Exhibit 10.14

 

LOAN AND PLEDGE AGREEMENT

 

THIS LOAN AND PLEDGE AGREEMENT (this “Agreement”) is made as of September 21,
1998 (the “Effective Date”) between ValiCert, Inc., a Delaware corporation
(“Lender”), and Srinivasan Krishnan (“Borrower”).

 

RECITALS

 

A. Borrower desires to borrow $75,000 from Lender on the terms and subject to
the conditions of this Agreement.

 

B. To induce Lender to make the loan, Borrower desires (i) to pledge and grant
Lender a security interest in 180,000 shares (the “Shares”) of Series A-Junior
Preferred Stock of Lender owned by Borrower, and (ii) to grant Lender an option
(the “Option”) to purchase certain of the Shares pursuant to an Option to
Purchase Stock Agreement of even date herewith between Borrower and Lender (the
“Option Agreement”).

 

AGREEMENT

 

1. Loan.

 

1.1 Advance of Funds. Subject to the terms and conditions of this Agreement,
Lender has advanced $75,000 to Borrower (the “Loan”).

 

1.2 Promise to Pay. On or before the fifth anniversary of the Effective Date
(the “Maturity Date”), Borrower promises to pay to Lender, at the address given
pursuant to Section 5.6 for notice to Lender, in lawful money of the United
States of America, the sum of $75,000, together with simple interest on the sum
of the outstanding principal balance of the Loan at the rate of 6% per annum
(the “Interest Rate”). Interest shall accrue and be due and payable upon the
Maturity Date. If payment of principal or accrued interest is not made in full
when due, all unpaid amounts (including principal and interest) shall bear
additional interest at the Interest Rate payable to Lender until paid in full.
If any payment is due on a Saturday, Sunday, or a public holiday under the laws
of the State of California, such payment shall be made on the next succeeding
business day and such extension of time shall be included in computing interest
in connection with such payment. The dates specified for payment under this
Section 1.2 may be accelerated as provided in Section 1.4.

 

1.3 NON-RECOURSE. THE PRINCIPAL AND INTEREST PAYABLE BY BORROWER UNDER THIS
AGREEMENT ARE NON-RECOURSE AND ARE SECURED SOLELY AS PROVIDED IN SECTION 2.6 OF
THIS AGREEMENT.

 

1.4 Acceleration. Lender may, at its option and in its sole discretion, declare
the then outstanding principal balance of the Loan, together with all accrued
and unpaid interest thereon, to be immediately due and payable if any of the
following (each, an “Event of Default”) shall occur:

 

(a) the failure of Borrower to pay any principal amount under this Agreement
when due;

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(b) the commencement of any proceeding against Borrower in bankruptcy, or
otherwise seeking any reorganization, arrangement or similar relief, or the
appointment of a receiver, trustee, or liquidator to take possession of the
assets of Borrower, or the commencement of any other proceeding under any law
for the relief of creditors;

 

(c) any assignment by Borrower for the benefit of Borrower’s creditors; or

 

(d) any other breach by Borrower of any of Borrower’s representations,
warranties or obligations under this Agreement which is not cured to the
satisfaction of Lender within fifteen days after notice of such breach is deemed
given pursuant to Section 5.6.

 

1.5 Waivers by Borrower. Borrower waives presentment, demand for performance,
notice of nonperformance, protest, notice of protest and notice of dishonor.

 

2. Pledge as Security.

 

2.1 Pledge. As security for all of borrower’s obligations and liabilities to
Lender under this Agreement (the “Obligations”), Borrower hereby assigns as
security and pledges to Lender the Shares and grants Lender a security interest
in all of Borrower’s rights, title and interest in and to the Shares, the
proceeds thereof and all proceeds of proceeds (collectively, the “Collateral”).
Borrower has executed or will execute a financing statement to perfect Lender’s
security interest in the Collateral, and agrees to execute continuation
statements and to take such additional actions as may be necessary or advisable
at the reasonable request of Lender to perfect and continue Lender’s security
interest in the Collateral.

 

2.2 Voting Rights. So long as Borrower is not in default of the performance of
any of the terms of this Agreement or in the payment of an amount due pursuant
to this Agreement, Borrower shall have the right to vote all of the Shares on
all corporate questions in accordance with Lender’s Certificate of Incorporation
and Bylaws.

 

2.3 Non-Stock Distributions. All cash distributions received by Borrower during
the term of this Agreement wit respect to the Shares shall be placed in an
interest bearing savings account specified by Lender and shall be delivered to
and held by Pledgeholder (as defined in Section 3.1) as additional Collateral,
provided, however, Borrower may elect to deliver such cash to Lender in
prepayment of the Loan by giving notice of such election to Lender and
Pledgeholder. All distributions other than in cash or stock received by Borrower
during the term of the Agreement wit respect to the Shares shall be delivered to
and held by Pledgeholder as additional Collateral.

