SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 14, 2019
OZOP SURGICAL CORP.
(Exact name of registrant as specified in its charter )
(State or Other Jurisdiction
|(Commission File Number)||(I.R.S. Employer Identification Number)|
319 Clematis Street Suite 714 West Palm Beach FL 33401
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since 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:
|☐||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|☐||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|☐||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|☐||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
|☑||Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).|
|☐||If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.|
Item 1.02 Termination of a Material Definitive Agreement.
As reported previously by Ozop Surgical Corp. a Nevada corporation (the “Company”) in its Current Report on Form 8-K filed with the Securities and Exchange Commission on September 28, 2018, on September 27, 2018, our wholly owned subsidiary, OZOP (Guangdong) Medical Technology Co., Ltd., a wholly owned foreign enterprise in China (“OZOP Guangdong”), entered into an amended and restated Equity Transfer Agreement to acquire a 100% ownership interest in Yijingtong (Beijing) Technology Development Ltd (“Yijingtong”) from its shareholders (the “Amended and Restated Equity Transfer Agreement”). The Amended and Restated Equity Transfer Agreement amended and restated the Equity Transfer Agreement entered into among OZOP Guangdong, Yijingtong and its shareholders dated July 23, 2018 (the “Equity Transfer Agreement”).
Pursuant to the terms of the Amended and Restated Equity Transfer Agreement, we agreed to pay the sellers of the Yijingtong equity interest RMB 1,000,000 (approximately US$147,815) payable in cash within five days of closing, and the closing was conditioned on the delivery by Yijingtong of its financial statements and footnote disclosure for the fiscal years ended December 31, 2016 and 2017 and for the period ended as of the most recently completed fiscal quarter prior to the date of delivery of the financial statements.
However, Yijingtong never delivered the financial statements and on February 14, 2019, the Board of Directors of the Company (the “Board”) by written consent decided to terminate the Equity Transfer Agreement, as amended and further decided to no longer pursue any other commercial activities in the Peoples Republic of China (“PRC”) at this time. The Equity Transfer Agreement, as amended, does not contain any penalties for termination.
In connection with the Equity Transfer Agreement, as amended, OZOP Guangdong had invested in a down a wholly owned foreign enterprise (“WOFE”) in China in 2017, and the Board resolved that since the Equity Transfer Agreement was terminated, that it no longer wished to incur the ongoing expenses to maintain the WOFE and authorized, Eric Siu, to shut down and dispose of the WOFE in his discretion such that the Company is no longer legally or financially tied to the WOFE. If Mr. Siu is successful in selling the WOFE to a third party, the net proceeds will be paid to OZOP Guangdong. The Company is responsible for all ongoing and past expenses to maintain the WOFE until such time as it is either shut down or disposed of.
Item 1.01. Entry into a Material Definitive Agreement.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Increase in Board of Directors and Appointment of New Director
On March 3, 2019, the Board approved at a special meeting of the Board, the increase of the number of the members of the Board from three (3) to four (4) and appointed Mr. Thomas McLeer as a member of the Board to fill the vacancy created by the increase.
Mr. Thomas McLeer also serves as the Company’s Chief Operating Officer and has served in such capacity since October 1, 2018.
Mr. McLeer, age 62, is a respected leader with over 25 years’ experience in spine and orthobiologics. Mr. McLeer is experienced in integrating all aspects of sales, marketing, engineering, product development and medical education for both public and private companies. Mr. McLeer served as Vice President of Sales and Marketing at LinkSpine from 2017 to February, 2018. Previously he was Senior Vice President of Commercial Operations for Alphatec Spine from 2012 to 2014. Mr. McLeer served as the Chief Marketing Officer and General Manager of Spinal Operations for Global Spine Pioneer Surgical from 2009 to 2012. Mr. McLeer served as the Vice President of Sales and Marketing for Archus Orthopedic from 2005 to 2009.
