Exhibit 10.1

 

EXECUTION COPY

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 14, 2005,
by and among Orthovita, Inc., a Pennsylvania corporation, with headquarters
located at 45 Great Valley Parkway, Malvern, Pennsylvania 19355 (the “Company”),
and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and collectively, the “Buyers”).

 

WHEREAS:

 

A. The Company and each Buyer desire to enter into this transaction to purchase
the securities set forth herein pursuant to a currently effective shelf
registration statement on Form S-3, which has at least $13,000,000 in
unallocated securities registered thereunder (Registration Number 333-111697)
(the “Registration Statement”), which Registration Statement has been declared
effective in accordance with the Securities Act of 1933, as amended (the “1933
Act”), by the United States Securities and Exchange Commission (the “SEC”).

 

B. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, that number of shares of common stock,
par value $0.01 per share, of the Company (the “Common Stock”), set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers together shall be 4,318,182 shares of Common
Stock and shall collectively be referred to herein as the “Purchased Shares”).

 

NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

 

1. PURCHASE AND SALE OF PURCHASED SHARES.

 

(a) Purchase of Purchased Shares.

 

Subject to the satisfaction (or waiver) of the conditions set forth in Sections
6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees to purchase from the Company on the Closing
Date (as defined below), the number of Purchased Shares as is set forth opposite
such Buyer’s name in column (3) on the Schedule of Buyers (the “Closing”). The
Closing shall occur on the Closing Date at the offices of Schulte Roth & Zabel
LLP, 919 Third Avenue, New York, New York 10022.

 

(b) Purchase Price. The purchase price for each Purchased Share to be purchased
by each Buyer at the Closing shall be $3.00 (the “Purchase Price”).

 

(c) Closing Date. The date and time of the Closing (the “Closing Date”) shall be
10:00 a.m., New York City Time, on December 14, 2005, after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such later date as is mutually agreed to by the Company and
each Buyer).

 

(d) Form of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase
Price to the Company for the Purchased Shares to be issued and sold to such
Buyer at

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the Closing, by wire transfer of immediately available funds in accordance with
the Company’s written wire instructions, and (ii) the Company shall cause the
Company’s transfer agent (the “Transfer Agent”) through the Depository Trust
Company (“DTC”) to release to such Buyer stock certificates in the name of each
Buyer for the amount of Purchased Shares such Buyer is purchasing as is set
forth opposite such Buyer’s name in column (3) of the Schedule of Buyers.

 

2. REPRESENTATIONS AND WARRANTIES OF EACH BUYER.

 

Each Buyer represents and warrants with respect to only itself that:

 

(a) Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of such Buyer and constitutes the legal, valid
and binding obligation of such Buyer enforceable against such Buyer in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(b) No Conflicts. The execution, delivery and performance by such Buyer of this
Agreement and the consummation by such Buyer of the transactions contemplated
hereby will not (i) result in a violation of the organizational documents of
such Buyer or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Buyer is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such Buyer,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.

 

(c) Residency. Such Buyer is a resident of that jurisdiction specified below its
address on the Schedule of Buyers.

 

(d) Organization; Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate, partnership or limited liability
company power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents (as defined below) and otherwise to
carry out its obligations thereunder. The execution, delivery and performance by
such Buyer of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate, partnership or limited liability company
action on the part of such Buyer. Each Transaction Document to which it is party
has been duly executed by such Buyer, and when delivered by such Buyer in
accordance with terms hereof, will constitute the valid and legally binding
obligation of such Buyer, enforceable against it in accordance with its terms,
except as such enforceability may be limited by general principles of equity or
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

 

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(e) Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by such Buyer to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Company shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees on behalf of such Buyer of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.

 

(f) Acquiring Person. Such Buyer, after giving effect to the transactions
contemplated hereby, will not, either individually or with a group (as defined
in Section 13(d)(3) of the Exchange Act), be the beneficial owner of 20% or more
of the Company’s outstanding Common Stock. For purposes of this Section 2(j),
beneficial ownership shall be determined pursuant to a Rule 13d-3 under the
Exchange Act.

 

(g) No Short Sales. From and after obtaining knowledge of the sale of the
Purchased Shares, such Buyer has not taken, and prior to the public announcement
of the transactions contemplated hereby, such Buyer shall not take, any action
that has caused or will cause such Buyer to have, directly or indirectly, sold
or agreed to sell any Common Stock, effected any short sale.

