EXHIBIT 10.33

                           LOAN AND SECURITY AGREEMENT

     This  Loan  and  Security  Agreement,   as  it  may  hereafter  be  amended
("Agreement"),  among SUMMIT BANK having offices at 210 Main Street, Hackensack,
New Jersey, 07601 ("Lender"), OSTEOTECH, INC., a Delaware Corporation; OSTEOTECH
INVESTMENT CORPORATION, a New Jersey Corporation; CAM IMPLANTS, INC., a Colorado
Corporation;   OSTEOTECH,   B.V.,  H.C.  IMPLANTS,  B.V.,  CAM  IMPLANTS,  B.V.,
OSTEOTECH/CAM  SERVICES,  B.V.,  each a  Company  of The  Netherlands;  and  OST
DEVELOPPEMENT,  a Corporation  of France  (jointly and severally  "Borrower") is
effective on June 10, 1999.


STATEMENTS

     A. The Borrower has requested financial accommodation(s) from Lender.

     B. Lender is willing to render the requested financial  accommodation(s) to
the Borrower in connection with the Borrower's business and on certain terms and
conditions.

     C. To secure the financial accommodation(s), the Borrower is willing, among
other things, to grant certain security interests to Lender in certain assets of
the Borrower.

     NOW,   THEREFORE,   in  consideration   of  the  promises,   covenants  and
understandings  set forth in this Agreement and the benefits to be received from
the performance of such promises,  covenants and  understandings,  and for other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

DEFINITIONS

     "Accounts Receivable" - as defined in Exhibit "A"

     "Actual Knowledge" - as defined in Section 5.1(b)

     "Base Rate" - as defined in Section 1.4(g)

     "Collateral" - as defined in Article 4

     "Current Ratio" - as defined in Section 7.13

     "Debt" - as defined in Article 3

     "Default" - as defined in Section 9.1

     "Delivered Financials" - as defined in Section 5.4(a)

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     "EBITDA" - as defined in Section 7.15

     "Environmental Laws" - as defined in Section 5.15(c)

     "Equipment" - as defined in Exhibit "A"

     "ERISA" - as defined in Section 5.10

     "General Intangibles" - as defined in Exhibit "A"

     "Inventory" - as defined in Exhibit "A"

     "LIBOR Rate" - as defined in Section 1.4(a)

     "Loan" - as defined in Section 1.4(e)

     "Loan I" - as defined in Section 1.1

     "Loan II" - as defined in Section 1.2

     "Loan III" - as defined in Section 1.3

     "Mortgage" - as defined in Exhibit "B"

     "Note" - as defined in Section 1.4(e)

     "Operating Documents" - as defined in Section 5.1(c)

     "OSHA" - as defined in Section 5.11

     "Plan" - as defined in Section 5.10

     "Project" - as defined in Section 1.1(a)

     "Property" - as defined in Section 1.1(a)

     "Re-set Date" - as defined in Section 1.5(d)

     "Subsidiary" - as defined in Section 5.16(d)

     "Tangible Net Worth" - as defined in Section 7.14

     "Working Capital" - as defined in Section 7.12

AGREEMENTS

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                               ARTICLE 1. THE LOAN

Section 1.1  The Revolving Loan (Loan I)

     1.1(a) Lender  agrees to provide,  at one time or from time to time, at the
request of the Borrower,  loans to Osteotech,  Inc. in an aggregate amount up to
Five Million  Dollars  ($5,000,000.00)  on a revolving loan basis ("Loan I") for
the purpose of working capital and capital expenditures and costs related to the
construction  of an approximate  65,000 square foot addition (the  "Project") to
real property and  improvements  located at 201 Industrial Way West,  Eatontown,
New Jersey (the  "Property").  Loan I is to be payable on the earlier of (i) May
31, 2001 or (ii) upon a Default.

     1.1(b) In the absence of Default, the Borrower has the option to extend the
term of Loan I for an additional  four (4) year term commencing on May 31, 2001,
exercisable  by written  notice to Lender,  not less than thirty (30) days prior
thereto.  If such  option is so  exercised,  the  outstanding  balance of Loan I
becomes  repayable in forty-eight (48) equal monthly  installments of principal,
together with accrued interest.

Section 1.2  The Mortgage Loan (Loan II)

     1.2(a)  Lender agrees to lend to Borrower the principal sum of Four Million
Five  Hundred  Thousand  ($4,500,000.00)  Dollars on a term basis ("Loan II") to
provide permanent mortgage financing of the Project. The funding of Loan II will
take place  following  the date of receipt by the  Borrower of an  unconditional
certificate  of  occupancy  for the  Project  in form and  substance  reasonably
satisfactory to Lender  provided that such  certificate of occupancy is obtained
within eighteen (18) months from the date hereof.

     1.2(b) The principal of Loan II is to be repaid in one hundred twenty (120)
consecutive equal monthly  installments of principal and interest,  based upon a
20  year  mortgage  amortization,  on the  first  day in  each  calendar  month,
commencing on the first day of the second month following the funding of Loan II
and each  subsequent  payment  is to be made on the same day of each  successive
month. Upon the 120th installment, the full amount of unpaid principal, together
with unpaid accrued interest, will be due and payable.

Section 1.3   The Equipment Loan (Loan III)

     1.3(a) Lender agrees to provide to Borrower loans in an aggregate amount up
to  Seventeen  Million  ($17,000,000.00)  Dollars  during a period not to exceed
eighteen  (18) months  following  the date  hereof for the purpose of  financing
equipment purchases,  clean-rooms,  other costs related to the Project and other
capital expenditures in the United States with advances of up to 80% of the cost
thereof based upon the submission by Borrower to Lender of invoices  therefor in
form reasonably  satisfactory to Lender ("Loan

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III"). Interest only will be paid on a monthly basis during the draw-down period
of eighteen (18) months from the date hereof.

     1.3(b) Upon the  expiration  of the  draw-down  period  provided in Section
1.3(a)  hereof,  the  outstanding  balance  of Loan  III is to be  automatically
converted  to a term loan to be  repaid  over a full  seven (7) year  amortizing
period  in  equal  monthly  installments  of  principal  together  with  accrued
interest.

     1.3(c)  Lender  will  maintain  a  schedule  of assets  purchased  with the
proceeds of Loan III,  which  schedule  is to identify  which of the assets is a
"fixture"  and which of the  assets is  "equipment"  within  the  meaning of the
Uniform  Commercial  Code  and  applicable  real  estate  law.  The form of such
schedule is attached  hereto as Exhibit "C." Such  schedule  will be attached to
UCC-1 financing  statements to be filed in such recording offices  designated by
Lender and  substantially in the form attached hereto as Exhibit "D" prior to or
simultaneously with the purchase of such assets. As principal payments are made,
the  amortization  will be equally  apportioned  to the  scheduled  fixtures and
equipment.  Lender will release its security interest on a particular fixture or
equipment selected by the Borrower upon payment in full of that part of Loan III
allocated to such fixture or equipment  pursuant to this amortized schedule upon
request of Borrower.

Section 1.4  Interest Rate and Other Provisions Relating to The Loan

     1.4(a)  Interest  accrues  on Loan I at  Borrower's  option,  at either (i)
Lender's floating Base Rate minus three-quarters of one percent (3/4%) per annum
or (ii) the 30, 60 or 90 day Base LIBOR (London  Interbank  Offered Rate),  plus
175 basis  points (the "LIBOR  Rate") as  selected  by the  Borrower  during the
initial  monthly  interest only payable  period.  Upon  conversion,  pursuant to
Section  1.1(b)  above,  interest  accrues at a fixed annual rate based upon 175
basis  points  above  the four (4) year  United  States  Treasury  Note  Rate as
published in The Wall Street Journal three (3) days prior to such conversion.

     1.4(b)  Interest  accrues  on Loan II on a fixed  rate based upon 190 basis
points above the ten (10) year United States  Treasury Note Rate as published in
the Wall Street Journal three (3) days prior to the date of funding.

     1.4(c)  Interest  accrues on Loan III at Borrower's  option,  at either (i)
Lender's  floating Base Rate minus  one-half of one percent  (1/2%) per annum or
(ii) the LIBOR  Rate,  as selected by the  Borrower  during the initial  monthly
interest only payable period. Upon conversion, pursuant to Section 1.3(b) above,
interest  accrues at a fixed  annual rate based upon 175 basis  points above the
seven year United  States  Treasury  Note Rate as  published  in The Wall Street
Journal three (3) days prior to the conversion date.

     1.4(d)  Each  change  in the  floating  interest  rate  is to  take  effect
simultaneously  with a  corresponding  change in the Base Rate without notice to
Borrower.  Interest  is  to  be  calculated  on a  daily  basis  with  each  day
representing 1/360th of a year in arrears.

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     1.4(e)  Loan I, Loan II and Loan III  (collectively  the  "Loan") are to be
evidenced by  promissory  note(s)  (the "Note") in the form  required by Lender,
attached hereto as Exhibit "E."

     1.4(f) In the event of Default,  interest  accrues on the Loan and the Debt
at a rate  equal to two (2%)  percent  above  the Base Rate as  defined  in this
Agreement.  Borrower  acknowledges  that: (i) such additional rate is a material
inducement to Lender to make the Loan;  (ii) Lender would not have made the Loan
in the absence of the agreement of the Borrower to pay such default rate;  (iii)
such additional rate represents  compensation  for increased risk to Lender that
the Loan will not be repaid;  and (iv) such rate is not a penalty and represents
a  reasonable  estimate of (a) the cost to Lender in  allocating  its  resources
(both personnel and financial) to the ongoing review, monitoring, administration
and  collection of the Loan and (b)  compensation  to Lender for losses that are
difficult to ascertain.

     1.4(g) The Base Rate of Lender means the fluctuating  Base Rate of interest
established  by Lender  from  time to time  whether  or not such  rate  shall be
otherwise published. The Base 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 Base 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 any
promissory note or this Agreement.

     1.4(h) Interest (and principal) is payable by Borrower on the Loan pursuant
to the terms of the Note and the terms of this Agreement.

     1.4(i) Borrower is to maintain its main operating  accounts with Lender and
is to maintain  sufficient  balances therein to enable Lender to directly charge
all scheduled payments next due to Lender.

     1.4(j) In no event is the interest rate or other charges of this  Agreement
to exceed the  highest  rate  permissible  under law. If any  provision  of this
Agreement or any other instrument executed in connection thereto be construed or
held to permit  the  collection  of or to require  the  payment of any amount of
interest in excess of that  permitted by applicable  law, the provisions of this
paragraph  control and override any contrary or  inconsistent  provision of this
Agreement or instrument.  The intention of the parties is to conform strictly to
the  applicable  laws relating to maximum rates of interest.  This Agreement and
each other instrument  evidencing or relating to the Debt are to be held subject
to  reduction or rebate as to any amount paid by or on behalf of the Borrower in
violation of any such law.

Section 1.5  LIBOR Rate

     1.5(a) At each and every  Re-Set  Date  during the term of this  Agreement,
Borrower is to have the right to select either the LIBOR Rates or variable rates
set forth in

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Sections 1.4(a) and 1.4(c) as applicable pursuant to the terms of this Agreement
to a  designated  principal  balance  unless  such  principal  balance  has been
previously  designated  as being  repayable at a LIBOR Rate and is subject to an
Interest Period which has not yet expired.  Each interest rate from time to time
so selected by  Borrower  is to take effect and is to end on a Re-Set  Date.  If
Borrower does not select an interest  rate by written  notice given to Lender at
least three (3) banking  days prior to a particular  Re-Set  Date,  the interest
rate  applicable  to the  principal  balance  for such  Re-Set Date is to be the
applicable  alternate  variable rate set forth in Sections  1.4(a) and 1.4(c) of
this  Agreement.  The LIBOR Rate or Rates  selected  by  Borrower  or  otherwise
designated  for a  particular  Re-Set  Date in  accordance  with  the  foregoing
provisions of this  paragraph,  are to be in effect from and including the first
day of the  Interest  Period to which  such  LIBOR  Rate  pertains  to,  but not
including,  the Roll Over Date  applicable  to such  Interest  Period,  and will
(subject to the  following  provisions  of this  paragraph) be applicable to the
portion of the principal  balance of the Loan with respect to which a LIBOR Rate
or Rates are due to be re-set on such Re-Set Date,  as well as to any portion of
the  principal  balance  bearing  interest  at a variable  rate and any  advance
scheduled to be made on such Re-Set Date.

     1.5(b) The term  "Interest  Period" means the period of time during which a
particular LIBOR Rate will be applicable to all or any particular portion of the
principal  balance in accordance  with the provisions of this Section,  it being
agreed that (a) each  Interest  Period is to commence  and is to  terminate on a
Re-Set  Date,  (b) each  Interest  Period is to be of a  duration  of either one
month,  two months or three months,  (c) no Interest  Period is to extend beyond
the term of this  Agreement  and (d) the portion of the  principal  balance with
respect to which a particular  Interest  Period is applicable will bear interest
at the LIBOR Rate  pertaining  to such  Interest  Period from and  including the
first day of such Interest  Period to, but not  including,  the last day of such
Interest Period and cannot be prepaid prior thereto, notwithstanding anything in
this Agreement to the contrary.

     1.5(c) The "Base LIBOR Rate"  applicable  to a particular  Interest  Period
means a rate per  annum  equal  to the rate of  interest  at which  U.S.  dollar
deposits  in an  amount  approximately  equal to the  portion  of the  principal
balance which will bear interest at a particular LIBOR Rate during such Interest
Period, and with maturities  comparable to the last day of such Interest Period,
are offered in immediately  available  funds in the London  Interbank  Market by
leading  banks in the  Eurodollar  market at 11:00  A.M.  London  time,  two (2)
banking  days  prior  to  the  commencement  of  such  Interest   Period.   Each
determination  of the  LIBOR  Rate  and the  Base  LIBOR  Rate  applicable  to a
particular  Interest  Period is to be made by Lender and is to be conclusive and
binding upon Borrower absent manifest  error.  Interest at the applicable  LIBOR
Rate from time to time is to be calculated for the actual number of days elapsed
on the basis of a 360-day year, in arrears.

     1.5(d) The term "Re-Set  Date" means  consecutive  numerical  corresponding
dates during the term of this Agreement,  the first of which Re-Set Dates is the
effective date of this Agreement. Each subsequent Re-Set Date during the term of
this  Agreement is to be the date in each  subsequent  calendar month during the
term of this Agreement  which  numerically  corresponds to the first Re-Set Date
during the term of this Agreement,

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provided,  however,  that if the  numerically  corresponding  date  in any  such
subsequent  calendar  month  during the term of this  Agreement is not a banking
day,  the  Re-Set  Date for  such  calendar  month is to be the next  succeeding
banking day, unless the next such succeeding  banking day would fall in the next
calendar  month, in which event the Re-Set Date for such calendar month is to be
the next preceding  banking day. For the purposes of this Agreement,  the period
of time  between  any two  consecutive  Re-Set  Dates  during  the  term of this
Agreement is to be deemed to be a period of one month.

     1.5(e) The "Roll Over Date"  applicable to a particular  Interest Period is
the last day of such Interest Period.

     1.5(f) If Lender has  determined  in good  faith  (which  determination  is
conclusive and binding upon Borrower  absent  manifest  error) that U.S.  dollar
deposits  in an  amount  approximately  equal to the  portion  of the  principal
balance  which is to bear  interest  at a  particular  LIBOR  Rate  during  such
particular  Interest  Period in accordance with the provisions of this Agreement
are not  generally  available at such time in the London  Interbank  Market,  or
reasonable  means do not exist for ascertaining a LIBOR Rate for such particular
Interest  Period,  Lender  is  to so  notify  Borrower  and  the  interest  rate
applicable  to the portion of the  principal  balance with respect to which such
LIBOR Rate was to pertain is to  automatically  be converted  to the  applicable
variable rate set forth in this Agreement as of the next occurring  Re-Set Date,
it being agreed that the applicable variable rate set forth in this Agreement is
to remain in effect  thereafter  with respect to such  portion of the  principal
balance until the next succeeding Re-Set Date in accordance with this Agreement.

     1.5(g) If any  change  in any law or  regulation  or in the  interpretation
thereof  by any  governmental  authority  charged  with  the  administration  or
interpretation  thereof  makes it unlawful for Lender to make or maintain  LIBOR
Rates with respect to the  principal  balance of any portion  thereof or to fund
the  principal  balance  or any  portion  thereof  at LIBOR  Rates in the London
Interbank  Market or to give effect to its  obligations as  contemplated by this
Agreement, then, upon notice by Lender to Borrower, the interest rate applicable
to  the  entire  principal  balance  is to be  automatically  converted  to  the
applicable alternate variable rate set forth in this Agreement,  it being agreed
that any notice given by Lender to Borrower  pursuant to this sentence is to, if
lawful,  be effective  insofar as it pertains to any  particular  portion of the
principal balance bearing interest at a particular LIBOR Rate on the last day of
the then existing Interest Period  pertaining to such particular  portion of the
principal balance,  or if not lawful, is to be effective  immediately upon being
given by Lender to Borrower,  and that the applicable variable rate is to remain
in effect  thereafter with respect to such  particular  portion of the principal
balance   unless  and  until  Lender  has   determined   in  good  faith  (which
determinations  are conclusive and binding upon Borrower  absent manifest error)
that the aforesaid  circumstances  no longer exist;  whereupon the interest rate
applicable to such portion of the principal balance may upon request of Borrower
be converted to a LIBOR Rate  determined in the manner  hereinabove set forth in
this  Agreement  effective  as of the first  Re-Set  Date which  occurs ten (10)
banking days or more after such good faith determination by Lender.

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     1.5(h) Borrower recognizes that the cost to Lender of making or maintaining
LIBOR Rates with respect to the principal balance or any portion thereof imposed
upon Banks,  generally,  including Lender,  may fluctuate and Borrower agrees to
pay Lender within ten (10) days after demand by Lender such additional amount or
amounts as Lender reasonably  determines will compensate Lender for actual costs
incurred by Lender in  maintaining  LIBOR Rates on the principal  balance or any
portion thereof.

Section 1.6  Monthly and Interim Statement

     Once each month  Lender is to render a statement of account to the Borrower
reflecting  the current  status of the Loan.  Each statement of account is to be
considered correct,  accepted by the Borrower and conclusively  binding upon the
Borrower,  unless the Borrower gives notice to Lender to the contrary in writing
within thirty (30) banking days after the sending of the statement by Lender. If
the Borrower disputes the accuracy of Lender's statement,  the Borrower's notice
is to specify in detail the basis of the dispute.

Section 1.7  Method of Advances

     Advances under Loan I may be made through written notification or facsimile
in form  reasonably  acceptable  to Lender,  by deposit of the amount  requested
pursuant to this  Agreement in the  Borrower's  operating  account(s)  which the
Borrower is to maintain at designated branches of Lender. All such written means
of  notification  and  writings are to be deemed  conclusively  binding upon the
Borrower.

