SUBSIDIARY GUARANTY AGREEMENT

Exhibit 10.12

EXECUTION COPY

SUBSIDIARY GUARANTY AGREEMENT

dated as of July 30, 2007

among

VITA LICENSING, INC.,

ORTHOVITA INTERNATIONAL SERVICES, INC.,

PARTISYN CORP.,

VITA SPECIAL PURPOSE CORP.,

as Guarantors

and

LB I GROUP INC.,

as Collateral Agent

Table of Contents

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SUBSIDIARY GUARANTY AGREEMENT

Dated as of July 30, 2007

In consideration of (i) the execution and delivery of the Senior Secured Note and Warrant Purchase Agreement, dated as of July 30, 2007 (the “ Note Purchase Agreement ”), by and among Orthovita, Inc., a Pennsylvania corporation (the “ Company ”), the financial institutions and other institutional lenders listed on the signature pages thereof (the “ Purchasers ”), and LB I Group Inc., a Delaware corporation, as Collateral Agent and (ii) the purchase of, and making the Loans under, each 10% Senior Secured Promissory Note, executed by the Company in favor of each Purchaser, each of, Vita Licensing, Inc., a Delaware corporation and Wholly-owned Subsidiary of the Company, Orthovita International Services, Inc., a Pennsylvania corporation and a Wholly-owned Subsidiary of the Company, Partisyn Corp., a Delaware corporation and a Wholly-owned Subsidiary of the Company, and Vita Special Purpose Corp., a Delaware corporation and an indirect Subsidiary of the Company (each a “ Guarantor ” and collectively the “ Guarantors ”), hereby agree with LB I GROUP INC., as Collateral Agent, acting both on its own behalf as the Collateral Agent and as the agent for the Guaranteed Parties, as follows (with certain terms used herein being defined in Article 4 ):

ARTICLE 1

GUARANTY

Section 1.01 Guaranty of Payment and Performance . Each Guarantor hereby (a) guarantees to each Guaranteed Party the due and punctual payment, observance and performance of all Guaranteed Obligations in accordance with their respective terms and when and as due (whether at maturity, by reason of acceleration or otherwise), or deemed to be due pursuant to Section 1.03 , and (b) agrees so to pay, observe or perform the same when so due, or deemed to be due, upon written demand by the Collateral Agent or any Guaranteed Party.

Section 1.02 Limitation on Guaranty . It is the intention of the Guarantors and the Guaranteed Parties that the obligations of each Guarantor under the Guarantor Related Documents shall be in, but not in excess of, the maximum amount permitted by Applicable Law. To that end, but only to the extent such obligations would otherwise be void, voidable or otherwise unenforceable, the obligations of each Guarantor hereunder shall be limited to the maximum amount that would not make such obligations void, voidable or otherwise unenforceable. Any such limitation shall be apportioned amongst the Guaranteed Obligations of the Guaranteed Parties pro rata in accordance with their respective amounts thereof. This Section 1.02 is intended solely to preserve the rights of the Guaranteed Parties under the Guarantor Related Documents to the maximum extent permitted by Applicable Law, and neither a Guarantor nor any other Person shall have any right under this Section 1.02 that it would not otherwise have under Applicable Law.

Section 1.03 Continuance and Acceleration of Guaranteed Obligations upon Certain Events . If:

(a) any Event of Default that the Note Purchase Agreement states is to result in the automatic acceleration of any Guaranteed Obligations shall occur;

(b) any injunction, stay or the like that enjoins any acceleration, or demand for the payment, observance or performance of any Guaranteed Obligations that would otherwise be required or permitted under the Related Documents shall become effective; or

(c) any Guaranteed Obligations shall be or be determined to be or become discharged, disallowed, invalid, illegal, void or otherwise unenforceable (whether by operation of any present or future Law or by order of any court or governmental agency) against the Credit Parties (other than in accordance with the terms thereof);

then (i) such Guaranteed Obligations shall, for all purposes of the Guarantor Related Documents, be deemed (A) in the case of clause (c), to continue to be outstanding and in full force and effect notwithstanding the unenforceability thereof against the Credit Parties and (B) if such is not already the case, to have thereupon become immediately due and payable and to have commenced bearing interest at the Default Rate and (ii) the Guaranteed Parties to which such Guaranteed Obligations are owing may, with respect to such Guaranteed Obligations, exercise all of the rights and remedies under the Guarantor Related Documents that would be available to them during an Event of Default.

