Document:

EXHIBIT 10.45

                      FIRST MODIFICATON TO LEASE AGREEMENT

      THIS FIRST MODIFICATION TO. LEASE AGREEMENT is made this 31 day of
October, 2003 by and between 51 JAMES WAY, L.L.C., having an address in care of
The Donato Group, 80 Corbett Way, Eatontown, New Jersey 07724 (the "Landlord")
and OSTEOTECH, INC., having an address of 51 James Way, Eatontown, New Jersey
07723 (the "Tenant").

                               W I T N E S S E T H

      WHEREAS, John Donato, Jr., d/b/a Mid Atlantic Industrial Co., as
predecessor in interest to Landlord and Tenant entered into a lease dated
October 20, 1994 (the "Lease") for the entire building of 38,400 square feet
located at 51 James Way in the Borough of Eatontown, Monmouth County, New Jersey
on certain real property designated as Block 134, Lot 6.19 on the Tax Map of
Eatontown, New Jersey (the "Property"); and

      WHEREAS, by Deed dated November 4, 1999, John Donato. Jr. conveyed his
interest in the Property to Landlord; and

      WHEREAS, pursuant to the terms of the Lease, the term commenced on January
1, 1995 and is set to expire on December 31, 2004; and

      WHEREAS, pursuant to the Lease, Tenant has an option to extend the term of
the Lease; and

      WHEREAS, the Landlord and Tenant have reached a mutual agreement for an
extension of the term of the Lease effective October 1, 2003, notwithstanding
the fact that the current Lease term is not set to expire until December 31
2004; and

      WHEREAS, the parties now wish to enter into this First Modification to
Lease Agreement for purposes of memorializing and modifying certain changes.

      NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar and
other good and valuable consideration, the sum and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

1.    Article 1B is hereby deleted in its entirety. The parties acknowledge that
      Tenant previously acquired title to the Property identified therein and
      subsequently re-conveyed the Property to an affiliate of Landlord. As
      such, this provision is no longer applicable.

2.    The parties hereto acknowledge that the Lease is hereby amended to extend
      the term to December 31, 2008.

3.    Effective January 1, 2004, the Minimum Rental shall be increased to $15.00
      psf, $576,000 per annum, on a triple net basis. Thereafter, the rent will
      increase on October 1 of each lease year by the rate of three (3%) percent
      over the prior Lease year's Minimum Rental. As such, the parties hereby
      confirm that the Minimum Rental shall be as follows:

<PAGE>

        Period                    Annual Fixed Rent    Monthly Rent
        -----------------------------------------------------------
        1/01/04-12/31/04            $576,000.00         $48,000.00
        1/O1/05-12/31/05            $593,280.00         $49,440.OO
        1/01/06-12/31/06            $611,078.40         $50,923.20
        1/01/07-l2/31/07            $629,410.75         $52,450.90
        1/01/08-12/31/08            $648,293.07         $54,024.42

      In addition to the Minimum Rental, Tenant shall continue to pay to
      Landlord such other items of Additional Rent and other sums as set forth
      in the Lease.

4.    Article 3G is hereby amended to provide that Tenant shall only have one
      (1) remaining five (5) year option to renew the Lease at market rates,
      exercisable six (6) months prior to the expiration of the then current
      term (i.e. April 1, 2008) provided the Lease is not in default.

5.    Landlord acknowledges that it is currently holding a security deposit in
      the amount of $21,984.00 pursuant to Article 36 of the Lease.

6.    Article 41 of the Lease is hereby amended to provide that Landlord's
      address shall be as follows:

                51 James Way, LLC
                Attn: John Donato, Jr.
                80 Corbett Way
                Eatontown, NJ 07724

      With a copy to:

                Ansell Zaro Grimm & Aaron, PC
                Attn: Michael V. Benedetto, Esq.
                1500 Lawrence Avenue
                Ocean, NJ 07712

7.    Article 46 of the Lease is hereby deleted in its entirety as Landlord has
      previously assigned the two (2) Leases identified therein and same is now
      inapplicable.

8.    Except as expressly modified herein, the terms of the original Lease shall
      remain in full force and effect.

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have set their hands and seals as
of the date and year first above written.

