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PRIVATE PLACEMENT

ENGAGEMENT AGREEMENT

 

May 22, 2013

 

Mr. Joey Parsi

CEO

Giggles N Hugs, Inc.

10250 Santa Monica Blvd., Suite 155

Los Angeles, CA 90067

 

Dear Mr. Parsi:

 

This Private Placement Engagement Agreement (the “Agreement”) shall serve to set
forth the terms and conditions by which WestPark Capital, Inc. (“WestPark”) will
provide financial advisory and other professional services to Giggles N Hugs,
Inc., its subsidiaries and/or affiliates (the “Company”). WestPark will act as
the Company’s Exclusive Placement Agent and assist it in a private offering of
its securities (the “Offering”) on a “best-efforts” basis pursuant to the terms
and conditions as set forth herein.

 

1.   Structure and scope. The Offering shall be for the purpose of raising up to
Two Million Dollars ($2,000,000) through a private placement structure from the
sale of the Company’s common stock or other security and/or a loan or credit
enhancement for the Company.           The actual amount, structure and pricing
of the proposed offering will be determined by the Company and WestPark, after
completion of an analysis of the business and market conditions for such an
offering.           WestPark will advise, and provide services to the Company on
the various aspects of a transaction (the “Transaction”) for the Offering which
will include: 1) identifying and contacting potential investors; 2) advising the
Company on various structuring options of the Transaction; and 3) assisting the
Company with the negotiations of the financial aspects of the Transaction (the
“Services”). In Connection with the foregoing, WestPark will work with the
Company’s management, providing advice, input and review, in their development
of an appropriate overall business plan suitable for distribution to potential
investors for the circumstances dictated by the transaction contemplated and
described herein.       2.   Term. The term of this Agreement shall be for a
period of six (6) months from the date of execution hereof (the “Effective
Date”), thereafter on a month-to-month basis, unless otherwise notified in
writing, by means of a notice of intent not to renew, at least 30 days prior to
commencement of each renewal term.

 

  Initials: /s/ RS & JP

 

1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067 ● Ph (310) 843-9300 ●
Fax (310) 843-9304

 

 

Giggles N Hugs Engagement Agreement

Page 2

May 22, 2013

 

3.   Company and WestPark Responsibilities. The Company represents and warrants
to WestPark that, to the best of its knowledge, any and all information provided
in connection with any transaction that may be initiated under the terms and
conditions of this agreement, in a form including but not limited to a business
plan, private placement memorandum, correspondence and collateral material,
whether it is for or to anyone connected with the Transaction or distributed to
outside parties, wall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading           The Company agrees and
acknowledges that any and all due diligence conducted by WestPark is for the
sole benefit and use by WestPark and will not and can not be relied on by any
other person or entity and all prospective investors will conduct their own due
diligence prior to participating in the transaction.           The terms herein
are based upon the completion of due diligence by WestPark and WestPark’s
satisfaction with historical operating results of the Company and the
reasonableness of financial projections prepared by the Company and attached
hereto as Exhibit 1.                 The Company agrees to refer any and all
investors, lenders and/or any other interested person or entity to which it has
or will come in contact to WestPark and WestPark will present, discuss, and
negotiate the Transaction with said contact. The Company will maintain a listing
of names, addresses and telephone numbers, in Microsoft Word format, of all
parries contacted in connection with this Transaction for WestPark, and WestPark
will follow up on the contacts and provide a report to the Company on a periodic
basis as appropriate           WestPark agrees that the form and content of any
written material to be distributed by WestPark concerning the Company will be
approved by the management of the Company prior to distribution       4.   Fees.
The Company will pay to WestPark, as consideration for the Services described
herein;               I. Cash               a. A non-refundable retainer of
Twenty Thousand Dollars ($20,000), due on the Effective Date of this Agreement.
              b. Concurrent with the funding of the Offering (the “Close” or
“Closings”), either as one event for the full amount contemplated herein or
through multiple Closings, qualifying under this Agreement, WestPark will be
compensated as follows;

  

    Transaction type

Fee 

    1) For all equity related transactions   Ten percent (10%) of transaction
value     2) Subordinated debt   Five percent (5.0%) of debt placement     3)
Senior debt placement   Two & one half percent (2.5%) of debt     4) Credit
enhancement   One half percent (0.5%)  

  

  Initials: /s/ RS & JP

 

1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067 ● Ph (310) 843-9300 ●
Fax (310) 843-9304

 

  

Giggles N Hugs Engagement Agreement

Page 3

May 22, 2013

 

