RETIREMENT AGREEMENT


     This  Agreement  is  executed  on the dates set forth  below by and between
MICHAEL J. JEFFRIES ("Jeffries"),  residing at 67 Schindler Way, Fairfield,  New
Jersey  07004,  and  OSTEOTECH,  INC.  ("Osteotech"),  located  at 51 James Way,
Eatontown, New Jersey 07724.

                              W I T N E S S E T H:

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

     1. Jeffries and Osteotech  confirm that (i) Jeffries  shall retire from his
employment  at  Osteotech  upon the close of business on December  31, 2005 (the
"Retirement  Date");  (ii)  Jeffries  shall  resign as a Director of  Osteotech,
effective  December 31, 2005;  and (iii)  Jeffries shall resign as a Director of
any Osteotech subsidiary companies, effective December 31, 2005.

     2.  Following  Jeffries'  retirement in  accordance  with Section 1 hereof,
Jeffries will have the right  commencing on, and not before,  January 1, 2006 to
receive  an amount  equal to 15  months  of his base  salary in the sum of three
hundred seventy-seven thousand five hundred dollars ($377,500.00).  Such payment
shall be made by check in twenty-eight (28) semi-monthly  installments,  between
January 15, 2006 and March 1, 2007,  each in the amount of twelve  thousand five
hundred eighty three dollars and thirty four cents  ($12,583.34)  gross,  plus a
final  payment  that shall be made by no later than March 15, 2007 in the amount
of twenty  five  thousand  one  hundred  sixty six dollars and sixty eight cents
($25,166.68)  gross,  all subject to applicable  deductions.  In December  2005,
Jeffries shall receive  compensation  corresponding  to all unused  vacation pay
that  Jeffries  will have  accrued as of December  31,  2005.  In the event that
Osteotech files for bankruptcy  protection in the U.S. Bankruptcy Court prior to
March 15, 2007,  then, at Jeffries'  option,  all of the above amounts unpaid at
the time of such filing  shall be  accelerated  and become  immediately  due and
payable.
<PAGE>

     3. Consistent with past practice, including the payment of a portion of the
premiums by Jeffries, following Jeffries' retirement, in accordance with Section
1 hereof,  Jeffries'  participation  in  Osteotech's  medical,  dental  and life
insurance  plans,  and  Osteotech's  payment of premiums for Jeffries'  medical,
dental, and life insurance coverage  (including  coverage of his family),  shall
continue through March 31, 2007.  Commencing April 1, 2007,  Osteotech shall pay
all COBRA  premiums on behalf of Jeffries,  through the earlier of (i) such time
that Jeffries becomes eligible to receive  Medicare  benefits,  or (ii) eighteen
months after April 1, 2007. The premium payments for such coverage through March
31, 2007 and the COBRA premium payments  represent  employer  provided  coverage
under a health plan, and, in accordance with Internal  Revenue Code Section 106,
will not be taxable income to Jeffries. Accordingly,  Jeffries shall not receive
a form 1099 on account of such payment of premiums by Osteotech. Osteotech shall
provide  Jeffries with the opportunity to make an application for portability or
conversion of any life insurance policy on his life as of March 31, 2007.

     4.  Jeffries  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.  Jeffries  shall  be  entitled  to  receive  100% of the  bonus
payments,  if any, that are awarded to Jeffries 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 Jeffries in
accordance with the Management  Performance  Bonus Plan and past practice.  This
will  confirm  that all stock  options to  purchase  Osteotech  stock  issued to
Jeffries  have vested and are fully  exercisable  as of the date hereof.  On the
eighth day after  Jeffries has signed this  Agreement and provided  Jeffries has
not cancelled or revoked this Agreement as provided in Section 14 hereof, all of


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<PAGE>

the stock options to purchase  Osteotech stock held by Jeffries shall be amended
to provide that such stock options will remain exercisable  through the original
expiration  date thereof,  notwithstanding  any  provisions  thereof which would
limit the exercise  period of such stock options  following the  termination  of
Jeffries'  employment.  A copy of Jeffries' Osteotech,  Inc. Stock Option Detail
Report, as of July 13, 2005, is attached hereto as Exhibit A.


     5. All inquiries received by Osteotech  concerning  Jeffries from potential
or future  employers  or other  business  associations  shall be directed to Mr.
Jeffrey  M. Rosen of  Osteotech,  or his  successor,  for  response.  Should any
potential or future employer or other business  associations  contact  Osteotech
for a reference concerning  Jeffries,  Osteotech shall verify only Jeffries' job
title and dates of employment.

     6. (a) In  exchange  for  Osteotech's  agreement  to provide  Jeffries  the
benefits  provided  by  this  Agreement,   Jeffries,  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 Jeffries 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  Jeffries'  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


                                       3
<PAGE>

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 Jeffries' employment at Osteotech and/or his retirement from such
employment.