WITNESS:                              51 JAMES WAY, L.L.C. - Landlord

/s/ Vana S. Mayer                     By: /s/ John Donato, Jr.
-------------------------------           --------------------------------------
                                          John Donato, Jr., Managing Member

                                      OSTEOTECH, INC. - Tenant

/s/ Linda M. Savoca                   By: /s/ Michael Jeffries
-------------------------------           --------------------------------------
                                          Michael Jeffries, Exec. Vice PresidentEXHIBIT 10.46

                       CODE OF BUSINESS CONDUCT AND ETHICS

Introduction

      We are committed to maintaining the highest standards of business conduct
and ethics. The Code of Business Conduct and Ethics reflects the business
practices and principles of behavior that support this commitment. We expect
every employee, officer and director to read and understand the Code and its
application to the performance of his or her business responsibilities.
References in the Code to employees are intended to also cover officers and, as
applicable, members of the Board of Directors ("Directors") and applies to all
business entities of Osteotech including, subsidiaries, affiliates, divisions
and departments.

      Officers, managers and other supervisors are expected to develop in
employees a sense of commitment to the spirit, as well as the letter, of the
Code. Supervisors are also expected to ensure that all agents and contractors
conform to Code standards when working for or on behalf of Osteotech. Nothing in
the Code alters the employment at-will policy of Osteotech.

      The Code cannot possibly describe every practice or principle related to
honest and ethical conduct. The Code addresses conduct that is particularly
important to proper dealings with the people and entities with whom we interact,
but reflects only a part of our commitment. The following additional policies of
Osteotech supplement or amplify the Code in certain areas and should be read in
conjunction with the Code: INSIDER TRADING POLICY, EMPLOYEE HANDBOOK, HUMAN
RESOURCES POLICY AND PROCEDURES MANUAL AND/OR POLICY STATEMENTS, AND CORPORATE
POLICY AND PROCEDURES.

      Action by members of your family (spouse, children, siblings, parents,
in-laws, brother or sister in-laws), significant others or other persons who
live in your household also may potentially result in ethical issues to the
extent that they involve Osteotech business. For example, acceptance of
inappropriate gifts by a family member from one of our suppliers could create a
conflict of interest and result in a Code violation attributable to you.
Consequently, in complying with the Code, you should consider not only your own
conduct, but also that of your family members, significant others and other
persons who live in your household.

      The integrity and reputation of Osteotech depends on the honesty, fairness
and integrity brought to the job by each person associated with us. It is the
responsibility of each employee to apply common sense, together with his or her
own highest personal ethical standards, in making business decisions where there
is no stated guideline in the Code. Unyielding personal integrity is the
foundation of corporate integrity.

                                  Page 1 of 14
<PAGE>

      YOU SHOULD NOT HESITATE TO ASK QUESTIONS ABOUT WHETHER ANY CONDUCT MAY
VIOLATE THE CODE, VOICE CONCERNS OR CLARIFY GRAY AREAS. SECTION 14 BELOW DETAILS
THE COMPLIANCE RESOURCES AVAILABLE TO YOU. IN ADDITION, YOU SHOULD BE ALERT TO
POSSIBLE VIOLATIONS OF THE CODE BY OTHERS AND REPORT SUSPECTED VIOLATIONS,
WITHOUT FEAR OF ANY FORM OF RETALIATION, AS FURTHER DESCRIBED IN SECTION 14.
Violations of the Code will not be tolerated. Any employee who violates the
standards in the Code may be subject to disciplinary action, up to and including
termination of employment for cause, and, in appropriate cases, civil legal
action or referral for criminal prosecution.

1.    Legal Compliance

      Obeying the law, both domestic and international, in letter and in spirit,
is the first requirement of this Code. Our success depends upon each employee's
operating within legal guidelines and cooperating with local, national and
international authorities. It is therefore essential that you understand the
legal and regulatory requirements applicable to your business unit and area of
responsibility. We hold periodic training sessions to ensure that all employees
comply with the relevant laws, rules and regulations associated with their
employment, including laws prohibiting insider trading (which are discussed in
further detail in Section 2 below). While we do not expect you to memorize every
detail of these laws, rules and regulations, we want you to be able to determine
when to seek advice from others. If you do have a question in the area of legal
compliance, it is important that you not hesitate to seek answers from your
supervisor or the Compliance Officer (refer to Section 14).