 

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company hereby makes the following representations and warranties to each
Buyer:

 

(a) Subsidiaries. The Company has no direct or indirect subsidiaries other (the
“Subsidiaries”) than those listed in the SEC Reports (as defined below). Except
as disclosed in the SEC Reports, the Company owns, directly or indirectly, all
of the capital stock of each Subsidiary free and clear of any lien, charge,
security interest, encumbrance, right of first refusal or other restriction
(collectively, “Liens”), and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights.

 

(b) Organization and Qualification. Each of the Company and each Subsidiary is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate: (i) materially adversely affect the
legality, validity or enforceability of this Agreement and any other documents
or agreements executed in connection with the transactions contemplated
hereunder (the “Transaction Documents”), (ii) have or result in a material
adverse effect on the results of operations, assets, business or condition
(financial or

 

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otherwise) of the Company and the Subsidiaries, taken as a whole, or
(iii) adversely impair the Company’s ability to perform fully on a timely basis
its obligations under any of the Transaction Documents (any of (i), (ii) or
(iii), a “Material Adverse Effect”).

 

(c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further consent or action is required
by the Company, its Board of Directors or its stockholders. Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not: (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) subject to obtaining the Required Approvals (as defined below), conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

 

(e) Filings, Consents and Approvals. No consent, waiver, authorization or order
of, give any notice to, or filing or registration with, any court or other
federal, state, local or other governmental authority or other Person is
required in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filings required under
Section 4(f), (ii) the filing with the SEC of the prospectus supplement required
by the Registration Statement pursuant to Rule 424(b) under the 1933 Act (the
“Prospectus Supplement”) supplementing the base prospectus forming part of the
Registration Statement (such base prospectus, together with the Prospectus
Supplement and all information incorporated by reference to SEC Reports (as
defined below) therein, the “Prospectus”), (iii) the application(s) to the
Nasdaq National Market (the “Principal Market”) for the listing of the

 

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Purchased Shares for trading thereon in the time and manner required thereby,
(iv) applicable Blue Sky filings (collectively, the “Required Approvals”) and
(v) such consents and waivers as have previously been obtained. “Person” means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.

 

(f) Issuance of the Purchased Shares. The Purchased Shares are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The issuance by the Company of the Purchased Shares has
been registered under the 1933 Act and all of the Purchased Shares are freely
transferable and tradable by the Buyers without restriction. The Purchased
Shares are being issued pursuant to the Registration Statement and the issuance
of the Purchased Shares has been registered by the Company under the 1933 Act.
The Registration Statement is effective and available for the issuance of the
Purchased Shares thereunder and the Company has not received any notice that the
SEC has issued or intends to issue a stop-order with respect to the Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of the Registration Statement, either temporarily or permanently, or intends or
has threatened in writing to do so. The “Plan of Distribution” section under the
Prospectus permits the issuance and sale of the Purchased Shares hereunder. Upon
receipt of the Purchased Shares, the Buyers will have good and marketable title
to such Purchased Shares and the Purchased Shares will be freely tradable on the
Principal Market. The Purchased Shares constitute less than 10% of the issued
and outstanding shares of Common Stock of the Company.

 

(g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether
or not presently convertible into, or exercisable or exchangeable for, shares of
capital stock of the Company) is set forth in the Prospectus or incorporated by
reference in the Prospectus by virtue of the Company’s most recent periodic
report filed with the SEC. All outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable and
have been issued in compliance with all applicable securities laws. No
securities of the Company are entitled to preemptive or similar rights, and no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents, except as set forth in the Prospectus. Except as
disclosed or incorporated by reference in the Prospectus, there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible into or exercisable or exchangeable for shares
of Common Stock. Except as set forth on Schedule 3(g), there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) and the
issuance and sale of the Purchased Shares will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the Buyers)
and will not result in a right of any holder of Company securities to adjust the
exercise, conversion, number of issuable shares, exchange or

 

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reset price under such securities. The Company will not authorize the issuance
of any additional securities unless there are sufficient authorized shares of
Common Stock (or any successor security thereto) available, taking into account
all potential adjustments or anti-dilution provisions in such securities, to
satisfy the rights of the Buyers to acquire the Purchased Shares. Further, if at
any time the number of shares of Common Stock available for issuance were
insufficient for any reason to satisfy such rights of the Buyers, the Company
would take immediate action to cause sufficient authorized shares to be
authorized or effect a reverse stock split to provide sufficient shares to be
available.

