Document:

Exhibit 10.47

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

      This modification ("Third Allonge to Agreement of Amendment") made this
30th day of April, 2004 to the Agreement of Amendment to Loan and Security
Agreement, Mortgage, Assignment of Leases and Other Documents effective March
13, 2002, as amended ("Agreement of Amendment") among FLEET NATIONAL BANK,
("Lender"); OSTEOTECH, INC., a Delaware Corporation, CAM IMPLANTS, INC., a
Colorado Corporation, OSTEOTECH, B.V., H.C. IMPLANTS, B.V., OSTEOTECH IMPLANTS,
B.V., OSTEOTECH/CAM SERVICES, B.V., each a Company of The Netherlands,
OSTEOTECH, S.A., and OST DEVELOPPEMENT, S.A., each a Corporation of France
jointly and severally "Borrower") and to which Agreement of Amendment these
presents are so firmly affixed as to become a part thereof.

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

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

            (1) The term "Conversion Date" is hereby redefined as the "Maturity
            Date." The Maturity Date is defined as April 30, 2006. Upon the
            Maturity Date, the full amount of unpaid principal, together with
            unpaid accrued interest, is due and payable.

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

            Prior to January 1, 2002, this Note bore interest at the option of
            the Borrower, at either Lender's Prime Rate minus three-quarters of
            one percent or the applicable Base LIBOR Rate plus 175 basis points.
            Effective January 1, 2002 and ending on the date Lender receives
            Borrower's Quarterly Report on Form 10Q for the quarter ending March
            31, 2003, this Note bears interest and is repayable in monthly
            installments of interest only (and not principal) at a fluctuating
            interest rate per annum equal at all times to either (a) the
            Lender's Prime Rate (as hereinafter defined) of interest in effect
            from time to time plus 150 basis points, each change in such
            fluctuating rate to take effect simultaneously with the
            corresponding change in such Prime Rate, without notice to the
            undersigned or (b) the applicable Base LIBOR Rate as defined in the
            Loan Agreement plus 400 basis points, at the option of the Borrower
            pursuant to the Loan Agreement. Commencing with the
<PAGE>

            receipt by Lender of Borrower's March 31, 2003 financial statements,
            and effective following the filing with the Securities and Exchange
            Commission ("SEC") and delivery to Lender thereafter of Borrower's
            Quarterly Report on Form 1OQ for the quarter ending March 31, 2003,
            interest is repayable in accordance with the following at the option
            of Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles - consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

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

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

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

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

            From the date of the execution of the Third Allonge to Agreement of
            Amendment and until receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of the
            Borrower as more fully described below:

                        Option                      -or-       Option
                        ------                                 ------

                Base LIBOR +225 bp ("Libor Rate")              Prime Rate - 25bp

            Commencing with the receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of
            Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                     Option                  -or-           Option
            -----                     ------                                 ------
<S>                             <C>                                    <C>
            Less than 1.1:l     Base LIBOR + 140 bp ("Libor Rate")     Prime Rate - 110bp

            1.1:1 - 1.5:1       Base LIBOR + 190 bp ("Libor Rate")     Prime Rate - 60 bp

            1.5:1 - 2.5:1       Base LIBOR + 275 bp ("Libor Rate")     Prime Rate + 25 bp

            2.5:1 - 3.99:l      Base LIBOR + 325 bp ("Libor Rate")     Prime Rate + 75 bp

            4.0 and greater     Base LIBOR + 375 bp ("Libor Rate")     Prime Rate + 125 bp
</TABLE>

                                       -2-
<PAGE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender, upon delivery to Lender
                  of either the Borrower's Quarterly Report on Form 1OQ or
                  Annual Report on Form 10K, on a rolling four quarter basis;
                  and

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

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

      3. Paragraph 3A(5) (relating to the sixth paragraph of the Revolving Note)
is hereby amended to read as follows:

            In the event of Default, interest accrues on all amounts payable
            hereunder at a rate equal to four (4%) percent above the interest
            rate otherwise payable. Borrower acknowledges that: (i) such
            additional rate is material inducement to Lender to make the loans;
            (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.

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

            Prior to January 1, 2002, this Note bore interest, at the option of
            the Borrower at either the Lender's Prime Rate minus one-half of one
            percent or

                                       -3-
<PAGE>

            the applicable Base LIBOR Rate plus 175 basis points. Effective as
            of the Conversion Date, the Borrower began monthly payments of
            principal and interest, such principal payments repayable in 84
            equal monthly installments, the first of such payments was made as
            of the second month following the Conversion Date and on the same
            day of each successive month. As of the Conversion Date through
            December 31, 2001,this Note bore interest at the applicable LIBOR
            Rate (Equipment) defined in the Loan Agreement. Effective January 1,
            2002 and ending on the date Lender receives Borrower's Quarterly
            Report on Form 1OQ for the quarter ending March 31, 2003, this Note
            bears interest and is repayable in monthly installments of interest,
            such interest to be at a fluctuating interest rate per annum equal
            at all times to either (a) the Lender's Prime Rate (as hereinafter
            defined) of interest in effect from time to time plus 150 basis
            points, each change in such fluctuating rate to take effect
            simultaneously with the corresponding change in such Prime Rate,
            without notice to the undersigned or (b) the applicable Base LIBOR
            Rate as defined in the Loan Agreement plus 400 basis points, at the
            option of the Borrower pursuant to the Loan Agreement. Effective
            September 10, 2001 the Borrower was to commence payment of
            principal, together with interest, in 84 equal monthly installments
            on the same day of each successive month thereafter commencing
            December 1, 2001. Borrower is to continue making such principal and
            interest payments and, upon the 84th such installment payment (the
            "Maturity Date"), the full amount of unpaid principal together with
            unpaid accrued interest is due and payable. Commencing with the
            receipt by Lender of Borrower's March 31, 2003 financial statements,
            and effective following the filing with the SEC and delivery to
            Lender thereafter of Borrower's Quarterly Report on Form 10Q for the
            quarter ending March 31, 2003, interest is repayable in accordance
            with the following at the option of Borrower, if the ratio of the
            Borrower's Senior Funded Debt as determined in accordance with
            generally accepted accounting principles consistently applied, to
            EBITDA as more fully described below ("Ratio") is as follows:

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

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

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

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

            From the date of the execution of the Third Allonge to Agreement of
            Amendment and until receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of the
            Borrower as more fully described below:

                        Option                      -or-       Option
                        ------                                 ------

                Base LIBOR +225 bp ("Libor Rate")              Prime Rate - 25bp

                                       -4-
<PAGE>

            Commencing with the receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of
            Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                     Option                  -or-           Option
            -----                     ------                                 ------
<S>                             <C>                                    <C>
            Less than 1.1:l     Base LIBOR + 140 bp ("Libor Rate")     Prime Rate - 110bp

            1.1:1 - 1.5:1       Base LIBOR + 190 bp ("Libor Rate")     Prime Rate - 60 bp

            1.5:1 - 2.5:1       Base LIBOR + 275 bp ("Libor Rate")     Prime Rate + 25 bp

            2.5:1 - 3.99:l      Base LIBOR + 325 bp ("Libor Rate")     Prime Rate + 75 bp

            4.0 and greater     Base LIBOR + 375 bp ("Libor Rate")     Prime Rate + 125 bp
</TABLE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender upon delivery to Lender of
                  either the Borrower's Quarterly Report on Form 1OQ or Annual
                  Report on Form 10K, on a rolling four quarter basis; and

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

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

      5. Paragraph 3B(4) (relating to the sixth paragraph of the Equipment Loan
Note) is hereby amended to read as follows:

            In the event of Default, interest accrues on all amounts payable
            hereunder at a rate equal to four (4%) percent above

                                       -5-
<PAGE>

            the interest rate otherwise payable. Borrower acknowledges that: (i)
            such additional rate is material inducement to Lender to make the
            loans; (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.

