX-2 3 v124387_ex2.htm
Exhibit 2
 
NOTE AND SECURITY AGREEMENT
 
$10,000,000
Dated as of __________, 2008
 
FOR VALUE RECEIVED, Modigene Inc., a Nevada corporation with offices at 3 Sapir Street, Weizmann Science Park, Nes-Ziona, Israel 74140 ("Borrower"), pursuant to this secured note (this "Note"), hereby promises to pay to The Frost Group, LLC, a Florida limited liability company ("Lender"), at such place as Lender may designate from time to time in writing, in lawful money of the United States of America, the principal amount of $10,000,000, or such lesser amount as shall equal the outstanding principal balance of the loan (the "Loan") made to Borrower by Lender pursuant to the Credit Agreement, dated as of March 25, 2008, by and among Borrower and Lender (the "Credit Agreement"), and to pay all other amounts due with respect to the Loan on the dates and in the amounts set forth in the Credit Agreement and this Note.
 
1. Definitions. All terms used, but not defined herein, shall have the meanings ascribed to them in the Credit Agreement. In addition, the terms set forth below shall have the following meanings:
 
(a) "Affiliate" means any Person that owns or controls directly or indirectly ten percent (10%) or more of the stock of another entity, any Person that controls or is controlled by or is under common control with such Persons or any Affiliate of such Persons and each of such Person's officers, directors, joint venturers or partners.
 
(b) "Code" means the Uniform Commercial Code as adopted and in effect in the State of Florida, as amended from time to time; provided that if by reason of mandatory provisions of law, the creation and/or 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 Florida, the term "Code" shall also mean the Uniform Commercial Code as in effect from time to time in such jurisdiction for purposes of the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection.
 
(c) "Equity Securities" of Borrower means (1) all common stock, preferred stock, participations, shares, partnership interests, membership interests or other equity interests in and of Borrower (regardless of how designated and whether or not voting or non-voting) and (2) all warrants, options and other rights to acquire any of the foregoing.
 
(d) "Event of Default" shall mean the occurrence of one or more of the following events:
 
(1) Borrower shall fail to make any payment due to Lender under this Note when the same shall become due and payable, whether at maturity, by acceleration or otherwise, within five (5) days after receipt of written notice from Lender that such payment is due and unpaid.


(2) Borrower materially violates any of the material covenants contained in Sections 6 and 7 of this Note and fails to remedy such violation within thirty (30) days after receipt of written notice from Lender that such a violation has occurred.
 
(3) Any material portion of Borrower's assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof; provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower.
 
(4) One or more defaults shall exist under any agreement with any third party or parties which consists of the failure to pay any Indebtedness at maturity or which results in a right by such third party or parties, whether or not exercised, to accelerate the maturity of Indebtedness in an aggregate amount in excess of Two Hundred Fifty Thousand Dollars ($250,000).
 
(5) A judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Fifty Thousand Dollars ($150,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days or more beyond the date such payment is due.
 
(6) Any material representation or material statement that exists now or hereafter in any warranty, representation, statement, certification, or report made to Lender by Borrower pursuant to the Credit Agreement shall prove to have been false or misleading in any material respect when made or furnished.
 
(7) Any material document executed in connection with the Loan ceases to be, or Borrower asserts that such document is not, in any material respect, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms.
 
(8) A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee (or similar official) of Borrower or for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such proceeding.
 
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(9) Borrower commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action in furtherance of any of the foregoing.
 
(e) "Indebtedness" means, with respect to Borrower, the aggregate amount of, without duplication, (a) all obligations of Borrower for borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of Borrower to pay the deferred purchase price of property or services (excluding trade payables aged less than one hundred eighty (180) days), (d) all capital lease obligations of Borrower, (e) all obligations or liabilities of others secured by a Lien on any asset of Borrower, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others guaranteed by Borrower, and (g) any other obligations or liabilities which are required by U.S. generally accepted accounting principles (“GAAP”) to be shown as debt on the balance sheet of Borrower.
 
(f) "Intellectual Property" means all of Borrower's right, title and interest in and to patents, patent rights (and applications and registrations therefor), trademarks and service marks (and applications and registrations therefor), inventions, copyrights, mask works (and applications and registrations therefor), trade names, trade styles, software and computer programs, source code, object code, trade secrets, methods, processes, know how, drawings, specifications, descriptions, and all memoranda, notes, and records with respect to any research and development, all whether now owned or subsequently acquired or developed by Borrower and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic media (but not including embedded computer programs and supporting information included within the definition of "goods" under the Code).
 
(g) "Lien" means any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreement, encumbrance or other lien with respect to any property of the Borrower in favor of any person.
 
(h) "Permitted Indebtedness" means and includes:
 
(1) Indebtedness of Borrower to Lender;
 
(2) Indebtedness arising from the endorsement of instruments in the ordinary course of business;
 
(3) Indebtedness existing on the date hereof and disclosed in the Schedules to the Credit Agreement;
 
(4) Indebtedness of Borrower in an aggregate original principal amount not to exceed $250,000 which is secured by Liens permitted under clause (5) of the definition of Permitted Liens;

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(5) Other Indebtedness in an aggregate amount not exceeding $500,000 at any time; and
 
(6) Extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower.
 
