UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Creative Medical Technology Holdings, Inc.
(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE PER SHARE
(Title of Class of Securities)
22529Y 101
(CUSIP Number)
Timothy Warbington
2017 W Peoria Avenue
Phoenix, AZ 85029
(602) 680-7439
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 18, 2016
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.
NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent.
| * | The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
Page 1 of 7
| 1 |
name of reporting person
Timothy Warbington
i.r.s. identification no. of above person (entities only) | ||
| 2 |
check the appropriate box if a member of a group*
(A) ¨ (B) ¨ | ||
| 3 | sec use only | ||
| 4 |
source of funds* PF | ||
| 5 | check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e) ¨ | ||
| 6 |
citizenship or place of organization United States | ||
|
number of shares beneficially owned by each reporting person with |
7 |
sole voting power
6,466,667 SHARES | |
| 8 |
shared voting power
58,648,327 SHARES | ||
| 9 |
sole dispositive power
6,466,667 SHARES | ||
| 10 |
shared dispositive power
58,648,327 SHARES | ||
| 11 |
aggregate amount beneficially owned by each reporting person 65,114,994 SHARES | ||
| 12 | check box if the aggregate amount in row (11) excludes certain shares* ¨ | ||
| 13 |
percent of class represented by amount in row (11) 63.75% | ||
| 14 |
type of reporting person* IN | ||
Page 2 of 7
| 1 | name of reporting person
Creative Medical Health, Inc.
i.r.s. identification no. of above person (entities only)
EIN 45-3715583 | ||
| 2 | check the appropriate box if a member of a group*
(A) ¨ (B) ¨ | ||
| 3 | sec use only | ||
| 4 | source of funds* WC | ||
| 5 | check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e) ¨ | ||
| 6 | citizenship or place of organization DELAWARE | ||
number of shares beneficially owned by each reporting person with |
7 | sole voting power
0 SHARES | |
| 8 | shared voting power
58,648,327 SHARES | ||
| 9 | sole dispositive power
0 SHARES | ||
shared dispositive power
58,648,327 SHARES | |||
| 11 | aggregate amount beneficially owned by each reporting person 58,648,327 SHARES | ||
| 12 | check box if the aggregate amount in row (11) excludes certain shares* ¨ | ||
| 13 | percent of class represented by amount in row (11) 57.14% | ||
| 14 | type of reporting person* HC | ||
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ITEM 1. SECURITY AND ISSUER.
This amended Schedule 13D Statement relates to shares of Common Stock, $0.001 par value per share (the “Common Stock”), of Creative Medical Technology Holdings, Inc., a Nevada corporation (the “Issuer”). The principal executive offices of the Issuer are located at 2017 W Peoria Avenue, Phoenix, AZ 85029.
Neither the present filing nor anything contained herein shall be construed as an admission that any Reporting Person constitutes a “person” for any purpose other than for compliance with Section 13(d) of the Securities Exchange Act of 1934, as amended.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D Statement is hereby filed jointly by Timothy Warbington, an individual, and Creative Medical Health, Inc., a Delaware corporation (individually, (“CMH”) and, collectively with Mr. Warbington, the “Reporting Persons”).
Mr. Warbington is the President and Chief Executive Officer of CMH. Due to his relationship with CMH, Mr. Warbington may be deemed to have shared voting and investment power with respect to the shares of Common Stock beneficially owned by CMH. As such, Mr. Warbington may be deemed to have shared beneficial ownership over such shares of Common Stock.
Mr. Warbington is also a director, President and Chief Executive Officer of the Issuer and is a citizen of the United States.
The principal business address of each Reporting Person is 2017 W Peoria Avenue, Phoenix, AZ 85029.
During the last five years, none of the Reporting Persons (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or, (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction where as a result of such proceeding, there was or is a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On May 18, 2016, the Issuer, closed (the “Closing”) the Agreement and Plan of Merger (the “Merger Agreement”) with Creative Medical Technologies, Inc., a Nevada corporation (“CMT”), Steven L. White, the principal shareholder and the sole officer and director of the Issuer (“Mr. White”), and Jolley Acquisition Corp., a Nevada corporation and wholly owned subsidiary of the Issuer (the “Merger Sub”). As a result of the Closing of the Merger Agreement, the Merger Sub was merged with and into CMT with CMT being the surviving corporation and CMT became a wholly-owned subsidiary of the Issuer.
Prior to Closing, Mr. Warbington and CMH respectively owned 1,000,000 and 10,000,000 shares of CMT, which converted into 6,466,667 and 64,666,667 shares of the Issuer at Closing.
The consideration used by CMH to acquire its shares of the Issuer was funds from working capital loaned and an exchange of shares of CMT owned by it. The consideration used by Mr. Warbington to acquire its shares of the Issuer was an exchange of shares of CMT owned by Mr. Warbington.
Effective December 18, 2016, CMH entered into a Stock Purchase Agreement with a third party pursuant to which the Issuer sold 3,412,731 shares of the Issuer’s Common Stock to the third party for $3,412.73.
