<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 8, 1996
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INFERENCE CORPORATION
---------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-26334 95-3436352
- ------------------ ----------- --------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
100 ROWLAND WAY, NOVATO, CALIFORNIA 94945
------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(415) 893-7200
--------------
NOT APPLICABLE
--------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS
At the 1996 annual meeting ("Annual Meeting") of shareholders of
Inference Corporation, a California corporation ("Inference-California"), held
on July 2, 1996, Inference-California's shareholders approved the
reincorporation of Inference-California into the State of Delaware.
On July 8, 1996, the reincorporation of Inference-California into the
State of Delaware was effected, pursuant to a merger of Inference-Corporation
into and with INFR, Inc., a wholly-owned subsidiary of Inference-California and
a Delaware corporation ("Inference-Delaware"). Inference-Delaware was the
surviving corporation in the merger and changed its corporate name from INFR,
Inc. to Inference Corporation. As a result of the merger, Inference-Delaware
has succeeded by operation of law to all of the assets, rights, powers and
property and all of the debts, liabilities and obligations of Inference-
California. There has been no change in the business, management, fiscal year,
location of principal facilities, assets or liabilities of Inference Corporation
as a result of the merger. Each outstanding share of Inference-California
Common Stock, no par value, was automatically converted into one share of
Inference-Delaware Common Stock, $0.01 par value. Each outstanding stock
certificate representing a share or shares of Inference-California will continue
to represent the same number of shares of Inference-Delaware Common Stock.
Exhibit 99.1 attached hereto and incorporated herein by this reference provides
a description of the capital stock of Inference-Delaware.
In addition to the approval of the reincorporation at the Annual
Meeting and the election of directors, the Company's shareholders approved the
following:
(i) The Inference Corporation Employee Stock Purchase Plan, with
500,000 shares of Class A Common Stock reserved for issuance thereunder;
and
(ii) Amendments to the Company's Amended and Restated 1993 Stock
Option Plan, which provide for the increase of shares available for
issuance thereunder by 500,000 shares and accelerated vesting of stock
options in certain events.
For a discussion of the proposals voted upon at the Company's 1996
Annual Meeting of Shareholders, see the Company's Proxy Statement filed with the
Securities and Exchange Commission on May 23, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits. See "Index to Exhibits."
--------
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INFERENCE CORPORATION,
a Delaware corporation
Date: July 16, 1996 By: /s/William D. Griffin
--------------------------
Name: William D. Griffin
Title: Senior Vice President,
Chief Financial Officer
3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION OF DOCUMENT PAGE
<S> <C> <C>
2.1 Agreement of Merger dated as of July 2, 1996
by and between the Registrant and INFR,
Inc., a Delaware corporation (merger
agreement effectuating the reincorporation of
the Registrant into Delaware).
3.1 Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
10.1 The Registrant's Employee Stock Purchase
Plan.
10.2 Amendment No. 1 to Registrant's Amended
and Restated 1993 Stock Option Plan dated
February 14, 1996.
10.3 Amendment No. 2 to Registrant's Amended
and Restated 1993 Stock Option Plan dated
March 28, 1996.
99.1 Description of the Registrant's Capital Stock.
</TABLE>
4
<PAGE>
EXHIBIT 2.1
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement"), dated as of July 2, 1996, is
entered into between Inference Corporation, a California corporation ("Inference
California"), and INFR, Inc., a Delaware corporation ("Inference Delaware").
Inference California and Inference Delaware are hereinafter sometimes
collectively referred to as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, Inference California is a corporation duly organized and existing
under the laws of the State of California;
WHEREAS, Inference Delaware is a corporation duly organized and existing
under the laws of the State of Delaware;
WHEREAS, on the date of this Agreement, Inference California has authority
to issue 35,000,000 shares of capital stock, consisting of: (i) 23,000,000
shares of Class A Common Stock, no par value ("California Class A Common
Stock"), of which 9,260,764 shares are issued and outstanding or reserved for
issuance; (ii) 2,000,000 shares of Class B Common Stock, no par value
("California Class B Common Stock"), of which 1,351,911 shares are issued and
outstanding or reserved for issuance; and (iii) 10,000,000 shares of Preferred
Stock, no par value, of which none are issued and outstanding;
WHEREAS, on the date of this Agreement, Inference Delaware has authority to
issue 19,000,000 shares of capital stock, consisting of: (i) 15,000,000 shares
of Class A Common Stock, par value $0.01 per share ("Delaware Class A Common
Stock"), 100 of which shares are issued and outstanding and owned by Inference
California; (ii) 2,000,000 shares of Class B Common Stock, par value $0.01 per
share ("Delaware Class B Common Stock"), of which none are issued and
outstanding; and (iii) 2,000,000 shares of Preferred Stock, par value $0.01 per
share, of which none are issued and outstanding;
WHEREAS, the respective Boards of Directors of Inference California and
Inference Delaware have determined that it is advisable and in the best
interests of each of such corporations that Inference California merge with and
into Inference Delaware upon the terms and subject to the conditions set forth
in this Agreement for the purpose of effecting the change of the state of
incorporation of Inference California from California to Delaware;
WHEREAS, the respective Boards of Directors of Inference California and
Inference Delaware have, by resolutions duly adopted, approved this Agreement;
WHEREAS, Inference California has approved this Agreement as the sole
stockholder of Inference Delaware; and
Exhibit 2.1-1
<PAGE>
WHEREAS, the shareholders of Inference California have approved this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Inference California and Inference Delaware hereby agree as
follows:
1. Merger. Subject to the conditions of this Agreement, Inference
California shall be merged with and into Inference Delaware (the "Merger"), and
Inference Delaware shall be the surviving corporation (hereinafter sometimes
referred to as the "Surviving Corporation"). The Merger shall become effective
upon the date and at the time of filing of a copy of this Agreement of Merger
with appropriate certificates of merger, providing for the Merger, with the
Secretary of State of the State of California or an appropriate Certificate of
Merger, providing for the Merger, with the Secretary of State of the State of
Delaware, whichever later occurs (the "Effective Time").
