EXHIBIT 10.6 DISTRIBUTION AND SUPPLY AGREEMENT

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                                                                    EXHIBIT 10.6


                        DISTRIBUTION AND SUPPLY AGREEMENT

      This Distribution and Supply Agreement (the "Agreement") is made as of
September 22, 2003 (the "Effective Date"), by and between Omrix
Biopharmaceuticals, Inc., a corporation organized under the laws of Delaware
(hereinafter referred to as "Omrix"), and Ethicon, Inc., a corporation organized
under the laws of New Jersey, acting by and through its Johnson & Johnson Wound
Management division (hereinafter referred to as "Ethicon," together with Omrix,
the "Parties" and each individually a "Party").

                                    RECITALS

      WHEREAS, Omrix has developed a biologic surgical adhesive in the form of a
frozen liquid fibrin sealant, including biological reagents and a delivery
device, known as "Quixil(TM)", and is in the process of developing a second
generation fibrin sealant product currently known as "FS2"; and

      WHEREAS, Omrix believes that one of the components of Quixil, thrombin,
can be developed as a stand-alone product with few or no process changes; and

      WHEREAS, pursuant to a development agreement dated the date hereof (the
"Development Agreement"), the Parties agree that Omrix will, with certain
testing and other contributions of Ethicon, further develop and obtain marketing
authorizations for a second generation fibrin sealant product, a thrombin
product, a product known as the "Hemostatic Pad Product" containing biologic
component(s) from Omrix and a substrate, and a kitted product containing a
medical device and thrombin known as "Flowable Hemostat"; and

      WHEREAS, this Distribution and Supply Agreement is being entered into to
set out the terms and conditions under which (A) Ethicon will act as Omrix's
exclusive distributor of Quixil and the products developed under the Development
Agreement, in each case in specific territories for hemostasis and sealing
indications for non-consumer applications only, (B) Omrix will supply and
Ethicon will purchase Quixil and the products covered by the Development
Agreement once they are developed and (C) Ethicon will provide the medical
device necessary to produce the Flowable Hemostat and may provide the substrate
necessary to produce the Hemostatic Pad.

      NOW THEREFORE, in consideration of the mutual covenants and consideration
set forth herein, and contingent upon the simultaneous execution of the
Development Agreement, the Parties hereto agree as follows:

      PORTIONS OF THIS EXHIBIT MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
        TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION.


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                                     ARTICLE 1
                                   DEFINITIONS

      As used in this Agreement, the following defined terms shall have the
meanings set out in this Article 1. Capitalized terms used but not otherwise
defined herein, and which are defined in the Development Agreement, shall have
the meanings given such terms in the Development Agreement.

      1.1 "ACCESSORY" shall mean any of the devices or other articles listed on
Exhibit A, as such Exhibit may be amended from time to time by mutual agreement
of the Parties, but in no event shall mean the basic application device
accompanying a Product.

      1.2 "AFFILIATE" shall mean, in relation to either Party hereto, (a) any
entity in which the relevant Party directly or indirectly holds more than 50% of
the voting stock or power, (b) any entity ("Holding Entity") which holds
directly or indirectly more than 50% of the voting stock or power of the
relevant Party, (c) any other entity in which more than 50% of the voting stock
or power is directly or indirectly held by any Holding Entity of the relevant
Party or (d) any entity in which the relevant Party directly or indirectly holds
less than 50% of the voting stock or power but has management control of such
entity in that it has the ability to appoint and remove the majority of the
Board of Directors (or other governing body) of such Party.

      1.3 "APPLICABLE LEGAL REQUIREMENTS" shall mean: (a) any and all federal,
national, supranational, state and local laws, regulations, ordinances, orders
and requirements applicable to the activities under this Agreement; and (b) any
other specifications, guidelines, procedures and directives mutually agreed to
by the Parties, applicable to the Products, Improved Products or Ethicon
Components, as applicable, or activities under this Agreement. In the case of
the United States, Applicable Legal Requirements shall include, without
limitation, all applicable laws, regulations and guidelines of and under the
U.S. Federal Food, Drug, and Cosmetic Act and Public Health Service Act,
including all applicable current Good Manufacturing Practices ("cGMP", see,
e.g., 21 CFR 211); provided that, in the event of any conflict between such
sources of authority, U.S. federal law and regulations shall be given priority.
In the case of the European Union, Applicable Legal Requirements shall include,
without limitation, all applicable regulations and directives of the European
Union, the European Commission and guidelines of the CPMP and all applicable
national legislation; provided that, in the event of any conflict between the
foregoing sources of authority, European Union law shall be given priority.

      1.4 "AVERAGE TRANSFER PRICE" with respect to any Product during any period
shall be determined by adding up all the Quarterly Amounts (as defined in
Exhibit C) with respect to such Product and such time period and dividing the
sum by the aggregate number of units of such Product sold during such period,
provided that the Average Transfer Price shall in no event be less than the
Minimum Transfer Price nor greater than the Maximum Transfer Price then in
effect for such Product.

      1.5 "BANKRUPTCY EVENT" shall mean (a) the person or entity in question
becomes insolvent, or voluntary or involuntary proceedings by or against such
person or entity are instituted in bankruptcy or under any insolvency law, or a
receiver, trustee or custodian is appointed for such person or entity, or
proceedings are instituted by or against such person or


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entity for corporate reorganization or the dissolution of such person or entity;
provided that an involuntary bankruptcy, dissolution or reorganization
proceeding shall not be deemed a Bankruptcy Event unless and until the person or
entity consents to such proceeding or such proceeding shall is not dismissed
within 60 days after the date of filing, or (b) such person or entity makes an
assignment for the benefit of its creditors, or substantially all of the assets
of such person or entity are seized or attached and not released within 60 days
thereafter.

      1.6 "BASELINE COSTS" with respect to a Product shall mean Omrix's actual
costs for the Cost Variables for manufacturing such Product determined based on
the cost at the end of the second twelve (12) month period after the First
Commercial Sale of that Product.

      1.7 "COST VARIABLES" shall mean the variables listed on Exhibit K hereto.

      1.8 "DEVELOPMENT PRODUCTS" shall mean FS2, Thrombin, the Flowable Hemostat
and the Hemostatic Pad Product.

      1.9 "DEVELOPED TERRITORY" shall have the meaning set forth in Section
2.3(a) hereof.

      1.10 "EFFECTIVE DATE" shall have the meaning set forth in the introduction
hereto.

      1.11 "ETHICON COMPONENTS" shall have the meaning set forth in the
Development Agreement.

      1.12 "EVENT OF DEFAULT" shall have the meaning given in Section 11.3
hereof.