      Ignorance of the law is no excuse and disregard of the laws will not be
tolerated. Violation of domestic or foreign laws, rules and regulations may
subject an individual, as well as Osteotech, to civil and/or criminal penalties.
You should be aware that conduct and records, including emails, are subject to
internal and external audits, and to discovery by third parties in the event of
a government investigation or civil litigation. It is in everyone's best
interests to know and comply with our legal and ethical obligations.

      Misuse of Company Computer Equipment

      You may not, while acting on behalf of Osteotech or while using our
computing or communications equipment or facilities, either:

      o     Access the internal computer system (also known as "hacking") or
            other resource of another entity without express written
            authorization from the entity responsible for operating that
            resource; or

      o     Commit any unlawful or illegal act, including, but not limited to,
            harassment, libel, fraud, sending of unsolicited bulk email (also
            known as

                                  Page 2 of 14
<PAGE>

            "spam") in violation of applicable laws or Company policy,
            trafficking in contraband of any kind, or espionage; or

      o     Fail to comply with Osteotech's separately issued policy on the use
            of our computer systems, including access to the internet.

      If you receive authorization to access another entity's internal computer
system or other resource, it must be in writing, you must make a permanent
record of that authorization so that it may be retrieved for future reference,
and you may not exceed the scope of that authorization.

      Unsolicited bulk email is regulated by law in a number of jurisdictions.
If you intend to send unsolicited bulk email to persons outside of Osteotech,
either while acting on our behalf or using our computing or communications
equipment or facilities, you should contact your supervisor or the Compliance
Officer for approval.

      All data residing on or transmitted through our computing and
communications facilities, including email and word processing documents, is the
property of Osteotech and subject to inspection, retention and review by
Osteotech.

      Environment Compliance

      Federal law imposes criminal liability on any person or company that
contaminates the environment with any hazardous substance that could cause
injury to the community or environment. Violations of environmental laws can be
a criminal offense and can involve monetary fines and imprisonment. We expect
employees to comply with all applicable environmental laws while acting on
behalf of or representing Osteotech.

      It is our policy to conduct our business in an environmentally responsible
way that minimizes environmental impacts. We are committed to minimizing and, if
possible, eliminating the use of any substance or material that may cause
environmental damage, reducing waste generation and disposing of all waste
through safe and responsible methods, minimizing environmental risks by
employing safe technologies and operating procedures, and being prepared to
respond appropriately to accidents and emergencies.

2.    Insider Trading

      Employees who have access to confidential (or "inside") information are
not permitted to use or share that information for stock trading purposes or for
any other purpose except to conduct our business. All non-public information
about Osteotech or about companies with which we do business is considered
confidential information. To use material non-public information in connection
with buying or selling securities, including "tipping" others who might make an
investment decision on the basis of this information, is not only unethical, it
is illegal. Employees must exercise the utmost care when handling material
inside information. We have adopted a separate Insider Trading

                                  Page 3 of 14
<PAGE>

and Tipping Policy to which you are bound as a condition of your employment
here. You should consult the Insider Trading and Tipping Policy for more
specific information on the definition of "material non-public information" and
on buying and selling our securities or securities of companies with which we do
business. Also refer to Section 11 and Section 12 for further discussion of
confidential information, participation in "chat room" discussions and inquiries
from those seeking financial information about Osteotech.

3.    International Business Laws

      Our employees are expected to comply with the applicable laws in all
countries to which they travel, in which they operate and where we otherwise do
business, including laws prohibiting bribery, corruption or the conduct of
business with specified individuals, companies or countries. The fact that in
some countries certain laws are not enforced or that violation of those laws is
not subject to public criticism will not be accepted as an excuse for
noncompliance. In addition, we expect employees to comply with U.S. laws, rules
and regulations governing the conduct of business by its citizens and
corporations outside the U.S.

