EMPLOYMENT AGREEMENT

     THIS AGREEMENT  effective the 1st of November,  2000 (the "Effective Date")
between OSTEOTECH,  INC., a Delaware corporation (the "Corporation") and Mark H.
Burroughs (the "Employee").

                                   WITNESSETH:

     WHEREAS,  the  Corporation  desires  to  retain  the  Employee  as its Vice
President, Finance and Treasurer; and

     WHEREAS,  the Employee  desires to maintain such  employment upon the terms
and conditions set forth herein.

     NOW,  THEREFORE,  in  consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:

     1.  Employment.  The  Corporation  hereby  continues the  employment of the
Employee,   and  the  Employee  hereby  accepts  continued   employment  by  the
Corporation as the Vice President, Finance and Treasurer of the Corporation upon
the terms and conditions set forth herein.

     2. Term.  Unless sooner  terminated in accordance with this Agreement,  the
term of this  Agreement and the term of employment of the Employee  shall be for
two (2) years commencing on the Effective Date hereof and shall be automatically
renewable for successive additional two (2) year terms unless at least three (3)
months prior to the initial two-year period or any subsequent  two-year term the
Corporation  terminates  this  Agreement  by  written  notice  to the  Employee,
whereupon  this  Agreement  shall  be  terminated  at the end of the  applicable
two-year  period  (with  such  initial  two year  term and any two year  renewal
thereof,  unless sooner  terminated in accordance  with this Agreement being the
"Term of Employment").


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     3. Duties.  The Employee shall be employed in an executive  capacity as the
Vice  President,  Finance and Treasurer of the  Corporation.  The Employee shall
perform  such duties and  services,  consistent  with his  positions,  as may be
assigned  to him  from  time to  time  by the  Chief  Financial  Officer  of the
Corporation.  In  furtherance of the  foregoing,  the Employee  hereby agrees to
perform well and faithfully the aforesaid  duties and  responsibilities  and the
other reasonable  senior executive duties and  responsibilities  assigned to him
from time to time by the Board of Directors of the  Corporation or its designee.
During the Term of the Employment,  the  Corporation  shall provide the Employee
with an office,  secretarial and other support  services at its  headquarters as
may be  required  for  the  Employee  to  perform  the  duties  assigned  to him
hereunder.

     4. Time to be Devoted to Employment.

          (a) Except for  reasonable  vacations  (to consist of at least 4 weeks
     per  year)  and  absences  due to  temporary  illness,  during  the Term of
     Employment,  the  Employee  shall  devote  substantially  his full time and
     energy to the business of the Corporation.

          (b) During the Term of  Employment,  the Employee shall not be engaged
     in any other business  activity  which,  in the reasonable  judgment of the
     Corporation,  conflicts with the duties of the Employee hereunder,  whether
     or not such  activity  is  pursued  for  gain,  profit  or other  pecuniary
     advantage.

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     5. Compensation; Reimbursement.

          (a)  During  the  Term  of  Employment,  the  Corporation  (or  at the
     Corporation's option, any subsidiary or affiliate thereof) shall pay to the
     Employee an annual  base salary  ("Base  Salary") of  $150,000,  payable in
     installments as is the policy of the Corporation  with respect to employees
     of the  Corporation  at  substantially  the  same  employment  level as the
     Employee, but in no event less frequently than once per month.  Thereafter,
     the Base Salary  shall be subject to increase at the option and in the sole
     discretion of the Board of Directors of the Corporation.

          (b) Employee  shall be eligible for an annual bonus as  determined  by
     the Board of Directors of the Corporation based on Employee's  performance.
     The bonus payment to Employee for a calendar  year is  contingent  upon the
     Employee being retained as an employee of the  Corporation at the time such
     payments are made.

          (c)  Employee  shall be  eligible  for an annual  stock  option  grant
     consistent with the  Corporation's  Stock Option Plan with said grant being
     determined  by the  Board  of  Directors  of the  Corporation  based on the
     Corporation's performance.

          (d) During the Term of  Employment,  the Employee shall be entitled to
     such  fringe  benefits  as are  made  available  from  time  to time to the
     employees of the Corporation at substantially  the same employment level as
     the Employee, including, without limitation, four weeks paid vacation.