      1.13 "FAILURE TO SUPPLY" shall have the meaning set forth in Section 3.3
hereof.

      1.14 "FDA" shall mean the United States Food and Drug Administration.

      1.15 "FIBRIN SEALANT PRODUCTS" shall mean Quixil and FS2.

      1.16 "FIELD" shall mean Non-Consumer Applications (as defined in the
Development Agreement) using human-plasma derived products that are indicated
for (A) hemostasis (with or without other indications) or (B) sealing only;
except that, notwithstanding anything to the contrary in the foregoing, the
Field does not include dentistry applications, regardless of whether hemostasis
and/or sealing is an indication, recombinant products or any device which uses
the patient's own blood.

      1.17 "FISCAL YEAR" shall mean Ethicon's fiscal year, which varies
annually, but which is approximately the period beginning on each January 1 and
ending on the following December 31.

      1.18 "FISCAL QUARTER" shall mean each of Ethicon's fiscal quarters, which
vary annually, but which are the approximately three (3) month periods beginning
on or about January 1, April 1, July 1 and October 1, respectively.

      1.19 "FIRST COMMERCIAL SALE" with respect to any Primary Product shall
mean the date of the first sale of such Product by Ethicon or its Affiliates (or
by Omrix pursuant to an


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order solicited by Ethicon as contemplated by Section 2.5), specifically
excluding sales to an Affiliate of Ethicon unless such Affiliate is the end user
of the Product.

      1.20 "FORCE MAJEURE EVENT" or "FORCE MAJEURE NOTICE" shall have the
meaning ascribed in Section 11.6 hereof.

      1.21 "FS2" shall mean the FS2 set forth in the Development Agreement, as
such FS2 is defined in the first Regulatory Approval for such Product.

      1.22 "FS2 TERRITORY" shall have the meaning as set forth in Section 2.3(a)
hereof.

      1.23 "HEMOSTATIC PAD PRODUCT" shall mean the Hemostatic Pad Product set
forth in the Development Agreement, as such Hemostatic Pad Product is defined in
the first Regulatory Approval for such Product.

      1.24 "IMPROVED PRODUCT" shall have the meaning set forth in the
Development Agreement.

      1.25 "FLOWABLE HEMOSTAT" shall mean the Flowable Hemostat set forth in the
Development Agreement, as such Flowable Hemostat is defined in the first
Regulatory Approval for such Product.

      1.26 "LONG TERM FORECAST" shall mean the ten year non-binding forecast of
Ethicon's requirements for the Products set forth on Exhibit I hereto, as
amended and updated pursuant to Section 4.5(a).

      1.27 "MAXIMUM TRANSFER PRICE" shall mean (i) in the case of Fibrin Sealant
Products, $*** per milliliter in the United States and (Euro)*** per milliliter
in the European Union, Norway, Iceland, Liechtenstein and Switzerland and all
other portions of the Territory other than the United States and (ii) in the
case of Thrombin, $*** per 5000 IU vial (of five (5) milliliters per vial) in
the United States and (Euro)*** per 5000 IU vial (of five (5) milliliters per
vial) in the European Union, Norway, Iceland, Liechtenstein and Switzerland and
all other portions of the Territory other than the United States; provided,
however, that the Maximum Transfer Price shall be subject to increase from time
to time through the adjustments set forth in Section 4.2. Maximum Transfer
Prices for all other Products shall be agreed in writing separately by the
Parties.
                                                                              
      1.28 "MINIMUM TRANSFER PRICE" shall mean (i) in the case of Fibrin Sealant
Products, $*** per milliliter in the United States and (Euro)*** per milliliter
in the European Union, Norway, Iceland, Liechtenstein and Switzerland and all
other portions of the Territory other than the United States (provided that the
foregoing Minimum Transfer Price for Fibrin Sealant Products shall be reduced
by ***% after the first Fiscal Year in which *** milliliters of Fibrin Sealant
Products are sold by Ethicon in the United States) and (ii) in the case of
Thrombin, $*** per 5000 IU vial (of five (5) milliliters per vial) in the
United States and (Euro)*** per 5000 IU vial (of five (5) milliliters per vial)
in the European Union, Norway, Iceland, Liechtenstein and Switzerland and all
other portions of the Territory other than the United States (provided that the
Minimum Transfer Price for Thrombin shall become US$*** per 5000 IU vial (of
five(5)                                                                        


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milliliters per vial) in the United States and (Euro)*** per 5000 IU vial (of
five (5) milliliters per vial) in the European Union, Norway, Iceland,
Liechtenstein and Switzerland and all other portions of the Territory other
than the United States after the earlier of calendar year 2010 or the first
calendar year in which *** vials of Thrombin are sold by Ethicon, subject to
adjustment as contemplated in the following proviso); provided, however, that
the Minimum Transfer Price shall be subject to proportional increase from time
to time based on the adjustments set forth in Section 4.2. Minimum Transfer
Prices for all other Products shall be agreed in writing separately by the
Parties.              

      1.29 "NET SALES" with respect to any Product shall mean the amounts
actually invoiced by Ethicon or its Affiliates from the sale of such Product to
non-Affiliates, less the following amounts: (i) discounts, including cash
discounts, or rebates actually allowed and taken, (ii) credits or allowances
actually granted upon claims or returns regardless of the Party requesting the
return, (iii) freight charges paid for delivery if separately invoiced to the
buyer, and (iv) taxes or other governmental charges levied on or measured by the
invoiced amount (but not direct taxes on income) whether absorbed by the billing
or the billed Party; provided that, with respect to any Product sold by Ethicon
in a transaction in which any other product(s) are also provided, the Net Sales
for the Product or Improved Product will be calculated by multiplying the actual
Net Sales of the combination product by the fraction (A/A+B), where A is the
invoiced price of such Product or Improved Product as if sold separately by
Ethicon and B is the aggregate of the invoiced prices of each of the other
product(s) included in the combination product as if each such product was sold
separately by Ethicon; provided further that the amount deemed to be the invoice
price for a product shall be the average amount invoiced in good faith by
Ethicon for such product when sold individually over the prior twelve (12) month
period.

      1.30 "OMRIX FACILITY" shall mean each of (a) Omrix's facility in Belgium
for Products to be distributed in the European Union (as it is to be expanded in
2004, except Portugal), Norway, Iceland, Liechtenstein and Switzerland (b)
Omrix's facility in Israel for Products to be distributed in the United States,
Canada and other portions of the Territory and (c) any other facility owned or
operated by Omrix in connection with this Agreement or any of the Products.

      1.31 "PRIMARY PRODUCTS" shall mean any Products, other than Accessories
and components of Accessories.

