8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 3, 2011

ORTHOVITA, INC.

(Exact Name of Registrant Specified in Charter)

Pennsylvania	0-24517	23-2694857
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
77 Great Valley Parkway Malvern, Pennsylvania		19355
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone, including area code: (610) 640-1775

Not applicable.

(Former Name and Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Compensation for Principal Executive, Principal Financial and Named Executive Officers

On March 2, 2011, the Compensation Committee of the Board of Directors of the Registrant recommended to the independent members of the Board of Directors the year-end stock option award grant to the Registrant’s President and Chief Executive Officer for 2010 performance, and approved the year-end stock option award grants for 2010 performance to each of the Registrant’s other executive officers with an effective grant date of March 3, 2011. Based on the Compensation Committee’s recommendations, on March 3, 2011, the independent members of the Board of Directors approved the year-end stock option award to the Registrant’s President and Chief Executive Officer. The options were granted under the Registrant’s 2007 Omnibus Equity Compensation Plan on March 3, 2011, have a ten-year term and per share exercise price of $2.40, and are described in the table below:

	Performance-Based  Awards1		Service-Based  Awards2
Executive Officer	# of Shares of Common Stock Underlying Options Granted		# of Shares of Common Stock Underlying Options Granted
Antony Koblish		250,000		250,000
Nancy Broadbent		104,100		104,100
Christopher Smith		100,000		100,000
Maarten Persenaire		105,200		105,200

1 If the Registrant achieves predetermined levels of both product sales revenue and operating income for the year ending December 31, 2011, the performance-based stock options will vest in equal one-third installments on the last calendar day of 2012, 2013 and 2014. The description of the performance-based stock options is qualified in its entirety by reference to the full text of the performance-based stock option agreement, which is attached as an exhibit to this report on Form 8-K.

2 All service-based stock options granted to executive officers for 2010 annual performance vest 25% on an annual basis over a four year period commencing on March 3, 2012, the first anniversary of the date of grant.

Although the Registrant’s executive officers were entitled to a nominal bonus under the Registrant’s Annual Target Performance Bonus program, as a result of the Registrant’s operating performance for 2010, the Compensation Committee exercised its discretion to determine that no bonus would be awarded to any executive officer for 2010 performance under that program, and recommended to the independent members of the Board of Directors that no bonus be awarded to the President and Chief Executive Officer. Based on the Compensation Committee’s recommendations, the Board of Directors determined that the Registrant’s President and Chief Executive Officer would not be awarded a bonus under the Annual Target Performance Bonus program for 2010 performance. In addition, no salary increase for 2011 was approved for any executive officer.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description of Document
10.1	Form of Performance Stock Option

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ORTHOVITA, INC.
By:	/s/ Christine J. Arasin
	Vice President and General Counsel

Dated: March 8, 2011

EX-10.1

Exhibit 10.1

ORTHOVITA, INC.

2007 OMNIBUS EQUITY COMPENSATION PLAN

FORM OF PERFORMANCE INCENTIVE STOCK OPTION GRANT

This STOCK OPTION GRANT, dated as of [GRANT DATE] (the “Date of Grant”), is delivered by Orthovita, Inc. (the “Company”) to [EMPLOYEE NAME] (the “Grantee”), an employee of the Company.

RECITALS

The Orthovita, Inc. 2007 Omnibus Equity Compensation Plan (as amended and restated, the “Plan”) provides for the grant of options to purchase shares of common stock of the Company. In accordance with its stock option grant policy and the Plan, the Company has decided to make a stock option grant to promote the best interests of the Company and its shareholders.

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

1. Grant of Option.

(a) Subject to the terms and conditions set forth in this Agreement and in the Plan, the Company hereby grants to the Grantee an incentive stock option (the “Option”) to purchase [# of shares granted] shares of common stock of the Company (“Shares”) at an exercise price of [EXERCISE PRICE] per Share. The Option shall become exercisable according to Paragraph 2 below.

(b) The Option is designated as an incentive stock option, as described in Paragraph 5 below. However, if and to the extent the Option exceeds the limits for an incentive stock option, as described in Paragraph 5, the Option shall be a nonqualified stock option.

2. Exercisability of Option.

(a) Notwithstanding the terms of Section 2(b) of this Agreement, the Option shall not become exercisable unless and until the following performance occur, and such occurrence is documented by the Company and acknowledged by the Committee (as defined below):

(i) [PERFORMANCE CRITERION 1]; and

(ii) [PERFORMANCE CRITERION 2].

(b) Subject to the terms and conditions set forth in Section 2(a) of this Agreement, the Option shall become exercisable on the following dates, if the Grantee is employed by, or providing service to, the Company on the applicable date:

Date Shares for Which the Option is Exercisable

The exercisability of the Option is cumulative, but shall not exceed 100% of the Shares subject to the Option. If the foregoing schedule would produce fractional Shares, the number of Shares for which the Option becomes exercisable shall be rounded down to the nearest whole Share. For purposes of this Agreement, employment with the Company shall mean employment as an employee of the Company or a subsidiary.