(i) "Permitted Investments" means and includes any of the following investments:
 
(1) Deposits and deposit accounts with commercial banks organized under the laws of the United States or a state thereof to the extent: (i) the deposit accounts of each such institution are insured by the Federal Deposit Insurance Corporation up to the legal limit; and (ii) each such institution has an aggregate capital and surplus of not less than One Hundred Million Dollars ($100,000,000).
 
(2) Investments in marketable obligations issued or fully guaranteed by the United States and maturing not more than one (1) year from the date of issuance.
 
(3) Investments in open market commercial paper rated at least "A1" or "P1" or higher by a national credit rating agency and maturing not more than one (1) year from the creation thereof.
 
(4) Investments pursuant to or arising under currency agreements or interest rate agreements entered into in the ordinary course of business.
 
(5) Investments, not requiring the use of cash or the assumption of liabilities, in joint ventures, partnerships or similar business arrangements entered into in the ordinary course of business in substantially the same industry and growth stage as Borrower.
 
(6) Other investments aggregating not in excess of Five Hundred Thousand Dollars ($500,000) at any time.
 
(j) "Permitted Liens" means:
 
(1) The Lien created by this Agreement.
 
(2) Liens for fees, taxes, levies, imposts, duties or other governmental charges of any kind which are not yet delinquent or which are being contested in good faith by appropriate proceedings which suspend the collection thereof (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower).
 
(3) Liens existing as of the date of this Note and identified in the Schedules to the Credit Agreement.

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(4) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower).
 
(5) Liens upon any equipment or other personal property acquired by Borrower after the date hereof to secure (i) the purchase price of such equipment or other personal property, or (ii) lease obligations or indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property; provided that such Liens are confined solely to the equipment or other personal property so acquired and the proceeds thereof and the amount secured does not exceed the acquisition price thereof.
 
(6) licenses of Intellectual Property entered into in the ordinary course of business (whether as licensor or licensee);
 
(7) bankers' liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business and Liens in favor of financial institutions arising in connection with Borrower's deposit accounts or securities accounts held at such institutions to secure customary fees and charges;
 
(8) any judgment, attachment or similar Lien not resulting in an Event of Default hereunder;
 
(9) the rights of third-party suppliers or other vendors having possession of manufacturing equipment;
 
(10) the rights of lessees, licensees and other third parties (a) having a right to possess or use assets in the ordinary course of business and (b) in property owned by them which is leased to another Person or which another Person has a right to use or possess;
 
(11) with respect to real property, easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the use of such real property in the ordinary course of business; and
 
(12) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described above but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.
 
(k) "Person" means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.

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(l) "Subsidiary" means any corporation or other entity of which a majority of the outstanding equity securities entitled to vote for the election of directors or other governing body (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.
 
2. Payments of Principal, Interest, Etc. The principal amount of the Loan evidenced hereby, together with any accrued and unpaid interest, and any and all unpaid costs, fees and expenses accrued, shall be due and payable on the earlier of (x) subject to the following sentence, March 25, 2009 (the “One-Year Anniversary”), in the event that no Advance has been made prior to such date, (y) March 25, 2013 (the “Five-Year Anniversary”), in the event that an Advance has been made prior to the One-Year Anniversary, and (z) the consummation of a merger, stock exchange or other similar corporate transaction involving the Company that results in the shareholders of the Company immediately prior to such transaction owing less than 50% of the outstanding voting securities of the Company (or the surviving company in a merger) immediately after such transaction (the "Maturity Date"). In the event that the Maturity Date would occur on the One Year Anniversary because no Advance had been made, Borrower shall have the option to extend the Maturity Date to the Five-Year Anniversary by issuing to Lender on the One-Year Anniversary the Warrants described in Section 1.12 of the Credit Agreement.
 
3. Interest. All amounts outstanding from time to time hereunder shall bear interest until such amounts are paid, at the Interest Rate (as defined in the Credit Agreement). Following any Event of Default (including before or after any judgment is entered) and after the Maturity Date, the principal balance outstanding hereunder, together with all such other amounts outstanding hereunder, shall bear interest at a rate per annum equal to the Default Rate (as defined in the Credit Agreement).
 
4. Prepayments. Borrower may prepay in cash, at any time or from time to time, all or any portion of the amounts due hereunder, without penalty or premium; provided, however, that any prepayment (whether voluntary or involuntary) shall be applied first to accrued and unpaid interest and second to outstanding principal and other sums due hereunder.
 
5. Security Interest.
 
(a) Grant of Security Interest. Borrower grants to Lender a valid and continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of the amounts due hereunder and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under the Credit Agreement and this Note. The "Collateral" shall mean and include all right, title, interest, claims and demands of Borrower in and to all personal property of Borrower, including without limitation, all of the following:
 
(1) All goods (and embedded computer programs and supporting information included within the definition of "goods" under the Code) and equipment now owned or hereafter acquired, including, without limitation, all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located.