      These U.S. laws, rules and regulations, which extend to all our activities
outside the U.S., include, but are not limited to:

      o     The Foreign Corrupt Practices Act, which prohibits directly or
            indirectly giving anything of value to a government official to
            obtain or retain business or favorable treatment, and requires the
            maintenance of accurate books of account, with all company
            transactions being properly recorded;

      o     U.S. Embargoes, which restrict or, in some cases, prohibit
            companies, their subsidiaries and their employees from doing
            business with certain other countries identified on a list that
            changes periodically (including, for example, Angola (partial),
            Burma (partial), Cuba, Iran, Iraq, Libya, North Korea, Sudan and
            Syria) or specific companies or individuals;

      o     Export Controls, which restrict travel to designated countries or
            prohibit or restrict the export of goods, services and technology to
            designated countries, denied persons or denied entities from the
            U.S., or the re-export of U.S. origin goods from the country of
            original destination to such designated countries, denied companies
            or denied entities; and

      o     Antiboycott Compliance, which prohibits U.S. companies from taking
            any action that has the effect of furthering or supporting a
            restrictive trade practice or boycott that is fostered or imposed by
            a foreign country against a country friendly to the U.S. or against
            any U.S. person.

                                  Page 4 of 14
<PAGE>

      If you have any questions as to whether an activity is restricted or
prohibited, including giving any verbal assurances that might be regulated by
international laws, seek assistance before taking any action.

4.    Conflicts of Interest

      A "conflict of interest" occurs when an individual's personal interest may
interfere in any way with the performance of his or her duties or the best
interest of Osteotech. A conflicting personal interest could result from an
expectation of personal gain, whether monetary or otherwise, now or in the
future or from a need to satisfy a prior or concurrent personal obligation. We
expect our employees to be free from influences that conflict with the best
interests of Osteotech. Even the appearance of a conflict of interest where none
actually exists can be damaging and should be avoided. Whether or not a conflict
of interest exists or will exist can be unclear. Conflicts of interest are
prohibited unless specifically authorized as described below.

      If you have any questions about a potential conflict or if you become
aware of an actual or potential conflict, you should discuss the matter with
your supervisor or the Compliance Officer (as further described in Section 14).
Supervisors may not authorize conflict of interest matters without first seeking
the approval of the Compliance Officer and filing with the Compliance Officer a
written description of the authorized activity. If the supervisor is involved in
the potential or actual conflict, you should discuss the matter directly with
the Compliance Officer. Factors that may be considered in evaluating a potential
conflict of interest are, among others:

      o     Whether it may interfere with the Directors, officer's or employee's
            job performance, responsibilities or morale;

      o     Whether the Director, officer or employee has access to confidential
            information;

      o     Whether it may interfere with the job performance, responsibilities
            or morale of others within the organization;

      o     Any potential adverse or beneficial impact on our business;

      o     Any potential adverse or beneficial impact on our relationships with
            our clients, customers or suppliers or other service providers;

      o     Whether it would enhance or support a competitor's position;

      o     The extent to which it would result in financial or other benefit
            (direct or indirect) to the employee;

      o     The extent to which it would result in financial or other benefit
            (direct or indirect) to one of our customers, suppliers or other
            service providers; and

                                  Page 5 of 14
<PAGE>

      o     The extent to which it would appear improper to an outside observer,
            or result in the violation of any law(s).

      The following are examples of situations that may, depending on the facts
and circumstances, involve conflicts of interests:

      o     Employment by (including consulting for) or service on the Board of
            Directors of a competitor, customer or supplier or other service
            provider. Activity that enhances or supports the position of a
            competitor to the detriment of Osteotech is prohibited, including
            employment by or service on the Board of Directors of a competitor.
            Employment by or service on the Board of Directors of a customer or
            supplier or other service provider is generally discouraged and you
            must seek authorization in advance if you plan to take such action.

      o     Owning, directly or indirectly, a significant financial interest in
            any entity that does business, seeks to do business or competes with
            us. In addition to the factors described above, persons evaluating
            ownership for conflicts of interest will consider the size and
            nature of the investment; the nature of the relationship between the
            other entity and Osteotech; the employee's access to confidential
            information and the employee's ability to influence Osteotech's
            decisions. If you would like to acquire a financial interest of that
            kind, you must seek approval in advance.

