COMMON STOCK WARRANT

ORTEC INTERNATIONAL, INC.    

 

NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO
SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE
EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii)
AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR (iii) RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED. THE WARRANT EVIDENCED HEREBY IS NON-
TRANSFERABLE.

 

Right to Purchase 1,105,100

Shares of Common Stock

 

Ortec International, Inc., a Delaware corporation (the "Company") hereby
certifies that, for value received, Cambrex Bio Science Walkersville, Inc., a
Delaware corporation ("CBSW" or a “Holder”), is entitled, on the terms set forth
below, to purchase from the Company at any time during the period commencing on
July 1, 2006 (the "Exercisability Date") and ending on the three (3) year
anniversary thereof, One Million One Hundred Five Thousand and One Hundred
(1,105,100) fully paid and nonassessable shares of the common stock, par value
$0.001 per share (the "Warrant Shares"), of the Company, at a price of $0.75 per
share, subject to adjustments as provided below (the "Purchase Price"). As used
herein, the term "Stock" shall mean the Company's presently authorized common
stock or any stock into or for which such common stock may hereafter be
converted or exchanged prior to or concurrent with the exercise of this Warrant.

 

1.

Exercise of Warrant.

 

 

(a)

Exercisability of the Warrant. This Warrant will become exercisable on the
Exercisability Date.

 

 

 

(b)

Full Exercise. This Warrant may be exercised by the Holder at any time during
the period commencing on the Exercisability Date and ending upon its expiration
for the full number of Warrant Shares by surrendering this Warrant and the
Notice of Exercise attached hereto as Exhibit A properly endorsed to the
Company's principal office, accompanied by payment in cash, by check or by wire
transfer in an amount equal to the product of the Purchase Price and the number
of Warrant Shares indicated on the face of this Warrant.

 

 

 

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(c)

Taxes. The Company will not be required to pay any tax imposed in connection
with any transfer involved in the issuance of a Warrant or a certificate for
shares of Stock in any name other than that of the original holder hereof, and
in such case, the Company will not be required to issue or deliver any stock
certificate or warrant until such tax is paid.

 

 

2.

Representations and Covenants of the Holder.

This Warrant has been issued by the Company in reliance upon the following
representations and covenants of the Holder:

 

 

(a)

Investment Purpose. The Stock issuable upon exercise of the Holder's rights
contained herein will be acquired for investment and not with a view to the sale
or distribution of any part thereof, and the holder has no present intention of
selling or engaging in any public distribution of the same except pursuant to a
registration or exemption.

 

 

 

(b)

Private Issue. The Holder understands (i) that the Stock issuable upon exercise
of this Warrant is not registered under the Act or qualified under applicable
state securities laws on the ground that the issuance contemplated by this
Warrant will be exempt from the registration and qualifications requirements
thereof, and (ii) that the Company's reliance on such exemption is predicated on
the representations set forth in this Section 2.

 

 

 

(c)

Disposition of Holder's Rights. This Warrant and all rights hereunder are
non-transferable.

 

 

The Stock issuable upon exercise of this Warrant is non-transferable, except in
accordance with the terms of this provision. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of shares of the Stock shall
terminate as to any particular share of Stock when (1) the transfer of such
security shall have been effectively registered under the Act and transferred by
the Holder thereof in accordance with such registration, or (2) such security
shall have been sold without registration in compliance with Rule 144 under the
Act or (3) a letter shall have been issued to the Holder at its request by the
staff of the Securities and Exchange Commission or a ruling shall have been
issued to the Holder at its request by such Commission stating that no action
shall be recommended by such staff or taken by such Commission, as the case may
be, if such security is transferred without registration under the Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the Stock issuable upon exercise of this Warrant may be sold
pursuant to Rule 144(k), the restrictions imposed herein shall

 

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terminate, the Holder or holder of a share of Stock issued upon exercise of this
Warrant as to which such restrictions have terminated shall be entitled to
receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Stock not bearing any
restrictive legend.

 

 

(d)

Financial Risk. The Holder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment, and has the ability to bear the economic risks of its investment.

 

 

 

(e)

Risk of No Registration. The Holder understands that if a registration statement
covering the transfer of the Stock under the Act is not in effect when it
desires to sell the Stock issuable upon exercise of this Warrant, it may be
required to hold such securities for an indefinite period. The Holder also
understands that any sale of Stock issuable upon exercise of this Warrant which
might be made by it in reliance upon Rule 144 under the Act may be made only in
accordance with the terms and conditions of that Rule.

 

 

3.

Delivery of Stock Certificates on Exercise. Promptly after the exercise of this
Warrant and the payment of the Purchase Price pursuant to Section 1 (b), the
Company will issue to the Holder or upon the order of the Holder hereof, a
certificate or certificates for the number of whole shares of Stock to which the
Holder is entitled; provided, however, that (i) the Holder shall have furnished
to the Company at the time of such exercise a signed Investment Representation
Statement substantially in the form attached hereto as Exhibit B and (ii) the
Company will place on each certificate the following legend:

 

 

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THESE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT.

