<PAGE>

                                                                   Exhibit 10.60

                              RETIREMENT AGREEMENT

     This Agreement is executed on the dates set forth below by and between
RICHARD W. BAUER ("Bauer"), residing at 1357 Tamarack Road, Manasquan, New
Jersey 08736, and OSTEOTECH, INC. ("Osteotech"), located at 51 James Way,
Eatontown, New Jersey 07724.

                                   WITNESSETH:

     In consideration of the mutual covenants and obligations hereinafter set
forth, Bauer and Osteotech agree as follows:

     1. Bauer and Osteotech confirm that Bauer shall retire from his employment
at Osteotech upon the close of business on December 31, 2005 (the "Retirement
Date").

     2. If Bauer retires in accordance with Section 1 hereof, Bauer shall
receive a payment of thirty-four thousand nine hundred sixteen dollars and
sixty-seven cents ($34,916.67), an amount which is equal to his gross base
salary for one month, on each of January 15, 2006, February 15, 2006 and March
15, 2006 for a total of one hundred four thousand seven hundred fifty dollars
($104,750.00) and on July 1, 2006 Bauer shall receive a payment of one hundred
four thousand seven hundred fifty dollars ($104,750.00), which is equal to three
months of his gross base salary. Commencing on and including July 15, 2006,
Bauer shall receive payments equal to 18 months of his gross base salary in the
total sum of six hundred twenty eight thousand five hundred dollars
($628,500.00). Such payments shall be made by check in thirty-six (36)
semimonthly installments, between July 15, 2006 and December 31, 2007, each in
the gross amount of seventeen thousand four hundred fifty-eight dollars and
thirty-three cents

<PAGE>

($17,458.33). In addition, on December 30, 2005, Osteotech shall pay to Bauer a
transition payment in the amount of forty-six thousand six hundred eighty-five
dollars and thirty-four cents ($46,685.34) for the purpose of establishing an
office, arranging logistical support and arranging Bauer's affairs so as to be
in a position to assist the Company in the duties envisioned by this Agreement
and to permit Bauer to transition from full time employment to such duties. On
December 30, 2005, Bauer shall receive compensation corresponding to all unused
vacation pay that Bauer will have accrued as of December 30, 2005. All payments
made to Bauer pursuant to this Agreement shall be subject to applicable
deductions in accordance with Osteotech's standard payroll practice.

     3. Consistent with past practice, including the payment of a portion of the
premiums by Bauer, following Bauer's retirement, in accordance with Section 1
hereof, Bauer's participation in Osteotech's medical, dental and life insurance
plans, and Osteotech's payment of premiums for Bauer's medical, dental, and life
insurance coverage (including coverage of his family), shall continue through
the later of (i) December 31, 2007 and (ii) the date Bauer ceases serving on
Osteotech's Board of Directors (the date in (i) or (ii) above being the
"Insurance Termination Date"). Commencing on the Insurance Termination Date,
Osteotech shall pay all COBRA premiums on behalf of Bauer, through the earlier
of (i) such time that Bauer becomes eligible to receive Medicare benefits, or
(ii) eighteen months after the Insurance Termination Date. The premium payments
for such coverage through the Insurance Termination Date and the COBRA premium
payments represent employer provided coverage under a health plan, and, in
accordance with Internal Revenue Code Section


                                        2

<PAGE>

106, will not be taxable income to Bauer. Accordingly, Bauer shall not receive a
form 1099 on account of such payment of premiums by Osteotech. Osteotech shall
provide Bauer with the opportunity to make an application for portability or
conversion of any life insurance policy on his life as of December 31, 2007. For
so long as Bauer serves on Osteotech's Board of Directors prior to December 31,
2007, he will not be eligible to receive cash Board fees, but will be eligible
to receive options and stock paid to the members of the Board upon their
re-election to the Board by the stockholders in each year that Bauer is
re-elected to the Board. For so long as Bauer serves on Osteotech's Board of
Directors after December 31, 2007, Bauer will be eligible to receive Board fees
in the same form, whether cash, options or stock, as other non-employee Board
members.

     4. Bauer agrees that no additional compensation of any kind shall be paid
to him, and the benefits provided to him under this Agreement shall be in full
payment and satisfaction of any and all financial obligations due to him from
Osteotech. Bauer shall be entitled to receive 100% of the bonus payments, if
any, that are awarded to Bauer for the year ending December 31, 2005 in
accordance with the Management Performance Bonus Plan, regardless of when such
bonus is awarded. Such bonus payments shall be paid to Bauer in accordance with
the Management Performance Bonus Plan and past practice.

