Exhibit 10.40

                                 SECOND ALLONGE
                                       to
                             AGREEMENT OF AMENDMENT
                                       TO
                     LOAN AND SECURITY AGREEMENT, MORTGAGE,
                              ASSIGNMENT OF LEASES
                               AND OTHER DOCUMENTS

      This modification ("Second Allonge to Agreement of Amendment") made this
27th day of March, 2003 to the Agreement of Amendment to Loan and Security
Agreement, Mortgage, Assignment of Leases and Other Documents effective March
13, 2002, as amended ("Agreement of Amendment") among FLEET NATIONAL BANK,
("Lender"); OSTEOTECH, INC., a Delaware Corporation, CAM IMPLANTS, INC., a
Colorado Corporation, OSTEOTECH, B.V., H.C. IMPLANTS, B.V., OSTEOTECH IMPLANTS,
B.V., OSTEOTECH/CAM SERVICES, B.V., each a Company of The Netherlands,
OSTEOTECH, S.A., and OST DEVELOPPEMENT, S.A., each a Corporation of France
(jointly and severally "Borrower") and to which Agreement of Amendment these
presents are so firmly affixed as to become a part thereof.

      A. Notwithstanding anything to the contrary set forth in the Agreement of
Amendment, the Agreement of Amendment is hereby amended as follows:

      1. Paragraph 3A(2) (relating to the second paragraph of the Revolving
Note) is hereby amended to read as follows:

            Prior to January 1, 2002, this Note bore interest at the option of
            the Borrower, at either Lender's Prime Rate minus three-quarters of
            one percent or the applicable Base LIBOR Rate plus 175 basis points.
            Effective January 1, 2002 and ending on the date Lender receives
            Borrower's Quarterly Report on Form 10Q for the quarter ending March
            31, 2003, this Note bears interest and is repayable in monthly
            installments of interest only (and not principal) at a fluctuating
            interest rate per annum equal at all times to either (a) the
            Lender's Prime Rate (as hereinafter defined) of interest in effect
            from time to time plus 150 basis points, each change in such
            fluctuating rate to take effect simultaneously with the
            corresponding change in such Prime Rate, without notice to the
            undersigned or (b) the applicable Base LIBOR Rate as defined in the
            Loan Agreement plus 400 basis points, at the option of the Borrower
            pursuant to the Loan Agreement. Commencing with the receipt by
            Lender of Borrower's March 31, 2003 financial statements, and
            effective following the filing with the Securities and Exchange
            Commission ("SEC") and delivery to Lender thereafter of Borrower's
            Quarterly Report on Form 10Q for the quarter ending March 31, 2003,
            interest is repayable in accordance with the following at the option
            of Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

<PAGE>

<TABLE>
<CAPTION>
            Ratio                              Option              -or-         Option
            -----                              ------              ----         ------
<S>                                   <C>                                 <C>
            Less than 1.5:1           Base LIBOR +225 bp ("Libor Rate")   Prime Rate - 25bp

            1.5:1 - 2.5:1             Base LIBOR + 300 bp ("Libor Rate")  Prime Rate + 50 bp

            2.5:1 - 3.99:1            Base LIBOR + 350 bp ("Libor Rate")  Prime Rate + 100 bp

            4.0 and greater           Base LIBOR + 400 bp ("Libor Rate")  Prime Rate + 150 bp
</TABLE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender, upon delivery to Lender
                  of either the Borrower's Quarterly Report on Form 10Q or
                  Annual Report on Form 10K, on a rolling four quarter basis;
                  and

            (ii)  Senior Funded Debt means all indebtedness of the Borrower
                  owing to financial institutions, all bonds, notes and
                  debentures payable by the Borrower (unless subordinated to
                  Fleet National Bank), all outstanding letters of credit issued
                  for the account of the Borrower, and all capital leases of the
                  Borrower.

            Each payment is to be made on the first day of each month. In no
            event is the interest rate to be higher than the maximum lawful
            rate. The Prime Rate of Lender means the fluctuating Prime Rate of
            interest established by Fleet National Bank from time to time
            whether or not such rate shall be otherwise published. The Prime
            Rate is established for the convenience of Lender. It is not
            necessarily Lender's lowest rate. In the event that there should be
            a change in the Prime Rate of Lender, such change shall be effective
            on the date of such change without notice to Borrower or any
            guarantor, endorser or surety. Any such change will not effect or
            alter any other term or conditions of this Note.

