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                                                                    Exhibit 10.3

                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (the "Agreement") entered into as of May 10, 2002 by
and between Orthovita, Inc., a Pennsylvania corporation (the "Company"), and
Erik M. Erbe, an employee of the Company ("Erbe").

     WHEREAS, the Company wishes to employ Erbe as its Chief Scientific Officer,
and to elect Erbe as its Chief Scientific Officer as provided in Section 1.2
herein, and both parties desire to enter into an employment agreement to reflect
Erbe's present position with the Company upon the terms and conditions set forth
herein.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.0 Employment. The Company hereby employs Erbe as its Chief Scientific
Officer. Erbe hereby accepts such employment and agrees to perform his duties
and responsibilities, in accordance with terms, conditions and provisions
hereinafter set forth.

     1.1 Employment Term. The term of Erbe's employment under this Agreement
shall commence as of the date hereof (the "Effective Date") and shall continue
in effect through April 23, 2003 with the option thereafter to renew the
contract for one year intervals provided, however, that if a Change in Control
shall have occurred during the Employment Term, the Employment Term shall expire
no earlier than twelve (12) months beyond the month in which such Change in
Control occurred (the "Employment Term"), unless terminated prior thereto in
accordance with the applicable provision of Section 5.

     1.2 Duties and Responsibilities. Erbe shall serve as the Company's Chief
Scientific Officer and in such other senior positions, if any, to which he may
be appointed during the Employment Term. During the Employment Term, Erbe shall
perform all duties and accept all responsibilities incident to, and not
inconsistent with, such positions.

     1.3 Extent of Service. During the Employment Term, Erbe agrees to use his
best efforts to carry out his duties and responsibilities under Section 1.2
hereof and, consistent with the other provisions of this Agreement, to devote
substantially all his business time, attention, and energy thereto except to the
extent required by Erbe's outside board directorships, civic or charitable
activities held on the date of this Agreement. Erbe agrees not to become engaged
in any additional business, civic or charitable activity which, in the CEO's
reasonable judgment, is likely to interfere materially with his ability to
discharge his duties and responsibilities to the Company.

     1.4 Base Salary. For all the services rendered by Erbe hereunder, the
Company shall pay Erbe a base salary at the annual rate of $186,600 plus an
automobile allowance of $600.00 per calendar month ("Base Salary"), payable in
installments at such times as the Company customarily pays its other senior
level Officers (but in any event no less often than monthly). Erbe's Base Salary

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shall be reviewed and may be appropriately adjusted at such time by the CEO
pursuant to its normal performance review policies for senior level Officers
upon his appointment as CSO; such increased Base Salary, if any, is hereafter
referred to as "Increased Base Salary".

     1.5 Retirement and Benefit Coverages. Erbe shall be eligible to participate
in any pension plans, retirement plans and any health, accident, general
liability, directors and officers liability, or disability insurance, sick leave
or other benefit plans or programs made available to other similarly situated
employees of the Company (the "Plans") as long as they are kept in force by the
Company and provided Erbe meets the eligibility requirements and other terms,
conditions and restrictions of the respective Plans. In addition, Erbe shall be
entitled to the Company's regular holiday and vacation policy and any other
perequisites provided by the Company to its senior level Officers.

     1.6 Stock Options/Stock Awards/Benefits. In the event that (i) Erbe's
employment is terminated by the Company or a successor entity pursuant to
Section 5.4 or (ii) Erbe resigns from the Company pursuant to Section 5.5 or
(iii) there is a Change of Control as defined in Section 6, then one hundred
percent (100%) of any stock option, restricted stock or other stock awards
granted Erbe that have not yet become exercisable or vested shall become
exercisable or vested on the effective date of the event set forth in (i), (ii)
or (iii) of this sentence and Erbe shall become entitled to the payments set
forth in Sections 5.4 or 5.5, as applicable. Subject to the discretion of the
Board, Erbe shall be eligible to receive additional grants of stock options from
time to time in the future, on such terms and subject to such conditions as the
Board shall determine as of the date of any such grant.

     1.7 Life Insurance. During the Employment Term, the Company shall maintain,
under an arrangement satisfactory to the Company, $1,000,000 of life insurance
on the life of Erbe. Erbe shall have the right to designate the beneficiary of
such insurance policy. The Company may maintain term life insurance, whole life
insurance or such other form of insurance as it deems appropriate.