     5. A copy of Bauer's Osteotech, Inc. Stock Option Detail Report, as of
October 31, 2005, is attached hereto as Exhibit A.

     6. All inquiries received by Osteotech concerning Bauer from potential or
future employers or other business associations shall be directed to Mr. Jeffrey
M. Rosen, Vice President of Human Resources of Osteotech, or his successor, for
response. Should


                                        3

<PAGE>

any potential or future employer or other business associations contact
Osteotech for a reference concerning Bauer, Osteotech shall verify only Bauer's
job title, dates of employment and the reason for termination being his
voluntary retirement.

     7. (a) In exchange for Osteotech's agreement to provide Bauer the benefits
provided by this Agreement, Bauer, for himself, his heirs, administrators,
executors, representatives and/or assigns, hereby voluntarily discharges and
releases Osteotech and its affiliates, parent and subsidiary companies,
officers, directors, employees, agents, representatives, successors and assigns
(collectively the "Osteotech Releasees") from any and all claims or liabilities
of any kind or description, known or unknown, suspected or unsuspected, fixed or
contingent, which Bauer ever had, now has or hereafter may have against each or
any of the Osteotech Releasees by reason of any matter whatsoever arising out of
or resulting from Bauer's employment at Osteotech through the date of this
Agreement, his agreement to retire from his employment at Osteotech and his
retirement from such employment. This release of claims specifically includes,
but is not limited to, any claim of discrimination, including any claim arising
under, or based upon, the Age Discrimination in Employment Act (or the Older
Workers Benefit Protection Act), Title VII of the Civil Rights Act of 1964, as
amended, the Americans with Disabilities Act, the New Jersey Conscientious
Employee Protection Act and/or the New Jersey Law Against Discrimination, and
any and all contract, quasi-contract, estoppel, tort or statutory claims under
federal, state or local law arising out of or resulting from Bauer's employment
at Osteotech and/or his retirement from such employment.


                                        4

<PAGE>

     (b) Bauer agrees to execute and deliver to Osteotech, on the Retirement
Date, a further General Release in the form of Exhibit B to this Agreement. The
benefits set forth in this Agreement shall not be paid to Bauer pursuant to the
terms of this Agreement until seven (7) days have passed after he signs such
General Release, and in the absence of revocation by him of such General
Release.

     (c) In exchange for the benefits provided to Osteotech by this Agreement,
Osteotech, for itself, its officers, directors, successors, agents,
representatives and assigns, hereby voluntarily discharges and releases Bauer
and his heirs, administrators, executors, representatives and/or assigns
(collectively the "Bauer Releasees"), from any and all claims or liabilities of
any kind or description, known or unknown, suspected or unsuspected, fixed or
contingent, which Osteotech ever had, now has or hereafter may have against each
or any of the Bauer Releasees by reason of any matter whatsoever arising out of
or resulting from Bauer's employment at Osteotech through the date of this
Agreement, and his retirement from such employment.

     (d) Osteotech agrees to execute and deliver to Bauer, on the Retirement
Date, a further General Release in the form of Exhibit C to this Agreement.

     (e) The terms and conditions of this Agreement shall be binding on the
parties hereto as of the date the Agreement has been signed and delivered by
both parties and this Agreement may not be unilaterally terminated, revoked or
amended by either party except as provided herein. Notwithstanding the
foregoing, except for the agreement set forth in Section 1 hereof, the portions
of Section 4 regarding the bonus payout, and the releases set forth in Sections
7(a) and 7(c) hereof, the provisions of this Agreement


                                        5

<PAGE>

shall not be effective unless and until Bauer retires on the Retirement Date in
accordance with Section 1. Until such provisions of this Agreement become
effective immediately after the Retirement Date, the terms of the Employment
Agreement by and between Osteotech and Bauer effective as of December 4, 1998,
as amended (the "Employment Agreement"), which Employment Agreement has been
renewed automatically for every two years for an additional two year term, shall
remain in effect and shall govern the terms of Bauer's employment with Osteotech
and the termination of Bauer's employment with Osteotech prior to the
effectiveness of such provisions of this Agreement. Upon the effectiveness of
such provisions of this Agreement immediately after the Retirement Date, the
Employment Agreement shall terminate and be of no further force and effect. None
of the releases contained in Section 7(a) and 7(c) of this Agreement or Exhibits
B and C hereto shall be deemed to be a release of any of the obligations of
Osteotech or Bauer under the Employment Agreement or this Agreement.