      2. Paragraph 3B(1) (relating to the second paragraph of the Equipment Loan
Note) is hereby amended to read as follows:

            Prior to January 1, 2002, this Note bore interest, at the option of
            the Borrower at either the Lender's Prime Rate minus one-half of one
            percent or the applicable Base LIBOR Rate plus 175 basis points.
            Effective as of the Conversion Date, the Borrower began monthly
            payments of principal and interest, such principal payments
            repayable in 84 equal monthly installments, the first of such
            payments was made as of the second month following the Conversion
            Date and on the same day of each successive month. As of the
            Conversion Date through December 31, 2001, this Note bore interest
            at the applicable LIBOR Rate (Equipment) defined in the Loan
            Agreement. Effective January 1, 2002 and ending on the date Lender
            receives Borrower's Quarterly Report on Form 10Q for the quarter
            ending March 31, 2003, this Note bears interest and is repayable in
            monthly installments of interest, such interest to be at a
            fluctuating interest rate per annum equal at all times to either (a)
            the Lender's Prime Rate (as hereinafter defined) of interest in
            effect from time to time plus 150 basis points,


                                      -2-
<PAGE>

            each change in such fluctuating rate to take effect simultaneously
            with the corresponding change in such Prime Rate, without notice to
            the undersigned or (b) the applicable Base LIBOR Rate as defined in
            the Loan Agreement plus 400 basis points, at the option of the
            Borrower pursuant to the Loan Agreement. Effective September 10,
            2001 the Borrower was to commence payment of principal, together
            with interest, in 84 equal monthly installments on the same day of
            each successive month thereafter commencing December 1, 2001.
            Borrower is to continue making such principal and interest payments
            and, upon the 84th such installment payment (the "Maturity Date"),
            the full amount of unpaid principal together with unpaid accrued
            interest is due and payable. Commencing with the receipt by Lender
            of Borrower's March 31, 2003 financial statements, and effective
            following the filing with the SEC and delivery to Lender thereafter
            of Borrower's Quarterly Report on Form 10Q for the quarter ending
            March 31, 2003, interest is repayable in accordance with the
            following at the option of Borrower, if the ratio of the Borrower's
            Senior Funded Debt as determined in accordance with generally
            accepted accounting principles consistently applied, to EBITDA as
            more fully described below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                              Option                -or-       Option
            -----                              ------                ----       ------
<S>                                   <C>                                 <C>
            Less than 1.5:1           Base LIBOR +225 bp ("Libor Rate")   Prime Rate - 25bp

            1.5:1 - 2.5:1             Base LIBOR + 300 bp ("Libor Rate")  Prime Rate + 50 bp

            2.5:1 - 3.99:1            Base LIBOR + 350 bp ("Libor Rate")  Prime Rate + 100 bp

            4.0 and greater           Base LIBOR + 400 bp ("Libor Rate")  Prime Rate + 150 bp
</TABLE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender upon delivery to Lender of
                  either the Borrower's Quarterly Report on Form 10Q or Annual
                  Report on Form 10K, on a rolling four quarter basis; and

            (ii)  Senior Funded Debt means all indebtedness of the Borrower
                  owing to financial institutions, or bonds, notes and
                  debentures payable by the Borrower (unless subordinated to
                  Fleet National Bank), all outstanding letters of credit issued
                  for the account of the Borrower, and all capital leases of the
                  Borrower.

            Each payment is to be made on the first day of each month. In no
            event is the interest rate to be higher than the maximum lawful
            rate. The Prime Rate of Lender means the fluctuating Prime Rate of
            interest established by Fleet National Bank from time to time
            whether or not such rate shall be otherwise published. The Prime
            Rate is established for the convenience of Lender. It is not
            necessarily Lender's lowest rate. In the event that there should be
            a change in the Prime Rate of Lender, such change shall be effective
            on the date of such


                                      -3-
<PAGE>

            change without notice to Borrower or any guarantor, endorser or
            surety. Any such change will not effect or alter any other term or
            conditions of this Note.