     1.8 Incentive Programs. Erbe shall be entitled to participate in any
short-term or long-term incentive compensation programs established by the
Company for its senior level Officers generally ("Incentive Programs"). Payments
under such Incentive Programs shall depend upon achievement of certain business
and individual performance targets specified and approved by the CEO; provided,
however, that Erbe's "target opportunity" under any such Incentive Program shall
be based on 35% of annual salary.

     2.0 Confidential Information. Erbe acknowledges that, by reason of his
employment by and service to the Company before and during the Employment Term,
he has had and will continue to have access to certain confidential and
proprietary information relating to the Company's business, which may include,
but is not limited to, trade secrets as defined by Pennsylvania Law, customer
information, supplier information, cost and pricing information, marketing and
sales techniques, strategies and programs, proprietary computer programs and
software and financial information (collectively referred to as "Confidential
Information"). Erbe acknowledges that such

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Confidential Information is a valuable and unique asset of the Company and Erbe
covenants that he will not at any time during the Employment Term use any
Confidential Information or divulge or disclose any Confidential Information to
any person, firm or corporation except in connection with Erbe's good faith
belief as to the proper performance of his duties for the Company. Erbe also
covenants that, for a period of three (3) years after the termination of his
employment, directly or indirectly, he will not use any Confidential Information
for any purpose or divulge or disclose any Confidential Information to any
person, firm or corporation, unless such information is in the public domain
through no fault of Erbe or except when required to do so by a court of law, by
any governmental agency having supervisory authority over the business of the
Company or over Erbe or by any administrative or legislative body (including a
committee thereof) which Erbe reasonably believes has apparent jurisdiction to
order him to divulge, disclose or make accessible such information, in which
case Erbe will inform the Company in writing promptly of such required
disclosure.

     2.1 Intellectual Property. Erbe will communicate to the Company any and all
novel ideas, concepts, inventions, processes, and improvements, patentable or
unpatentable, made or conceived by him, either solely or jointly with others,
from the time of entering the Company's employ until he leaves, along the line
of the Company's business, or resulting from or suggested by any work which he
may do for the Company, or at its request, and he will, at all times during his
employment with the Company and after his termination for any reason, assist the
Company in every proper way (at the Company's expense), to obtain for the
Company's own benefit patents for any or all of these ideas, concepts,
inventions, processes and improvements in the United States and any and all
foreign countries, if patentable, by executing and delivering to the Company any
and all applications, assignments, and other instruments, by giving evidence and
testimony, and by executing and delivering to the Company all drawings,
blueprints, notes, and specifications deemed necessary by the Company in order
to apply for and obtain letters patent of the United States or foreign countries
for such ideas, concepts, inventions, processes and improvements, and Erbe does
hereby assign and will assign and convey to the Company his entire right, title
and interest in and to all such ideas, concepts, inventions, processes, and
improvements, and all patent applications and patents thereon. Erbe further
agrees to conduct himself as described above after leaving the Company's
employment as to all ideas, concepts, inventions, processes and improvements
conceived or disclosed while with the Company.

     3.0 Non-Competition; Non-Solicitation.

         (a) During the Employment Term and for a period of two years
thereafter, Erbe will not, except with the prior written consent of the CEO,
directly or indirectly own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit his name to be
used in connection with, any business or enterprise that is engaged in a
geographic area in which the Company or any of its affiliates is operating
either during the Employment Term or on the date Erbe's employment terminates,
as applicable, (whether or not such business is physically located within those
areas) (the "Geographic Area"), in any biomaterials business that is directly
competitive to a business from

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which the Company or any of its affiliates derive at least five percent of its
respective gross revenues either during the Employment Term or on the date
Erbe's employment terminates, as applicable ("Competing Business"). It is
recognized by Erbe that the business of the Company and its affiliates and
Erbe's connection therewith is or will be involved in activity throughout the
Geographic Area, and that more limited geographical limitations on this
non-competition covenant are therefore not appropriate.

          (b) The foregoing restrictions shall not be construed to prohibit the
ownership by Erbe of less than five percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"), provided that such ownership represents a passive investment
and that neither Erbe nor any group of persons including Erbe in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.

          (c) Erbe further covenants and agrees that, during the Employment Term
and for the period of two years thereafter, Erbe will not, without the prior
written consent of the Company, personally solicit for a Competing Business any
customer that was a customer of the Company or any of its affiliates during the
Employment Term or on the date on which Erbe's employment terminates or any
person who is a managerial or higher level employee of the Company at the date
Erbe's employment terminates. The foregoing covenant of Erbe shall not apply to
any person after twelve months have elapsed subsequent to the date on which such
person's employment by the Company has terminated.