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

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

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

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

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

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

                                       -6-
<PAGE>

            From the date of the execution of the Third Allonge to Agreement of
            Amendment and until receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of the
            Borrower as more fully described below:

                        Option                      -or-       Option
                        ------                                 ------

                Base LIBOR +225 bp ("Libor Rate")              Prime Rate - 25bp

            Commencing with the receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of
            Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                     Option                  -or-           Option
            -----                     ------                                 ------
<S>                             <C>                                    <C>
            Less than 1.1:l     Base LIBOR + 140 bp ("Libor Rate")     Prime Rate - 110bp

            1.1:1 - 1.5:1       Base LIBOR + 190 bp ("Libor Rate")     Prime Rate - 60 bp

            1.5:1 - 2.5:1       Base LIBOR + 275 bp ("Libor Rate")     Prime Rate + 25 bp

            2.5:1 - 3.99:l      Base LIBOR + 325 bp ("Libor Rate")     Prime Rate + 75 bp

            4.0 and greater     Base LIBOR + 375 bp ("Libor Rate")     Prime Rate + 125 bp
</TABLE>

            For purposes of determining the Ratio:

            (i)   The first determination will be made by Lender for the first
                  quarter, 2003. Each determination by Lender will be made by
                  dividing (a) the Senior Funded Debt of the Borrower as of the
                  last day of each fiscal quarter by (b) the Borrower's EBITDA
                  determined on a rolling four quarter basis. Each determination
                  of the Ratio will be made by Lender upon delivery to Lender of
                  either the Borrower's Quarterly Report on Form 1OQ or Annual
                  Report on Form 10K, on a rolling four quarter basis; and

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

            The first thirteen (13) months of principal and interest was to be
            paid by the Borrower to Lender in equal installments of principal
            and interest in the amount of Thirty-Six Thousand Two Hundred Three
            Dollars - 56/100 ($36,203.56) commencing February 1, 2001 and on the
            same day of each successive month thereafter. Effective as of the
            date of the Agreement of Amendment, remaining principal and interest
            is to be paid during and

                                       -7-
<PAGE>

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

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

            In the event of Default, interest accrues on all amounts payable
            hereunder at a rate equal to four (4%) percent above the interest
            rate otherwise payable. Borrower acknowledges that: (i) such
            additional rate is material inducement to Lender to make the loan;
            (ii) Lender would not have made the loan 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 loan 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 loan evidenced by
            this Note and (b) compensation to Lender for losses that are
            difficult to ascertain.

      8. Paragraph 3D(2) (relating to Section 1.1(a) of the Loan Agreement) is
hereby amended to read as follows:

            (2) Section 1.1(a) is hereby amended to read as follows:

            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 for other general corporate purposes, notwithstanding anything
            to the contrary herein, including, without limitation, any prior
            uses for 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

                                       -8-
<PAGE>

            payable on the earlier of (i) April 30, 2006 or (ii) upon a Default.

      9. Paragraph 3D(6) relating to Section 1.4(f) of the Loan Agreement) is
hereby amended to read as follows:

            (6) Section 1.4(f) is hereby amended to read as follows:

            1.4(f) In the event of Default, interest accrues on the Loan and the
            Debt at a rate equal to four (4%) percent above the interest rate
            otherwise payable. 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.

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

            (7) Section 1.4(k) is hereby amended to read as follows:

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

                                       -9-
<PAGE>

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

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

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

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

            From the date of the execution of the Third Allonge to Agreement of
            Amendment and until receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of the
            Borrower as more fully described below:

                        Option                      -or-       Option
                        ------                                 ------

                Base LIBOR +225 bp ("Libor Rate")              Prime Rate - 25bp

            Commencing with the receipt by Lender of Borrower's Quarterly Report
            on Form 10Q for the quarter ending June 30, 2004, interest is
            repayable in accordance with the following at the option of
            Borrower, if the ratio of the Borrower's Senior Funded Debt as
            determined in accordance with generally accepted accounting
            principles consistently applied, to EBITDA as more fully described
            below ("Ratio") is as follows:

<TABLE>
<CAPTION>
            Ratio                     Option                  -or-           Option
            -----                     ------                                 ------
<S>                             <C>                                    <C>
            Less than 1.1:l     Base LIBOR + 140 bp ("Libor Rate")     Prime Rate - 110bp

            1.1:1 - 1.5:1       Base LIBOR + 190 bp ("Libor Rate")     Prime Rate - 60 bp

            1.5:1 - 2.5:1       Base LIBOR + 275 bp ("Libor Rate")     Prime Rate + 25 bp

            2.5:1 - 3.99:l      Base LIBOR + 325 bp ("Libor Rate")     Prime Rate + 75 bp

            4.0 and greater     Base LIBOR + 375 bp ("Libor Rate")     Prime Rate + 125 bp
</TABLE>

            For purposes of determining the Ratio:

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

                                      -10-
<PAGE>

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

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

      11. Paragraph 3(D)(13) (relating to Article 4 of the Loan Agreement) is
hereby amended to read as follows:

            (13) Article 4 is hereby amended to read as follows:

                          ARTICLE 4. SECURITY INTEREST

            (a) To secure the payment and performance by the Borrower of the
            Debt and except as otherwise provided by Section 7.3, Osteotech,
            Inc. is not to pledge, set over, collaterally assign or grant a
            security interest, other than to Lender, in any of its assets,
            property or rights, including those more particularly defined on
            Exhibit "A" annexed to the Agreement of Amendment and incorporated
            herein, except that the Borrower may license, consign, assign, sell,
            exchange, settle, or otherwise contract with respect to, as the case
            may be, its Accounts, Goods, Inventory and General Intangibles in
            the ordinary course of its business as presently conducted and
            consistent with its past practices.

            (b) To secure the payment and performance by the Borrower of the
            Debt to Lender, Osteotech, Inc. hereby pledges, sets over, assigns
            and grants a first and only priority security interest to Lender in
            all Accounts, Chattel Paper, Deposit Accounts, Equipment, Goods,
            Instruments, Inventory, and all collateral described on Exhibit
            "A-1" annexed to the Agreement of Amendment and incorporated herein
            and pursuant to such other agreements more particularly described on
            Exhibit "B" annexed to the Agreement of Amendment and incorporated
            herein.

