Exhibit 10.20

CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 24B-2

Certain portions, indicated by [*****], of this exhibit have been omitted pursuant to Rule 24b-2 of the Securities Act of 1934. The omitted materials have been filed separately with Securities and Exchange Commission.

FIRST AMENDED EXCLUSIVE

DISTRIBUTION AND LICENSE AGREEMENT

Specialty Allografts and Bone Paste

This First Amended Exclusive Distribution and License Agreement (this “ Agreement ”) is effective as of the 15 ^th day of April, 2004, (the “ Effective Date ”) by and between Regeneration Technologies, Inc., a Delaware corporation (“ RTI ”), and Medtronic Sofamor Danek USA, Inc., a Tennessee corporation (“ MSD ”). RTI and MSD are sometimes individually referred to herein as a “ Party ” and collectively as the “ Parties .”

WHEREAS, RTI and MSD each acknowledge that the processing and use of human tissue for human transplantation purposes is in the public interest and in the interest of medicine generally, and that this Agreement will enhance these interests through facilitating the availability of processed tissue for use in medical procedures and thereby advance the medical and scientific application thereof;

WHEREAS, the Parties are successors in interest to each of that certain Management Services Agreement, dated July 23, 1996, between The University of Florida Tissue Bank, Inc. (“ UFTB ”) and Sofamor Danek Group, Inc. (“ SDG ”), as amended (the “ 1996 Management Services Agreement ”), and that certain Management Services Agreement—Bone Paste, dated May 11, 1998, between UFTB and SDG, as amended (the “ 1998 Management Services Agreement ” and, together with the 1996 Management Services Agreement, the “ Original Agreements ”);

WHEREAS, the Parties entered into that certain Exclusive Distribution and License Agreement (the “2002 Agreement”) as of June 1, 2002 (the “Original Effective Date”) and the Parties now wish to redefine the terms governing their relationship by entering into this Agreement;

WHEREAS, MSD and RTI each desire that RTI process and produce certain human specialty allograft tissue listed in Schedule 2.1 attached hereto (the “ Specialty Allografts ”) and paste products containing demineralized bone, gelatin, and particulate mineral including but not limited to cortical and/or cancellous chips listed in Schedule 2.1 attached hereto (“ Bone Paste ”), and MSD desires to distribute such Specialty Allografts and Bone Paste in accordance with the terms and conditions contained herein;

WHEREAS, MSD desires to obtain a license from RTI to market, promote and distribute Specialty Allografts and Bone Paste; and

WHEREAS, the Parties desire to work together to develop new technology and products for use in medical procedures;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, the Parties hereby represent, covenant and agree as follows:

ARTICLE I

AMENDMENT AND TERMINATION OF ORIGINAL AGREEMENTS AND 2002

AGREEMENT

1.1 Amendment . In order to facilitate continued service to patients and efficient use of human tissue, prior to November 1, 2002, (the “ Implementation Date ”) the Parties continued to operate under the Original Agreements and agreed as follows:

(a) Management Services Fee . Beginning on the Original Effective Date and ending on the day immediately prior to the Implementation Date, (i) with respect to UFTB Allografts, the Management Services Fee (as such terms are defined in the 1996 Agreement) was [*****] and (ii) with respect to UFTB Paste Products, the Management Services Fee (as such terms are defined in the 1998 Agreement) was [*****].

(b) Effect . Except as set forth expressly herein, all terms of the Original Agreements remained in full force and effect until the Implementation Date.

1.2 Termination . As of the Implementation Date, the Parties agree and acknowledge that, without any additional action on either Party’s behalf, the Original Agreements terminated and are of no further force or effect; provided, however, such termination did not relieve either Party from liabilities arising prior to the Implementation Date under the terms of the Original Agreements. The parties further acknowledge and agree that as of the Effective Date, the 2002 Agreement terminated and was superceded in all respects by this Agreement.

1.3 Arbitration . RTI and MSD covenant and agree to use best efforts to resolve all outstanding disputes under the Original Agreements by the Effective Date, including but not limited to those matters currently in arbitration.

1.4 Quarterly Meetings . Senior management of RTI (Brian Hutchison or his successor) and MSD (Pete Wehrly and/or Michael DeMane or their successors) shall meet either in person or telephonically each quarter as their respective schedules permit to discuss all outstanding issues under the Agreement and specifically to exchange information about past and future developments in the relationship between MSD and RTI and the growth potential for distribution and development of RTI products and biologic products generally, and to agree upon what portion of such information may be publicly disclosed. If an agreement to disclose cannot be reached then the party who owns that information will make the final determination of disclosure of that information; provided however that no party shall be prohibited from disclosing any information which it is required to disclose under applicable federal, state or foreign law.