     4.0  Equitable Relief.

          (a) Erbe acknowledges and agrees that the restrictions contained in
Sections 2 and 3 are reasonable and necessary to protect and preserve the
legitimate interest, properties, goodwill and business of the Company, that the
Company would not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by the Company should
Erbe's breach any of the provisions of Sections 2 and 3. Erbe represents and
acknowledges that (i) he has been advised by the Company to consult his own
legal counsel in respect of this Agreement, and (ii) he has had full
opportunity, prior to execution of this Agreement, to review thoroughly this
Agreement with his counsel.

          (b) Erbe further acknowledges and agrees that a breach of any of the
restrictions in Sections 2 and 3 cannot be adequately compensated by monetary
damages. Erbe agrees that the Company shall be entitled to seek preliminary
injunctive relief, without the necessity of proving actual damages. In the event
that any of the provisions of Sections 2 or 3 hereof should ever be adjudicated
to exceed the time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time, geographic,
service, or other limitations permitted by applicable law, that such

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amendment shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.

          (c) Erbe irrevocably and unconditionally (i) agrees that any suit,
action or other legal proceeding arising out of this Agreement, including,
without limitation, any action commenced by the Company for preliminary and
permanent injunctive relief and other equitable relief, may be brought in the
United States District Court for the Eastern District of Pennsylvania, or if
such court does not have jurisdiction or will not accept jurisdiction, in any
court of general jurisdiction in Chester County, Pennsylvania, (ii) consents to
the non-exclusive jurisdiction of either such court in any such suit, action or
proceeding, and (iii) waives any objection which Erbe may have to the laying of
venue of any such suit, action or proceeding in either such court. Erbe also
irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers at the address set forth in the notice
provisions of Section 12 hereof.

  5.0     Termination. The Employment Term shall terminate upon the occurrence
of any one of the following events:

  5.1     Disability. The Company may terminate the Employment Term, in
compliance with applicable law, if Erbe is unable substantially to perform the
essential duties and responsibilities hereunder to the full extent required by
the Board by reason of mental or physical illness, injury or any other cause for
six consecutive months, or for more than nine months in the aggregate during any
period of twelve consecutive calendar months (a "Disability"); provided,
however, that the Company shall continue to pay Erbe his Base Salary or
Increased Base Salary, as applicable, until termination of the Employment Term.
At the date of such termination the Company shall prepare and execute a release
substantially in the form attached hereto as Annex 1, (the "Release"), and
present the Release for execution to Erbe, or Erbe's representative should he
lack capacity to execute the Release. Upon execution of the Release by Erbe, or
his personal representative, as the case may be, Erbe shall be entitled to
receive all payments and benefits to the same extent and at the same time as
specified in Section 5.4(b), offset by any amounts Erbe receives under any long
term disability program maintained by the Company. Otherwise, in the event of
Disability, the Company shall have no further liability or obligation to Erbe
under this Agreement except as set forth in the Release. In the event of any
dispute under this Section 5.1 and to the extent determined by the Board to be
job-related and consistent with business necessity, Erbe shall submit to a
physical examination by a licensed physician experienced in disability
examination selected by the Board and approved by Erbe, such approval not to be
unreasonably withheld.

  5.2     Death. The Employment Term shall terminate on the date of Erbe's
death. In such event, the Company shall pay to Erbe's executors, legal
representatives or administrators, as applicable, an amount equal to the
installment of his Base Salary set forth in Section 1.4 hereof or Increased Base
Salary, as applicable, for the full month in which he dies, and all unreimbursed
expenses and unused vacation time. If Erbe dies while an employee of the
Company, the designated beneficiary, or if no such beneficiary has been
designated, Erbe's estate, shall be entitled to receive (i) the proceeds of the
life insurance policy described in Section 1.7 and (ii) a payment from the
Company of an amount equal to the benefits calculated as of the date of death
pursuant to Section

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5.4(a)(ii), on the basis that the death of Erbe is equivalent to termination
without cause. Otherwise, the Company shall have no further liability or
obligation under this Agreement to his executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
him.