            (c) Not later than April 30, 2002, and to further secure the payment
            and performance by the Borrower of the Debt to Lender, Osteotech,
            Inc., is to pledge, set over, assign and grant a first and only
            priority security interest, pledge and charge to Lender in
            sixty-five (65%) percent of the issued and outstanding stock issued
            to it by Osteotech, S.A. and OST Developpement and pursuant to such
            other agreements more particularly described on Exhibit "B" annexed
            to the Agreement of Amendment and incorporated herein. All Pledge
            Agreements/Charge Agreements relating to Osteotech, B.V., HC
            Implants, B.V., CAM Implants, B.V. and Osteotech/Cam

                                      -11-
<PAGE>

            Services, B.V. referred to on Exhibit "B" are hereby discharged.

            (d) 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, except to the extent provided by Section
            7.3.

            (e) The foregoing 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.

      12. Paragraph B(3) of the Second Allonge to Agreement of Amendment to Loan
and Security Agreement, Mortgage, Assignment of Leases and Other Documents
(relating to Section 6.7(f) of the Loan Agreement) is hereby amended to read as
follows:

            6.7(f) On or before the tenth (10th) day of each month, a report, in
            form and substance satisfactory to Lender, showing the value of cash
            and marketable securities held by Borrower as of the close of the
            preceding month. In the event that such value, is less than
            $5,000,000.00, Lender may (a) engage an independent consultant
            acceptable to Lender, at the expense of Borrower, to provide such
            reports as Lender may require concerning the operations, management
            and affairs of Borrower; and (b) Borrower will promptly execute and
            hereby authenticates such documents and the filing of such documents
            as Lender may require, at the expense of Borrower, to grant to
            Lender a first and only priority perfected security interest in all
            of the Borrower's general intangibles, including, but not limited
            to, all of Borrower's patents and patent applications, whether or
            not registered. The provisions of this Section terminate on December
            31, 2004 unless prior thereto there exists or has existed an event
            of Default.

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

            Section 6.15 Fees

            Section 6.15(a) is hereby amended to read as follows:

            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-half of one percent (1/2%) per
            annum on the amount by which such maximum exceeds such average daily
            unpaid balance; commencing with the receipt by Lender of Borrower's
            Quarterly Report on Form 10Q for the quarter ending June 30,

                                      -12-
<PAGE>

            2004, 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(s) is
            payable to Lender in arrears on the last day of each quarter.

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

            6.15(e) Amendment Fee. The Borrower is to pay to Lender an amendment
            fee of $15,000.00 payable upon execution of the Third Allonge to
            Agreement of Amendment.

      14. Paragraph 3D(18) (relating to Section 7.4 of the Loan Agreement) is
hereby amended to read as follows:

            (18) Section 7.4 is hereby amended to read as follows:

            Section 7.4 Other Liabilities

            During such time as either (a) any amount remains outstanding on the
            Loan 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., CAM Implants, Inc., Osteotech, B.V., H.C.
            Implants, BV., Osteotech Implants, B.V., Osteotech/Cam Services,
            B.V., Osteotech, S.A. and OST Developpement 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 (i) the Debt to
            Lender; (ii) indebtedness subordinated to payment of the Debt on
            terms approved by Lender in writing; (iii) those liabilities of
            Osteotech, Inc. and CAM Implants, Inc. otherwise incurred to
            financial institutions in an amount in the aggregate less than
            $500,000.00; (iv) those leases already in effect as of the effective
            date of the Loan Agreement as disclosed in the Delivered Financials
            and capital leases not to exceed $1,000,000.00 in the aggregate
            outstanding at any time; or (v) line of credit liabilities of
            Osteotech, B.V., H.C. Implants, BV., Osteotech Implants, B.V.,
            Osteotech/Cam Services, B.V., Osteotech, S.A and OST Developpement
            S.A. which may not exceed $2,500,000.00 in the aggregate.

      15. Paragraph 3D(19) (relating to Section 7.6 of the Loan Agreement) is
hereby amended to read as follows:

            (19) Section 7.6 is hereby amended to read as follows:

            Section 7.6 Loans or Investments

                                      -13-
<PAGE>

            From the date of the Agreement, the Borrower is not to make any new
            advances or loans (a) in excess of $1,500,000.00 in the aggregate
            outstanding at any given time to Osteotech, B.V., H.C. Implants,
            B.V., Osteotech Implants, B.V., Osteotech/Cam Services, B.V.,
            Osteotech, S.A. or OST Developpement without the prior written
            consent of Lender or (b) in excess of $50,000.00 in the aggregate
            outstanding at any given time to any unrelated entity if there then
            exists a Default or any amount outstanding on Loan I without the
            prior written consent of Lender.

      16. All of the Loan Documents are hereby amended to provide that the
"Borrower" is to be hereafter defined, jointly and severally, as Osteotech,
Inc., Osteotech, S.A. and OST Developpement, S.A.

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

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

Witness:                                     OSTEOTECH, INC.
                                             A Delaware Corporation

/s/ [ILLEGIBLE]                             By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                  Executive Vice President

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

/s/ [ILLEGIBLE]                             By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                   Managing Director

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

/s/ [ILLEGIBLE]                             By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                   Managing Director

Signatures continued ......

                                      -14-
<PAGE>

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

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

/s/ [ILLEGIBLE]                              By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                   Managing Director

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

/s/ [ILLEGIBLE]                              By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                   Managing Director

Witness:                                     OSTEOTECH, S.A.
                                             A Corporation of France

/s/ [ILLEGIBLE]                              By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                   Managing Director

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

/s/ [ILLEGIBLE]                              By: /s/ Michael J. Jeffries
----------------------------                    --------------------------------
                                                  MICHAEL J. JEFFRIES
                                                   Managing Director

Witness:                                     FLEET NATIONAL BANK

/s/ [ILLEGIBLE]                              By: /s/ Richard J. Banning
----------------------------                    --------------------------------
                                                     RICHARD J. BANNING
                                                     Sr. Vice President

                                      -15-Exhibit
10(xxx)

First Professionals
Insurance Company, Inc.
Jacksonville, Florida

Anesthesiologists’
Professional Assurance Company
Coral Gables, Florida

and

Intermed
Insurance Company
St. Louis, Missouri

Medical Professional Liability Excess of Loss Reinsurance
Contract

Terms
Effective:  January 1, 2004

Business Reinsured

	
  A.

  	
  By this Contract the Reinsurer agrees to reinsure
  the excess liability which may accrue to the Company under its policies,
  contracts and binders of insurance or reinsurance (hereinafter called
  “policies”) issued or renewed on or after the effective date hereof and
  classified by the Company as follows:

	
   
	
   

	
   
	
  1.
	