      o     Soliciting or accepting gifts, favors, loans or preferential
            treatment from any person or entity that does business or seeks to
            do business with us. See Section 8 for further discussion of the
            issues involved in this type of conflict.

      o     Soliciting contributions to any charity or for any political
            candidate from any person or entity that does business or seeks to
            do business with us.

      o     Moonlighting without permission.

      o     Conducting our business transactions with your family member,
            significant other or person who shares your household or a business
            in which you have a significant financial interest. Material
            related-party transactions approved by the Audit Committee of the
            Board of Directors and involving any executive officer or Director
            will be publicly disclosed as required by applicable laws and
            regulations. Such transactions involving all other employees must be
            approved in advance by the Compliance Officer.

      o     Exercising supervisory or other authority on behalf of Osteotech
            over a co-worker who is also a Family Member. The employee's
            supervisor

                                  Page 6 of 14
<PAGE>

            and/or the Compliance officer will consult with the Human Resources
            department to assess the advisability of reassignment.

      Loans to, or guarantees of obligations of, employees or their Family
Members by Osteotech could constitute an improper personal benefit to the
recipients of these loans or guarantees, depending on the facts and
circumstances. Some loans are expressly prohibited by law and applicable law
requires that our Board of Directors approve all loans and guarantees to
employees. As a result, all loans and guarantees by Osteotech must be approved
in advance by the Audit Committee of the Board of Directors.

      Authorization for exceptions to the determination of the Compliance
Officer may be applied for directly to the Chairperson of the Audit Committee of
the Board of Directors. Officers and Directors seeking waivers from compliance
with this Code of Business Conduct and Ethics Policy may receive such waiver
only from the Audit Committee.

5.    Corporate Opportunities

      You may not take personal advantage of opportunities that are presented to
you or discovered by you as a result of your position with us or through your
use of corporate property or information, unless authorized by your supervisor,
the Compliance Officer or the Audit Committee, as described in Section 4.
Participation in an investment or outside business opportunity that is related
to our existing or proposed lines of business must be pre-approved. You cannot
use your position with us or corporate property or information for improper
personal gain, nor can you compete with us in any way.

6.    Maintenance of Corporate Books, Records, Documents and Accounts; Financial
      Integrity; Public Reporting

      The integrity of our records and public disclosure depends on the
validity, accuracy and completeness of the information supporting the entries to
our books of account. Therefore, our corporate and business records should be
completed accurately and honestly. The making of false or misleading entries,
whether they relate to financial results or test results of any nature, is
strictly prohibited. Our records serve as a basis for managing our business and
are important in meeting our obligations to customers, suppliers, creditors,
employees, others with whom we do business, and compliance with regulatory rules
and regulations. As a result, it is important that our books, records and
accounts accurately and fairly reflect, in reasonable detail, our assets,
liabilities, revenues, costs and expenses, as well as all transactions and
changes in assets and liabilities. We require that:

      o     All test results, whether involving experiments, quality testing,
            donor suitability testing, validation testing, or any other testing
            be accurately and properly reported in the records of the Company;

                                  Page 7 of 14
<PAGE>

      o     All transactions of Osteotech, irrespective of its nature or reason,
            be properly reflected in our books and records, and where required,
            be properly disclosed to the public;

      o     No entry be made in our books and records that intentionally hides
            or disguises the nature of any transaction or of any of our
            liabilities, or misclassifies any transactions as to accounts or
            accounting periods;

      o     Transactions be supported by appropriate documentation;

      o     The terms of sales and other commercial transactions be reflected
            accurately in the documentation for those transactions and all such
            documentation be reflected accurately in our books and records;

      o     Employees comply with our system of internal controls; and

      o     No cash or other assets be maintained for any purpose in any
            unrecorded or "off-the-books" fund.