      1.32 "PRODUCTION PLAN" shall have the meaning set forth in Section 4.6
hereof.

      1.33 "PRODUCTS" shall mean Quixil, the Development Products, the Improved
Products and Accessories.

      1.34 "PURCHASE PRICE" shall have the meaning set forth in Section 4.2
hereof.

      1.35 "QUALITY AGREEMENT" shall have the meaning set forth in Section
3.2(e) hereof.

      1.36 "QUIXIL" shall have the meaning set forth in the Development
Agreement.

      1.37 "QUIXIL QUALITY AGREEMENT" shall have the meaning set forth in
Section 3.2(e) hereof.


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      1.38 "QUIXIL TERRITORY" shall have the meaning set forth in Section 2.3(a)
hereof.

      1.39 "REGULATORY AGENCY" with respect to a given country shall mean the
regulatory agency or notified body in such country that performs the same or
equivalent function as the FDA in the United States. Any reference to a rule or
requirement of the FDA herein shall refer, if the circumstances make it
applicable, to the equivalent rule or requirement of any Regulatory Agency. For
avoidance of doubt, FDA shall be considered a Regulatory Agency for purposes of
this definition.

      1.40 "REGULATORY APPROVAL" shall mean EU Marketing Clearance or U.S.
Marketing Clearance, as applicable, each as defined in the Development
Agreement, or with respect to Products in any other country, the filing and
receipt of all other registrations, approvals, licenses and authorizations
required for the marketing and sale of the Product in such country, excluding
any dossiers or applications required for pricing or reimbursement.

      1.41 "REGULATORY CHANGES" shall mean any changes in or to a Product, its
components or its Regulatory Approval imposed by the applicable Regulatory
Agency subsequent to Regulatory Approval, except for changes to Quixil required
for Omrix to meet the milestone set forth in Section 4.1(b) hereof. For the
avoidance of doubt, changes which Omrix makes for product quality, compliance
requirements, ongoing improvement programs related to viral inactivation
processes and productivity improvements not imposed by the applicable Regulatory
Agency shall not be considered Regulatory Changes.

      1.42 "REMEDIATION PLAN" shall have the meaning set forth in Section 3.3
hereof.

      1.43 "RESTRICTED COUNTRIES" shall mean, (i) with respect to Quixil and
FS2, the United States, Canada, Japan and any country in which Omrix has,
pursuant to a written contract in existence as of the Agreement Date, appointed
a distributor for Quixil and (ii) with respect to any of the Development
Products (other than FS2), Japan; provided that, if Omrix ceases to have a
written contract with such distributor, the country excluded as a result of such
contract with such distributor shall cease to be a Restricted Country. Exhibit H
lists, by Product, all countries in which Omrix has a written contract with a
distributor with respect to such Product as of the Agreement Date.

      1.44 "SHORTFALL AMOUNT" with respect to a given Product shall mean (A) 50%
of the Average Transfer Price for such Product multiplied by (B) the excess of
the minimum quantity of such Product required to by purchased by Ethicon
hereunder over the quantity of such Product actually purchased by Ethicon for
the applicable period.

      1.45 "SPECIFICATIONS" shall mean the specifications for the design,
composition, product safety assurance, manufacture, packaging, and/or quality
control of any Product, as set forth on Exhibit B attached hereto and made a
part hereof, as the same may hereafter be modified pursuant to the Development
Agreement or by mutual agreement in writing but prior to the first applicable
Regulatory Approval for the applicable product.

      1.46 "TERRITORY" for a Product, shall mean the territory for such product
set forth in Section 2.3.


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      1.47 "THROMBIN" shall mean the Thrombin set forth in the Development
Agreement, as such Thrombin is defined in the first Regulatory Approval for such
Product.

      1.48 "UP FRONT DIFFERENCE" shall mean *** U.S. Dollars ($***).

                                    ARTICLE 2
                  DISTRIBUTION AND SUPPLY RELATIONSHIP; ESCROW

      2.1 APPOINTMENT; PAYMENT. Subject to the terms and conditions of this
Agreement, Omrix hereby appoints Ethicon, and Ethicon hereby accepts
appointment, as Omrix's exclusive distributor of Quixil in the Quixil Territory,
FS2 in the FS2 Territory and the Development Products and Improved Products in
the Developed Territory (other than Improved Products arising from Covered
Improvements to FS2, for which Omrix appoints Ethicon solely in the FS2
Territory); provided that, Ethicon shall have no rights to market, sell or
distribute the Products outside the Field and may only market, sell and
distribute Improved Products within the Field after the Parties mutually agree
on annual minimum purchases, transfer prices and/or net sales percentages
applicable to such Improved Products; provided that the parties shall use good
faith efforts to reach agreement on such terms; and provided, further, that in
no event shall Omrix agree to sell the Improved Products to a third party on
terms that are less favorable to Omrix than those proposed by Ethicon. Omrix
understands and agrees that Ethicon may utilize its Affiliates to act as
distributors hereunder in certain geographic areas, provided that, such
Affiliates are subject to the same restrictions, limitations and requirements as
are applicable to Ethicon, and Ethicon shall at all times remain responsible for
performance of all of its and its Affiliates' obligations under this Agreement.
In consideration of the foregoing appointment and the execution by Omrix of this
Agreement, Ethicon shall pay Omrix within three (3) business days of the
Effective Date *** U.S. Dollars ($***).

      2.2 SUPPLY.

            (a) Supply of Products. Omrix shall supply the Products to Ethicon
on an exclusive basis in the Field in the Territory applicable to such Product
as set forth in Section 2.3 (the "Applicable Territory") in accordance with and
subject to the terms and conditions of this Agreement. In addition, Omrix shall
supply the Accessories to Ethicon on a non-exclusive basis in the Applicable
Territory for sale or distribution in connection with Primary Products in
accordance with and subject to the terms and conditions of this Agreement.
Ethicon shall not solicit or accept orders for any Product from any prospective
purchaser located outside of the Applicable Territory for said Product or for
use outside the Field, subject to applicable law. Ethicon shall not engage in
any advertising or promotional activities relating to the Products directed
primarily to customers located outside the Applicable Territory for such Product
or promoting the use of any Products outside the Field. Ethicon may not deliver
or tender (or cause to be delivered or tendered) any Product outside of the
Applicable Territory for such Product or outside the Field. Notwithstanding the
preceding three sentences, if Ethicon receives an unsolicited order for Products
from a prospective purchaser located outside the Applicable Territory for such
Product and such purchaser is likely to resell such Products back into the
Applicable Territory, then Ethicon may accept such order. Omrix agrees that it
will not: (i) engage in an any advertising or promotional activities relating to
any Product for use in the Field and directed primarily to customers located
inside the Applicable Territory for said Product; (ii)


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solicit or accept orders for any Product from any prospective purchaser located
in the Applicable Territory for said Product for use in the Field, or (iii)
deliver or tender (or cause to be delivered or tendered) any Product for use in
the Field in the Applicable Territory for said Product. Omrix will take all
reasonable measures to ensure that all of its distributors of the Products
comply with the exclusive rights granted by Omrix to Ethicon in the Territory
related to each particular Product under this Agreement, subject to applicable
law.