Section 1.8  Reimbursement of Increased Cost to Lender

     If any law,  regulation or guideline,  or change in any law,  regulation or
guideline  or in the  interpretation  thereof,  or any  order or  ruling  by any
regulatory body,  court or other  governmental  authority,  or compliance by the
Lender with any request or directive (whether or not having the force of law) of
any such  regulatory  body,  court or  authority,  imposes,  modifies,  or deems
applicable  any  reserve,  capital,  special  deposit  or other  requirement  or
condition  which  results  in an  increased  cost or  reduced  benefit to banks,
generally,  including Lender (and as determined by reasonable  allocation of the
aggregate of such increased costs or reduced  benefits to Lender  resulting from
such  event),  then  Borrower  is to pay to Lender from time to time upon demand
additional  amounts  sufficient to compensate Lender for such increased costs or
reduced  benefits,  together  with  interest on each such amount from a date ten
(10) days after the date of such  demand  until  payment in full  thereof at the
highest interest rate then applicable to any of the Debt. A certificate  setting
forth in  reasonable  detail such  increased  cost  incurred or reduced  benefit
realized by Lender as a result of any such event is to be  conclusive  as to the
amount thereof, absent manifest error.

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Section 1.9  Conditions Precedent to the Loan

     The  obligation  of Lender to make the Loan  pursuant to this  Agreement is
subject to the following conditions:

     1.9(a)   Such   reasonable   assurances   (including    certificates   from
representatives  of the Borrower) that Lender requires that the  representations
and  warranties of the Borrower set forth in this  Agreement or relating to this
Agreement are true, accurate and complete;

     1.9(b)   Such   reasonable   assurances   (including    certificates   from
representatives  of the Borrower) that Lender  requires that the proceeds of the
Loan are to be  utilized  by the  Borrower  for the  purposes  set forth in this
Agreement;

     1.9(c)   Such   reasonable   assurances   (including    certificates   from
representatives  of the Borrower) that Lender  requires that no event of Default
defined in this Agreement or other documents  relating to this Agreement exists,
continues to exist, or would exist but for the lapse of time or notice;

     1.9(d) The  financial  condition,  operating  status and  general  business
affairs of Borrower are to be reasonably satisfactory to Lender;

     1.9(e) There are to be no litigation (whether  bankruptcy,  insolvency,  at
law or in equity) or other  proceedings  pending or threatened before any court,
agency  or  tribunal  which  may  materially   adversely  affect  the  financial
condition,  operations  or affairs of Borrower  other than as  disclosed  in the
Borrower's public filings;

     1.9(f)  Borrower is to provide  satisfactory  evidence of its existence and
good standing in every state in the United States where organized or required;

     1.9(g) There will have been no material  adverse change with respect to the
facts as set forth in financial statements dated December 31, 1998,  disclosures
or other information submitted to Lender in connection with this Agreement;

     1.9(h) Any and all disclosures, financial or otherwise, regarding Borrower,
are to be deemed accurate and complete and acceptable to Lender;

     1.9(i)  Borrower is to provide  satisfactory  evidence  that all  necessary
authorizations from applicable boards of directors have been obtained;

     1.9(j) The  consummation  of the  transactions  evidenced by this Agreement
will not constitute a breach of any agreement  between or among Borrower  and/or
third parties,  or violate any provision of an applicable  operating  agreement,
by-law, or provision of law;

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     1.9(k)  Opinions and  certificates  of Borrower's  counsel,  accountants or
other  representatives are to be submitted as reasonably  requested by Lender or
Lender  counsel  to the  effect  that all  documents  executed  by  Borrower  or
submitted on behalf of Borrower at closing are legally  binding and  enforceable
in accordance with their terms under New Jersey law;

     1.9(l) The transaction(s)  evidenced by this Agreement will not violate law
or  principles of equity,  including but not limited to, the Uniform  Fraudulent
Transfer Act;

     1.9(m) There will not exist any Default or other event of default to Lender
on any obligation due Lender;

     1.9(n) There will not exist any material  default by Borrower  with respect
to compliance with law;

     1.9(o)  The  Borrower  is to pay the fees  payable  to Lender  pursuant  to
Section 6.15 hereof;

     1.9(p) The  Borrower is to deliver to the Lender a prepaid  certificate  of
the title insurance  company  insuring both the ownership by the Borrower of the
Property  subject to the  Mortgage and the lien of the Mortgage in the amount of
Loan II and  confirming  that Loan II is  secured by the  Mortgage  and that the
Mortgage  constitutes  a valid  first  and  only  lien on the  Property  without
exception; and

     1.9(q) The Borrower is to provide to the Lender original prepaid  insurance
policies issued pursuant to Section 6.12 hereof.

Section 1.10  Additional Conditions Precedent to Loan II

     In addition to the  conditions  precedent  set forth in Section 1.9 herein,
the  obligation of Lender to close or make any advance of funds as to Loan II is
further subject to the following conditions:

     1.10(a)  Completion of an inspection of the Property and the Project by the
Lender and/or its construction  consultant  which is reasonably  satisfactory to
the Lender;

     1.10(b) Receipt by the Lender of a satisfactory and unconditional permanent
certificate of occupancy for the Project;

     1.10(c) Receipt by the Lender of a reasonably  acceptable "as-built" survey
prepared by a New Jersey  licensed  engineer or surveyor  locating  all property
lines,  building  setback  lines,  easements and the Project,  such survey to be
certified to Lender,  Lender's counsel and the title insurance  company insuring
the Mortgage;

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     1.10(d)  Receipt by the Lender of such title  insurance  endorsements as it
may require, including, but not limited to, an endorsement specifically insuring
the "as-built" survey;

     1.10(e)  Receipt  by  the  Lender  of  a  reasonably   acceptable  property
inspection and appraisal  report (at Borrower's  expense)  reflecting a value of
the Property of not less than $5,625,000.00 upon completion of the Project. This
provision is subject to a minimum projected loan to value of 80%; and

     1.10(f)  Receipt by the Lender of evidence  that the  Borrower has paid all
taxes, assessments, service charges, water and sewer as to the Property.


     ARTICLE 2. ADDITIONAL OBLIGATIONS OF THE BORROWER

Section 2.1  Expenses in Preserving Interests of Lender

     The Borrower  agrees to pay on demand,  such  reasonable  advances  made by
Lender to or for the account of the Borrower,  including advances for insurance,
repairs to any  Collateral,  taxes,  and such costs  incurred  by Lender (in its
discretion  and  regardless as to whether any such advance  increases the unpaid
balance  of the  Loan  or the  Debt)  in the  discharge  of any  lien,  security
interest, encumbrance, lease, pledge or assignment.

Section 2.2  Expenses in Realizing Upon Security Interest

     The Borrower agrees to pay, on demand,  all reasonable  costs and expenses,
including  reasonable  attorneys fees, incurred by Lender to preserve,  collect,
protect, foreclose, sell, or otherwise realize upon its security interest in the
Collateral  identified  in this  Agreement  or in any other  security  agreement
executed  by the  Borrower  which  grants  Lender  a  security  interest  in the
Collateral  or in any other  document  reflecting  any other  obligation  of the
Borrower to Lender.

Section 2.3  Expenses in Enforcing and Defending Rights

     The Borrower agrees to pay, on demand,  all reasonable  costs and expenses,
including  reasonable  attorneys  fees,  incurred  by Lender  in the good  faith
prosecution  or defense  of any action or  proceeding  relating  to the  subject
matter of this  Agreement  or other  agreement  or  instrument  executed  by the
Borrower.

Section 2.4  Costs of Lender

     The Borrower agrees to pay, on demand,  to Lender all reasonable  costs and
expenses incurred by Lender in the preparation,  execution,  administration  and
modification of this Agreement or other related  agreements  including,  but not
limited  to,  attorneys  fees,

                                      E-13

<PAGE>

filing fees,  consultant,  appraisal and other  professional  fees, search fees,
recording fees and other out-of-pocket expenses.


                              ARTICLE 3. THE DEBT

For purposes of this Agreement, the term "Debt" is defined as the Loan and those
additional obligations of the Borrower defined in Article 1 and Article 2 of
this Agreement.

                          ARTICLE 4. SECURITY INTEREST

     (a) To secure the payment and  performance  by the  Borrower of Loan I, and
except  as  otherwise  provided  by  Section  7.3,  Osteotech,  Inc.,  Osteotech
Investment  Corporation  and CAM  Implants,  Inc.  are not to pledge,  set over,
collaterally  assign or grant a security  interest in any of the items set forth
on Exhibit "A" annexed hereto and incorporated herein.

     (b) To secure the payment and  performance  by the  Borrower of Loan II and
Loan III to Lender, the Borrower hereby pledges, sets over, assigns and grants a
first  priority  security  interest to Lender in all  collateral and pursuant to
such other agreements more particularly  described on Exhibit "B" annexed hereto
and incorporated  herein. The security interests pledged, set over, assigned and
granted by the Borrower to Lender are to be a first and only  priority lien upon
all such collateral.

     (c)  The  foregoing   collateral   described  in  Section  4(b)  above  is,
collectively,  the  "Collateral"  and further secures payment and performance by
the  Borrower  of all of its  obligations  in  this  Agreement  or in the  other
documents delivered in connection with this Agreement. The provisions of Section
4(a)  above are no longer  applicable  when Loan I has been paid in full and the
agreement of Lender to lend thereunder has been terminated pursuant to the terms
thereof unless there then exists a Default.

     (d) Upon  repayment  of Loan III,  and if either  Loan I or Loan II remains
unpaid,  Lender  agrees,  unless there then exists a Default,  to discharge  its
security interests in the Collateral  described in subparagraphs  (iii) and (iv)
of Exhibit "B" hereof.

               ARTICLE 5. REPRESENTATIONS AND WARRANTIES TO LENDER

     In order to induce Lender to execute this Agreement, the Borrower makes the
following representations and warranties:

Section 5.1  Organization and Standing

     5.1(a) The  Borrower is duly  licensed or  qualified to do business in each
jurisdiction  in  which  qualification  is  required  by law,  and it is in good
standing in all such

                                      E-14

<PAGE>

jurisdictions,  except  where such  failure to qualify  will not have a material
adverse effect on its business or its ability to perform hereunder. The Borrower
has full power and authority to own its  properties  and to carry on business in
all jurisdictions where it is doing business.  All leases relating to the use by
the Borrower of properties or assets are in full force and effect.

     5.1(b) To Borrower's  actual knowledge  (defined as the actual knowledge of
either  the  Chief  Financial  Officer,  Chief  Executive  Officer  or the  Vice
President-Finance  of the  Borrower  after  good faith  inquiry in the  ordinary
performance of their function),  the Borrower  possesses all licenses,  permits,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto,
to conduct its business substantially as now conducted and as presently proposed
to be conducted, and is not in violation of rights of others with respect to any
of the foregoing except as otherwise disclosed in Borrower's public filings.

     5.1(c) Lender has been  provided with a true copy of the filed  Certificate
of  Incorporation,   Certificate  of  Limited   Partnership  or  Certificate  of
Formation,   as  the  case  may  be,   operating  and  shareholder   agreements,
certificates,   bylaws  and  any  amendments  thereto  (collectively  and  where
applicable  "Operating  Documents")  as the same are  still  in full  force  and
effect.  Lender  may  rely  on the  accuracy  and  integrity  of  the  Operating
Documents.  Borrower has the authority to execute this Agreement and perform the
undertakings set forth herein.

     5.1(d) There has been no  Certificate  of  Cancellation  or  Certificate of
Dissolution  filed on behalf of the Borrower nor has the Borrower  been de facto
dissolved by any event such as the death,  retirement,  resignation,  expulsion,
bankruptcy or  dissolution  of any  shareholder,  partner or member or any other
event which would cause the dissolution of Borrower pursuant to applicable law.

     5.1(e) The individual(s) executing this Agreement on behalf of the Borrower
are  authorized  as  officers,  partners  or  members  to do so and to bind  and
obligate Borrower pursuant to the terms hereof.

Section 5.2  Power

     5.2(a) The  Borrower  has the power to execute,  deliver and carry out this
Agreement,  and such other related documents and instruments executed by it. Its
board of directors or members,  or all  partners,  as the case may be, have duly
authorized and approved the terms of this  Agreement and all related  actions by
it. No other action,  whether by resolution,  governmental entity, or otherwise,
is necessary  for the  consummation  of the  transactions  contemplated  by this
Agreement. The Borrower's performance hereunder does not and will not constitute
a breach or default of any material agreement or law to which it is subject.

                                      E-15

<PAGE>


     5.2(b) This Agreement and the documents  relating  thereto,  upon execution
and delivery, will constitute the Borrower's legal, valid and binding agreements
enforceable in accordance with their terms.

Section 5.3  Litigation

     Except as disclosed in its public filings,  to Borrower's actual knowledge,
there  are no  lawsuits,  judicial  proceedings,  investigations  or  complaints
pending  or  threatened  against  the  Borrower  relating  to any  aspect of its
business or properties,  including but not limited to environmental  protection,
which would, if decided adversely to Borrower, have a material adverse effect on
the Borrower.  Borrower is not in default with respect to any  judgment,  order,
injunction or assessment issued by any court or any governmental agency relating
to any material  aspect of its business or properties or relating to its ability
to consummate the transactions contemplated by this Agreement.

Section 5.4  Financial Statements and Solvency

     5.4(a) Prior to the execution of this Agreement, the Borrower has delivered
to Lender the  consolidated  financial  statements  of  Osteotech,  Inc. and its
Subsidiaries dated December 31, 1998 (the "Delivered  Financials")  requested by
Lender. The Delivered Financials have been prepared in accordance with generally
accepted  accounting  principles  consistently  applied,  and fairly present the
consolidated  assets,  liabilities,  results of operations and capital as at the
dates  thereof.  The Delivered  Financials  reflect or provide for all fixed and
contingent  claims and debts and liabilities as of the dates thereof.  There has
not been any material adverse change of financial  condition between the date of
the most recent of the Delivered  Financials and the date of this Agreement.  To
Borrower's  actual  knowledge,  no fact or condition  exists, is contemplated or
threatened which may cause any such change at any time in the future.

     5.4(b) Except as shown on the Delivered  Financials,  to Borrower's  actual
knowledge,  the  Borrower has no other  liabilities  as of the date hereof which
would materially and adversely affect its financial condition.

     5.4(c) To Borrower's actual knowledge, all books and records of account are
materially  accurate,  complete and properly  reflect all material  transactions
purported to be documented thereby.

     5.4(d) Borrower's assets, as valued on the December 31, 1998 balance sheet,
exceed Borrower's known liabilities (including,  without limitation,  contingent
liabilities).  Borrower is paying its debts as they become due, and Borrower has
capital and assets sufficient to carry on its business.

                                      E-16

<PAGE>


Section 5.5  Compliance with Law

     5.5(a) To Borrower's  actual  knowledge,  the Borrower is, and at all times
during the past has been, in compliance in all material  respects with all laws,
governmental  rules and  regulations  applicable to its business and properties,
including those relating to environmental protection.

     5.5(b) To Borrower's  actual  knowledge,  the Borrower is, and at all times
since  Borrower   acquired  the  Property  has  been,  in  compliance  with  all
requirements of the Americans with Disabilities Act of 1990, 42 U.S.C.  12101 et
seq.,  including,  but not  limited to,  those  regulations  promulgated  by the
Architectural  and  Transportation  Barrier  Compliance  Board at 36 CFR 1191 et
seq.,  and by the  Department  of  Justice  at 28 CFR 36 et seq.,  to the extent
applicable to the Property.

Section 5.6  No Adverse Restrictions

     The Borrower is not subject to any  provision in the  Operating  Documents,
any contract, mortgage, lease, judgment, court order, rule or regulation, or any
other  restriction of any kind which could  materially and adversely  affect its
business and properties, the results of its operations or its ability to fulfill
any  obligations  in this  Agreement or in any  document  relating  thereto.  No
material contract,  instrument,  understanding,  judgment, statute, court order,
rule or  regulation  to which it is a party or by which it is bound  has been or
will be violated or breached by the execution and performance of this Agreement.

Section 5.7  Taxes and Tax Returns

     5.7(a) The  Borrower  has filed all tax returns  which were  required to be
filed as of the date of this Agreement.

     5.7(b) The  provisions  for taxes  shown in the  Delivered  Financials  are
sufficient to satisfy all taxes due and all assessments received for all periods
ended on or prior to the dates thereof.

     5.7(c) As of the date of this Agreement, no taxes are due from Borrower and
no tax liabilities  have been assessed or proposed against Borrower which either
remain unpaid or are not otherwise provided for in the Delivered Financials.

     5.7(d) The Borrower is not aware of any basis upon which any assessment for
a material amount of additional taxes can be made against it.

     5.7(e)  The  Borrower  has not  signed  any  extension  agreement  with the
Internal Revenue Service or any governmental  authority or given any waiver of a
statute of limitations with respect to the payment of taxes.

                                      E-17

<PAGE>


     5.7(f) The results of any governmental  examination or audit of tax returns
are properly reflected in the Delivered Financials.

     5.7(g) All taxes  which  Borrower is required by law to withhold or collect
(the "Withholding  Taxes") have been duly withheld and collected.  To the extent
required,  the  Borrower  has paid  over  the  Withholding  Taxes to the  proper
governmental  authorities on a timely basis or has reflected them as a liability
in the Delivered Financials.

Section 5.8  Title to Collateral

     The  Borrower  has good and  marketable  title to all of its  tangible  and
intangible assets subject only to those liens, encumbrances, security interests,
assignments, pledges, mortgages or leases set forth on the Delivered Financials.
The  Borrower has good and  marketable  title to the  Collateral  except for the
security  interest granted to Lender by the Borrower.  None of the Collateral is
or is about  to  become  subject  to any  assignment,  mortgage,  pledge,  lien,
security  interest,  lease or  encumbrance  except as  provided by virtue of the
execution or performance of this Agreement.

Section 5.9  Use of Proceeds of the Loan

     5.9(a) The Borrower is not engaged in the business of extending  credit for
the  purpose of  purchasing  or  carrying  margin  stock  within the  meaning of
Regulation  U of the Board of  Governors  of the  Federal  Reserve  System.  The
proceeds of the Loan are not  intended by the Borrower to be used to purchase or
carry any margin stock or to reduce or retire any indebtedness incurred for such
purpose. If requested by Lender, the Borrower has furnished to Lender statements
in conformity  with the  requirements of Federal Reserve Form U-1 referred to in
Regulation U to the foregoing effect.

     5.9(b)  The  Borrower  does not  intend to apply the  proceeds  of the Loan
directly or indirectly to the  "acquisition" of "stock" of a "foreign issuer" or
"debt  obligation"  of a "foreign  obligor",  as such  terms are  defined in the
United  States  Interest  Equalization  Tax Act,  or to take or permit any other
action which would subject Lender to the tax imposed by said Act.

     5.9(c) The  Borrower  is not an  "investment  company",  or an  "affiliated
person"  of, or  "promoter"  or  "principal  underwriter"  for,  an  "investment
company",  as such terms are defined in the Investment  Company Act of 1940. The
application  of the proceeds and  repayment  thereof of the Loan by the Borrower
and the performance of the transactions  contemplated by this Agreement will not
violate any  provision of said Act, or any rule,  regulation  or order issued by
the Securities and Exchange Commission thereunder.


