Exhibit 10.2


 


DEBT SETTLEMENT AGREEMENT


 


This Debt Settlement
Agreement (the “Agreement”), effective this 31st day of December 2016, is by and between Creative
Medical Health, Inc., a Delaware corporation (hereinafter the “Debtor”), and Henry Baldenegro, an individual
(hereinafter the “Creditor”).


 


RECITALS:


 


WHEREAS, on
October 15, 2014, the Debtor issued to the Creditor a Promissory Note (the “2014 Note”) in the principal amount
of $76,264.32, a copy of which is attached as Exhibit A hereto;


 


WHEREAS, on
May 13, 2015, the Debtor issued to the Creditor a Promissory Note (the “2015 Note”) in the principal amount
of $78,273.62, a copy of which is attached as Exhibit B hereto;


 


WHEREAS, on
September 30, 2016, the Debtor issued to the Creditor a Promissory Note (the “2016 Note” and, together, with
the 2014 Note and the 2015 Note, the “Notes”) in the principal amount of $96,266.85, a copy of which is attached
as Exhibit C hereto;


 


WHEREAS, as
of the date hereof, the amount owed by the Debtor under the Notes, including all principal and accrued interest, is $293,560.91;


 


WHEREAS, the
Debtor is the parent company of Creative Medical Technology Holdings, Inc., a Nevada company (“CELZ”) which
is also a public company whose shares of Common Stock are quoted on the OTC Markets under the symbol “CELZ;”


 


WHEREAS, the
Debtor is the owner of 2,935,609 shares of Common Stock of CELZ (the “Shares”);


 


WHEREAS, the
Debtor is the owner of 293,561 additional shares of Common Stock of CELZ (the “Option Shares”); and


 


WHEREAS, in
lieu of cash payment of the Notes by the Debtor, the Creditor wishes to receive the Shares and an option to purchase the Option
Shares as full and complete satisfaction of the Notes.


 


NOW, THEREFORE,
in consideration of the terms and conditions of this Agreement, the parties hereto agree as follows:


 


1.       Sale
of Shares. For and in satisfaction of the monies owed by the Debtor to the Creditor under the Notes, the Creditor hereby accepts
the Shares of CELZ valued at $0.10 per share.


 


2.       Option
to Purchase Additional Shares. In addition to the sale of the Shares to Creditor, for and in complete satisfaction of the monies
owed by the debtor to the Creditor under the Notes, the Debtor hereby grants to the Debtor an option to purchase the Option Shares
at an exercise price of $0.10 per share (the “Option”).


 






     


     


    

 


a.       Manner
of Exercise. The Option may be exercised in whole or in part at any time prior to 5 p.m., Mountain time, on August 1, 2019,
by delivery of the following to Debtor at 2007 W Peoria Avenue, Phoenix , AZ 85029, email: timwarbington@yahoo.com (such address,
or such other address as Debtor may from time to time designate by notice in writing to the Creditor, being referred to as the
“Principal Office”): (i) an executed Notice of Exercise in the form attached hereto as Exhibit D;
and (ii) payment of the purchase price in cash by wire transfer or check. Upon the Creditor’s exercise of the rights represented
by this Agreement, a certificate for the Option Shares so purchased, registered in the name of the Creditor or a Person affiliated
with the Creditor, if the Creditor so designates, shall be transferred and delivered to the Creditor or such Person within a reasonable
time after the rights represented by this Agreement shall have been so exercised. The Person in whose name any certificate for
Option Shares is to be transferred upon exercise of the Option shall be deemed to have become the holder of record of such Option
Shares on the date on which the Option was exercised and payment of the purchase price was made, irrespective of the date of delivery
of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books
of CELZ are closed, such Person shall be deemed to have become the holder of record of such Option Shares at the close of business
on the next succeeding date on which the stock transfer books are open.


 


b.       Charges,
Taxes and Expenses. The transfer of certificates for the Option Shares shall be made without charge to the Creditor for any
issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Debtor; provided that in the event certificates for the Option Shares are to be issued in a name other
than the name of the Creditor, the Debtor may require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.


 


c.       Stock
Dividends, Distributions, Subdivisions and Combinations. If CELZ shall: (i) pay a stock dividend or otherwise make a distribution
or distributions on Common Shares in Common Shares, (ii) subdivide outstanding Common Shares into a larger number of shares, or
(iii) combine (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, then (A) the
Option Shares shall be multiplied by a fraction of which the numerator shall be the number of Common Shares outstanding before
such event and of which the denominator shall be the number of Common Shares outstanding after such event and (B) the number of
Option Shares issuable upon exercise of the Option, shall be proportionately adjusted. Any adjustment made pursuant to this Section
2(c) shall become effective immediately after the record date for the determination of stockholders entitled to receive such a
dividend or distribution or, in the case of such a subdivision, combination or reclassification, immediately after the effective
date.