  5.3.    Cause.  The Company may terminate the Employment Term at any time for
"Cause" upon 30 days' written notice to Erbe, in which event all payments under
this Agreement shall cease, except for (i) Base Salary, or Increased Base
Salary, as applicable, to the extent already earned and a payment equal to any
unreimbursed expenses and unused vacation, which shall be paid in a single lump
sum on the day the Employment Term terminates, and (ii) any other benefits in
accordance with the terms of any applicable Plans and Incentive Programs of the
Company. For purposes of this Agreement, Erbe's employment may be terminated for
"cause" if (i) Erbe is convicted of a felony, (ii) in the reasonable
determination of the Board, Erbe has committed an intentional act of fraud,
embezzlement, or theft in connection with Erbe's duties in the course of his
employment with the Company, or engaged in gross negligence in the course of his
employment with the Company, (iii) Erbe intentionally breached his obligations
under this Agreement, including inattention to or neglect of duties and shall
not have remedied such breach within 30 days after receiving written notice from
the Board specifying the details thereof, provided, however, that in any case
under this clause (iii), the act or failure to act by Erbe is materially harmful
to the business of the Company, and (iv) the failure by Erbe to follow the
lawful directives of the Company's Chairman or its Board of Directors, provided
that (other than in the case of those actions or omissions set forth in clause
(i) and (ii) above) Erbe shall have been given reasonably detailed notice that
such an event constituting cause for termination has occurred and shall have
been given at least 30 days opportunity to take remedial action but shall have
failed or refused to do so. For purposes of this Agreement, an act or omission
on the part of Erbe shall be deemed "intentional" or gross negligence only if it
was done by Erbe in bad faith, not merely an error in judgment, and without
reasonable belief that the act or omission was in the best interest of the
Company. In the event of a dispute concerning application of the words
intentional or gross negligence as used in this Section 5.3, no claim by the
Company that Cause exists shall be given effect unless the Company establishes
to the Board by clear and convincing evidence that Cause exists.

  5.4.    Termination Without Cause.

          (a) The Company may terminate Erbe without cause, at any time, from
the position in which he is employed hereunder (on which date the Employment
Term shall be deemed to have ended) upon not less than 30 days' prior written
notice to Erbe; provided, however, that, commencing on the date of such notice,
Erbe shall be under no obligation to render any additional services to the
Company and shall be allowed to seek other employment. Upon such termination,
except as provided in Section 5.4(b) below, Erbe shall be entitled to receive
(i) Base Salary or Increased Base Salary, as applicable, to the extent already
earned and for the remaining term of his employment under this agreement, and a
payment equal to any unused vacation, unreimbursed expenses, which shall be paid
in a single lump sum on the day the Employment Term ends, and (ii) any other
benefits in accordance with the terms of any Plans and Incentive Programs of the
Company.

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          (b) Notwithstanding the foregoing, upon such termination, the Company
shall prepare and execute the Release and present the Release to Erbe for
execution. Upon execution of the Release by Erbe, he shall be entitled to
receive, commencing on the eighth day following execution of the Release, in
lieu of the Company obligations described in Subsection (a) of this Section,
which Erbe agrees to waive, (i) continuation for twenty-four (24) months of
Erbe's current Base Salary, or Increased Base Salary, as applicable, in
accordance with Section 1.4 (without regard to Erbe's removal), (ii) any other
amounts earned, vested, or owing but not yet paid under Section 1.1 through 1.8
above, (iii) a pro-rata portion of any Incentive Programs to the extent that
such amount would have been earned in accordance with the terms of such
Incentive Programs specified in Section 1.8 above for the then current fiscal
year of the Company, without regard to a requirement, if any, set forth in
Incentive Programs of employment with the Company at date of payment under such
Incentive Programs (iv) a payment equal to any unused vacation and unreimbursed
expenses, (v) any other benefits in accordance with the terms of any Plans and
Incentive Programs of the Company without regard to a requirement, if any, set
forth in Plans or Incentive Programs of employment with the Company at date of
payment under such Plans or Incentive Programs, and (vi) to the extent not
provided in (v) directly above, health insurance for Erbe and eligible family
members and disability insurance for Erbe, for a period of twenty-four (24)
months from the date of termination pursuant to Section 5.4(a), each with
coverage and at a cost identical to that provided Erbe immediately prior to such
termination. Upon Termination Without Cause, Company shall have no liability or
obligation to Erbe except as set forth in Section 5.4 and in the Release.