                                      E-18

<PAGE>

Section 5.10  ERISA

     To Borrower's actual  knowledge,  Borrower is in compliance in all material
respects with the provisions of the Employee  Retirement  Income Security Act of
1974, as amended  ("ERISA"),  and the related provisions of the Internal Revenue
Code, and with all regulations and published  interpretations  issued thereunder
by the United States Treasury Department,  the United States Department of Labor
and the Pension Benefit  Guaranty  Corporation  ("PBGC").  To Borrower's  actual
knowledge, neither a reportable event as defined in Section 4043 of ERISA, nor a
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Internal  Revenue  Code,  has  occurred  and is  continuing  with respect to any
employee  benefit plan subject to ERISA  established or maintained,  or to which
contributions  have been or may be made, by Borrower or by any trade or business
(whether or not incorporated) which together with Borrower would be treated as a
single  employer  under Section 4001 of ERISA (any such trade or business  being
referred to as an "ERISA  Affiliate,"  and any such employee  benefit plan being
referred to as a "Plan").  No notice of  intention  to terminate a Plan has been
filed nor has any Plan been terminated;  the PBGC has not instituted proceedings
to terminate, or to appoint a trustee to administer, any Plan nor, to Borrower's
actual knowledge,  do circumstances  exist that constitute  grounds for any such
proceedings;  and neither  Borrower nor any ERISA  Affiliate  has  completely or
partially  withdrawn from any multi  employer Plan described in Section  4001(a)
(3) of ERISA. To Borrower's actual knowledge,  Borrower and each ERISA Affiliate
has met the minimum  funding  standards  under ERISA with respect to each of its
Plans; no Plan of Borrower or of any ERISA Affiliate has an accumulated  funding
deficiency  or waived  funding  deficiency  within the meaning of ERISA;  and no
material  liability to the PBGC under ERISA has been incurred by Borrower or any
ERISA Affiliate.

Section 5.11  OSHA

     To Borrower's  actual  knowledge,  Borrower has duly complied with, and its
facilities, business, leaseholds, equipment and other property are in compliance
in all material respects with, the provisions of the federal Occupational Safety
and Health Act ("OSHA") and all rules and regulations thereunder and all similar
state  and  local  laws,  rules and  regulations;  and there are no  outstanding
citations, notices or orders of non-compliance issued to Borrower or relating to
its facilities, business, leaseholds, equipment or other property under any such
law, rule or regulation.

Section 5.12  Inventory

     The value of Inventory reflected on the Delivered  Financials is set at the
lower  of cost or  market  in  accordance  with  generally  accepted  accounting
principles consistently applied.


                                      E-19

<PAGE>

Section 5.13  Accounts Receivable

     To  Borrower's  actual  knowledge,  except for reserves as reflected in the
Delivered  Financials,  all of the Accounts  Receivable  reflected in the latest
Delivered  Financials are collectible,  are subject to no known counterclaims or
setoffs of any nature  whatsoever,  and require no further  action to constitute
such  accounts as due and owing by the  account  debtors.  None of the  Accounts
Receivable  includes any conditional  sales,  consignments or sales on any basis
other  than  that of an  absolute  sale in the  ordinary  and  usual  course  of
business,  except as otherwise noted. No agreement has been made under which any
deductions or discounts  may be claimed  except  regular  discounts in the usual
course of business.

Section 5.14  No Consents or Approvals Needed

     Under the state of the  applicable  law at the time of the  signing of this
Agreement, no approval,  consent,  authorization,  or notice by or to any party,
including a governmental  entity,  is required in connection with this Agreement
and the consummation of the transactions and matters covered by this Agreement.

Section 5.15  Environmental Compliance

     5.15(a)  To the  Borrower's  actual  knowledge,  to  the  extent  that  the
Collateral or real or personal property owned or occupied by the Borrower in the
State of New  Jersey  is or has been used to  refine,  produce,  store,  handle,
transfer,   process  or  transport  hazardous   substances,   hazardous  wastes,
pollutants or other related  substances as those terms are defined by New Jersey
or federal law, the Borrower  has  complied  with all  applicable  Environmental
Laws.

     5.15(b) No friable  asbestos or any substance  containing  asbestos  deemed
hazardous by federal or state regulations has been installed in the Collateral.

     5.15(c) To  Borrower's  actual  knowledge,  neither  the  Borrower  nor the
Collateral or real or personal property owned or occupied by the Borrower in the
State of New Jersey are in violation of or subject to any existing,  pending, or
threatened  investigation  or inquiry or to any remedial  obligations  under any
federal or state laws pertaining to health or the  environment,  including,  but
not limited to the Industrial Site Recovery Act f/k/a the Environmental  Cleanup
Responsibility  Act ("ISRA")  (N.J.S.A.13:1K-6  et seq., as amended),  the Spill
Compensation and Control Act (N.J.S.A.58:10 23.11 as amended), the Hazardous and
Solid  Waste  Amendments  of 1984 Pub.  L98-616  (42  U.S.C.  699 et.  seq.,  as
amended);   a  certain  statute  adopted  by  New  Jersey  for  registration  of
underground storage tanks (N.J.S.A.58:10-21 et seq.,), the Resource Conservation
and Recovery Act (42 U.S.C.  6901 et.  seq.,  as amended) and the  Comprehensive
Environmental Response,  Compensation and Liability Act (42 U.S.C. 9601 et seq.,
as  amended);  (all  such  federal,  state,  county,  municipal  or other  laws,
ordinances  or  regulations  are  hereinafter  collectively  referred  to as the
"Environmental  Laws").  To the  actual  knowledge  of  Borrower,  there  are no
underground  storage tanks  located on any property  occupied by the Borrower in
the State of New Jersey.

                                      E-20

<PAGE>

     5.15(d) To the Borrower's actual  knowledge,  the Borrower has obtained all
permits, licenses or similar authorizations to construct, occupy, operate or use
any   buildings,   improvements,   fixtures  and  equipment  by  reason  of  any
Environmental Laws.

     5.15(e) To Borrower's actual  knowledge,  none of the Collateral or real or
personal  property  owned or occupied by the Borrower in the State of New Jersey
has,  is now or is intended  to be used as a major  storage  facility or for the
operation of a hazardous substance or waste disposal facility as those terms are
defined by any Environmental Laws.

     5.15(f) No lien or, to Borrower's actual knowledge, claim has been attached
to or made against the Borrower, any revenues of the Borrower, the Collateral or
any real or personal  property owned or occupied by the Borrower in the State of
New Jersey by the State of New Jersey or the federal  government  for damages or
cleanup and removal costs, as those terms are defined by any Environmental  Laws
arising  from an  intentional  or  unintentional  act or  omission  of it or any
previous  owner or operator of its real or personal  property  resulting  in the
releasing,  spilling,  pumping,  pouring,  emitting,  emptying,  discharging  or
dumping of hazardous substances,  hazardous wastes,  pollutants or other related
substances as those terms are defined by any Environmental Laws.

     5.15(g) To the Borrower's actual knowledge,  the Borrower has not taken any
intentional  or  unintentional  act or  omission  resulting  in  the  releasing,
spilling, leaking, pumping, pouring, emitting, emptying,  discharging or dumping
of hazardous substances,  hazardous wastes,  pollutants or related substances as
those terms are defined by any Environmental Laws.

     5.15(h) The Borrower has provided an  environmental  report to Lender which
is true, accurate and complete to the actual knowledge of Borrower.

     5.15(i) The  Borrower  has  required  that the seller of any real  property
located in the State of New Jersey acquired (either  directly or indirectly,  by
such means as a stock  transaction,  for  example)  by the  Borrower on or after
January l, 1984 and all  occupants  of all real  property  owned by the Borrower
since  January 1, 1984  comply  with the  provisions  of ISRA and have  provided
evidence of such compliance to Lender. To Borrower's  actual  knowledge,  it has
otherwise  complied  with ISRA,  will not take or fail to take such action which
would render its  representations or covenants made in this Section to be untrue
or  incapable  of  performance,  and  has  and  will  provide  evidence  of such
compliance to Lender.

Section 5.16  Identification of the Borrower

     5.16(a)  Schedule 1 annexed  hereto sets forth a complete and accurate list
of all names by which the  Borrower  is known or under  which  the  Borrower  is
conducting

                                      E-21

<PAGE>

business,  including,  without limitation, its fictitious names, alternate names
and trade names.

     5.16(b)  Schedule 1 annexed  hereto sets forth a complete and accurate list
of all offices and locations in the United States at which the Borrower conducts
any of its business or  operations,  the locations of all Collateral and records
relating to Collateral and the Borrower's chief executive office, if any.


     5.16(c) The  Borrower has not,  within the six (6) year period  immediately
preceding  the  effective  date of this  Agreement,  changed its name,  been the
survivor of a merger or  consolidation,  or acquired all or substantially all of
the assets of any person or entity except as otherwise set forth in Schedule 1.

     5.16(d) Except in the case of Osteotech,  Inc.,  which is a publicly traded
company,  all of the issued and  outstanding  capital  stock or other  ownership
interests of the Borrower are owned and registered as otherwise disclosed in the
officers' certificates delivered  contemporaneously  herewith by or on behalf of
the Borrower.  Osteotech Investment Corporation,  CAM Implants,  Inc., Osteotech
B.V., H.C. Implants,  B.V., CAM Implants B.V.,  Osteotech/Cam  Services B.V. and
OST Developpement are Subsidiaries of Osteotech, Inc. A Subsidiary is defined as
any entity of which the  voting or  ownership  interests  in an amount of 50% or
more is/are owned or controlled by any Borrower or any party which  subsequently
executes a guaranty pursuant to this Agreement.

     5.16(e)  Schedule  1 annexed  hereto  sets  forth the  Standard  Industrial
Classification Codes applicable to the properties and operations of Borrower.

Section 5.17  The Project

     The Project is to be constructed strictly in accordance with all applicable
ordinances  and  statutes  and  in  accordance  with  the  requirements  of  all
regulatory   authorities   having   jurisdiction  and  in  conformity  with  the
requirements  of the Board of Fire  Underwriters or similar body. The Project is
to be  constructed  entirely  on the  Property  and  does not  encroach  upon or
overhang  any  easement  or  right-of-way  nor upon the land of others,  and the
Project,  when erected,  is to be wholly within the building  restriction  lines
however  established and will not violate  applicable use or other  restrictions
contained  in  prior  conveyances,  laws,  zoning  ordinances,  codes,  rules or
regulations.  The Project is intended to be made and completed using first-class
materials in a good,  substantial  and  workmanlike  manner and will be equipped
with first-class equipment.

Section 5.18  Duration and Effect of Representations and Warranties

     5.18(a) The representations and warranties made to Lender in this Article 5
are to be true,  accurate  and  complete  for the  duration  of the term of this
Agreement.


                                      E-22
<PAGE>

     5.18(b)  None of the  representations,  warranties  or  statements  made to
Lender in this Agreement or in any other  agreement  executed in connection with
this Agreement or contemplated by this Agreement contain any untrue statement of
a material fact, or omit to state a material fact necessary in order to make the
statements made not misleading.

                         ARTICLE 6. COVENANTS TO LENDER

     In order to induce Lender to execute this Agreement, the Borrower makes the
following affirmative covenants:

Section 6.1  Payment of Debt

     The  Borrower  is to pay  all of its  obligations,  including  the  Debt to
Lender,  when due in accordance  with such  documents  evidencing or documenting
such obligations including but not limited to, this Agreement.

Section 6.2  Change of Financial Conditions

     Any  and  all  future  substantial  and  material  adverse  changes  in the
Borrower's  consolidated  financial  condition are to be promptly brought to the
attention of Lender.

Section 6.3  Litigation

     The Borrower is to promptly notify Lender if any lawsuits,  losses, claims,
judicial  proceedings,   investigations,   complaints,   notices,  or  citations
including but not limited to, those relating to occupational health,  safety, or
environmental  protection,  are pending or threatened against the Borrower which
exceed applicable insurance coverage.

Section 6.4  Organization and Standing

     The Borrower is to continue to be duly licensed or qualified to do business
in each jurisdiction in which  qualification is required by law except where the
failure to do so would not have a material  adverse effect on the Borrower,  and
to continue to be in good standing and to preserve legal existence.

Section 6.5  Compliance with Law


     The  Borrower  is to  comply  in  all  material  respects  with  all  laws,
governmental  rules and  regulations  applicable to its business and properties,
including,  but not limited to, ERISA, OSHA and Environmental  Laws. At any time
while any amount is outstanding  under Loan II or Loan III, Lender has the right
to enter, during normal business hours, onto the Property,  upon 72 hours' prior
written  notice,  and cause such tests,  inspections,  and/or  procedures  to be
conducted  by a  professional  engineering  firm or others  for the  purpose

                                      E-23

<PAGE>

of ensuring  compliance with all  Environmental  Laws and rules,  and having the
Property certified to the Lender as such. Without limitation of Lender's rights,
while any amount under Loan II or Loan III is outstanding, Lender has the right,
but not the  obligation,  to  enter,  during  normal  business  hours,  onto the
Property,  upon 72 hours' prior written notice, to take such other actions as it
deems reasonably  necessary or advisable to test, cleanup,  remove,  resolve, or
minimize  the impact of, or otherwise  deal with,  any  environmental  condition
which, in the sole reasonable opinion of the Lender,  could jeopardize or affect
its Collateral.  All costs and expenses incurred by the Lender in the reasonable
exercise  of any such  rights is  secured  by the  Collateral  and is payable on
demand.  In the event that asbestos  exists in the Collateral or is found by the
Borrower or any other  person or entity at any time to exist in the  Collateral,
the Borrower is to (1) promptly  notify  Lender that the asbestos  exists or has
been discovered,  (2) obtain a written estimate and report from an environmental
firm  acceptable  to Lender of the cost of the removal of the  asbestos  and the
manner  in  which  it  should  be  removed,  which  removal  procedure  is to be
satisfactory to Lender, (3) deposit with Lender in escrow an amount equal to the
cost of such removal and (4) diligently pursue the removal of the asbestos.  The
amount held in escrow will be released by Lender upon (a)  delivery to Lender of
evidence  satisfactory to Lender that the applicable laws, rules and regulations
have been complied with in  connection  with such removal and disposal,  and (b)
inspection of the completed work by Lender's  engineer (at  Borrower's  expense)
and a  determination  by said  engineer  that the removal has been  handled in a
satisfactory manner. Lender acknowledges that Borrower produces medical products
and as such is part of a highly regulated industry and that access to Borrower's
clean  rooms and other  parts of the  Property is  restricted  (the  "Restricted
Locations") by Borrower's  policies and procedures.  Lender acknowledges that it
will not have access to such Restricted Locations.  After a Default, and upon 72
hours'  prior  written  notice,  Lender  will be  allowed  access  to enter  the
Restricted   Locations   provided  that  Lender  complies  with  the  Borrower's
established standard operating procedures (then in effect and then made known to
Lender by Borrower)  with respect to access to such  Restricted  Locations.  The
actions  exercisable by Lender prior to Default pursuant to this Section will be
conducted  in a manner  reasonably  designed to  interfere as little as possible
with the operation of the Borrower's business. The actions exercisable by Lender
following  Default  pursuant to this Section will be conducted in a commercially
reasonable manner in all respects.

Section 6.6  Taxes

     Borrower is to make due and timely payment of all Federal,  State and local
taxes and assessments  required by law and to execute and deliver to Lender,  on
demand, appropriate certificates attesting to the payment or deposit of any such
taxes or assessments.

Section 6.7  Reports

     Osteotech,  Inc. is to provide to Lender, in form and substance  reasonably
satisfactory to Lender:

                                      E-24

<PAGE>


     6.7(a) As soon as  available,  but in no event  later than ninety (90) days
after the end of each fiscal year of  Osteotech,  Inc., a  consolidated  balance
sheet of  Osteotech,  Inc. and its  Subsidiaries  as of the end of such year and
statements of income,  cash flows and changes in  stockholders'  equity for such
year (all in  reasonable  detail and with all notes and  supporting  schedules),
audited by a "Big Five"  accounting firm or other  independent  certified public
accountant  satisfactory  to  Lender,  and  attested  to by the Chief  Financial
Officer or Treasurer of  Osteotech,  Inc.,  as  presenting  fairly the financial
condition of Osteotech,  Inc. and its  Subsidiaries  as of the dates and for the
periods  indicated  and as having been  prepared in  accordance  with  generally
accepted accounting principles  consistently applied, except as may be otherwise
disclosed in such  financial  statements or the notes  thereto;  together with a
consolidating  and  consolidated  balance  sheet as of the end of such  year and
statements of income,  cash flows and changes in  stockholders'  equity for such
year (all in  reasonable  detail and with all notes and  supporting  schedules),
prepared by the Chief Financial  Officer of Osteotech,  Inc., and attested to by
the Chief Financial Officer or Treasurer of Osteotech, Inc.

     6.7(b) As soon as  available,  but in no event later than  forty-five  (45)
days after the end of the first,  second and third  quarterly  fiscal periods of
Osteotech,  Inc., a consolidating  and consolidated  balance sheet of Osteotech,
Inc. and its Subsidiaries as of the end of such period and statements of income,
cash flows and changes in stockholders' equity for such period commencing at the
end of the  previous  fiscal year and ending with the end of such period (all in
reasonable detail and with all notes and supporting schedules),  prepared by the
Chief  Financial  Officer  of  Osteotech,  Inc.  and  attested  to by the  Chief
Financial Officer or Treasurer of Osteotech, Inc.

     6.7(c) Upon submission of the financial statements and information provided
by Sections 6.7(a) and 6.7(b) hereof:

     (A)  Certificates  of  insurance  for  all  policies  of  insurance  to  be
     maintained  pursuant  to this  Agreement  at the times  provided by Section
     6.7(a);

     (B) An estoppel  certificate  executed by an authorized  representative  of
     Borrower  indicating  that there then exists no Default and no event which,
     with the giving of notice or lapse of time,  or both,  would  constitute an
     event of default under any material agreement to which it is a party at the
     times provided by Section 6.7(b);

     (C) Lender's  form of Compliance  Certificate  completed by Borrower at the
     times provided by Section 6.7(b) in the form attached as Exhibit "F";

     (D) An  accountant's  reliance  letter  confirming that the Lender may rely
     upon the financial  information  submitted at the times provided by Section
     6.7(a).

     6.7(d) Promptly after preparation or receipt:

                                      E-25

<PAGE>

     (A) Copies of any statement or report  furnished by Osteotech,  Inc. to any
     other party  pursuant  to the terms of any  indenture,  loan,  or credit or
     similar  agreement  and not  otherwise  required to be  furnished to Lender
     pursuant to this Agreement; and

     (B) Copies of all proxy statements, financial statements, and reports which
     Osteotech, Inc. sends to stockholders or owners, and copies of all regular,
     periodic,  and  special  reports,  and all  registration  statements  which
     Borrower files with any national securities exchange or regulatory agency.

Section 6.8  Access to Records and Property

     Not more than once per calendar  year in the absence of a Default,  upon 72
hours' prior written  request by Lender (which  request need not be given in the
event of a Default,  but which  request will include the identity of the auditor
selected by Lender),  Borrower  is to give any  representatives  of Lender or an
independent audit firm selected by Lender access during normal business hours to
examine,  audit,  copy or make  extracts  from,  any and all books,  records and
documents in its possession  relating to its affairs and the Collateral.  Lender
acknowledges  that Borrower  produces  medical products and as such is part of a
highly  regulated  industry and that access to Borrower's  clean rooms and other
parts of the Property is restricted (the  "Restricted  Locations") by Borrower's
policies and  procedures.  Lender  acknowledges  that it will not have access to
such  Restricted  Locations.  After a Default,  and upon 72 hours' prior written
notice, Lender will be allowed access to enter the Restricted Locations provided
that  Lender  complies  with  the  Borrower's   established  standard  operating
procedures  (then in effect  and then made  known to  Lender by  Borrower)  with
respect to access to such Restricted  Locations.  Lender and any such audit firm
must keep  confidential  any documents or information  of a confidential  nature
obtained pursuant to the provisions  hereof.  The actions  exercisable by Lender
prior  to  Default  pursuant  to this  Section  will be  conducted  in a  manner
reasonably designed to interfere as little as possible with the operation of the
Borrower's  business.  The  actions  exercisable  by  Lender  following  Default
pursuant to this Section will be conducted in a commercially  reasonable  manner
in all respects.