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ARTICLE II

LICENSE GRANT

2.1 License; Sublicensing Rights; Field of Use . Subject to the provisions of this Agreement, RTI hereby grants to MSD a worldwide and royalty free license to distribute Specialty Allografts and Bone Paste throughout the world except with respect to the country of Italy (the “ Territory ”). Schedule 2.1 attached hereto contains a list of all Specialty Allografts and Bone Paste as of the date hereof, including a list of Specialty Allografts and Bone Paste for which the license grant hereunder is exclusive in the Exclusive Territory (as defined in Section 3.1(a) herein) and non-exclusive in the remainder of the Territory, subject to Section 3.1(f), and a list of Specialty Allografts and Bone Paste for which the license grant hereunder is nonexclusive throughout the Territory.

2.2 License of RTI Marks . RTI grants to MSD a royalty free license to use under the quality control of RTI the RTI name and logo and all goodwill associated therewith, and all trademarks, service marks, trade names, designs, graphics and logos associated with the Specialty Allografts or the Bone Paste, (the “ Current RTI Marks ”) in connection with the marketing and distribution of Specialty Allografts and Bone Paste as provided in this Agreement. RTI further grants to MSD a royalty free license to use under the quality control of RTI service marks or trademarks adopted and/or used by RTI and associated specifically with Specialty Allografts or Bone Paste (the “ Future RTI Marks ,” and, together with the Current RTI Marks, the “ RTI Marks ,”) in connection with the marketing and distribution of Specialty Allografts and Bone Paste as provided in this Agreement. A list of all Current RTI Marks and their filing status (if any) is attached hereto as Schedule 2.2. RTI shall update Schedule 2.2. with all Future RTI Marks within thirty (30) days after they have been adopted or used by RTI.

2.3 Additional Specialty Allografts and Bone Paste . The parties shall update Schedule 2.1 to include all line extensions of Specialty Allografts and Bone Paste and any jointly developed products as described in Section 6.3 herein. Line extensions shall include any improvements or modifications to, or substitute or alternative products for, Specialty Allografts or Bone Paste reasonably anticipated to be used primarily for spinal fusion surgery that are competitive with any Specialty Allograft and/or Bone Paste identified in Schedule 2.1. If the parties are unable to agree on whether a product should be added to Schedule 2.1, the parties shall refer the matter to a special master jointly selected by the parties to determine the issue and the determination of the special master shall be binding and non-appealable. The Special Master shall be selected using the same process as the selection of the arbitrator under Section 9.12 hereof.

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ARTICLE III

EXCLUSIVITY; MSD DISTRIBUTION SERVICES; SPECIALTY ALLOGRAFT AND

BONE PASTE SUPPLY

3.1 Exclusivity .

(a) Exclusive Distributor Appointment . Subject to MSD’s right to subcontract or delegate in whole or in part to one or more third parties its obligations and responsibilities as distributor of Specialty Allografts and Bone Paste as expressly set forth in this Agreement, during the term of this Agreement, MSD shall be the exclusive distributor for Specialty Allografts and Bone Paste (except those identified specifically as non-exclusive on Schedule 2.1) throughout the United States, Canada and Puerto Rico (the “Exclusive Territory”), and MSD has agreed to be a non-exclusive distributor in all other countries and territories in the Territory only to the extent described in Section 3.1(e) hereof; provided, however, with respect to Bone Paste, the grant of rights herein shall be exclusive only for the intended or expected use primarily in spinal surgery and shall be exclusive for the use of the trademark, service mark, trade name, design, graphics and logos associated with “Osteofil.” RTI agrees that any Bone Paste delivered other than pursuant to this Agreement shall contain a different brand name and label than the Bone Paste delivered pursuant to this Agreement. MSD agrees that it will distribute Bone Paste only pursuant to its grant of distribution rights for use in spinal procedures.

(b) RTI Covenant . Except as otherwise provided for under this Agreement, and other than with respect to Bone Paste intended or expected to be primarily used outside the spine or as provided in Section 6.3(e) of this Agreement, RTI shall not, during the term of this Agreement, in any manner, directly or indirectly or by assisting others, (i) produce, manufacture, distribute, or assist with the marketing of Specialty Allografts and Bone Paste (ii) engage in any manufacturing, distribution or marketing activities on behalf of any other individual or entity with respect to any Specialty Allografts and Bone Paste or (iii) have an equity, profit or joint venture interest in, or render services (of an executive, marketing, manufacturing, research and development, administrative, financial or consulting nature) to any business that produces, manufactures, distributes, or assists with the marketing of Specialty Allografts and Bone Paste or (iv) engage in any activities described in (i), (ii) or (iii) above with respect to any allograft tissue intended or expected to be primarily used in the spine.