Effective December 31, 2016, CMH entered into a Debt Settlement Agreement with a third party pursuant to which CMH sold 2,935,609 shares of the Issuer’s Common Stock to a third party in exchange for the cancellation of debt issued by CMH to the third party in the aggregate amount of $293,560.91. As an incentive for the third party to enter into the transaction CMH also granted to the third party an option to purchase up to 293,561 shares of the Issuer owned by CMH at $0.10 per share with such option expiring August 1, 2019.
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ITEM 4. PURPOSE OF TRANSACTION
Except as disclosed below, the Reporting Persons have acquired beneficial ownership of the securities for investment purposes and will evaluate their investment in the securities on a continual basis. The Reporting Persons have no plans or proposals that would relate to or would result in: the acquisition of additional securities of the Issuer or the disposition of presently-owned securities of the Issuer; any extraordinary corporate transaction involving the Issuer; a sale or transfer of a material amount of assets of the Issuer; any material change in the present capitalization or dividend policy of the Issuer; any material change in the operating policies or corporate structure of the Issuer; any change in the Issuer's charter or by-laws; the Shares of the Issuer ceasing to be authorized to be quoted in the over-the-counter market; or causing the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934. The Reporting Persons, however, reserve the right, at a later date, to effect one or more of such changes or transactions in the number of Shares they may be deemed to beneficially own.
The shares of the Issuer acquired by the Reporting Persons with the intent to effect a reverse acquisition of the Issuer, whereby the Reporting Persons obtained voting and management control of the Issuer.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Pursuant to Rule 13d-3(a), at the close of business on November 10, 2016, the Issuer had 102,113,750 shares of Common Stock issued and outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q, filed with the Commission on November 10, 2016. Of the total shares beneficially owned by the Reporting Persons, (i) Mr. Warbington beneficially owns 65,114,994 shares of Common Stock (which includes 58,648,327 shares of Common Stock owned by CMH), which constitutes approximately 63.75% of the outstanding shares of the Issuer; and (ii) CMH beneficially owns 58,648,327 shares of Common Stock (which includes 30,000 shares issuable upon exercise of outstanding warrants), which constitutes approximately 57.14% of the outstanding shares of the Issuer. Mr. Warbington shares beneficial ownership of 58,648,327 shares with an entity of which he has voting control of the shares. The Reporting Persons have not effected any transactions in the Common Stock during the past 60 days, except as described in this Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
The disclosure in Items 2 and 3 is incorporated by reference herein.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
| Incorporated by Reference | Filed Herewith | ||||
| Exhibit Description | Form | File No. | Exhibit No. | Filing Date | |
| Agreement and Plan of Merger, dated April 29, 2016 | 8-K | 000-53500 | 2.1 | 5/5/16 | |
| Articles of Exchange filed Effective May 18, 2016 | 8-K | 000-53500 | 3.1 | 5/19/16 | |
| Stock Purchase Agreement, dated Effective December 18, 2016 | X | ||||
| Debt Settlement Agreement, dated Effective December 31, 2016 | X | ||||
[SIGNATURE PAGE TO FOLLOW]
Page 5 of 7
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Dated: January 19, 2017 | /s/ Timothy Warbington | |||
| Timothy Warbington | ||||
| Creative Medical Health, Inc. | ||||
| Dated: January 19, 2017 | By: | /s/ Timothy Warbington | ||
| Timothy Warbington, CEO | ||||
Page 6 of 7
EXHIBIT A
JOINT FILING UNDERTAKING
Each of the undersigned, being duly authorized thereunto, hereby executes this agreement as an exhibit to this Schedule 13D with respect to the Common Shares of Creative Medical Technology Holdings, Inc. to evidence the agreement of the below-named parties, in accordance with the rules promulgated pursuant to the Securities Exchange Act of 1934, as amended, to file this Schedule 13D jointly on behalf of each such party.
| January 19, 2017 | ||
| (Date) |
| /s/ Timothy Warbinton | |
| Timothy Warbington | |
|
Creative Medical Health, Inc.
/s/ Timothy Warbinton | |
| Name: Timothy Warbington | |
| Title: Chief Executive Officer |
Page 7 of 7
Exhibit 10.1
Stock Sale Agreement
This Agreement, entered into effective the 18th day of December 2016, is by and between Henry E. Baldenegro, an individual (the “Buyer”) and Creative Medical Health, Inc., a Delaware corporation (the “Seller”).
RECITALS:
WHEREAS, Seller is the legal and beneficial owner of 3,412,731 shares (the “Shares”) of common stock of Creative Medical Technology Holdings, Inc., a Nevada corporation (the “Issuer”);
WHEREAS, Buyer is desirous to sell the Shares to the Seller and Buyer is willing to purchase the Shares from the Seller; and
NOW, THEREFORE, in consideration of the mutual terms and conditions hereof, the parties hereto agree as follows:
1. Sale of Stock. Seller and Buyer agree that for and in consideration of $3,412.73 from the Buyer, the Seller hereby bargains, sells, assigns, conveys and transfers to Buyer all right, title, and interest in and to the Shares. Seller hereby irrevocable authorizes the transfer agent for the Issuer to transfer the Shares from the Seller to the Buyer and to forward to the Buyer a stock certificate representing the Shares to the address set forth in this Agreement.