Section 6.9  Preservation of Title to Collateral

     The Borrower is to immediately notify Lender of any material loss or damage
to, or any  occurrence  which would  adversely  affect the security  interest of
Lender in and to the  Collateral.  The Collateral is to be free and clear of all
assignments,   mortgages,   pledges,  liens,  security  interests,   leases,  or
encumbrances  except in favor of Lender and except as otherwise provided herein.
The security  interest  held by  CryoLife,  Inc. as to Patent  #5,333,626  filed
December  31, 1991 is to be  discharged  and  evidence  thereof  provided by the
Borrower  to  Lender  within  six  (6)  months  of the  effective  date  of this
Agreement.  The Borrower is to continue to maintain good and marketable title to
the Collateral, at the sole expense of the Borrower.

                                      E-26

<PAGE>

Section 6.10  Financial Records and Location of Collateral


     The Borrower is to maintain true,  materially  accurate and complete books,
records,  and  accounts of its business  affairs in  accordance  with  generally
accepted accounting principles consistently applied in the Borrower's respective
country  of  organization.  The  Borrower  is to keep  accurate  records  of the
Collateral,  which  records  are at all times to be  physically  located  at the
address  of the  Borrower  set  forth on  Schedule  1. All  Collateral  is to be
physically  located at the chief  executive  office of the Borrower set forth on
Schedule 1, unless otherwise agreed by Lender and documented to the satisfaction
of Lender.

Section 6.11  Condition of Buildings and Collateral

     All Collateral is to be used solely by the Borrower in connection  with its
business.  The Borrower is to maintain the  Collateral and it is to maintain the
Property and all buildings,  plants, improvements and structures thereon in good
condition and repair,  ordinary wear and tear excepted,  and in compliance  with
all zoning laws, ordinances,  and regulations of governmental authorities having
jurisdiction.

Section 6.12  Insurance

     6.12(a)  The  Borrower  is to  maintain  in full  force  and  effect on the
Collateral  (and on all of its  other  assets,  if  requested  by  Lender),  the
following insurance:

     (i) Comprehensive  general public liability insurance  (including,  but not
     limited  to,  product  liability  insurance)  in an  amount  not less  than
     $10,000,000.00 in the aggregate and $3,000,000.00 per occurrence;

     (ii) "All-Risk" coverage policy of fire, pilferage,  theft, burglary,  loss
     in transit,  title and extended  coverage hazard  insurance  (together with
     vandalism and malicious  mischief  endorsements) in an aggregate amount not
     less than the outstanding  principal  amount of Loan II and Loan III in the
     aggregate;

     (iii) If the  Collateral  is required  to be insured  pursuant to the Flood
     Disaster  Protection  Act of 1973 or the National  Flood  Insurance  Act of
     1968, and the  regulations  promulgated  thereunder,  flood insurance in an
     amount not less than the outstanding  principal  balance of the Loan or the
     maximum limit of coverage available, whichever amount is less;

                                      E-27

<PAGE>

     (iv) Business  interruption  and/or loss of rental insurance  sufficient to
     pay, during the period of interruption or loss,  normal operating  expenses
     in connection with the Collateral; and

     (v) Boiler and machinery  insurance covering vessels,  air tanks,  boilers,
     machinery,   pressure  piping,   heating,  air  conditioning  and  elevator
     equipment in such amounts as Lender reasonably  requires from time to time,
     provided that such equipment is part of the Collateral.

     6.12(b) Each insurance  policy required under this Section is to be written
by  insurance  companies  authorized  or  licensed  to do business in New Jersey
having an Alfred M. Best  Company,  Inc.  rating of A+ or higher and a financial
size  category  of not less than VII,  and is to be on such forms and written by
such companies as reasonably approved by Lender.

     6.12(c) Each insurance  policy required under Sections  6.12(a)(i)(ii)(iii)
and (v) providing  insurance against loss or damage to property is to be written
or endorsed so as to (i) contain a New Jersey standard mortgagee, secured party,
or loss payee endorsement,  as the case may be, or its equivalent, and (ii) make
all losses payable directly to the Lender, without contribution.

     6.12(d) Each insurance policy required under this Section  providing public
liability  coverage is to be written and endorsed so as to name the Lender as an
additional insured, as its interest may appear.

     6.12(e) Each insurance  policy  required under this Section is to contain a
provision  to the effect that such policy is not to be  canceled,  altered or in
any way limited in  coverage or reduced in amount  unless the Lender is notified
in writing at least thirty (30) days prior to such change.  At least thirty (30)
days prior to the  expiration  of any such  policy,  the  Borrower is to furnish
evidence  satisfactory  to the  Lender  that such  policy  has been  renewed  or
replaced or is no longer required by this Section.

     6.12(f) Each insurance  policy  required  under this Section  (except flood
insurance  written under the federal flood  insurance  program) is to contain an
endorsement  by the  insurer  that any loss is to be payable  to Lender,  as its
interest may appear, in accordance with the terms of such policy notwithstanding
any act or  negligence  or breach of any  warranty of or by the  Borrower  which
might otherwise result in forfeiture of said insurance and the further agreement
of the  insurer  waiving  all  rights  of  setoff,  counterclaim,  deduction  or
subrogation against the Borrower (so as not to interfere with Lender's rights).

     6.12(g) In the event of loss or damage to the  Collateral,  the proceeds of
any insurance  provided hereunder is to be applied as set forth in this Section;
in the event

                                      E-28

<PAGE>

of a public liability claim, the proceeds of any insurance provided hereunder is
to be applied  toward  extinguishing  or  satisfying  the  liability and expense
incurred in connection therewith.

     6.12(h)  The  Borrower  is not to  take  out  any  separate  or  additional
insurance with respect to the Collateral  which is  contributing in the event of
loss  unless it is  properly  compatible  with all of the  requirements  of this
Section.

     6.12(i) The  Borrower is to pay the  premiums on the  policies  therefor as
they become  payable,  and is to deliver to Lender such policies,  with standard
clauses in favor of Lender attached.

     6.12(j) Each insurance  policy required under this Section is to be written
and  endorsed to provide  that the  intentional  actions of Borrower  are not to
affect the  insurable  interest of Lender or prevent  payment of the proceeds of
the policy to Lender.

     6.12(k) Lender is entitled to receive all insurance  proceeds  payable with
respect  to the  damage  or  loss  of the  Collateral  up to the  amount  of any
outstanding Debt secured by such Collateral.  In the absence of Default,  Lender
is to use any such insurance  proceeds in an amount up to  $5,000,000.00  in the
aggregate to first  reimburse  Borrower for the cost of replacement or repair of
the  Collateral.  In the event Lender receives  insurance  proceeds in excess of
$5,000,000.00, Lender has the option to apply said excess proceeds to either the
cost of  replacement  or repair of the  Collateral  or on  account  of the Debt;
provided,  however,  Borrower shall not be subject to any prepayment penalty for
amounts  of the Debt  paid  down  pursuant  to  Lender's  receipt  of  insurance
proceeds.  Any such excess proceeds not used by Lender as herein provided are to
be paid promptly to Borrower.

     6.12(l)  In no  event  is  Lender  required  either  to (i)  ascertain  the
existence of or examine any  insurance  policy,  or (ii) advise  Borrower in the
event such  insurance  coverage  does not comply with the  requirements  of this
Agreement.

Section 6.13 Payment of Proceeds

     Upon receipt of any or all proceeds of the  Collateral,  the Borrower is to
pay such  proceeds  directly to Lender;  whereupon  Lender is to  discharge  its
security  interests to the extent of the  Collateral  whose  proceeds  have been
received by Lender. Nothing in this Section is intended to prohibit the Borrower
from retiring any Collateral  following the expiration of any applicable  useful
life thereof.


                                      E-29

<PAGE>

Section 6.14  Further Assurances

     The  Borrower  is  to  execute  such  further  instruments  and  documents,
including Uniform Commercial Code financing  statements,  as may be requested by
Lender in order to render  effective the terms and conditions of this Agreement.
Any such Uniform  Commercial  Code financing  statements are to be filed in such
locations as Lender may require, at Borrower's sole expense.  If requested,  the
Borrower is to provide Lender with satisfactory evidence of such filing(s) prior
to  any  advance  under  the  Loan.  The  Borrower  is to  provide  Lender  with
satisfactory  evidence that any common law or statutory  liens  affecting any of
the  Collateral,  including,  but not limited to landlords  lien,  materialman's
lien, or liens under the New Jersey  Construction  Lien Law have been discharged
and removed of record  prior to any advance  under the Loan.  The Borrower is to
cause each  Subsidiary  hereafter  formed to execute  Lender's form of unlimited
unconditional guaranty of payment of the Debt, as a guarantor,  and to otherwise
agree in writing (a) that the terms and  conditions of this  Agreement  apply to
such guarantor as if such guarantor were a "Borrower" and (b) that the guarantor
otherwise  consents to the terms of this  Agreement.  The form of such unlimited
unconditional guaranty of payment is attached hereto as Exhibit "G."

Section 6.15  Fees

     6.15(a)  Unused  Facility Fee. If, for any quarter  during the term of this
Agreement,  the average daily unpaid  balance of the  outstanding  advances made
pursuant  to Loan I for each day of such  quarter  does not  equal  the  maximum
amount of Loan I,  then  Borrower  is to pay to Lender a fee at a rate  equal to
one-quarter  of one percent (1/4%) per annum on the amount by which such maximum
exceeds such  average  daily  unpaid  balance.  Such fee is payable to Lender in
arrears on the last day of each quarter.

     6.15(b)  Commitment Fee. The Borrower is to pay to Lender a fee of one-half
of one percent  (1/2%) of the amount of Loan II and  one-quarter  of one percent
(1/4%) of the amount of Loan III due and payable as of the date hereof.

Section 6.16  Duration of Covenants

     The covenants made in this Article 6 are to be true,  accurate and complete
as of the  effective  date of this  Agreement  and are to be true,  accurate and
complete for the duration of the term of this Agreement.


                         ARTICLE 7. COVENANTS TO LENDER
                        REGARDING PROHIBITED TRANSACTIONS

     In order to induce Lender to execute this Agreement, the Borrower makes the
following negative covenants:

                                      E-30

<PAGE>


Section 7.1  Merger or Consolidation

     The Borrower is not to merge with,  consolidate with, or be acquired by any
other unrelated  corporation,  partnership,  or entity where the Borrower is not
the  surviving  entity,  without  the prior  written  consent of Lender;  if the
Borrower intends to purchase all or substantially  all of the assets or stock of
any other corporation, partnership, or entity, the

     Borrower  must first provide  notice to Lender and execute such  additional
documents as Lender may reasonably  require,  in accordance with Section 6.14 of
this Agreement, to maintain and apply the terms of this Agreement thereto.


Section 7.2  Sale of Assets

     Except in the ordinary  course of Borrower's  business,  Borrower is not to
sell,  transfer or encumber any of its material  property or assets necessary to
operate or conduct business, other than Collateral, unless the Borrower provides
prior written notice thereof to Lender.

Section 7.3  Other Liens

     During such time as either (a) any amount remains  outstanding on Loan I or
the agreement of Lender to lend thereunder has not been  terminated  pursuant to
the terms thereof or (b) there then exists a Default, Osteotech, Inc., Osteotech
Investment Corporation and CAM Implants, Inc. are not to incur, create or permit
to exist any mortgage,  assignment,  pledge,  hypothecation,  security interest,
lien or other encumbrance on any of their property or assets, including, but not
limited to, the items on Exhibit "A,"  whether now owned or hereafter  acquired,
except (a) liens for taxes not  delinquent;  (b) those  liens in favor of Lender
created by this  Agreement  and  related  documents;  (c) those  liens,  such as
carrier, warehousemen,  unemployment, worker's compensation, or retirement liens
arising by operation of law in the ordinary  course of business;  (d) easements,
rights-of-way,  restrictions  and  other  similar  encumbrances  which,  in  the
aggregate,  do not  materially  interfere  with the use or  occupation  of those
properties  or assets;  and (e) purchase  money  security  interests in specific
assets of the Borrower  acquired by the  liabilities  incurred and  permitted in
Section  7.4(c);  and (f) liens on property or assets of any entity  existing at
the time such entity is merged with or into or  consolidated  with the  Borrower
pursuant  to Section 7.1  provided  such liens were in  existence  prior to such
merger or consolidation.  In the event that (a) Loan I has been paid in full and
the agreement of Lender to lend thereunder has been  terminated  pursuant to the
terms thereof and (b) in the absence of Default,  the provisions of this Section
apply thereafter only to the Collateral.

                                      E-31

<PAGE>


Section 7.4  Other Liabilities

     During such time as either (a) any amount remains  outstanding on Loan I or
the agreement of Lender to lend thereunder has not been  terminated  pursuant to
the terms thereof or (b) there then exists a Default, Osteotech, Inc., Osteotech
Investment  Corporation and CAM Implants,  Inc. are not to incur, create, assume
or permit to exist any indebtedness or liability to any financial institution on
account of either borrowed money,  the deferred  purchase price of property,  or
the capital  lease of assets or property for the conduct of business  except (a)
the Debt to  Lender;  (b)  indebtedness  subordinated  to payment of the Debt on
terms approved by Lender in writing; (c) those liabilities otherwise incurred to
financial  institutions in an amount in the aggregate less than $500,000.00;  or
(d) those leases already in effect as of the effective date of this Agreement as
disclosed in the Delivered Financials.


Section 7.5  Guaranties

     The Borrower is not to assume,  guarantee,  endorse,  contingently agree to
purchase or otherwise become liable upon the obligation of any unrelated person,
firm or entity  except (a) by the  endorsement  of  negotiable  instruments  for
deposit  or  collection  or  similar  transactions  in the  ordinary  course  of
business; or (b) contingent  obligations under letters of credit in the ordinary
course of business for the purchase of merchandise for resale.

Section 7.6  Loans or Investments

     The Borrower is not to make any  advances or loans in excess of  $50,000.00
in the aggregate to any  unrelated  entity if there then exists a Default or any
amount outstanding on Loan I without the prior written consent of Lender.

Section 7.7 Sale of Collateral

     The Borrower is not to sell, conditionally sell, sell on approval, consign,
lease,  transfer,  remove from its premises set forth on Schedule 1 or otherwise
dispose of any Collateral  except  Collateral  identified on Exhibit "B"(iii) in
the ordinary  course of business or due to ordinary wear and tear and unless the
Borrower  promptly delivers the proceeds or other value (if any) received by the
Borrower to Lender to reduce the amount of the Debt.

Section 7.8  No Future Adverse Restrictions

     The  Borrower  is not to change its  Operating  Documents  or  execute  any
contract, mortgage, lease or other agreement which could be unduly burdensome or
materially and adversely affect its business and properties,  the results of its
operations,  or its ability to perform  according  to this  Agreement or related
documents.

                                      E-32

<PAGE>

Section 7.9  Change of Location or Name

     The  Borrower  is not to change the place  where its books and  records are
maintained,  change its name,  change the nature of its business in any material
respect, or transact business under any other name unless it first executes such
documents   reasonably  requested  by  Lender  to  preserve  Lender's  interests
hereunder.

Section 7.10  Change of Accounting Practices

     The  Borrower  is  not to  change  its  present  accounting  principles  or
practices  in any  material  respect,  except as may be  required  by changes in
generally accepted accounting principles or as business  circumstances,  laws or
regulations may require.

Section 7.11 Inconsistent Agreement

     The Borrower is not to enter into any  agreement  containing  any provision
that would be violated by the performance of Borrower's  obligations  under this
Agreement or under any document delivered or to be delivered by it in connection
therewith.

Section 7.12  Working Capital

     Osteotech, Inc. is not to cause or permit the Working Capital of Osteotech,
Inc.  and its  Subsidiaries  to be less than  $18,000,000.00,  the term  Working
Capital  means,  as of  the  time  of  any  determination  thereof,  the  amount
determined in accordance with generally accepted accounting principles,  applied
on a consistent  basis,  by which the current assets of Osteotech,  Inc. and its
Subsidiaries exceed the current liabilities.  The term "current assets" is to be
determined  in  accordance  with  generally   accepted   accounting   principles
consistently  applied and includes cash and liquid  investments on hand, prepaid
items,  Accounts  Receivable  and  Inventory at not in excess of cost or current
market value (whichever is lower); all after deduction of adequate and necessary
reserves.  The term "current liabilities" is to be determined in accordance with
generally accepted accounting  principles  consistently applied and includes all
indebtedness  payable within one year from the date of  determination.  The term
"indebtedness"  is  to be  determined  in  accordance  with  generally  accepted
accounting  principles  consistently applied and includes all items which should
be and are  included  on the  balance  sheet in  determining  total  liabilities
whether  demand,  installment,   contingent,  secured,  unsecured,   guaranteed,
endorsed or assumed.

Section 7.13  Current Ratio

     Osteotech,  Inc. is not to cause or permit the ratio of the current  assets
of Osteotech,  Inc. and its  Subsidiaries to the current  liabilities to be less
than 2:1. The terms "current assets" and "current liabilities" have the meanings
set forth in Section 7.12.

                                      E-33

<PAGE>


Section 7.14  Indebtedness  to Tangible Net Worth Ratio

     Osteotech,  Inc. is not to cause or permit the ratio of the indebtedness of
Osteotech,  Inc.  and its  Subsidiaries  to the tangible net worth to be greater
than  1.25:1.  The term  "tangible  net  worth"  meaning,  as of the time of any
determination  thereof,  the difference between (a) the sum of (i) the par value
(or value stated on the books of Osteotech,  Inc. and its  Subsidiaries)  of the
capital stock of all classes of Osteotech,  Inc. and its Subsidiaries,  plus (or
minus in the case of a deficit) (ii) the amount of a surplus, whether capital or
earned,  less (b) the sum of  treasury  stock,  unamortized  debt  discount  and
expense,  good  will,  trademarks,   trade  names,  patents,  deferred  charges,
leasehold  improvements  and other  intangible  assets,  and any write-up of the
value of any assets,  all  determined  in  accordance  with  generally  accepted
accounting principles consistently applied.

Section 7.15  EBITDA Ratio

     Osteotech,  Inc.  is not to cause or permit  the ratio of  earnings  before
interest, taxes, depreciation and amortization ("EBITDA") of Osteotech, Inc. and
its Subsidiaries to scheduled principal payments,  actual interest and dividends
paid during the prior fiscal year by Osteotech,  Inc. and its Subsidiaries to be
less than 1.5:1 as of the time of any  determination  thereof in accordance with
generally accepted accounting principles consistently applied.

Section 7.16  No Violations of Environmental Statutes

     The  Borrower  is not to cause or  permit to exist a  releasing,  spilling,
leaking, pumping,  emitting,  pouring,  emptying,  discharging,  or dumping of a
hazardous  substance,  hazardous waste,  pollutant or related substance as those
terms are defined by any Environmental  Laws, whether or not resulting in a lien
or claim being attached or made against them for damages or cleanup costs by the
State of New Jersey or the Federal government.