  Professional Liability business and ancillary
  coverages, covering Physicians, Surgeons, Dentists, Chiropractors,
  Podiatrists and other Allied Medical Practitioners and their Professional
  Associations;

	
   
	
   
	
   

	
   
	
  2.
	
  Health Care Facilities Liability and ancillary
  coverages, including employed medical technicians, partnerships, corporations
  and limited liability companies;

	
   
	
   
	
   

	
   
	
  subject to the terms, conditions and limitations
  hereinafter set forth.

	
   
	
   

	
  B.
	
  Coverage hereunder may include prior acts coverage
  and/or extended discovery or reporting coverage when provided on original
  policies.  

	
   
	
   

	
  Commencement and Termination

	
   
	
   

	
  A.
	
  Subject to paragraphs B and C, below, this Contract
  shall become effective on January 1, 2004, with respect to claims made
  against or reported to the Company on or after that date as respects policies
  allocated to underwriting years commencing on or after that date and shall
  continue in force thereafter until terminated.

	
   
	
   

	
  B.
	
  As respects policies issued by Intermed Insurance
  Company prior to January 1, 2000 for the first $1,000,000 of limits:

	
   
	
   

	
   
	
  Losses occurring prior to January 1, 2000, on
  occurrence form policies whether expired prior to, or in force at, January 1,
  2000, but where a claim as respects the loss occurrence is first made to the
  Company during the effective period of this Contract.  As respects this paragraph B, no loss
  occurrence will be covered both hereunder and under any prior Contract, nor
  will any loss occurrence be covered hereunder if the loss occurrence was
  reported to the Company by the insured prior to January 1, 2000.

	
   
	
   

	
  C.
	
  As respects Extended Reporting Endorsements issued
  by Intermed Insurance Company prior to January 1, 2000, on policies written
  for the first $1,000,000 of limits: 
  claims made during the effective period of this Contract.

	
  

  
	
   

	
  Page 2

	
  D.
	
  Either party may terminate this Contract on any
  December 31 by giving the other party not less than 90 days prior
  written notice by certified mail.

	
   
	
   

	
  E.
	
  Notwithstanding paragraph D above, the Company may
  terminate this Contract or the share of a Subscribing Reinsurer at any time
  by giving the Subscribing Reinsurer not less than 30 days prior written
  notice in the event any of the following circumstances occur:

	
   
	
   

	
   
	
  1.
	
  The Subscribing Reinsurer’s policyholders’ surplus
  at the inception of any underwriting year has been reduced by more than 25.0%
  of the amount of surplus 12 months prior to that date; or

	
   
	
   
	
   

	
   
	
  2.
	
  The Subscribing Reinsurer’s policyholders’ surplus
  at any time during any underwriting year has been reduced by more than 25.0%
  of the amount of surplus at the date of the Subscribing Reinsurer’s most
  recent financial statement filed with regulatory authorities and available to
  the public as of the inception of this Contract; or

	
   
	
   
	
   

	
   
	
  3.
	
  The Subscribing Reinsurer’s A.M. Best’s rating has
  been assigned or downgraded below A- and/or Standard and Poor’s Counterparty
  Credit and Financial Strength rating is assigned or downgraded below A-; or

	
   
	
   
	
   

	
   
	
  4.
	
  A State Insurance Department or other legal
  authority has ordered the Subscribing Reinsurer to cease writing business; or

	
   
	
   
	
   

	
   
	
  5.
	
  The Subscribing Reinsurer has become insolvent or
  has been placed into liquidation or receivership (whether voluntary or
  involuntary) or proceedings have been instituted against the Subscribing
  Reinsurer for the appointment of a receiver, liquidator, rehabilitator,
  conservator or trustee in bankruptcy, or other agent known by whatever name,
  to take possession of its assets or control of its operations; or

	
   
	
   
	
   

	
   
	
  6.
	
  The Subscribing Reinsurer has ceased assuming new
  and renewal property and casualty treaty reinsurance business.

	
   
	
   
	
   

	
  F.
	
  Unless the Company elects to reassume the unearned
  reinsurance premium in force on the effective date of termination, and so
  notifies the Reinsurer to or as promptly as possible after the effective date
  of termination, reinsurance hereunder on business in force on the effective
  date of termination shall remain in full force and effect until expiration,
  cancellation or next premium anniversary of such business, whichever first
  occurs, but in no event beyond 12 months, plus odd time and any
  extension of coverage for extended discovery or reporting coverage, following
  the effective date of termination.

	
   
	
   

	
  G.
	
  Any claims made under the extended reporting
  coverage provision shall be deemed to have been made on the date the original
  policy expired or was cancelled. 
  Premium for such extended reporting coverage shall be considered fully
  earned by the reinsurer on the last date the original policy was in force.

	
   
	
   
	
   

	
  H.
	
  “Underwriting year” as used herein shall mean the
  period from January 1, 2004 through December 31, 2004, and each
  subsequent 12-month period thereafter, unless this Contract is terminated, in
  which event the final underwriting year shall be from the beginning of the
  then current underwriting year through the date of termination.  All premiums and all claims or losses from
  both new and renewal policies incepting during a given underwriting year
  shall be credited or charged, respectively, to such underwriting year,
  regardless of the date said premiums earn or such claims are made or losses
  occur (subject to the “cutoff” provisions of paragraph F of this
  Article).

	
   
	
   

	
   
	
  Any extended reporting period provided under a
  subject policy shall be deemed to incept during the same underwriting year as
  the subject policy.

	
  

  
	
   

	
  Page 3

Territory

This Contract
shall be world-wide in its geographic scope.

Exclusions

See attached.

Retention and Limit

	
  A.
	
  Coverage A:  As respects all business covered
  hereunder, subject to the inuring Coverage B, below, the Company shall retain
  and be liable for the first $500,000 of ultimate net loss each insured, each
  claim or occurrence.  The Reinsurer
  shall then be liable for the amount by which such ultimate net loss exceeds
  the Company’s retention, but the liability of the Reinsurer shall not exceed
  $2,500,000 as respects each insured, each claim or occurrence.

	
   
	
   

	
   
	
  As respects paragraph B., Commencement and
  Termination, the maximum aggregate amount of ultimate net loss recoverable
  hereunder from occurrence policies issued by Intermed is $4,000,000 per
  underwriting year.

	
   
	
   

	
   
	
  The Company shall purchase or be deemed to have
  purchased inuring excess reinsurance to limit its loss subject hereto from
  any one coverage any one policy (exclusive of loss in excess of policy limits
  or extra contractual obligations) to $1,000,000 per claim or occurrence.

	
   
	
   

	
  B.
	
  Coverage B (cessions layer): As
  respects all business covered hereunder with limits attaching, the Company
  shall retain and be liable for the first $1,000,000 of ultimate net loss each
  insured, each claim or occurrence:

	
   
	
   

	
   
	
  1.
	