There is no family relationship between Mr. McLeer and any director or executive officer of the Company or any person nominated or chosen to become a director or executive officer of the Company.
Director Resignations and Agreements
Resignation of Eric Sui and Agreement with Mr. Sui:
On February 27, 2019, the Company entered into a Mutual Agreement of Understanding (the “Agreement”) with Eric Siu pursuant to which the Company agreed to approve and ratify all of Mr. Sui’s and his related parties’ efforts at pursuing medical device sales and manufacturing in greater China. Additionally, pursuant to the Agreement, the Company and Mr. Siu agreed to confirm and settle amounts owed to Mr. Siu and related parties by the Company upon the completion of the audit of the Company as of December 31, 2018.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 which is incorporated herein by reference.
On March 5, 2019, Eric Sui resigned from his position as a member of the Board. Mr. Sui’s resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. A copy of the resignation letter from Mr. Sui to the Company dated March 5, 2019, is filed herewith as Exhibit 17.1.
Resignation of Salman J. Chaudry and Agreement with Mr. Chaudry:
On March 4, 2019, the Company entered into a Separation Agreement (the “Separation Agreement”) with Salman J. Chaudhry, pursuant to which Mr. Chaudry resigned immediately from his positions as the CCO and Secretary of the Company and as a member of the Board and from all positions with the Company effective immediately and pursuant to which the Company agreed to pay Mr. Chaudry $227,200.61 (the “Outstanding Fees”) in certain increments as set forth in the Separation Agreement. Pursuant to the Separation Agreement, within 72 hours of the Company’s receiving funds in any fund raising, whether in equity or debt subsequent to the date of the Separation Agreement, in excess of $500,000 (the “Funding”), to pay Mr. Chaudry $170,401 of the Outstanding Fees. Pursuant to the Separation Agreement, if the Company raises less than $500,000 through any debt or equity financings prior to the Funding, then the Company will pay Mr. Chaudry 10% of the proceeds received by the Company in such funding. Within three months of the first payment under the Separation Agreement, the Company will pay Mr. Chaudry the residual sum of the Outstanding Fees. Pursuant to the Separation Agreement the Company and Mr. Chaudry agreed to release each other from certain claims pursuant to the terms set forth therein. Mr. Chaudry’s resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices.
The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by the Separation Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.2 which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
|10.1||Agreement of Understanding between Ozop Surgical Corp. and Eric Sui dated February 27, 2019.*|
|10.2||Separation Agreement between Ozop Surgical Corp. and Salman J. Chaudhry dated March 4, 2019.*|
Resignation Letter from Eric Sui Dated March 5, 2019.*
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.
|OZOP SURGICAL CORP.|
|Date: March 5, 2019||By:||/s/Barry Hollander|
|Chief Financial Officer|
MUTUAL AGREEMENT OF UNDERSTANDING
The undersigned (the “Parties”) enter into this Mutual Agreement of Understanding (the “MAU”) to clarify previous actions agreed to by the Parties as well as the matters included herein.
