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): January 30, 2006

Ortec International, Inc.

(Exact Name of Registrant as Specified in its Charter)

DE	0-27368	11-3068704
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3960 Broadway New York, NY	10032
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (212) 740-6999

(Former name or former address, if changed from 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:

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement

(a)     Modification of Registration Rights Agreement. In October 2005 we closed a private placement in which we sold our common stock and Series F warrants to a group of accredited investors. In connection with such sales we entered into an agreement with such investors whereby we undertook to register all of the shares of our common stock they purchased, and the shares of our common stock issuable upon exercise of our Series F warrants they acquired, in that private placement. We agreed that if we did not file that registration statement by January 6, 2006, or have that registration statement declared effective by March 14, 2006, we would pay liquidated damages to the purchasers. Our agreement with those purchasers provided that the holders of a majority of the shares of our common stock we were required to register pursuant to that agreement (the “majority holders”) could modify and/or waive our obligations under that agreement and such modification and/or waiver would be binding on all the purchasers in that private placement. On January 30, 2006 the majority holders (i) waived our obligation to pay any liquidated damages for our failure to file the registration statement by January 6, 2006; (ii) extended to June 7, 2006 the time by which the registration statement had to be declared effective before we had to pay any liquidated damages and (iii) permitted us to include in such registration statement shares of our common stock we may issue, or that will be issuable, in (x) a transaction in which we acquire by merger another biotechnology company and/or (y) a new private placement of our securities in which we raise up to $10,000,000. Such modification and waiver will enable us to pursue such acquisition and private placement without incurring those liquidated damages expenses.

(b)     Availability of Authorized Shares. On January 30 and 31^st, 2006, North Sound Capital, LLC (North Sound) and SDS Capital Group SPC, Ltd. (SDS) entered into other agreements with us whereby they agreed not to convert any of the aggregate of 6,372.0156 shares of our Series D Convertible Preferred Stock owned by them, nor exercise any of our Series F warrants held by them, until such time that we are able to obtain approval from our stockholders to amend our certificate of incorporation to increase the number of shares of our common stock we are authorized to issue, or take such other corporate action, which will enable us to have sufficient number of shares of our common stock which we are authorized to issue, to issue in a private placement of our securities and in the acquisition of a biotechnology company, which proposed transactions are both referred to above. These agreements will provide us with the ability to use the approximately 33,000,000 shares which North Sound and SDS have agreed not to acquire, together with our available authorized shares, in such proposed private placement and acquisition transactions. These agreements will be voided if we are unable to complete the proposed private placement of our securities before April 30, 2006. We have agreed that after the completion of the proposed private placement and/or acquisition we will proceed promptly to file a proxy statement for a meeting of our stockholders at which we expect to increase the number of shares of our common stock we are authorized to issue, or take such other corporate action, to have available for issuance enough shares of our common stock upon conversion of North Sound’s and SDS’s Series D Convertible Preferred Stock and upon exercise of their warrants.

(c)     Reduction of Liquidation Preference. All of the 6,372.0156 shares of our outstanding Series D Convertible Preferred Stock are owned by North Sound and SDS. On January 30 and 31, 2006 North Sound and SDS entered into agreements with us agreeing to exchange all of their shares of our Series D Convertible Preferred Stock into an equal number of shares of our new Series D-1 Convertible Preferred Stock. The only difference between our Series D Preferred shares and our Series D-1 Preferred shares is that the liquidation preference of the Series D Preferred shares is $10,000 per share and that of the Series D-1 Preferred shares is $10 per share. Each Series D-1 Preferred share will be convertible (as is each Series D Preferred share) into 4,000 shares of our common stock.

Other than North Sound and SDS, and other of our shareholders and warrant holders who signed the modification and waiver agreements referred to in paragraph (a) above, being owners of our common stock, of our Series D Convertible Preferred Stock and of our warrants to purchase shares of our common stock, we have no material relationship with any such person.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits.

Exhibit No.				Description
-----------				-----------
	10.1		Form of Waiver and Modification.
	10.2	Preferred Stock Exchange Agreement – North Sound.
	10.3	Preferred Stock Exchange Agreement – SDS.
	10.4		Non-conversion agreement – North Sound.
	10.5		Non-conversion agreement – SDS.

SIGNATURE

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

Ortec International, Inc.

(Registrant)

Date: February 2, 2006	By:	/s/ Alan W. Schoenbart
		Chief Financial Officer

EXHIBIT INDEX

EX-10.1	Form of Waiver and Modification.
EX-10.2	Preferred Stock Exchange Agreement - North Sound.
EX-10.3	Preferred Stock Exchange Agreement - SDS.
EX-10.4	Non-conversion Agreemen t - North Sound.
EX-10.5	Non-conversion Agreement - SDS.

EX-10.1

WAIVER AND MODIFICATION

Ortec International, Inc.