      3. Paragraph 3C(1) (relating to the second paragraph of the Mortgage Note)
is hereby amended to read as follows:

            Prior to January 1, 2002, this Note bore interest during each
            calendar month at a fixed rate of 7.38% per annum. Effective January
            1, 2002 and ending on the date Lender receives Borrower's Quarterly
            Report on Form 10Q for the quarter ending March 31, 2003, this Note
            bears interest and is repayable in monthly installments of interest
            at a fluctuating interest rate per annum equal at all times to
            either (a) the Lender's Prime Rate (as hereinafter defined) of
            interest in effect from time to time plus 150 basis points, each
            change in such fluctuating rate to take effect simultaneously with
            the corresponding change in such Prime Rate, without notice to the
            undersigned or (b) the applicable Base LIBOR Rate as defined in the
            Loan Agreement plus 400 basis points, at the option of the Borrower
            pursuant to the Loan Agreement. Commencing with the receipt by
            Lender of Borrower's March 31, 2003 financial statements, and
            effective following the filing with the SEC and delivery to Lender
            thereafter of Borrower's Quarterly Report on Form 10Q for the
            quarter ending March 31, 2003, interest is repayable in accordance
            with the following at the option of Borrower, if the ratio of the
            Borrower's Senior Funded Debt as determined in accordance with
            generally accepted accounting principles consistently applied, to
            EBITDA as more fully described below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                              Option              -or-         Option
            -----                              ------              ----         ------
<S>                                   <C>                                 <C>
            Less than 1.5:1           Base LIBOR +225 bp ("Libor Rate")   Prime Rate - 25bp

            1.5:1 - 2.5:1             Base LIBOR + 300 bp ("Libor Rate")  Prime Rate + 50 bp

            2.5:1 - 3.99:1            Base LIBOR + 350 bp ("Libor Rate")  Prime Rate + 100 bp

            4.0 and greater           Base LIBOR + 400 bp ("Libor Rate")  Prime Rate + 150 bp
</TABLE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender upon delivery to Lender of
                  either the Borrower's Quarterly Report on Form 10Q or Annual
                  Report on Form 10K, on a rolling four quarter basis; and

            (ii)  Senior Funded Debt means all indebtedness of the Borrower
                  owing to financial institutions, all bonds, notes and
                  debentures payable by the Borrower (unless subordinated to
                  Fleet National Bank), all outstanding letters of credit issued
                  for the account of the Borrower, and all capital leases of the
                  Borrower.


                                      -4-
<PAGE>

            The first thirteen (13) months of principal and interest was to be
            paid by the Borrower to Lender in equal installments of principal
            and interest in the amount of Thirty-Six Thousand Two Hundred Three
            Dollars - 56/100 ($36,203.56) commencing February 1, 2001 and on the
            same day of each successive month thereafter. Effective as of the
            date of the Agreement of Amendment, remaining principal and interest
            is to be paid during and throughout the period of one hundred seven
            (107) months in equal payments of principal in the amount of
            Nineteen Thousand Three Hundred Twenty-Nine - 36/100 Dollars
            ($19,329.36), together with accrued interest by the Borrower to
            Lender on the first day of each month commencing on April 1, 2002,
            and on the same day of each successive month thereafter. Upon the
            107th such installment (the "Maturity Date"), the full amount of
            unpaid principal, together with unpaid accrued interest is due and
            payable. In no event is the interest rate to be higher than the
            maximum lawful rate. The Prime Rate of Lender means the fluctuating
            Prime Rate of interest established by Fleet National Bank from time
            to time whether or not such rate shall be otherwise published. The
            Prime Rate is established for the convenience of Lender. It is not
            necessarily Lender's lowest rate. In the event that there should be
            a change in the Prime Rate of Lender, such change shall be effective
            on the date of such change without notice to Borrower or any
            guarantor, endorser or surety. Any such change will not effect or
            alter any other term or conditions of this Note.