          (e) The Corporation shall reimburse  Employee,  in accordance with the
     practice from time to time for other officers of the  Corporation,  for all
     reasonable  and  necessary  traveling  expenses,  disbursements  and  other
     reasonable  and  necessary  incidental  expenses  incurred by him for or on
     behalf of the Corporation in the  performance of his duties  hereunder upon
     presentation  by the Employee to the  Corporation of appropriate  vouchers,
     receipts and reports.

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     6. Disability or Death.

          (a) If the Employee is incapacitated or disabled by accident, sickness
     or  otherwise  so as to render him  mentally  or  physically  incapable  of
     performing  the  services  required  to be  performed  by  him  under  this
     Agreement for a period of 90 consecutive  days or longer,  (such  condition
     being herein referred to as "Disability"), the Employee will be eligible to
     receive benefits under the Corporation's Long Term Disability Benefits Plan
     pursuant  to the terms and  conditions  of such  plan.  Until the  Employee
     becomes eligible for benefits under the Corporation's  Long Term Disability
     Benefits  Plan and so long as the  Corporation  shall  not  have  otherwise
     terminated  the  Employee's  employment  hereunder in accordance  with this
     Agreement,  the  Employee  shall be entitled  to receive his  compensation,
     notwithstanding any such Disability.

          (b) If the Employee dies during the Term of Employment, his employment
     hereunder shall be deemed to cease as of the date of his death.

     7.  Termination  For Cause.  The  Corporation  may,  with the approval of a
majority of the Board of Directors of the Corporation,  terminate the employment
of the Employee  hereunder at any time during the Term of Employment for "cause"
(such termination being hereinafter  called a "Termination For Cause") by giving
the  Employee  notice of such  termination,  and upon the giving of such  notice
termination shall take effect  immediately.  For the purposes of this Section 7,
"cause" shall mean (i) the  Employee's  actions on behalf of the  Corporation or
any subsidiary or affiliate  thereof,  without the authorization of the Board of
Directors or the President and Chief Executive Officer of the Corporation, which
actions are knowingly  for the  pecuniary  benefit of the Employee or members of
his family and which actions  materially  and  adversely  effect the business or
affairs of the Corporation or any subsidiary or affiliate  thereof,  or (ii) the
Employee  fails in any material  respect to observe and perform his  obligations
hereunder  or under the Employee  Confidential  Information,  Invention  and Non
Competition  Agreement by and between Employee and Corporation  which failure is
not cured within twenty (20) days after written  notice  thereof is given to the
Employee by the Corporation,  or, (iii) the commission by the Employee of an act
involving embezzlement or fraud against the Corporation (other than non-material
expense  account  issues) or  commission  or  conviction of a felony or (iv) the
repeated use by the Employee of alcohol in a manner which  impairs his duties or
the use of any controlled substance other than under a physicians prescription.

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     8.  Termination  Without Cause. The Corporation may, with the approval of a
majority of the Board of Directors of the Corporation,  terminate the employment
of the  Employee  hereunder  at any time during the Term of  Employment  without
"cause"  (such  termination  being  hereinafter  called a  "Termination  Without
Cause") by giving the Employee  notice of such  termination,  upon the giving of
such notice, termination shall take effect immediately.

     9. Voluntary Termination. Any termination of the employment of the Employee
hereunder  otherwise  then  as  a  result  of  an  Involuntary  Termination,   a
Termination  For Cause or a  Termination  Without  Cause shall be deemed to be a
"Voluntary Termination". A Voluntary Termination shall be deemed to be effective
immediately upon receipt of notice to the Corporation of such termination.

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     10. Effect of Termination of Employment.

     (a) Upon the termination of the Employee's employment hereunder pursuant to
a Voluntary Termination or a Termination For Cause, neither the Employee nor his
beneficiary  or estate  shall  have any  further  rights or claims  against  the
Corporation under this Agreement except to receive:

          (i) the unpaid  portion  of the Base  Salary  provided  for in Section
     5(a), computed on a pro rata basis to the date of termination; and

          (ii)  reimbursement  for any expenses for which the Employee shall not
     have theretofore been reimbursed as provided in Section 5(e).

          (iii) any  amounts due and owing to the  Employee  by the  Corporation
     under any benefit plan.