Section 1.04 Recovered Payments . The Guaranteed Obligations shall be deemed not to have been paid, observed or performed, and each Guarantor’s obligations under the Guarantor Related Documents in respect thereof shall continue and not be discharged, to the extent that any payment, observance or performance thereof by the Company or any other guarantor, or out of the proceeds of any Collateral, is recovered from or paid over by or for the account of any Guaranteed Party for any reason, including as a preference or fraudulent transfer or by virtue of any subordination (whether present or future or contractual or otherwise) of the Guaranteed Obligations, whether such recovery or payment over is effected by any judgment, decree or order of any court or governmental agency, by any plan of reorganization or by settlement or compromise by any Guaranteed Party (whether or not consented to by the Company, any Guarantor or any other guarantor) of any claim for any such recovery or payment over. Each Guarantor hereby expressly waives the benefit of any applicable statute of limitations and agrees that it shall be liable under the Guarantor Related Documents with respect to any Guaranteed Obligation whenever such a recovery or payment over thereof occurs.

Section 1.05 Evidence of Guaranteed Obligations . Entries made in good faith in the records of each Guaranteed Party shall be prima facie evidence of the Guaranteed Obligations owing to it and of all payments, observances and performances in respect thereof absent manifest error.

Section 1.06 Binding Nature of Certain Adjudications . Each Guarantor shall be conclusively bound by the adjudication in any action or proceeding, legal or otherwise, involving any controversy arising under, in connection with, or in any way related to, any of the Guaranteed Obligations, and by a judgment, award or decree entered therein.

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Section 1.07 Nature of Guarantors’ Obligations . Each Guarantor’s obligations under this Agreement (a) are absolute and unconditional, (b) are unlimited in amount except as provided in Section 1.02 , (c) constitute a guaranty of payment and performance and not a guaranty of collection, (d) are as primary obligor and not as a surety only, (e) shall be a continuing guaranty of all present and future Guaranteed Obligations and all promissory notes and other documentation given in extension or renewal or substitution for any of the Guaranteed Obligations and (f) shall be irrevocable.

Section 1.08 No Release of Guarantors . THE GUARANTEED OBLIGATIONS OF EACH GUARANTOR UNDER THIS AGREEMENT SHALL NOT BE REDUCED, LIMITED OR TERMINATED, NOR SHALL ANY GUARANTOR BE DISCHARGED FROM SUCH GUARANTEED OBLIGATIONS, FOR ANY REASON WHATSOEVER (other than, subject to Section 1.04 and Section 1.12 , the payment, observance and performance of the Guaranteed Obligations), including (and whether or not the same shall have occurred or failed to occur once or more than once and whether or not such Guarantor shall have received notice thereof):

(a)(i) any increase in the principal amount of, or interest rate applicable to, (ii) any extension of the time of payment, observance or performance of, (iii) any other amendment or modification of any of the other terms and provisions of, (iv) any release, composition or settlement (whether by way of acceptance of a plan of reorganization or otherwise) of, (v) any subordination (whether present or future or contractual or otherwise) of, or (vi) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of, the Guaranteed Obligations;

(b)(i) any failure to obtain, (ii) any release, composition or settlement of, (iii) any amendment or modification of any of the terms and provisions of, (iv) any subordination of, or (v) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of, any other guaranties of the Guaranteed Obligations;

(c)(i) any failure to obtain or any release of, (ii) any failure to protect or preserve, (iii) any release, compromise, settlement or extension of the time of payment of any obligations constituting, (iv) any failure to perfect or maintain the perfection or priority of any Lien upon, (v) any subordination of any Lien upon, or (vi) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of any Lien or intended Lien upon, any Collateral now or hereafter securing the Guaranteed Obligations or any other guaranties thereof;

(d) any termination of or change in any relationship between any Guarantor and the other Credit Parties, including any such termination or change resulting from a change in the ownership of such Guarantor or the other Credit Parties or from the cessation of any commercial relationship between such Guarantor and the other Credit Parties;