            (b) Supply of Ethicon Components. Ethicon shall supply the Ethicon
Components, if any, to Omrix within ninety (90) days of Omrix's orders therefor.
Ethicon hereby agrees to supply Omrix with sufficient amounts and quality of
Ethicon Components, if applicable, in order for Omrix to meet its supply
obligations to Ethicon with respect to the Hemostatic Pad Product and Flowable
Hemostat hereunder, and to do so in the time frame necessary for Omrix to meet
its delivery obligations to Ethicon hereunder. Ethicon further covenants that
all Ethicon Components shall be delivered to Omrix with a remaining shelf-life
equal to or greater than two (2) years.

      2.3 TERRITORY.

             (a) For purposes of this Agreement, the Territory with respect to
each Primary Product shall be as follows:

                  (i) Quixil: The European Union (including the countries
joining in 2004 but excluding Portugal), Norway, Iceland, Liechtenstein and
Switzerland (collectively, the "Quixil Territory").

                  (ii) FS2: The European Union (including the countries joining
in 2004), Norway, Iceland, Liechtenstein and Switzerland (the "FS2 Territory").

                  (iii) All other Products: The European Union (including the
countries joining in 2004), Norway, Iceland, Liechtenstein, Switzerland, the
United States of America and Canada and all their territories and possessions
(including Puerto Rico) (the "Developed Territory").

             (b) The Territory with respect to any Accessory shall be the same as
the Territory for any Primary Product with which such Accessory can be used.

      2.4 ADDITIONAL TERRITORIES. If Omrix desires to commercially exploit any
Product in any country that is not within the Territory for such Product and is
not in the Restricted Countries, it shall notify Ethicon in writing of such
intention, and thereafter Ethicon shall have three (3) months to request, by
written notice to Omrix, that such country be added to the Territory for such
Product. If Ethicon desires to commercially exploit any Product in any country
that is not within the Territory for such product and is not in the Restricted
Countries, it shall notify Omrix in writing of such intention. Upon either
event, the Parties shall then negotiate in good faith the minimum number of
sales of such Product by Ethicon in such country for the first twenty-four (24)
months following the four month anniversary of Regulatory Approval in such
country; provided that, Ethicon shall pay the necessary costs of Regulatory
Approval for such Product in such additional country. If Ethicon fails to make
such election


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within the applicable time frame, if the Parties fail to reach an agreement in
writing on the terms of adding such country to the Territory within thirty (30)
days of Ethicon's written notice to Omrix contemplated above, if Ethicon fails
to file for Regulatory Approval in such country within one-hundred twenty (120)
days of reaching agreement on terms that contemplate that Ethicon will be
responsible for filing for Regulatory Approval in such country, or if Ethicon
fails to timely pay (or reimburse Omrix) for any necessary costs of such
Regulatory Approval, Ethicon shall have no rights to such Product in such
country and Omrix shall be free to sell such Product in such country directly or
through any third party distributor.

      2.5 INTERIM SALES AGENCY AGREEMENT.

            (a) General. Notwithstanding anything else in this Agreement, with
respect to each country within the Territory in which Ethicon does not have the
regulatory and other legal authorizations, licenses, approvals and other
clearance necessary for Ethicon to distribute or sell as principal
("Distribution Clearance") any Product (each such country, an "Agency Country"
with respect to such Product), Ethicon shall be Omrix's exclusive sales
representative for such Product (an "Agency Product" with respect to such
country) in that country and Ethicon shall not distribute or sell as principal
any such Product prior to Distribution Clearance. Within any Agency Country,
Omrix shall not solicit directly or indirectly from any party any purchases of
products that are Agency Products with respect to such country. Ethicon may
solicit and transmit orders to Omrix for Agency Products, but Ethicon shall not
be authorized to bind Omrix to any proposals, orders or agreements of any kind.
At such time as Ethicon shall have received Distribution Clearance for a Product
within a country that was theretofore an Agency Country, Ethicon shall
automatically cease to serve as Omrix's sales representative and shall
simultaneously become the exclusive distributor of such Product within such
country, as contemplated by the other provisions of this Agreement.

            (b) Commissions. In consideration of Ethicon's sales efforts under
this Section 2.5, Omrix will pay Ethicon a sales commission of *** percent
(***%) of Omrix's Net Sales of the applicable Agency Product(s) in the Agency
Country. Commissions for a calendar quarter will be paid by Omrix to Ethicon
within 40 days after the end of such calendar quarter.

            (c) Reporting. Omrix will provide Ethicon with monthly quantity
reports ("Monthly Quantity Reports") of all Agency Products sold by Omrix in
each Agency Country. Omrix will provide the Monthly Quantity Reports no more
than 60 days after the end of each calendar month. The Monthly Quantity Reports
will be provided to Ethicon in electronic format and in accordance with Omrix's
standard accounting practices. The Monthly Quantity Reports will contain the
following information: a) Omrix's unique customer identification number; b) end
user customer name, address, city, state, and zip code; c) product code and
description; d) selling unit of measure; e) quantity sold in such month; and f)
indication of positive or negative transaction (credit or return, etc.). Ethicon
may hire, at its own expense, a mutually-agreed-upon independent third party to
audit the Net Sales reported by Omrix under this Section 2.5(c) no more than
once per calendar year and, if Omrix's records are insufficient for the
foregoing purposes or any such inspection discloses an underpayment of five
percent (5%) or more of the amount of payments actually due for any period,
then, in addition to any other rights and remedies available to Ethicon under
this Agreement, Omrix will pay Ethicon's reasonable cost of


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such inspection after receipt of the bill or invoice for such inspection. Omrix
will provide reasonable access to applicable records and reasonably cooperate
with such third party auditor. Any adjustments to Commissions will be made
promptly following completion of the audit.

             (d) Promotional Materials. Omrix shall provide Ethicon with such
types and quantities of Omrix's standard promotional materials for the Agency
Products as Ethicon may reasonably request in order to promote and solicit
orders for such Products. No such promotional materials for any Agency Country
shall refer to Ethicon if such reference is prohibited by the Applicable Legal
Requirements in such country.