Section 7.17  Violation of Representations, Warranties and Covenants

     The  Borrower  is not to take any action or omit to take any  action  which
could render any of its representations, warranties or covenants to be untrue or
incapable of performance.

Section 7.18  Year 2000 Compatibility

     To Borrower's actual  knowledge,  (i) the hardware and software utilized by
Borrower are designed to be used prior to,  during and after  calendar year 2000
A.D. and such  hardware and software  will operate  during each such time period
without error relating to date data,  specifically  including any error relating
to, or the  conduct  of,  date data which  represents  or  references  different
centuries or more than one century,  (ii) the

                                      E-34

<PAGE>

hardware and software  utilized by Borrower will not  abnormally  end or provide
invalid or  incorrect  results as a result of date data,  and (iii) the hardware
and software  utilized by Borrower  have been  designed to ensure year 2000 A.D.
compatibility, including date data, century recognition, leap year, calculations
which accommodate same century and multi-century  formulas and date values,  and
date data interface values that reflect the century.

Section 7.19  Duration of Covenants Regarding Prohibited Transactions

     The  covenants  made in this  Article 7 are to  remain  in  effect  for the
duration of the term of this Agreement.


              ARTICLE 8. MISCELLANEOUS RIGHTS AND DUTIES OF LENDER

Section 8.1  Charges Against Credit Balances

     Lender,  without  notice,  in its sole and  absolute  discretion  following
Default, may charge and withdraw from any credit balance which Borrower may then
have with Lender or any affiliate of the Lender,  any amount(s) which become due
to Lender or which are  otherwise  expended  or  advanced  by Lender  under this
Agreement.

Section 8.2  Collections; Modification of Terms

     At any time  following  Default,  Lender  may,  in its  sole  and  absolute
discretion,  demand,  sue for,  collect or receive  any money or property at any
time  payable  or  receivable  on  account of or in  exchange  for,  or make any
compromises it deems  desirable,  or otherwise modify the terms or rights of the
Borrower  with  respect to any of the  Collateral  without  notice  and  without
otherwise discharging or affecting the Debt.

Section 8.3  Uniform Commercial Code

     At all times prior to and following Default,  Lender is entitled to all the
rights and  remedies of a secured  party under the  Uniform  Commercial  Code as
enacted in New Jersey and any other jurisdiction where Collateral is located.

Section 8.4  Preservation of Collateral

     At all times prior to and  following  Default,  Lender may take any and all
action which,  in its sole and absolute  discretion,  is necessary and proper to
preserve the Collateral,  or Lender's interests under this Agreement,  including
without limitation,  those duties of the Borrower imposed by this Agreement. Any
sums so expended by Lender are to be secured by the  Collateral and added to the
Debt.  Such  sums are to be  payable  on demand  with  interest  at the  highest
interest rate set forth in this Agreement  until repaid by Borrower.  Lender may
also demand  that escrow  accounts be  established  to fund  anticipated  future
expenditures in the event of Default.

                                      E-35

<PAGE>


Section 8.5  Power of Attorney

     Lender is hereby  irrevocably  appointed by Borrower as its lawful attorney
and  agent in fact to  execute  financing  statements  and other  documents  and
agreements as Lender may deem reasonably necessary for the purpose of perfecting
any security interests,  mortgages or liens contemplated by this Agreement.  All
acts by Lender or its designee are hereby  ratified  and  approved,  and neither
Lender,  nor  its  designee,  is to be  liable  for  any  acts  of  omission  or
commission,  or for any error of  judgment  or  mistake.  The powers of attorney
granted  to  Lender in this  Agreement  are  coupled  with an  interest  and are
irrevocable  during  the  term of  this  Agreement.  Whenever  Lender  deems  it
desirable that any legal action be instituted  with respect to any Collateral or
that  any  other  extraordinary  action  be taken in an  attempt  to  effectuate
collection  of any  Collateral,  Lender may reassign the item in question to the
Borrower  (without  recourse to Lender) and require the Borrower to proceed with
such legal or other action, at the Borrower's sole liability,  cost and expense,
in which  event all  amounts  collected  by the  Borrower  on such items are to,
nevertheless, be treated as proceeds of Collateral.


                               ARTICLE 9. DEFAULT

Section 9.1  Definition of Default

     The  Borrower  is in  default  and the  Debt  becomes  immediately  due and
payable,  without notice except as otherwise  expressly herein provided,  at the
option of Lender  upon the  occurrence  of any or all of the  following  events,
circumstances or determinations ("Default"):

     9.1(a) Upon the failure of the  Borrower to pay,  when due, all or any part
     of Debt as set forth in any instrument,  document,  or agreement evidencing
     the Debt executed  between the Borrower and Lender within seven (7) days of
     the sending by Lender of written notice of delinquency;

     9.1(b) Upon the failure of the Borrower to observe or perform any covenant,
     term or condition  required by this  Agreement or by any other  instrument,
     document or agreement  related thereto  executed by the Borrower and Lender
     within  seven (7) days of the  sending by Lender of written  notice of said
     failure;

     9.1(c)  Upon  the  occurrence  of any  event of  default  as  defined  with
     reference to any other indebtedness of the Borrower to any third parties so
     that the holder of such  indebtedness  declares such indebtedness due prior
     to its date of maturity;

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<PAGE>

     9.1(d) Upon any material breach of  representation,  warranty or disclosure
     by the Borrower set forth in this Agreement or any other document  executed
     in  connection  with the Loan, or if any such  representation,  warranty or
     covenant is no longer true or capable of performance;

     9.1(e) Upon the submission to Lender of any materially  false or fraudulent
     statement  by the  Borrower  in  connection  with  the  execution  of  this
     Agreement;

     9.1(f) Upon the liquidation of any Borrower;  except that  Osteotech,  Inc.
     may  liquidate CAM Implants,  Inc., a Colorado  corporation,  upon ten (10)
     days' prior notice to Lender;

     9.1(g) Upon the  commencement  by or as to the Borrower,  of any insolvency
     proceedings, bankruptcy proceedings, reorganization proceedings, assignment
     for the benefit of creditors,  or  proceedings  of like  character,  or the
     appointment of a receiver,  custodian or trustee as to any or all assets of
     the  Borrower;  or if  any of  the  foregoing  is  instituted  against  the
     Borrower,  and it is not dismissed  within  thirty (30) days  following the
     institution or initiation thereof;

     9.1(h) Upon the occurrence of any event of default otherwise defined in any
     separate instrument,  document,  or agreement existing now or in the future
     executed by the Borrower and Lender;

     9.1(i) Upon the entry of any  judgment  against  the  Borrower in excess of
     $200,000.00,  individually  or in  the  aggregate,  which  remains  unpaid,
     undischarged,  unsatisfied,  unbonded,  not made  subject  to an appeal and
     bonded on terms reasonably  acceptable to Lender, or undismissed  following
     thirty (30) days after entry;

     9.1(j)  Upon the  event  that  any or all of the  assets  of the  Borrower,
     including,  but not limited to the  Collateral  having a value in excess of
     $200,000.00,  is/are attached,  distrained,  levied upon or made subject to
     any  involuntary  lien  or  involuntary  security  interest  which  are not
     discharged  or removed  following  forty-five  (45) days after  attachment,
     distraint  or levy,  or  otherwise  contested  in good  faith on terms  and
     conditions reasonably satisfactory to Lender;

                                      E-37

<PAGE>


     9.1(k) Upon the event that any  indorser or  guarantor  is  determined,  or
     seeks to determine that it is to be no longer liable for its obligations as
     contemplated by this Agreement or related documents;

     9.1(l)  Upon any  indictment,  charge  or  proceeding  filed or  commenced,
     whether  criminal  or civil,  pursuant  to  Federal  or State  law  against
     Borrower for which  forfeiture of any of the property or assets of Borrower
     is a penalty;

     9.1(m) Upon the event that Borrower (a) becomes  unable or fails to pay its
     debts  generally as they become due, (b) admits in writing its inability to
     pay its  debts,  or (c)  proposes  or makes a  composition  agreement  with
     creditors,  a general  assignment  for the benefit of creditors,  or a bulk
     sale;

     9.1(n) In the event that,  with  respect to any Plan (as defined in Section
     5.10 of this  Agreement),  there  occurs  or  exists  any of the  events or
     conditions  described  in the  following  clauses  (a) through (h) and such
     event or condition,  together with all like events or conditions,  could in
     the  opinion  of  Lender  subject  Borrower  to any tax,  penalty  or other
     liability that might,  singly or in the aggregate,  have a material adverse
     effect on the  financial  condition  or the  properties  or  operations  of
     Borrower:(a) a reportable  event as defined in Section 4043 of ERISA, (b) a
     prohibited  transaction  as defined in Section 406 of ERISA or Section 4975
     of the Internal  Revenue  Code,  (c)  termination  of the Plan or filing of
     notice of intention to terminate,  (d)  institution by the Pension  Benefit
     Guaranty  Corporation of proceedings to terminate,  or to appoint a trustee
     to administer,  the Plan, or circumstances  that constitute grounds for any
     such proceedings,  (e) complete or partial withdrawal from a multi employer
     Plan, or the reorganization,  insolvency or termination of a multi employer
     Plan, (f) an accumulated  funding  deficiency  within the meaning of ERISA,
     (g)  violation of the  reporting,  disclosure  or fiduciary  responsibility
     requirements  of  ERISA or the  Internal  Revenue  Code,  or (h) any act or
     condition which could result in direct, indirect or contingent liability to
     any Plan or the Pension Benefit Guaranty Corporation;

     9.1(o) Upon the loss of any governmental license or permit which materially
     adversely  affects the operation of the business operated or to be operated
     on the Property;

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<PAGE>

     9.1(p)  Upon  the  submission  hereafter  of  any  written  representation,
     warranty or disclosure made to the Lender by the chief  financial  officer,
     chief executive officer,  or vice  president-finance  of the Borrower which
     proves to be  materially  false or  misleading  as of the date  when  made,
     whether or not such  representation or disclosure appears in this Agreement
     or in any other loan document executed in connection with the Loan; or

     9.1(q)  Upon the failure by the  Borrower  to  complete  the Project and to
     obtain a permanent  and  unconditional  certificate  of  occupancy  for all
     buildings to be  constructed  as part of the Project on or before  eighteen
     (18) months following the date hereof.


                   ARTICLE 10. REMEDIES OF LENDER UPON DEFAULT

Section 10.1  Rights of Lender

     Upon the  occurrence  of any event  constituting  Default,  Lender  has the
right, without notice:

     10.1(a)  Collection - To institute legal  proceedings for collection of the
     Debt against the Borrower, all of which becomes immediately payable;

     10.1(b)  Completion  of  Project  - To  enter  the  Property  and  complete
     construction of the Project and employ such persons in connection therewith
     and take whatever other action which may be necessary or desirable,  in the
     opinion of Lender,  to  complete  all or part of the  Project.  All sums so
     expended by Lender are secured as part of the Debt. It is  understood  that
     the Lender is under no  obligation  to  complete  the  construction  of the
     Project. For this purpose,  Borrower hereby constitutes and appoints Lender
     as its true and lawful  attorney-in-fact with full power of substitution in
     the Property to complete the Project in the name of Borrower;

     10.1(c) Accounts - To charge and withdraw from any credit balance which the
     Borrower may then have with Lender or with any  affiliate  of Lender,  such
     amounts as may be necessary to satisfy the Debt;

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<PAGE>

     10.1(d)  Existing  Commitments  - To  terminate  and  cancel  any  existing
     commitment  to the Borrower for a line of credit,  loan,  or balance of the
     Loan;

     10.1(e)  Assembly of Collateral - To seize the Collateral or to require the
     Borrower to assemble the Collateral  without need for Lender to post a bond
     or security,  and make it available at a Lender  designated place for sale,
     lease, or other  disposition by Lender (and to Lender, if a public sale) to
     satisfy the Debt without any right of Borrower to adjourn such sale;

     10.1(f) Tax  Notification  - To sign the name of  Borrower  upon any local,
     state or federal agency information release form including, but not limited
     to,  Tax  Information  Authorization  Form  8821  of the  Internal  Revenue
     Service; or

     10.1(g)  Cumulative  Rights - To exercise all rights and remedies set forth
     in this Agreement or otherwise  provided by law or other agreement (whether
     or not  referred to in this  Agreement)  on a  cumulative  basis and in any
     order selected by Lender.

Section 10.2  Application of Proceeds of Disposition of Collateral

     The proceeds of any sale, lease, or disposition of the Collateral are to be
applied  to  satisfy  the  following  items  defined  in this  Agreement  in the
following order:

     10.2(a) First, toward expenses in preserving interests of Lender,  expenses
     in realizing  upon security  interest,  and expenses of Lender in enforcing
     and  defending  rights as  defined  in this  Agreement  in  Article 2 or as
     otherwise defined and applied in the Mortgage.

     10.2(b)  Second,  on account  of the Loan or any other Debt or  obligations
     secured pursuant to this Agreement.

Section 10.3  Redemption of Collateral

     In the  event  that the  Borrower  may  elect to  redeem  any or all of the
Collateral  prior to the  sale,  lease,  or other  disposition  by  Lender,  the
Borrower is to pay to Lender,  in full, the Loan and that additional part of the
Debt that Lender requires in accordance with this Agreement.

                                      E-40

<PAGE>


Section 10.4  Notice of Disposition of Collateral

     Unless the  Collateral  is  perishable,  threatens  to decline  speedily in
value, or is of a type  customarily  sold on a recognized  market (as defined in
Article 9 of the Uniform  Commercial Code),  Lender is to give reasonable notice
of the time and place of any public sale,  lease,  or other  disposition  of the
Collateral  or of the time  after  which  any  private  sale or  other  intended
disposition of the Collateral is to be made.  Reasonable  notice is to be deemed
three (3) days. The  requirements of notice are to be met if such notice is sent
pursuant to this Agreement.

Section 10.5  Marshaling of Assets

     Lender has no  obligation  whatsoever  to proceed  first against any of the
Collateral  or  any  guarantor  before  proceeding  against  any  other  of  the
Collateral.  It is expressly  understood and agreed that all of such  Collateral
stands as equal  security  for the Debt and that Lender has the right to proceed
against or sell any/or all of the Collateral or other collateral in any order as
Lender, in its sole discretion, determines.


                      ARTICLE 11. MISCELLANEOUS PROVISIONS

Section 11.1  Binding Effect

     This Agreement is binding upon, inures to the benefit of and is enforceable
by the heirs, personal  representatives,  successors and assigns of the parties.
This  Agreement  is not  assignable  by the Borrower  without the prior  written
consent of Lender.  Lender may, without notice or consent of Borrower,  transfer
or assign all or part of its rights or interests hereunder to any third party.


Section 11.2  Non Waiver

     Neither a course of dealing,  nor a failure or delay on the part of Lender,
successors and assigns,  in the exercise of any right, power, or privilege is to
operate as a waiver.  A partial  exercise of any right,  power,  or privilege by
Lender is not to preclude any further right, power, or privilege,  nor be deemed
a waiver.  Any waiver or  modification  to this Agreement or any other document,
instrument,  or  agreement  executed  by  the  Borrower,  is to be in a  writing
executed by Lender. Any written modification signed by Lender and Borrower is to
be deemed part of this Agreement.

Section 11.3  Non Liability of Lender

     Lender has no duty to preserve or protect the  Collateral,  to preserve the
rights of the Borrower  against other parties,  or to sell,  lease, or otherwise
dispose of any or all of the  Collateral,  or its proceeds,  or in any priority,
unless it elects to do so as provided in this  Agreement.  This Section is to be
deemed an express waiver of the defense of impairment of Collateral.

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<PAGE>

Section 11.4  Right to Appraise

     11.4(a)  Lender 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 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.

     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.  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.

Section 11.5  Disclaimer by Lender on Documents

     Except for instruments or documents executed by Lender, Lender is not to be
deemed to assume any  liability or  responsibility  to the Borrower or any other
party for the correctness,  the validity,  or the genuineness of any instruments
or documents that may be executed in connection with this Agreement,  or for the
existence,  character,  quantity,  quality, condition, value, or delivery of any
Collateral  purporting  to be  represented  by any such  documents.  Lender,  by
accepting  the  security  interest  in  the  Collateral,  or  by  releasing  any
Collateral to the Borrower,  is not to be deemed to have assumed any  obligation
or  liability  to any  supplier or debtor of the  Borrower.  The  Borrower is to
indemnify  and hold  Lender  harmless  with  respect to any claim or  proceeding
arising out of such matters.

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<PAGE>

Section 11.6  Notices and Banking Days

     11.6(a)  Each  demand,  notice  or other  communication  by  Lender  to the
Borrower or by the Borrower to Lender is to be sent by certified  mail,  postage
prepaid, return receipt requested, or recognized delivery or courier service for
which a written receipt may be obtained.

     11.6(b) Notices to Lender are to be directed to the following address:

                                   SUMMIT BANK
                            Parkway 109 Office Center
                             328 Newman Springs Road
                               Red Bank, NJ 07701
                   Attention: David M. Nilsen, Vice President


     11.6(c)  Notices  to the  Borrower  are  to be  directed  to the  following
address:

                                 OSTEOTECH, INC.
                                  51 James Way
                               Eatontown NJ 07724
            Attention: Michael J. Jeffries, Executive Vice President

     11.6(d)  A  banking  day is any day that  Lender  designates  or  otherwise
conducts  business.  A payment or duty which becomes due on a day not designated
by Lender as a banking  day  automatically  becomes  due on the next day that is
designated by Lender as a banking day.

Section 11.7  Captions

     The captions and titles appearing in this Agreement are inserted solely for
the  convenience of the parties and do not in any way define,  limit or describe
the terms and conditions of this Agreement.

Section 11.8  Entire Agreement

     There are no  understandings,  agreements,  representations,  warranties or
covenants,  express or implied,  which are not specified herein, or in the other
written instruments, documents, or agreements referred to in this Agreement. All
prior oral and written understandings, negotiations, or agreements are deemed to
be superseded by the terms of this Agreement and such other written instruments,
documents or agreements specifically referred to in this Agreement.

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<PAGE>


Section 11.9  Severability

     In the event that any portion of this Agreement is deemed  unenforceable by
a Court of competent  jurisdiction,  such provision declared to be unenforceable
is to be deemed to have been omitted from this Agreement, and all such remaining
terms and conditions of this Agreement are to continue in full force and effect.

Section 11.10  Joint and Several Liability

     The terms and  conditions  of this  Agreement  are  jointly  and  severally
binding upon all parties  identified as the  Borrower.  Each Borrower is jointly
and severally liable without regard to which entity receives or has received the
proceeds of the loans and  advances  made  hereunder.  Each such  entity  hereby
acknowledges  that it expects  to derive  economic  advantage  from each loan or
advance made.

Section 11.11  Applicable Law and Consent to Jurisdiction

     This  Agreement is to be  interpreted  and enforced in accordance  with the
laws of the State of New Jersey (without regard to the conflicts of law rules of
New Jersey).  Borrower hereby  irrevocably  consents to the  jurisdiction of the
Courts of the State of New Jersey and to the  jurisdiction  of the United States
District  Court for the  District  of New  Jersey,  for the purpose of any suit,
action or other  proceeding  arising out of or relating to this Agreement or the
Debt, or the subject matter hereof or thereof. Borrower hereby waives and agrees
not to assert in any such suit,  action or  proceeding  any claim that it is not
personally  subject  to such  jurisdiction,  or any  right to  remove  an action
brought  in State to  Federal  Court,  or any claim  that such  suit,  action or
proceeding  is in an  inconvenient  forum or that the venue thereof is improper.
Borrower hereby consents that it may be served with process by the  notification
procedure set forth in this Agreement.