     (f) Notwithstanding anything to the contrary contained herein, if Osteotech
signs a preliminary or definitive agreement agreeing to, or Osteotech's board of
directors authorizes Osteotech's management to pursue, a transaction or series
of transactions that would constitute a "Change in Control" (a "Change in
Control Transaction") under the Change in Control Agreement dated as of
September 8, 2002, as may be amended to comply with IRC Section 409A or other
applicable law and regulations, by and between Osteotech and Bauer (the "Change
in Control Agreement"), or if a public announcement is made by a third party
that it is pursuing a transaction which if consummated would constitute a Change
in Control Transaction, and such


                                        6

<PAGE>

Change in Control Transaction shall be consummated on or before the Retirement
Date, this Agreement shall not become effective (except for the releases set
forth in Sections 7(a) and (c) hereof), the Change of Control Agreement shall
remain in full force and effect and shall govern the terms and conditions of
Bauer's employment with Osteotech and the termination of Bauer's employment with
Osteotech, and Sections 12, 13 and 14 of the Employment Agreement shall remain
in full force and effect.

     (g) Notwithstanding anything to the contrary contained herein, if Osteotech
signs a preliminary or definitive agreement agreeing to, or Osteotech's board of
directors authorizes Osteotech's management to pursue, a transaction or series
of transactions that would constitute a Change in Control Transaction on or
before the Retirement Date, or if a public announcement is made by a third party
that it is pursuing a transaction which if consummated would constitute a Change
in Control Transaction on or before the Retirement Date, and such Change in
Control Transaction shall be consummated subsequent to the Retirement Date, the
Change in Control Agreement shall terminate and this Agreement shall become
effective in accordance with its terms, except that Bauer shall receive the
payments due to him under Section 2 of this Agreement until such time as such
Change in Control Transaction is consummated, at which time (i) the payments
under Section 2 of this Agreement and the benefits under Section 3 of this
Agreement shall cease, (ii) in the place of the payments and benefits referred
to in subsection 7(g)(i) above, Bauer shall be entitled to receive the benefits
provided by Section 4(b)(ii) of the Change in Control Agreement and the payments
provided by Section 4(b)(iii) and Section 4(d) of the Change in Control
Agreement, provided that any


                                       7

<PAGE>

such payments payable to Bauer under Section 4(b)(iii) of the Change in Control
Agreement will be reduced by the amount of payments received by Bauer under
Section 2 of this Agreement, (iii) the last two paragraphs of Section 4(b) of
the Change in Control Agreement shall apply to the payments payable to Bauer
under Section 4(b)(iii) of the Change in Control Agreement.

     (h) None of the releases contained in Sections 7(a) and 7(c) of this
Agreement or Exhibits B and C hereto shall be deemed to be a release of any of
the obligations of Osteotech or Bauer under the Change in Control Agreement.

     (i) Notwithstanding anything contained in this Agreement, the terms and
conditions of the Indemnity Agreement by and between Osteotech and Bauer, dated
March 20, 1997 (the "Indemnity Agreement") shall remain in full force and effect
in accordance with its terms, provided that Bauer shall be entitled to coverage
under the Indemnity Agreement in connection with his employment with Osteotech,
his service on the Board of Directors of Osteotech and any activities undertaken
by Bauer in connection with Osteotech's business pursuant to this Agreement or
any subsequent agreement between Osteotech and Bauer. Without limiting the
foregoing, Osteotech confirms that it will continue to defend Bauer and provide
him with indemnification in accordance with the terms of the Indemnity Agreement
in connection with the pending lawsuit by Marc Burel against Osteotech and
Bauer. None of the releases contained in Sections 7(a) and 7(c) of this
Agreement or Exhibits B and C hereto shall be deemed to be a release of any of
the obligations of Osteotech or Bauer under the Indemnity Agreement.


                                        8

<PAGE>

     (j) The release by Bauer provided in this Agreement shall not be deemed to
apply to any individual releasee who has not released Bauer, in the event that
such releasee shall bring a claim against Bauer.