(e) any exercise of, or any election not or failure to exercise, delay in the exercise of, waiver of, or forbearance or other indulgence with respect to, any right, remedy or power available to the Guaranteed Parties, including (i) any election not or failure to exercise any right of setoff, recoupment or counterclaim, (ii) any election of remedies effected by the Guaranteed Parties, including the foreclosure upon any real estate constituting Collateral, whether or not such election affects the right to obtain a deficiency judgment, and (iii) any election by the Guaranteed Parties in any proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) of such Code; and

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(f) ANY OTHER ACT OR FAILURE TO ACT OR ANY OTHER EVENT OR CIRCUMSTANCE THAT (i) VARIES THE RISK OF ANY GUARANTOR UNDER THIS AGREEMENT OR (ii) BUT FOR THE PROVISIONS HEREOF, WOULD, AS A MATTER OF STATUTE OR RULE OF LAW OR EQUITY, OPERATE TO REDUCE, LIMIT OR TERMINATE THE OBLIGATIONS OF ANY GUARANTOR THEREUNDER OR DISCHARGE SUCH GUARANTOR FROM ANY THEREOF.

Section 1.09 Certain Waivers . Each Guarantor waives:

(a) any requirement, and any right to require, that any right or power be exercised or any action be taken against the Company, any other Guarantor or any Collateral for the Guaranteed Obligations;

(b) all defenses to, and all setoffs, counterclaims and claims of recoupment against, the Guaranteed Obligations that may at any time be available to the Company or any other Guarantor;

(c)(i) notice of acceptance of and intention to rely on the Guarantor Related Documents, (ii) notice of the issuance of any Notes, the making or renewal of any Loans under the Note Purchase Agreement and of the incurrence or renewal of any other Guaranteed Obligations, (iii) notice of any of the matters referred to in Section 1.08 and (iv) all other notices that may be required by Applicable Law or otherwise to preserve any rights against the Guarantors under this Agreement, including any notice of default, demand, dishonor, presentment and protest;

(d) diligence;

(e) any defense based upon, arising out of or in any way related to (i) any claim that any sale or other disposition of any Collateral for the Guaranteed Obligations was not conducted in a commercially reasonable fashion or that a public sale, should the Guaranteed Parties have elected to so proceed, was, in and of itself, not a commercially reasonable method of sale, (ii) any claim that any election of remedies by the Guaranteed Parties, including the exercise by the Guaranteed Parties of any rights against any Collateral, impaired, reduced, released or otherwise extinguished any right that a Guarantor might otherwise have had against the Company or any other guarantor or against any Collateral, including any right of subrogation, exoneration, reimbursement or contribution or right to obtain a deficiency judgment, (iii) any claim based upon, arising out of or in any way related to any of the matters referred to in Section 1.08 and (iv) any claim that the Guarantor Related Documents should be strictly construed against the Guaranteed Parties; and

(f) ALL OTHER DEFENSES UNDER APPLICABLE LAW THAT WOULD, BUT FOR THIS CLAUSE (f), BE AVAILABLE TO ANY GUARANTOR AS A DEFENSE AGAINST OR A REDUCTION OR LIMITATION OF ITS OBLIGATIONS UNDER THIS AGREEMENT.

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Section 1.10 Independent Credit Evaluation . Each Guarantor has independently, and without reliance on any information supplied by the Guaranteed Parties, taken, and will continue to take, whatever steps it deems necessary to evaluate the financial condition and affairs of the Credit Parties, and the Guaranteed Parties shall have no duty to advise the Guarantors of information at any time known to them regarding such financial condition or affairs.