 


d.       Calculation
and Notice of Adjustment to Option Shares. Whenever an adjustment to the Option Shares or other terms of the Option is effected
pursuant to this Section 2, Debtor shall thereafter promptly mail to the Holder a notice setting forth the Option Shares and other
terms of such adjustment and setting forth a brief statement of the facts requiring such adjustment.


 


3.       Closing
Requirements. Upon the execution of the Agreement by the parties, the Creditor shall deliver to the Debtor the cancelled Notes
and Debtor shall irrevocably direct the transfer agent of CELZ to transfer the Shares and Option Shares in compliance with the
terms of this Agreement.


 


4.       Exemption
from Registration. It is the intention of the parties to this Agreement, that the transactions contemplated by this Agreement
be a private sale of securities that is exempt from the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the “Securities Act”), pursuant to the satisfaction of the conditions for Section 4(a)(7)
exemption and/or the so-called “Section 4(a)(1 1/2)” private resale exemption.


 






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5.       Forgiveness
of Debt. The Creditor, for himself, and for his heirs, executors, administrators, and assigns, as applicable, shall, and does,
accept, receive, and take the Shares and the Option from the Debtor as full and complete satisfaction of the Notes, including interest
thereon and penalties, if any, as applicable owed to him by the Debtor.


 


6.       Representations
and Warranties of the Debtor. The Debtor represents and warrants to the Creditor as set forth below. These representations
and warranties are made as an inducement for the Creditor to enter into this Agreement and, but for the making of such representations
and warranties and their accuracy, the Creditor would not be a party hereto.


 


a.       Organization
and Good Standing. The Debtor is a corporation duly organized, validly existing and in good standing under the laws of the
State of Delaware with full power and authority to enter into and perform the transactions contemplated by this Agreement.


 


b.       Performance
of This Agreement. The execution and performance of this Agreement and the sale of the Shares and the granting of the Option
contemplated hereby have been duly authorized by the board of directors of the Debtor.


 


c.       The
Shares and Option Shares. The Debtor is the record and beneficial owner of the Shares and the Option Shares and the Shares
and Option Shares are not the only shares of Common Stock owned by the Seller or any of its affiliates. Except for this Agreement,
there is no agreement, arrangement or understanding with any other Person regarding the sale or transfer of any Shares or Option
Shares, and there exist no liens, claims, options, proxies, voting agreements, charges or encumbrances of any kind affecting the
Shares or Option Shares. Upon transfer of the Shares and Option Shares to the Creditor, the Creditor will acquire ownership of
the Shares and Option Shares, free and clear of all liens, claims, options, proxies, voting agreements, charges or encumbrances
of any kind affecting the Shares and the Option Shares. The Debtor represents (a) it acquired the Shares and the Option Shares
for investment purposes only and not with a view toward distribution or resale in violation of any applicable securities laws,
and (b) that it is selling the Shares and will only sell the Option Shares, as principal, for its own account and not as a broker
or agent for another party. As used in this Agreement, the term “Person” shall be construed broadly to mean
any natural person, corporation, general partnership, limited partnership, limited liability company, union, association, court
or government agency, board or other entity or instrumentality. From the date hereof until August 1, 2019, the Debtor will continue
to own the Option Shares free of encumbrances.


 


d.       Accuracy
of All Statements Made by the Debtor. No representation or warranty by the Debtor in this Agreement, nor any statement, certificate,
schedule, or exhibit hereto furnished or to be furnished by the Debtor pursuant to this Agreement, nor any document or certificate
delivered to the Creditor pursuant to this Agreement or in connection with actions contemplated hereby, contains or shall contain
any untrue statement of material fact or omits to state or shall omit to state a material fact necessary to make the statements
contained therein not misleading.


 


e.       Conflicts.
The execution, delivery and performance of this Agreement will not (i) violate, conflict with, or result in the breach, acceleration,
default or termination of, or otherwise give any other contracting party the right to terminate, accelerate, modify or cancel any
of the terms, provisions, or conditions of any material agreements or instrument to which the Debtor is a party or by which its
assets may be bound, or (ii) constitute a violation of any material applicable law, rule or regulation, or of any judgment, order,
injunctive, award or decree of any court, administrative agency or other governmental authority applicable to the Debtor.


 






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f.       Broker’s
Fees. The Debtor has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect
to the transactions contemplated by this Agreement.


 


g.      Information.


 


(1)       The
Debtor represents, warrants and acknowledges that it: (a) is a sophisticated seller with respect to the Shares, (b) has adequate
information concerning the Shares, (c) has conducted, to the extent it deemed necessary, an independent investigation of such matters
as, in its judgment, is necessary for it to make an informed investment decision with respect to the sale of the Shares to the
Creditor and with respect to the Creditor as the purchaser of the Shares, and (d) has not relied upon the Creditor for any investigation
into, assessment of, or evaluation with respect to the sale of the Shares to the Creditor or with respect to the Creditor as the
purchaser of the Shares.


