January 30, 2006


 


Ortec International, Inc.


3960 Broadway


New York, NY  10032


 


Gentlepersons:


 


1.         The undersigned, being the holders of 5000.1027 outstanding shares of Ortec International, Inc.’s (the “Company”) Series D Convertible Preferred Stock (the “Series D Preferred Stock”), hereby agree to exchange each share of Series D Preferred Stock owned by the undersigned for one share of the Company’s new Series D-1 Convertible Preferred Stock (the “Series D-1 Preferred Stock”).  The undersigned understands that the only differences between the Series D Preferred Stock and the Series D-1 Preferred Stock are:


 



	
             
 	
            (a)
 	
            The liquidation preference for the Series D-1 Preferred Stock will, instead of the Ten Thousand ($10,000) Dollars per share for the Series D Preferred Stock, be the greater of
 



 

 



	
            (i)  
 	
            Ten ($10) Dollars per share of Series D-1 Preferred Stock, or
 



 

 


	
             
 	
            (ii)
 	
            an amount per share of Series D-1 Preferred Stock calculated by taking the total amount available for distribution to holders of all of the Company’s outstanding Common Stock before deduction of any preference payments for the Series D-1 Preferred Stock, divided by the Total of (x) all of the then outstanding shares of the Company’s Common stock, plus (y) all of the shares of the Company’s Series D-1 Preferred Stock on an as converted basis, and multiplied by 4,000. 
 



 

 



	
             
 	
            (b)
 	
            The Conversion Price for the Series D-1 Preferred Stock shall be $0.0025 per share of Series D-1 Preferred Stock instead of Two Dollars and Fifty Cents ($2.50) per share Series D Preferred Stock.
 



 

 



	
             
 	
            (c)
 	
            The number of shares of Series D-1 Preferred Stock that the Company will be authorized to issue shall be Fifty Thousand (50,000) shares instead of Ten Thousand (10,000) shares of Series D Preferred Stock that the Company is authorized to issue.
 



 

 



	
            2.
 	
            The undersigned each represent that:
 



 

 


	
             
 	
            (a)
 	
            it is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act) and
 



 

 


 






 



	
             
 	
            (b)
 	
            the undersigned is acquiring such shares of Series D-1 Preferred Stock for investment and not with a view to distribution thereof.
 



 

 



	
            Yours very truly,
 



 


 


 



	
            North Sound Legacy Institutional Fund, LLC
 
	
            By:  North Sound Capital, LLC
 	
             




 


 


By:        /s/ Tom McAuleyPrint name: Tom McAuley



	
            Title: 1/30/06
 	
             

	
            Number of Shares: 1,739.55105
 



 


 


North Sound Legacy International, Ltd.



	
            By:  North Sound Capital, LLC
 



 


 


By:        /s/ Tom McAuley 



	
            Print name: Tom McAuley
 	
             

	
            Title: Chief Investment Officer
 	
             

	
            Date: 1/30/06
 	
             

	
            Number of Shares: 3,260.55165
 
				



 


 






 






 


The foregoing is agreed to and accepted.


 



	
            Ortec International, Inc.
 



 


 


By:        /s/ Ron LipsteinPrint name:  Ron Lipstein



	
            Title:  Chief Executive Officer
 
	
            Date: 1/30/06