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(2) All inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's books relating to any of the foregoing.
 
(3) All contract rights and general intangibles (except to the extent included within the definition of Intellectual Property), now owned or hereafter acquired, including, without limitation, goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any kind.
 
(4) All now existing and hereafter arising accounts, contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower's books relating to any of the foregoing.
 
(5) All documents, cash, deposit accounts, letters of credit (whether or not the letter of credit is evidenced by a writing), certificates of deposit, instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including, without limitation, all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Borrower's books relating to the foregoing.
 
(6) Any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property to the extent such proceeds no longer constitute Intellectual Property.
 
(7) Notwithstanding the foregoing, the Collateral shall not include any Intellectual Property; provided, however, that the Collateral shall include all accounts receivables, accounts, and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the "Rights to Payment").

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(b) After-Acquired Property. If Borrower shall at any time acquire a commercial tort claim, as defined in the Code, Borrower shall immediately notify Lender in writing signed by Borrower of the brief details thereof and grant to Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Note, with such writing to be in form and substance satisfactory to Lender.
 
(c) Duration of Security Interest. Lender's security interest in the Collateral shall continue until the payment in full and the satisfaction of all obligations of Borrower under this Note, and the termination of any commitment to fund any Loan, whereupon such security interest shall terminate. Lender shall, at Borrower's sole cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the release contemplated by this Section 5(c). including duly executing and delivering termination statements for filing in all relevant jurisdictions under the Code.
 
(d) Location and Possession of Collateral. The Collateral is and shall remain in the possession of Borrower at its location(s) at 3 Sapir Street, Weizmann Science Park, Nes-Ziona, Israel 74140. Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Lender for perfection of its security interest therein) and so long as no Event of Default has occurred and is continuing, shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; provided that the possession, enjoyment, control and use of the Collateral shall at all time be subject to the observance and performance of the terms of this Note.
 
(e) Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Lender, at the request of Lender, all financing statements and other documents Lender may reasonably request, in form reasonably satisfactory to Lender, to perfect and continue Lender's perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under this Note and the Credit Agreement.
 
(f) Right to Inspect. Lender (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower's usual business hours, to inspect Borrower's books and records and to make copies thereof and to inspect, test, and appraise the Collateral in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.
 
(g) Protection of Intellectual Property. Borrower shall use its commercially reasonable efforts to (i) protect, defend and maintain the validity and enforceability of its material Intellectual Property and promptly advise Lender in writing of material infringements which become known to Borrower, and (ii) not allow any Intellectual Property material to Borrower's business to be abandoned, forfeited or dedicated to the public except in the ordinary course of Borrower's business.

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(h) Other Lien Subordination. Lender agrees that the Liens granted to it hereunder in equipment and other personal property acquired by Borrower after the date hereof ("Third Party Equipment") which secure Indebtedness constituting Permitted Indebtedness under Subclause (4) of the definition of Permitted Indebtedness shall be subordinate to the Liens of existing or future lenders providing equipment financing and equipment lessors for Third Party Equipment or if such lenders prohibit the granting of Liens to other lenders, Lender shall release its Lien on such Third Party Equipment and the proceeds thereof; provided that such Liens are confined solely to the equipment so financed and the proceeds thereof and are Permitted Liens. Upon the expiration of the Liens of such other lenders or the termination of their prohibition of Liens in favor of other lenders, the Third Party Equipment shall automatically become part of the Collateral, and Lender is authorized at that time to amend any filed financing statement(s) to reflect that change. Notwithstanding the foregoing, except as set forth in this Section 5(h), the obligations hereunder shall not be subordinate in right of payment to any obligations to other lenders, equipment lenders or equipment lessors, and Lender's rights and remedies hereunder shall not in any way be subordinate to the rights and remedies of any such lenders or equipment lessors.
 
6. Affirmative Covenants. Borrower covenants that, so long as any amounts are due and payable hereunder to Lender or any commitment to make any Loan still exists, Borrower shall:
 
(a) Maintain its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect. Borrower shall maintain in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a Material Adverse Effect.
 
(b) Comply with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could reasonably be expected to have a Material Adverse Effect.
 
(c) Deliver to Lender: (i) as soon as available, but in any event within ninety (90) days after the end of Borrower's fiscal year or the date of Borrower's board of directors' adoption, Borrower's operating budget and plan for the next fiscal year; (ii) at the time of filing of Borrower's Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, the financial statements of Borrower filed with such Form 10-K; (iii) at the time of filing of Borrower's Form 10-Q with the Securities and Exchange Commission after the end of each of the first three fiscal quarters of Borrower, the financial statements of Borrower filed with such Form 10-Q; and (iv) such other financial information as Lender may reasonably request from time to time. In addition, Borrower shall deliver to Lender (x) promptly upon becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders; and (y) promptly upon receipt of notice thereof, a report of any material legal actions pending or threatened against Borrower or the commencement of any action, proceeding or governmental investigation involving Borrower is commenced that is reasonably expected to result in damages or costs to Borrower of One Hundred Fifty Thousand Dollars ($150,000).
 
