INDEMNITY AGREEMENT

     Agreement  dated  as of the  1st  day of  November,  2000,  by and  between
Osteotech,  Inc.,  a  Delaware  corporation  (the  "Corporation"),  and  Mark H.
Burroughs ("Indemnitee").

     Indemnitee  currently is serving as an officer of the Corporation,  and the
Corporation  desires  that  Indemnitee  continue  to  serve  in  such  capacity.
Indemnitee  is willing to continue to serve in such  capacity if  Indemnitee  is
adequately protected against the risks associated with such service.

     The   Corporation  and  Indemnitee  have  concluded  that  the  indemnities
available under the Corporation's  by-laws need to be supplemented to more fully
protect Indemnitee against the risks associated with Indemnitee's service to the
Corporation.

     In consideration of the premises and of the mutual  agreements  hereinafter
set forth, the parties hereto agree as follows:

     1. The Corporation  shall pay on behalf of the Indemnitee and  Indemnitee's
executors,  administrators or assigns,  any amount that Indemnitee is or becomes
legally  obligated  to pay as a result  of any  claim  or  claims  made  against
Indemnitee  by reason of the fact that  Indemnitee  served as an  officer of the
Corporation or any Affiliate  thereof or because of any actual or alleged breach
of duty, neglect, error, misstatement,  misleading statement,  omission or other
act done,  or suffered or wrongfully  attempted by  Indemnitee  in  Indemnitee's
capacities  as an officer  of the  Corporation  or any  Affiliate  thereof.  For
purposes of this  Agreement,  the term  "Affiliate"  shall mean any  corporation
controlling,  controlled by or under common  control with the  Corporation.  The
payments that the Corporation  will be obligated to make hereunder shall include
(without  limitation)  damages,  judgments,  settlements,  costs and expenses of
investigation,  costs and  expenses  of  defense  of legal  actions,  claims and
proceedings and appeals  therefrom,  and costs of attachments and similar bonds;
provided,  however,  that the Corporation shall not be obligated to pay fines or
other obligations or fees imposed by law or otherwise that it is prohibited from
paying as indemnity by applicable law or for any other reason.
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     2. Costs and expenses  (including,  without  limitations,  attorneys' fees)
incurred  by  Indemnitee  in  defending  or  investigating  any  action,   suit,
proceeding  or  claim  referred  to in  Section  1  hereof  shall be paid by the
Corporation in advance of the final disposition of such matter upon receipt of a
written  undertaking  by or on behalf of Indemnitee to repay any such amounts if
it is ultimately  determined that Indemnitee is not entitled to  indemnification
under the terms of this Agreement.

     3. If a claim  under  this  Agreement  is not paid by or on  behalf  of the
Corporation  within  ninety days after a written  claim has been received by the
Corporation,  Indemnitee  may at any time  thereafter  bring  suit  against  the
Corporation  to recover  the unpaid  amount of the claim and, if  successful  in
whole or in part,  Indemnitee  shall also be  entitled to be paid the expense of
prosecuting such claim.

     4. In the event of payment under this Agreement,  the Corporation  shall be
subrogated  to the extent of such  payment to all of the rights of  recovery  of
Indemnitee,  who shall execute all papers  required and shall do everything that
may be  necessary  to  secure  such  rights,  including  the  execution  of such
documents  necessary  to enable  the  Corporation  effectively  to bring suit to
enforce such rights.

