NONTRANSFERABLE NON-INCENTIVE
                             STOCK OPTION AGREEMENT
                              CLIFF VESTING OPTION


     THIS AGREEMENT (the "Agreement"), is dated as of [___________,____], by and
between   OSTEOTECH,   INC.,  a  Delaware   corporation  (the  "Company"),   and
[______________]  (the  "Optionee"),  pursuant to the Company's  2000 Stock Plan
(the "Plan").

     For good and valuable consideration,  the receipt and adequacy of which are
hereby acknowledged, the Company and Optionee hereby agree as follows:

1. Grant of Option.

     The Company  hereby grants to Optionee,  effective as of the date set forth
above (the "Grant Date"), the right and option (hereinafter called the "Option")
to purchase up to an aggregate of [_______]  shares of common  stock,  par value
$0.01 per share (the "Common  Stock"),  of the Company at a price of  $[_______]
per share,  upon the terms and conditions set forth in this Agreement and in the
Plan.  This Option is not  intended to be an incentive  stock option  within the
meaning of Section 422 of the  Internal  Revenue  Code of 1986,  as amended (the
"Code"). The Option shall terminate at the close of business ten (10) years from
the Grant Date, or such shorter period as is prescribed  herein.  Optionee shall
not have any of the rights of a stockholder  with respect to the shares  subject
to the Option  until such  shares  shall be issued to  Optionee  upon the proper
exercise of the Option.

2. Duration and Exercisability.

     (a) Except as otherwise  provided in Section 2(b) hereof and subject to the
terms and conditions set forth herein,  this Option shall become  exercisable by
the  Optionee for all of the shares of Common  Stock  issuable  hereunder on the
third  anniversary  of the Grant  Date.  The  Optionee  must be  employed by the
Company  on such  third  anniversary  date in order  for this  option  to become
exercisable.

     (b)  Notwithstanding  the  provisions  of Section 2(a) hereof,  this Option
shall  become  exercisable  upon the  satisfaction  of the  accelerated  vesting
conditions set forth in Exhibit A hereto (the "Accelerated Vesting Conditions"),
provided  that  Optionee is employed by the Company at the time the  Accelerated
Vesting Conditions are satisfied.

     (c) During the lifetime of Optionee,  the Option shall be exercisable  only
by Optionee and shall not be assignable or transferable by Optionee,  other than
as  provided  for in  accordance  with the  provisions  of Section  4(c) of this
Agreement.

3. Adjustment of Shares.

     (a) The exercise price and the number of shares  purchasable  upon exercise
of the Options may be adjusted by the Compensation  Committee (the "Compensation
Committee") of the Board of Directors of the Company (the "Board") in accordance
with Section 4(c) of the Plan upon the occurrence of certain  corporate  actions
that may affect the Common Stock.
<PAGE>



     (b) In the event of a dissolution  or liquidation of the Company the Option
shall terminate,  provided that, if a period of one (1) year from the Grant Date
shall have elapsed,  the Optionee shall have the right immediately prior to such
dissolution or  liquidation to exercise such portion of the Option,  in whole or
in part, as determined in the sole  discretion of the Board,  whether or not the
Optionee's  right to exercise the Option has  otherwise  vested  pursuant to the
terms of  Section 2 of this  Agreement.  The Board  shall also have the right to
waive such one (1) year period.

     (c) Subject to the terms of any Change in Control Agreement (as hereinafter
defined),  which shall control to the extent such terms shall  conflict with the
terms of this Section 3(c), in the event that the Company is a party to a merger
or  consolidation,  the Option  shall be subject to the  agreement  of merger or
consolidation. Such agreement, without the Optionee's consent, may provide for:

          (i) The  continuation  of the Option by the Company (if the Company is
     the surviving corporation);

          (ii)  The  assumption  of the  Plan and the  Option  by the  surviving
     corporation or its parent;

          (iii) The  substitution by the surviving  corporation or its parent of
     options with substantially the same terms for the Option; or

          (iv) The  cancellation  of the Option provided that the Optionee shall
     have  the  right  immediately  prior to such  merger  or  consolidation  to
     exercise  the  Option in whole or in part,  whether  or not the  Optionee's
     right to exercise the Option has otherwise accrued pursuant to Section 2 of
     this Agreement.