     (b) Upon the termination of the Employee's employment hereunder pursuant to
Disability  or death  neither the Employee nor his  beneficiary  or estate shall
have any further rights or claims against the  Corporation  under this Agreement
except to  receive  payments  equal to that  provided  for in Section  6(a),  if
applicable,  and Section 10(a) hereof and any other benefits available under the
Corporation's Benefits Plans.

     (c) Upon the termination of the Employee's employment hereunder pursuant to
a Termination Without Cause,  neither the Employee nor his beneficiary or estate
shall have any  further  rights or claims  against  the  Corporation  under this
Agreement except to receive a termination  payment equal to that provided for in
Section 10(a) hereof,  plus an aggregate  amount equal to 12 months Base Salary,
payable in 12 equal monthly  installments  and the  continuation  of medical and
dental  benefits and life  insurance  for the same 12 month period to the extent
such benefits were being provided to Employee at the time of termination.

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     11. General Provisions.

     (a) This Agreement and any or all terms hereof may not be changed,  waived,
discharged,  or terminated  orally,  but only by way of an instrument in writing
signed by the parties.

     (b) This  Agreement  shall be governed by and construed in accordance  with
the laws of the State of New Jersey,  without reference to the conflicts of laws
of the State of New Jersey or any other jurisdiction.

     (c) If any  portion  of this  Agreement  shall be found  to be  invalid  or
contrary  to public  policy,  the same may be modified or stricken by a Court of
competent  jurisdiction,  to the extent  necessary to allow the Court to enforce
such  provision in a manner which is as consistent  with the original  intent of
the  provision as possible.  The  striking or  modification  by the Court of any
provision shall not have the effect of invalidating the Agreement as a whole.

     (d) Employee acknowledges that he has signed the Corporation's Confidential
Information,  Invention and  Non-Competition  Agreements and said agreements are
made a part hereof.

     (e)  This   Agreement,   together  with  the   Corporation's   Confidential
Information,  Invention and Non-Competition  Agreements,  constitutes the entire
and  exclusive  agreement  between  Employee and  Corporation  pertaining to the
subject  matter  thereof,  and  supersedes  and  replaces  any and  all  earlier
agreements.

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     12. Notices. Notices and other communications hereunder shall be in writing
and  shall  be  delivered  personally  or sent by air  courier  or  first  class
certified or registered  mail,  return  receipt  requested and postage  prepaid,
addressed as follows:

         If to the Employee:

                  Mark H. Burroughs
                  204 Churchill Downs Ct.
                  Mt. Laurel, NJ  08054

         If to the Corporation:

                  Osteotech, Inc.
                  51 James Way
                  Eatontown, New Jersey 07724
                  Attn: CEO

         Copy to:

                  Elliot M. Olstein, Esq.
                  Carella, Byrne, Bain, Gilfillan,
                    Cecchi, Stewart & Olstein
                  6 Becker Farm Road
                  Roseland, New Jersey 07068

     All  notices  and  other  communications  given  to  any  party  hereto  in
accordance  with the provisions of this  Agreement  shall be deemed to have been
given on the date of delivery if personally delivered; on the business day after
the date when sent if sent by air courier;  and on the third  business day after
the date when  sent if sent by mail,  in each case  addressed  to such  party as
provided in this Section or in accordance  with the latest  unrevoked  direction
from such party.

     13.  Headings.  The section  headings  contained in this  Agreement are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.

     14.  Assignment.  This  Agreement is personal in its nature and the parties
hereto  shall not,  without  the consent of the other,  assign or transfer  this
Agreement or any rights or obligations  hereunder;  provided,  however, that the
provisions  hereof  shall inure to the benefit of, and be binding  upon (i) each
successor of the Corporation, whether by merger, consolidation,  transfer of all
or  substantially  all  assets,  or  otherwise  and (ii)  the  heirs  and  legal
representatives of the Employee.

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     IN WITNESS WHEREOF, the parties have duly executed this Agreement effective
as of the date first above written.

                                       OSTEOTECH, INC.

                                       By:_/s/ Richard W. Bauer____
                                       Name:  Richard W. Bauer
                                       Title:  Chief Executive Officer


                                       EXECUTIVE

                                       By:_/s/ Mark H. Burroughs__
                                       Name:  Mark H. Burroughs
                                       Title:  Vice President, Finance
                                                And Treasurer




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