Section 11.12  Consents

     The Borrower consents:

     11.12(a) To any extension,  postponement of time of payment,  indulgence or
to any substitution, exchange or release of Collateral;

     11.12(b) To any addition to or release of any party or persons primarily or
secondarily liable.

Section 11.13  Waiver of Liability

     Lender is not liable due to any action or failure to act by Lender relating
to this Agreement or the Debt except as a result of Lender's gross negligence or
willful  misconduct.  This provision shall survive the termination or expiration
of this Agreement or payment of the Debt.

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<PAGE>


SECTION 11.14  WAIVE JURY TRIAL

     THE BORROWER,  FOR ITSELF, AND LENDER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY
JURY IN ANY  LITIGATION  RELATING TO THIS AGREEMENT OR THE DEBT AS AN INDUCEMENT
TO THE EXECUTION OF THIS AGREEMENT.

Section 11.15  Execution in Counterparts

     This Agreement may be executed in any number of counterparts, each of which
when so  executed is deemed to be an  original  and all of which taken  together
constitute but one and the same agreement.


                           ARTICLE 12. INDEMNIFICATION

     As part of the Debt,  Borrower  agrees to and hereby  indemnifies and holds
Lender  harmless from and against,  and to reimburse  Lender with respect to any
and all claims, demands, causes of action, losses, damages,  liabilities,  costs
and expenses (including  consequential  damages,  reasonable attorneys' fees and
court  costs) of any and every kind or  character,  known or  unknown,  fixed or
contingent,  asserted against or incurred by Lender at any time and from time to
time by reason of or arising out of:

     (a) the  material  breach of any  representation,  warranty  or covenant of
     Borrower set forth in this Agreement;

     (b) the failure of Borrower to perform any obligation herein required to be
     performed by Borrower; or

                                      E-45

<PAGE>


     (c) the ownership, construction,  occupancy, operation, use and maintenance
     of the Collateral.

This covenant survives the date on which the Debt is paid and performed in full
and notwithstanding whether Borrower has been released and discharged or whether
Lender becomes the owner of the Collateral.


                                ARTICLE 13. TERM

This Agreement is to remain in effect for so long as the Debt remains unpaid.


                       ARTICLE 14. PREPAYMENTS OF THE LOAN

     (a)  Borrower  may  prepay  all or part of the Loan,  in the  absence  of a
Default, upon:

     (i) giving sixty (60) days' prior notice to Lender of the intended  payment
     date; and

     (ii) paying to Lender, as liquidated damages,  the applicable amount stated
     below  as to that  portion  of the  Loan  prepaid  to the  extent  that the
     principal  amount prepaid bears interest at a then applicable  fixed annual
     interest rate:

          (a)  Multiply the outstanding principal balance which is being prepaid
               by the  difference  between the  interest  rate on the Loan being
               repaid and the  Reference  Rate (as  hereinafter  defined),  on a
               monthly  basis,  to arrive at a "Monthly  Payment  Differential";
               then

          (b)  Determining  a  present  value  which   reflects  the  number  of
               scheduled   monthly   payments   foregone  as  a  result  of  the
               prepayment,  the size of the Monthly Payment Differential and the
               Reference  Rate by  discounting  an annuity  equal to the Monthly
               Payment  Differential  for the number of months  remaining to and
               including  the  Maturity  Date of the  Loan  being  repaid  at an
               interest rate equal to the Reference  Rate. The standard  formula
               for the  present  value  of an  annuity  will be  used  for  this
               calculation.

                                      E-46

<PAGE>

The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the U.S. Treasury security closest in
maturity to the remaining term of the Loan being repaid. If there is more than
one U.S. Treasury security with such a maturity date, the selection is to be at
the average rate of such Treasury securities. There will be no discount if the
Reference Rate exceeds the interest rate otherwise payable to Lender.

     (b) Notwithstanding the foregoing prepayment  premiums,  prepayments may be
made  without  premium,  in the  absence of a Default,  (i) in amounts up to ten
(10%) percent of the original  principal amount of the Loan in any given year or
(ii) if the  prepayment  follows  a  refusal  by the  Lender  to  afford  future
financing requested in writing by the Borrower,  which is subsequently  provided
by a financial  institution under substantially similar terms as those requested
of the Lender by the Borrower, and as evidenced by a written commitment received
by the Borrower from an institutional lender, and such prepayment(s) are made to
retire  all Debt in full  simultaneously  to  enable  Borrower  to  accept  such
otherwise committed financing.  Lender's receipt of insurance proceeds shall not
be deemed a prepayment subject to prepayment  penalties for the purposes of this
Section 14(b).

                   ARTICLE 15. CROSS DEFAULT/CROSS COLLATERAL

     All other existing and future agreements between or among Lender, Borrower,
any guarantor  and/or any  Subsidiary are hereby amended so that a Default under
this Agreement is a default under such other agreements and a default under such
agreements is a Default under this Agreement.  Any collateral pledged under such
other  agreements  among Lender,  Borrower,  any guarantor and/or any Subsidiary
secures the Debt under this Agreement;  the Collateral under this Agreement also
secures all other existing and future obligations of the Borrower, any guarantor
and/or any Subsidiary to Lender or its affiliates.

           ARTICLE 16. FURTHER ACKNOWLEDGMENTS OF BORROWER AND LENDER

Section 16.1  Representation by Counsel


     Borrower and Lender  acknowledge and agree that they (i) have independently
reviewed and approved each and every provision of this Agreement,  including the
Exhibits and schedules attached hereto and any and all other documents and items
as they or their  counsel  have deemed  appropriate,  and (ii) have entered into
this  Agreement and have  executed the closing  documents  voluntarily,  without
duress or  coercion,  and have done all of the  above  with the  advice of their
legal counsel.

                                      E-47

<PAGE>


Section 16.2  Waiver of Objection

     Borrower  and Lender  acknowledge  and agree  that,  to the  extent  deemed
necessary by them or their  counsel,  they and their counsel have  independently
reviewed,  investigated  and/or  have  full  knowledge  of  all  aspects  of the
transaction  and the basis for the  transaction  contemplated  by this Agreement
and/or have  chosen not to so review and  investigate  (in which case,  Borrower
acknowledges  and agrees  that it has  knowingly  and upon the advice of counsel
waived any claim or defense  based on any fact or any aspect of the  transaction
that any investigation would have disclosed), including without limitation:

     (i) the risks and  benefits of the various  waivers of rights  contained in
     this Agreement,  including but not limited to, the waiver of the right to a
     jury trial; and

     (ii)  the  adequacy  of the  consideration  being  transferred  under  this
     Agreement.


Section 16.3  No Reliance Upon Lender

     Borrower  acknowledges and agrees that it has made its own investigation or
elected not to make such investigation as to all matters deemed material to this
transaction  and has not relied on any statement of fact or opinion,  disclosure
or non-disclosure  of the Lender,  and has not been induced by the Lender in any
way,  except  for the  consideration  recited  herein,  in  entering  into  this
Agreement and executing the closing documents  contemplated  hereby, and further
acknowledges that the Lender has not made any warranties or  representations  of
any kind in connection with this  transaction  except as specifically  set forth
herein or in the documents  executed in  conjunction  with this  Agreement,  and
Borrower is not relying on any such representations or warranties.


Section 16.4  All Material Matters Reviewed

     Borrower acknowledges and agrees that, after careful consideration, it does
not deem any matter not  reviewed or  investigated  by it to be material to this
Agreement and the transactions contemplated hereby.

                                      E-48

<PAGE>


     IN WITNESS WHEREOF, the Borrower and Lender have executed this Agreement.


Witness:                                     OSTEOTECH, INC.
                                             A Delaware Corporation

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Executive Vice President


Witness:                                     OSTEOTECH INVESTMENT
                                             CORPORATION
                                             A New Jersey Corporation

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Executive Vice President


Witness:                                     CAM IMPLANTS, INC.
                                             A Colorado Corporation

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Chief Financial Officer


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

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Managing Director


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

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Managing Director


Signatures continued ...

                                      E-49

<PAGE>


 ... continuation of signatures to Loan and Security Agreement



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

/s/ Michael J. Jeffries                      By: /s/ Richard W. Bauer
-----------------------------------              -------------------------------
                                                 RICHARD W. BAUER
                                                 Managing Director



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

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Managing Director


Witness:                                     OST DEVELOPMENT
                                             A Corporation of France

/s/ Patricia Franklyn Herbert, Esq.          By: /s/ Michael J. Jeffries
-----------------------------------              -------------------------------
                                                 MICHAEL J. JEFFRIES
                                                 Managing Director


Witness:                                     SUMMIT BANK


/s/ Paul H. Shur, Esq.                       By: /s/ David M. Nilsen
-----------------------------------              -------------------------------
                                                 DAVID M. NILSEN
                                                 Vice President

                                      E-50

<PAGE>


                                   SCHEDULE 1

A. LOCATIONS OF COLLATERAL AND NAME OF OWNER

OSTEOTECH, INC.
51 James Way
Eatontown NJ   07724

201 Industrial Way West
Eatontown NJ 07724

1151 Shrewsbury Avenue
Shrewsbury   NJ   07702

1163 Shrewsbury Avenue
Shrewsbury   NJ   07702


OSTEOTECH INVESTMENT CORPORATION
51 James Way
Eatontown NJ   07724

201 Industrial Way West
Eatontown NJ 07724

1151  Shrewsbury Avenue
Shrewsbury   NJ   07702

1163  Shrewsbury Avenue
Shrewsbury   NJ   07702


B. NAMES; LOCATION OF CHIEF EXECUTIVE OFFICE


     1. Names under which Borrower conducts business:

          a. Osteotech, Inc., a Delaware Corporation

          b. Osteotech Investment Corporation, a New Jersey Corporation

          c. Osteotech BV, a Company of the Netherlands

          d. Osteotech/CAM Services BV, a Company of the Netherlands

                                      E-51

<PAGE>


          e. H.C. Implants, BV, a Company of the Netherlands

          f. CAM Implants, BV, a Company of the Netherlands

          g. CAM Implants, Inc., a Colorado Corporation

          h. OST Developpement, a Corporation of France


     2. Chief executive office of Borrower - 51 James Way, Eatontown NJ 07724



C. SIC CODE OF BORROWER - 8090



D. ANY TRANSACTIONS


     1. In 1998,  Osteotech,  Inc. purchased a five (5%) percent equity interest
in OST  Developpement,  a corporation  of France,  and in 1999  Osteotech,  Inc.
purchased an additional eighty-five (85%) percent equity interest.

     2. Osteotech  Investment  Corporation  acquired all patents from Osteotech,
Inc. and licensed them back to Osteotech, Inc. in 1997.

                                      E-52

<PAGE>


                                   EXHIBIT "A"



                                      E-53

<PAGE>


                                    EXHIBIT A

(i)  "Accounts  Receivable,"  which  means,  all  accounts  (in  addition to the
definition contained in the Uniform Commercial Code) and any and all obligations
of any kind at any time due and/or  owing to the  Borrower and all rights of the
Borrower  to  receive  payment  or any  other  consideration  including  without
limitation,  invoices,  contract rights,  accounts  receivable,  notes,  drafts,
acceptances,  instruments  and all other debts,  obligations  and liabilities in
whatever form owing to Borrower from any person, firm,  governmental  authority,
corporation  or  any  other  entity,  all  security  therefor,  and  all  of the
Borrower's rights to goods sold (whether delivered,  undelivered,  in transit or
returned)  which  may  be  represented   thereby,   whether  or  not  earned  by
performance,  including without  limitation,  refunds,  tax refunds,  all of the
Borrower's rights in, to and under all purchase orders now or hereafter received
for goods or  services,  and all of  Borrower's  rights  as an unpaid  vendor or
lienor,  including stoppage in transit,  replevin and reclamation,  all of which
whether now existing or hereafter arising, together with all proceeds,  products
and insurance as to any and all of the foregoing.

(ii) "General Intangibles," which means, all general intangibles (in addition to
the  definition  contained  in the  Uniform  Commercial  Code)  and  any and all
personal property,  choses-in-action,  and things in action,  leases, income tax
refunds, copyrights, licenses, rights, patents, patent rights, franchise rights,
distributorship  rights,  trademarks,  trade  names,  service  marks,  trademark
rights,  formulae,  customer  lists and goodwill of the  Borrower,  all of which
whether now existing or hereafter arising, together with all proceeds,  products
and insurance as to any and all of the  foregoing.

(iii)  "Inventory,"  which means,  all inventory (in addition to the  definition
contained in the Uniform  Commercial  Code) and all goods,  merchandise or other
personal  property  held by the  Borrower  for sale or lease or to be  furnished
under labels and other devices,  names or marks affixed  thereto for purposes of
selling or  identification,  and all right,  title and  interest of the Borrower
therein and thereto,  all raw  materials,  work or goods in process or materials
and supplies of every nature used,  consumed or to be consumed in the Borrower's
business,  all  packaging  and  shipping  materials,  all of which  now owned or
hereafter  acquired by the  Borrower,  and wherever  located,  and all proceeds,
products and insurance as to any or all of the foregoing.

(iv) All moneys, securities,  drafts, notes, documents,  instruments (including,
without  limitation,  negotiable  instruments and  non-negotiable  instruments),
chattel paper,  items, and documents of title,  (including,  without limitation,
bills of lading, dock warrants,  dock receipts and warehouse  receipts),  of the
Borrower, whether now owned or existing or hereafter arising or acquired.

(v) All claims of the Borrower  against  third parties for loss or damage to, or
destruction of, any and all of the foregoing, all guarantees, security and liens
for  payment  of any  Accounts  Receivable  and  documents  of title,  policies,
certificates of insurance,  insurance proceeds,  securities,  chattel paper, and
other documents and instruments evidencing or pertaining thereto, and all files,
correspondence,  computer  programs,  tapes,  discs and related data  processing
software  owned or used by the  Borrower  or in which  Borrower  has

                                      E-54

<PAGE>

an interest which contains information  identifying any one or more of the items
referred to in (i) through (iv) above.

(vi) As to all of the  foregoing  (i)  through  (v)  inclusive,  cash  proceeds,
non-cash  proceeds and  products  thereof,  additions  and  accessions  thereto,
replacements and substitutions therefor.







                                      E-55

<PAGE>


                                   EXHIBIT "B"





                                      E-56

<PAGE>


                                    EXHIBIT B

(i) "Mortgage," which means the Mortgage and Security Agreement of even date, or
as it may be subsequently amended,  executed by the Borrower as to the Property,
and the Premises  defined  therein,  together  with all  proceeds,  products and
insurance as to any and all of the foregoing.

(ii)  "Assignment of Leases," which means the Assignment of Leases of even date,
or as it may be subsequently amended,  executed by the Borrower,  and the Leases
defined  therein,  together with all proceeds,  products and insurance as to any
and all of the foregoing.

(iii) "Loan III  Equipment,"  which  means,  all  equipment  (in addition to the
definition  contained  in the  Uniform  Commercial  Code)  and  all,  machinery,
furniture,  fixtures,  motor  vehicles and all other  tangible  assets,  and all
replacements,  repairs,  modifications,  alterations,  additions,  controls  and
operating accessories therefor, all substitutions and replacements therefor, all
accessions  and  additions  thereto,  as acquired by the Borrower  utilizing the
proceeds  of Loan  III,  and all  proceeds,  products  and  insurance  as to the
foregoing.

(iv) All moneys, securities,  drafts, notes, documents,  instruments (including,
without  limitation,  negotiable  instruments and  non-negotiable  instruments),
chattel paper,  items, and documents of title,  (including,  without limitation,
bills of lading, dock warrants,  dock receipts and warehouse  receipts),  of the
Borrower  relating  to any one or more of the items  referred  to in (i) through
(iii) above.

(v) All claims of the Borrower  against  third parties for loss or damage to, or
destruction  of, any one or more of the items  referred to in (i) through  (iii)
above, and documents of title,  policies,  certificates of insurance,  insurance
proceeds,  securities,  chattel  paper,  and  other  documents  and  instruments
evidencing  or  pertaining  thereto,  and all  files,  correspondence,  computer
programs, tapes, discs and related data processing software owned or used by the
Borrower  or in  which  Borrower  has an  interest  which  contains  information
identifying any one or more of the items referred to in (i) through (iv) above.

(vi) As to all of the  foregoing  (i)  through  (v)  inclusive,  cash  proceeds,
non-cash  proceeds and  products  thereof,  additions  and  accessions  thereto,
replacements and substitutions therefor.

                                      E-57

<PAGE>


                                   EXHIBIT "C"






                                      E-58

<PAGE>


                                    EXHIBIT C


Name of      Serial #      Date of    Cost        80%          Fixture or
  Owner    Description    Purchase             Discounted       Equipment
                                                 Cost







                                      E-59

<PAGE>



                                   EXHIBIT "D"









                                      E-60

<PAGE>


              UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC-1

INSTRUCTIONS:
1.   PLEASE TYPE all the information required on this form. Leave "File NO." and
     "Date & Hour" blank.
2.   Remove  Secured  Party  and  Debtor  copies  and send  other 2 copies  with
     interleaved  carbon paper to the filing Officer.  ENCLOSE FILING FEE. Check
     or money order for fee should be made payable to "N.J. Secretary of State."
3.   If the space provided for any item(s) on the form is inadequate the item(s)
     should be continued  on  additional  sheets 8 1/2" x 11".  Only one copy of
     such  additional  sheets need be presented to the Filing Officer with a set
     of 2 copies of the  Financial  Statement.  Long  schedules  of  collateral,
     indentures, etc. should be submitted on sheets which are 8 1/2" x 11".
4.   If  collateral  is crops  or goods  which  are or are to  become  fixtures,
     describe the real estate and give name and address of record owner.
5.   At the  time of  filing,  Filing  Officer  will  return  second  copy as an
     acknowledgement.  At  a  later  time,  secured  party  may  date  and  sign
     Termination   Legend  and  a  second  copy  as  a  Termination   Statement.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------

This FINANCING STATEMENT is presented to a Filing Officer for filing pursuant to
the Uniform Commercial Code
---------------------------------------------------------------------------------------------------------
<S>                      <C>                                                       <C>
FOR OFFICE USE ONLY      Debtor(s)  Name (Last Name, First) Complete Address       Maturity date (if any)
                                                                                   ----------------------





                                                                                   ----------------------
                                                                                   FOR OFFICE USE ONLY

                         ----------------------------------------------------------
                         Secured Party(ies) and Complete Address
                            SUMMIT BANK
                            210 MAIN STREET
                            HACKENSACK, NJ 07601


                         ----------------------------------------------------------
                         Assignee(s) of Secured Party and Complete Address




---------------------------------------------------------------------------------------------------------
This financing statement covers the following types (or items) of property:

               SUCH EQUIPMENT OR FIXTURES MORE PARTICULARLY DESCRIBED ON EXHIBIT
               "C" ATTACHED HERETO.




---------------------------------------------------------------------------------------------------------
When collateral is crops or fixtures complete this portion of form.
a.   Description of real estate (Sufficient to identify the property).



b.   Name and complete address of record owner.