 

(h) SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the 1933 Act and the Securities Exchange Act of
1934, as amended (the “1934 Act”), including pursuant to Section 13(a) or 15(d)
thereof, for the two (2) years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. The
Company has made available to each Buyer a true, correct and complete copy of
all SEC Reports filed within the ten (10) days preceding the date hereof. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the 1933 Act and the 1934 Act and the rules and regulations
of the SEC promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Registration Statement, the Prospectus and the Prospectus
Supplement complied in all material respects with the requirements of the 1933
Act and the 1934 Act and the rules and regulations of the SEC promulgated
thereunder, and none of such Registration Statement or any such prospectus
contain or contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the case of any prospectus in the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

 

(i) Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC
Reports: (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that could reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP

 

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or required to be disclosed in filings made with the SEC, (iii) the Company has
not altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its shareholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144. “Rule 144” means Rule 144 promulgated by the
SEC pursuant to the 1933 Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC having substantially
the same effect as such Rule.

 

(j) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which: (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Purchased Shares or (ii) could, if there were an unfavorable decision,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. Except for the confidential treatment request
submitted to the SEC with respect to Amendment No. 1 to Exclusive Sales
Distribution Agreement, dated September 30, 2005, between the Company and
Angiotech BioMaterials Corp., the Company does not have pending before the SEC
any request for confidential treatment of information. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving the Company or any current or former director
or officer of the Company. The SEC has not issued any stop order or other order
suspending the effectiveness of the Registration Statement.

 

(k) Compliance. Neither the Company nor any Subsidiary: (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) to the knowledge of the
Company, is in violation of any order of any court, arbitrator or governmental
body, or (iii) is or has been in violation of any statute, rule or regulation of
any governmental authority, except in each case as could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(l) Labor Relations. No strike, work stoppage, slow down or other material labor
problem exists or, to the knowledge of the Company, is threatened or imminent
with respect to any of the employees of the Company or any Subsidiary.

 

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(m) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.

 

(n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them that is material to the
business of the Company and the Subsidiaries and good and marketable title in
all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except
for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries, (ii) Liens on the assets of Vita Special
Purpose Corp. in favor of Paul Capital Royalty Acquisition Fund, L.P. pursuant
to the Revenue Interests Assignment Agreement dated October 16, 2001, and
(iii) Liens on certain assets of the Company pursuant to the Master Security
Agreement dated as of October 4, 2001 between the Company and General Electric
Capital Corporation. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in compliance.

 

(o) Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could reasonably be expected to have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). None of the Intellectual
Property Rights have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agreement. Neither the Company
nor any Subsidiary has received a written notice or otherwise has reason to
believe that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights.

 

(p) Insurance. To the knowledge of the Company, the Company and the Subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost, except for cost increases
being experienced by public companies in similar businesses and risk categories.

 

(q) Transactions With Affiliates and Employees. Except as set forth in SEC
Reports filed at least ten (10) days prior to the date hereof, none of the
officers or directors of the

 

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Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any material transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

 

(r) Internal Accounting Controls. Except as disclosed in the Company’s periodic
reports for the quarters ended June 30, 2005 and September 30, 2005, the Company
and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The financial records of the Company accurately reflect in all
material respects the information relating to the business of the Company, the
location and collection of its assets, and the nature of all transactions giving
rise to the obligations or accounts receivable of the Company. The Company has
established disclosure controls and procedures (as defined in 1934 Act Rules
13a-14 and 15d-14) for the Company and designed such disclosures controls and
procedures to ensure that material information relating to the Company is made
known to the certifying officers by others within the Company, particularly
during the period in which the Company’s Form 10-K or 10-Q, as the case may be,
is being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of a date within 90
days prior to the filing date of the Form 10-K for the year ended December 31,
2004 (such date, the “Evaluation Date”). The Company presented in the Form 10-K
for the year ended December 31, 2004, the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, except as
disclosed in the Company’s periodic reports for the quarters ended June 30, 2005
and September 30, 2005, there have been no significant changes in the Company’s
internal controls (as such term is defined in Item 307(b) of Regulation S-K
under the 1934 Act) or, the knowledge of the Company, in other factors that
could significantly affect the Company’s internal controls.