 

2.4 Stock Distributions and Adjustments of Collateral. If during the term of
this Agreement any stock or other non-cash distribution, dividend,
reclassification, readjustment, or other change is declared or made in the
capital structure of Lender, all new, substituted and additional shares of stock
or other securities issued by reason of any such change shall be immediately
delivered by Borrower to Pledgeholder, together with executed assignments
separate from certificate, to be held by Pledgeholder in the same manner as the
Shares originally pledged hereunder, and hereafter the term “Shares” shall
include such securities.

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2.5 Warrants and Rights; Option. If, during the term of this Agreement,
subscription warrants or any other rights or options shall be issued in
connection with any of the Shares, and Borrower shall elect to exercise such
warrants, rights or options, all new shares or other securities so acquired by
the Borrower shall be immediately delivered to Pledgeholder to be held under the
terms of this Agreement in the same manner as the Shares originally pledged
hereunder, and thereafter the term “Shares” shall include such securities. If
the Option expires or is terminated prior to the termination of this Agreement,
any remaining securities or other property then subject to the Option, together
with assignments separate from certificate or any certificates representing such
securities, shall be immediately delivered to Pledgeholder to be held under the
terms of this Agreement in the same manner as the Shares, and thereafter the
term “Shares” shall include such securities and other property.

 

2.6 Default; Non-Recourse Obligation. If an Event of Default has occurred,
Lender is authorized to sell, assign and deliver at Lender’s discretion, form
time to time, all or any part of the Collateral at any private or public sale,
on not less than ten days’ written notice to Borrower and Pledgeholder, at such
price or prices and upon such terms as Lender may deem advisable and Lender
shall have all the rights and remedies of a secured creditor under the
provisions of the California Uniform Commercial Code. At any such public sale,
Lender may bid for, and become the purchaser of, the whole or any part of the
Collateral offered for sale. In case of any private or public sale, after
deducting the costs, counsel fees and other expenses of sale and delivery, the
remaining proceeds of such sale shall be applied to the satisfaction of the
Obligations; provided, however, that after satisfaction in full of the
Obligations, the balance of the proceeds of sale then remaining shall be paid to
Borrower. Borrower shall not be liable for any deficiency if the proceeds of the
sale of the Collateral are insufficient to discharge the amount of principal and
interest due under this Agreement.

 

2.7 Return of Collateral. Upon Borrower’s satisfaction of the Obligations,
Lender shall instruct Pledgeholder to return to Borrower all Collateral then in
Pledgeholder’s possession.

 

2.8 Substitution of Collateral. Borrower may substitute at any time, and from
time to time, any Collateral, subject in each case to obtaining the prior
written approval of Lender, such approval to be given or withheld in the
exercise of Lender’s sole discretion.

 

3. Escrow.

 

3.1 Appointment of Pledgeholder. Borrower and Lender hereby appoint Venture Law
Group, A Professional Corporation (“Pledgeholder”) to act as pledgeholder for
them in accordance with this Agreement.

 

3.2 Delivery of Documents. Borrower has delivered to Pledgeholder the stock
certificates listed on Schedule 3.2, together with a stock assignment separate
from certificate for each stock certificate, duly executed by Borrower.

 

3.3 Duties After an Event of Default. Pledgeholder shall have no duty to
determine the existence of an Event of Default, but may, without any liability
whatsoever, rely upon the written notice of Lender that an Event of Default has
occurred. If, following an Event

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of Default, Lender shall elect to exercise its right to realize on the Shares,
Pledgeholder shall, upon the receipt of written notice from Lender of the number
of Shares sold and sale price, (a) date the stock assignments necessary for each
transfer in question, (b) fill in the number of Shares being transferred and (c)
deliver the same, together with the certificate(s) evidencing the Shares to be
transferred to the purchaser against the simultaneous delivery to Pledgeholder
of the purchase price for the number of the Shares then being purchased. In
connection with each such sale, Pledgeholder shall deliver from the Escrow the
specific Shares which are designated by Lender. Following an Event of Default,
Pledgeholder shall dispose of the Collateral other than the Shares in accordance
with written instructions of Lender. After deducting the costs, counsel fees and
other expenses of such sale and delivery as provided in Section 2.6 of this
Agreement, Pledgeholder shall pay the remaining proceeds of such sale to Lender
to the extent of the obligations of Borrower under this Agreement as specified
by Lender. Any remaining proceeds of such sale shall be paid to Borrower.

