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