 

(s) Solvency. Based on the financial condition of the Company as of date hereof
and as of the Closing Date: (i) the Company’s fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all

 

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amounts on or in respect of its debt when such amounts are required to be paid.
The Company does not intend to incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt).

 

(t) Certain Fees. Except for the fees described in the Prospectus Supplement,
all of which are payable by the Company to the registered broker-dealers named
therein, no brokerage or finder’s fees or commissions are or will be payable by
the Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement, and the Company has not taken any action that
would cause any Buyer to be liable for any such fees or commissions. The Company
agrees that the Buyers shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of any Person for fees of the type
contemplated by this Section in connection with the transactions contemplated by
this Agreement.

 

(u) Integration. Neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Purchased Shares to be
integrated with prior offerings by the Company for purposes of any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will the Company or
any of its Subsidiaries take any action or steps that would cause the offering
of the Purchased Shares to be integrated with other offerings.

 

(v) Listing and Maintenance Requirements. The Company has not, in the 12 months
preceding the date hereof, received notice from the Principal Market on which
the Common Stock is or has been listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements of the
Principal Market. The Company is, and has no reason to believe that it will not
in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements. The issuance and sale of the Purchased Shares
hereunder does not contravene the rules and regulations of the Principal Market
and no shareholder approval is required for the Company to fulfill its
obligations under the Transaction Documents. The Common Stock is currently
listed on the Principal Market.

 

(w) Registration Rights. No holder of securities of the Company has rights to
the registration of any securities of the Company because of the issuance of the
Purchased Shares hereunder that could expose the Company to material liability
or any Holder to any liability or that could impair the Company’s ability to
consummate the issuance and sale of the Purchased Shares in the manner, and at
the times, contemplated hereby, which rights have not been waived by the holder
thereof as of the date hereof.

 

(x) Application of Takeover Protections. The Company and its Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Articles of Incorporation (or similar charter documents) or
the laws of its state of incorporation that is or

 

10

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could become applicable to the Buyers as a result of the Buyers and the Company
fulfilling their obligations or exercising their rights under the Transaction
Documents, including, without limitation, as a result of the Company’s issuance
of the Purchased Shares and the Buyers’ ownership of the Purchased Shares.

 

(y) Investment Company. The Company is not, and is not an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

(z) Sarbanes-Oxley Act. The Company is in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof, except where such
noncompliance would not reasonably be expected to have a Material Adverse
Effect.

 

(aa) Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that the Company believes constitutes material nonpublic
information other than the issuance of the Purchased Shares contemplated
hereunder. The Company understands and confirms that the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that no Buyer makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2.

 

4. COVENANTS.

 

(a) Best Efforts. Each party shall use its best efforts timely to satisfy each
of the covenants and the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.

 

(b) Prospectus Supplement and Blue Sky. On or before the execution of this
Agreement, the Company shall have delivered, and as soon as practicable after
the Closing the Company shall file, the Prospectus Supplement with respect to
the Purchased Shares as required under and in conformity with the 1933 Act,
including Rule 424(b) thereunder. If required, the Company, on or before the
Closing Date, shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Purchased
Shares for sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing Date. The
Company shall make all filings and reports relating to the offer and sale of the
Purchased Shares required under applicable securities or “Blue Sky” laws of the
states of the United States following the Closing Date.

 

11

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(c) Reporting Status. Until the date on which the Buyers shall have sold all the
Purchased Shares (the “Reporting Period”), the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.

 

(d) Listing. The Company shall promptly secure the listing of all of the
Purchased Shares upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock from time
to time issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock’s authorization for listing on the Principal Market.
Neither the Company nor any of its Subsidiaries shall take any action which
would be reasonably expected to result in the delisting or suspension of the
Common Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(d).

 

(e) Fees. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or broker’s commissions (other than for
Persons engaged by any Buyer) relating to or arising out of the transactions
contemplated hereby, including, without limitation, any fees or commissions
payable to the agent in connection with the Purchased Shares (collectively, the
“Agent”). The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney’s
fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment. Except as otherwise set forth in this Agreement or in the
Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Purchased Shares to the Buyers.