  The Reinsurer shall then be liable for the amount by
  which such ultimate net loss exceeds the Company’s retention, but the
  liability of the Reinsurer shall not exceed $4,000,000 as respects each
  insured, each claim or occurrence, for: 
  all Health Care Facilities, all Clinics and Corporations, all individual
  Dentists, and all individual Doctors in Arkansas; and

	
   
	
   
	
   

	
   
	
  2.
	
  The Reinsurer shall then be liable for the amount by
  which such ultimate net loss exceeds the Company’s retention, but the
  liability of the Reinsurer shall not exceed $1,000,000 as respects each
  insured, each claim or occurrence, for individual insureds, not included in
  1. above.  

	
   
	
   

	
   
	
  As respects business written in the State of Kansas,
  the Company’s retention shall be deemed to include coverage provided by the
  Healthcare Stabilization Fund.

	
   
	
   

	
   
	
  Provided that a policy cession has been made to
  Coverage B, a separate limit shall be payable by Reinsurers for Extra
  Contractual Obligations (ECO) and Loss in Excess of Policy Limits (XPL),
  without a separate retention by the Company other than their 10% ECO / XPL
  co-participation.

	
   
	
   

	
  C.
	
  The Company shall purchase or be deemed to have
  purchased inuring excess reinsurance to limit its loss subject hereto from
  any one coverage any one policy (exclusive of loss in excess of policy limits
  or extra contractual obligations) to $5,000,000 and $7,000,000 in the
  aggregate.

	
   
	
   

	
  D.
	
  Loss Adjustment Expense pro rata in addition to the
  limit or included in the limit, to follow the Company’s original policy.

	
  

  
	
   

	
  Page 4

Definitions

See
attached.  

Claims and Loss Adjustment Expense

	
  A.
	
  Whenever a claim is reserved by the Company for an
  amount greater than $250,000 and/or whenever a claim appears likely to result
  in a claim under this Contract, the Company shall notify the Reinsurer.  All cases of serious injury which, regardless
  of considerations of liability or coverage, in the opinion of the Company,
  might result in a claim under this Contract shall be reported to the
  Reinsurer, including, but not limited to the following:

	
   
	
   

	
   
	
  1.
	
  Brain injury with significant cognitive, behavioral
  or physical residual damages;

	
   
	
   
	
   

	
   
	
  2.
	
  Quadriplegia or paraplegia including Cauda Equina
  Syndrome;

	
   
	
   
	
   

	
   
	
  3.
	
  Fatalities or significantly diminished life
  expectancy of wage earners or parents with minor children;

	
   
	
   
	
   

	
   
	
  4.
	
  Any claim where the Company sustains a verdict for
  loss in excess of the policy limit and/or any action alleging extra
  contractual or bad faith obligations against the Company;

	
   
	
   
	
   

	
   
	
  5.
	
  Any declaratory judgment action brought by or
  against the Company where the expense amount is greater than $50,000.  

	
   
	
   
	
   

	
   
	
  The Company will provide individual claim reports on
  reported claims to the Reinsurer and will provide updates as needed.

	
   
	
   

	
  B.
	
  The Reinsurer shall have the right to participate,
  at its own expense, in the defense of any claim or suit involving this
  reinsurance.

	
   
	
   

	
  C.
	
  All claim settlements made by the Company, provided
  they are within the terms of this Contract, shall be binding upon the
  Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be
  liable upon receipt of reasonable evidence of the amount paid by the Company.

	
   
	
   

	
  D.
	
  In the event of loss hereunder, loss adjustment
  expense incurred by the Company in connection therewith which does not reduce
  the Company’s limit of liability under the policy involved shall be shared by
  the Company and the Reinsurer in the proportion the ultimate net loss paid or
  payable by the Reinsurer bears to the total loss paid or payable by the
  Company, prior to any reinsurance recoveries, but after deduction of all
  salvage, subrogation and other recoveries. 
  However, if a verdict or judgment is reduced by any process other than
  by the trial court, resulting in an ultimate saving to the Reinsurer, or a
  judgment is reversed outright, the expenses incurred in securing such
  reduction or reversal shall be shared by the Company and the Reinsurer in the
  proportion that each benefits from such reduction or reversal, and the
  expenses incurred up to the time of the original verdict or judgment which do
  not reduce the Company’s limit of liability under the policy involved shall
  be shared in proportion to each party’s interest in such original verdict or
  judgment.  The Reinsurer’s liability
  for such loss adjustment expense shall be in addition to its liability for
  ultimate net loss.

	
  

  
	
   

	
  Page 5

Reinsurance Premium

	
  A.
	
  Coverage A

	
   
	
   
	
   

	
   
	
  1.
	
  As respects First Professionals Insurance Company:

	
   
	
   
	
   

	
   
	
   
	
  As premium for the reinsurance provided hereunder
  during each underwriting year, the Company shall pay the Reinsurer 10.4% of
  its gross net written premium applicable to all subject business for the
  underwriting year.

	
   
	
   
	
   

	
   
	
   
	
  The Company shall pay the Reinsurer an annual
  deposit premium of $23,000,000 in four equal installments of $5,750,000, at
  January 1, April 1, July 1, and October 1 of each underwriting year.  In the event this Contract is terminated
  prior to any December 31, no deposit premium installments shall be due after
  the effective date of termination.

	
   
	
   
	
   

	
   
	
  2.
	
  As respects Anesthesiologists’ Professional
  Assurance Company:

	
   
	
   
	
   

	
   
	
   
	
  As premium for the reinsurance provided hereunder
  during each underwriting year, the Company shall pay the Reinsurer 20.5% of
  its gross net written premium applicable to all subject business for the
  underwriting year.

	
   
	
   
	
   

	
   
	
   
	
  The Company shall pay the Reinsurer an annual deposit
  premium of $4,850,000 in four equal installments of $1,212,500, at January 1,
  April 1, July 1, and October 1 of each underwriting year.  In the event this Contract is terminated
  prior to any December 31, no deposit premium installments shall be due after
  the effective date of termination.

	
   
	
   
	
   

	
   
	
  3.
	
  As respects Intermed Insurance Company:

	
   
	
   
	
   

	
   
	
   
	
  As premium for the reinsurance provided hereunder
  during each underwriting year, the Company shall pay the Reinsurer 26.5% of
  its gross net written premium applicable to all subject business for the
  underwriting year.

	
   
	
   
	
   

	
   
	
   
	
  The Company shall pay the Reinsurer an annual
  deposit premium of $9,250,000 in four equal installments of $2,312,500, at
  January 1, April 1, July 1, and October 1 of each underwriting year.  In the event this Contract is terminated
  prior to any December 31, no deposit premium installments shall be due after
  the effective date of termination.

	
   
	
   
	
   

	
   
	
  As respects the items 1, 2, and 3 above, within 60
  days after the end of each underwriting year, the Company shall provide a
  report to the Reinsurer setting forth the premium due hereunder for the
  underwriting year, computed in accordance with the paragraphs above, and any
  additional premium due the Reinsurer shall be paid by the Company with its report,
  and any return premium due the Company shall be remitted promptly.  In the event this Contract is terminated
  prior to any December 31, premium due shall be pro rated accordingly.