---------------------------------------------------------------------------------------------------------

a. (X) Proceeds of Collateral are also covered.   b. (X) Products of Collateral are also covered.

No. of additional sheets presented. ( )
---------------------------------------------------------------------------------------------------------
( ) Filed with Register of Deeds and Mortgages of ___________ County.   ( )  Secretary of State
( ) Filed with the County Clerk of County.

---------------------------------------------------------------------------------------------------------
          Signature(s) of Debtor(s)                   Signature(s) of Secured Party(ies) or Assignee(s)

____________________________________________          ___________________________________________________

____________________________________________          ___________________________________________________
</TABLE>


FILING OFFICER COPY - This form of statement is approved by


                                      E-61

<PAGE>





                                   EXHIBIT "E"




                                      E-62

<PAGE>


                               EQUIPMENT LOAN NOTE

$17,000,000.00                                             _______________, 1999
                                                           Hackensack,    New
Jersey

     FOR VALUE RECEIVED,  the undersigned promises to pay to the order of SUMMIT
BANK (the "Lender"),  at 210 Main Street,  Hackensack,  New Jersey,  07601,  the
principal  sum of  Seventeen  Million  Dollars  ($17,000,000.00)  or the  amount
actually advanced pursuant to a certain Loan and Security Agreement of even date
herewith,  or as it may be  subsequently  amended,  signed by the undersigned as
"Borrower" ("Loan Agreement"), together with interest as herein provided.

     During each calendar month from the date hereof until the Conversion  Date,
this Note bears  interest and is repayable in monthly  installments  of interest
only at a  fluctuating  interest rate per annum equal at all times either to (a)
the Lender's Base Rate (as hereinafter  defined) of interest in effect from time
to time minus one-half of one percent  (1/2%),  each change in such  fluctuating
rate to take effect  simultaneously  with the corresponding  change in such Base
Rate,  without notice to  undersigned or (b) the applicable  Base LIBOR Rate, as
defined  in the Loan  Agreement,  plus 175 basis  points,  at the  option of the
Borrower pursuant to the Loan Agreement.  The first payment is to be made on the
first  day of the  month  following  the date of this  Note and each  subsequent
payment is to be made on the same day of each  successive  month. In no event is
the interest  rate to be higher than the maximum  lawful rate.  The Base Rate of
Lender means the  fluctuating  Base Rate of interest  established by Lender from
time to time  whether or not such rate shall be  otherwise  published.  The Base
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 Base
Rate of Lender,  such change is  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.  The term
"Conversion  Date" is defined as a date  which is no more than  eighteen  months
from the date hereof.

     In the absence of Default (as defined in the Loan  Agreement),  the term of
this  Note is  automatically  extended  for an  additional  seven  (7) year term
commencing on the Conversion  Date.  Thereupon,  this Note becomes  repayable in
eighty-four (84) equal monthly installments of principal,  together with accrued
interest at a fixed  annual rate based upon 175 basis points above the seven (7)
year United States  Treasury  Note Rate as published in The Wall Street  Journal
three (3) days prior to the Conversion  Date. The first payment is to be made on
the  first  day of the  second  month  following  the  Conversion  Date and each
subsequent  payment is to be made on the same day of each successive month. Upon
the eighty-fourth  (84th) such installment  payment (the "Maturity  Date"),  the
full amount of unpaid  principal,  together with unpaid accrued  interest is due
and payable.

                                      E-63

<PAGE>


     Interest is calculated in arrears on a daily basis upon the unpaid  balance
with each date representing 1/360th of a year in arrears.

     All payments on this Note are to be made in  immediately  available  lawful
money of the United States by direct charge to  Borrower's  or  Guarantor's  (as
defined in the Loan Agreement)  deposit accounts with Lender. In addition to the
provision above for direct charge of payments due, Lender is hereby  authorized,
at its sole  discretion,  to debit any other of the  Borrower's  or  Guarantor's
accounts for payments due  pursuant to the Loan  Agreement.  This  authorization
shall not affect the Borrower's or  Guarantor's  obligations to pay when due all
amounts  payable  under this Note,  whether  or not there are  sufficient  funds
therefor in such accounts.  The foregoing  authorization  is in addition to, and
not in limitation of, any rights of setoff.

     In the  event of  Default  (as  defined  in the Loan  Agreement),  interest
accrues on all amounts  payable  hereunder  at a rate equal to two (2%)  percent
above the Base Rate.  Borrower  acknowledges that: (i) such additional rate is a
material  inducement  to Lender to make the loans  evidenced by this Note;  (ii)
Lender  would not have made the loans  evidenced  by this Note in the absence of
the  agreement of the Borrower to pay such default rate;  (iii) such  additional
rate  represents  compensation  for  increased  risk to  Lender  that the  loans
evidenced  by this Note will not be repaid;  and (iv) such rate is not a penalty
and represents a reasonable estimate of (a) the cost to Lender in allocating its
resources  (both  personnel and  financial) to the ongoing  review,  monitoring,
administration  and  collection  of the  loans  evidenced  by this  Note and (b)
compensation to Lender for losses that are difficult to ascertain.

     In the event any  payment  is  received  by Lender  more than ten (10) days
after the date due, the undersigned  Borrower is to pay, to the extent permitted
by law, Lender a late charge of five (5%) percent of the overdue payment (but in
no event to be less than $25.00 nor more than  $2,500.00).  Any such late charge
assessed is immediately due and payable. Any payment received after 3:00 P.M. on
a banking day is deemed received on the next succeeding banking day.

     Except as otherwise  specified herein, each payment made under this Note is
to be applied first to the payment of any expenses or charges  payable  pursuant
to the Loan  Agreement  and accrued  interest,  and the balance  only applied to
principal amounts due under this Note.

     This Note is secured by such Collateral defined in and pursuant to the Loan
Agreement. All terms of the Loan Agreement are incorporated herein by reference.
In the  event  of  ambiguity  or  inconsistency  between  the  terms of the Loan
Agreement and the terms hereof, the terms of the Loan Agreement prevail.

     In the event that this Note is prepaid  following the  Conversion  Date and
prior to the Maturity  Date,  a  prepayment  premium will be payable by Borrower
equal to a sum which is calculated by a formula as follows:

                                      E-64

<PAGE>

     (a) Multiply the  outstanding  principal  balance which is being prepaid by
     the  difference  between the interest  rate on this Note and the  Reference
     Rate (as hereinafter  defined), on a monthly basis, to arrive at a "Monthly
     Payment Differential"; then

     (b)  Determining  a present  value which  reflects  the number of scheduled
     monthly  payments  foregone as a result of the prepayment,  the size of the
     Monthly  Payment  Differential  and the Reference  Rate by  discounting  an
     annuity equal to the Monthly Payment  Differential for the number of months
     remaining to and  including  the Maturity Date at an interest rate equal to
     the  Reference  Rate.  The  standard  formula for the  present  value of an
     annuity will be used for this calculation.

The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the United States Treasury security
closest in maturity to the remaining term of this Note. If there is more than
one United States Treasury security with such a maturity date, the selection is
to be at the average rate of such Treasury securities. There will be no discount
if the Reference Rate exceeds the interest rate otherwise payable pursuant to
this Note.

     Notwithstanding the foregoing prepayment premiums,  prepayments may be made
without premium, in the absence of a Default (as defined in the Loan Agreement),
(i) in amounts up to ten (10%) percent of the original  principal amount of this
Note in any given year or (ii) if the prepayment follows a refusal by the Lender
to afford  future  financing  requested  in  writing by the  Borrower,  which is
subsequently  provided by a financial  institution under  substantially  similar
terms as that  requested  of the Lender by the  Borrower,  and as evidenced by a
written  commitment  received by the Borrower from an institutional  lender, and
such  prepayment(s)  are  made to  retire  all  Debt  (as  defined  in the  Loan
Agreement) in full  simultaneously  to enable  Borrower to accept such otherwise
committed financing.

     The  undersigned  Borrower  hereby waives  demand,  notice of  non-payment,
protest, and all other notices or demands whatsoever.

     Lender's  books and records  are prima facie  evidence of the amount of the
obligations evidenced in this Note and are binding upon Borrower.

     Lender is hereby authorized to fill in any blank spaces in this Note and to
date this Note as of the applicable date and to correct patent errors herein.

     This Note has been  executed  and  delivered  in New Jersey and is deemed a
contract made under New Jersey law.

                                      E-65

<PAGE>


BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION  RELATING
TO THIS NOTE OR RELATED  DOCUMENTS AS AN INDUCEMENT TO THE  ACCEPTANCE BY LENDER
OF THIS NOTE.

Witness:                                      OSTEOTECH, INC.
                                              A Delaware Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President


Witness:                                      OSTEOTECH INVESTMENT
                                              CORPORATION
                                              A New Jersey Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President


Witness:                                      CAM IMPLANTS, INC.
                                              A Colorado Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Chief Financial Officer


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director
Signatures continued ...


<PAGE>



 ........................... continuation of signatures to Equipment Loan Note



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

_________________________                     By: ______________________________
                                                  RICHARD W. BAUER
                                                  Managing Director


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director


Witness:                                      OST DEVELOPEMENT
                                              A Corporation of France

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director

                                      E-67

<PAGE>


                           CONVERTIBLE REVOLVING NOTE

$5,000,000.00                                              _______________, 1999
                                                           Hackensack, New
Jersey

     Upon  the  earlier  of  (a)  Default  or (b)  the  Conversion  Date  and in
accordance with a certain Loan and Security Agreement of even date herewith,  or
as it may be  subsequently  amended,  signed by the  undersigned  as  "Borrower"
("Loan  Agreement") For Value Received,  the undersigned  promises to pay to the
order of SUMMIT BANK (the "Lender"), at 210 Main Street, Hackensack, New Jersey,
07601, the principal sum of Five Million Dollars  ($5,000,000.00)  or the amount
actually advanced pursuant to Loan I as defined in the Loan Agreement,  together
with interest as herein  provided.  The term "Default" is as defined in the Loan
Agreement. The term "Conversion Date" is defined as May 31, 2001.

     During each calendar month from the date hereof until the Conversion  Date,
this Note bears  interest and is repayable in monthly  installments  of interest
only at a  fluctuating  interest rate per annum equal at all times to either (a)
the Lender's Base Rate (as hereinafter  defined) of interest in effect from time
to  time  minus  three-quarters  of one  percent  (3/4%),  each  change  in such
fluctuating rate to take effect  simultaneously with the corresponding change in
such Base Rate,  without notice to undersigned or (b) the applicable  Base LIBOR
Rate as defined in the Loan  Agreement  plus 175 basis points,  at the option of
the Borrower pursuant to the Loan Agreement.  The first payment is to be made on
the first day of the month  following the date of this Note and each  subsequent
payment is to be made on the same day of each  successive  month. In no event is
the interest  rate to be higher than the maximum  lawful rate.  The Base Rate of
Lender means the  fluctuating  Base Rate of interest  established by Lender from
time to time  whether or not such rate shall be  otherwise  published.  The Base
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 Base
Rate of Lender,  such change is  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.

     In the absence of Default,  the  Borrower has the option to extend the term
of this Note for an additional  four (4) year term  commencing on the Conversion
Date  exercisable by written notice to Lender in the form and manner  prescribed
by the Loan  Agreement,  not less than thirty (30) days prior to the  Conversion
Date. If such option is so exercised, this Note becomes repayable in forty-eight
(48) equal monthly installments of principal,  together with accrued interest at
a fixed  annual  rate based  upon 175 basis  points  above the four year  United
States Treasury Note Rate as published in The Wall Street Journal three (3) days
prior to the  Conversion  Date. The first payment is to be made on the first day
of the second month following the Conversion Date and each subsequent payment is
to be made on the  same day of each  successive  month.  Upon  the  forty-eighth
(48th) such installment payment (the "Maturity Date"), the full amount of unpaid
principal, together with unpaid accrued interest is due and payable.

                                      E-68

<PAGE>


     Interest is calculated  on a daily basis upon the unpaid  balance with each
date representing 1/360th of a year in arrears.

     All payments on this Note are to be made in  immediately  available  lawful
money of the United States by direct charge to  Borrower's  or  Guarantor's  (as
defined in the Loan Agreement)  deposit accounts with Lender. In addition to the
provision above for direct charge of payments due, Lender is hereby  authorized,
at its sole  discretion,  to debit any other of the  Borrower's  or  Guarantor's
accounts for payments due  pursuant to the Loan  Agreement.  This  authorization
shall not affect the Borrower's or  Guarantor's  obligations to pay when due all
amounts  payable  under this Note,  whether  or not there are  sufficient  funds
therefor in such accounts.  The foregoing  authorization  is in addition to, and
not in limitation of, any rights of setoff.

     In the event of Default,  interest accrues on all amounts payable hereunder
at a rate equal to two (2%) percent above the Base Rate.  Borrower  acknowledges
that: (i) such  additional  rate is a material  inducement to Lender to make the
loans  evidenced  by this  Note;  (ii)  Lender  would  not have  made the  loans
evidenced  by this Note in the absence of the  agreement  of the Borrower to pay
such default  rate;  (iii) such  additional  rate  represents  compensation  for
increased  risk to  Lender  that the  loans  evidenced  by this Note will not be
repaid; and (iv) such rate is not a penalty and represents a reasonable estimate
of (a) the cost to  Lender in  allocating  its  resources  (both  personnel  and
financial) to the ongoing review,  monitoring,  administration and collection of
the loans evidenced by this Note and (b)  compensation to Lender for losses that
are difficult to ascertain.

     In the event any  payment  is  received  by Lender  more than ten (10) days
after the date due, the undersigned  Borrower is to pay, to the extent permitted
by law, Lender a late charge of five (5%) percent of the overdue payment (but in
no event to be less than $25.00 nor more than  $2,500.00).  Any such late charge
assessed is immediately due and payable. Any payment received after 3:00 P.M. on
a banking day is deemed received on the next succeeding banking day.

     Except as otherwise  specified herein, each payment made under this Note is
to be applied first to the payment of any expenses or charges  payable  pursuant
to the Loan  Agreement  and accrued  interest,  and the balance  only applied to
principal amounts due under this Note.

     This Note is secured by such Collateral defined in and pursuant to the Loan
Agreement. All terms of the Loan Agreement are incorporated herein by reference.
In the  event  of  ambiguity  or  inconsistency  between  the  terms of the Loan
Agreement and the terms hereof, the terms of the Loan Agreement prevail.

     In the event that this Note is prepaid  following the  Conversion  Date and
prior to the

                                      E-69

<PAGE>

Maturity  Date, a prepayment  premium will be payable by Borrower equal to a sum
which is calculated by a formula as follows:


     (a) Multiply the  outstanding  principal  balance which is being prepaid by
     the  difference  between the interest  rate on this Note and the  Reference
     Rate (as hereinafter  defined), on a monthly basis, to arrive at a "Monthly
     Payment Differential"; then

     (b)  Determining  a present  value which  reflects  the number of scheduled
     monthly  payments  foregone as a result of the prepayment,  the size of the
     Monthly  Payment  Differential  and the Reference  Rate by  discounting  an
     annuity equal to the Monthly Payment  Differential for the number of months
     remaining to and  including  the Maturity Date at an interest rate equal to
     the  Reference  Rate.  The  standard  formula for the  present  value of an
     annuity will be used for this calculation.

The Reference Rate is to be equal to the current yield to maturity, on the date
five (5) days prior to prepayment, of the United States Treasury security
closest in maturity to the remaining term of this Note. If there is more than
one United States Treasury security with such a maturity date, the selection is
to be at the average rate of such Treasury securities. There will be no discount
if the Reference Rate exceeds the interest rate otherwise payable pursuant to
this Note.

     Notwithstanding the foregoing prepayment premiums,  prepayments may be made
without premium, in the absence of a Default (as defined in the Loan Agreement),
(i) in amounts up to ten (10%) percent of the original  principal amount of this
Note in any given year or (ii) if the prepayment follows a refusal by the Lender
to afford  future  financing  requested  in  writing by the  Borrower,  which is
subsequently  provided by a financial  institution under  substantially  similar
terms as that  requested  of the Lender by the  Borrower,  and as evidenced by a
written  commitment  received by the Borrower from an institutional  lender, and
such  prepayment(s)  are  made to  retire  all  Debt  (as  defined  in the  Loan
Agreement) in full  simultaneously  to enable  Borrower to accept such otherwise
committed financing.

     The  undersigned  Borrower  hereby waives  demand,  notice of  non-payment,
protest, and all other notices or demands whatsoever.

     Lender's  books and records  are prima facie  evidence of the amount of the
obligations evidenced in this Note and are binding upon Borrower.

     Lender is hereby authorized to fill in any blank spaces in this Note and to
date this Note as of the applicable date and to correct patent errors herein.

                                      E-70

<PAGE>

     This Note has been  executed  and  delivered  in New Jersey and is deemed a
contract made under New Jersey law.

BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING
TO THIS NOTE OR RELATED DOCUMENTS AS AN INDUCEMENT TO THE ACCEPTANCE BY LENDER
OF THIS NOTE.

Witness:                                      OSTEOTECH, INC.
                                              A Delaware Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President


Witness:                                      OSTEOTECH INVESTMENT
                                              CORPORATION
                                              A New Jersey Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President


Witness:                                      CAM IMPLANTS, INC.
                                              A Colorado Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Chief Financial Officer


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director

Signatures continued ......

                                      E-71

<PAGE>


 ....................... continuation of signatures to Convertible Revolving Note



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

_________________________                     By: ______________________________
                                                  RICHARD W. BAUER
                                                  Managing Director



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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director



Witness:                                      OST DEVELOPMENT
                                              A Corporation of France

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director




                                      E-72


<PAGE>


                               MORTGAGE TERM NOTE

$4,500,000.00                                             _______________, 1999
                                                          Hackensack, New Jersey

     FOR VALUE RECEIVED,  the undersigned promises to pay to the order of SUMMIT
BANK (the "Lender"),  at 210 Main Street,  Hackensack,  New Jersey,  07601,  the
principal  sum of  Four  Million  Five  Hundred  Thousand  Dollars  ($4,500,000)
together with interest as herein  provided and in accordance with a certain Loan
and Security Agreement dated ______________,  1999, or as it may be subsequently
amended, signed by the undersigned as "Borrower" ("Loan Agreement").

     This note bears interest during each calendar month from the date hereof at
a fixed rate of ________ ( %) percent per annum. Principal and interest is to be
paid during and  throughout  the period of one hundred  twenty  (120)  months in
equal  payments of principal and interest  (calculated on a twenty year mortgage
amortization  basis) in the  amount  of  ________________  ($ )  Dollars  by the
Borrower to Lender on the first day of each month commencing on the second month
following  the  date  hereof  and  on the  same  day of  each  successive  month
thereafter. Upon the one hundred twentieth (120th) such installment payment (the
"Maturity  Date") the full  amount of unpaid  principal,  together  with  unpaid
accrued interest is due and payable.

     Interest is calculated  on a daily basis upon the unpaid  balance with each
date representing 1/360th of a year in arrears.

     All payments on this Note are to be made in  immediately  available  lawful
money of the United States by direct charge to Borrower's  deposit accounts with
Lender.  In addition to the  provision  above for direct charge of payments due,
Lender is hereby authorized,  in its sole discretion,  to debit any other of the
Borrower's  accounts  for  payments  due  pursuant to the Loan  Agreement.  This
authorization  shall not affect the  Borrower's  obligations to pay when due all
amounts  payable  under this Note,  whether  or not there are  sufficient  funds
therefor in such accounts.  The foregoing  authorization  is in addition to, and
not in limitation of, any rights of setoff.