     (b) Jeffries 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  (except for the  amendment  to Jeffries'
stock  options)  shall not be paid to Jeffries  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 Jeffries
and  his  heirs,  administrators,   executors,  representatives  and/or  assigns
(collectively the "Jeffries 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 Jeffries  Releasees by reason of any matter whatsoever arising out
of or resulting from Jeffries'  employment at Osteotech through the date of this
Agreement, and his retirement from such employment.

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

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<PAGE>

     (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  amendment to Jeffries'  stock options and the bonus
payout,  and the  releases  set  forth in  Sections  6(a) and 6(c)  hereof,  the
provisions of this  Agreement  shall not be effective  unless and until Jeffries
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
Jeffries  effective  as of January 1, 1998 (the  "Employment  Agreement")  shall
remain in effect  and  shall  govern  the  terms of  Jeffries'  employment  with
Osteotech and the  termination of Jeffries'  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 6(a) and 6(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 Jeffries under the Employment Agreement or this Agreement.

     (f) Unless and until such  provisions of this  Agreement  become  effective
immediately  after the Retirement Date, the terms and conditions of the Employee
Confidential Information, Invention and Non-Competition Agreement, dated January
22, 1990, signed by Jeffries (the "Non-Competition Agreement"),  shall remain in
full force and effect.  Upon the  effectiveness  of this  Agreement  immediately
after the Retirement Date, the Non-Competition  Agreement shall terminate and be
of no further force and effect.  None of the releases contained in Sections 6(a)
and 6(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  Jeffries  under  the
Non-Competition Agreement or this Agreement.

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<PAGE>

     (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"  (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 Jeffries  (the
"Change in Control Agreement")  subsequent to September 30, 2005, 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  subsequent  to
September 30, 2005, and such Change in Control  Transaction shall be consummated
on or before the  Retirement  Date,  this Agreement  shall not become  effective
(except for the portion of Section 4 regarding the  amendment to Jeffries  stock
options and the releases set forth in Sections 6(a) and (b) hereof),  the Change
of Control  Agreement shall remain in full force and effect and shall govern the
terms and conditions of Jeffries' employment with Osteotech,  the termination of
Jeffries'  employment  with Osteotech and the exercise of Jeffries stock options
in  connection  with or  following  the  Change in Control  Transaction  and the
Non-Competition Agreement shall remain in full force and effect.

     (h) 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 September 30, 2005, or if a public  announcement is made by a third party
that it is pursuing a transaction which if consummated would constitute a Change


                                       6
<PAGE>

in Control  Transaction  on or before  September  30,  2005,  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 Jeffries 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  6(h)(i)  above,  Jeffries  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 such payments  payable to Jeffries  under Section
4(b)(iii)  of the Change in Control  Agreement  will be reduced by the amount of
payments received by Jeffries 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  Jeffries  under  Section  4(b)(iii)  of the Change in
Control  Agreement and (iv) Section 2(c)(vii) of the Change in Control Agreement
shall govern the  exercise of Jeffries  stock  options  rather than Section 4 of
this Agreement.

     (i)  None of the  releases  contained  in  Sections  6(a)  and 6(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 Jeffries under the Change in Control Agreement.

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<PAGE>

     (j)  Notwithstanding  anything  contained in this Agreement,  the terms and
conditions  of the  Indemnity  Agreement by and between  Osteotech and Jeffries,
dated March 20, 1997 (the "Indemnity  Agreement") shall remain in full force and
effect in accordance with its terms, provided that Jeffries 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 Jeffries in connection with Osteotech's  business pursuant to this
Agreement or any subsequent  agreement between  Osteotech and Jeffries.  None of
the releases contained in Sections 6(a) and 6(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 Jeffries under the Indemnity Agreement.

     (k) In connection  with Jeffries'  responsibilities  under this  Agreement,
Osteotech agrees to add or continue,  as appropriate,  Jeffries as an additional
insured under  Osteotech's  Directors and Officers  insurance  coverage,  and to
provide a copy of such policy to him upon his request.

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

     7. In further  recognition of the benefits  provided to Jeffries under this
Agreement,  Jeffries  agrees to consult with  Osteotech  with respect to matters
which occurred  during the period of Jeffries'  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. Jeffries agrees to make himself available
at  reasonable  times  and upon  reasonable  notice,  consistent  with his other
business and personal  commitments,  and assuming Jeffries is physically able to
do so, to be interviewed or deposed or to otherwise testify  concerning any such
claim or proceeding.  Jeffries  further agrees to promptly notify Mr. Richard W.


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<PAGE>

Bauer, or his successor or designee,  if Jeffries  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  Jeffries
for  reasonable   out-of-pocket   expenses   incurred  in  connection  with  the
satisfaction  of his obligations  under this Section 7. However,  Jeffries shall
seek advance  approval from Mr. Richard W. Bauer,  or his successor or designee,
before  incurring  any  significant   expense  for  which  Jeffries  shall  seek
reimbursement from Osteotech,  which approval shall not be unreasonably withheld
or delayed.  Also in connection with the  satisfaction of his obligations  under
this Section 7,  Osteotech  shall  provide,  at Jeffries'  option,  either legal
counsel on behalf of  Jeffries  (subject  to  Jeffries'  written  approval),  or
reimburse  Jeffries  for the  reasonable  fees and costs of legal  counsel  that
Jeffries  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 March 31, 2007,  Jeffries agrees to
fulfill the above obligations without any associated compensation. Subsequent to
March 31, 2007, if Osteotech  desires that Jeffries  provide  future  consulting
services  to  Osteotech,  any such  services  shall be  provided  pursuant  to a
mutually satisfactory  agreement to be negotiated at such time between Osteotech
and Jeffries.