	
   
	
   
	
   

	
   
	
  4.
	
  “Gross net written premium” (GNWP) as used herein is
  defined as gross written premium of the Company for primary policy limits of
  $1,000,000 each claim or less for the classes of business reinsured
  hereunder, less cancellations and return premiums, and less premiums ceded by
  the Company for inuring facultative reinsurance, if any.

	
  

  
	
   

	
  Page 6

	
  B.
	
  Coverage B (cessions layer):  

	
   
	
   

	
   
	
  1.
	
  As premium for the reinsurance provided hereunder
  during each underwriting year, the Company shall pay the Reinsurer 100% of
  its gross excess limits net written.

	
   
	
   
	
   

	
   
	
  2.
	
  Within 30 days following the end of each calendar
  quarter, the Company shall report its gross excess limits net written premium
  applicable to subject business.  The
  premium due the Reinsurer, less any commission thereon, shall be paid by the
  Company with its report.

	
   
	
   
	
   

	
   
	
  3.
	
  “Gross excess limits net written premium” as used
  herein is the full gross written premium of the Company for the classes of
  business reinsured hereunder for policy limits greater than $1,000,000 each
  claim, less cancellations and return premiums, and less premiums ceded by the
  Company for inuring facultative reinsurance, if any.

	
   
	
   
	
   

	
  C.
	
  Both Layers

	
   
	
   

	
   
	
  Regardless of the option chosen by the Company at
  expiration or cancellation, in the event the Company is bound by statute or
  regulation to continue coverage, the Reinsurers will continue to receive
  premium as set forth above on such policies quarterly as earned.

	
   
	
   

	
  Ceding Commission –Coverage B (cessions layer):  

	
   

	
   
	
  As respects Coverage B, the Reinsurer shall allow
  the Company a 22.5% commission on all premiums ceded to the Reinsurer
  hereunder.  The Company shall allow
  the Reinsurer return commission on return premiums at the same rate. 

	
   

	
  Profit Sharing – Coverage A 

	
   

	
  A.
	
  The Reinsurer shall pay the
  Company profit sharing equal to 35.0% of the net profit in accordance with
  the provisions of paragraphs B and C hereunder, if any, accruing to the
  Reinsurer during each accounting period. 
  The first accounting period shall be from January 1, 2004 through
  December 31, 2004, and each subsequent 12-month period that this
  Contract continues in force thereafter shall be a separate accounting
  period.  In the event this Contract is
  terminated, the final accounting period shall be from the beginning of the
  then current accounting period through the date of termination if this
  Contract is terminated on a “cutoff” basis, or through the end of the
  “runoff” period if this Contract is terminated on a “runoff” basis.

	
   
	
   

	
  B.
	
  The Reinsurer’s net profit for each accounting
  period shall be calculated in accordance with the following formula, it being
  understood that a positive balance equals net profit and a negative balance
  equals net loss:

	
   
	
   

	
   
	
    1.
	
  Premiums earned for policies allocated to the
  accounting period; less 

	
   
	
   
	
   

	
   
	
    2.
	
  Expenses incurred by the Reinsurer at 30.0% of premiums
  earned for policies allocated to the accounting period; less

	
   
	
   
	
   

	
   
	
    3.
	
  Losses incurred for policies allocated to the
  accounting period; less

	
   
	
   
	
   

	
   
	
    4.
	
  IBNR as original (to correspond with LOC funding);
  less

	
   
	
   
	
   

	
   
	
    5.
	
  The Reinsurer’s net loss, if any, from the
  immediately preceding accounting period of this Contract and/or Reinsurer net
  loss, if any, carried forward from the following Agreements:

	
  

  
	
   

	
  Page 7

	
   
	
   
	
  a.
	
  First Professionals Insurance Company Casualty
  Excess of Loss Reinsurance Agreement CXS-3014(1994) for calendar years 1994
  and 1995; and/or

	
   
	
   
	
   
	
   

	
   
	
   
	
  b.
	
  First Professionals Insurance Company Physicians,
  Dentists, and Chiropractors Casualty First through Fourth and Clash Excess of
  Loss Reinsurance Agreement AR 4302, for calendar year 1996; and/or

	
   
	
   
	
   
	
   

	
   
	
   
	
  c.
	
  First Professionals Insurance Company Physicians,
  Dentists, and Chiropractors Casualty First through Fourth and Clash Excess of
  Loss Reinsurance Agreement AR 4373, for calendar years 1997 through 1999;
  and/or

	
   
	
   
	
   
	
   

	
   
	
   
	
  d.
	
  FPIC Insurance Group Medical Malpractice and Lawyers
  Professional Liability Excess of Loss Reinsurance Agreement AR 12427, for
  calendar years 2000, 2001, 2002, and 2003; less

	
   
	
   
	
   
	
   

	
   
	
  6.
	
  The Reinsurer’s net loss, if any, from Coverage B of
  this Contract, calculated as follows:

	
   
	
   
	
   
	
   

	
   
	
   
	
  a.
	
                 Premiums
  earned for policies allocated to the accounting period; less

	
   
	
   
	
   
	
   

	
   
	
   
	
  b.
	
                 Ceding
  Commission allowed hereon, less

	
   
	
   
	
   
	
   

	
   
	
   
	
  c.
	
  Expenses incurred by the Reinsurer at 30.0% of net
  premiums earned (premiums earned less ceding commission thereon) for policies
  allocated to the accounting period; less

	
   
	
   
	
   
	
   

	
   
	
   
	
  d.
	
                 Losses
  incurred for policies allocated to the accounting period; less

	
   
	
   
	
   
	
   

	
   
	
   
	
  e.
	
                 IBNR
  as original (to correspond with LOC Funding); less

	
   
	
   
	
   
	
   

	
   
	
   
	
  f.
	
  The Reinsurer’s net loss, if any, from the
  immediately preceding accounting period (beginning with the January 1, 2003
  Medical Malpractice Liability Excess of Loss Reinsurance Agreement, Second
  layer, now Coverage B).  It is understood
  that the net loss, if any, from an accounting period shall be carried forward
  to extinction.

	
   
	
   
	
   
	
   

	
  C.
	
  The Company shall calculate and report the Reinsurer’s
  net profit within 45 days after 24 months following the end of each
  accounting period, and within 45 days after the end of each 12-month period
  thereafter until all losses subject hereto have been finally settled.  At the first calculation, one-third of the
  profit sharing will be payable; at the second calculation, (first
  re-calculation), two-thirds (less any amount previously paid) will be
  payable; and at the third and subsequent calculations, the full amount (less
  any amounts previously paid) will be payable.  Any return profit sharing shown to be due the Reinsurer shall
  be paid by the Company with its report.

	
   
	
   

	
  D.
	