  5.5     Constructive Termination Without Cause.

          (a) Resignation by Erbe for good reason ("Constructive Termination
without Cause") shall mean a termination of Erbe's employment at his initiative
following the occurrence, without Erbe's written consent, of (i) a material
diminution in Erbe's duties, responsibilities, authority or status, or a failure
of Erbe to have a position reporting directly to the CEO, (ii) a reduction in
any amount of Erbe's Base Salary, or Increased Base Salary, as applicable, (iii)
the assignment to Erbe of duties or responsibilities which are materially
inconsistent with the duties, responsibilities, authority, or status of his
position as defined in Section 1.2 above or which materially impair Erbe's
ability to function in his then current position, or (iv) a failure of the
Company to comply with any of the material terms of this Agreement, provided
that (other than in the case of those actions or omissions set forth in clause
(ii) above) the Company shall have been given reasonably detailed notice that
such an event constituting cause for termination has occurred and shall have
been given at least 30 days opportunity to take remedial action but shall have
failed or refused to do so.

          (b) In the event of a Constructive Termination Without Cause, the
Company shall prepare and execute the Release and present the Release to Erbe
for execution. Upon execution of the Release by Erbe, he shall be entitled to
receive all amounts and benefits to the same extent and at the same time as
specified in Section 5.4(b). In the event Erbe refuses to execute the Release
(or revokes the Release), he shall receive only the amounts and benefits to the
same extent and at the

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same time as specified in Section 5.4(a).

          (c) Prior to resigning under this Section, Erbe shall give written
notice to the Board and offer a 30-day period for the Company to cure. If no
cure has been effected by the end of the applicable cure period, Erbe may resign
immediately. The Company may not terminate Erbe pursuant to Section 5.3 or 5.4
subsequent to the date of the written notice provided pursuant to this Section
5.5(c).

  5.6.    Voluntary Termination. Erbe may voluntarily terminate the Employment
Term upon 30 days' prior written notice for any reason. In such event, Erbe
shall be entitled only to (i) Base Salary, or Increased Base Salary, as
applicable, to the extent already earned and a payment equal to any unused
vacation, and unreimbursed expense which shall be paid in a single lump sum on
the day the Employment Term terminates, and (ii) any other benefits in
accordance with the terms of any Plans and Incentive Programs of the Company. A
voluntary termination under this Section 5.6 shall not be deemed a breach of
this Agreement.

  5.7     Termination at End of Employment Term. Notwithstanding Section 5.6, if
Erbe's employment with the Company is terminated or not renewed at the end of an
Employment Term by the Company, the Company shall prepare and execute the
Release and present the Release to Erbe for execution. Upon execution of the
Release by Erbe, the Company shall pay to Erbe as severance compensation the
amounts described in Section 5.4(b), but with Erbe's Base Salary, or Increased
Base Salary, as applicable, to continue under Section 5.4(b)(i) for one year
after termination of employment. The payments under this Section 5.7 shall be
made in lieu of the payments described in Section 5.6, which Erbe hereby agrees
to waive. In the event Erbe refuses to execute the Release (or revokes the
Release), Erbe shall receive only amounts and benefits specified in Section 5.6.

  5.8     Mitigation. Executive shall be required to mitigate the amount of any
payment or benefit provided for in Sections 5.4(b), 5.5(b) and 5.7, by seeking
other employment or otherwise there shall be offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain. The Company's obligations to make
payments under this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against Executive or others.

  6.0     Change of Control

          (a) Notwithstanding anything in this Agreement to the contrary, if it
is determined that any amount or benefit to be paid or provided under this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement by the Company to or for the benefit of Erbe would
be an "excess parachute payment," within the meaning of section 280G of the
Code, or any successor provision thereof, then the payments and benefits to be
paid or provided under this Agreement shall be reduced to the minimum extent
necessary (but in no event

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no less than zero) so that no portion of any such payment or benefit, as so
reduced, constitutes an excess parachute payment as therein defined. The fact
that Erbe's right to payments or benefits may be reduced by reason of the
limitations contained in this Section 6, shall not of itself limit or otherwise
affect any other rights of Erbe other than pursuant to this Agreement.

           (b) All determinations to be made under this Section 6 shall be made
by the Company's independent public accounting firm as in effect immediately
prior to the Change of Control (the "Accounting Firm"), which firm shall provide
its determinations and any supporting calculations to the Company and Chief
Executive Officer within 10 business days of the event that gives rise to the
"excess parachute payment." Any such determination by the Accounting Firm shall
be binding upon the Company and Erbe. Erbe shall in his sole discretion
determine which and how much of the payments or benefits shall be eliminated or
reduced consistent with the requirements of this Section 6. Within five days
after Erbe's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to or for the benefit of Erbe such
amounts as are then due to Erbe under this Agreement. In the event that Erbe
fails to make such designation within 20 business days of his notice that such
payments or benefits must be eliminated or reduced to comply with this Section 6
of the Agreement, the Company may effect such reduction in any manner it deems
appropriate