On February 14, 2019, by Unanimous Written Consent the Board of Directors of the Ozop Surgical Corp. (the “Company”) adopted the following resolutions:
|·||to terminate any acquisition of YJT., or to pursue any other commercial activities in the Peoples Republic of China at this time;|
|·||Whereas OZOP Surgical AG invested in a WOFE in China in 2017 and the Company no longer wishes to incur ongoing expenses to maintain this structure nor spend time and additional resources complying with PRC regulations concerning this enterprise, nor is it any part of the current or immediate future business focus, Eric is authorized to shut down this entity or dispose of it in any manner that he chooses such that the Company is no longer legally or financially tied to this entity. If Eric Siu is successful in selling the WOFE to a third party, the net proceeds will be wired to the bank account of OZOP Surgical Limited (HK); and|
|·||Whereas the board has decided that it is in the best interests of the Company to suspend ongoing operations in Hong Kong and reduce the ongoing expenses of maintaining OZOP Surgical Limited, a wholly owned Hong Kong subsidiary, in suspense until such time it serves an ongoing business purpose. The Company re iterates it is responsible for any past and ongoing expenses to maintain this legal entity. Eric is authorized to take whatever actions are necessary to reduce ongoing expenses.|
Additionally, the Parties hereby agree of the following:
|·||the Corporation approves and ratifies all of Mr. Eric Siu’s and his related parties’ efforts at pursuing medical devise sales in greater China on his and their own account;|
|·||As a Director of the Company, Mr. Siu is included and entitled to indemnification allowable under the full extent of the law and as provided for in the Company’s Amended and Restated Articles of Incorporation with the Secretary of State of Nevada and the Corporation’s Bylaws.|
|·||the Parties agree to confirm and settle amounts owed to Mr. Siu and Mr. Siu’s related parties from the Corporation. Such amounts are currently estimated as follows:|
|o||the Corporation owes Mr. Eric Siu the sum of HK$1,065,178 (per the accountant’s spreadsheet);|
|o||the Corporation owes ACL, Ltd., the sum of HK$1,152,712.80, the Hong Kong Salary HKD174,500 (per the accountant’s spreadsheet), USA Salary up to Dec 2018, USD$61,632;|
All above amounts are to be reconciled and confirmed upon completion of the audit of the Company as of December 31, 2018, for which Mr. Siu will cooperate completely and provide all documents requested from the Company and the Company’s auditors. The Company will pay these amounts on a schedule to be mutually agreed and based upon the receipt of investment funds.
OZOP SURGICAL CORP.
|/s/ Michael Chermak||
/s/ Eric Siu
|By: Michael Chermak||Eric Siu|
|Its: Chief Executive Officer|
|Date: February 27, 2019||Date: February 27, 2019|
This Separation Agreement between Ozop Surgical Corp, a Nevada corporation with its principal office at 319 Clematis Street, Suite 714, West Palm Beach, FL 33401 (hereinafter referred to as “OZOP” or the Company” and Salman J. Chaudhry (hereinafter referred to as “Chaudhry”). References to OZOP and the Company include any and all subsidiaries and predecessor companies.
|A.||Chaudhry has been an independent contractor of OZOP since January 2017 and currently hold the job title of Chief Commercial Officer, International (“CCO”) and is the Secretary and Member of the Company’s Board of Directors (the “Board”).|
|B.||During the period January 2017 – end December 2018, Mr. Chaudhry accrued compensation at the monthly rate of $10,000 per month resulting in total compensation of $240,000, of which the amount of $227,200.61 is outstanding (hereinafter referred to as “Outstanding Fees”).|
|C.||Due to personal reasons not related to any Company policy or actions, Mr. Chaudhry is immediately resigning from his position as CCO and Secretary of the Company and as a member of the Board and all positions of OZOP.|
|D.||Based on recent discussions with investors, OZOP in the process of raising funds through the closing of an equity round which is expected to occur on or around 22 March 2019. For the avoidance of doubt, this clause D shall include any funds raised in excess of $500,000 regardless of source and/or instrument type i.e. equity and/or debt subsequent to the date of this Agreement (hereinafter referred to as the “Funding”).|
|E.||First Payment: Within 72 hours of receipt of first funds from the Funding, OZOP will pay Chaudhry the sum of $170,401 of the Outstanding Fees.|