4. Effect of Termination of Employment.

     (a) In the event that Optionee shall cease to be employed by the Company or
its  subsidiaries,  if any, for any reason other than  termination for cause (as
defined in Section 4(b) hereof) or Optionee's  death or disability (as such term
is defined in Section 4(c)  hereof),  Optionee  shall have the right to exercise
the  Option at any time  within  three (3)  months  after  such  termination  of
employment  to the extent of the full number of shares  Optionee was entitled to
purchase under the Option on the date of termination;  provided,  however,  that
this Option shall not be  exercisable  after the  expiration  of the term of the
Option if earlier.

     (b) In the event that Optionee shall cease to be employed by the Company or
its  subsidiaries,  if any,  upon  termination  for cause,  the Option  shall be
terminated  as of  the  date  of  the  act  giving  rise  to  such  termination.
Termination for cause shall mean  termination of the Optionee's  employment with
the Company for the following acts: dishonesty,  fraud, conviction or confession
of a felony or of a crime involving moral turpitude, destruction or theft of the
Company's property, physical attack on a fellow employee, willful malfeasance or
gross  negligence,  refusal or failure to perform job duties (other than failure
resulting  from  disability),  misconduct  materially  injurious to the Company,
participation in fraud against the Company,  entering into  competition  against
the  Company,  and/or a material  breach or  threatened  material  breach of any
agreements with the Company.

                                       2
<PAGE>

     (c) If Optionee shall die while this Option is still exercisable  according
to its terms, or if Optionee's employment with the Company is terminated because
Optionee has become disabled (within the meaning of Code Section 22(e)(3)) while
in the employ of the Company or a  subsidiary,  if any, and  Optionee  shall not
have fully exercised the Option, such Option may be exercised at any time within
twelve (12) months after  Optionee's  death or date of termination of employment
for disability by Optionee,  or personal  representatives or administrators,  or
guardians of Optionee,  as  applicable,  or by any person or persons to whom the
Option  is  transferred   by  will  or  the  applicable   laws  of  descent  and
distribution,  to the extent of the full number of shares  Optionee was entitled
to  purchase  under the  Option  on the date of  Optionee's  death,  the date of
termination of Optionee's  employment with the Company,  if earlier, or the date
of termination of Optionee's  employment  with the Company for such  disability,
and subject in all cases to the  condition  that no Option shall be  exercisable
after the expiration of the term of the Option.

5. Manner of Exercise.

     (a) The Option may be exercised only by Optionee or other proper party,  as
provided  herein,  by  delivering  within the period  during which the Option is
exercisable hereunder written notice to the Company at its principal office. The
notice  shall  state  the  number  of  shares  as to which  the  Option is being
exercised  and be  accompanied  by payment  in full of the Option  price for all
shares designated in the notice.

     (b)  Optionee  may pay the  Option  price in cash,  by check  (bank  check,
certified check or personal check),  by money order, or with the approval of the
Compensation  Committee (i) by delivering to the Company for cancellation shares
of  Common  Stock  of the  Company  with a fair  market  value as of the date of
exercise equal to the exercise price of the Option or the portion  thereof being
paid by tendering such shares or (ii) by delivering to the Company a combination
of cash and Common  Stock of the Company  with an  aggregate  fair market  value
equal to the exercise price of the Option.  For these purposes,  the fair market
value of the  Company's  shares of Common  Stock of the  Company  as of any date
shall be as reasonably determined by the Compensation  Committee pursuant to the
Plan.