               (i) Within two years after the event that gives rise to the
"excess parachute payment," the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph. If the Accounting Firm
determines that any payments will have been made by the Company which should not
have been made ("Overpayment"), consistent with the calculations required to be
made hereunder, any such Overpayment shall be treated for all purposes as a loan
to Erbe which Erbe shall repay to the Company, together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code (the
"Federal Rate"). In the event that the Accounting Firm determines that
additional payments which have not been made by the Company could have been made
("Underpayment"), consistent with the calculations required to be made
hereunder, any such Underpayment shall be promptly paid by the Company to or for
the benefit of Erbe, together with interest at the Federal Rate.

               (ii) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (b)(i) above
shall be borne solely by the Company.

               (iii) The limitations of this Section 6(b) shall only apply if
payments under this Agreement are subject to Section 280G at the time of the
Change of Control. If payments under this Agreement would not be subject to
Section 280G if the shareholders of the Company approved the payments, the
Company shall use its best efforts to procure the necessary shareholder approval
of the payments in a timely manner. If the shareholders approve the payments so
that Section 280G does not apply, the Company shall make payments under this
Agreement without regard to this Section 6(b).

           (c) A "Change of Control" shall be deemed to have occurred if the
event set forth

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in any one of the following paragraphs shall have occurred:

           (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act other than a person who is a shareholder of the Company as of
the effective date of this Agreement) is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the then outstanding securities of the Company, as determined by the
Board of Directors of the Company; or

           (ii) The shareholders of the Company approve (or, if shareholder
approval is not required, the Board approves) an agreement providing for (i) the
merger, consolidation or other form of business combination of the Company, or
any direct or indirect subsidiary of the Company, with another corporation and
the shareholders of the Company, immediately prior to such transaction, will not
beneficially own, immediately after such transaction, shares of the Company or
the surviving entity or any parent thereof, entitling the shareholders of the
Company to vote more than 50% of all shares of the Company, or the surviving
entity or any parent thereof which would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of all
or substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company; or

           (iii) Individuals who are Continuing Directors cease to constitute a
majority of the members of the Board ("Continuing Directors" for this purpose
being the members of the Board on the date of adoption of this Agreement,
provided that any person becoming a member of the Board subsequent to such date
whose election or nomination for election was supported by two-thirds of the
Directors who then comprised the Continuing Directors shall be considered to be
a Continuing Director).

    7.0    Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of Erbe's employment and the Employment
Term to the extent necessary to the intended preservation of such rights and
obligations.

    8.0    Settlement of Disputes; Arbitration; Expenses. All claims by Erbe
for benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to Erbe in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Board shall afford a reasonable opportunity for a
review of the decision denying a claim and shall further allow to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that Erbe's claim has been denied. Any further dispute under the
provisions of this Agreement (other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction) shall be settled by
arbitration in the City of Philadelphia, Pennsylvania in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Erbe, respectively, and the third of
whom shall be selected by the other

                                       10

<PAGE>

two arbitrators. Any award entered by the arbitrators shall be final, binding
and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. The Company shall be responsible
for all of the fees of the American Arbitration Association and the arbitrators
and any expenses relating to the conduct of the arbitration as well as Erbe's
reasonable legal fees and expenses. The arbitrators shall, in any other event,
determine who shall pay Erbe's legal fees and expenses.

   9.0     No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
shall preclude the assumption of such rights by executors, administrators or
other legal representatives of Erbe or his estate and their assigning any rights
hereunder to the person or persons entitled thereto.

   10.0    Source of Payment. All payments provided for under this Agreement
shall be paid in cash from the general funds of the Company. The Company shall
not be required to establish a special or separate fund or other segregation of
assets to assure such payments, and, if the Company shall make any investments
to aid it in meeting its obligations hereunder, Erbe shall have no right, title
or interest whatever in or to any such investments except as may otherwise be
expressly provided in a separate written instrument relating to such
investments. Nothing contained in this Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind,
or a fiduciary relationship, between the Company and Erbe or any other person.
To the extent that any person acquires a right to receive payments from the
Company hereunder, such right, without prejudice to rights which employees may
have, shall be no greater than the right of an unsecured creditor of the
Company.

   11.0    Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

           If to the Company, to:

                     Orthovita, Inc.
                     45 Great Valley Parkway
                     Malvern, PA 19355
                     Att: David S. Joseph, Chairman

           If to Erbe, to:

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<PAGE>

                    Mr. Erik M. Erbe
                    1247 Berwyn Paoli Road
                    Berwyn, PA 19312

or to such other names or addresses as the Company or Erbe, as the case may be,
shall designate by notice to each other person entitled to receive notices in
the manner specified in this Section.