  “Losses incurred” as used herein shall mean ceded
  losses and loss adjustment expense paid as of the effective date of
  calculation, plus the Company’s ceded reserves for losses and loss adjustment
  expense outstanding as of the same date, it being understood and agreed that
  all losses and related loss adjustment expense under policies allocated to an
  accounting period shall be charged to that accounting period, regardless of
  the date said losses actually occur, unless this Contract is terminated on a
  “cutoff” basis, in which event the Reinsurer shall have no liability for
  claims made or occurrences commencing after the effective date of
  termination.

	
   
	
   

	
  E.
	
  “Premiums earned” as used herein shall mean the
  ceded written premiums for policies (or endorsements) allocated to the
  accounting period, less the unearned portion thereof as of the effective date
  of calculation, it being understood that all premium from policies (or
  endorsements) allocated to an accounting period shall be credited to that
  accounting period, unless this Contract is terminated on a “cutoff” basis and
  the Company reassumes the unearned premium as of the effective date of
  termination.

	
  

  
	
   

	
  Page 8

Other Reinsurance

The Company
shall be permitted to maintain underlying “Net Account Quota Share Reinsurance”
which will be disregarded for purposes of this reinsurance.  In addition, the Company may purchase
individual facultative reinsurance, which may inure to the benefit of this
reinsurance.  Premiums for inuring
reinsurance, if any, shall be deducted from the subject premiums hereunder.

For
informational purposes, the Companies maintain intercompany reinsurance, which
applies after this reinsurance.

Other Provisions

Salvage and
Subrogation

Offset (BRMA 36C)

Access to Records (BRMA 1A)

Net Retained Lines (BRMA 32E)

Errors and Omissions (BRMA 14F)

Liability of the Reinsurer

Currency (BRMA 12A)

Taxes (BRMA 50B)

Federal Excise Tax (BRMA 17A)

Unauthorized Reinsurers (Evergreen LOC, Outstanding Losses/LAE and IBNR) (See
attached)

Insolvency

Arbitration (BRMA 6J)

Service of Suit (BRMA 49E)

Agency Agreement

Intermediary (BRMA 23A)

Wording

As expiring
and underlying as far as applicable, to be agreed Leading Underwriter only

Several Liability Notice – LSW 1001 (Reinsurance)

The
Subscribing Reinsurer’s obligations under contracts of reinsurance to which
they subscribe are several and not joint and are limited solely to the extent
of their individual subscriptions.  The
subscribing Reinsurers are not responsible for the subscription of any
co-subscribing Reinsurer who for any reason does not satisfy all or part of its
obligations.

	
  

  
	
   

	
  Page 9

Exclusions

	
  A.

  	
  This Contract does not apply to and specifically
  excludes the following:

	
   
	
   
	
   
	
   

	
   
	
  1.
	
  Reinsurance assumed by the Company other than:

	
   
	
   
	
   

	
   
	
   
	
  a.
	
  Intra-company reinsurance; and

	
   
	
   
	
   
	
   

	
   
	
   
	
  b.
	
  Policies underwritten by the Company but issued by
  another carrier at the Company’s request and reinsured 100% by the Company.

	
   
	
   
	
   
	
   

	
   
	
  2.
	
  Business produced and underwritten by others.

	
   
	
   
	
   

	
   
	
  3.
	
  Hospital Professional Liability and related General
  Liability Business. 

	
   
	
   
	
   

	
   
	
  4.
	
  Occurrence form policies except for those policies
  noted in paragraph B of Commencement and Termination.

	
   
	
   
	
   

	
   
	
  5.
	
  Insureds written under the Company’s Non-Standard
  Medical and Dental Malpractice Quota Share Reinsurance Agreement (or
  replacement thereof).  

	
   
	
   
	
   

	
   
	
  6.
	
  Nuclear risks as defined in the “Nuclear Incident
  Exclusion Clause - Liability - Reinsurance” attached to and forming
  part of this Contract.

	
   
	
   
	
   

	
   
	
  7.
	
  All liability of the Company arising by contract,
  operation of law, or otherwise, from its participation or membership, whether
  voluntary or involuntary, in any insolvency fund.  “Insolvency fund” includes any guaranty fund, insolvency fund,
  plan, pool, association, fund or other arrangement, however denominated,
  established or governed, which provides for any assessment of or payment or
  assumption by the Company of part or all of any claim, debt, charge, fee or
  other obligation of an insurer, or its successors or assigns, which has been
  declared by any competent authority to be insolvent, or which is otherwise
  deemed unable to meet any claim, debt, charge, fee or other obligation in
  whole or in part.

	
   
	
   
	
   

	
   
	
  8.
	
  Liability as a member, subscriber or reinsurer of
  any Pool, Syndicate or Association.

	
   
	
   
	
   

	
  B.
	
  Business falling within the scope of one or more of
  the exclusions set forth in paragraph A or not within the terms, conditions
  or limitations of this Contract may be submitted to the Reinsurer for special
  acceptance and, if accepted by the Reinsurer, shall be subject to all the
  terms of this Contract except as modified by the special acceptance.

	
  

  
	
   

	
  Page 10

Definitions

	
  A.
	
  “Ultimate net loss” as used herein is defined as the
  sum or sums (including deductibles of $250,000 or less paid by the Company or
  the insured, loss in excess of policy limits, extra contractual obligations
  and any loss adjustment expense, as hereinafter defined, which reduces the
  Company’s limit of liability under the policy involved) paid or payable by
  the Company in settlement of claims and in satisfaction of judgments rendered
  on account of such claims, after deduction of all salvage, all recoveries and
  all claims on inuring insurance or reinsurance, whether collectible or
  not.  Nothing herein shall be
  construed to mean that losses under this Contract are not recoverable until
  the Company’s ultimate net loss has been ascertained.

	
   
	
   

	
  B.
	
  “Loss in excess of policy limits” and “extra
  contractual obligations” as used herein shall be defined as follows:

	
   
	
   
	
   

	
   
	
  1.
	
  “Loss in excess of policy
  limits” shall mean 90.0% of any amount paid or payable by the Company in
  excess of its policy limits, but otherwise within the terms of its policy,
  such loss in excess of the Company’s policy limits having been incurred
  because of, but not limited to, failure by the Company to settle within the
  policy limits or by reason of the Company’s alleged or actual negligence,
  fraud or bad faith in rejecting an offer of settlement or in the preparation
  of the defense or in the trial of an action against its insured or reinsured
  or in the preparation or prosecution of an appeal consequent upon such an
  action.

	
   
	
   
	
   

	
   
	
  2.
	
  “Extra contractual
  obligations” shall mean 90.0% of any punitive, exemplary, compensatory or
  consequential damages paid or payable by the Company, not covered by any
  other provision of this Contract and which arise from the handling of any
  claim on business subject to this Contract, such liabilities arising because
  of, but not limited to, failure by the Company to settle within the policy
  limits or by reason of the Company’s alleged or actual negligence, fraud or
  bad faith in rejecting an offer of settlement or in the preparation of the
  defense or in the trial of an action against its insured or reinsured or in
  the preparation or prosecution of an appeal consequent upon such an
  action.  An extra contractual
  obligation shall be deemed, in all circumstances, to have occurred on the
  same date as the loss covered or alleged to be covered under the policy.