     8. In further recognition of the benefits provided to Bauer under this
Agreement, Bauer agrees to consult with Osteotech with respect to matters which
occurred during the period of Bauer's employment at Osteotech, and to cooperate
with Osteotech on an ongoing basis in connection with the defense of any claim
or proceeding made or filed against Osteotech (or any officer, director or
employee thereof) or the prosecution of any claim or proceeding made or filed by
Osteotech, in each case relating to Osteotech's business during the period of
his employment at Osteotech. Bauer agrees to make himself available at
reasonable times and upon reasonable notice, consistent with his other business
and personal commitments, and assuming Bauer is physically able to do so, to be
interviewed or deposed or to otherwise testify concerning any such claim or
proceeding. Bauer further agrees to promptly notify Osteotech's Chief Executive
Officer ("CEO") or his designee if Bauer receives any legal notices or requests
for information from any person or entity, other than a representative of
Osteotech, concerning matters involving Osteotech which arose during the period
of his employment at Osteotech. Osteotech agrees to reimburse Bauer for
reasonable out-of-pocket expenses incurred in connection with the satisfaction
of his obligations under this Section 8. However, Bauer shall seek advance
approval from the CEO or his designee, before incurring any significant expense
for which Bauer shall seek reimbursement from Osteotech, which approval shall
not be unreasonably withheld or delayed. Also in connection with the


                                        9

<PAGE>

satisfaction of his obligations under this Section 8, Osteotech shall provide,
at Bauer's option, either legal counsel on behalf of Bauer (subject to Bauer's
written approval), or reimburse Bauer for the reasonable fees and costs of legal
counsel that Bauer has retained in this regard (which selection of counsel shall
be subject to written approval by Osteotech), which reimbursement shall not be
unreasonably withheld or delayed. Prior to January 1, 2008, Bauer agrees to
fulfill the above obligations without any associated compensation. Subsequent to
December 31, 2007, if Osteotech desires that Bauer provide future consulting
services to Osteotech, any such services shall be provided pursuant to a
mutually satisfactory agreement to be negotiated between Osteotech and Bauer.

     9. Bauer will not disclose or provide to any person, firm, corporation or
entity (except when authorized by Osteotech in writing) any information,
materials, biologics or animals which are owned by Osteotech or which came into
the possession of Osteotech from a third party under an obligation of
confidentiality, including without limitation, information relating to trade
secrets, business methods, products, processes, procedures, development or
experimental projects, suppliers, customer lists or the needs of customers or
prospective customers, clients, etc. (collectively "Confidential Information"),
which Confidential Information came into his possession or knowledge during the
course of his employment by Osteotech, and Bauer will not use such Confidential
Information for his own purpose or for the purpose of any person, firm,
corporation or entity, other than Osteotech. The provisions of this section
shall not apply to Confidential Information which: (i) at the time of disclosure
is already in the public domain; (ii) Bauer can demonstrate was in his
possession or known to him prior to the effective date of the


                                       10

<PAGE>

commencement of his employment by Osteotech; (iii) subsequently becomes part of
the public domain through no fault of Bauer; (iv) becomes known to Bauer through
a third party who is under no obligation of confidentiality to Osteotech; and
(v) is required to be disclosed by law or by judicial or administrative
proceedings.

     10. Bauer agrees that, by no later than December 31, 2005, he shall deliver
to Mr. Jeffrey M. Rosen of Osteotech, or his successor or designee, all books,
records, notes, documents and other written or computer generated materials of
any nature whatsoever relating to Osteotech's business and any other Osteotech
property in his possession or within his control (e.g., laptop computer,
Blackberry, credit cards, equipment, office keys). Bauer agrees that he shall
not keep in his possession or under his control any of Osteotech's property of
any kind. Nothing herein shall require Bauer to return to Osteotech the Board
minutes that have been provided to him as a director of Osteotech. Bauer will
keep any such minutes confidential in accordance with paragraph 8 of this
Agreement.

     11. Bauer agrees that, through December 31, 2007, he shall not directly or
indirectly be engaged in or assist others in engaging in any business or
activity which is involved in selling products, processes or services which
compete with any significant product, process or service which Osteotech is
developing, marketing or selling at the time of Bauer's retirement, whether his
involvement shall be as an owner (except for passive ownership of up to five
percent (5%) of the securities of a public company), officer, director,
employee, consultant, partner or agent. For purposes of this provision,
products, processes or services which Osteotech is marketing or selling shall be
deemed


                                       11

<PAGE>

"significant" if sales of such products, processes or services exceed ten
percent (10%) of Osteotech's total sales, or, with respect to products under
development as of the Retirement Date, Osteotech is actively engaged in
developing such products and has invested funds in the development of such
products in the sum of at least $200,000 in direct costs. Upon Bauer's
retirement on the Retirement Date, Osteotech shall provide Bauer with a list of
each product, process and service which has been sold, marketed or is under
development by Osteotech as of the Retirement Date.