|F.||Other Fundings. In the event OZOP raises any funds less than $500,000 through any debt or equity financings (“Other Fundings”) prior to the Funding, OZOP will pay Chaudhry 10% of the proceeds received by OZOP from the Other Fundings within 72 hours of the receipt of Other Fundings. Payments made to Chaudhry from Other Fundings reduces the balance due on the first payment of $170,401.|
|G.||Second Payment: Within three months from the date of the First Payment, OZOP will pay Chaudhry the residual sum of $56,799.61 of the Outstanding Fees.|
|H.||Other than the above there are no disputes, with respect to Mr. Chaudhry’s relationship as an independent contractor with OZOP and the termination of that relationship as set out in this Agreement.|
NOW, THEREFORE, in consideration of the mutual promises, covenants, and agreements set forth herein, the parties mutually agree as follows:
|1.||Effective Date . This Agreement is effective on the latest signature date below.|
|2.||Method of payment of Outstanding Fees . The Company will pay Mr. Chaudhry the Outstanding Fees through bank transfers to the following bank account:|
Account Name: Salman Javed Chaudhry
Bank Name: JPMorgan Chase Bank NA
Account No.: 288630632
Routing Number: 322271627
|3.||Release of Claims by Chaudhry . Upon receipt of the Outstanding Dues, Chaudhry hereby unconditionally releases and discharges OZOP, its successors, assigns, agent, directors, officers, employees, representatives from any and all claims, demands, charges, damages, relating to Mr. Chaudhry’s period as an independent contractor. Furthermore, Chaudhry specifically waives any and all claims for back pay, front pay for his services except as set forth herein. The receipt of the Outstanding Fees will result in automatic termination of any further claims for compensation under any application laws or statutes existing in the United States. Nothing contained herein shall release the Company from its obligations set forth in this Agreement. This release and waiver of claims by Chaudhry covers, but is not limited to, all claims for misrepresentation, fraud, breach of implied or express contract, breach of implied covenant of good faith and fair dealing, defamation, and interference with economic relations. This release and waiver of claims by Chaudhry releases and waives all claims against Ozop which may accrue as of the date of this Agreement.|
|4.||Release of Claims by OZOP . OZOP, for itself, its heirs, assigns and representatives, hereby releases and waives all claims it has or may have, whether known, unknown, actual, potential or contingent, against Chaudhry, including any of his agents and representatives, in any way arising out of or relating to Chaudhry's independent contractor relationship with OZOP and the termination of Chaudhry's independent contractor relationship with OZOP. This release and waiver of claims by OZOP covers, but is not limited to, all claims for misrepresentation, fraud, breach of implied or express contract, breach of implied covenant of good faith and fair dealing, defamation, and interference with economic relations. This release and waiver of claims by OZOP releases and waives all claims against Chaudhry which may accrue as of the date of this Agreement.|
|5.||Amendment . This Agreement may not be supplemented, amended, or modified except through a new written agreement signed by both parties.|
|6.||No Assignment of Claims . Chaudhry represents and warrants that he has not previously assigned or transferred, or attempted to assign or transfer, to any third party, any of the Claims waived and released herein.|
|7.||Confidential Information . As a further material inducement to OZOP to enter into this Agreement, Chaudhry agrees that he will not divulge the following information or types of information to anyone without the prior written consent of OZOP which will not be unreasonably withheld: trade secrets, salaries, financial information, franchise information, marketing information, pricing, products, product lists, product information, sales information, personal employee information, or any other information of a similar confidential, sensitive or competitive nature. Chaudhry acknowledges that he has previously signed a confidentiality agreement with OZOP that remains in effect and under which he continues to be obliged to not disclose or make use of confidential or proprietary company information.|
|8.||No disparagement . Chaudhry agrees not to damage, disparage or criticize, orally or in writing, OZOP, its officers, executives, management or operations to any third person or entity. OZOP agrees, through its executives and officers, not to damage, disparage or criticize, orally or in writing, Chaudhry to any third person or entity.|