3. Term of Option.

(a) The Option shall have a term of ten years from the Date of Grant and shall terminate at the expiration of that period unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.

(b) The Option shall automatically terminate upon the happening of the first of the following events:

(i) The expiration of the 90-day period after the Grantee’s termination of employment with the Company, if the termination is for any reason other than disability (as defined in the Plan), death or cause (as defined in the Plan);

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(ii) The expiration of the one-year period after the Grantee’s termination of employment from the Company on account of the Grantee’s disability (as defined in the Plan);

(iii) The expiration of the one-year period after the Grantee’s termination of employment, if the Grantee dies while employed by the Company or within 90 days after the Grantee ceases to be so employed on account of a termination of employment described in subparagraph (i) above; or

(iv) The date on which the Grantee’s employment is terminated for cause (as defined in the Plan).

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately before the tenth anniversary of the Date of Grant. Any portion of the Option that is not exercisable at the time the Grantee ceases to be employed by the Company shall immediately terminate.

4. Exercise Procedures.

(a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised and the method of payment. Payment of the exercise price shall be made in accordance with procedures established by the Board of Directors of the Company (the “Board”) or Compensation Committee of the Board (the “Committee”) from time to time based on type of payment being made but, in any event, prior to issuance of the shares. The Grantee shall pay the exercise price (i) in cash, (ii) with the approval of the Board or Committee, by delivering Shares of the Company owned by the Grantee (including Company Shares acquired in connection with the exercise of an Option, subject to such restrictions as the Board or Committee deems appropriate) and having a fair market value on the date of exercise equal to the exercise price, (iii) through a broker-assisted exercise as described below, (iv) through any combination of the foregoing, or (v) through such other method as the Board or Committee may approve, to the extent permitted by applicable law. For a broker-assisted exercise, the Grantee shall deliver to the Company a notice of exercise, in accordance with procedures permitted by Regulation T of the Federal Reserve Board, instructing the Company to deliver shares of Company stock due upon the exercise of the Option to any registered broker or dealer designated by the Board in lieu of delivery to the Grantee, and such instructions shall designate the account into which the shares are to be deposited. The Board or Committee may impose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise the Option.

(b) The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. The Company may require that the Grantee (or other person exercising the Option after the Grantee’s death) represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Committee deems appropriate.

(c) All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable. The Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities, subject to prior approval of the Committee.

5. Designation as Incentive Stock Option.

(a) This Option is designated an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). If the aggregate fair market value of the stock on the date of the grant with respect to which incentive stock options are exercisable for the first time by the Grantee during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a nonqualified stock option that does not meet the requirements of Section 422 of the Code. If and to the extent that the Option fails to qualify as an incentive stock option under the Code, the Option shall remain outstanding according to its terms as a nonqualified stock option.

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(b) The Grantee understands that favorable incentive stock option tax treatment is available only if the Option is exercised while the Grantee is an employee of the Company or a parent or subsidiary of the Company or within a period of time specified in the Code after the Grantee ceases to be an employee. The Grantee understands that the Grantee is responsible for the income tax consequences of the Option, and, among other tax consequences, the Grantee understands that he or she may be subject to the alternative minimum tax under the Code in the year in which the Option is exercised. The Grantee will consult with his or her tax adviser regarding the tax consequences of the Option.

6. Change of Control. The provisions of the Plan applicable to a Change of Control shall apply to the Option, and, in the event of a Change of Control, the Committee may take such actions as it deems appropriate pursuant to the Plan.

7. Restrictions on Exercise. Only the Grantee may exercise the Option during the Grantee’s lifetime. After the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of the Option are subject to the provisions of the Plan and to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Shares, (iii) capital or other changes of the Company and (iv) other requirements of applicable law. The Committee shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

9. No Employment Rights. The grant of the Option shall not confer upon the Grantee any right to continue in the employ of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment at any time. The right of the Company to terminate at will the Grantee’s employment at any time for any reason is specifically reserved.

10. No Shareholder Rights. Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a shareholder with respect to the Shares subject to the Option, until certificates for Shares have been issued upon the exercise of the Option.

11. Assignment and Transfers. The rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

12. Applicable Law. The validity, construction, interpretation and effect of this instrument shall be governed by and determined in accordance with the laws of the Commonwealth of Pennsylvania without regard to principles of conflict of laws.

13. Notice. Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the Controller at 77 Great Valley Parkway, Malvern, PA 19355, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

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IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

Attest:	ORTHOVITA, INC.
	By:

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement. I hereby further agree that all the decisions and determinations of the Board or Committee shall be final and binding.

Grantee:

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