	
   
	
   
	
   

	
   
	
  Notwithstanding anything stated herein, this
  Contract shall not apply to any loss in excess of policy limits or any extra
  contractual obligation incurred by the Company as a result of any
  deliberately fraudulent and/or criminal act by any officer or director of the
  Company acting individually or collectively or in collusion with any
  individual or corporation or any other organization or party involved in the
  presentation, defense or settlement of any claim covered hereunder.

	
   
	
   

	
   
	
  If any provision of this Article shall be rendered
  illegal or unenforceable by the laws, regulations or public policy of any
  state, such provision shall be considered void in such state, but this shall
  not affect the validity or enforceability of any other provision of this
  Contract or the enforceability of such provision in any other jurisdiction.

	
   
	
   

	
  C.
	
  “Insured” as used herein shall mean any party or
  parties provided with a separate policy limit by the Company. 

	
   
	
   

	
  D.
	
  “Claim” and “occurrence” shall have the same meaning
  as the term occurrence, claim, medical incident, wrongful act or such similar
  term, as applicable, under the Company’s policy forms.

	
   
	
   

	
  E.
	
  “Loss adjustment expense” as used herein shall mean
  expenses allocable to the investigation, defense and/or settlement of
  specific claims, including litigation expenses, interest on judgments, and
  declaratory judgment expense, as outlined below, but not including office
  expenses or salaries of the Company’s regular employees. 

	
  

  
	
   

	
  Page 11

	
  F.
	
  “Declaratory judgment expense” as used herein shall
  mean all court costs, attorneys’ fees and expenses incurred by the Company in
  contesting insurance coverage on policies reinsured hereunder.  The following shall apply with regard to
  declaratory judgment expense:

	
   
	
   

	
   
	
  1.
	
  Expenses associated with unsuccessful actions
  constitute loss adjustment expense;

	
   
	
   
	
   

	
   
	
  2.
	
  Expenses associated with successful or compromised
  actions are recoverable at 80.0%, and shall be subject to a $70,000
  deductible per action, which shall be retained by the Company, and further
  shall be limited to $1,000,000 each underwriting year.

	
   
	
   
	
   

	
   
	
  Declaratory judgment expenses shall be deemed to
  have occurred on the same date as the loss covered or alleged to be covered
  under the policy. 

	
  

  
	
   

	
  Page 12

Unauthorized Reinsurers

	
  A.
	
  If the Reinsurer is unauthorized in any state of the
  United States of America or the District of Columbia, the Reinsurer agrees to
  fund its share of the Company’s ceded United States unearned premium and
  outstanding loss and loss adjustment expense reserves (including incurred but
  not reported loss reserves) by:

	
   
	
   
	
   

	
   
	
  1.
	
  Clean, irrevocable and unconditional letters of
  credit issued and confirmed, if confirmation is required by the insurance
  regulatory authorities involved, by a bank or banks meeting the NAIC
  Securities Valuation Office credit standards for issuers of letters of credit
  and acceptable to said insurance regulatory authorities; and/or

	
   
	
   
	
   

	
   
	
  2.
	
  Escrow accounts for the benefit of the Company;
  and/or

	
   
	
   
	
   

	
   
	
  3.
	
  Cash advances;

	
   
	
   
	
  

	
   
	
  if, without such funding, a penalty would accrue to
  the Company on any financial statement it is required to file with the
  insurance regulatory authorities involved.  The Reinsurer, at its sole
  option, may fund in other than cash if its method and form of funding are
  acceptable to the insurance regulatory authorities involved.

	
   
	
   
	
   

	
  B.
	
  With regard to funding in whole or in part by
  letters of credit, it is agreed that each letter of credit will be in a form
  acceptable to insurance regulatory authorities involved, will be issued for a
  term of at least one year and will include an “evergreen clause,” which
  automatically extends the term for at least one additional year at each
  expiration date unless written notice of non-renewal is given to the Company
  not less than 30 days prior to said expiration date.  The Company
  and the Reinsurer further agree, notwithstanding anything to the contrary in
  this Contract, that said letters of credit may be drawn upon by the Company
  or its successors in interest at any time, without diminution because of the
  insolvency of the Company or the Reinsurer, but only for one or more of the
  following purposes:

	
   
	
   
	
  

	
   
	
  1.
	
  To reimburse itself for the Reinsurer’s share of
  unearned premiums returned to insureds on account of policy cancellations,
  unless paid in cash by the Reinsurer;

	
   
	
   
	
   

	
   
	
  2.
	
  To reimburse itself for the Reinsurer’s share of
  losses and/or loss adjustment expense paid under the terms of policies
  reinsured hereunder, unless paid in cash by the Reinsurer;

	
   
	
   
	
   

	
   
	
  3.
	
  To reimburse itself for the Reinsurer’s share of any
  other amounts claimed to be due hereunder, unless paid in cash by the
  Reinsurer;

	
   
	
   
	
   

	
   
	
  4.
	
  To fund a cash account in an amount equal to the
  Reinsurer’s share of any ceded unearned premium and/or outstanding loss and
  loss adjustment expense reserves (including incurred but not reported loss
  reserves) funded by means of a letter of credit which is under non-renewal
  notice, if said letter of credit has not been renewed or replaced by the
  Reinsurer 10 days prior to its expiration date;

	
   
	
   
	
   

	
   
	
  5.
	
  To refund to the Reinsurer any sum in excess of the
  actual amount required to fund the Reinsurer’s share of the Company’s ceded
  unearned premium and/or outstanding loss and loss adjustment expense reserves
  (including incurred but not reported loss reserves), if so requested by the
  Reinsurer.

      In the event the
amount drawn by the Company on any letter of credit is in excess of the actual
amount required for B(1), B(2) or B(4), or in the case of B(3), the actual
amount determined to be due, the Company shall promptly return to the Reinsurer
the excess amount so drawn. 

Signed Line %

	
  

  
	
   

	
  Page 13

	
   
	
  hannover re
	
   

	
   
	
   
	
   

	
   
	
  All terms, wordings, special agreements and

  amendments to be agreed by Hannover Re
	
   

	
   
	
   
	
   

	
   
	
  Ref.-No.: LY13140B/LY13339A
	
   

	
   
	
   
	
   

	
   
	
  For our share of: 30% of 100%
	
   

	
   
	
   
	
   

	
   
	
  equals:
                 $750,000
  First Layer
	
   

	
   
	
                              $1,200,000
  Second Layer
	
   

	
   
	
   
	
   

	
   
	
  Hannover:     March
  8, 2004
	
   

	
   
	
  Hannover Ruckversicherung AG
	
   

	
   
	
  North American Treaty Department
	
   

	
   
	
   
	
   

	
   
	
  /s/ Jurgen
  Graber    /s/ Carola Von-Heimburg
	
   

	
  

  
	
   

	
  Page 14

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