(c) MSD Right to Compete . Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall prohibit MSD from manufacturing, marketing or distributing allograft tissue or other products that compete, either directly or indirectly, with Specialty Allografts and Bone Paste. Schedule 3.1(c) attached hereto contains a list of all allograft tissue or other products that MSD manufactures, markets or distributes that MSD believes may compete, either directly or indirectly, with Specialty Allografts or Bone Paste. MSD shall update Schedule 3.1(c) within fifteen (15) days of the first day of each calendar quarter starting July 1, 2004.

(d) Release of Exclusivity . MSD may release RTI from the exclusivity provisions of this Agreement with respect to a specific Specialty Allograft or Bone Paste by giving written notice thereof, upon which time MSD’s rights hereunder with respect to such Specialty Allograft or Bone Paste shall become nonexclusive but shall otherwise remain in full force and effect. In addition, if MSD submits Binding Orders for [*****] for a specific Specialty Allograft or Bone Paste that are less than [*****] of the average value of Binding Orders submitted by MSD to RTI for the same specific Specialty Allograft or Bone Paste, as the case may be, for the immediately preceding [*****], then RTI may

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notify MSD in writing of such shortfall. The Initial Stocking Order shall not be used in the calculation of the average value of Binding Orders submitted by MSD. Upon receipt of such notice, MSD shall have [*****] in which to submit additional Binding Orders such that the total Binding Orders as defined in paragraph 3.4(d), for the quarter are not less than [*****] of the average value of Binding Orders submitted by MSD for the same specific Specialty Allograft or Bone Paste, as the case may be, for the immediately preceding [*****]. If MSD fails to submit such additional Binding Orders, MSD’s rights hereunder with respect to such Specialty Allograft or Bone Paste shall become nonexclusive but shall otherwise remain in full force and effect. Notwithstanding the foregoing, in the event that RTI delays or fails to deliver Specialty Allografts or Bone Paste in sufficient quantity to meet a MSD Forecast or an MSD Binding Order, or regulatory actions delay delivery of the Specialty Allografts or Bone Paste then RTI shall not have the right to provide notice of a shortfall for any such period. With respect to a New Allograft, the average value of Binding Orders submitted by MSD and actually filled by RTI for the first full year of such New Allograft shall be used for the purposes of this Section 3.1(d), provided, however, that MSD may submit an initial stocking order with respect to such New Allograft that will not be included in such calculation.

(e) International Distribution . MSD’s agreement in Section 3.1(a) hereof to allow RTI to distribute Specialty Allografts and Bone Paste or other allograft tissue and bone paste products for use in the spine (hereinafter “Spinal Allograft Products”) in territories outside of the United States, Canada, and Puerto Rico (the “Exclusive Territory”), is specifically conditioned on the following conditions being met at all times:

(i) Prior to any such distribution RTI must use commercially reasonable efforts to assure that no Spinal Allograft Products will be distributed to anyone who further distributes or intends to distribute such Spinal Allograft Products into the Exclusive Territory for spinal applications and if such Spinal Allograft Products are distributed by any party other than MSD in the Exclusive Territory for spinal applications then RTI will cease all distribution to that customer and immediately use its best efforts to enjoin such distribution and recover inventory from that distributor;

(ii) Specialty Allografts and Bone Paste for MSD’s distribution shall receive priority with respect to donors, processing and manufacturing over any distribution by RTI or third parties, except for tissue suitable for Bone Paste to be distributed by Exactech;

(iii) Marketing materials that reference BioCleanse will be provided to MSD concurrent with or prior to their distribution to the public;

(iv) Distribution by RTI or any third party as allowed by this Section 3.1 (e) will not violate any MSD Intellectual Property Rights; and

(v) RTI shall provide advance notice of RTI’s intent to distribute or the existence of any proposed agreement with distributors in any country in which

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MSD then has distribution of Spinal Allograft Products on a non-exclusive basis and in all cases RTI and MSD shall meet to address issues related to price, ownership of product registrations and trade names prior to the entry into any such agreement or RTI’s own distribution outside of the Exclusive Territory.

In the event of any breach of the conditions of Sections 3.1(e)(i), (ii), (iv) or (v) hereof, RTI will immediately cease distribution of Spinal Allograft Products in any country outside of the Exclusive Territory related to such breach.