      4. Paragraph 3D(7) (relating to Section 1.4(k) of the Loan Agreement) is
hereby amended to read as follows:

            Notwithstanding the foregoing provisions of Section 1.4, and in the
            absence of Default, effective January 1, 2002 and ending on the date
            Lender receives Borrower's Quarterly Report on Form 10Q for the
            quarter ending March 31, 2003, interest accrues on the Loan and is
            repayable in monthly installments of interest at a fluctuating
            interest rate per annum equal at all times to either (a) the
            Lender's Prime Rate of interest in effect from time to time plus 150
            basis points, each change in such fluctuating rate to take effect
            simultaneously with the corresponding change in such Prime Rate,
            without notice to the Borrower or (b) the applicable Base LIBOR Rate
            as defined in the Loan Agreement plus 400 basis points ("LIBOR
            Rate"), at the option of the Borrower pursuant to the Agreement of
            Amendment. Commencing with the receipt by Lender of Borrower's March
            31, 2003 financial statements, and effective following the filing
            with the SEC and delivery to Lender thereafter of Borrower's
            Quarterly Report on Form 10Q for the quarter ending March 31, 2003,
            interest is repayable in accordance with the following at the option
            of Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                              Option              -or-          Option
            -----                              ------              ----          ------
<S>                                   <C>                                 <C>
            Less than 1.5:1           Base LIBOR +225 bp ("Libor Rate")   Prime Rate - 25bp

            1.5:1 - 2.5:1             Base LIBOR + 300 bp ("Libor Rate")  Prime Rate + 50 bp

            2.5:1 - 3.99:1            Base LIBOR + 350 bp ("Libor Rate")  Prime Rate + 100 bp

            4.0 and greater           Base LIBOR + 400 bp ("Libor Rate")  Prime Rate + 150 bp
</TABLE>


                                      -5-
<PAGE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender upon delivery to Lender of
                  either the Borrower's Quarterly Report on Form 10Q or Annual
                  Report on Form 10K, on a rolling four quarter basis; and

            (ii)  Senior Funded Debt means all indebtedness of the Borrower
                  owing to financial institutions, all bonds, notes and
                  debentures payable by the Borrower (unless subordinated to
                  Fleet National Bank), all outstanding letters of credit issued
                  for the account of the Borrower, and all capital leases of the
                  Borrower.

            The interest rates herein provided also apply following any
            applicable Conversion Date.

      5. Paragraph 3D(15) (relating to Section 6.15 of the Loan Agreement) is
hereby amended to read as follows:

            Section 6.15 Fees

            A new section 6.15(d) is hereby added as follows:

            6.15(d) Waiver and Amendment Fee. The Borrower is to pay to Lender a
            waiver and amendment fee of $100,000.00 payable upon execution of
            the Second Allonge to Agreement of Amendment.

      6. Paragraph 3D(16) (relating to Section 6.17(h) and Section 6.17(j) of
the Loan Agreement) is hereby amended to read as follows:

            Section 6.17 Additional Covenants

            The following new sections to Section 6.17 are hereby added as
            follows:

            The Borrower is to perform and/or deliver the following, in form and
            substance satisfactory to Lender, not later than 45 days from the
            date of the execution of the Second Allonge to Agreement of
            Amendment in the case of 6.17(h); and not later than April 30, 2003
            in the case of 6.17(j):


                                      -6-
<PAGE>

            6.17(h) Reimbursement of all costs incurred by Lender in conducting
            an appraisal of all domestic Equipment; and

            6.17(j) delivery of an appraisal of all domestic Equipment.

      6. Paragraph 3D(22) (relating to Section 7.15 of the Loan Agreement) is
hereby amended to read as follows:

            Section 7.15 EBITDA Ratio

            Osteotech, Inc. is not to cause or permit any of the following:

                  (a) For the first quarter of 2002, the earnings before
                  interest, taxes, depreciation and amortization of Osteotech,
                  Inc. and its Subsidiaries ("EBITDA") to be less than
                  $1,100,000.00 (the fee payable pursuant to Section 6.15(b),
                  attorneys' fees payable by the Borrower hereunder, appraisal
                  fees, collateral review exam fees, counsel fees payable by the
                  Borrower to implement the pledge of stock set forth in Article
                  4(c) and related expenses ("Excluded Expenses")) are not to be
                  included in this determination);

                  (b) For the second quarter of 2002, EBITDA to be less than
                  $1,920,000.00 (Excluded Expenses are not to be included in
                  this determination);

                  (c) For the third quarter of 2002, the ratio of EBITDA less
                  capital expenditures, less cash taxes (multiplied by 4) to the
                  current maturities of long term debt plus interest expense, to
                  be less than 1:1 (Excluded Expenses are not to be included in
                  this determination);

                  (d) For the fourth quarter of 2002, a minimum EBITDA of
                  $1,570,000.00 (Excluded Expenses are not to be included in
                  this determination);

                  (e) For the first quarter of 2003, the ratio of EBITDA for
                  such quarter less capital expenditures, less cash taxes (all
                  multiplied by 4) to the current maturities of long term debt
                  plus (first quarter interest expense multiplied by 4), to be
                  less than 1:1 (Excluded Expenses are not to be included in
                  this determination);