      WestPark, in its sole discretion, may purchase an equity interest in the
Company, under the same terms and conditions set forth in the Transaction, in an
amount not to exceed the total compensation earned by WestPark for the Services
provided, and;             II. Warrants               Seven (7) year warrants
(the “Warrants”) for the purchase of an equity interest of the Company equal to
3.0% (Three Percent) of the outstanding shares after the final closing of
funding pursuant to the terms of this agreement. If funds raised are less than
$2,000,000, such 3% will be prorated accordingly. The Warrants will have (a) a
nominal exercise price of $.01 per share and (b) a cashless exercise provision,
and the shares underlying the Warrants will have standard piggyback registration
rights.             All forms of compensation set forth in this section are due
and payable to WestPark with respect to any completed transaction for the period
from the Effective date of this Agreement through the end of the 24th month
following the termination date of this agreement, after giving effect to any and
all extensions to this Agreement.           All consideration payable to
WestPark pursuant to the terms and conditions of this Agreement, are due and
payable on or before its respective due date. WestPark, as an accommodation may
present the Company with an invoice for such amounts due, however payment is not
subject to the receipt of an invoice. This Agreement shall serve as the
Company’s documentation for payment processing and remittances.         5.  
Expenses & Administrative Fee. The Company is responsible for all costs related
to this Offering, which may include but is not limited to the preparation and
production of a PPM, legal fees, printing and reproduction costs, accounting and
other professional services. Blue Sky registration fees, road show and travel
related expense and miscellaneous out-of-pocket expenses incurred in connection
with this engagement. The Company will be required to pay for all expenses in
excess of $500 in advance by either providing for direct billing to the Company
or Company’s credit card. Any expenses incurred by WestPark on behalf of the
Company, related to this engagement will be invoiced and due upon receipt.      
      The Company will pay WestPark a Banking and Administrative Fee equal to
two percent (2%) of the funds raised in the Offering, concurrent with each
Closing, of which no accounting will be provided.           The Company will pay
the cost of a background check of any or all of the Company’s officers and key
management that WestPark determines to be necessary to conduct.         6.  
Late Fees and Finance Charges. All fees and expenses not received by WestPark by
the respective due date are subject to a late fee and interest will be charged
at the rate of 1.5% per month on all outstanding balances. In the event that an
account becomes delinquent, WestPark employs the same prudent collection
procedures as other businesses and if it becomes necessary to file suit or to
engage a collection agency for the collection of any fees and/or costs, the
Company shall pay all related costs and expenses, including reasonable
attorneys’ fees.

 

  Initials: /s/ RS & JP

 

1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067 ● Ph (310) 843-9300 ●
Fax (310) 843-9304

 

 

Giggles N Hugs Engagement Agreement

Page 4

May 22, 2013

 

7.   Representations and Warrants. The Company represents and warrants to
WestPark that the Company will not knowingly cause or permit any action to be
taken in connection with the Offering which violates the Securities Act of 1933
or any state securities laws; the Company will cooperate with WestPark so as to
permit the Offering to be conducted in a manner consistent with the applicable
state and federal securities laws, that all information and statements provided
by the Company and included m. but not limited to the PPM, business plan,
correspondence and any and all collateral material will be true and correct,
that the PPM will not be misleading or violate the anti-fraud provisions of the
Securities and Exchange Act of 1934, current Company management, as disclosed to
WestPark, will continue in place after the Offering for a reasonable period of
time; there will be included in the PPM financial statements of the Company for
the last three fiscal years or for such shorter period as the Company was in
existence and the latest unaudited comparative quarterly or other interim
financial statements; the financial statements will fairly reflect the financial
condition of the Company and the results of its operations at a time and for the
periods covered by such financial statements, and such statements will be
substantially as heretofore represented to WestPark; the Company does not know
of any undisclosed facts adversely affecting the PPM or the Offering; the
Company will immediately disclose to WestPark, in writing, any new facts as they
may arise that may adversely affect the PPM or the Offering; the Company will
prepare and deliver to WestPark its most recent estimate of sales, earnings, and
cash flow and agrees to update those estimates on a monthly basis during the
term of the Offering. The Company agrees to indemnify and hold WestPark and its
attorneys, accountants, agents and employees, officers and directors, free and
harmless from any liability, cost and expense, including attorneys’ fees in the
event of a breach of this representation and warranty.       8.  
Indemnification. In consideration of the services to be provided by WestPark
under this Agreement, the Company shall;         Indemnify and hold harmless
WestPark and any of its directors, officers, employees, consultants or agents
(each individually an “Indemnified Person”) from and against any losses, claims,
damages or liabilities to which such Indemnified Person may become subject
arising out of our in connection with the rendering of services by WestPark
hereunder, except to the extent that such losses, claims, damages or liabilities
are determined in judicial rulings to have primarily resulted from the gross
negligence or willful misconduct of such Indemnified Person and reimburse such
Indemnified Person for reasonable legal and other expenses as they are incurred,
that arise in connection with investigating, preparing to defend or defending
any lawsuit, claim or proceeding and any appeals therefrom arising in any manner
out of or in connection with the rendering of services by WestPark, provided,
however that in the event a final judicial determination is made to the effect
specified above, such Indemnified Person will promptly remit to the Company any
amounts reimbursed under the section.           The Company and WestPark agree
that (i) the indemnification and reimbursement commitments set forth above shall
apply whether or not such Indemnified Person is a named party to any such
lawsuit, claim or other proceeding, and (ii) promptly after receipt by WestPark
of notice of its involvement in any action, proceeding or investigation, shall
notify the Company in writing of such involvement. This indemnification shall
survive any termination of this Agreement.       9.   Exclusive Nature. WestPark
is hereby engaged as the Company’s exclusive placement agent respecting
services, as may be required by the Company for this Offering. WestPark agrees
to syndicate parties introduced by issuer or by its advisor, Issuer can
terminate offering as defined in the offering.