(d) Each time financial statements are furnished pursuant to Section 6(c) above, deliver to Lender an Officer's Certificate signed by Borrower’s chief executive officer, president, treasurer or chief financial officer (each a “Responsible Officer”) in form reasonably satisfactory to Lender, certifying such financial statements, Borrower's compliance with the terms of this Note and that no Event of Default has occurred under this Note.

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(e) As soon as possible, and in any event within five (5) business days after the discovery of an Event of Default, provide Lender with an Officer's Certificate signed by a Responsible Officer setting forth the facts relating to or giving rise to such Event of Default and the action which Borrower proposes to take with respect thereto.
 
(f) Make due and timely payment or deposit of all Taxes required of it by applicable law or imposed upon any property belonging to it, and will execute and deliver to Lender, on demand, appropriate certificates attesting to the payment or deposit thereof; provided that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which suspend the collection thereof; provided that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower.
 
(g) Keep and maintain all items of equipment and other similar types of personal property that form any significant portion or portions of the Collateral in good operating condition and repair. Borrower shall not permit any such material item of Collateral to become a fixture to real estate or an accession to other personal property, without the prior written consent of Lender. With respect to items of leased equipment (to the extent Lender has any security interest in any residual Borrower's interest in such equipment under the lease), Borrower shall keep, maintain, repair, replace and operate such leased equipment in accordance with the terms of the applicable lease.
 
(h) Insure its business and the Collateral with policies in a form, with companies, and in amounts determined by the Board of Directors of the Borrower and appropriate for companies of Borrower’s size in Borrower’s industry. All property policies shall have a lender's loss payable endorsement showing Lender as an additional loss payee and all liability policies shall show Lender as an additional insured and all policies shall provide that the insurer must give Lender at least thirty (30) days notice before canceling its policy. At Lender's request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Lender's option, be payable to Lender on account of the Obligations. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy, toward the replacement or repair of destroyed or damaged property; provided that (i) any such replaced or repaired property (a) shall be of equal or like value as the replaced or repaired Collateral and (b) shall be deemed Collateral in which Lender has been granted a security interest and (ii) after the occurrence and during the continuation of an Event of Default all proceeds payable under such casualty policy shall, at the option of Lender, be payable to Lender, on account of the Indebtedness evidenced by this Note and the Credit Agreement. If Borrower fails to obtain insurance as required under Section 6(h) or to pay any amount or furnish any required proof of payment to third persons and Lender, Lender may make all or part of such payment or obtain such insurance policies required in Section 6(h), and take any action under the policies Lender deems prudent. On or prior to the Initial Closing Date and prior to each policy renewal, Borrower shall furnish to Lender certificates of insurance or other evidence satisfactory to Lender that insurance complying with all of the above requirements is in effect.

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(i) Assuming the proper filing of one or more financing statement(s) identifying the Collateral with the proper state and/or local authorities, to the extent perfection may be achieved under the uniform commercial code by filing, the security interests in the Collateral granted to Lender pursuant to this Agreement (i) constitute and will continue to constitute first priority security interests (except to the extent any Permitted Liens may have a superior priority to Lender's Lien under this Agreement) and (ii) are and will continue to be superior and prior to the rights of all other creditors of Borrower (except to the extent of such Permitted Liens).
 
(j) At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Lender to make effective the purposes of this Note, including without limitation, the continued perfection and priority of Lender's security interest in the Collateral.
 
7. Negative Covenants. Borrower covenants that, so long as any amounts are due and payable hereunder to Lender or any commitment to make any Loan still exists, without the prior approval of Lender (which shall not be unreasonably withheld or delayed), Borrower shall not:
 
(a) Change its name, jurisdiction of incorporation, or principal place of business without thirty (30) days prior written notice to Lender.
 
(b) Subject to its rights under Section 7(d) and except in the ordinary course of business, remove any items of Collateral from the Collateral location(s) specified in this Note.
 
(c) Create, incur, assume or suffer to exist any Lien of any kind upon any of the Collateral, whether now owned or hereafter acquired, except Permitted Liens.
 
(d) Convey, sell, lease or otherwise dispose of all or any part of the Collateral to any Person (collectively, a "Transfer"), except for: (i) Transfers of inventory in the ordinary course of business; or (ii) Transfers of worn-out or obsolete equipment.
 
(e) Except as set forth in the Schedules to the Credit Agreement delivered by Borrower as of the date hereof or except in an amount as would not be material, (i) pay any dividends or make any distributions on its Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Securities (other than repurchases pursuant to the terms of employee stock purchase plans, employee restricted stock agreements or similar arrangements in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000)); (iii) return any capital to any holder of its Equity Securities as such; (iv) make any distribution of assets, Equity Securities, obligations or securities to any holder of its Equity Securities as such; or (v) reserve any sum for any purpose listed in clauses (i) through (iv) of this paragraph; provided, however, Borrower may pay dividends payable solely in Common Stock.
 