                  (f) For the second quarter of 2003, the ratio of EBITDA for
                  the first and second quarters of 2003 less capital
                  expenditures, less cash taxes (all divided by 2 and then
                  multiplied by 4) to the current maturities of long term debt
                  plus (interest expense


                                      -7-
<PAGE>

                  for the first and second quarters divided by 2 and then
                  multiplied by 4), to be less than 1:1 (Excluded Expenses are
                  not to be included in this determination);

                  (g) For the third quarter of 2003, the ratio of EBITDA for the
                  first, second and third quarters of 2003 less capital
                  expenditures, less cash taxes (all divided by 3 and then
                  multiplied by 4) to the current maturities of long term debt
                  plus (interest expense for the first, second and third
                  quarters divided by 3 and then multiplied by 4), to be less
                  than 1.25:1 (Excluded Expenses are not to be included in this
                  determination);

                  (h) For the fourth quarter of 2003, the ratio of EBITDA for
                  the first, second, third and fourth quarters of 2003 less
                  capital expenditures, less cash taxes to the current
                  maturities of long term debt plus interest expense for the
                  first, second, third and fourth quarters, determined on a
                  rolling four quarter basis, to be less than 1.25:1 (Excluded
                  Expenses are not to be included in this determination); or

                  (i) Thereafter, the ratio of EBITDA less capital expenditures
                  less cash taxes to the current maturities of long term debt
                  plus interest expense, determined on a rolling four quarter
                  basis, to be less than 1.25:1 (Excluded Expenses are not to be
                  included in this determination).

            Non-compliance by the Borrower with its prior covenant that its
            ratio of EBITDA less capital expenditures, less cash taxes
            (multiplied by 4) to the current maturities of long term debt plus
            interest expense be not less than 1:1 for the third quarter of 2002
            is hereby waived by Lender. Such waiver shall be without prejudice
            in the event of any other Default hereunder. Such waiver is also not
            to be deemed a waiver of any further or other non-compliance or
            Default. Non-compliance by the Borrower with its prior covenant of a
            minimum EBITDA of $1,570,000 for the fourth quarter of 2002 is
            hereby waived by Lender. Such waiver shall be without prejudice in
            the event of any other Default hereunder. Such waiver is also not to
            be deemed a waiver of any further or other non-compliance or
            Default.

            All of the foregoing is to be determined in accordance with
            generally accepted accounting principles consistently applied.

      7. Paragraph 3D(35) (relating to Section 11.4 of the Loan Agreement) is
hereby amended to read as follows:

            Section 11.4 Right to Appraise


                                      -8-
<PAGE>

            11.4(a) Lender has the right to appraise and re-appraise the
            Property or Collateral at any time, including, but not limited to,
            (A) a Collateral review and appraisal of the Property not later than
            April 30, 2002, which has already been completed, and (B) a
            Collateral review and field examination of the Collateral not later
            than May 15, 2003. Lender also has the right to appraise and
            re-appraise the Property in any federally related transaction
            defined under Title XI of the Financial Institutions, Reform,
            Recovery and Enforcement Act of 1989, 12 U.S.C. 3310 et seq. and
            Section V(b) of the Bank Holding Company Act, 12 U.S.C. 1844 et seq.
            or upon:

            (i) Lender having reasonably determined that the quality of the
            credit shall have diminished;

            (ii) there occurs a material adverse change in the condition of the
            real estate market;

            (iii) Lender having reasonably determined that the condition of the
            said Collateral has deteriorated; and/or

            (iv) such reappraisal is required by any regulatory authority having
            jurisdiction over Lender.

            11.4(b) Borrower is to reimburse Lender not more than once each year
            (which limitation does not apply in the event of Default) for any
            reasonable fees, costs, expenses or charges incurred by Lender in
            engaging any such appraiser or reviewing and documenting such
            appraisal or reappraisal and such fees are part of the Debt, payable
            on demand.

            11.4(c) Borrower is to (i) provide any information as reasonably
            requested by Lender in order to perform the appraisal or reappraisal
            and (ii) permit any appraiser designated by Lender to enter the
            Property or other location at any reasonable time for the purpose of
            conducting the appraisal or reappraisal subject to the limitations
            of Section 6.8; the terms of which apply to all appraisers or
            consultants so designated by Lender.