   12.0    Contents of Agreement; Amendment and Assignment.

           (a) This Agreement supersedes all prior agreements, including the
Payment in the Event of Your Termination of Employment on a Change of Control of
Orthovita, Inc. Agreement dated May 29, 2001 and the Confidentiality and
Non-Disclosure Agreement dated July 5, 1995, and sets forth the entire
understanding between the parties hereto with respect to the employment of Erbe
by the Company and cannot be changed, modified, extended or terminated except as
provided herein or upon written amendment approved by the Company and executed
on its behalf by a duly authorized officer and by Erbe. This Agreement does not
amend or modify the provisions of any Plans or Incentive Programs in which Erbe
participates or is eligible to participate except as set forth in Sections 1.6
and 5.4(b)(iii) and (v) hereof.

           (b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Erbe
hereunder are of a personal nature and shall not be assignable or delegatable in
whole or in part by Erbe. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to Erbe, expressly to assume and
agree to perform this Agreement in the same manner and to the extent the Company
would be required to perform if no such succession had taken place.

   13.0    Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.

   14.0    Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such

                                       12

<PAGE>

right, remedy or power may be exercised by such party from time to time and as
often as may be deemed expedient or necessary by such party in its sole
discretion.

   15.0    Beneficiaries/References. Erbe shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Erbe's death by giving the Company written notice thereof. In the event of
Erbe's death or a judicial determination of his incompetence, references in this
Agreement to Erbe shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.

   16.0    Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

   17.0    Withholding.  The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Erbe shall bear
all expense of, and be solely responsible for, all federal, state and local
taxes due with respect to any payment received hereunder except as otherwise
provided with respect to his restricted stock award.

   18.0    Governing Law.  This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

   IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

ORTHOVITA, INC.

By:      /s/ David S. Joseph                   /s/ Erik M. Erbe
         --------------------                  -----------------
         Authorized Signature                  Erik M. Erbe
         David S. Joseph                       Chief Scientific Officer
         Chairman of the
         Board of Directors

                                       13



<PAGE>

                                                                         Annex 1

                    Separation Agreement and General Release

This Separation Agreement and General Release (Agreement) is made by and between
Erik M. Erbe (EMPLOYEE) and ORTHOVITA, Inc. (ORTHOVITA) effective this ____ day
of _______, 200_.

EMPLOYEE and ORTHOVITA agree to the following terms in full and final settlement
of all matters relating to or arising out of EMPLOYEE's employment and
separation from employment with ORTHOVITA:

1.         EMPLOYEE's employment with ORTHOVITA shall end as of __________,
           200_.  ORTHOVITA shall have no obligation, contractual or otherwise,
           to hire, re-hire or re-employ him in the future.

2.         It is agreed that for the promises made herein, EMPLOYEE will receive
           the following considerations:

           a.   Continue EMPLOYEE's semi-monthly salary of $___________, minus
           all payroll deductions required by law or authorized by EMPLOYEE
           through the ____ day of __________, 200_.

           b.   Orthovita, Inc will continue your medical benefits thru _______,
           200_. After this period, EMPLOYEE may, upon notice to ORTHOVITA,
           elect to continue medical coverage under the provisions of COBRA for
           an additional 18 months by paying the applicable premium.

           c.   Except as set forth herein, it is expressly agreed and
           understood that ORTHOVITA does not have, and will not have, any
           obligation to provide EMPLOYEE at any time in the future with any
           payments, benefits or considerations other than those recited in
           paragraphs 2(a) through 2(b) above, other than any vested benefits to
           which EMPLOYEE may be entitled under the terms of ORTHOVITA's 401(k)
           Plan.