|9.||Entire Agreement . This Agreement contains the entire agreement and understanding of OZOP and Chaudhry concerning the subject matter hereof and this Agreement supersedes and replaces all prior negotiations, proposed agreements, agreements or representations whether written or oral. OZOP and Chaudhry agree and acknowledge that neither OZOP nor Chaudhry, including any agent or attorney of either, has made any representation, guarantee or promise whatsoever not contained in this Agreement to induce the other to execute this Agreement, and neither party is relying on any representations, guarantee, or promise not contained in this Agreement in entering into this Agreement.|
|10.||Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California.|
|11.||Submission to Jurisdiction . Chaudhry and OZOP each submits to the jurisdiction of any state or federal court sitting in the State of California in any action or proceeding arising out of or relating to this Agreement, and each party agrees that all claims of whatever type relating to or arising out of this Agreement may be heard and determined only in a state or federal court sitting in the State of California. Chaudhry and OZOP each waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought, and waives any bond, surety, or other security that might be required of any other party with respect thereto. Chaudhry and OZOP each agrees that if any action or proceeding relating to or arising out of this Agreement is brought in any other court or forum other than a state or federal court sitting in the State of California, the action or proceeding shall be dismissed with prejudice and the party bringing the action or proceeding shall pay the other party's legal fees and costs.|
|12.||Consultation with Attorney . Chaudhry understands and acknowledges that OZOP has advised Chaudhry to consult with an attorney of Chaudhry's choice prior to signing this Agreement.|
|13.||Right of Revocation . Chaudhry acknowledges that OZOP advised Chaudhry of Chaudhry’s right to consider the terms of this Agreement for 21 days after its delivery, and Chaudhry, after consulting counsel, hereby irrevocably waives that right.|
|14.||Revocation Period . Pursuant to federal law, this Agreement is revocable by Chaudhry for seven days following Chaudhry’s execution of the Agreement ("Revocation Period"). To be effective, such revocation must be in writing signed by Chaudhry and must be delivered to the Chief Executive Officer before 11 :59 p.m., on the last day of the Revocation Period. If an effective revocation is delivered in the foregoing manner and timeframe, this Agreement shall be of no force or effect and shall be null and void ab initio. Chaudhry understands that if Chaudhry revokes this Agreement, Chaudhry will lose all benefits of this Agreement. The promises of OZOP in this Agreement will go into effect only if Chaudhry has not revoked the Agreement within the Revocation Period.|
|15.||Default . In the event OZOP defaults in either or both of its payment obligations after the Funding, OZOP shall deemed to be in default and additional interest at the rate of 15% per annum of the amount in default, shall accrue from the date of default. Upon such default, Chaudhry shall be entitled to receive from OZOP all costs of collection, including without limitation, attorneys’ fees and disbursements, and full costs of any legal action undertaken by Chaudhry. Furthermore, Chaudhry will no longer be bound per the terms of this Agreement until such time the default has been cured.|
|16.1.||If either party initiates proceedings for the other’s breach of this Agreement, the prevailing party shall recover attorneys' fees and costs, including such fees and costs on any enforcement or appeal proceedings.|
|16.2.||If one or more paragraphs of this Agreement are ruled invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of the Agreement, which shall remain in full force and effect.|
|16.3.||This Agreement may be modified only by a writing signed by both parties.|
|16.4.||This Agreement may be executed in two counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same document.|
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates indicated below by each of their signatures, to be effective for all purposes as of the date of the latest signature below.
|OZOP SURGICAL CORP.||SALMAN J. CHAUDHRY|
|By: /s/ Michael Chermak||
/s/ Salman Chaudhry
|Its: Chief Executive Officer|
|Date: March 4, 2019||Date: March 4, 2019|
RESIGNATION OF ERIC SIU
AS DIRECTOR OF OZOP SURGICAL CORP.
A Nevada Corporation
I, Eric Siu, Director of Ozop Surgical Corp. , a Nevada Corporation hereby tender and submit this resignation from the Board of Directors of Ozop Surgical Corp. My resignation does not imply or infer any dispute or disagreement relating to the Company’s operations, policies or practices in any way. I wish the Company much success in its future endeavors.
Dated, this 5th day of March, 2019.
/s/ Eric Siu