(f) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto.

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(g) Enter into any contractual obligation with any Affiliate or engage in any other transaction with any Affiliate except upon terms at least as favorable to Borrower as an arms-length transaction with persons who are not Affiliates of Borrower.
 
(h) (i) Except in an amount as would not be material, prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled repayment thereof any Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Note and the Credit Agreement) or lease obligations, (ii) amend, modify or otherwise change the terms of any Indebtedness for borrowed money or lease obligations so as to accelerate the scheduled repayment thereof or (iii) repay any notes to officers, directors or shareholders except as provided for in this Note.
 
(i) Create, incur, assume or permit to exist any Indebtedness except Permitted Indebtedness.
 
(j) Make any investment except for Permitted Investments.
 
(k) Become an "investment company" or a company controlled by an "investment company" under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Loan for that purpose; fail to meet the minimum funding requirements of ERISA; permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower's business or operations or could reasonably be expected to cause a material adverse change, or permit any of its Subsidiaries to do so.
 
(l) Except as currently exists as of the date hereof or as provided under that certain Exclusive License Agreement by Washington University, as licensor, and Modigene Inc., a Delaware corporation and a wholly-owned subsidiary of the Borrower, dated as of February 15, 2007, create, incur, assume or suffer to exist any Lien of any kind upon any Intellectual Property or Transfer any Intellectual Property, whether now owned or hereafter acquired, other than licenses of Intellectual Property entered into in the ordinary course of business.
 
8. Lender's Rights and Remedies.
 
(a) Rights and Remedies. Upon the occurrence of an Event of Default, while such Event of Default is continuing (provided that an Event of Default shall be continuing at all times after any cure period therefor expires), Lender shall not have any further obligation to advance money or extend credit to or for the benefit of Borrower. In addition, upon the occurrence and during the continuance of an Event of Default, the entire unpaid principal sum hereunder, plus any and all interest accrued thereon, plus all other sums due and payable to Lender hereunder shall, at the option of Lender, become due and payable immediately without presentment, demand, notice of nonpayment, protest, notice of protest, or other notice of dishonor, all of which are hereby expressly waived by Borrower. Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Lender may, at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower:

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(1) Make such payments and do such acts as Lender considers necessary or reasonable to protect Lender's security interest in the Collateral. Borrower agrees to assemble the Collateral if Lender so requires and to make the Collateral available to Lender as Lender may designate. Borrower authorizes Lender and its designees and agents to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien which in Lender's determination appears or is claimed to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower's owned premises, Borrower hereby grants Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Lender's rights or remedies provided herein, at law, in equity, or otherwise;
 
(2) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Lender and its agents and any purchasers at or after foreclosure are hereby granted a non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant to the provisions of this Section 8, to use, without charge, Borrower's Intellectual Property, including without limitation, labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights; provided that such license shall only be exercisable in connection with the disposition of Collateral upon Lender's exercise of its remedies hereunder;
 
(3) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Lender determines are commercially reasonable; and
 
(4) Credit bid and purchase all or any portion of the Collateral at any public sale.
 
Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.
 
(b) Effect of Sale. Upon the occurrence of an Event of Default and during the continuation thereof, to the extent permitted by law, Borrower covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part thereof, and, to the full extent legally permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment creditors of Borrower, acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Note, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Lender, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted. Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the property sold or any part thereof under, by or through Borrower, its successors or assigns.

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(c) Power of Attorney in Respect of the Collateral. Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest), the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name to file any notices of security interests, financing statements and continuations and amendments thereof pursuant to the Code or federal law, as may be necessary to perfect, or to continue the perfection of Lender's security interests in the Collateral. Borrower does hereby irrevocably appoint Lender (which appointment is coupled with an interest) on the occurrence of an Event of Default and during the continuation thereof, the true and lawful attorney in fact of Borrower with full power of substitution, for it and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 5 with full power to settle, adjust or compromise any claim thereunder as fully as if Lender were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Lender's possession or under Lender's control; (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral; (d) in Lender's discretion to file any claim or take any other action or proceedings, either in its own name or in the name of Borrower or otherwise, which Lender may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Lender in and to the Collateral; (e) endorse Borrower's name on any checks or other forms of payment or security; (f) sign Borrower's name on any invoice or bill of lading for any account or drafts against account debtors; (g) make, settle, and adjust all claims under Borrower's insurance policies; (h) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Lender determines reasonable; (i) transfer the Collateral into the name of Lender or a third party as the Code permits; and (j) to otherwise act with respect thereto as though Lender were the outright owner of the Collateral.
 
9. Remedies Cumulative, Etc.
 
(a) No right or remedy conferred upon or reserved to Lender hereunder or now or hereafter existing at law or in equity is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and concurrent, and in addition to every other such right or remedy, and may be pursued singly, concurrently, successively or otherwise, at the sole discretion of Lender, and shall not be exhausted by any one exercise thereof but may be exercised as often as occasion therefor shall occur.