3.2 MSD’s Distribution Services . MSD shall use commercially reasonable efforts to distribute, or facilitate the marketing and distribution of, Specialty Allografts and Bone Paste in the Territory, in accordance with this Agreement (the “ Services ”). The Services shall include, without limitation: (i) developing marketing and training literature and aids for Specialty Allografts and Bone Paste; (ii) training MSD marketing and distribution personnel; (iii) conducting training courses and seminars to educate medical professionals, surgeons, customer support staff, hospital personnel and buying groups related to Specialty Allografts and Bone Paste in the use of Specialty Allografts and Bone Paste, including educating surgeons and staff on Specialty Allograft and Bone Paste design, ordering, delivery and stocking procedures; (iv) exhibiting Specialty Allografts and Bone Paste at medical society meetings; (v) promoting Specialty Allografts and Bone Paste in association with MSD’s other educational services and marketing efforts; and (vi) supporting at a clinical level the marketing and distribution efforts of both RTI and MSD by providing surgical case coverage for Specialty Allografts and Bone Paste. Subject to RTI’s ability to satisfy each Scheduled Order (as defined in Section 3.4(d)) and each Interim Order (as defined in Section 3.4(d)), MSD shall order from RTI and maintain sufficient units of Specialty Allografts and Bone Paste for samples, exhibits and training purposes. MSD shall be solely responsible for training, service and support for Specialty Allografts and Bone Paste distributed by MSD, and shall have no right to reimbursement or contribution for any costs related to such responsibilities.

3.3 Taxes . MSD shall have the sole responsibility for collection and payment to the appropriate taxing authorities of any taxes, tariffs, duties or excise, sales or use, value added or other taxes or levies imposed upon Specialty Allografts or Bone Paste, as the case may be, as a result of MSD’s distribution of Specialty Allografts or Bone Paste, as the case may be, to customers. RTI shall have the sole responsibility for payment to the appropriate taxing authorities of any taxes, tariffs, duties or excise, sales or use, value added or other taxes or levies imposed on the services provided by RTI under this Agreement.

3.4 Specialty Allograft and Bone Paste Supply; Forecasts . The Parties acknowledge and agree that donated human tissue is necessary for the production of Specialty Allografts and Bone Paste, and that at times the demand for such products may exceed the supply due to limited amounts of donated human tissue. The Parties agree to use their mutual best efforts, including MSD’s knowledge of the needs of its customers and RTI’s expertise in processing tissue, to match the available supply to the requirements of patients and healthcare providers for Specialty Allografts. Accordingly, the Parties agree to do the following:

(a) MSD Forecasts . [*****].

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(b) RTI Forecasts . [*****].

(c) Transmission of Forecasts . [*****].

(d) Binding Orders . [*****].

(e) Allocation Priority . [*****].

(f) Shortfall . [*****].

3.5 Shipping Procedures . RTI shall ship Specialty Allografts and Bone Paste corresponding to Binding Orders to MSD at least once per week at RTI’s sole cost and expense, provided that MSD shall reimburse RTI for actual and reasonable expenses incurred by RTI in expediting shipments or making additional shipments pursuant to Interim Orders at MSD’s request.

3.6 Returned and Rejected Specialty Allografts and Bone Paste .

(a) Returned Specialty Allografts and Bone Paste . The return policy for Specialty Allografts and Bone Paste is set forth in Schedule 3.6(a) (the “ Return Policy ”).

(b) Rejected Specialty Allografts and Bone Paste . With respect to latent defects, MSD shall promptly notify RTI after receiving notification from a customer of such customer’s discovery thereof, and MSD and such customer shall have the right to reject such Specialty Allografts or Bone Paste. For the avoidance of doubt, and notwithstanding any provision of the Return Policy, MSD shall be permitted to reject Specialty Allografts or Bone Paste due to latent defects at any time after discovery of such latent defects or at any time after receiving notification from a customer of such customer’s discovery of such latent defects. Any notification of rejection to RTI shall state the basis for the rejection.

(c) Effect of Return or Rejection . The customer shall be bound by the terms of the Return Policy; provided, however, that in the event of a conflict between the terms of the Return Policy and the terms of this Agreement, the terms of this Agreement shall govern and control in all respects. Neither MSD nor the customer shall be obligated to pay for any rejected shipment of Specialty Allografts or Bone Paste shipped to such customer which fails to meet the Specialty Allograft Specifications or the Specialty Allograft Packaging Specifications or the Bone Paste Specifications or the Bone Paste Packaging Specifications or otherwise breaches the RTI Specialty Allograft Warranty or Bone Paste Warranty, as the case may be, set forth on Schedule 4.3(a) and Schedule 4.3(b), respectively, hereof. The customer shall not be obligated to pay for any shipment of Specialty Allografts or Bone Paste rejected by a customer. If a customer fails to pay for any rejected shipment of Specialty Allografts or Bone Paste, MSD shall not be obligated to pay any license or service fee to RTI for such Specialty Allografts or Bone Paste, and MSD shall be entitled to receive, in its sole discretion, either (i) a credit against future license or service fees in the amount of any such fee MSD had previously paid to RTI for any such rejected Specialty Allografts or Bone Paste or (ii) a replacement Specialty Allograft or Bone Paste, as the case may be. Unless otherwise waived by MSD, all

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Specialty Allografts and Bone Paste shipped to MSD by RTI under this Agreement shall have remaining shelf life of at least sixty percent (60%) of the appropriate shelf life for such Specialty Allografts or Bone Paste (as the case may be).