3960 Broadway

New York, NY 10032

Attn: Alan W. Schoenbart

Gentlemen:

Reference is made to the Registration Rights Agreement (the “Agreement”) dated as of October 12, 2005 by and among Ortec International, Inc. (the “Company”) and the purchasers listed on Schedule I thereto. Capitalized terms not defined in this waiver and modification shall have the meaning ascribed to them in the Agreement. The undersigned, being the Holders of a majority of the Registrable Securities now outstanding and pursuant to the provisions of Section 7 (f) of the Agreement agree and consent to the following:

1. The undersigned waive the Company’s obligations arising from those portions of the provisions of Section 7 (e) of the Agreement which require the Company to make payments, as liquidated damages, to the Holders as a result of the Company’s failure to file the Registration Statement on or prior to the Filing Date. The undersigned do not waive the Company’s obligations, also set forth in Section 7(e) of the Agreement, to make payments, as liquidated damages, to the Holders if the Registration Statement is not declared effective by the Commission on or prior to the Effectiveness Date (as modified in Section 2 below).

2. The definition of “Effectiveness Date” in Section 1 of the Agreement is changed to read as follows:

“Effectiveness Date” means with respect to the Registration Statement the earlier of the one hundred fifth (105^th) Business Day following the Filing Date or the date which is within three (3) Business Days of the date on which the Commission informs the Company that the Commission (i) will not review the Registration Statement or (ii) that the Company may request the acceleration of the effectiveness of the Registration Statement.

3. The undersigned agree that the following shall be added to Schedule II (“Other Securities Permitted to be Included in the Registration Statement”) to the Agreement:

10. So many shares of Common Stock issued, or issuable upon the exercise of warrants issued (estimated to be 38,000,000 shares in aggregate), in a transaction for the acquisition by merger of another biotechnology company.

 

11. So many shares of Common Stock that may be issued, or issuable upon the exercise of warrants or upon the conversion of convertible securities issued, in raising up to $10,000,000 in a private placement of the Company’s securities within the next 10 months.

 

Yours very truly,

By:
	Print Name:
	Title:
	Date:

EX-10.2

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

EX-10.3

January 30, 2006

Ortec International, Inc.

3960 Broadway

New York, NY 10032

Gentlepersons:

1.         The undersigned, being the holders of 1271.9129 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,

SDS Capital Group SPC, Ltd.

By: /s/ Steve DerbyPrint name: Steve Derby

Title: Director

Date: January 31, 2006

Number of Shares: 1271.9129

The foregoing is agreed to and accepted.

Ortec International, Inc.

By: /s/ Ron LipsteinPrint name: Ron Lipstein

Title: Chief Executive Officer

Date: 1/31/06

EX-10.4

January 27, 2006

Andrew B. David, Esq.

General Counsel

North Sound Capital LLC

20 Horseneck Lane

Greenwich, CT 06830

Dear Mr. David:

Entities in respect of which you act as manager or investment adviser are the holders of shares of Series D Convertible Preferred Stock and warrants to purchase our common stock.

We (a) are in negotiations to acquire another biotechnology company and if those negotiations result in the closing of such acquisition we will have to issue shares of our common stock and warrants to purchase additional shares of our common stock to the acquired company’s shareholders and (b) are currently seeking to raise funds in a private placement of our securities which will require us to issue shares of our common stock and/or securities convertible into shares of our common stock and/or warrants to purchase shares of our common stock. We will probably not yet have a sufficient number of shares of our common stock which we are authorized to issue for the securities to be issued by us in such contemplated acquisition transaction and in the proposed private placement of our securities because of (x) the number of shares of our common stock already outstanding, (y) our outstanding Series D Convertible Preferred Stock which is convertible into shares of our common stock and (z) our outstanding warrants and options entitling the holders thereof to purchase shares of our common stock. Furthermore, we will not have sufficient time before the time we hope to close such private placement sales of our securities and such acquisition to arrange a meeting of our stockholders at which our stockholders can adopt an amendment to our certificate of incorporation to increase the number of shares of our common stock which we are authorized to issue, or take any other action, which will enable us to have sufficient number of shares of our common stock which we are authorized to issue, to issue in such transactions. We will not have enough time to arrange such a meeting of our stockholders because of the time required by SEC regulations for us to prepare, file, clear and mail proxy statements for such a meeting.

In order for us to be able to close the proposed acquisition and private placement, we are asking you to agree that you will not (a) convert any of the shares of our Series D Convertible Preferred Stock owned by you nor (b) exercise any of our Series F Warrants owned by you, that would require us to issue shares of our common stock in excess of those we are authorized to issue. Provided, however, that if we do not close the proposed private placement of our securities within 90 days after the date on which you execute this document, you shall no longer be bound by your undertakings set forth in the immediately preceding sentence. We warrant to you that we

will, immediately after the closing of the proposed private placement of our securities and our proposed acquisition, take all steps necessary to file a proxy statement with the SEC, get it approved for mailing to our stockholders, to call a meeting of our stockholders and at such meeting to secure our stockholders’ approval to amend our certificate of incorporation to increase the number of shares of our common stock which we are authorized to issue, or to take such other corporate action, so that we will have a sufficient number of shares of our common stock which we are authorized to issue to enable you to convert all the shares of our Series D Convertible Preferred Stock owned by you and to exercise all of the Ortec Series F Warrants owned by you. We will give you written notice as soon as our stockholders have taken such action.