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(b) Borrower hereby waives presentment, demand, notice of nonpayment, protest, notice of protest, notice of dishonor and any and all other notices in connection with any default in the payment of, or any enforcement of the payment of, all amounts due under this Note. To the extent permitted by law, Borrower waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.
 
10. Costs and Expenses. Following the occurrence of any Event of Default, Borrower shall pay upon demand all reasonable costs and expenses (including reasonable attorneys' fees and expenses) incurred by Lender in the exercise of any of its rights, remedies or powers under this Note and any amount thereof not paid promptly following demand therefor shall be added to the principal sum hereunder and shall bear interest at the Default Rate from the date of such demand until paid in full.
 
11. Indemnification and Waiver.
 
(a) General Indemnity. Borrower agrees upon demand to pay or reimburse Lender for all liabilities, obligations and out-of-pocket expenses, including Lender's Expenses and reasonable fees and expenses of counsel for Lender from time to time arising in connection with the enforcement or collection of sums due under this Note or the Credit Agreement, and in connection with any amendment or modification of such documents or any "work-out" in connection with such documents. Borrower shall indemnify, reimburse and hold Lender, and each of its respective successors, assigns, agents, attorneys, officers, directors, shareholders, servants, agents and employees (each an "Indemnified Person") harmless from and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person in connection therewith (including reasonable attorneys' fees and expenses), fines, penalties (and other charges of any applicable governmental authority), licensing fees relating to any item of Collateral, damage to or loss of use of property (including consequential or special damages to third parties or damages to Borrower's property), or bodily injury to or death of any person (including any agent or employee of Borrower) (each, a "Claim"), directly or indirectly relating to or arising out of the use of the proceeds of the Loans or otherwise, the falsity of any representation or warranty of Borrower or Borrower's failure to comply with the terms of this Note or the Credit Agreement. The foregoing indemnity shall cover, without limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any item of equipment or product included in the Collateral, (ii) any Claim for infringement of any patent, copyright, trademark or other intellectual property right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Substances on the premises owned, occupied or leased by Borrower, including any Claims asserted or arising under any environmental law, or (iv) any Claim for negligence or strict or absolute liability in tort; provided, however, Borrower shall not indemnify Lender for any liability incurred by Lender to the extent it is the result of Lender's gross negligence or willful misconduct. Such indemnities shall continue in full force and effect, notwithstanding the expiration or termination of this Note. Upon Lender's written demand, Borrower shall assume and diligently conduct, at its sole cost and expense, the entire defense of Lender, each of its partners, and each of their respective, agents, employees, directors, officers, shareholders, successors and assigns against any indemnified Claim described in this Section 11. Borrower shall not settle or compromise any Claim against or involving Lender without first obtaining Lender's written consent thereto, which consent shall not be unreasonably withheld.

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12. Notices. All notices required to be given to any of the parties hereunder shall be in writing and shall be deemed to have been sufficiently given for all purposes when presented personally to such party or sent by hand delivery, facsimile, courier service guaranteeing next business day delivery, or overnight U.S. express mail, return receipt requested, to such party at its address set forth in the Credit Agreement with copies to the parties designated to receive copies in the Credit Agreement. Such notice shall be deemed to be given when received. Any notice of any change in such address shall also be given in the manner set forth above. Whenever the giving of notice is required, the giving of such notice may be waived in writing by the party entitled to receive such notice.
 
13. Severability. In the event that any provision of this Note is held to be invalid, illegal or unenforceable in any respect or to any extent, such provision shall nevertheless remain valid, legal and enforceable in all such other respects and to such extent as may be permissible. Any such invalidity, illegality or unenforceability shall not affect any other provisions of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
 
14. Successors and Assigns. This Note inures to the benefit of Lender and binds Borrower, and their respective successors and assigns, and the words "Borrower" and "Lender" whenever occurring herein shall be deemed and construed to include such respective permitted successors and assigns as provided in the Credit Agreement; provided, however, neither this Note nor any rights hereunder may be assigned by Borrower without Lender's prior written consent, which consent may be granted or withheld in Lender's sole discretion.
 
15. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida. Borrower agrees that any action or proceeding against it to enforce the Note may be commenced in state or federal court in any county in the State of Florida, and Borrower waives personal service or process and agrees that a summons and complaint commencing an action or proceeding in any such court shall be properly served and shall confer personal jurisdiction if serviced by registered or certified mail in accordance with the notice provisions set forth herein.
 
16. Entire Agreement; Construction; Amendments and Waivers.
 
(a) Entire Agreement. This Note and the Credit Agreement taken together, constitute and contain the entire agreement between Borrower and Lender with respect to the subject matter hereof and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, with respect to such subject matter. Borrower acknowledges that it is not relying on any representation or agreement made by Lender or any employee, attorney or agent thereof, other than the specific agreements set forth in this Note and the Credit Agreement. Lender acknowledges that it is not relying on any representation or agreement made by Borrower or any employee, attorney or agent thereof, other than the specific agreements set forth in this Note and Credit Agreement.