           3. Except for the rights created by this agreement, EMPLOYEE and his
successors, assigns, heirs and legal representatives, hereby releases, acquits
and forever discharges ORTHOVITA and its representatives, parent and subsidiary
corporations (as the case may be), predecessors, successors, affiliates,
officers, agents, assigns, employees and attorneys, releasing them from any and
all claims, rights, expenses, debts, demands, costs, contracts, liabilities,
obligations, actions, and causes of action of every nature, known or unknown,
whether in law or in equity, which he had, now has, or may have which are in any
way connected with, or arise out of, any cause whatsoever, from the beginning of
time to the date of this Agreement, including, but not limited to, any and all
matters relating to EMPLOYEE's employment with ORTHOVITA. EMPLOYEE specifically
releases and discharges, but not by way of limitation, any obligation, claim,
demand or cause of action based on, or arising out of, any alleged wrongful
termination, breach of employment contract, breach of implied covenant of good
faith and fair dealing, defamation, intentional or negligent infliction of
emotional

                                       14

<PAGE>

     distress. EMPLOYEE also releases and discharges any and all claims, rights
     and/or remedies under Title VII of the Civil Rights Act of 1964, as
     amended, 42 U.S.C. (S)2000e et seq, the Employment Retirement Income
     Security Act of 1974 as amended, 29 U.S.C. (S)1001 et seq, the Pennsylvania
     Human Relations Act, as amended, 43 P.S.951 et seq, the Age Discrimination
     in Employment Act of 1967 as amended, 29 U.S.C. (S)621 et seq, the American
     with Disabilities Act, 42 U.S.C. (S)12101 et seq, the Family and Medical
     Leave Act, 29 U.S.C. (S)2601 et seq, any other federal, state or local
     statute or regulation which relates to his employment or its termination as
     well as all claims for counsel fees or costs.

4.   EMPLOYEE agrees not to disclose, or discuss with, any person (other than
     his spouse, attorney and tax or other financial advisor) any of the terms
     and conditions of this Agreement, except as may be required by law or
     regulations, and except as may be required to effectuate the terms of this
     Agreement. Disclosure of any terms of this Agreement will constitute a
     material breach of the Agreement.

5.   EMPLOYEE understands and agrees that in the course of employment with
     ORTHOVITA, he may have acquired confidential information and Trade Secrets
     concerning Orthovita business, its future plans and its methods of doing
     business, including, without limitation, proprietary information about its
     products, services, product development, customers, technology, financial
     circumstances, marketing, pricing, costs, compensation and other matters
     (hereinafter collectively called "Trade Secrets"). EMPLOYEE may not reveal
     or disclose, sell, use, lecture upon, or publish any such Trade Secrets, or
     authorize anyone else to do so at any time subsequent to his employment
     with ORTHOVITA. All ORTHOVITA documents, files, lists and other information
     of a business nature, whether in hard copy or machine readable form, will
     be returned to ORTHOVITA by EMPLOYEE forthwith, and any future use of same
     by EMPLOYEE is prohibited.

6.   Neither the negotiation, undertaking or signing of this Separation
     Agreement and General Release constitutes or operates as an acknowledgment
     of admission that ORTHOVITA, or any person acting on behalf of ORTHOVITA,
     has violated or failed to comply with any provisions of federal or state
     constitution, statute, law, regulation, municipal ordinance, or principle
     of common law. This agreement is made voluntarily to provide an amicable
     conclusion to his employment relationship with Orthovita.

7.   This Agreement is the only and complete agreement between EMPLOYEE and
     ORTHOVITA on or in any way relating to the subject matter hereof. No
     statements, promises, or representations have been made by either party to
     the other and no consideration has been or is offered, promised or expected
     other than that already received or described in this Agreement.

8.   EMPLOYEE represents that he has been advised by ORTHOVITA, through this
     document, that he should discuss this Agreement with an attorney of his own
     choosing at his own cost, and that he has carefully read and fully
     understands all its terms and effects. EMPLOYEE further represents that his
     decision to execute this Agreement is entirely voluntary and knowing and
     without any pressure, coercion or undue influence by ORTHOVITA and in

                                       15

<PAGE>

     exchange for the consideration decided herein, which he acknowledges is
     adequate and satisfactory to him and beyond that to which he would
     otherwise be entitled.

9.   This Agreement shall be governed by and interpreted and construed in
     accordance with the laws of the Commonwealth of Pennsylvania. If any
     provisions of this Agreement shall, for any reason, be adjudged by any
     court of competent jurisdiction to be invalid or unenforceable, in whole or
     in part, such judgment shall not affect, impair or invalidate the remainder
     of this agreement. The employee agrees not to speak negatively of any
     product or service or officer, director, employee or former employee of
     Orthovita with respect to past or future issues.

IN WITNESS WHEREOF, and intended to be legally bound hereby, the parties have
executed the foregoing Separation Agreement and General Release.

Dated: _______________________________      ____________________________________
                                                        Erik M. Erbe
Witness: _____________________________

ORTHOVITA, Inc.

Dated: _______________________________      By: ________________________________
                                                     David S. Joseph
                                                     Chairman

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