Please be good enough to sign and return to us the enclosed undertaking to enable us to proceed to close the proposed private placement of our securities and our proposed acquisition.

Thank you for your help in enabling us to reach our goal in making Ortec a viable and profitable company.

Yours very truly,

/s/ Alan W. Schoenbart

Alan W. Schoenbart

Chief Financial Officer

The undersigned agree that the undersigned will not convert any shares of Ortec’s Series D Convertible Preferred Stock owned by the undersigned, nor exercise any of the Ortec Series F Warrants owned by the undersigned, until Ortec International, Inc. gives us written notice that Ortec has enough shares of its common stock it is authorized to issue for issuance of shares of Ortec common stock upon such conversion and/or exercise, or as otherwise provided in the text above.

NORTH SOUND CAPITAL LLC

For: North Sound Legacy Institutional Fund LLC

North Sound Legacy International Ltd.

By /s/ Tom McAuley
	Print Name: Tom McAuley
	Title:Chief Investment Officer
	Date: January 30, 2006

EX-10.5

January 31, 2006

SDS Capital Group SPC LTD

c/o SDS Management LLC

Attn: Steve Derby

53 Forest Ave, Suite 203

Old Greenwich, CT 06870

Dear Steve:

You are the owner of the following securities issued by us, Ortec International, Inc., which entitles you to purchase or otherwise acquire shares of our common stock, par value $0.001 per share: Series F Warrants which entitles you to purchase an aggregate of 792,960 shares of our common stock, and shares of our Series D Convertible Preferred Stock evidenced by certificate numbers D-1, D-12, D-16, and D-17, which are convertible into an aggregate of 5,088,000 shares of our common stock.

We (a) are in negotiations to acquire another biotechnology company and if those negotiations result in the closing of such acquisition we will have to issue shares of our common stock and warrants to purchase additional shares of our common stock to the acquired company’s shareholders and (b) are currently seeking to raise funds in a private placement of our securities which will require us to issue shares of our common stock and/or securities convertible into shares of our common stock and/or warrants to purchase shares of our common stock. We will probably not yet have a sufficient number of shares of our common stock which we are authorized to issue for the securities to be issued by us in such contemplated acquisition transaction and in the proposed private placement of our securities because of (x) the number of shares of our common stock already outstanding, (y) our outstanding Series D Convertible Preferred Stock which is convertible into shares of our common stock and (z) our outstanding warrants and options entitling the holders thereof to purchase shares of our common stock. Furthermore, we will not have sufficient time before the time we hope to close such private placement sales of our securities and such acquisition to arrange a meeting of our stockholders at which our stockholders can adopt an amendment to our certificate of incorporation to increase the number of shares of our common stock which we are authorized to issue, or take any other action, which will enable us to have sufficient number of shares of our common stock which we are authorized to issue, to issue in such transactions. We will not have enough time to arrange such a meeting of our stockholders because of the time required by SEC regulations for us to prepare, file, clear and mail proxy statements for such a meeting.

In order for us to be able to close the proposed acquisition and private placement, we are asking you to agree that you will not (a) convert any of the shares of our Series D Convertible Preferred Stock owned by you nor (b) exercise any of the Series F Warrants owned by you, that would require us to issue shares of our common stock in excess of those we are authorized to issue. Provided, however, that if we do not close the proposed private placement of our securities within 90 days after the date on which you execute this document, you shall no longer be bound by your undertakings set forth in the immediately preceding sentence. We warrant to you that we will, immediately after the closing of the proposed private placement of our securities and our proposed acquisition, take all steps necessary to file a proxy statement with the

SEC, get it approved for mailing to our stockholders, to call a meeting of our stockholders and at such meeting to secure our stockholders’ approval to amend our certificate of incorporation to increase the number of shares of our common stock which we are authorized to issue, or to take such other corporate action, so that we will have a sufficient number of shares of our common stock which we are authorized to issue to enable you to convert all the shares of our Series D Convertible Preferred Stock owned by you and to exercise all of the Ortec Series F Warrants owned by you. We will give you written notice as soon as our stockholders have taken such action.

Please be good enough to sign and return to us the enclosed undertaking to enable us to proceed to close the proposed private placement of our securities and our proposed acquisition.

Thank you for your help in enabling us to reach our goal in making Ortec a viable and profitable company.

Yours very truly,

/s/ Alan W. Schoenbart

Alan W. Schoenbart

Chief Financial Officer

The undersigned agree that the undersigned will not convert any shares of Ortec’s Series D Convertible Preferred Stock owned by the undersigned, nor exercise any of the Ortec Series F Warrants owned by the undersigned, until Ortec International, Inc. gives us written notice that Ortec has enough shares of its common stock it is authorized to issue for issuance of shares of Ortec common stock upon such conversion and/or exercise. Provided, however, that if we do not close the proposed private placement of our securities within 90 days after the date on which you execute this document, you shall no longer be bound by your undertakings set forth in the immediately preceding sentence.

SDS Capital Group SPC LTD.

By: /s/ Steve Derby

Print Name: Steve Derby

Title: Director

Date: January 31, 2006