ARTICLE IV

SPECIFICATIONS; PACKAGING SPECIFICATIONS; SPECIALTY ALLOGRAFT AND

BONE PASTE LABELING; REGULATORY APPROVAL; RTI WARRANTIES

4.1 Specifications .

(a) Specialty Allografts . Specialty Allografts shall meet the specifications set forth on Schedule 4.1(a) hereto (the “ Specialty Allograft Specifications ”).

(b) Bone Paste . Bone Paste shall meet the specifications set forth on Schedule 4.1(b) hereto (the “ Bone Paste Specifications ”).

4.2 Packaging Specifications .

(a) Specialty Allografts . RTI shall supply all packaging and labeling information and designs, including without limitation all artwork and pharmacological information, usage instructions and warnings to be applied to Specialty Allografts (the “ Specialty Allograft Packaging Specifications ”). Once Specialty Allografts are supplied and initially packaged by RTI, MSD will not without RTI’s concurrence remove, alter or modify any Specialty Allograft Packaging Specifications of such Specialty Allografts.

(b) Bone Paste . RTI shall supply all packaging and labeling information and designs, including without limitation all artwork and pharmacological information, usage instructions and warnings to be applied to Bone Paste (the “ Bone Paste Packaging Specifications ”). Once Bone Paste is supplied and initially packaged by RTI, MSD will not without RTI’s concurrence remove, alter or modify any Bone Paste Packaging Specifications of such Bone Paste.

4.3 Warranties .

(a) Specialty Allografts . RTI has listed specific warranty information with respect to Specialty Allografts on Schedule 4.3(a) and RTI shall use its best efforts to keep Schedule 4.3(a) updated to include all applicable warranties.

(b) Bone Paste . RTI has listed specific warranty information with respect to Bone Paste on Schedule 4.3(b) and RTI shall use its best efforts to keep Schedule 4.3(b) updated to include all applicable warranties.

(c) Warranty Obligation . All warranty obligations of the respective Parties listed with respect to Specialty Allografts and Bone Paste shall be solely the obligation and responsibility of RTI.

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4.4 Labeling . All Specialty Allografts and Bone Paste distributed pursuant to this Agreement shall be labeled by RTI in accordance with this Section 4.4. Any Specialty Allograft or Bone Paste which is improperly labeled shall not be deemed delivered until properly identified by MSD, and RTI shall credit MSD’s account for its reasonable costs incurred while (i) identifying Specialty Allografts and Bone Paste that were inappropriately labeled and (ii) correcting orders both to RTI and from its customers.

(a) RTI Processed Specialty Allografts and Bone Paste . All Specialty Allografts and Bone Paste processed or manufactured by RTI (the “ RTI Processed Specialty Allografts and Bone Paste ”) shall be sterilized, labeled and packaged by RTI using the RTI Marks. The costs of labeling the RTI Processed Specialty Allografts and Bone Paste is included in the applicable LSF (as defined in Section 5.1) and shall not be charged to MSD.

(b) Third Party Processed Specialty Allografts and Bone Paste . In the event MSD exercises its right to process or manufacture, or appoints a Third Party Supplier to process or manufacture, Specialty Allografts or Bone Paste pursuant to Section 3.4(f) herein (the “ Third Party Processed Specialty Allografts and Bone Paste ”), at MSD’s sole discretion and expense, RTI shall sterilize, package and label as sterilized by RTI such Third Party Processed Specialty Allografts and Bone Paste. MSD shall pay RTI a commercially reasonable fee for such sterilization, packaging and labeling of the Third Party Processed Specialty Allografts and Bone Paste; provided, however, such fee shall not exceed the consideration RTI receives from any other third parties for substantially similar services.

(c) Sterilization Validation . During the term of this Agreement, RTI shall use commercially reasonable efforts to validate its processes to allow for and substantiate a “sterile” product label claim on all Specialty Allografts and Bone Paste.

