SETTLEMENT AND STANDSTILL AGREEMENT

This SETTLEMENT AND STANDSTILL AGREEMENT, dated as of September 26, 2014 (this
“Agreement”), is entered into by and between Blue Calypso, Inc., a Delaware
corporation (the “Company”), on the one hand, and Ronald L. Chez and Individual
Retirement Accounts for the benefit of Ronald L. Chez. (together, the "Chez
Parties"), on the other hand. The Company and the Chez Parties, are collectively
referred to as the “Parties” and each a “Party”.

WHEREAS, the Chez Parties beneficially own an aggregate of 17,586,361 shares of
Common Stock, par value of $0.0001, of the Company, constituting approximately
7.8% of the Company’s outstanding shares (the “Chez Held Shares”); and

WHEREAS, the Chez Parties filed Amendment No. 3 to Schedule 13D on September 10,
2014 with the Securities and Exchange Commission (the “SEC”) wherein the Chez
Parties expressed their displeasure with a bonus that was paid to the Company’s
Chief Executive Officer; and

WHEREAS, the Parties have determined that the best interests of the Parties and
the stockholders of the Company would be served by avoiding further expense and
disruption that could result from a prolonged dispute with the Chez Parties; and

WHEREAS, the Parties intend to provide hereby, for among other matters, the full
support from the Chez Parties for the executive officers and directors of the
Company; and

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as
follows:

SECTION 1.  REPRESENTATIONS.

(a)

Representations and Warranties of the Company.  The Company hereby represents
and warrants to the Chez Parties that this Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.

(b)

Representations and Warranties of the Chez Parties. Each of the Chez Parties
hereby represents and warrants to the Company that:

(1)

this Agreement has been duly authorized, executed and delivered by each of the
Chez Parties, and is a valid and binding obligation of each of the Chez Parties,
enforceable against each of the Chez Parties in accordance with its terms; and

(2)

except for the Chez Held Shares, which are beneficially owned solely by the Chez
Parties as indicated in their Schedule 13D filed with the SEC, as amended, no
Affiliate or Associate (as such terms are hereinafter defined) of any of the
Chez Parties (other than the Chez Family Foundation, which currently holds
526,000 shares)  may be deemed the “beneficial owner” (as such term is
hereinafter defined) of any shares of the Common Stock, par value $0.0001, of
the Company (including any direct or indirect rights, options or agreements to
acquire Common Stock of the Company) or has any rights, options or agreements to
acquire or vote, any other Common Stock of the Company; and

 

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(3) in entering into this Agreement with the Company, the Chez Parties are
acting solely on behalf of the Chez Parties and not in concert with any others,
as a 13D Group (as defined below).

SECTION 2.  ACTIONS BY THE COMPANY.

(a)

Temporary Reduction in Compensation of Chief Executive Officer.

(1)

The Company shall cause the annual base salary of the Company’s Chief Executive
Officer to be reduced to $200,000 for a period of twelve (12) months following
the date hereof. Following the twelve (12) month anniversary of the date hereof,
the compensation committee of the board of directors of the Company shall review
the compensation of the Company’s Chief Executive Officer to determine if any
adjustment in compensation is then warranted based on the Company’s performance
at that time as determined in the sole discretion of the Compensation Committee
of the Company’s Board of Directors.

(2)

The Company’s Chief Executive Officer shall forfeit options to purchase 750,000
shares of the Company’s Common Stock, which were granted to him in March 2014
(the “March 14 Option Grant”).  The Company and its Chief Executive Officer
hereby agree to enter into revised documentation with respect to the March 14
Option Grant within thirty (30) days of the date of this Agreement.

(3)

The Company’s Chief Executive Officer shall, purchase $85,000 worth of Common
Stock of the Company at prices not to exceed $0.175 per share within twelve (12)
months following the date hereof, provided that he shall make at least $15,000
of those purchases in the period commencing on the first day after the date of
this Agreement that the Company’s Chief Executive Officer is permitted under
applicable law, and under applicable Company policies, including but not limited
to the Company’s Insider Trading and Public Communications Policy, to make open
market purchases of the Company’s Common Stock and ending on December 15, 2014.

(b)

Temporary Reduction in Compensation of Chief Technology Officer.  