      Our accounting records are also relied upon to produce reports for our
management, stockholders and creditors, as well as for governmental agencies. In
particular, we rely upon our accounting and other business and corporate records
in preparing the periodic and current reports that we file with the SEC. These
reports must provide full, fair, accurate, timely and understandable disclosure
and fairly present our financial condition and results of operations. Employees
who collect, provide or analyze information for or otherwise contribute in any
way in preparing or verifying these reports should strive to ensure that our
financial disclosure is accurate and transparent and that our reports contain
all of the information about Osteotech that would be important to enable
stockholders and potential investors to assess the soundness and risks of our
business and finances and the quality and integrity of our accounting and
disclosures. In addition:

      o     No employee may take or authorize any action that would cause our
            financial records or financial disclosure to fail to comply with
            generally accepted accounting principles, the rules and regulations
            of the SEC or other applicable laws, rules and regulations;

      o     All employees must cooperate fully with our Accounting Department,
            as well as our internal auditors, independent public accountants and
            legal counsel, respond to their questions with candor and provide
            them with complete and accurate information to help ensure that our
            books and records, as well as our reports filed with the SEC, are
            accurate and complete; and

      o     No employee should knowingly make (or cause or encourage any other
            person to make) any false or misleading statement in any of our
            reports filed

                                  Page 8 of 14
<PAGE>

            with the SEC or knowingly omit (or cause or encourage any other
            person to omit) any information necessary to make the disclosure in
            any of our reports accurate in all material respects.

      Similarly, our records are relied upon to assure compliance with FDA laws
and regulations and American Association of Tissue Banks standards. All records
relied upon to comply with FDA laws and regulations and AATB standards must
accurately reflect all processing, testing, validation and complaint information
as well as information to provide accurate traceability of all tissue processed,
stored or distributed by Osteotech.

      Any employee who becomes aware of any departure from these standards has a
responsibility to report his or her knowledge promptly either to a supervisor,
the Disclosure Committee, Compliance Officer or one of the other compliance
resources described in Section 14. If you report a departure from these
standards to a supervisor, the supervisor is then required to report the
information to the Disclosure Committee, the Compliance Officer or one of the
other compliance resources described in Section 14.

7.    Fair Dealing

      We strive to outperform our competition fairly and honestly. Advantages
over our competitors are to be obtained through superior performance of our
products and services, not through unethical or illegal business practices.
Acquiring proprietary information from others through improper means, possessing
trade secret information that was improperly obtained, or inducing improper
disclosure of confidential information from past or present employees of other
companies is prohibited, even if motivated by an intention to advance our
interests. If information is obtained by mistake that may constitute a trade
secret or other confidential information of another business, or if you have any
questions about the legality of proposed information gathering, you must consult
with your supervisor or the Compliance Officer, as further described in Section
14.

      You are expected to deal fairly with our customers, suppliers, employees
and anyone else with whom you have contact in the course of performing your job.
No employee may take unfair advantage of anyone through misuse of confidential
information, misrepresentation of material facts or any other unfair dealing
practice.

      Employees involved in procurement have a special responsibility to adhere
to principles of fair competition in the purchase of products and services by
selecting suppliers based exclusively on normal commercial considerations, such
as quality, cost, availability, service and reputation, and not on the receipt
of special favors.

8.    Gifts and Entertainment

      Business entertainment and gifts are meant to create goodwill and sound
working relationships and not to gain improper advantage with customers or
facilitate approvals

                                  Page 9 of 14
<PAGE>

from government officials. Unless express permission is received from a
supervisor, the Compliance Officer or the Audit Committee, entertainment and
gifts cannot be offered, provided or accepted by any employee unless consistent
with customary business practices and not (a) excessive in value, (b) in cash,
(c) susceptible of being construed as a bribe or kickback or (d) in violation of
any laws. This principle applies to our transactions everywhere in the world,
even where the practice is widely considered "a way of doing business." Under
some statutes, such as the U.S. Foreign Corrupt Practices Act (further described
in Section 3), giving anything of value to a government official to obtain or
retain business or favorable treatment is a criminal act subject to prosecution
and conviction. Discuss with your supervisor or the Compliance Officer any
proposed entertainment or gifts if you are uncertain about their
appropriateness.