 

(f) Disclosure of Transactions and Other Material Information. The Company
shall, on or before 8:30 a.m., New York City Time, on the first Business Day
after the date hereof, file a Current Report on Form 8-K reasonably acceptable
to the Buyers disclosing all material terms of the transactions contemplated
hereby in the form required by the 1934 Act, and attaching the form of this
Agreement as an exhibit to such filing (including all attachments, the “8-K
Filing”). The Company shall not, and shall cause each of its Subsidiaries and
each of their respective officers, directors, employees and agents, not to,
provide any Buyer with any material, nonpublic information regarding the Company
or any of its Subsidiaries from and after the filing of the press release
referred to in the first sentence of this Section without the express written
consent of such Buyer. In the event of a breach of the foregoing covenant by the
Company, any Subsidiary, or its each of respective officers, directors,
employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Buyer shall have the right to make a public disclosure,
in the form of a press release, public advertisement or otherwise, of such
material, nonpublic information without the prior approval by the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees
or agents. No Buyer shall have any liability to the Company, its Subsidiaries,
or any of its or their respective officers, directors, employees, shareholders
or agents for any such disclosure. Subject to the foregoing, neither the Company
nor any Buyer shall issue any press releases or any other public statements

 

12

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with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of any Buyer, to make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations, including
the applicable rules and regulations of the Principal Market (provided that in
the case of clause (i) each Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior to its
release). Without the prior written consent of any applicable Buyer, the Company
shall not disclose the name of any Buyer in any filing, announcement, release or
otherwise.

 

(g) Additional Issuances of Securities.

 

(i) For purposes of this Section 4(g), the following definitions shall apply.

 

(1) “Common Stock Equivalents” means, collectively, Options and Convertible
Securities.

 

(2) “Convertible Securities” means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for Common Stock.

 

(3) “Options” means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.

 

(ii) From the date hereof until the date that is the three (3) week anniversary
of the Closing Date, the Company will not, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition of) any of its or its
Subsidiaries’ equity or equity equivalent securities, including without
limitation pursuant to any registration statement, shelf registration statement,
equity line or otherwise, or any debt, preferred stock or other instrument or
security that is, at any time during its life and under any circumstances,
convertible into or exchangeable or exercisable for Common Stock or Common Stock
Equivalents.

 

(iii) The foregoing restrictions shall not apply (1) in connection with any
employee benefit plan which has been approved by the Board of Directors of the
Company, pursuant to which the Company’s securities may be issued to any
employee, officer or director for services provided to the Company or any of its
Subsidiaries, or pursuant to the exercise of any securities of the Company
issued thereunder; (2) upon conversion of any Options or Convertible Securities
that are outstanding on the day immediately preceding the Closing Date,
provided, that the terms of such Options or Convertible Securities are not
amended, modified or changed on or after the date hereof; or (3) in connection
with any bona fide strategic transaction or acquisition by the Company, whether
through an acquisition for stock or a merger, of any business, assets or
technologies the primary purpose of which is not to raise equity capital.

 

(h) Incorporation; Good Standing. On or prior to the 30th day after the Closing
Date, the Company shall deliver to each Buyer a certificate evidencing the
incorporation

 

13

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and good standing of the Company and each of its Subsidiaries in Pennsylvania
issued by the Pennsylvania Secretary of the Commonwealth.

 

(i) Articles of Incorporation. On or prior to the 30th day after the Closing
Date, the Company shall have delivered to each Buyer a certified copy of the
Articles of Incorporation, as amended, (the “Articles”) as certified by the
Pennsylvania Secretary of the Commonwealth.

 

5. INTENTIONALLY OMITTED

 

6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the Company hereunder to issue and sell the Purchased Shares
to each Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:

 

(i) Such Buyer shall have executed each of the Transaction Documents to which it
is a party and delivered the same to the Company.

 

(ii) Such Buyer shall have delivered to the Company the Purchase Price for the
Purchased Shares being purchased by such Buyer and each other Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.

 

(iii) The representations and warranties of such Buyer shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date.

