Item 1.01 Entry into a Material Definitive Agreement.
On May 25, 2021, Charlie's Holdings, Inc. (the "Company") entered into a
Dividend Waiver and Exchange Agreement (the "Exchange Agreement"), between the
Company and the holders (the "Series A Holders") of its Series A Convertible
Preferred Stock, par value $0.001 ("Series A Preferred"), pursuant to which the
Company paid to the Series A Holders total consideration of $1,649,986 (the
"Dividend Amount"), which Dividend Amount was paid in the form of 173,649,978
shares of the Company's common stock, par value $0.001 ("Common Stock"), valued
at $0.0044313 per share (the "Shares"), and $880,490.85 in cash.
The Shares issued under the terms of the Exchange Agreement to the Series A
Holders ("Exchanging Holders") were issued in exchange for: (i) each Exchanging
Holder's rights to receive a cash payment equal to such Exchanging Holder's
respective portion of the Dividend Amount; and (ii) a covenant not to pursue
legal action against the Company for the Company's failure to pay the Dividend
Amount when due (the "Exchange"). The Shares issued in connection with the
Exchange reduced the Dividend Amount payable in cash by $769,495.15. The
Exchange was undertaken pursuant to Sections 3(a)(9) and 4(2) promulgated under
the Securities Act of 1933, as amended.
The foregoing description of the Exchange Agreement does not purport to be
complete, and is qualified in its entirety by reference to the full text of the
form of Exchange Agreement, attached to this Current Report on Form 8-K as
Exhibit 10.1, and incorporated by reference herein.
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