 

Furthermore, the Company will place on each certificate any legend required by
any applicable state blue sky law.

 

4.

Adjustment for Dividends in Other Stock or Property; Reclassifications. The
Purchase Price and the number and type of Warrant Shares and/or other property
issuable upon exercise of this Warrant shall be appropriately and
proportionately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization, any corporate reorganization or
other similar event affecting the number or character of outstanding Warrant
Shares,

 

 

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so that the number and type of securities and/or other property issuable upon
exercise of this Warrant shall be equal to that which would have been issuable
with respect to the number of Warrant Shares subject hereto at the time of such
event, had such Warrant Shares then been outstanding.

 

5.

Certificate as to Adjustments. In each case of an adjustment in the Purchase
Price or in the shares of Stock or other stock, securities or property
receivable on the exercise of the Warrant, the Company, at its expense, will
compute such adjustment in accordance with the terms of the Warrant and prepare
a certificate setting forth such adjustment and showing in detail the facts upon
which the adjustment is based. The Company will mail a copy of each such
certificate to the Holder of the Warrant outstanding at that time.

 

 

6.

Notices of Record Date. In case (i) the Company takes a record of the holders of
its Stock (or other stock or securities at the time receivable upon the exercise
of the Warrant) for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for any purchase any shares of
stock of any class or any other securities; or (ii) of any capital
reorganization of the Company, any reclassification of the common stock of the
Company, any consolidation or merger of the Company with or into another
corporation, including, without limitation, any Merger or Consolidation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation; or (iii) of any voluntary dissolution" liquidation or winding-up on
the Company; then, in each such case: The Company will mail or cause to be
mailed to each Holder of a Warrant at the time outstanding a notice specifying,
as the case may be, (a) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and time, if any is to
be fixed as of which the holders of record of Stock (or such other stock or
securities at the time receivable upon the exercise of the Warrant) will be
entitled to exchange their shares of Stock (or such other stock or securities)
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up, and in the case of a reorganization, consolidation, merger or
conveyance, the fair market value of such securities or other property as
determined by the Board of Directors of the Company. Such notice shall be mailed
at least ten (10) days prior to the date specified therein; provided, however,
that in the event of a Merger or Consolidation the Company shall use its best
efforts to provide such notice in accordance with Section 11 below at least
twenty- one (21) days prior to the closing date of such Merger or Consolidation
and, in any event, shall provide such notice in accordance with Section 11 below
at least fifteen (15) days prior to such closing date.

 

 

 

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7.

Reservation of Stock Issuable on Exercise of Warrant. The Company will at all
times reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, all such shares of Stock and other stock, or such
other stock, securities and property as from time to time are receivable upon
the exercise of the Warrant.

 

 

8.

Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and (in
the case of loss, theft or destruction) upon delivery of an indemnity agreement
in such reasonable amount as the Company may determine, or (in the case of
mutilation) upon surrender and cancellation thereof, the Company at its expense,
will issue a replacement warrant in substantially identical form to this
Warrant.

 

 

9.

Registration. (a) If CBSW exercises this Warrant and purchases Warrant Shares
hereunder (“Registrable Securities”), the Company shall use its best efforts to
notify CBSW in writing at least 20 days before filing any registration statement
under the Act for purposes of effecting an underwritten public offering by the
Company of securities of the Company (excluding registration statements relating
to any employee benefit plan or a corporate merger, acquisition or
reorganization) and will afford CBSW an opportunity to include in such
registration statement all or any part of the Registrable Securities then held
by CBSW. CBSW desiring to include in any such registration statement all or any
part of the Registrable Securities held by CBSW shall, within 10 days after
receipt of the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Securities CBSW wishes to include in such registration statement. If
CBSW decides not to include all of its Registrable Securities in any such
registration statement filed by the Company, CBSW shall nevertheless continue to
have the right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed by the Company
with respect to offerings of its securities, all upon the terms and conditions
set forth herein. CBSW’s rights to include any Registrable Securities in any
offering under this section are subject in all events to the ability of the
managing underwriter for such offering to exclude some or all of the Registrable
Securities requested to be registered on the basis of a good faith determination
that inclusion of such securities might adversely affect the success of the
offering or otherwise adversely affect the Company; provided, however, that no
Registrable Securities shall be excluded from any such offering if any
securities of the Company other than Registrable Securities are included in such
offering for resale by any person other than the Company. Any such exclusion
shall be pro rata among all holders who have requested to sell Registrable
Securities in such registration.