 

3.4 Attorney-In-Fact; Additional Stock Assignments. Borrower hereby irrevocably
constitutes and appoints Pledgeholder as Borrower’s attorney-in-fact and agent
for the term of this Escrow to execute, with respect to such securities or other
Collateral as are deposited with Pledgeholder hereunder, all documents necessary
or appropriate to make such securities or other Collateral negotiable and
complete any transaction herein contemplated. Borrower shall deliver to
Pledgeholder from time to time such number of stock assignments separate from
certificate or other documents duly executed by Borrower as may be reasonably
requested by Lender or Pledgeholder.

 

3.5 Return of Property. If at the time of termination of this Agreement,
Pledgeholder, has in Pledgeholder’s possession any documents, securities, or
other property belonging to Borrower, Pledgeholder shall deliver all of same to
Borrower and shall be discharged of all further obligations hereunder.

 

3.6 Special Instructions to Pledgeholder. Borrower hereby instructs
Pledgeholder, as Escrowholder pursuant to the Option, to retain in pledge under
this Agreement as additional Collateral (i) any proceeds from the exercise of
the Option, and (ii) any Shares or other property which remain in Pledgeholder’s
possession (as Escrowholder under the Option) at the expiration or earlier
termination of the Option.

 

3.7 Duties; Modification of Duties. Pledgeholder shall carry out Pledgeholder’s
duties hereunder to the best of Pledgeholder’s ability and shall be liable only
for gross negligence or willful misconduct. Pledgeholder’s duties hereunder may
be altered, amended, modified or revoked only by a written instrument signed by
Lender, Borrower and Pledgeholder.

 

3.8 Obligations. Pledgeholder shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by Pledgeholder to be genuine and to have been signed or presented by
the proper party or parties. Pledgeholder shall not be personally liable for any
act Pledgeholder may do or omit to do hereunder as Pledgeholder or as
attorney-in-fact for Borrower while acting in good faith and in the exercise of
Pledgeholder’s

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own good judgment, and any act done or omitted by Pledgeholder pursuant to the
advice of Pledgeholder’s own attorneys shall be conclusive evidence of such good
faith.

 

3.9 Authorization to Act. Pledgeholder is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or corporation, excepting only orders or process of courts of law,
and is hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case Pledgeholder obeys or complies with any such
order, judgment or decree of any court, he shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

 

3.10 Bankruptcy. Bankruptcy, insolvency, or dissolution of any party hereto
shall not affect Pledgeholder’s performance hereunder.

 

3.11 Statute of Limitations. Pledgeholder shall not be liable for the lapse of
any rights because of any Statute of Limitation applicable with respect to this
Agreement or any documents deposited with Pledgeholder.

 

3.12 Legal Counsel. Pledgeholder shall be entitled to employ such legal counsel
and other experts as Pledgeholder may deem necessary properly to advise
Pledgeholder in connection with Pledgeholder’s obligations and may pay such
counsel reasonable compensation therefore, for which Pledgeholder shall be
reimbursed by Lender.

 

3.13 Termination of Duties; Successor. Pledgeholder’s responsibilities as
Pledgeholder hereunder shall terminate if (a) Pledgeholder shall resign by
thirty days written notice to Borrower and Lender or (b) Borrower and Lender
jointly agree as to Pledgeholder’s termination and appoint Pledgeholder’s
successor. Upon Pledgeholder’s receipt of notice of any such appointment of
Pledgeholder’s successor, all documents, shares and other property then in
Pledgeholder’s possession pursuant to this Agreement shall be delivered to such
successor.

 

3.14 Further Instruments. If Pledgeholder reasonably requires other or further
instruments in connection with this Agreement or obligations in respect hereto,
the necessary parties hereto shall join in furnishing such instruments.

 

3.15 Conflicting Notices; Disputes. If Pledgeholder receives a notice from
Lender that Lender is exercising any of Lender’s rights hereunder, Pledgeholder
shall first complete all action required with respect to the notice before
taking action with respect to any subsequently received notice which in any way
conflicts with the prior notice. If any dispute arises with respect to the
delivery and/or ownership or right of possession of the Collateral, Pledgeholder
may, at Pledgeholder’s option, be relieved from all liability to Borrower and
Lender by depositing all documents held hereunder with the Clerk of the
California Superior Court for the City and County of Los Angeles for the purpose
of permitting the Borrower and Lender to litigate their respective rights in
said court. The receipt of the Clerk of said court of such documents shall
discharge Pledgeholder from all liability to the Borrower and Lender, and the
same may be pleaded as a bar to any action against Pledgeholder by Borrower or
Lender.

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3.16 Acknowledgment. Lender and Borrower hereby acknowledge that Pledgeholder
represents Lender and agree that Pledgeholder may continue to represent Lender
and/or Pledgeholder in all respects including, without limitation, with respect
to any dispute between Borrower and Lender arising out of this Agreement or
otherwise.