            (e) Termination of UK Employee. Ethicon may within ten (10) business
days of the Effective Date, in its sole discretion, hire Jonathan Gillespie on
terms and conditions similar to his current employment with Omrix. If Ethicon
chooses to hire Mr. Gillespie, Ethicon shall be responsible for obtaining a
waiver or for paying for costs resulting from Mr. Gillespie's contractual notice
provisions or any statutory rights solely to the extent arising from the
termination of Mr. Gillespie by Omrix, if any, up to a maximum of $50,000. Omrix
shall be responsible for all other costs arising from the termination of Mr.
Gillespie's employment. If Ethicon chooses not to hire Mr. Gillespie within ten
(10) business days of the Effective Date, Ethicon will reimburse Omrix solely
for the costs of terminating Mr. Gillespie, including without limitation any
contractual or statutory rights of Mr. Gillespie relating to his termination, up
to a maximum of $50,000. Ethicon will pay Omrix's invoice therefor within
forty-five (45) days of receipt. Omrix agrees to indemnify Ethicon for any
liabilities arising from Mr. Gillespie's employment and any costs arising from
the termination of Mr. Gillespie's employment in excess of the $50,000
reimbursed by Ethicon.

      2.6 EXCLUSIVE PURCHASE OF PRODUCT. For the period of the above
distribution rights, Ethicon agrees that Omrix will be Ethicon's and its
Affiliates' exclusive supplier of human plasma derived hemostats and sealants
for use in the Field in the Territory; provided that, Omrix agrees that its sole
and exclusive remedy for a breach of this provision shall be to terminate this
Agreement and/or seek damages against Ethicon (and not any of its Affiliates)
and Omrix shall not be entitled and hereby waives any right to seek injunctive
relief or any damages against any of Ethicon's Affiliates. For purposes of this
Section 2.6 only, "Territory" where used without reference to one or more of the
Products shall mean all the Territories set forth in Section 2.3 applicable to
one or more of the Products. For the avoidance of doubt, the foregoing
restriction restricts Ethicon and its Affiliates from internally sourcing human
plasma derived hemostats and sealants for use in the Field in the Territory. If
such exclusivity is not enforceable under applicable law and Ethicon or its
Affiliates sell or distribute human plasma derived hemostats and sealants of any
party other than Omrix in a country in the Territory, and Ethicon fails to cure
such breach or nonperformance within sixty (60) days after receiving written
notice from Omrix thereof, Omrix may make non-exclusive, upon written notice to
Ethicon made within sixty (60) days of the end of such cure period, (A) if such
country is in the European Union, all exclusivity rights of Ethicon hereunder in
the portion of the Territory that is in the European Union, (B) if such country
is the United States, all exclusivity rights of Ethicon hereunder in the United
States and (C) if such country is not in the European Union and is not the
United States, all exclusivity rights of Ethicon hereunder in such country;
provided that such termination of exclusivity shall be Omrix's sole and
exclusive remedy for any breach of this Section 2.6. The provisions of this


                                       10
<PAGE>

Section 2.6 shall not be interpreted in a manner that would require Ethicon to
violate Applicable Legal Requirements in order to maintain its exclusivity
rights hereunder. The foregoing shall not restrict Ethicon's ability to obtain
products to replace Products for which Ethicon or Omrix has exercised its rights
of termination under this Agreement. The provisions of this Section 2.6 are
subject to the provisions of Section 2.8(d) in all respects.

      2.7 DISTRIBUTION BY OMRIX. Nothing in this Agreement will limit the right
of Omrix to market, sell and distribute the Products outside the Field anywhere
in the world, under any names, trademarks, logos, and other trade dress (other
than any names, trademarks, logos and trade dress of Ethicon or Johnson &
Johnson or their Affiliates) as Omrix in its sole discretion may determine;
provided however, Omrix shall not directly or indirectly (through its
Affiliates, agents or licensees) market, sell or distribute any product under
the Quixil name or trademark anywhere in the Territory other than Products sold
to Ethicon or Agency Products. Omrix shall not have the right, however, to
distribute Products which incorporate an Ethicon Component.

      2.8 CARVE OUT AND EFFECTS THEREOF.

            (a) Carve Out. Notwithstanding anything to the contrary in this
Agreement, Ethicon shall have no rights in the United States, Canada or any of
their territories or possessions (including Puerto Rico) to FS2 or Improved
Products arising from Covered Improvements to FS2 or any Improvements to Quixil;
provided that, Omrix agrees that it and its Affiliates will not commercialize
FS2 in the Field in the United States and its territories and possessions
(including Puerto Rico) or enter into any transaction for the commercialization
(including without limitation, the supply, sale, marketing, promotion,
licensing, or distribution) of FS2 in the Field in the United States and its
territories and possessions (including Puerto Rico) without including Ethicon as
its exclusive distributor in the Field under terms and conditions that are
substantially similar to this Agreement, except as otherwise permitted by this
Section 2.8 unless the Restriction Sunset (as defined in Section 2.8(b) below)
occurs.

            (b) Expansion of the FS2 Territory. The FS2 Territory under this
Agreement may be expanded to include the United States, Canada and their
territories and possessions (including Puerto Rico) upon the mutual agreement in
writing of Omrix and Ethicon on the same terms and conditions as those set forth
herein; provided that any such agreement shall require, at the least, that (i)
Ethicon shall pay an additional fee equal to the Up Front Difference upon such
mutual written agreement, (ii) Section 5(c) of the Development Agreement shall
be amended and restated in its entirety to read: "a milestone of ***
dollars ($***) shall be paid by Ethicon upon the earlier of (A) First
Commercial Sale of FS2 in the United States or (B) forty-five (45) days after US
Marketing Clearance of FS2, less any amounts paid under this Section 5(c) prior
to the amendment which inserted this revised Section 5(c)", (iii) all purchases
of FS2 shall be counted towards Ethicon's Fibrin Sealant minimum purchase
requirements under Section 4.4 herein and (iv) references to "FS2" shall be
deleted from the first and fourth lines of Section 1.43; provided further that,
after the four (4) year period commencing on the Effective Date, if no mutual
agreement has yet occurred to so expand the FS2 Territory on the foregoing
terms, and Omrix subsequently proposes to Ethicon an agreement to so expand the
FS2 Territory on the foregoing terms, but Ethicon has not agreed in writing
within thirty (30) days of Omrix's proposed agreement to so expand the FS2
Territory on such terms, then Omrix shall be free to


                                       11
<PAGE>

grant such rights in the United States, Canada and all their territories and
possessions (including Puerto Rico) to a third party (the occurrence of such
thirtieth (30th) day, , the "Restriction Sunset").