4.5 Regulatory Approval .

(a) United States . RTI warrants that Specialty Allografts, Bone Paste, Specialty Allograft Specifications, the Bone Paste Specifications, the Specialty Allograft Packaging Specifications and the Bone Paste Packaging Specifications shall be in conformity in all respects with all applicable federal, state, and local laws, rules and regulations relating thereto within the United States, including, without limitation, the Federal Food, Drug and Cosmetic Act (including Good Tissue Practices Regulations), the National Organ Transplant Act, FDA tissue regulations, and American Association of Tissue Banks (the “ AATB ”) or other generally accepted industry standards. RTI will continue to maintain and fulfill such regulatory approval of the federal, state and local governing bodies, and be responsible for all filings and other documents necessary to continue to meet said regulatory requirements, including, without limitation, fulfilling all applicable reporting, tracking and other requirements of regulatory agencies, self-regulatory organizations or governmental entities that have jurisdiction with respect to RTI, Specialty Allografts and Bone Paste. MSD shall cooperate in preparing any such filings to the extent reasonably requested by RTI. MSD shall be fully responsible for compliance with regulatory requirements with respect to all Specialty Allograft and Bone Paste distribution activities

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performed by MSD, including, if necessary, registration as a Tissue Bank under FDA 21 CFR 1271 and under any state licensure requirements. MSD shall be responsible for assuring that applicable AATB requirements are met with respect to MSD’s distribution activities. RTI shall be responsible for any market withdrawal or recall activities with respect to Specialty Allografts or Bone Paste as required pursuant to applicable laws, rules, regulations or standards. In the event RTI fails to perform any required market withdrawal or recall activities with respect to Specialty Allografts or Bone Paste, then MSD may perform such market withdrawal or recall activities. Each Party shall fully cooperate in any market withdrawal or recall activities on request of the other Party. MSD shall provide post-market feedback information to RTI in accordance with regulatory requirements.

(b) AATB Accreditation . The Parties acknowledge that RTI is a member of the AATB. RTI warrants that it will use its best efforts to continue its membership in good standing in the AATB and retain its AATB accreditation at all time during the term of this Agreement.

(c) All International Markets . MSD shall be fully responsible for market approvals, product registration and licensure for all markets in the Exclusive Territory and any other countries where MSD proposes to begin distributing RTI products and those products have not been previously registered, licensed and approved. RTI will use commercially reasonable efforts to support such registration activities. For all other markets in the Territory, RTI is fully responsible for market approvals, product registration and licensure. The purpose of this Section is to assign responsibility to satisfy licensure requirements in particular countries. The inability of MSD or RTI to obtain licensure in a particular market shall not, in and of itself, constitute a material breach of this Agreement.

(d) Costs . All costs associated with obtaining and/or maintaining any regulatory or governmental approval, within the United States, or accreditation with AATB as set forth in this Section 4.5 shall be borne solely by RTI insofar as those costs relate to activities performed by RTI. All costs associated with regulatory requirements, or AATB accreditation related to distribution activities performed by MSD, shall be borne by MSD. All costs associated with obtaining international market approvals, product registrations and licensure for any markets outside the Exclusive Countries where MSD proposes to begin distributing RTI products and where those products have not been previously registered, licensed and approved shall be the responsibility of MSD. MSD shall be responsible for costs associated with its responsibilities under Section 4.5(c).

(e) Allograft or Bone Paste products to be used in clinical investigations . MSD shall inform RTI in advance of any and all clinical investigations where Specialty Allografts or Bone Paste are to be used to ensure that proper donor consent, if required, has been received. MSD shall provide RTI with study outlines and all results of any such clinical investigations pertinent to the use and performance of Specialty Allografts or Bone Paste. RTI shall assist in clinical activities in regard to provision of information to FDA in support of MSD clinical investigations.

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4.6 Additional RTI Representations and Warranties . RTI hereby represents and warrants to MSD the following:

(a) it is the owner of or the exclusive licensee under patent rights, if any, stemming from U.S. Patent Application S/N 08/816,079, dated March 13, 1997, attached as Exhibit A, including any continuations, continuations-in-part, or divisions of this patent application, or as well as foreign counterparts thereof and patents issuing thereon which relates to Bone Paste;

(b) it is the owner of the Dowel products listed in Exhibit B which are comprised solely from allograft for use in medical procedures in the human spine;

(c) has the right to grant the licenses granted to MSD in this Agreement;

(d) as of the Effective Date, RTI has not received notice, nor is it aware, that the Specialty Allografts or Bone Paste infringe upon any patent which has been issued to any third party;

(e) Specialty Allografts and Bone Paste shall be processed, packaged, stored and shipped (i) biomechanically suitable for use in medical procedures in which human tissue is needed to replace human tissue, (ii) in accordance with the Specialty Allograft Specifications and Specialty Allograft Packaging Specifications or the Bone Paste Specifications and Bone Paste Packaging Specifications, as the case may be, for use as prescribed by a physician for medical procedures in which human tissue is needed or used and (iii) in accordance with Section 4.5;

