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Item 1.01.
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Entry into a Material Definitive Agreement.
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Securities Purchase Agreement and Convertible
Promissory Note
On February 21, 2019, Ozop Surgical Corp. a
Nevada corporation (the “Company”) entered into a securities purchase agreement (the “SPA”) with Power
Up Lending Group Ltd., a Virginia corporation (the “Investor”), pursuant to which the Company agreed to issue a 12%
Convertible Promissory Note, (the “Note”) in the principal amount of $53,000 in exchange for a purchase price of $53,000.
The proceeds will be used by the Company for general corporate purposes and working capital.
Pursuant to the SPA, the Company agreed not
to conduct any equity (or debt with an equity component) financing in an amount less than $150,000 (the “Future Offering”)
during the period beginning on the date of the issuance of the Note and ending nine months following such date without first giving
the Investor notice of the Future Offering and allowing the Investor the option to purchase the securities being offered in the
Future Offering on the same terms as contemplated by such Future Offering. The SPA includes customary representations, warranties
and covenants by the Company and customary closing conditions.
The Note matures 12 months after the date of
issuance. The Note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from
the issuance date of the Note, at a conversion price equal to 61% multiplied by the lowest trading price during the 20 trading
day period ending on the last completed trading date in the OTC Markets prior to the date of conversion, provided, however, that
the Investor may not convert the Note to the extent that such conversion would result in the Investor’s beneficial ownership
being in excess of 4.99% of the Company’s issued and outstanding common stock together with all shares owned by the Investor
and its affiliates. The beneficial ownership limitation may not be waived by the Investor.
The Note carries a pre-payment penalty if the
Note is paid off in 30, 60, 90,120,150, or 180 days following the issue date. The pre-payment penalty is based on the then outstanding
principal at the time of pay off plus accrued and unpaid interest multiplied by 110%, 115%, 120%, 125%, 130%, and 135% respectively.
After the expiration of 180 days following the issue date, the Company shall have no right of prepayment.
Pursuant to the Note, during any period any
obligations are owed to the Investor under the Note, if the Company seeks to enter into a lease or otherwise dispose of any significant
portion of its assets outside of the ordinary course of business, it must first obtain the Investor’s written consent to
do so. Pursuant to the Note, during any period where funds are owed under the Note, if the Company enters into any future financing
transactions with a third party investor, excluding certain exempted issuances listed in the Note, the Company will be required
to give notice of same to the Investor at least 10 days prior to closing of such future financing, and in the event that the Investor
determines that the terms of the subsequent investment are preferable to the terms of the securities issued to the Investor pursuant
to the terms of the SPA, the Company will have to amend and restate the securities issued to the Investor pursuant to the SPA (which
may include the conversion terms of the Note), to be identical to the instruments evidencing the subsequent investment.
On February 21, 2019, the Company initially
reserved 10,426,229 shares of its common stock with its transfer agent, for issuance upon for conversion of the Note in accordance
with the terms thereof.
The foregoing descriptions
of the SPA and the Note do not purport to be complete and are qualified in their entirety by reference to the full text of the
transaction documents, copies of which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and
are incorporated by reference herein.