 


(2)       The
Debtor acknowledges that it has been afforded (i) the opportunity to receive information about CELZ and its financial condition,
results of operations, business, properties, management and prospects (including access to all of CELZ’s filings with the
SEC), and (ii) the opportunity to ask such questions of, and to receive answers from, representatives of CELZ concerning such information,
in each case sufficient to enable it to evaluate a decision to sell the Shares to the Creditor.


 


h.      No
General Solicitation. The Shares are being offered without prior advertising or general solicitation based on a significant
preexisting relationship between the parties.


 


7.       Representations
and Warranties of the Creditor. The Creditor represents and warrants to the Debtor as set forth below. These representations
and warranties are made as an inducement for the Debtor to enter into this Agreement and, but for the making of such representations
and warranties and their accuracy, the Debtor would not be a party hereto.


 


a.       No
Assignment or Transfer of Debt. The Creditor is the sole owner and holder of the Notes and has not bargained, sold, assigned,
conveyed, or otherwise transferred any interest in the Notes, owed by the Debtor to the Creditor.


 


b.      Accredited
Investor. The Creditor represents that he is an “accredited investor” as defined in Regulation D under the Securities
Act.


 


c.       Restricted
Securities. The Creditor understands that the Shares and the Option Shares to be sold to him will not have been registered
pursuant to the Securities Act, or any state securities act, and thus will be restricted securities as defined in Rule 144 promulgated
by the Securities and Exchange Commission (the “SEC”). Therefore, under current interpretations and applicable
rules, he will be required to retain the Shares and the Option Shares for a period of at least six months from the time the of
the sale and at the expiration of such holding period his sales may be confined to brokerage transactions of limited amounts requiring
certain notification filings with the SEC and such disposition may be available only if CELZ is current in its filings with the
SEC under the Securities Exchange Act of 1934, as amended, or other public disclosure requirements.


 






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d.       Experience;
Non-distributive Intent. The Creditor is an existing stockholder of CELZ and has sufficient knowledge and experience in investing
in companies similar to CELZ so as to be able to evaluate the risks and merits of its investment in the Shares and the Option Shares
and is able financially to bear the risks thereof. The Creditor acknowledges that the Shares are acquired and the Option Shares
will be acquired for his own account and not with the present view towards the distribution thereof and he will not dispose of
the Shares or Option Shares except (i) pursuant to an effective registration statement under the Securities Act, or (ii) in any
other transaction which, in the opinion of counsel acceptable to CELZ, is exempt from registration under the Securities Act, or
the rules and regulations of the SEC thereunder, and that an appropriate legend will be placed upon each of the certificates representing
the Shares and the Option Shares, and stop transfer instructions shall be placed with the transfer agent for the securities.


 


e.       Limitations
on Transfer of Shares and the Option Shares. The Creditor acknowledges that he is aware that there are substantial restrictions
on the transferability of the Shares and the Option Shares. Since the Shares and the Option Shares will not be registered under
the Securities Act or any applicable state securities laws, the Shares and the Option Shares may not be, and the Creditor agrees
that they shall not be, transferred unless the Shares and Option Shares are registered under the Securities Act and state securities
laws or unless such sale is exempt from such registration under the Securities Act and any other applicable state securities laws
or regulations.


 


f.       Accuracy
of All Statements Made by the Creditor. No representation or warranty by the Creditor in this Agreement, nor any statement,
certificate, schedule, or exhibit hereto furnished or to be furnished by the Creditor pursuant to this Agreement, nor any document
or certificate delivered to the Debtor pursuant to this Agreement or in connection with actions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits to state or shall omit to state a material fact necessary to make
the statements contained therein not misleading.


 


g.       Conflicts.
The execution, delivery and performance of this Agreement will not (i) violate, conflict with, or result in the breach, acceleration,
default or termination of, or otherwise give any other contracting party the right to terminate, accelerate, modify or cancel any
of the terms, provisions, or conditions of any material agreements or instrument to which the Creditor is a party or by which his
assets may be bound, or (ii) constitute a violation of any material applicable law, rule or regulation, or of any judgment, order,
injunctive, award or decree of any court, administrative agency or other governmental authority applicable to the Creditor.


 


h.       Broker’s
Fees. The Creditor has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect
to the transactions contemplated by this Agreement.


 


i.       No
General Solicitation. The Shares and the Option Shares are being offered without prior advertising or general solicitation
based on a significant preexisting relationship between the parties.