 

 

 

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(b)

If a registration statement under which the Company gives notice under this
section is for an underwritten offering, then the Company shall so advise CBSW.
In such event, the right of CBSW’s Registrable Securities to be included in a
registration pursuant to this Section shall be conditioned upon CBSW
participation in such underwriting and the inclusion of CBSW’s Registrable
Securities in the underwriting to the extent provided herein. CBSW proposing to
distribute their Registrable Securities through such underwriting shall enter
into an underwriting agreement in customary form with the managing underwriter
or underwriters selected for such underwriting and shall furnish such
information and documents as the Company or the managing underwriter or
underwriters may reasonably request. Notwithstanding any other provision of this
Agreement, if the managing underwriter determine(s) in good faith that marketing
factors require a limitation of the number of shares to be underwritten, then
the managing underwriter(s) may exclude Registrable Securities from the
registration and the underwriting, pro rata among all Holders who have requested
to sell Registrable Securities in such registration; provided, however, that no
Registrable Securities shall be excluded from any such offering if any
securities of the Company other than Registrable Securities are included in such
offering for resale by any person other than the Company. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw such Holder’s Registrable Securities therefrom by written notice to the
Company and the underwriter. Any Registrable Securities excluded or withdrawn
from such underwriting shall be excluded and withdrawn from the registration.

 

 

11.

Notices. Any notices, demand, offer, request or other communication required or
permitted to be given by either the Company or a Holder (collectively, a
"Notice") pursuant to the terms of this Agreement, if delivered to the Holder,
shall be sent to the following address:

 

 

If to CBSW:

Cambrex Bio

Science Walkersville, Inc.

8830 Biggs Ford Road

 

Walkersville, MD 21893

 

Attention: Vice President

 

 

Fax No. 301-845-6099

 

With a copy to:

 

 

Cambrex Corporation

 

 

One Meadowlands Plaza

 

 

East Rutherford, NJ 07073

 

 

Attention: Corporate Secretary

 

Fax No. 201-804-9851

 

 

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If to Company:

 

 

Ortec International, Inc.

 

 

3960 Broadway

 

 

New York, NY 10032

 

 

Attention: Chief Executive Officer

 

Fax: 212-740-2570

 

or at such other addressed provided to the Company or such other address as a
party may request by notifying the other in writing.

 

Any notice shall be delivered in writing. Any such Notice shall be deemed
effectively given the earlier of (i) when received, (ii) when delivered
personally, (iii) one (1) business day after being delivered by facsimile (with
receipt of appropriate confirmation), (iv) one (1) business day after being
deposited with an overnight courier service and (v) four (4) days after being
deposited in the U.S. mail, First Class with postage prepaid.

 

12.

Change; Waiver. Neither this warrant nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.

 

 

13.

No Fractional Shares or Script. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant, but in lieu
of such fractional shares the Company shall make cash payment therefore upon the
basis of the Purchase Price then in effect.

 

 

14.

No Rights as Stockholder. This Warrant does not entitle the Holder to any voting
rights or other rights as a stockholder of the Company prior to the exercise of
this Warrant.

 

 

15.

Headings. The headings in this Warrant are for purposes of reference only and
shall not be deemed to constitute a part hereof.

 

 

16.            Counterparts. This Warrant may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

 

17.            Governing Law. This Warrant is delivered in the State of Delaware
and shall be construed in accordance with and governed by the laws of such
state.

 

18.

Confidentiality; No Public Disclosure. The terms and conditions of this Warrant
are confidential. Neither party shall make any public disclosure concerning the
terms and conditions of this Warrant without the prior written

 

 

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consent of the other party, except as required by the rules and regulations of
the securities and Exchange Commission, the Nasdaq National Market or any other
applicable stock exchanges.

 

Dated:

February 13, 2006 ____________

 

ORTEC INTERNATIONAL, INC.

 

 

/s/ Alan W Schoenbart___

Signature of Authorized Signatory

 

Alan W. Schoenbart, CFO

 

Agreed and

CAMBREX BIO SCIENCE WALKERSVILLE, INC.

Accepted:

 

 

 

/s/ Shawn P. Cavanagh

Signature of Authorized Signatory

 

 

Shawn P. Cavanagh, S.V. P. & G.M.

Print Name and Title

 

 

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

TO: ORTEC INTERNATIONAL, INC.

 

1. The undersigned hereby elects to purchase __________ shares of Common Stock
of Ortec International, Inc. pursuant to the terms of the attached Warrant.

 

 

2.

Exercise (Please initial the blank):

 

 

 

•

The undersigned elects to exercise the attached Warrant by means of a cash
payment, and tenders herewith payment in full for the purchase price of the
shares being purchased, together with all applicable transfer taxes, if any.
Please issue a certificate, or certificates representing said shares of stock,
in the name of the undersigned or in such other name as are specified below

 

_________________

 

(Name)

__

 

_

 

(Address)

 

3.

The undersigned represents that the aforesaid shares of stock are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.

 

 

_

Name of Warrantholder

 

_

Signature of Authorized Signatory

 

_

Print Name and Title