9.    Antitrust

      Antitrust laws are designed to protect the competitive process. These laws
generally prohibit:

      o     Agreements, formal or informal, with competitors that harm
            competition or customers, including price fixing and allocations of
            customers, territories and contracts;

      o     Agreements, formal or informal, that establish or fix the price at
            which a customer may resell a product; and

      o     The acquisition or maintenance of a monopoly or attempted monopoly
            through anti-competitive conduct.

      Certain kinds of information, such as pricing, production and inventory,
should not be exchanged with competitors, regardless of how innocent or casual
the exchange may be and regardless of the setting, whether business or social.

      Understanding the requirements of antitrust and unfair competition laws of
the various jurisdictions where we do business can be difficult, and you are
urged to seek assistance from your supervisor or the Compliance Officer whenever
you have a question relating to these laws.

10.   Protection and Proper Use of Company Assets

      All employees are expected to protect our assets and ensure their
efficient use. Theft, carelessness and waste have a direct impact on our
profitability. Our property, such as lab equipment, lab supplies, office
supplies, computer equipment, buildings, and products, are expected to be used
only for legitimate business purposes, although incidental personal use may be
permitted. Employees should be mindful of the fact that we retain the right to
access, review, monitor and disclose any information transmitted, received or
stored using our electronic equipment, with or without an employee's or third

                                 Page 10 of 14
<PAGE>

party's knowledge, consent or approval. Any misuse or suspected misuse of our
assets must be immediately reported to your supervisor or the Compliance
Officer.

11.   Confidentiality

      One of our most important assets is our confidential information.
Employees who have received or have access to confidential information should
take care to keep this information confidential. Confidential information may
include business, technical, marketing, and service plans; financial
information; product specifications or architecture, source codes, engineering,
and manufacturing ideas, designs; databases; customer lists, pricing strategies;
personnel data, personally identifiable information pertaining to our employees,
customers or other individuals (including, for example, names, addresses,
telephone numbers, social security numbers and medical information), and similar
types of information provided to us by our customers, suppliers and partners.
This information may be protected by patent, trademark, copyright and trade
secret and other laws.

      Except when disclosure is authorized or legally mandated, you must not
share our or our suppliers' or customers' confidential information with third
parties or others within Osteotech who have no legitimate business purpose for
receiving that information. Doing so would constitute a violation of the
Confidentiality and Non-Disclosure Agreement that you signed upon joining us.
Unauthorized use or distribution of this information could also be illegal and
result in civil liability and/or criminal penalties.

      You should also take care not to inadvertently disclose confidential
information. Materials that contain confidential information, such as memos,
notebooks, computer disks and laptop computers should be stored securely.
Unauthorized posting or discussion of any information concerning our business,
information or prospects on the Internet is prohibited. You may not discuss our
business, information or prospects in any "chat room" regardless of whether you
use your own name or pseudonym. Be cautious when discussing sensitive
information in public places like elevators, airports, restaurants and
"quasi-public" areas within Osteotech, such as cafeterias. All Osteotech emails,
voicemails and other communications are presumed confidential and should not be
forwarded or otherwise disseminated outside of Osteotech, except where required
for legitimate business purposes.

      In addition to the above responsibilities, if you are handling information
protected by any privacy policy published by us, such as our website privacy
policy, then you must handle that information solely in accordance with the
applicable policy.

12.   Media/Public Discussions

      It is our policy to disclose material information concerning Osteotech to
the public only through specific limited channels to avoid inappropriate
publicity and to ensure that all those with an interest in Osteotech will have
equal access to information. All inquiries or calls from the press and financial
analysts, investors or others seeking

                                 Page 11 of 14
<PAGE>

financial and business operations information of any nature should be referred
to the Chief Financial Officer or the investor relations department, if one is
established. We have designated our CEO and CFO our official spokespersons for
financial and business operations matters. Unless a specific exception has been
made by the CEO or CFO, these designees are the only employees who may
communicate with the press on behalf of Osteotech.

13.   Waivers

      Any waiver of this Code for executive officers (including, where required
by applicable laws, our principal executive officer, principal financial
officer, principal accounting officer or controller (or persons performing
similar functions)) or Directors may be authorized only by our Board of
Directors or the Audit Committee of the Board and will be disclosed to
stockholders as required by applicable laws, rules and regulations.