 

7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

The obligation of each Buyer hereunder to purchase the Purchased Shares at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:

 

(i) The Company shall have (i) executed and delivered to such Buyer each of the
Transaction Documents, and (ii) delivered the Purchased Shares being purchased
by such Buyer at the Closing pursuant to this Agreement.

 

14

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(ii) Such Buyer shall have received the opinion of Morgan, Lewis & Bockius LLP,
the Company’s outside counsel (“Company Counsel”), dated as of the Closing Date,
substantially in the form attached hereto as Exhibit A.

 

(iii) The Company shall have delivered to such Buyer a letter from a reputable
service company stating that a verbal good standing has been obtained from the
Pennsylvania Secretary of the Commonwealth with respect to the Company and each
of its Subsidiaries as of a date within 10 days of the Closing Date.

 

(iv) The Common Stock (I) shall be listed on the Principal Market and (II) shall
not have been suspended, as of the Closing Date, by the SEC or the Principal
Market from trading on the Principal Market nor shall suspension by the SEC or
the Principal Market have been threatened, as of the Closing Date, either (A) in
writing by the SEC or the Principal Market or (B) by falling below the minimum
listing maintenance requirements of the Principal Market.

 

(v) The Company shall have delivered to such Buyer a certificate, executed by
the Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with this transaction as adopted by the Company’s Board
of Directors or a committee thereof in a form reasonably acceptable to such
Buyer, (ii) the Articles and (iii) the Bylaws of the Company, each as in effect
at the Closing, in the form attached hereto as Exhibit B.

 

(vi) The representations and warranties of the Company shall be true and correct
in all material respects (except for those representations and warranties that
are qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer or Chief
Financial Officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such Buyer
in the form attached hereto as Exhibit C.

 

(vii) The Company shall have obtained all governmental, regulatory or third
party consents and approvals, if any, necessary for the sale of the Purchased
Shares.

 

(viii) The Registration Statement shall be effective and available for the
issuance and sale of the Purchased Shares hereunder and the Company shall have
delivered to such Buyer the Prospectus required thereunder.

 

(ix) The Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request.

 

15

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8. TERMINATION. In the event that the Closing shall not have occurred with
respect to a Buyer on the Closing Date due to the Company’s or such Buyer’s
failure to satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party’s failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.

 

9. MISCELLANEOUS.

 

(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

 

(c) Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.

 

(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

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(e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral
or written agreements between the Buyers, the Company, their affiliates and
Persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
holders of Purchased Shares representing at least a majority of the amount of
the Purchased Shares, or, if prior to the Closing Date, the Buyers listed on the
Schedule of Buyers as being obligated to purchase at least a majority of the
amount of the Purchased Shares. No provision hereof may be waived other than by
an instrument in writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it applies to less than
all of the holders of the Purchased Shares then outstanding. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the
same consideration also is offered to all of the parties to the Transaction
Documents, holders of shares of Common Stock The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.

 

(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Orthovita, Inc.

    

45 Great Valley Parkway

    

Malvern, Pennsylvania 19355

    

Telephone:

     (610) 640-1775

Facsimile:

     (610) 640-2603

Attention:

     Joseph M. Paiva

 

  with a copy to:

 

Morgan, Lewis & Bockius LLP

    

1701 Market Street

    

Philadelphia, Pennsylvania 19103

    

Telephone:

     (215) 963-5092

Facsimile:

     (215) 963-5001

Attention:

     Stephen A. Jannetta, Esq.

 

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If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers,

 

With a copy (for informational purposes only) to:

 

Schulte Roth & Zabel LLP

    

919 Third Avenue

    

New York, New York 10022

    

Telephone:

     (212) 756-2000

Facsimile:

     (212) 593-5955

Attention:

     Eleazer Klein, Esq.

 

with copies to such Buyer’s representatives as set forth on the Schedule of
Buyers, or to such other address and/or facsimile number and/or to the attention
of such other Person as the recipient party has specified by written notice
given to each other party five (5) days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the holders of Purchased Shares
representing at least a majority of the number of the Purchased Shares. A Buyer
may assign some or all of its rights hereunder without the consent of the
Company, provided that such transferee agrees in writing to be bound, with
respect to the transferred Purchased Shares, by the provisions hereof that apply
to the Buyers, in which event such assignee shall be deemed to be a Buyer
hereunder with respect to such assigned rights.

