Exhibit 10.3
 
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.

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(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.
 
18. Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any obligations
hereunder or commitment to fund remain outstanding. The obligations of Borrower
to indemnify Lender with respect to the expenses, damages, losses, costs and
liabilities described in Section 11 shall survive until all applicable statute
of limitations periods with respect to actions that may be brought against
Lender with respect to this Note have run.
 
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.
 
MODIGENE INC.
     
By:
   
Name:
   
Title:
Chief Executive Officer

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