14.   Compliance Standards and Procedures

      Compliance Resources and Reporting Possible Code Violations Or Other
      Misconduct

      To facilitate compliance with this Code, we have implemented a program of
Code awareness, training and review. We have established the position of
Compliance Officer to oversee this program. The Compliance Officer is a person
to whom you can address any questions or concerns. The Compliance Officer,
Michael J. Jeffries, can be reached at extension 6205. In addition to fielding
questions or concerns with respect to potential violations of this Code, the
Compliance Officer is responsible for:

      o     Investigating possible violations of the Code;

      o     Assuring that new employees are trained in Code policies by the
            Human Resources Department

      o     Ensuring that annual training sessions to refresh employee's
            familiarity with the Code are held

      o     Distributing copies of the Code annually to each employee with a
            reminder that each employee is responsible for reading,
            understanding and complying with the Code;

      o     Update the Code as needed and alerting employees to any updates,
            with appropriate approval of the Audit Committee of the Board of
            Directors, to reflect changes in the law, Osteotech's operations and
            in recognized best practices, and to reflect Osteotech's experience;
            and

      o     Otherwise promoting an atmosphere of responsible and ethical
            conduct.

                                 Page 12 of 14
<PAGE>

      Your most immediate resource for any matter related to the Code is your
supervisor. He or she may have the information you need, or may be able to refer
the question to another appropriate source. There may, however, be times when
you prefer not to go to your supervisor or to the Compliance Officer. In these
instances, you should feel free to communicate directly and in confidence to the
Chairperson of the Audit Committee. To facilitate this type of communication,
Osteotech has arranged with National Hotline Services, Inc., to maintain a
hotline on behalf of Osteotech and to receive all written or verbal
communications which will then be forwarded to the Chairperson of the Audit
Committee if in writing or summarized in a memorandum for the Chairperson if
received verbally. You may reach them by writing to the National Hotline
Service, Inc., 620 Kenmore Avenue (Suite B), Fredericksburg, VA 22401, or by
calling 1-800-826-6762.

      National Hotline Services is also available to those who wish to ask
questions about Osteotech policy, seek guidance on specific situations or report
violations of the Code. You may call the toll-free number, indicated above,
anonymously if you prefer, to report violations of the Code, although doing so
may not allow the Compliance Officer to obtain follow-up detail from you that
may be necessary to fully investigate the matter. Whether you identify yourself
or remain anonymous, your telephonic or email contact with National Hotline
Services will be kept strictly confidential to the extent reasonably possible
and still allow for the objectives of the Code to be accomplished.

      If you encounter a situation or are considering a course of action and its
appropriateness is unclear, discuss the matter promptly with your supervisor or
the Compliance Officer; even the appearance of impropriety can be very damaging
and should be avoided.

      If you are aware of a suspected or actual violation of Code standards by
others, you have a responsibility to report it. You are expected to promptly
provide a compliance resource, as described above, with a specific description
of the violation that you believe has occurred, including any information you
have about the persons involved and the time of the violation. Whether you
choose to speak with your supervisor, the Compliance Officer, or communicate
with the Chairperson of the Audit Committee through National Hotline Services,
you should do so without fear of any form of retaliation. We will take prompt
disciplinary action against any employee who retaliates against you, up to and
including termination of employment.

      Supervisors must promptly report any complaints or observations of Code
violations to the Compliance Officer. The Compliance Officer will investigate
all reported possible Code violations promptly and with the highest degree of
confidentiality that is possible under the specific circumstances. Your
cooperation in the investigation will be expected. As needed, the Compliance
Officer will consult with the Human Resources Department and/or the Audit
Committee of the Board of Directors.

      If the investigation indicates that a violation of the Code has probably
occurred, we will take such action as we believe to be appropriate under the
circumstances. If we

                                 Page 13 of 14
<PAGE>

determine that an employee is responsible for a Code violation, he or she will
be subject to disciplinary action up to, and including, termination of
employment and, in appropriate cases, civil action or referral for criminal
prosecution. Appropriate action may also be taken to deter any future Code
violations.

                                 Page 14 of 14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]