     12. Bauer agrees that the restrictions imposed upon him in this Agreement
are reasonable and that they are appropriate and necessary to protect
Osteotech's legitimate business interests. Bauer further agrees that such
restrictions do not and will not impose an undue hardship upon him.

     13. Bauer acknowledges and represents that he fully understands this
Agreement, that he has had adequate and reasonable opportunity to review this
Agreement, that he was advised to consult with independent counsel of his choice
before signing it, that he did in fact consult with independent counsel of his
choice before signing it, and that he is signing it voluntarily.

     14. Bauer acknowledges and agrees that he has been given at least
twenty-one (21) days to consider this Agreement. Bauer further acknowledges and
agrees that he may cancel or revoke this Agreement within seven (7) days after
signing it. To be effective, any notice of cancellation or revocation must be in
writing and delivered either by hand or mail within such seven (7) day period to
Mr. Jeffrey Rosen or his successor or designee at Osteotech. If delivered by
mail, the notice of cancellation or revocation must


                                       12

<PAGE>

be (a) post-marked within the seven (7) day period; (b) properly addressed to
Mr. Jeffrey Rosen, Osteotech, Inc., 51 James Way, Eatontown, New Jersey 07724;
and (c) sent by certified mail, return receipt requested. Bauer acknowledges and
agrees that, if he exercises his right of cancellation or revocation, Osteotech
shall be relieved of all obligations undertaken in this Agreement.

     15. The terms and conditions of this Agreement may not be altered, amended
or modified except by a writing duly executed by both Bauer and Osteotech.

     16. The terms and conditions of this Agreement are personal to Bauer and
Osteotech and may not be assigned by either party to any person or entity
without the prior written consent of the other party. However, in the event of
Bauer's untimely death between December 31, 2005 and December 31, 2007, the
balance of any outstanding payments owed to Bauer under this Agreement shall be
made to his wife, and, in the event of her untimely death subsequent to Bauer
death, prior to December 31, 2007, the balance of such payments shall be made to
Bauer's legal heirs.

     17. Except as otherwise stated herein, this Agreement contains the entire
understanding between Bauer and Osteotech with respect to the retirement of
Bauer from his employment at Osteotech. There are no covenants, representations
or undertakings with respect to such retirement other than those expressly set
forth or referenced in this Agreement.

     18. If any portion of this Agreement is found by a court of competent
jurisdiction to be void and unenforceable, such portion shall be deemed to be
severable


                                       13

<PAGE>

from this Agreement and shall have no effect on the remaining sections of this
Agreement.

     19. This Agreement shall be governed and construed in accordance with the
laws of the State of New Jersey without regard to its choice of law or conflicts
of law rules.

     20. This Agreement has been reviewed and negotiated by both Bauer and
Osteotech, and no provision of this Agreement shall be construed against either
party on the ground that such party was the drafter of that provision of this
Agreement.

     21. This Agreement shall be binding upon Bauer and Osteotech upon its
execution by them and shall inure to the benefit of their respective heirs,
successors and permitted assigns.

     IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
dates set forth below.

                                        OSTEOTECH, INC.


/s/ Richard W. Bauer                    By: /s/ Sam Owusu-Akyaw
-------------------------------------       ------------------------------------
Richard W. Bauer                            Sam Owusu-Akyaw
                                        Its: President and Chief Operating
                                             Officer

Date: November 22, 2005                 Date: November 22, 2005


                                       14

<PAGE>

                                    EXHIBIT A

                                 OSTEOTECH INC.
                        STOCK OPTION DETAIL STATUS REPORT
                             AS OF NOVEMBER 15, 2005

RICHARD W. BAUER

<TABLE>
<CAPTION>
AGREEMENT #   PLAN ID   GRANT DATE   EXPIRATION DATE   TYPE   PRICE $   GRANTED   EXERCISED   OUTSTANDING
-----------   -------   ----------   ---------------   ----   -------   -------   ---------   -----------
<S>           <C>       <C>          <C>               <C>    <C>       <C>       <C>         <C>
   1044         1991     12/7/1995       12/7/2005      ISO    4.4170    30,000     22,500        7,500
   1073         1991     12/5/1996       12/5/2006       NQ    6.6670   150,000     75,000       75,000
   1065         1991     12/6/1996       12/6/2006      ISO    3.8330    37,500     18,750       18,750
   1099         1991     7/31/1997       7/30/2007       NQ    8.5000   265,250          0      265,250
   1163         1991     12/3/1998       12/3/2008       NQ   20.6670    37,500          0       37,500
   1206         1991     12/9/1999       12/9/2009      ISO   15.8750    15,000          0       15,000
   1304         2000     12/7/2000       12/7/2010       NQ    3.5000    25,000          0       25,000
   1246         2000     12/7/2000       12/7/2010      ISO    3.5000    25,000          0       25,000
   1391         2000      8/2/2002        8/2/2012       NQ    8.9000    40,000          0       40,000
   1527         2000    12/18/2003      12/18/2013       NQ    7.9600    30,000          0       30,000
   1551         2000    12/16/2004      12/16/2014       NQ    5.3500    28,500          0       28,500
                                                                        -------    -------      -------
TOTALS                                                                  683,750    116,250      567,500
                                                                        =======    =======      =======
</TABLE>