            (c) Improvements to Quixil and Commercialization thereof. For the
avoidance of doubt, notwithstanding anything to the contrary herein or in the
Development Agreement, Omrix shall be free to develop Improvements (as defined
in the Development Agreement) to Quixil, but may not commercialize such
Improvements in the Field (i) in the Quixil Territory, except as provided herein
and in the Development Agreement and (ii) in the United States, Canada and all
their territories and possessions (including Puerto Rico) without including
Ethicon as its exclusive distributor in the Field for all products resulting
from such Improvements, until the date of the Restriction Sunset ; provided
that, notwithstanding anything to the contrary herein or in the Development
Agreement, Omrix shall be free to commercialize any such improvements which are
(A) modifications to the delivery device accompanying Quixil in the United
States, Canada and all their territories and possessions (including Puerto Rico)
and/or (B) any variations to Quixil required by a Regulatory Agency in the
United States, Canada and all their territories and possessions (including
Puerto Rico).

            (d) Limited Waiver of Restriction on Ethicon. Notwithstanding
anything to the contrary herein, so long as Ethicon does not have exclusive
distribution rights to FS2 in the United States, Canada and their territories
and possessions (including Puerto Rico), then Ethicon and its Affiliates shall
be permitted to source and commercialize fibrin sealant products which compete
directly with Quixil and/or FS2 in the United States, Canada and all their
territories and possessions (including Puerto Rico), whether or not in the
Field; provided that Ethicon has given sixty (60) days prior notice to Omrix of
its intent to develop such competing product and Ethicon and its Affiliates
shall not commercialize such fibrin sealant products for six (6) months after
providing such notice to Omrix. In the event Ethicon provides such notice or
commences such development or commercialization without such notice, then each
of the following shall be deemed terminated and of no further force or effect:
(A) the proviso in clause (a) of Section 2.8, (B) clause (b) of Section 2.8 and
(C) the restrictions on commercialization by Omrix in the United States, Canada
and all their territories and possessions (including Puerto Rico) set forth in
Section 2.8(c)(ii).

      2.9 NO FURTHER GRANTS OR LICENSES. Except for the rights expressly granted
by this Agreement, no further licenses are granted to Omrix or Ethicon in or
under this Agreement, either expressly or by implication.

                                    ARTICLE 3
                    LAUNCH; PROMOTION; PRODUCTION FACILITIES

      3.1 LAUNCH AND COMMERCIAL EXPLOITATION OF THE PRODUCTS.

            (a) Omrix expressly understands and acknowledges that, subject to
Section 2.6 above, Ethicon may be currently involved in, and in the future may
evaluate and/or become involved in, other business opportunities and products
for the hemostasis and sealant markets,


                                       12
<PAGE>

some of which products may compete with the Products. Subject to Section 2.6
above, Ethicon in its sole discretion may, both now and during the term of this
Agreement, alone or in other business or research arrangements with third
parties, sell such competing products and otherwise participate in these and
other markets. Omrix acknowledges that the Development Costs, milestone
payments, purchase prices, and other consideration paid or to be paid by Ethicon
hereunder and under the Development Agreement, together with Ethicon's agreement
to make minimum purchases hereunder, constitute complete and adequate
consideration for Omrix entering into this Agreement and shall constitute
complete satisfaction of any duty, whether express or implied, which could be
imposed upon Ethicon to commercially exploit its rights under this Agreement and
are accepted by Omrix in lieu of any other minimum efforts obligation on the
part of Ethicon. Omrix acknowledges, understands and agrees, that Omrix shall
not challenge in any subsequent claim or action any decision or action regarding
the commercial exploitation of the Products made or taken by any director,
officer, employee or individual acting as agent of Ethicon or its Affiliates in
what such individual subjectively believes to be the best interests of Ethicon
(or such Affiliate), and that they are not required to take into account the
interests of Omrix, unless such decision or action constitutes a material breach
by Ethicon of any of its obligations under this Agreement.

            (b) Ethicon shall have the right to use a contract sales force for
the commercial exploitation of the Products.

      3.2 REGULATORY & QUALITY OVERSIGHT.

            (a) Regulatory Approval: Omrix will use commercially reasonable
efforts to obtain and maintain the necessary Regulatory Approval to market and
sell each Product in the Territory in the Field subject to Ethicon's obligations
to pay for certain costs pursuant to Section 4.1 of the Development Agreement.
For purposes of this Agreement, Omrix shall produce the various Products under
cGMPs and Ethicon shall produce the Ethicon Components under cGMPs.

            (b) Quality Oversight. Ethicon quality and manufacturing staff will
have the right to inspect the Omrix Facilities during regular business hours
and, upon reasonable written notice, may review submissions to Regulatory
Agencies before they are submitted and any correspondence/citations from such
Regulatory Agencies, provided that Omrix has no obligation to delay the
submission or consider any input from Ethicon. Omrix shall give Ethicon copies
of any such submissions in advance of filing them and shall promptly provide
Ethicon with copies of such citations and correspondence from Regulatory
Agencies. Omrix quality and manufacturing staff will have the right to inspect
Ethicon's facilities in which Ethicon Components are manufactured and in which
the Products are held and stored, during regular business hours.

            (c) Agency Relations. Omrix may request that Ethicon cooperate with
Omrix in establishing and maintaining a positive relationship with Regulatory
Agencies concerning the applicable Product and Ethicon will then use
commercially reasonable efforts to do so.

            (d) Changes to Specifications. Omrix shall give Ethicon reasonable
advance written notice of any change, improvement or modification (i) to any
specification for an


                                       13
<PAGE>

Accessory or (ii) to the method, location or process of manufacture or
production of any Accessory or any raw material used in its manufacture, but in
the case of this clause (ii), only if such change, improvement or modification
would require the submission of any amendment, filing or other documentation
with any regulatory authority or otherwise materially adversely affect the
Accessory, the Primary Products with which it is used, or the marketability of
either. The Parties acknowledge that Specifications for Products and the Ethicon
Components are addressed separately under the Development Agreement.

            (e) Quality Agreement. Attached as Exhibit D is the quality
agreement for Quixil as agreed by the Parties (the "Quixil Quality Agreement").
The Parties may enter into a separate quality agreement on a Product-by-Product
basis or may amend the Quixil Quality Agreement to apply to such Product and the
regulations applicable thereto (each, a "Quality Agreement"), which Quality
Agreement shall supercede any contradictory provisions of this Section 3.2 with
respect to the applicable Product.