(1)

The Company shall cause the annual base salary of the Company’s Chief Technology
Officer to be reduced to $137,500 for a period of twelve (12) months following
the date hereof. Following the twelve (12) month anniversary of the date hereof,
the compensation committee of the board of directors of the Company shall review
the compensation of the Company’s Chief Technology Officer to determine if any
adjustment in compensation is then warranted based on the Company’s performance
at that time as determined in the sole discretion of the Compensation Committee
of the Company’s Board of Directors.

SECTION 3.  STANDSTILL.

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(a)

The Chez Parties agree that, for a period of twelve (12) months following the
date hereof, the Chez Parties will not join a 13D Group (other than a group
consisting solely of the Chez Parties and their Affiliates and Associates) or
other group, or otherwise act in concert with any third Person for the purpose
of acquiring, holding, voting or disposing of Voting Securities.

(b)

The Chez Parties agree that, for a period of twelve (12) months following the
date hereof, the Chez Parties, individually or in concert with others acting as
a 13D Group will not (1) make or in any way participate in the “solicitation” of
“proxies” (as such terms are used in the rules and regulations of the SEC) with
respect to any Voting Securities, (2) propose any stockholder resolutions under
Rule 14a-8 of the Securities Exchange Act of 1934, as amended, (3) seek to call
a meeting of stockholders of the Company, (4) seek to take any action by the
written consent of the stockholders of the Company, or (5) seek to advise or
influence any other Person with respect to the voting of the Voting Securities.

(c)

The Chez Parties agree that, for a period of twelve (12) months following the
date hereof, the Chez Parties, individually or in concert with others acting as
a 13D Group will not deposit any Voting Securities in a voting trust or, except
as otherwise provided or contemplated herein, subject any Voting Securities to
any arrangement or agreement with any Person with respect to the voting of such
Voting Securities.

(d)

The Chez Parties agree that, for a period of twelve (12) months following the
date hereof, the Chez Parties, individually or in concert with others acting as
a 13D Group will not otherwise act, alone or in concert with others, without the
prior written consent of the Company, to effect to seek offer or propose
(whether publicly or otherwise) to effect control of the management, board of
directors (including the removal of any director) or policies of the Company.

(e)

The Chez Parties agree that, for a period of twelve (12) months following the
date hereof, they will not issue any communication or make any written
statement, including but not limited to in a Schedule 13D or press release or
otherwise that disparages or criticizes the Company. This includes making any
disparaging communications or statements about the Company or any of the Release
Group Members (as defined herein).

(f)

The Chez Parties and the Company agree that the foregoing paragraphs (a) through
(e) shall not prohibit the Chez Parties, individually or in concert with others
acting as a "group" as defined under Section 13(d) of the Exchange Act, or any
of the Chez Parties' principals, directors, stockholders, members, general
partners and affiliates, from (i)  taking any other action with respect to the
Company or any Voting Securities of the Company held by the Chez Parties or (ii)
from taking any action (including, without limitation, those described in the
foregoing paragraphs (a) through (e)) should the Company not comply with Section
2 of this Agreement, or if the Chez Parties reasonably believe that it is acting
in the best interests of the Company’s shareholders.

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SECTION 4.  RELEASE AND COVENANT NOT TO SUE.

(a)

The Chez Parties, on behalf of themselves, and each of their respective
successors, assigns and Affiliates (collectively, the “Chez Group Members” and
individually a “Chez Group Member”), hereby fully, forever, irrevocably and
unconditionally releases and discharges the Company and its subsidiaries,
directors, officers, shareholders, Affiliates, employees, agents, heirs,
beneficiaries, executors, administrators, successors and assigns (together with
the Company, the “Release Group Members” and individually a “Release Group
Member”) of and from any and all manner of claims, actions, causes of action,
grievances, liabilities, obligations, promises, damages, agreements, rights,
debts and expenses (including claims for attorneys' fees and costs), of every
kind except as to any acts or omissions of or on behalf of the Company that
would constitute fraud, embezzlement or willful misconduct, either in law or in
equity, whether contingent, mature, known or unknown, suspected or unsuspected,
including, without limitation, any claims arising under any federal, state,
local or municipal law, common law or statute, whether arising in contract or in
tort, and any claims arising under any other laws or regulations of any nature
whatsoever that any Chez Group Member ever had, now has or may have, for or by
reason of any cause, matter or thing whatsoever, from the beginning of the world
to the date hereof (collectively, the “Released Claims”).  The foregoing release
does not apply to any claims arising under the terms of this Agreement.