6. Notices.

     All  notices  or other  communications  which  are  required  or  permitted
hereunder shall be deemed to be sufficient if contained in a written  instrument
given by personal delivery, air courier or registered or certified mail, postage
prepaid,  return receipt  requested,  addressed to such party at the address set
forth below or such other  address as may  thereafter be designated in a written
notice from such party to the other party:

                  if to the Company, to:

                           Attention: Chief Financial Officer
                           Osteotech, Inc.
                           51 James Way
                           Eatontown, New Jersey 07724

                  if to the Optionee, to:

                           [Optionee's Name]
                           [Optionee's Address]

                                       3
<PAGE>

All such  notices,  advances,  and  communications  shall be deemed to have been
delivered and received (a) in the case of personal delivery, on the date of such
delivery,  (b) in the case of air  courier,  on the  business day after the date
when sent and (c) in the case of mailing,  on the third  business day  following
such mailing.

7. Miscellaneous.

     (a) This Option is issued  pursuant to the Company's 2000 Stock Plan and is
subject to its terms. The terms of the Plan are available for inspection  during
business hours at the principal offices of the Company.

     (b) This  Agreement  shall not confer on Optionee any right with respect to
continuance of employment by the Company or any of its subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such  employment
at any time.  Optionee  shall  have none of the  rights  of a  stockholder  with
respect to shares  subject to this  Option  until  such  shares  shall have been
issued to Optionee upon exercise of this Option.

     (c) The exercise of all or any parts of this Option shall only be effective
at such time as the sale of Common  Stock  pursuant  to such  exercise  will not
violate any state or federal securities or other laws.

     (d) The Company  shall at all times  during the term of the Option  reserve
and keep  available  such number of shares as will be  sufficient to satisfy the
requirements of this Agreement.

     (e) No waiver of any breach or condition of this Agreement  shall be deemed
to be a waiver of any other or subsequent  breach or condition,  whether of like
or different nature.

     (f) The  Optionee  shall  take  whatever  additional  actions  and  execute
whatever additional  documents the Company may in its judgment deem necessary or
advisable  in order to carry out or  effect  one or more of the  obligations  or
restrictions  imposed on the Optionee pursuant to the express provisions of this
Agreement.

     (g) This Agreement  shall be governed by and construed in accordance  with,
the laws of the State of Delaware.

     (h) This Agreement may be executed in counterparts,  each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument.

                                       4
<PAGE>

     (i) This Agreement  constitutes  the entire  agreement  between the parties
with respect to the subject matter hereof, merging any and all prior agreements,
provided that any change in control agreement or similar  agreement  ("Change in
Control  Agreement")  between the  Optionee  and the Company  which  governs the
exercisability  of options to purchase  the  Company's  Common Stock held by the
Optionee  upon a change in control of the  Company (as defined in such Change in
Control  Agreement)  shall  control  with regard to the  exercisability  of this
Option in the event of such a change in control of the Company to the extent the
terms of such  Change  in  Control  Agreement  conflict  with the  terms of this
Agreement.

     (j) In order to  provide  the  Company  with the  opportunity  to claim the
benefit  of any  income  tax  deduction  which may be  available  to it upon the
exercise  of the Option and in order to comply  with all  applicable  federal or
state  income tax laws or  regulations,  the  Company may take such action as it
deems appropriate to insure that, if necessary,  all applicable federal or state
payroll,  withholding,  income or other  taxes are  withheld or  collected  from
Optionee.  With the Company's concurrence,  Optionee may elect to satisfy his or
her federal and state income tax withholding  obligations  upon exercise of this
Option by (i)  having  the  Company  withhold  a portion of the shares of Common
Stock  otherwise  to be  delivered  upon  exercise of such Option  having a fair
market  value equal to the amount of federal and state income tax required to be
withheld upon such  exercise,  in accordance  with such rules as the Company may
from time to time  establish,  or (ii)  delivering to the Company  shares of its
Common Stock other than the shares  issuable upon exercise of such Option with a
fair market value equal to such taxes, in accordance with such rules.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement as of the
date set forth above.