     8. At Jeffries'  option,  Jeffries  agrees to continue to serve on the AATB
Board  unless  he is not  reelected  to such  Board.  Osteotech  will  reimburse
Jeffries for any reasonable and necessary out-of-pocket expenses related to this
activity.

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<PAGE>

     9. Jeffries 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  Jeffries  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) Jeffries can demonstrate was in
his possession or known to him prior to the effective  date of the  commencement
of his employment by Osteotech;  (iii)  subsequently  becomes part of the public
domain  through no fault of Jeffries;  (iv) becomes known to Jeffries  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.  Jeffries  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). Jeffries 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  Jeffries  to return to
Osteotech  the Board  minutes  that have been  provided  to him as a director of
Osteotech.  Jeffries will keep any such minutes  confidential in accordance with
paragraph 9 of this Agreement.

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<PAGE>

     11. Jeffries agrees that,  through March 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 Jeffries'  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 "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  Jeffries'
retirement on the Retirement Date,  Osteotech shall provide Jeffries 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.  Jeffries  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.  Jeffries further agrees that such
restrictions do not and will not impose an undue hardship upon him.

     13. Jeffries  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.

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<PAGE>

     14.  Jeffries  acknowledges  and  agrees  that he has  been  given at least
twenty-one (21) days to consider this Agreement.  Jeffries 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. Richard W. Bauer 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.  Richard W. Bauer,  Osteotech,  Inc., 51
James Way,  Eatontown,  New Jersey 07724; and (c) sent by certified mail, return
receipt  requested.  Jeffries  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  Jeffries and  Osteotech.
16. The terms and  conditions  of this  Agreement  are  personal to Jeffries 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
Jeffries'  untimely  death  between  December 31, 2005 and March 31,  2007,  the
balance of any outstanding  payments owed to Jeffries under this Agreement shall
be made to his wife,  and,  in the event of her  untimely  death  subsequent  to


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<PAGE>

Jeffries  death,  prior to March 31, 2007, the balance of such payments shall be
made to Jeffries'  legal heirs.  17.  Except as otherwise  stated  herein,  this
Agreement contains the entire understanding  between Jeffries and Osteotech with
respect to the  retirement of Jeffries 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 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 Jeffries 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 Jeffries and Osteotech  upon its
execution  by them and shall  inure to the  benefit of their  respective  heirs,
successors and permitted assigns.

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<PAGE>




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

OSTEOTECH, INC.

By: /s/ RICHARD W. BAUER
     Richard W. Bauer
     Chief Executive Officer

Date: July 26, 2005

     /s/  MICHAEL J. JEFFRIES
     MICHAEL J. JEFFRIES


Date:  July 26, 2005

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<PAGE>





                                    EXHIBIT A



                                    EXHIBIT B
                                 GENERAL RELEASE

     In  exchange  for the  benefits  provided  to  Jeffries  by the  Retirement
Agreement  dated as of July  26,  2005  (the  "Retirement  Agreement")  by and
between  Michael J. Jeffries  ("Jeffries")  and Osteotech,  Inc.  ("Osteotech"),
Jeffries,  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 Jeffries
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
Jeffries' 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  Jeffries'  employment  at  Osteotech,  his  agreement  to retire from such
employment and/or his retirement from such employment.

     Jeffries acknowledges and agrees that he has been given at least twenty-one
(21) days to consider this General Release.  Jeffries  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. Richard W. Bauer 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.  Richard W. Bauer,  Osteotech,  Inc., 51
James Way,  Eatontown,  New Jersey 07724; and (c) sent by certified mail, return
receipt  requested.  Jeffries  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.

     Jeffries  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.


MICHAEL J. JEFFRIES


Date: _________________________


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                                    EXHIBIT C

                                 GENERAL RELEASE

     In exchange for the benefits provided to Osteotech,  Inc.  ("Osteotech") by
the  Retirement   Agreement  dated  as  of  July  [__],  2005  (the  "Retirement
Agreement")  by and between  Michael J.  Jeffries  ("Jeffries")  and  Osteotech,
Osteotech,   for  itself,   its   officers,   directors,   successors,   agents,
representatives and assigns, hereby voluntarily discharges and releases Jeffries
and  his  heirs,  administrators,   executors,  representatives  and/or  assigns
(collectively the "Jeffries 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 Jeffries  Releasees by reason of any matter whatsoever arising out
of or resulting from Jeffries'  employment at Osteotech through the date hereof,
and his retirement from such employment.



OSTEOTECH, INC.

By: ___________________________
     Richard W. Bauer
     Chief Executive Officer

Date:


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