 

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

(i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9
shall survive the Closing for a period of two years thereafter. Each Buyer shall
be responsible only for its own representations, warranties, agreements and
covenants hereunder.

 

(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

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(k) Indemnification. (i) In consideration of each Buyer’s execution and delivery
of the Transaction Documents and acquiring the Purchased Shares thereunder and
in addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and their shareholders, partners, members, officers, directors, employees
and their direct or indirect investors and any of the foregoing Persons’ agents
or other representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the “Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in the Transaction Documents, (b) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents or (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of the Transaction Documents or
(ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Purchased Shares. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.

 

(ii) Promptly after receipt by an Indemnitee under this Section 9(k) of notice
of the commencement of any action or proceeding (including any governmental
action or proceeding) involving an Indemnified Liability, such Indemnitee shall,
if a claim for indemnification in respect thereof is to be made against any
indemnifying party under this Section 9(k), deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnitee; provided, however, that an Indemnitee
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for such Indemnitee to be paid by the indemnifying party,
if, in the reasonable opinion of the Indemnitee, the representation by such
counsel of the Indemnitee and the indemnifying party would be inappropriate due
to an actual conflict of interest between such Indemnitee and any other party
represented by such counsel in such proceeding (it being understood that, in the
event that a claim involves more than one Indemnitee, the indemnifying party’s
obligations to pay the fees and expenses of one counsel shall extend only to one
Indemnitee). Legal counsel referred to in the immediately preceding sentence
shall be selected by the Investors holding at least a majority of the Purchased
Shares. The Indemnitee shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Indemnified
Liabilities by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnitee that relates to
such action or Indemnified Liabilities. The indemnifying party shall keep the
Indemnitee fully apprised at all times as to the status of the

 

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defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect to such Indemnified Liabilities or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnitee with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnitee under this Section 9(k),
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

 

(iii). The indemnification required by this Section 9(k) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Liabilities are
incurred.

 

(iv) The indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnitee against the indemnifying
party or others, and (ii) any liabilities the indemnifying party may be subject
to pursuant to the law.

 

(l) No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

(m) Remedies. Each Buyer and each holder of the Securities shall have all rights
and remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any applicable law.
Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.

 

(n) Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other

 

20

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Person under any law (including, without limitation, any bankruptcy law, state
or federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

 

(o) Independent Nature of Buyers’ Obligations and Rights. The obligations of
each Buyer under any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents and the Company
acknowledges that the Buyers are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Buyer confirms that it has independently participated in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Buyer shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose.

 

[Signature Page Follows]

 

21

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

 

COMPANY: ORTHOVITA, INC. By:  

/s/ Joseph M. Paiva

Name:

 

Joseph M. Paiva

Title:

 

Chief Financial Officer

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

 

BUYER: MAGNETAR CAPITAL MASTER FUND, LTD By: Magnetar Financial LLC Its:
Investment Manager By:  

/S/ PAUL SMITH

Name:

 

Paul Smith

Title:

 

General Counsel

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

 

BUYERS: CORTINA ASSET MANAGEMENT LLC By:   /s/ Lori K. Hoch

Name:

  Lori K. Hoch

Title:

 

Authorized Signatory

 

24

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SCHEDULE OF BUYERS

 

Buyer

--------------------------------------------------------------------------------

  

Address and Facsimile Number

--------------------------------------------------------------------------------

   Number of Purchased Shares

--------------------------------------------------------------------------------

  

Legal Representative’s
Address and Facsimile Number

--------------------------------------------------------------------------------

Magnetar Capital

Master Fund, Ltd

  

Doug Litowitz

Magnetar Capital Master Fund, Ltd.

1603 Orrington Avenue,

13th Floor

Evanston, IL 60201

Phone: 847-905-4400

Fax: 847-869-2064

Doug.Litowitz@magnetar.com

 

   3,151,516   

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Attention: Eleazer Klein, Esq.

Facsimile: (212) 593-5955

Telephone: (212) 756-2376

Cortina Asset

Management LLC

  

Lori K. Hoch

Cortina Asset

Management, LLC

330 E. Kilbourn, Suite 850

Milwaukee, Wisconsin 53202

Phone: 414-225-7365

Fax: 414-225-0733

lhoch@cortina-am.com

   1,166,666     

TOTAL

        4,318,182