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(b) Construction. This Note is the result of negotiations between and has been reviewed by each of Borrower and Lender as of the date hereof and their respective counsel; accordingly, this Note shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower or Lender. Borrower and Lender agree that they intend the literal words of this Note and the Credit Agreement and that no parol evidence shall be necessary or appropriate to establish Borrower's or Lender's actual intentions.
 
(c) Amendments and Waivers. Any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of this Note or of the Credit Agreement shall not be effective without the written consent of Lender and Borrower. Any waiver or consent with respect to any provision of such loan documents shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, waiver or consent affected in accordance with this Section 16(c) shall be binding upon Lender and on Borrower.
 
17. No Set-Offs by Borrower. All sums payable by Borrower pursuant to this Note or the Credit Agreement shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever.
 
 
19. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY.
 
SIGNATURE PAGE FOLLOWS

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.
 
     
By:
  
   
 
Title:
Chief Executive Officer

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 EX-3 4 v124387_ex3.htm
Exhibit 3
SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of July 30, 2008, among Jonathan Fleisig (the "Seller") and the parties set forth on Schedule I hereto (the "Purchasers").
 
RECITALS
 
WHEREAS, the Seller currently owns 263,000 of the issued and outstanding shares of the Common Stock (the “Purchased Securities”), $0.00001 par value, of Modigene Inc., a Nevada corporation (the "Corporation"); and
 
WHEREAS, the Seller desires to sell to the Purchasers and the Purchasers desire to purchase from the Seller, the Purchased Securities in amounts set forth opposite such Purchaser’s name on Schedule I attached hereto, for a purchase price of $1.10 per share of Purchased Security (the "Purchase Price").
 
NOW THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
 
Section 1.  Purchase and Sale of the Purchased Securities. 
 
Subject to the terms and conditions hereof, the Seller hereby agrees to sell to each Purchaser, and each Purchaser hereby agrees to purchase from the Seller, all of the Seller’s right, title and interest in, to and under, the Purchased Securities in amounts set forth opposite such Purchaser’s name on Schedule I attached hereto.
 
Section 2.  Closing.
 
The closing of the sale of the Purchased Securities (the "Closing") shall take place on July 31, 2008, or as soon thereafter as is practicable.
 
Section 3.  Deliveries.
 
A.    Seller Deliverables. At the Closing, upon delivery of the Purchase Price, the Seller shall deliver to each Purchaser
 
(a)
an executed counterpart of this Agreement; and
 
(b)
copies of the letter of transmittal and direction letter to the Corporation providing for delivery of the Purchaser’s respective Purchased Securities to such Purchaser.
 
 
B.       Purchaser Deliverables. At the Closing, each Purchaser shall deliver to the Seller:
 
(i)
an executed counterpart of this Agreement; and
 
(ii)
the applicable Purchase Price by wire transfer of immediately available funds.
 
Section 4.         Representations, Warranties and Acknowledgements of the Seller. 
 
The Seller hereby represents and warrants to each Purchaser, as follows:.
 
A.  Due Authorization; Due Execution; No Conflicts. This Agreement has been duly executed and delivered by the Seller and is the valid and binding obligation of the Seller, enforceable in accordance with its terms. The execution, delivery and performance by the Seller of this Agreement does not (a) violate any provision of law, statute, rule or regulation applicable to the Seller or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body applicable to the Seller or (b) conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute (with due notice or lapse of time or both) a default under any agreement, contract or instrument to which the Seller is a party.
 
B.  Title to the Securities. The Seller good and valid title to the Purchased Securities, free and clear of all liens, claims, encumbrances and similar restrictions. The Seller has the absolute legal right, power and authority to sell to the Purchasers the Purchased Securities, and upon transfer to the Seller of the Purchase Price, the Seller will pass to the Purchasers good and valid title to the Purchased Securities, free and clear of all liens, claims, encumbrances and similar restrictions.
 
C.  Brokers and Finders. No Person acting on behalf or under the authority of the Seller is or will be entitled to any broker’s, finder’s, or similar fee or commission in connection with the transactions contemplated hereby.
 
D.  Acknowledgements. The Seller acknowledges and agrees as follows:
 
(i)
Each of the Purchasers and their affiliates, and other related parties, may now possess and may hereafter possess certain information, including material and/or non-public information ("Information"), concerning the Corporation and its affiliates and/or the Corporation’s securities that may or may not be independently known to the Seller.
 
(ii)
The Seller has entered into this Agreement and agrees to consummate the purchase and sale of the Purchased Securities pursuant hereto notwithstanding that it is aware that Information may exist and that it may not have been disclosed by any of the Purchasers to it, and confirms and acknowledges that neither the existence of any Information, nor the substance of it, nor the fact that it may not have been disclosed by any of the Purchasers to it, is material to it or its determination to enter into this Agreement and to consummate the purchase and sale of the Purchased Securities pursuant hereto. The Seller shall not sue, commence litigation or make any claim arising out of or related to the omission of any of the Purchasers to disclose any Information to the Seller.
 