Section 1.11 Release and Subordination of Rights Against the Company, Other Guarantors and Collateral . (a) All rights that any Guarantor may at any time have against the Company, any other Credit Party or any Collateral for the Guaranteed Obligations (including rights of subrogation, exoneration, reimbursement and contribution and whether arising under Applicable Law or otherwise), and all obligations that the Company or any other Credit Party may at any time have to such Guarantor, arising by virtue of such Guarantor’s obligations under such Guarantor’s Related Documents, any payment made pursuant thereto or the exercise by the Guaranteed Parties of their rights with respect to the Collateral are hereby expressly subordinated to the prior payment, observance and performance in full of the Guaranteed Obligations. Each Guarantor hereby agrees not to enforce any of the rights, or attempt to obtain payment or performance of any of the obligations, subordinated pursuant to this Section 1.11 until the Guaranteed Obligations have been paid, observed and performed in full, except that such prohibition shall not apply to routine acts, such as the giving of notices and the filing of continuation statements, necessary to preserve any such rights. If any amount shall be paid to or recovered by any Guarantor (whether directly or by way of setoff, recoupment or counterclaim) on account of any right or obligation subordinated pursuant to this Section 1.11, such amount shall be held in trust by such Guarantor for the benefit of the Guaranteed Parties, not commingled with any of such Guarantor’s other funds and forthwith paid over to the Collateral Agent, in the exact form received, together with any necessary endorsements, to be applied and credited against, or held as security for, the Guaranteed Obligations and the obligations of such Guarantor under the Guarantor Related Documents.

(b) Each Guarantor hereby agrees not to assert or enforce (whether by or in a legal or equitable proceeding or otherwise) any, “claims” (as defined in Section 101(4) of the Bankruptcy Code) against the Company and any other Credit Party prior to the payment in full of all Guaranteed Obligations, whether arising under Applicable Law or otherwise, to which such Guarantor is or would at any time be entitled, including any such claims to which such Guarantor may be entitled as a result of any right of subrogation, exoneration or reimbursement, provided , that the foregoing shall not prohibit any Guarantor from receiving, so long as no Event of Default is continuing, regularly scheduled payments from the Company or any other Credit Party in respect of any debts, liabilities or other Obligations owed to such Guarantor by the Company or such other Credit Party arising other than as a result of this Agreement or any payment made hereunder by any Guarantor.

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Section 1.12 Payments by the Guarantors . (a)  Time, Place and Manner . All payments due to any Guaranteed Party under this Agreement shall be made to the Collateral Agent at the Collateral Agent’s Office and distributed in accordance with Section12 of the Note Purchase Agreement.

(b) No Reductions . All payments due any Guaranteed Party under the Guarantor Related Documents shall be made by the Guarantors thereunder without any reduction or deduction whatsoever, including any reduction or deduction for any set-off, recoupment, counterclaim (whether, in any case, in respect of an obligation owed by such Guaranteed Party to the Guarantors, the Company or any other guarantor and, in the case of a counterclaim, whether sounding in tort, contract or otherwise) or Tax, except for any withholding or deduction for Taxes required to be withheld or deducted under Applicable Law.

(c) Indemnified Taxes . (i) If any Indemnified Tax is required to be withheld or deducted from, or is otherwise payable by the Guarantors in connection with, any payment to any Guaranteed Party under the Guarantor Related Documents, each Guarantor (A) shall, if required, withhold or deduct the amount of such Indemnified Tax from such payment and, in any case, pay such Indemnified Tax to the appropriate taxing authority in accordance with Applicable Law and (B) shall pay to such Guaranteed Party such additional amounts as may be necessary so that the net amount received by such Guaranteed Party with respect to such payment, after withholding or deducting all Indemnified Taxes required to be withheld or deducted, is equal to the full amount payable under the Guarantor Related Documents. If any Indemnified Tax is withheld or deducted from, or is otherwise payable by the Guarantors in connection with, any payment payable to any Guaranteed Party under the Guarantor Related Documents, each Guarantor shall, as soon as possible after the date of such payment, furnish to such Guaranteed Party the original or a certified copy of a receipt for such Indemnified Tax from the applicable taxing authority. If any payment due to any Guaranteed Party under the Guarantor Related Documents is or is expected to be made without withholding or deducting therefrom, or otherwise paying in connection therewith, any Indemnified Tax payable to any taxing authority, each Guarantor shall, within 30 days after any request from any Guaranteed Party, furnish to such Guaranteed Party a certificate from such taxing authority, or an opinion of counsel acceptable to such Guaranteed Party, in either case stating that no Indemnified Tax payable to such taxing authority