     In the event of Default (as defined in the Loan Agreement) interest accrues
on all amounts  payable  hereunder at a rate equal to two (2%) percent above the
fixed rate of interest provided in this Note.  Borrower  acknowledges  that: (i)
such  additional  rate is a  material  inducement  to  Lender  to make the loans
evidenced by this Note;  (ii) Lender would not have made the loans  evidenced by
this Note in the absence of the  agreement  of the  Borrower to pay such default
rate;  (iii) such additional rate represents  compensation for increased risk to
Lender that the loans  evidenced by this Note will not be repaid;  and (iv) such
rate is not a penalty and  represents a  reasonable  estimate of (a) the cost to
Lender in allocating its resources (both personnel and financial) to the ongoing
review, monitoring, administration and collection of the loans evidenced by this
Note and (b) compensation to Lender for losses that are difficult to ascertain.

                                      E-73

<PAGE>


     In the event any  payment  is  received  by Lender  more that ten (10) days
after the date due, the undersigned  Borrower is to pay, to the extent permitted
by law, Lender a late charge of five (5%) percent of the overdue payment (but in
no event to be less than $25.00 nor more that  $2,500.00).  Any such late charge
assessed is immediately due and payable. Any payment received after 3:00 P.M. on
a banking day is deemed received on the next succeeding banking day.

     Except as otherwise  specified herein, each payment made under this Note is
to be applied first to the payment of any expenses or charges  payable  pursuant
to the Loan  Agreement  and accrued  interest,  and the balance  only applied to
principal amounts due under this Note.

     This Note is secured by such Collateral defined in and pursuant to the Loan
agreement. All terms of the Loan Agreement are incorporated herein by reference.
In the  event  of  ambiguity  or  inconsistency  between  the  terms of the Loan
Agreement and the terms hereof, the terms of the Loan Agreement prevail.

     In the event  that this  Note is  prepaid  prior to the  Maturity  Date,  a
prepayment  premium  will  be  payable  by  Borrower  equal  to a sum  which  is
calculated by a formula as follows:

          (a) Multiply the outstanding  principal balance which is being prepaid
          by the  difference  between  the  interest  rate on this  Note and the
          Reference Rate (as hereinafter defined), on a monthly basis, to arrive
          at a "Monthly Payment Differential"; then

          (b) Determining a present value which reflects the number of scheduled
          monthly payments  foregone as a result of the prepayment,  the size of
          the Monthly Payment Differential and the Reference Rate by discounting
          an annuity equal to the Monthly Payment Differential for the number of
          months  remaining to and  including  the Maturity  Date at an interest
          rate equal to the Reference Rate. The standard formula for the present
          value of an annuity will be used for this calculation.

The Reference Rate is to be equal to the current yield to maturity,  on the date
five (5) days  prior to  prepayment,  of the  United  States  Treasury  security
closest in maturity to the  remaining  term of this Note.  If there is more than
one United States Treasury  security with such a maturity date, the selection is
to be at the average rate of such Treasury securities. There will be no discount
if the Reference  Rate exceeds the interest rate otherwise  payable  pursuant to
this Note.

                                      E-74

<PAGE>



     Notwithstanding the foregoing prepayment premiums,  prepayments may be made
without premium, in the absence of a Default (as defined in the Loan Agreement),
(i) in amounts up to ten (10%) percent of the original  principal amount of this
Note in any given year or (ii) if the prepayment follows a refusal by the Lender
to afford  future  financing  requested  in  writing by the  Borrower,  which is
subsequently  provided by a financial  institution under  substantially  similar
terms as that  requested  of the Lender by the  Borrower,  and as evidenced by a
written  commitment  received by the Borrower from an institutional  lender, and
such  prepayment(s)  are  made to  retire  all  Debt  (as  defined  in the  Loan
Agreement) in full  simultaneously  to enable  Borrower to accept such otherwise
committed financing.

     The  undersigned  Borrower  hereby waives  demand,  notice of  non-payment,
protest, and all other notices or demands whatsoever.

     Lender's  books and records  are prima facie  evidence of the amount of the
obligations evidenced in this Note and are binding upon Borrower.

     Lender is hereby authorized to fill in any blank spaces in this Note and to
date this Note as of the applicable date and to correct patent errors herein.

     This Note has been  executed  and  delivered  in New Jersey and is deemed a
contract made under New Jersey law.



BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION  RELATING
TO THIS NOTE OR RELATED  DOCUMENTS AS AN INDUCEMENT TO THE  ACCEPTANCE BY LENDER
OF THIS NOTE.


Witness:                                      OSTEOTECH, INC.
                                              A Delaware Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President





Signatures continued ......

                                      E-75

<PAGE>


 ........................... continuation of signatures to Mortgage Term Note


Witness:                                      OSTEOTECH INVESTMENT
                                              CORPORATION
                                              A New Jersey Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President


Witness:                                      CAM IMPLANTS, INC.
                                              A Colorado Corporation

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Chief Financial Officer


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director


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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director


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

_________________________                     By: ______________________________
                                                  RICHARD W. BAUER
                                                  Managing Director



Signatures continued ...

                                      E-76

<PAGE>



 ........................... continuation of signatures to Mortgage Term Note




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

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director


Witness:                                      OST DEVELOPMENT
                                              A Corporation of France

_________________________                     By: ______________________________
                                                  MICHAEL J. JEFFRIES
                                                  Managing Director

                                      E-77

<PAGE>





                                   EXHIBIT "F"





                                      E-78

<PAGE>


                             COMPLIANCE CERTIFICATE


I, Steven T.  Sobieski,  hereby certify that I am the duly elected and qualified
Vice President of Finance and Treasurer of Osteotech,  Inc. (the  "Company"),  a
corporation  organized  pursuant  to the laws of the State of  Delaware,  and do
further hereby  certify,  on behalf of the Company in connection with a Loan and
Security  Agreement  between  the  Company,  as the  borrower,  and Summit  Bank
(formerly  United Jersey  Bank/Central,  N.A.) (the "Bank"),  a national banking
association,  as the lender,  dated as of May 27, 1993,  as amended,  (the "Loan
Agreements")  and all other  agreements and  transactions  to be entered into or
consummated  pursuant to the Loan Agreement  (collectively the "Loan Documents")
and the waiver letter dated  September 23, 1998 that from October 14, 1998,  the
last date on which the Bank was provided with a Compliance Certificate,  through
the date hereof:


     1.   I have reviewed the Loan  Documents  and I am generally  familiar with
          all  aspects  of the  business  of  the  Company  as it is  now  being
          conducted.

     2.   Based  upon  a  review  of  the  Company's  activities  and  financial
          statements  during the period covered hereby,  the Company has to date
          complied with all of the covenants and agreements  contained in and as
          required by the Loan  Agreement  and the Loan  Documents,  no Event of
          Default (as that term is defined in the Loan  Agreement)  has occurred
          and no event which, with the giving of notice or the lapse of time, or
          both, would constitute an Event of Default.

     3.   All  prior  advances,  if any,  under  the Loan  Agreement  have  been
          utilized for purposes permitted thereunder.

     4.   The  Company has not used any  advances  under the Loan  Agreement  to
          transfer  funds or property to any Affiliate of the Company during the
          period covered hereby.





Dated: Nov. 13, 1998                          /s/ Steven T. Sobieski
       -----------------------                ----------------------------------
                                              Steven T.  Sobieski
                                              Vice President of Finance &
                                              Treasurer



                                      E-79

<PAGE>







                                   EXHIBIT "G"






                                      E-80


<PAGE>


                          UNLIMITED CONTINUING GUARANTY

STATEMENTS

     A.  OSTEOTECH,   INC.,  a  Delaware   Corporation;   OSTEOTECH   INVESTMENT
CORPORATION,   a  New  Jersey  Corporation;   CAM  IMPLANTS,  INC.,  a  Colorado
Corporation;   OSTEOTECH,   B.V.,  H.C.  IMPLANTS,  B.V.,  CAM  IMPLANTS,  B.V.,
OSTEOTECH/CAM  SERVICES,  B.V.,  each a  Company  of The  Netherlands;  and  OST
DEVELOPPEMENT, a Corporation of France (jointly and severally "Borrower") has or
is about to  receive  a loan and may  desire in the  future to obtain  financial
accommodations from SUMMIT BANK ("Lender").

     B.  ___________________________________("Guarantor"),  having an address of
____________________________________,  has agreed to  guaranty  in  writing  the
performance  of all debts,  liabilities  and duties of the Borrower to Lender in
order  to  induce   Lender  to  render  or  to  continue  to  render   financial
accommodations to the Borrower.

     NOW,   THEREFORE,   in  consideration   of  the  promises,   covenants  and
understandings  set forth in this Agreement and the benefits to be received from
the  performance of such promises,  covenants and  understandings  and for other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged, the Guarantor agrees as follows:

GUARANTY

     ARTICLE 1. GUARANTY OF THE OBLIGATIONS OF THE BORROWER

Section 1.1 Existing Obligations

     The  Guarantor  agrees to  unconditionally  pay and perform,  when due, all
debts,  liabilities  and duties of every kind and  character now existing of the
Borrower to Lender regardless of whether such debts,  liabilities and duties may
be the result of loans, advances,  depository accounts, funds transfers,  direct
or  indirect,  primary  or  secondary,  joint or  several,  fixed or  contingent
(regardless  of  form,  the  enforceability  of  any  underlying  instrument(s),
existence  of  collateral  therefor,   whether  guaranteed,   or  subject  to  a
participation agreements).

Section 1.2 Future Advances

     The Guarantor agrees to unconditionally  pay and perform,  when due, future
advances, loans, debts, liabilities and duties of the Borrower to Lender whether
the result of loans, advances,  depository accounts, funds transfers,  direct or
indirect,   primary  or  secondary,   joint  or  several,  fixed  or  contingent
(regardless  of  form,  the  enforceability  of  any  underlying  instrument(s),
existence  of  collateral  therefor,   whether  guaranteed,   or  subject  to  a
participation agreement).

                                      E-81

<PAGE>


Section 1.3 Expenses in Preserving Interests of Lender

     The Guarantor agrees to  unconditionally  pay, on demand,  advances made by
Lender to or for the account of the Borrower,  including advances for insurance,
repairs  to any  collateral,  taxes,  and such costs  incurred  by Lender in the
discharge  of  any  lien,  security  interest,  encumbrance,  lease,  pledge  or
assignment.

Section 1.4 Obligations to Lender Affiliates

     The  Guarantor  agrees to  unconditionally  pay and perform,  when due, all
other debts, liabilities and duties of every kind, and character of the Borrower
to any  affiliate(s) or participant of Lender,  whether such debts,  liabilities
and duties exist now or may exist in the future,  and regardless of whether such
debts,  liabilities and duties may be the result of loans, advances,  depository
accounts, funds transfers,  direct or indirect,  primary or secondary,  joint or
several,  fixed or contingent  (regardless  of form, the  enforceability  of any
underlying instrument(s),  existence of collateral therefor, whether guaranteed,
or subject to a participation agreement).

Section 1.5 Expenses in Realizing Upon Security Interest

     The  Guarantor  agrees to  unconditionally  pay,  on demand,  all costs and
expenses,  including  reasonable attorneys fees, incurred by Lender to preserve,
collect,  protect,  foreclose,  sell,  or  otherwise  realize  upon its security
interest in any security  agreement executed by the Borrower which grants Lender
a security interest or in any other document  reflecting any other obligation of
the Borrower or any indorser or guarantor in favor of the Lender.

Section 1.6 Expenses in Enforcing and Defending Rights

     The  Guarantor  agrees to  unconditionally  pay,  on demand,  all costs and
expenses,  including  reasonable  attorneys  fees,  incurred  by  Lender  in the
prosecution  or defense  of any action or  proceeding  relating  to the  subject
matter of any agreement or  instrument  executed by the Borrower or any indorser
or guarantor of the obligations of the Borrower to Lender.


                         ARTICLE 2. COLLATERAL SECURITY

     The Guarantor  acknowledged and agrees that the validity and enforceability
of this  Guaranty is not  affected by the  existence,  value or condition of any
collateral security for any of the provisions of Article 1.

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<PAGE>


                      ARTICLE 3. VARIATIONS OF THE TERMS OF
                         THE OBLIGATIONS OF THE BORROWER

     The Guarantor acknowledges and agrees that, without notice, the performance
or  payment  by  the  Borrower  of  any  of  its  debts,  liabilities,   duties,
representations,  covenants and warranties may be waived, modified, accelerated,
extended,  compromised,  renewed or  subordinated  (in whole or in part), or any
collateral   of  either  the   Guarantor  or  the  Borrower  may  be  exchanged,
surrendered,  ignored or disposed of, and any liens or security interests may be
abandoned,  extended,  modified or discharged,  by Lender without  affecting the
liability of the Guarantor in this Guaranty.  The Guarantor expressly waives any
defense that Lender, by its action or inaction, has impaired any such collateral
or any rights of subrogation. The Guarantor waives (1) the option to demand that
any  collateral for this Guaranty or any obligation of the Borrower to Lender be
marshaled  and (2)  any  right  of  subrogation  as  long  as any  obligation(s)
described in this Guaranty remain outstanding or unsatisfied.


                  ARTICLE 4. GUARANTOR OBLIGATED TO BE INFORMED

     The Guarantor has established adequate means of obtaining,  on a continuing
basis, all facts pertaining to the risks of this Guaranty. The Guarantor assumes
the  responsibility  for  being and  keeping  itself  informed  of all the facts
pertaining to such risks and agrees that Lender has no duty to disclose any such
facts to the  Guarantor.  The Guarantor  recognizes  that this Guaranty  imposes
certain risks upon the Guarantor and that these risks may increase in the future
due to changing  circumstances.  Any such  risks,  increases  in such risks,  or
future risks do not and will not alter the  liability  of the  Guarantor in this
Guaranty.


             ARTICLE 5. COLLATERAL FOR UNLIMITED CONTINUING GUARANTY

     To secure this Guaranty,  the Guarantor hereby pledges,  sets over, assigns
and grants a security  interest and right of set-off to Lender in every  account
of the Guarantor with Lender or its affiliates,  in any other  property,  rights
and  instruments  of the  Guarantor  which  may be  delivered  or come  into the
possession, custody or control of Lender, and such additional security interests
which may be  granted  by the  Guarantor  to Lender  in any  separate  agreement
executed between the Guarantor and Lender.


                    ARTICLE 6. CONTINUING NATURE OF GUARANTY

     This Guaranty is a continuing  guaranty.  The borrower or any  co-guarantor
may be released or  discharged  by Lender  without  affecting  the  liability or
obligations of the Guarantor.

                                      E-83

<PAGE>


                ARTICLE 7. CONSENT TO LOAN AND SECURITY AGREEMENT

     The Guarantor  agrees to, consents to the terms of, and otherwise agrees to
be bound to the terms of a certain Loan and Security  Agreement  executed by the
Borrower,  as amended from time to time ("Loan Agreement"),  as if the Guarantor
had executed same as a Borrower.


                            ARTICLE 8. NO CONDITIONS

     The Guarantor  agrees that this Guaranty is effective  irrespective  of and
hereby waives notice of default,  notice of dishonor,  notice of protest, notice
of presentment,  or acceptance of this Guaranty.  This is a guaranty of payment,
not collection.


                        ARTICLE 9. RECOVERY OF PREFERENCE

     The Guarantor  agrees that if, at any time,  all or any part of any payment
previously  applied by Lender on account of this  Guaranty or  obligation of the
Borrower  must be  returned by Lender for any  reason,  whether by court  order,
administrative  order, or settlement,  the Guarantor remains liable for the full
amount  returned  as if such  payment  had never been  received  by Lender,  and
notwithstanding  any termination by Lender of this Guaranty or the  cancellation
of any instrument(s) evidencing the obligations of the Borrower.


                         ARTICLE 10. NO ADVERSE ACTIONS

     The Guarantor agrees that it is not to take any action, or fail to take any
action, which would render any representation,  warranty, covenant or obligation
of itself or of the Borrower to Lender to be untrue or incapable of performance.


                           ARTICLE 11. BINDING EFFECT

     This  Guaranty  inures to the benefit of and is  enforceable  by the heirs,
personal  representatives,  successors  and assigns of Lender and the Guarantor.
This  Guaranty is not  assignable  by the  Guarantor  without the prior  written
consent of Lender.


                             ARTICLE 12. NON WAIVER

     The Guarantor agrees that no failure or delay on the part of Lender, or its
successors and assigns,  in the exercise of any right,  power or privilege is to
operate as a waiver.  A partial  exercise of any right,  power,  or privilege by
Lender is not to preclude any further right, power, or privilege,  nor be deemed
a waiver.  Any waiver or  modification  to this Guaranty or any other  document,
instrument  or  agreement  executed  by  the  Guarantor  is to  be in a  writing
consented to by Lender.

                                      E-84

<PAGE>

                               ARTICLE 13. NOTICES

     Each demand,  notice, or other  communication by Lender to the Guarantor or
by the Guarantor to Lender is to be sent in accordance with the Loan Agreement.


                              ARTICLE 14. CAPTIONS

     The  captions and titles  appearing  in this  Guaranty are inserted for the
convenience  of the  parties  hereto  and are  intended  to refer  to  specified
representations,  warranties,  covenants and other terms and  conditions of this
Guaranty.


                          ARTICLE 15. ENTIRE AGREEMENT

     There are no  understandings,  agreements,  representations,  warranties or
covenants,  express or implied,  which are not specified herein, or in the other
written instruments,  documents, or agreements referred to in this Guaranty. All
prior  oral  understandings,  negotiations,  or  agreements  are  deemed  to  be
superseded  by the terms of this  Guaranty and such other  written  instruments,
documents or agreements referred to in this Guaranty.


                            ARTICLE 16. SEVERABILITY

     In the event that any portion of this Guaranty is deemed unenforceable by a
Court of competent jurisdiction,  such provision declared to be unenforceable is
to be deemed to have been omitted  from this  Guaranty,  and all such  remaining
terms and conditions of this Guaranty are to continue in full force and effect.


                           ARTICLE 17. APPLICABLE LAW

     This Guaranty is to be interpreted and enforced in accordance with the laws
of the State of New Jersey  (without regard to the conflicts of law rules of New
Jersey).  All  disputes  arising  under  the  terms of this  Guaranty  are to be
resolved in accordance with the terms of the Loan Agreement.

                                      E-85

<PAGE>


                      ARTICLE 18. REPRESENTATION BY COUNSEL

     The Guarantor  acknowledges the opportunity to consult  independent counsel
of its own choice,  and that it has relied upon such counsel's advice concerning
this Guaranty,  the  enforceability and interpretation of the terms contained in
this Guaranty and the  consummation of the  transactions  and matters covered by
this  Guaranty.  Guarantor  acknowledges  that it has not executed this Guaranty
under duress.

                          ARTICLE 19. WAIVE JURY TRIAL

     THE GUARANTOR HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION
RELATING  TO  THIS  GUARANTY  OR  RELATED  DOCUMENTS  AS AN  INDUCEMENT  TO  THE
ACCEPTANCE OF THIS GUARANTY.


     IN WITNESS  WHEREOF,  the Guarantor  has executed  this Guaranty  effective
______________________.



Attest/Witness:


______________________                               By:  ____________________






                                      E-86