     5. The  Corporation  shall not be liable  under this  Agreement to make any
payment in connection with any claim made against Indemnitee:

               a) for which  payment is  actually  made to  Indemnitee  under an
          insurance policy  maintained by the Corporation,  except in respect of
          any excess beyond the amount of payment under such insurance;

               b)  for  which  Indemnitee  is  indemnified  by  the  Corporation
          otherwise than pursuant to this Agreement;

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               c) based upon or attributable  to Indemnitee  gaining in fact any
          personal  profit or  advantage  to which he was not legally  entitled;
          provided,  however,  that  notwithstanding  the foregoing,  Indemnitee
          shall be  protected  under this  Agreement as to any claims upon which
          such suit may be brought  alleging that the Indemnitee  gained in fact
          any personal profit or advantage to which he was not legally  entitled
          unless a  judgment  or other  final  adjudication  thereof  adverse to
          Indemnitee shall establish that Indemnitee gained in fact any personal
          profit or advantage to which he was not legally entitled;

               d) for an accounting or profits made from the purchase or sale by
          Indemnitee  of  securities  of the  Corporation  within the meaning of
          Section 16(b) of the  Securities  Exchange Act of 1934 and  amendments
          thereto or similar  provisions  of any state  statutory  law or common
          law; or

               e)  brought  about  or   contributed  to  by  the  dishonesty  of
          Indemnitee;  provided,  however,  that  notwithstanding the foregoing,
          Indemnitee  shall be protected  under this  Agreement as to any claims
          upon  which  suit may be brought  alleging  dishonesty  on the part of
          Indemnitee,  unless a judgment  or other  final  adjudication  thereof
          adverse to Indemnitee  shall establish that Indemnitee  committed acts
          of active and deliberate  dishonesty with actual dishonest purpose and
          intent,   which  acts  were   material  to  the  cause  of  action  so
          adjudicated.

     6.  Indemnitee,  as a condition  precedent  to his right to be  indemnified
under this Agreement, shall give to the Corporation notice in writing as soon as
practicable of any claim made for which  indemnity will or could be sought under
this Agreement.  Notice to the Corporation shall be directed to Osteotech, Inc.,
51 James Way, Eatontown,  New Jersey 07724,  Attention:  Corporate Secretary (or
such other address as the Corporation shall designate in writing to Indemnitee).

     7.  Nothing  herein  shall be  deemed to  diminish  or  otherwise  restrict
Indemnitee's right to indemnification  under any provision of the certificate of
incorporation or by-laws of the Corporation or under Delaware law.

     8. Indemnitee  agrees to continue to serve as an officer of the Corporation
to the best of Indemnitee's  ability until the expiration or earlier termination
of Indemnitee's  term of office or until  Indemnitee  tenders his resignation in
writing. Notwithstanding the foregoing, this Agreement shall not be deemed to be
a commitment by the Corporation to employ the Indemnitee.

     9. This  Agreement  shall be governed by and construed in  accordance  with
Delaware law.

     10. This Agreement  shall be binding upon all successors and assigns of the
Corporation  (including any transferee of all or substantially all of its assets
and any  successor by merger or operation of law) and shall inure to the benefit
of the heirs, personal representatives and estate of Indemnitee.

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     11. If any provision or provisions  of this  Agreement  shall be held to be
invalid,  illegal or unenforceable  for any reason  whatsoever (i) the validity,
legality  and  enforceability  of the  remaining  provisions  of this  Agreement
(including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not by themselves invalid, illegal or unenforceable) shall not in any way be
affected  or impaired  thereby,  and (ii) to the fullest  extent  possible,  the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this  Agreement  containing  any such provision held to be invalid,
illegal  or  unenforceable,  that  are not by  themselves  invalid,  illegal  or
unenforceable)  shall be  construed  so as to give  effect to the  intent of the
parties that the  Corporation  provide  protection  to Indemnitee to the fullest
enforceable extent.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed as of the day and year first above written.

                                         OSTEOTECH, INC.

                                         By:  /s/ MICHAEL JEFFRIES
                                         Name:  Michael Jeffries
                                         Title:  Executive Vice President


Attest:                                   INDEMNITEE
By:  /s/ LINDA M. SAVOCA            By:  /s/ MARK H. BURROUGHS
         Linda M. Savoca                  Name:  Mark H. Burroughs
                                          Address:  204 Churchill Downs Court
                                          Mt. Laurel, NJ 08504


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