 


8.       Miscellaneous
Provisions.


 


a.       Default
Costs. Should any party to this Agreement default in any of the covenants, conditions, or promises contained herein, the defaulting
party shall pay all costs and expenses, including a reasonable attorney’s fee, which may arise or accrue from enforcing this
Agreement, or in pursuing any remedy provided hereunder or by the statutes of the State of California.


 






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b.       Rights
Are Cumulative. The rights and remedies granted to the parties hereunder shall be in addition to and cumulative of any other
rights or remedies either may have under any document or documents executed in connection herewith or available under applicable
law. No delay or failure on the part of a party in the exercise of any power or right shall operate as a waiver thereof nor as
an acquiescence in any default nor shall any single or partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right.


 


c.       Waiver
and Amendment. Neither this Agreement nor any provision hereof may be changed, waived, terminated or discharged orally, but
only by an instrument in writing signed by the party against whom enforcement of the change, waiver, termination or discharge is
sought.


 


d.       Notices.
All communications provided for herein shall be in writing and shall be deemed to be given or made on (a) the date of delivery,
if delivered in person, by nationally recognized overnight delivery service, or by facsimile, or (b) three days after mailing if
mailed from within the continental United States by registered or certified mail, return receipt requested, to the party entitled
to receive the same, if to the initial parties hereto, to the address first above written, or at such other address or facsimile
number as shall be designated by any party hereto in written notice to the other party hereto delivered pursuant to this Paragraph.


 


e.       Governing
Law. This Agreement and the rights and duties of the parties hereto shall be construed and determined in accordance with the
laws of the State of Arizona, and any and all actions to enforce the provisions of this Agreement, shall be brought in a court
of competent jurisdiction in the State of Arizona and in no other place.


 


f.       Successors
and Assigns. This Agreement shall be binding upon the parties and their successors and assigns and shall inure to the benefit
of the other parties and successors and assigns.


 


g.       Counterparts.
This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute
one instrument.


 


h.       Entire
Agreement. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter
hereof and supersedes all negotiations, representations, prior discussions, and preliminary agreements between the parties hereto
relating to the subject matter of this Agreement.


 


i.        Interpretation
of Agreement. This Agreement shall be interpreted and construed as if equally drafted by all parties hereto.


 


j.        Survival
of Covenants, Etc. All covenants, representations and warranties made herein shall survive the making of this Agreement and
shall continue in full force and effect until the obligations of this Agreement have been fully satisfied.


 


k.       Partial
Invalidity. If any term of this Agreement shall be held to be invalid or unenforceable, such term shall be deemed to be severable
and the validity of the other terms of this Agreement shall in no way be affected thereby.


 






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l.        Headings.
The descriptive headings of the various Sections or parts of this Agreement are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof.


 


m.      Number
and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the
masculine, feminine, and neuter.


 


n.       Full
Knowledge. By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions
of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has
freely agreed to be bound by the terms and conditions of this Agreement.


 


[Signature Page to Follow]


 




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IN WITNESS WHEREOF,
the undersigned have executed and delivered this Agreement the day and year first above written.


 


	DEBTOR: 	Creative Medical Health, Inc.
	 	 	 
	 	 	 
	 	 	 
	 	By:	/s/ Timothy Warbington
	 	 	Timothy Warbington, Chief Executive Officer
	 	 	 
	 	 	 
	 	 	 
	CREDITOR:	/s/ Henry Baldenegro
	 	Henry Baldenegro, Individually




 




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EXHIBIT A


 


[Promissory Note dated October 15, 2014
in the Principal Amount of $76,264.32]


 




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EXHIBIT B


 


[Promissory Note dated May 13, 2015 in the
Principal Amount of $78,273.62]


 




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EXHIBIT C


 


[Promissory Note dated September 30, 2016
in the Principal Amount of $96,266.85]


 




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EXHIBIT D


 


NOTICE OF WARRANT EXERCISE


 


Date: _________________


 


To: CREATIVE MEDICAL HEALTH, INC.


 


The undersigned registered holder
(the “Holder”) of the attached Common Stock Purchase Option (the “Option”) of Creative Medical
Health, Inc. (“CMH”) hereby elects to purchase: _________________________ shares (the “Acquired Option
Shares”) of common stock of Creative Medical Technology Holdings, Inc., a Nevada corporation (“CELZ”)
owned by CMH pursuant to the terms of the Debt Settlement Agreement dated effective December 31, 2016 by and among the Holder and
CMH (the “Agreement”) and tenders herewith payment of the purchase price in full. The Holder confirms that the
Holder is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended (the “Act”),
or otherwise meets the requirements of an exemption from the registration requirements of the Act.


 





	Name of Holder (please print or type)	Henry Baldenegro	 
	 	 	 
	 	 	 
	 	 	 
	Signature of Holder 	 	 



 






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