 

  Initials: /s/ RS & JP

 

1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067 ● Ph (310) 843-9300 ●
Fax (310) 843-9304

 

 

Giggles N Hugs Engagement Agreement

Page 5

May 22, 2013

  

10.   Non-Circumvent. The Company shall not accept nor enter into any
transaction, that would be considered a transaction included and described
herein, with any person and/or entity introduced to the Company by WestPark,
which either intentionally or unintentionally would directly or indirectly
circumvent the payment, in full or in part, of any and all consideration that
would be due WestPark pursuant to this Agreement, a breach of which would be
considered a Transaction pursuant to the terms and conditions of this Agreement
and all consideration pursuant to this Agreement would be immediately due and
payable to WestPark.       11.   SEC Filings. The Company will file a Notice of
Sale of Securities Pursuant to Regulation D Section 4(6), and/or Uniform Limited
Offering Exemption (“Form D”) with the Securities and Exchange Commission prior
to solicitation of the Offering. Once filed, the Company will provide a copy of
the Form D as filed to WestPark. Filing the Form D is the responsibility of the
Company and failure to do so will result in a material breach of this Agreement.
      12.   Confidentiality. WestPark understands and agrees that it will not
provide any information to any third party concerning the Company unless said
third party has executed a confidentiality- agreement in form and content
acceptable to the Company, unless the Company has provided a written waiver of
the confidentiality agreement requirement for such third party.       13.  
Successors. This Agreement is binding upon the parties hereto and their
respective permissible assigns, successors, heirs and personal representatives,
and shall inure to their benefit.       14.   Assignment. Neither this Agreement
nor any right pursuant hereto or interest herein shall be assignable by any of
the parties hereto without the prior written consent of the other parties
hereto, except as expressly permitted herein.       15.   Governing Law. This
Agreement shall be governed and construed in accordance with the laws of the
State of California. The prevailing party in any legal action brought under this
Agreement shall be entitled to immediately recover all legal fees and costs.    
  16.   Costs and Attorneys’ Fees. If any action, suit, arbitration proceeding
or other proceeding is instituted arising out of these Private Placement
Agreement, the prevailing party shall recover all of such party’s costs,
including, without limitation, the court costs and attorneys’ fees incurred
therein, including any and all appeals or petitions therefrom, As used herein,
“attorneys’ fees” shall mean the full and actual costs of any legal services
actually rendered in connection with the matters involved, calculated on the
basis of the usual fee charged by the attorneys performing such services.      
17.   Waiver and Amendment. No waiver, amendment or modification of any
provision of this Agreement shall be effective unless consented to by both
parties in writing. No failure of delay by either party in exercising any
rights, power or remedy under this Agreement shall operate as a waiver of such
right, power or remedy. Any terms and/or conditions of this Agreement may be
waived at any time, pursuant to this section, but a waiver in one instance shall
not be deemed to constitute a waiver in any other instance.

 

  Initials: /s/ RS & JP

 

1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067 ● Ph (310) 843-9300 ●
Fax (310) 843-9304

 

 

Giggles N Hugs Engagement Agreement

Page 6

May 22, 2013

 

18.   Severability. In the event that any provision of this Agreement shall be
held to be invalid, illegal or unenforceable in any circumstances, the remaining
provisions shall nevertheless remain in full force and effect and shall be
construed as if the unenforceable portions were deleted.       19.   Section
Headings; Defined Terms. Numbered and titled section headings and defined terms
are for convenience only and shall not he construed as amplifying or limiting
any of the provisions of this Agreement.       20.   Entire Agreement. This
Agreement and any exhibits herein incorporated and attached hereto supersede all
prior and contemporaneous negotiations and agreements (whether written or oral)
and constitute the entire understanding among the parties.

 

Please confirm that the foregoing correctly sets forth our Agreement by
returning one executed Agreement to our corporate office at 1900 Avenue of the
Stars, Suite 310, Los Angeles, CA, 90067, and a facsimile of same to (310)
843-9304.

 

  Very truly yours,       WestPark Capital, Inc.         By: /s/ Robert Schultz
    Robert Schultz, Managing Director

 

Approved and agreed to this 30 day of May 2013, Los Angeles, California.

  

Giggles N Hugs, inc.         By: /s/ Joey Parsi     Joey Parsi, CEO  

  Initials: /s/ RS & JP

 

1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067 ● Ph (310) 843-9300 ●
Fax (310) 843-9304