2. Representations and Warranties of Buyer. The Buyer hereby represents and warrants to Seller as follows:
2.1 Restricted Securities. The Buyer understands that the Seller is an affiliate of the Issuer, that the Shares have not been registered pursuant to the Securities Act, or any state securities act, and that the Shares are thus “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 have to retain the Shares for a period of at least one year from the date of this Agreement and at the expiration of such one year period his sales will be confined to brokerage transactions of limited amounts requiring certain notification filings with the SEC and such disposition may be available only if the Issuer is current in its filings with the SEC under the Exchange Act, or other public disclosure requirements. Accordingly, the undersigned hereby acknowledges that he is prepared to hold the Shares for an indefinite period.
2.2 Accredited Investor. The Buyer is an “accredited investor” in that Buyer is (i) a natural person whose individual net worth, or joint net worth with Buyer’s spouse, (excluding the value of the individual’s primary residence) exceeds $1,000,000; or (ii) a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with Buyer’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
2.3 Investment Purpose. The Buyer acknowledges that the Shares are being purchased for his own account, for investment, and not with the present view towards the distribution, assignment, or resale to others or fractionalization in whole or in part. The Buyer further acknowledges that no other person has or will have a direct or indirect beneficial or pecuniary interest in the Shares.
2.4 Limitations on Resale; Restrictive Legend. The Buyer acknowledges that he will not sell, assign, hypothecate, or otherwise transfer any rights to, or any interest in, the 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 the Issuer, is exempt from registration under the Securities Act, or the rules and regulations of the SEC thereunder. The Buyer also acknowledges that an appropriate legend will be placed upon each of the certificates representing the Shares stating that the Shares have not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of the Shares.
2.5 Information. The Buyer has been furnished (i) with all requested materials relating to the business, finances, and operations of the Issuer; (ii) with information deemed material to making an informed investment decision; and (iii) with additional requested information necessary to verify the accuracy of any documents furnished to the Buyer by the Issuer. Such person has been afforded the opportunity to ask questions of the Issuer and its management and to receive answers concerning the terms and conditions of this transaction.
2.6 Documents. The Buyer has had access to each and every document filed by the Issuer with the SEC available on the website of the SEC at www.sec.gov. The Buyer has relied upon the information contained therein and has not been furnished any other documents, literature, memorandum, or prospectus.
2.7 Knowledge and Experience in Business and Financial Matters. The Buyer has such knowledge and experience in business and financial matters that he is capable of evaluating the risks of the prospective investment, and that his financial capacity is of such proportion that the total cost of his commitment in the Shares would not be material when compared with his total financial capacity.
2.8 No Advertisements. The Buyer is not entering into this Agreement as a result of or subsequent to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar media or broadcast on television or radio, or presented at any seminar or meeting.
2.9 Relationship to Company. The Buyer has a significant preexisting personal or business relationship with the Seller.
3. Representations and Warranties of Seller. The Seller hereby represents and warrants to the Buyer as follows:
3.1 Affiliate Status. The Seller is an affiliate of the Issuer as defined in Rule 144.
3.2 Ownership of Shares. The Seller is the record and beneficial owner and holder of the Shares and such Shares are owned free and clear of all liens, encumbrances, charges and assessments of every nature and subject to no restrictions with respect to transferability.
3.3 Power and Authority. The Seller has full power and authority to dispose, assign, and transfer the Shares in accordance with the terms hereof.
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3.4 No Outstanding Commitments. Except for this Agreement, there are no outstanding options, contracts, calls, commitments, agreements or demands of any character relating to the Shares.
4. Miscellaneous.
4.1 Default. 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.
4.2 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, letters of intent, and preliminary agreements between the parties hereto relating to the subject matter of this Agreement.
4.3 Interpretation of Agreement. This Agreement shall be interpreted and construed as if equally drafted by all parties hereto.
4.4 Survival of Covenants, Etc. All covenants, representations, and warranties made herein to any party, or in any statement or document delivered to any party hereto, shall survive the making of this Agreement and shall remain in full force for a period of two years from the date of this Agreement.
4.5 Further Action. The parties hereto agree to execute and deliver such additional documents and to take such other and further action as may be required to carry out fully the transactions contemplated herein.
4.6 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.
4.7 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.
4.8 Counterparts. This Agreement may be executed in two or more partially or fully executed counterparts, each of which shall be deemed an original and shall bind the signatory, but all of which together shall constitute but one and the same instrument.
4.9 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.
SIGNATURE PAGE FOLLOWS
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SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have executed this Agreement the day and year first above written.
| CREATIVE MEDICAL HEALTH, INC. | ||
| SELLER: | /s/Timothy Warbington | |
| By: Timothy Warbington | ||
| Its: Chief Executive Officer | ||
| Address: | 2017 W Peoria Avenue | |
| Phoenix, AZ 85029 | ||
| BUYER: | /s/ Henry E. Baldenegro | |
| Henry E. Baldenegro | ||
| Address: | 2332 East Bishop Drive | |
| Tempe, Arizona 85282 |
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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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