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(iii)
None of the Purchasers has made and does not make any representation or warranty, whether express or implied, including without limitation with respect to the business, condition (financial or otherwise), properties, prospects, creditworthiness, status or affairs of the Corporation or with respect to the value of any of the Purchased Securities, of any kind or character and none of the Purchasers has any obligations to the Seller, whether express or implied, including without limitation, fiduciary obligations, except as expressly set forth in this Agreement.
 
Section 5.         Representations, Warranties and Acknowledgements of the each of the Purchasers.
 
Each Purchaser, solely in respect of itself, represents to the Seller as follows:
 
A.  Investment Representations.
 
(i)
Such Purchaser is acquiring the Purchased Securities for its own account, for investment and not with a view to the distribution thereof, nor with any present intention of distributing the same.
 
(ii)
Such Purchaser understands that the Purchased Securities have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act, and that they must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from registration.
 
(iii)
Such Purchaser understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to such Purchaser) promulgated under the Securities Act depends on the satisfaction of various conditions and that, if applicable, Rule 144 may only afford the basis for sales under certain circumstances and only in limited amounts.
 
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(iv)
Such Purchaser has had a reasonable time prior to the date hereof to ask questions and receive answers concerning the terms and conditions of the sale and purchase of the Purchased Securities, and to obtain any additional information which the Seller possesses or could acquire without unreasonable effort or expense, and has generally such knowledge and experience in business and financial matters and with respect to investments in securities as to enable such Purchaser to understand and evaluate the risks of such investment and form an investment decision with respect thereto.
 
(v)
Such Purchaser is an "accredited investor," as such term is defined in Rule 501 (the provisions of which are known to such Purchaser) promulgated under the Securities Act.
 
(vi)
Such Purchaser has all requisite power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated by this Agreement and this Agreement constitutes a valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms.
 
B.  Brokers and Finders. No Person acting on behalf or under the authority of such Purchaser is or will be entitled to any broker’s, finder’s, or similar fee or commission in connection with the transactions contemplated hereby.
 
C.  Acknowledgements. Each Purchaser acknowledges and agrees as follows:
 
(i)
The Seller and its affiliates, and other related parties, may now possess and may hereafter possess Information concerning the Corporation and its affiliates and/or the Corporation’s securities that may or may not be independently known to such Purchaser.
 
(ii)
Such Purchaser has entered into this Agreement and agrees to consummate the purchase and sale of the Purchased Securities pursuant hereto notwithstanding that it is aware that Information may exist and that it may not have been disclosed by the Seller to it, and confirms and acknowledges that neither the existence of any Information, nor the substance of it, nor that the fact that it may not have been disclosed by the Seller to it, is material to it or its determination to enter into this Agreement and to consummate the purchase and sale of the Purchased Securities pursuant hereto. Such Purchaser shall not sue, commence litigation or make any claim arising out of or related to the omission of Seller to disclose any Information to such Purchaser.
 
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(iii)
Such Purchaser has appropriate sophistication with respect to the Purchased Securities to undertake their purchase as contemplated herein and has independently and without reliance on the Seller or its affiliates and based on such information as such Purchaser had deemed appropriate in its independent judgment made its own analysis and decision to enter into this Agreement.
 
(iv)
The Seller has not made and does not make any representation or warranty, whether express or implied, including without limitation with respect to the business, condition (financial or otherwise), properties, prospects, creditworthiness, status or affairs of the Corporation or with respect to the value of any of the Purchased Securities, of any kind or character except as expressly set forth in this Agreement and the Seller has no obligations to any Purchaser, whether express or implied, including without limitation, fiduciary obligations, except as expressly set forth in this Agreement.
 
Section 6.  Successors and Assigns. 
 
This Agreement shall bind and inure to the benefit of the parties and their respective successors, assigns, administrative agents, heirs and estate, as the case may be. No party may assign its rights and obligations under this Agreement to any third party without the prior consent of the other parties hereto.
 
Section 7.  Entire Agreement. 
 
This Agreement and the other writings and agreements referred to herein or delivered pursuant hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior arrangements or understandings between such parties with respect thereto. This Agreement shall become effective and be in full force and effect, immediately upon execution and delivery of this Agreement by all parties hereto.
 
Section 8.  Amendments. 
 
The terms and provisions of this Agreement may not be modified or amended, or any of the provisions hereof waived, temporarily or permanently, except pursuant to the written consent of the parties hereto.
 
Section 9.  Counterparts. 
 
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument, but all of which together shall constitute one instrument.
 
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Section 10.  Governing Law. 
 
This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without regard to principles of conflicts of laws.
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be executed as of the date first written above.
 
     
 
SELLER:

/s/ Jonathan Fleisig


PURCHASERS:



Frost Gamma Investments Trust
 
 		  
 		  
 
  By:   /s/ Phillip Frost,M.D.
  Name:  Phillip Frost, M.D.
  Title:   Trustee
 
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Schedule I
List of Purchasers
 
Purchaser
Number of Shares of Common Stock
Frost Gamma Investments Trust
263,000
   
   
   
Totals:
263,000

 
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