(f) Specialty Allografts and Bone Paste are and shall be delivered free of any liens, encumbrances, pledges, or claims of any third party;

(g) the rights granted herein do not violate any rights previously granted by RTI to any third party;

(h) it is fully authorized to enter into and perform this Agreement;

(i) Specialty Allografts and Bone Paste have been and will be professionally processed and have come and will come packaged for further distribution throughout the Territory;

(j) that it has obtained the materials for production of Specialty Allografts and Bone Paste in compliance with all applicable federal, state and local laws, rules and regulations associated with Specialty Allografts or Bone Paste, as the case may be, and all applicable AATB standards;

(k) that its execution and performance of this Agreement will not (i) conflict with, or result in a breach or default under, any agreement, contract, arrangement, mortgage or indenture to which it is bound, (ii) result in the creation of any lien, encumbrance or pledge upon any of the properties or assets (other than raw materials) of RTI, or (iii) violate any statute, rule, regulation or order applicable to RTI; and

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(l) that it shall provide to MSD at least quarterly comprehensive reports regarding RTI’s performance of its obligations under this Agreement.

4.7 MSD Representations and Warranties . MSD hereby represents and warrants to RTI the following:

(a) it is fully authorized to enter into and perform this Agreement;

(b) that its execution and performance of this Agreement will not (i) conflict with, or result in a breach or default under, any agreement, contract, arrangement, mortgage or indenture to which it is bound, (ii) result in the creation of any lien, encumbrance or pledge upon any of the properties or assets (other than raw materials) of MSD, or (iii) violate any statute, rule, regulation or order applicable to MSD; and

(c) as of the Effective Date, MSD has not received notice, nor is it aware, that the Specialty Allografts or Bone Paste infringe upon any patent which has been issued to any third party.

4.8 Quality Procedures . The Parties acknowledge the importance of ensuring that the Specialty Allografts and Bone Paste are of the highest quality and are safe and effective for their intended or expected uses. Accordingly, within ten (10) days after signing this Agreement, RTI shall provide MSD with a full and complete copy of its policies and procedures for ensuring the quality and safety of Specialty Allografts and Bone Paste (the “Quality Procedures”). The Quality Procedures shall be consistent with the terms of this Agreement and provide greater detail for the arrangement and responsibilities of the parties in the procurement, processing, testing and delivery of Specialty Allografts and Bone Paste hereunder as well as regulatory reporting functions and the exchange of information relevant to any of the foregoing. The Quality Procedures shall also set forth material specifications and acceptability criteria for the Specialty Allografts and Bone Paste, which specifications and criteria shall be no less stringent than industry standards and shall include, at a minimum, standards and procedures for donor screening, intake evaluation, tissue processing, tissue storage, tissue record keeping, retained samples, maintenance and access to documentation. Within ten (10) days after signing this Agreement, the parties shall each designate in writing an appropriate contact person for communications regarding the Quality Procedures, and the parties will promptly notify each other in writing of any changes in such personnel. The designated contacts for each party, and other reasonably appropriate safety and quality assurance personnel as the parties may designate from time to time, shall meet in person or via other appropriate means no less often than quarterly to review the Quality Procedures and consider modifications thereto. Quality Procedures will be amended from time to time by RTI with the advice and comment from MSD to reflect changes in technology, laws, regulations and industry standards, provided that no party will be required to agree to any change to the Quality Procedures that, in the reasonable discretion of such party, would adversely impact the quality, safety or efficacy of any Specialty Allograft or Bone Paste. RTI will not modify or amend the Quality Procedures without providing prompt written notice to MSD

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ARTICLE V

LICENSE AND SERVICE FEE

5.1 License and Service Fee . Beginning on the Implementation Date, MSD shall pay to RTI a license and service fee (“ LSF ”) for Specialty Allografts and Bone Paste delivered to MSD from RTI pursuant to a Binding Order.

5.2 Initial Fees .

(a) Bone Paste . The initial LSF for each unit of Bone Paste, by catalog number, shall be equal to [*****] of the average net distribution fee (“ ANDF ”) received by RTI for such catalog number between [*****]. ANDF means the sum of the actual gross amounts invoiced to customers for such Bone Paste catalog number during such time period (excluding items placed on consignment) less discounts, rebates paid or accrued, credits, taxes, shipping, handling and other fees, and less allowances and returns, and divided by the total number of units of each such Bone Paste catalog number shipped during that period.