      3.3 REMEDIATION PLAN. In the event that Omrix encounters production or
other problems that are causing, or Omrix believes are significantly likely to
cause, Omrix to fail to meet its supply obligations hereunder ("Supply
Disruptions"), Omrix will provide Ethicon with written notice of a potential
supply disruption. Within sixty (60) days of such notice, Omrix will develop in
good faith a remediation plan ("Remediation Plan") to redress or avoid such
Supply Disruptions. Ethicon shall have the right to consult and comment on the
Remediation Plan and Omrix will consider its comments in good faith. Upon
completion of the Remediation Plan, Omrix will use its best efforts to
successfully implement the Remediation Plan. Nothing in this Section 3.3 shall
limit Omrix's liability for failure to supply Products in accordance with the
terms of this Agreement. Further, in the event of a Failure to Supply (as
defined below), Omrix will pay certain liquidated damages as set forth in
Section 4.7 hereof. For the purposes of this Agreement, "Failure to Supply"
shall mean, with respect to any Product, (A) the failure of Omrix to both (1)
supply at least sixty-five percent (65%) of Ethicon's binding orders for such
Product which conform to the Forecast for a consecutive three (3) month period
(the "Initial Shortage Period") and (2) supply at least eighty percent (80%) of
Ethicon's binding orders for such Product which conform to the Forecast for the
nine (9) month period that commences with the beginning of the Initial Shortage
Period (such nine month period, a "Shortage Period") or (B) the failure of Omrix
to supply at least ninety percent (90%) of Ethicon's binding orders for such
Product which conform to the Forecast during any Fiscal Year (such a Fiscal
Year, also a "Shortage Period"). Any such shortage under clauses (A) or (B)
below ninety percent (90%) of the quantities ordered by Ethicon pursuant to
binding orders which conform to the Forecast during the Shortage Period is
referred to herein as a "Failure to Supply Shortfall" for such Product (for
instance, if the Binding Orders for the Shortage Period were for 100 units of a
Product and Omrix supplied only 65 units of that Product during that period, the
Failure to Supply Shortfall would be 25 units of that Product).

      3.4 SUPPLY AGREEMENT. Omrix agrees to use commercially reasonable efforts
to enter into (and maintain during the term of this Agreement) a binding supply
agreement on or prior to December 31, 2003 for the supply human plasma with NABI
Biopharmaceuticals substantially in the form attached hereto as Exhibit M.


                                       14
<PAGE>

                                    ARTICLE 4
      MILESTONE PAYMENTS, MINIMUM REQUIREMENTS AND PAYMENT AND ORDER TERMS

      4.1 FIBRIN SEALANT MILESTONE PAYMENTS. Ethicon shall pay to Omrix the
following payments upon the following milestones:

            (a) Upon the first anniversary of the First Commercial Sale of
Quixil by Ethicon (or by Omrix pursuant to an order solicited by Ethicon as
contemplated by Section 2.5), Ethicon shall pay Omrix *** U.S. Dollars (US$***);
and

            (b) Within thirty (30) days following EU Marketing Clearance (as
defined in the Development Agreement) for Quixil to be used to support
hemostasis in general surgery as per the EU Guideline CPMP/BPWG/153/00, Ethicon
shall pay Omrix *** U.S. Dollars (US$***).

      4.2 INVOICES; PURCHASE PRICE; ADJUSTMENTS.

            (a) Invoices. Within five (5) days of the end of each calendar
month, Omrix will invoice Ethicon for the Purchase Price (as defined below) for
each Product and Accessory actually received by Ethicon in compliance with the
terms and provisions of this Agreement in such month. Ethicon shall pay each
such invoice in full within forty-five (45) days of receipt thereof. Omrix may
offer, in its sole discretion to Ethicon, on an invoice-by-invoice basis, that
invoices paid in full within ten (10) days of receipt of such invoice shall be
discounted two percent (2%) from the amount stated on such invoice. The purchase
price (the "Purchase Price") for each Product purchased from Omrix during the
Initial Term shall be as set forth on Exhibit C.

            (b) Cost Adjustments. Within forty-five (45) days of the end of the
second twelve (12) month period after the First Commercial Sale of a Product
hereunder, the Parties shall agree on the Baseline Costs for such Product or
shall appoint an independent expert to make such determination.

                  (i) On the second August 15 (or the next business day if such
date is not a business day) after the end of such second twelve (12) month
period and the August 15 (or the next business day if such date is not a
business day) of every second calendar year thereafter, if there has been a net
increase in the unit costs of Omrix's Cost Variables for a Product since the
determination of the Baseline Costs or the date of the most recent price
adjustment increase pursuant to this sentence, the Parties will use good faith
efforts to agree to an increase in the sample prices, Maximum Transfer Price and
Minimum Transfer Price for such Product for the subsequent full Fiscal Years
(commencing on or around January 1, 2006) that will preserve that portion of
Omrix's percentage gross profit margin on such Product that is solely based on
Omrix's Cost Variables for which there has been a net increase in unit costs,
and any independent expert determining the extent of such cost changes shall
consider only net changes in the unit costs of the Cost Variables (Schedule 4.2
hereto sets forth an example of such calculations).


                                       15
<PAGE>

                  (ii) In addition, if Omrix effectuates a change in
manufacturing a Product as a result of Regulatory Changes at any time, the
Parties will use good faith efforts to agree to a change in the sample price,
Maximum Transfer Price and Minimum Transfer Price for such Product to reflect
variable costs or savings actually incurred by Omrix as a result of such
Regulatory Changes (e.g., if such that additional costs or savings to Omrix of
$*** per ml would increase or decrease the sample prices, Maximum Transfer Price
and Minimum Transfer Price by $*** per ml); provided that, any equipment costs
required to effectuate such Regulatory Changes included in such calculation
shall be amortized for the remaining useful life of such equipment.

                  (iii) Further, if Omrix incurs an extraordinary increase in
raw materials and/or supply costs of more than *** percent (***%) for a Product,
the Parties will use good faith efforts to agree to an increase in the sample
price, Maximum Transfer Price and Minimum Transfer Price for such Product to
reflect such increased costs of raw materials and to preserve that portion of
Omrix's percentage gross profit margin on such Product that is solely based on
an extraordinary increase in raw materials or supply costs of more than ***
percent (***%); provided that such price change shall not be effective until at
least six (6) months after the Effective Date or the most recent adjustment for
extraordinary increases in raw materials costs pursuant to this sentence. If,
subsequent to an increase in the sample price, Maximum Transfer Price or Minimum
Transfer Price to reflect an extraordinary increase in raw materials costs,
those additional costs are subsequently reduced, the Parties will use good faith
efforts to agree to a reduction in the sample price, Maximum Transfer Price and
Minimum Transfer Price for the applicable Product to reflect such reductions in
those costs; provided that such price change shall not be effective until at
least six (6) months after the increase in prices for such extraordinary
increases in raw materials costs pursuant to the prior sentence.