 

4. Representation, Warranties and Covenants of Borrower.

 

4.1 Ownership of Collateral; No Conflicts. Borrower represents and warrants as
of this date, and covenants for the period beginning on this date and ending the
termination of this Agreement, that (a) Borrower has and will have the right to
enter into this Agreement, to transfer to Lender all or any part of the
Collateral, free and clear of any lien, claim, encumbrance or restriction of any
type or nature whatsoever (other than restrictions on resale that may arise
under applicable federal and state securities laws); and (b) there is no
provision of any existing agreement, and Borrower will not enter into an
agreement, by which Borrower is or would be bound (or to which Borrower is or
would become subject) that conflicts or would conflict with this Agreement or
the performance of Borrower’s obligations under this Agreement.

 

4.2 Further Assurances. Upon the reasonable request of Pledgeholder or Lender,
Borrower will prepare, execute and deliver any further instruments and do any
further acts that may be necessary to carry out more effectively the purpose of
this Agreement.

 

5. Miscellaneous.

 

5.1 Amendment. Except as provided in Section 3.7, this Agreement may only be
amended by a writing signed by Borrower and Lender.

 

5.2 Assignment. Borrower may not assign or otherwise transfer any of his rights
or obligations under this Agreement. Lender may assign all or any portion of his
rights and obligations under this Agreement at any time, and from time to time,
with notice to Borrower. Subject to the foregoing, this Agreement shall be
binding upon the heirs, executors and personal representative of Borrower and
shall be binding upon and inure to the benefit of the successors and assigns of
Lender.

 

5.3 Entire Agreement; Controlling Document. This Agreement and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence and understandings between the parties with respect to the
subject matter hereof, whether oral or in writing.

 

5.4 Costs of Enforcement. If any party to this Agreement seeks to enforce its
rights under this Agreement by legal proceedings or otherwise, the
non-prevailing party shall pay all costs and expenses incurred by the prevailing
party, including, without limitation, all reasonable attorneys’ fees.

 

5.5 Governing Law, Consent to Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts entered into by California residents and to be performed wholly in
the State of California. Each party hereto hereby agrees that any action which,
in whole or in part, in any way arises under this Agreement shall be brought in
the Superior Court of the State of California

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for the County of Santa Clara or the United States District Court for the
Northern District of California. Each party hereby submits to the exclusive
jurisdiction and venue of such Courts for purposes of any such action and agrees
that any notice, document or complaint in any such action may be served on it by
delivery in the manner provided for the delivery of notices under this
Agreement.

 

5.6 Notices. All notices and other communications under this Agreement (other
than payments hereunder, which shall be deemed made as of the date of receipt by
Lender) shall be in writing, and shall be deemed to have been duly given on the
date of delivery if delivered personally, or on the third day after mailing if
mailed to the party to whom notice is to be given by first class mail,
registered or certified, postage prepaid, and addressed as set forth on the
signature page (until any such address is changed by notice duly given).

 

5.7 Severability. If any provision of this Agreement shall be determined to be
invalid or unenforceable, the remainder shall be valid and enforceable to the
maximum extent possible.

 

5.8 Headings. The section headings used in this Agreement are intended
principally for convenience and shall not, by themselves, determine the rights
and obligations of the parties to this Agreement.

 

5.9 Delay and Waiver. No delay on the part of Lender in exercising any right
under this Agreement shall operate as a waiver of such right. The waiver by
Lender of any term or condition of this Agreement shall not be construed as a
waiver of a subsequent breach or failure of the same term or condition or a
waiver of any other term or condition contained in this Agreement.

 

5.10 Term. This Agreement shall terminate upon delivery by Lender, to Borrow and
Pledgeholder, of notice that all obligations of Borrower under this Agreement
have been fulfilled.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement the day and
year first above written.

 

BORROWER:        

         

/s/    SRINIVASAN KRISHNAN        

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Srinivasan Krishnan

 

LENDER:

         

                                VALICERT, INC.

           

/s/    YOSI AMRAM        

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Joseph (Yosi) Amram, President and CEO

 

Consent of Borrower’s Spouse. Borrower’s spouse consents to be bound by the
terms of this Loan and Pledge Agreement as to her interests, whether as
community property or otherwise, if any, in the Collateral.

 

           

Borrower’s Spouse:    

           

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(signature)

 

Consent of Pledgeholder. The undersigned agrees to act as pledgeholder under
this Agreement pursuant to Section 3 and agrees to be bound only by such Section
3 and Section 5.

 

           

Venture Law Group, A Professional Corporation    

       

By:

 

/S/    JAMES L. BROCK        

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James L. Brock, Director

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Schedule 3.2

 

Company

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Record Holder

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Type of Stock

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Certificate
Number

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Number of
Shares

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