(b) Specialty Allografts . The initial LSF for each Specialty Allografts (excluding assembled allografts specifically identified as “Assembled Allografts” and listed on Schedule 2.1 (“ Assembled Allografts ”)), by catalog number, shall be equal to [*****] of (i) the ANDF received by RTI for such Specialty Allograft catalog number between [*****], or (ii) the ANDF if listed on Schedule 2.1 for such Specialty Allograft catalog number, as the case may be. ANDF means the sum of the actual gross amounts invoiced to customers for such Specialty Allograft catalog number during such time period (excluding items placed on consignment) less discounts, rebates paid or accrued, credits, taxes, shipping, handling and other fees, and less allowances and returns, and divided by the total number of units of each such Bone Paste catalog number shipped. The initial LSF for Assembled Allografts shall be calculated in the same manner, except that the percentage shall be [*****]; provided, however, if RTI receives all necessary government approvals to manufacture Assembled Allografts by combining tissue from multiple donors in a single graft, the LSF for such Assembled Allografts shall be the same as the LSF for standard (non-assembled) Specialty Allografts of the same shape and dimensions. The LSF for nonexclusive Specialty Allografts identified as on Schedule 2.1 shall not exceed the comparable LSF for such Specialty Allografts received by RTI from any other third party.

(c) Samples . The LSF for samples, not for implantation, of Specialty Allografts and Bone Paste ordered by MSD in connection with its obligations under Section 3.2(a) shall be one half of the LSF for the Specialty Allografts or Bone Paste, as the case may be, calculated in accordance with Section 5.2(a) or (b) above.

5.3 Adjustment to License and Service Fee . Subject to the limitations contained in this paragraph, RTI may increase the LSF for any or all Specialty Allografts and Bone Paste on the first anniversary of the Implementation Date, and thereafter not more than twice annually, upon [*****] advance written notice to MSD. RTI may not increase the LSF for any Specialty Allograft such that the LSF for such Specialty Allograft or Bone Paste is greater than [*****] of

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the ANDF (excluding items placed on consignment) received by MSD for such Specialty Allograft over the preceding [*****]. RTI may not increase the LSF for any Bone Paste such that the LSF for such Bone Paste is greater than [*****] of the ANDF (excluding items placed on consignment) received by MSD for such Bone Paste over the preceding [*****]. In the event of a significant technological advance or a material increase in regulatory compliance costs that either Party reasonably anticipates will have an immediate and material impact on the marketplace for Specialty Allografts or Bone Paste, the Parties will meet and confer in good faith on adjustments to the applicable LSFs, with the objective of adjusting each LSF to equal approximately [*****] of the ANDF expected to be received by MSD as a result of distribution of such Specialty Allografts, and [*****] of the ANDF expected to be received by MSD as a result of distribution of such Bone Paste, as the case may be. Notwithstanding any other provision of this Agreement, the Parties may mutually agree to alternative fee arrangements for any Specialty Allografts or Bone Paste.

5.4 Payment Terms . All LSF payments shall be paid in U.S. Dollars within thirty (30) days of the later of MSD’s receipt of Specialty Allografts or Bone Paste, as the case may be, pursuant to a Binding Order, or the receipt of RTI’s invoice therefor. All LSF fees shall be FOB MSD’s place of business in Memphis, Tennessee, or such other locations within the 48 contiguous United States as the Parties may agree to designate.

ARTICLE VI

CERTAIN AGREEMENTS OF RTI AND MSD

6.1 Inspections . The Parties shall permit, once annually, on reasonable notice, a representative of the other Party to inspect those processing facilities and methods of operation used by the other Party in connection with Specialty Allografts and Bone Paste as considered necessary or desirable by the other Party for the purpose of determining the other Party’s compliance with the undertakings set forth in this Agreement or satisfying a Party’s legal or regulatory obligations. The representative shall sign an agreement promising not to use any information obtained from the inspection except for its determination of such Party’s compliance. In addition to the annual inspection provided pursuant to this Agreement, if (i) RTI has engaged in international distribution pursuant to Section 3.1(g) hereof or the development or marketing of RTI-Developed New Allografts not primarily useful for spinal fusion surgery pursuant to Section 6.3(e) hereof and (ii) a Supply Shortfall has occurred or MSD has received an RTI Forecast which is more than [*****] lower than the most recent applicable MSD Forecast, then MSD shall be permitted to conduct an additional inspection of records relating to RTI’s receipt of donor tissue suitable for products which are subject to such Supply Shortfall or such lower RTI Forecast at any time within [*****] after occurrence of such event solely for the purpose of ensuring that MSD is receiving priority on supply as required by this Agreement. No observation or inspection under this Section 6.1 shall serve to waive any rights of MSD or RTI hereunder.

6.2 Ownership and Licensing of Intellectual Property Rights .

(a) Intellectual Property Rights . For purposes of this Agreement, “Intellectual Property Rights” means all works, including literary works, pictorial, graphic and

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