If the Parties cannot agree on the amount of a change in sample price, Maximum
Transfer Price and Minimum Transfer Price for a Product contemplated above
within six (6) weeks of such price change being proposed by a Party, the Parties
shall mutually agree on an independent expert to be responsible for making a
final determination of whether and to what extent the sample price, Maximum
Transfer Price and Minimum Transfer Price will be adjusted and both Parties
agree to abide by the determination of such independent expert. In all cases,
the Parties shall equally share in the cost of such expert. In no event shall
the sample prices, Maximum Transfer Prices and Minimum Transfer Prices be
adjusted to less than the original sample prices, Maximum Transfer Prices and
Minimum Transfer Prices set forth under this Agreement. If the Parties cannot
agree on Baseline Costs, price changes or on an independent expert to determine
such matters within nine (9) weeks of the end of the period from which such
Baseline Costs would be computed or of a proposal of a price change by a Party,
the dispute shall be handled through dispute resolution pursuant to Article 13
hereof.

      4.3 SHIPPING TERMS. All shipments of Products shall be EXW (Ex Works)
(INCOTERMS 2000) Omrix's facility in Israel for all Products other than those
shipped to the European Union, for which the shipping terms shall be EXW Omrix's
facility in Belgium. Each shipment shall be accompanied by a packing slip which
describes the Products and states the purchase order number. To the extent there
is any conflict or inconsistency between this Agreement and any purchase order,
purchase order release, confirmation, acceptance or any similar document, the
terms of this Agreement shall govern.


                                       16
<PAGE>

      4.4 PURCHASES AND MINIMUMS.

            (a) Ethicon agrees to purchase the following quantities of Fibrin
Sealant Products:

                  (i) Ethicon hereby orders from Omrix *** units (1 ml
equivalent) of Quixil, for delivery on or prior to December 31, 2003 and agrees
that this clause (i) constitutes a binding "purchase order" for that amount of
Quixil; provided that Omrix shall reallocate units so ordered to the extent
necessary to supply customers pursuant to Section 2.5 hereof. For the avoidance
of doubt, sales of Quixil in Agency Countries through December 31, 2003 shall
count toward Ethicon's *** unit order for Quixil in this clause.

                  (ii) A minimum quantity of *** units (1 ml equivalent) of
Fibrin Sealant Products during the period commencing on January 1, 2004 and
ending September 30, 2005. Of that *** units (1 ml equivalent) Ethicon hereby
agrees to order *** units (1 ml equivalent) of Quixil for delivery on or prior
to June 30, 2004, an additional *** units (1 ml equivalent) of Quixil for
delivery on or prior to September 30, 2004 and an additional *** units (1 ml
equivalent) of Quixil for delivery on or prior to December 31, 2004. The units
ordered pursuant to clause (i) above shall not count toward the requirements of
this clause (ii). Sales of Fibrin Sealant Products in Agency Countries
commencing on January 1, 2004 and ending September 30, 2005 shall count toward
Ethicon's *** unit purchase requirement of this clause (ii) as Fibrin Sealant
Products purchased by Ethicon. For the period from October 1, 2005 through
December 31, 2005, Ethicon will purchase a minimum quantity of Fibrin Sealant
Products equal to ***% of the quantity of units of Fibrin Sealant sold to
Ethicon in Fiscal Year 2004 (***% of the quantity of units of Fibrin Sealant
purchased by Ethicon in Fiscal Year 2004 prorated by ***%), provided that, for
the avoidance of doubt, such quantities shall include any amounts sold pursuant
to Section 2.5 hereof.

                  (iii) Commencing in Fiscal Year 2006, and every subsequent
Fiscal Year during the Term, a minimum quantity of units (1 ml equivalent) of
Fibrin Sealant Products equal to *** percent (***%) of the quantity of units of
Fibrin Sealant Products sold by Ethicon in the previous Fiscal Year.

            (b) Ethicon agrees to purchase the following quantities of Thrombin
as a stand alone product:

                  (i) A minimum quantity of *** units (each unit being a 5,000
IU vial) during the period commencing on the First Commercial Sale of Thrombin
by Ethicon and ending twenty-four (24) months thereafter.

                  (ii) Commencing in the first full Fiscal Year following such
twenty-four (24) month period in clause (i), and every subsequent Fiscal Year
during the Term, a minimum quantity of units of Thrombin equal to *** percent
(***%) of the quantity of units of Thrombin sold by Ethicon in the previous
Fiscal Year; provided that the minimum for the remainder of the Fiscal Year in
which such twenty-four (24) month period expires shall be *** percent (***%) of
the quantity of units of Thrombin sold by Ethicon in the second twelve (12)


                                       17
<PAGE>

months of such twenty-four (24) month period, prorated based on the portion of
such Fiscal Year then remaining.

             (c) If for any reason Ethicon fails to purchase the applicable
minimum requirements above for a Product during the corresponding period
described in Section 4.4 (as applicable, the "Minimum Period"), then Ethicon
shall pay the Shortfall Amount to Omrix within forty-five (45) days of the end
of the applicable Minimum Period and Omrix's sole and exclusive alternative
remedy for failure to pay such amount shall be to unilaterally terminate by
written notice to Ethicon within sixty (60) days of Ethicon's failure to pay the
Shortfall Amount within the forty-five (45) day period set forth above provided
that Ethicon has not cured such failure to pay the Shortfall Amount within such
sixty (60) day period (1) this Agreement with respect to such Product only or
(2) Ethicon's rights of exclusivity with respect to distribution of such
Product, at Omrix's sole discretion. In the event Ethicon fails to purchase the
minimum quantities of a Product for three consecutive Minimum Periods, then
Omrix's sole and exclusive remedy, other than collection of the Shortfall
Amounts as contemplated above, under this Agreement shall be the right to
terminate this Agreement by written notice to Ethicon within sixty (60) days of
the end of the third consecutive Minimum Period with respect to such Product
only. In no event shall Ethicon's failure to meet any minimum requirements of
Section 4.4 constitute a breach of this Agreement; provided that the Parties
each acknowledge that failure to pay the resulting Shortfall Amount shall
constitute a material breach of this Agreement. Omrix shall not be obligated to
deliver any Products in exchange for the Shortfall Amount.

            (d) In the event that Ethicon's annual unit sales volume of Fibrin
Sealant Produc