No. of Shares Subject to Option: [__________]
Exercise Price per Share: $[____]
Date of Grant: [__________,_____]

OSTEOTECH, INC.



By:______________________
    Name:
    Title:






By:__________________________
           [Optionee]

                                       5
<PAGE>


                          Exhibit A to Nontransferable
                      Non-Incentive Stock Option Agreement
                        Cliff Vesting Option dated as of
                  [_____________,_____] between Osteotech, Inc.
                   and [____________] (the "Option Agreement")


     The Accelerated Vesting Condition referred to in Section 2(b) of the Option
Agreement are as follows:


                       For the six months ending [_________] Osteotech Inc. and
                       Subsidiaries' consolidated net revenues must be at least
                       $[________] and consolidated operating income must be at
                       least $[__________].


                                       6
<PAGE>



     FIRST AMENDMENT TO NONTRANSFERABLE NON-INCENTIVE STOCK OPTION AGREEMENT
                              CLIFF VESTING OPTION

This  Amendment,  dated  as of  [___________,_____],  is  made  by  and  between
OSTEOTECH,  INC., a Delaware  corporation (the "Company"),  and [______________]
(the "Optionee"), pursuant to the Company's 2000 Stock Plan.

                                    Recitals

WHEREAS, the Company and the Optionee entered into that certain  Nontransferable
Non-Incentive  Stock Option Agreement Cliff Vesting Option (the "Original Option
Agreement"),  dated as of  [___________,_____],  pursuant  to which the  Company
granted Optionee the right and option to purchase the Company's shares of common
stock; and

WHEREAS,  the  Company  and the  Optionee  desire  to amend  Section 4 and other
relevant Sections of the Original Option Agreement to extend the exercise period
of the Option in the event of the Optionee's termination of employment.

NOW,  THEREFORE,  in consideration of the foregoing and the mutual covenants set
forth herein, the Company and the Optionee hereby agree to the following:

1.   Section  2(c) of the  Original  Option  Agreement  is  hereby  amended  and
     restated with the following:

          "(c) During the lifetime of Optionee,  the Option shall be exercisable
     only by Optionee and shall not be assignable or  transferable  by Optionee,
     other than as provided for in accordance  with provision of Section 4(b) of
     this Agreement."

2.   Section 4 of the Original  Option  Agreement is hereby amended and restated
     with the following:

         "4.      Effect of Termination of Employment

               (a) In the event that Optionee  shall cease to be employed by the
          Company or its  subsidiaries,  if any,  for any reason,  the  Optionee
          shall have the right to exercise the Option  through the expiration of
          the Option Term.

               (b)  If the  Optionee  shall  die  while  this  Option  is  still
          exercisable  according to its terms, or if Optionee's  employment with
          the Company is terminated because Optionee has become disabled (within
          the  meaning  of Code  Section  22(e)(3))  while in the  employ of the
          Company or its subsidiaries, if any, the Optionee shall not have fully
          exercised the Option, such Option may be exercised at any time through
          the  expiration  of the  term of the  Option,  by  Optionee,  personal
          representatives  or  administrators,  or  guardians  of  Optionee,  as
          applicable,  or by any  person  or  persons  to  whom  the  Option  is
          transferred   by  will  or  the   applicable   laws  of  descent   and
          distribution."

                                      7
<PAGE>

3.   Except as set forth herein, the Original Option Agreement remains unchanged
     and in full force and effect.  In case of any conflict between the Original
     Option Agreement,  as amended, and the 2000 Stock Option Plan, the Original
     Option Agreement, as amended, shall control.

     IN WITNESS  WHEREOF,  the Company and the Optionee  hereto have caused this
Amendment to be duly executed as of the date first written above.

OSTEOTECH, INC.


By. _____________________                   By. _____________________
      Name:                                                          [Optionee]
      Title:



                                       8
<PAGE>