                                       15

<PAGE>

                                    EXHIBIT B
                                 GENERAL RELEASE

     In exchange for the benefits provided to Bauer by the Retirement Agreement
dated as of _________, 2005 (the "Retirement Agreement") by and between Richard
W. Bauer ("Bauer") and Osteotech, Inc. ("Osteotech"), Bauer, for himself, his
heirs, administrators, executors, representatives and/or assigns, hereby
voluntarily discharges and releases Osteotech and its affiliates, parent and
subsidiary companies, officers, directors, employees, agents, representatives,
successors and assigns (collectively the "Osteotech Releasees") from any and all
claims or liabilities of any kind or description, known or unknown, suspected or
unsuspected, fixed or contingent, which Bauer ever had, now has or hereafter may
have against each or any of the Osteotech Releasees by reason of any matter
whatsoever arising out of or resulting from Bauer's employment at Osteotech, his
agreement to retire from such employment and his retirement from such
employment. This release of claims specifically includes, but is not limited to,
any claim of discrimination, including any claim arising under, or based upon,
the Age Discrimination in Employment Act (or the Older Workers Benefit
Protection Act), Title VII of the Civil Rights Act of 1964, as amended, the
Americans with Disabilities Act, the New Jersey Conscientious Employee
Protection Act and/or the New Jersey Law Against Discrimination, and any and all
contract, quasi-contract, estoppel, tort or statutory claims under federal,
state or local law arising out of or resulting from Bauer's employment at
Osteotech, his agreement to retire from such employment and/or his retirement
from such employment.

     Bauer acknowledges and agrees that he has been given at least twenty-one
(21) days to consider this General Release. Bauer further acknowledges and
agrees that he may cancel or revoke this General Release within seven (7) days
after signing it. To be effective, any notice of cancellation or revocation must
be in writing and delivered either by hand or mail within such seven (7) day
period to Mr. Jeffrey Rosen at Osteotech. If delivered by mail, the notice of
cancellation or revocation must be (a) post-marked within the seven (7) day
period; (b) properly addressed to Mr. Jeffrey Rosen, Osteotech, Inc., 51 James
Way, Eatontown, New Jersey 07724; and (c) sent by certified mail., return
receipt requested. Bauer acknowledges and agrees that, if he exercises his right
of cancellation or revocation, Osteotech shall be relieved of all obligations
undertaken in the Retirement Agreement.

     Bauer acknowledges and agrees that he fully understands this General
Release, that he was advised by Osteotech of his right to consult with
independent counsel of his choice before signing it, and that he is signing it
voluntarily.


-------------------------------------
RICHARD W. BAUER

Date:
      ------------------


                                       16

<PAGE>

                                    EXHIBIT C

                                 GENERAL RELEASE

     In exchange for the benefits provided to Osteotech, Inc. ("Osteotech") by
the Retirement Agreement dated as of _________, 2005 (the "Retirement
Agreement") by and between Richard W. Bauer ("Bauer") and Osteotech, Osteotech,
for itself, its officers, directors, successors, agents, representatives and
assigns, hereby voluntarily discharges and releases Bauer and his heirs,
administrators, executors, representatives and/or assigns (collectively the
"Bauer Releasees"), from any and all claims or liabilities of any kind or
description, known or unknown, suspected or unsuspected, fixed or contingent,
which Osteotech ever had, now has or hereafter may have against each or any of
the Bauer Releasees by reason of any matter whatsoever arising out of or
resulting from Bauer's employment at Osteotech through the date hereof, and his
retirement from such employment.

OSTEOTECH, INC.


By:
    ---------------------------------

-------------------------------------
Its
    ---------------------------------

Date:
      -------------------------------


                                       17