            11.4(d) Borrower agrees that all appraisals, inspections and/or
            reports prepared by Lender or commissioned by Lender are the
            exclusive property of Lender, except that Borrower will be entitled
            to a copy of such appraisal provided that Borrower executes such
            documents reasonably requested by Lender by which Borrower will,
            among other things, hold Lender harmless from any statements or
            other information contained in such appraisals or reports. Nothing
            contained in any such appraisal or reports constitutes a
            representation or warranty by Lender as to any matter or fact with
            respect to the Loan. The Borrower agrees that it will not use or
            rely upon such reports in any way, nor is the Borrower to provide
            the reports or any copies, summaries or outlines of same to any
            third party except by reason of court order or applicable law.


                                      -9-
<PAGE>

      B. Notwithstanding anything to the contrary set forth in the Loan
Agreement, the Loan Agreement is hereby amended as follows:

      1.    The following is added as Section 6.7(e) to the Loan Agreement:

            6.7(e) On or before the tenth (10th) day of each month, the detailed
            aging reports setting forth the amount due and owing on domestic
            Accounts on the Borrower's books as of the close of the preceding
            month, and, upon request, together with a reconciliation report
            satisfactory to Lender showing all sales, collections, payments and
            adjustments to Accounts, together with a current list of names and
            addresses of all account debtors on the Borrower's books as of the
            close of the preceding month.

      3.    The following is added as Section 6.7(f) to the Loan Agreement:

            6.7(f) On or before the tenth (10th) day of each month, a report, in
            form and substance satisfactory to Lender, showing the value of cash
            and marketable securities held by Borrower as of the close of the
            preceding month. In the event that such value, is less than
            $10,000,000, Lender may (a) engage an independent consultant
            acceptable to Lender, at the expense of Borrower, to provide such
            reports as Lender may require concerning the operations, management
            and affairs of Borrower; and (b) Borrower will promptly execute such
            documents as Lender may require, at the expense of Borrower, to
            grant to Lender a first and only priority perfected security
            interest in all of the Borrower's general intangibles, including,
            but not limited to, all of Borrower's patents and patent
            applications, whether or not registered.

      4.    The following is added as Section 6.7(g) to the Loan Agreement:

            On or before the twentieth (20th) day of each of the first two
            months of each fiscal quarter, a statement of the Borrower's
            consolidated and consolidating cash flow and profit and loss as of
            the close of the preceding month, prepared and certified in a manner
            consistent with Section 6.7(b).


                                      -10-
<PAGE>

      Except as specifically modified herein, all of the terms and conditions of
the Agreement of Amendment, as amended, Loan Agreement, and the certificates and
other documents executed in connection therewith, shall remain in full force and
effect and any term in initial capitals and not otherwise defined herein shall
have the meaning ascribed thereto in the Agreement of Amendment.

      IN WITNESS WHEREOF, the parties have signed this Second Allonge to
Agreement of Amendment.

Witness:                                   OSTEOTECH, INC.
                                           A Delaware Corporation

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Executive Vice President


Witness:                                   CAM IMPLANTS, INC.
                                           A Colorado Corporation

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Chief Financial Officer


Witness:                                   OSTEOTECH, B.V.
                                           A Company of The Netherlands

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Managing Director


Witness:                                   H.C. IMPLANTS, B.V.
                                           A Company of The Netherlands

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Managing Director


                                      -11-
<PAGE>

Signatures continued ......

............................ continuation of signatures to Second Allonge to
Agreement of Amendment


Witness:                                   OSTEOTECH IMPLANTS, B.V.
                                           A Company of The Netherlands

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Managing Director


Witness:                                   OSTEOTECH/CAM SERVICES, B.V.
                                           A Company of The Netherlands

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Managing Director

Witness:                                   OSTEOTECH, S.A.

                                           A Corporation of France

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Managing Director


Witness:                                   OST DEVELOPPEMENT, S.A.
                                           A Corporation of France

/s/ Mark H. Burroughs                      By: /s/ Michael J. Jeffries
---------------------                          -----------------------
                                               MICHAEL J. JEFFRIES
                                               Managing Director


Witness:                                   FLEET NATIONAL BANK

/s/ John F. Ganning                        By: /s/ David M. Nilsen
--------------------                           -----------------------
                                               DAVID M. NILSEN
                                               Senior Vice President


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