(b)

 Without limiting the generality of Section 4(a), each Chez Group Member agrees
not to (and agrees to use his, hers or its reasonable best efforts to cause the
other Chez Group Members not to) commence any action against any Release Group
Member on the basis of, or that is otherwise inconsistent with, any Released
Claim.  Each Chez Group Member further agrees that he, she or it will not,
directly or indirectly, induce, encourage or assist any other Person, or
otherwise participate in the commencement, support or maintenance of any action
by any other Person against any Release Group Member on the basis of, or that is
otherwise inconsistent with, any Released Claim. 

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SECTION 5.  DEFINITIONS.  As used in this Agreement, the terms “Affiliate” and
“Associate” shall have the respective meanings set forth in Rule 12b-2
promulgated by the SEC under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”); the terms “beneficial owner” and “beneficially own” shall
have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under
the Exchange Act; and the terms “person” or “persons” shall mean any individual,
corporation (including not-for-profit), general or limited partnership, limited
liability or unlimited liability company, joint venture, estate, trust,
association, organization or other entity of any kind or nature; the term
"Voting Securities" shall mean any securities issued by the Company entitled to
vote on any matter presented to shareholders at an annual or special meeting of
shareholders, including the election of directors, or securities convertible
into, or exercisable or exchangeable for, such securities, whether or not
subject to the passage of time or other contingencies; the term "business day"
shall mean any day other than a Saturday, Sunday or a day on which banks in New
York, New York are authorized or obligated by applicable law or executive order
to close or are otherwise generally closed; the term “Change of Control” means
any of: (a) the purchase or other acquisition by any Person or group of Persons,
directly or indirectly, in one transaction or a series of related transactions,
of Voting Securities that, immediately following consummation of the
transaction(s), when combined with any other Voting Securities beneficially
owned by such Person or group, represent one hundred percent (100%) of the then
outstanding Voting Securities; (b) the consummation of any tender offer or
exchange offer by any Person or group that results in such Person or group
beneficially owning, when combined with any other Voting Securities beneficially
owned by such Person or group, one hundred percent (100%) of the then
outstanding Voting Securities immediately following the consummation of such
tender or exchange offer; (c) the consummation of a merger, consolidation,
amalgamation, joint venture, business combination or other similar transaction
involving the Company pursuant to which the stockholders of the Company
immediately preceding such transaction hold none of the voting equity interests
in the surviving or resulting entity of such transaction; or (d) the purchase or
other acquisition of all or substantially all of the assets of the Company and
its subsidiaries, taken as a whole, by any Person or group of Persons; and the
term “13D Group” means any group of Persons formed for the purpose of acquiring,
holding, voting or disposing of Voting Securities which would be required under
Section 13(d) of the Securities Exchange Act, as amended (the “Exchange Act”),
and the rules and regulations promulgated thereunder, to file a statement on
Schedule 13D (a “Schedule 13D”) pursuant to Rule 13d-1(a) of the rules and
regulations promulgated under the Exchange Act or a Schedule 13G of the rules
and regulations promulgated under the Exchange Act pursuant to Rule 13d-1(c) of
the rules and regulations promulgated under the Exchange Act with the SEC as a
“person” within the meaning of Section 13(d)(3) of the Exchange Act if such
group beneficially owns Voting Securities representing more than five percent
(5%) of any class of Voting Securities then outstanding.

SECTION 6.  REMEDIES.  Each of the Parties acknowledges that a breach of any of
the terms of this Agreement may result in immediate and irreparable injury to
the other Party not compensable by monetary damages.  Therefore, each of the
Parties acknowledge that the other Party to this Agreement shall be entitled to
injunctive relief from any court of competent jurisdiction in the event of any
actual or threatened breach of any of the terms of this Agreement in addition to
any other remedy to which an aggrieved party may be entitled at law or in
equity, including the right to recover all costs and expenses, including, but
not limited to reasonable attorneys’ fees, court costs, witness fees,
disbursements and other expenses of litigation or negotiation and
notwithstanding the actions of the other aggrieved party.

