On May 17, 2017, StemSpine, LLC (“ StemSpine ”), a newly formed Nevada limited liability company and wholly owned subsidiary of Creative Medical Technologies, Inc. (“ CMT ”), the wholly owned subsidiary of Creative Medical Technology Holdings, Inc. (the “ Company ”), entered into a Patent Purchase Agreement dated May 17, 2017 (the “ Agreement ”), with Creative Medical Holdings, Inc. (“ CMH ”), the parent of the Company. Under the terms of the Agreement, StemSpine acquired U.S. Patent No. 9,598,673 covering use of various stem cells for treatment of lower back pain (the “ Patent ”). The inventors of the Patent were Thomas Ichim, PhD and Amit Patel, MD, each a director of the Company, CMT, and CMH, and Annette Marleau, PhD, a Senior Vice-President of the Company and a senior officer of CMT and CMH. The managers of StemSpine are Timothy Warbington, Donald Dickerson, and CMH. The Patent was issued on March 21, 2017.

On or before June 29, 2017, StemSpine has agreed to pay CMH $100,000 for the Patent. Under the terms of the Agreement, StemSpine has also agreed for a period of five years from the date of the first sale of any product derived from the Patent to make royalty payments of 5% from gross sales of such products. StemSpine has also agreed to pay royalties of 50% of sale price or ongoing payments from third parties for licenses granted under the Patent to third parties. In addition, StemSpine has agreed to make progress payments under the Agreement determined by whether the technology represented by the Patent is tested by use of autologous cells or allogenic cells. In the case of pursuit of the technology using autologous cells, StemSpine has agreed to pay CMH $100,000 upon the signing of an agreement with a university for the initiation of an IRB clinical trial; and $200,000 upon completion of the clinical trial. In the event StemSpine determines to pursue the technology using allogenic cells, StemSpine has agreed to pay CMH $100,000 upon the filing for IND with the FDA; $200,000 upon the dosing of the first patient in Phase 1-2 clinical trial; and $400,000 upon the dosing of the first patient in Phase 3 clinical trial. In each case, except for the initial payment of $100,000 on or before June 29, 2017, StemSpine has the option to make these payments in cash or in shares of the Company’s common stock at a 30% discount to the market price of the stock at the time of the transaction. The parties to the Agreement have agreed that in no event will the aggregate royalty payments under the Agreement exceed $2,500,000.

StemSpine has agreed to maintain books and records, and furnish reports to CMH, sufficient to validate the payments due under the Agreement. The Agreement also contains representations and warranties by CMH as to the sole ownership and interest in the Patent at the time of transfer and as to other matters customary to a transaction of this nature.