SECTION 7.  MISCELLANEOUS.  

(a)

Notices.  All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto will
be in writing and will be deemed validly given, made or served if (1) given by
fax, when such fax is transmitted to the fax number set forth below and the
appropriate confirmation is received, or (2) if given by any other means, when
delivered in person, by overnight courier or two business days after being sent
by registered or certified mail (postage prepaid, return receipt requested) as
follows:

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If to the Chez Parties:

Ronald L. Chez.
c/o Barry L Fischer, Esq.
Thompson Coburn LLP
55 E. Monroe Street, 37th Floor
Chicago, IL 60603
Fax: 312-580-2201

If to the Company:

 

Blue Calypso, Inc.
19111 North Dallas Parkway, Suite 200
Dallas, TX 75287
Attn: William Ogle, CEO
Phone: 972) 695-4776
Fax: (___) ___-____

With a copy (which shall not constitute notice) to:

Fox Rothschild LLP

997 Lenox Drive, Bldg. 3

Lawrenceville, NJ 08648
Attn: Sean F. Reid, Esq.

Phone: (609) 896-3600
Fax: (609) 896-1469

(b)

This Agreement may be executed by the parties hereto in separate counterparts
(including by fax and .pdf), each of which when so executed shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

(c)

This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to its conflict of laws principles.  The
parties each consent to the jurisdiction of the federal and state courts sitting
in Wilmington, Delaware for purposes of enforcement of this Agreement.  In
addition, for purposes of any action arising with respect to this Agreement, the
Company and the Chez Parties each (1) irrevocably and unconditionally consent to
the personal jurisdiction and venue of the federal or state courts located in
Wilmington, Delaware; (2) agree that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court;
(3) agree that it shall not bring any action relating to this Agreement or
otherwise in any court other than the federal or state courts located in
Wilmington, Delaware; and (4) irrevocably waive the right to trial by jury.

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(d)

This Agreement constitutes the only agreement between the Company and the Chez
Parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written. This Agreement shall bebinding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. No party
hereto may assign or otherwise transfer either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written consent of
the other parties hereto. Any purported transfer without such consent shall be
void. No amendment, modification, supplement or waiver of any provision of this
Agreement shall be effective unless it is in writing and signed by the party or
parties hereto affected thereby, and then only in the specific instance and for
the specific purpose stated therein. Any waiver by any party hereto of a breach
of any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party hereto to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

(e)

If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement shall remain
in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree shall remain in full force and effect to
the extent not held invalid or unenforceable. The parties hereto further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
purposes of such invalid or unenforceable provision.

(f)

This Agreement is solely for the benefit of the parties hereto, and their
respective principals, directors, members and general partners, and is not
enforceable by any other Persons.

(g)

Each of the parties hereto acknowledges that it has been represented by counsel
of its choice throughout all negotiations that have preceded the execution of
this Agreement, and that it has executed this Agreement with the advice of such
counsel. Each party hereto and its counsel cooperated and participated in the
drafting and preparation of this Agreement, and any and all drafts relating
thereto exchanged among the parties shall be deemed the work product of all of
the parties and may not be construed against any party by reason of its drafting
or preparation. Accordingly, any rule of law or any legal decision that would
require interpretation of any ambiguities in this Agreement against any party
hereto that drafted or prepared it is of no application and is hereby expressly
waived by each of the parties, and any controversy over interpretations of this
Agreement shall be decided without regard to events of drafting or preparation.

(h)

The Chez Parties hereby acknowledge and agree that the language contained in its
Schedule 13D amendment to be filed subsequent to the date hereof relating to the
matters hereto shall be consistent with the requirements set forth in this
Agreement.

[Execution page follows.]

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

BLUE CALYPSO, INC.

By: /s/ William Ogle

Name:  William Ogle

Title:    CEO

 

/s/ Ronald L. Chez

Ronald L. Chez

Limited Joinder and Consent

The undersigned consents to, and agrees to be bound by and subject to, the
terms, conditions, covenants and obligations of Section 2(a) of this Agreement.

/s/ William Ogle

William Ogle

Limited Joinder and Consent

The undersigned consents to, and agrees to be bound by and subject to, the
terms, conditions, covenants and obligations of Section 2(b) of this Agreement.

/s/ Andrew Levi

Andrew Levi