2. Governing Documents. The Certificate of Incorporation of Inference
Delaware, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation without change or
amendment until thereafter amended in accordance with the provisions thereof and
applicable laws, except that the Certificate of Incorporation shall hereby be
amended to change the name of the Surviving Corporation to "Inference
Corporation," and the Bylaws of Inference Delaware, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
without change or amendment until thereafter amended in accordance with the
provisions thereof, of the Certificate of Incorporation of the Surviving
Corporation and applicable law.
3. Succession. At the Effective Time, the separate corporate existence
of Inference California shall cease, and Inference Delaware shall possess all
the rights, privileges, powers and franchises of a public and private nature and
be subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations; and all and singular, the rights, privileges, powers
and franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to each of the Constituent Corporations on
whatever account, as well for stock subscriptions as all other things in action
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the respective
Constituent Corporations, and the title to any real estate vested by deed or
otherwise, in either of such Constituent Corporations shall not revert or be in
any way impaired by reason of the Merger; but all rights of creditors and all
liens upon any property of Inference California shall be preserved unimpaired.
To the extent permitted by law, any claim existing or action or proceeding
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place. All debts, liabilities and duties of the
respective Constituent Corporations shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it. All corporate
acts, plans, policies, agreements, arrangements, approvals and authorizations of
Inference California, its shareholders, Board of Directors and committees
thereof, officers and agents which were valid and effective immediately prior to
the Effective Time, shall be taken
Exhibit 2.1-2
<PAGE>
for all purposes as the acts, plans, policies, agreements, arrangements,
approvals and authorizations of the Surviving Corporation and shall be as
effective and binding thereon as the same were with respect to Inference
California. The employees and agents of Inference California shall become the
employees and agents of the Surviving Corporation and continue to be entitled to
the same rights and benefits which they enjoyed as employees and agents of
Inference California. The requirements of any plans or agreements of Inference
California involving the issuance or purchase by Inference California of certain
shares of its capital stock shall be satisfied by the issuance or purchase of a
like number and same class of shares of the Surviving Corporation.
4. Directors and Officers. The Directors and Officers of Inference
California on the Effective Time shall be and become the sole Directors and
Officers, holding the same titles and positions, of the Surviving Corporation on
the Effective Time, and after the Effective Time shall serve in accordance with
the Bylaws of the Surviving Corporation.
5. Further Assurances. From time to time, as and when required by the
Surviving Corporation or by its successors or assigns, there shall be executed
and delivered on behalf of Inference California such deeds and other
instruments, and there shall be taken or caused to be taken by it all such
further and other action, as shall be appropriate, advisable or necessary in
order to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to and possession of all property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of Inference
California, and otherwise to carry out the purposes of this Agreement, and the
officers and directors of the Surviving Corporation are fully authorized in the
name and on behalf of Inference California or otherwise, to take any and all
such action and to execute and deliver any and all such deeds and other
instruments.
6. Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) each share of California Class A Common Stock outstanding
immediately prior to the Effective Time shall be changed and converted into
and shall be one fully paid and nonassessable share of Delaware Class A
Common Stock;
(b) each share of California Class B Common Stock outstanding
immediately prior to the Effective Time shall be changed and converted into
and shall be one fully paid and nonassessable share of Delaware Class B
Common Stock; and
(c) the 100 shares of Delaware Class A Common Stock presently issued
and outstanding in the name of Inference California shall be cancelled and
retired and resume the status of authorized and unissued shares of Delaware
Class A Common Stock, and no shares of Delaware Common Stock or other
securities of Inference Delaware shall be issued in respect thereof.
Exhibit 2.1-3
<PAGE>
7. Conditions to Obligations. The obligations of each party to complete
the Merger are subject to the following conditions:
(a) Inference California Shareholder Approval. The Merger shall have
-----------------------------------------
received the requisite approval of the shareholders of California Inference
pursuant to the General Corporation Law of the State of California.
(b) Approval from Government Agencies. All governmental approvals and
---------------------------------
other actions required to effect the Merger and related transactions shall
have been obtained, without conditions or restrictions that the affected
party reasonably considers unduly burdensome.
(c) Listing. The Delaware Class A Common Stock shall be listed, or
-------
approved for listing, on the Nasdaq National Market.
8. Stock Certificates. At and after the Effective Time, all of the
outstanding certificates which, immediately prior to the Effective Time,
represented shares of California capital stock shall, respectively, be deemed
for all purposes to evidence ownership of, and to represent, shares of Delaware
capital stock into which the shares of California capital stock, formerly
represented by such certificates, have been converted as herein provided. The
registered owner on the books and records of the Surviving Corporation or its
transfer agents of any such outstanding stock certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted for
to the Surviving Corporation or its transfer agents, have and be entitled to
exercise any voting and other rights with respect to, and to receive any
dividends and other distributions upon, the shares of Delaware capital stock
evidenced by such outstanding certificate as above provided.
9. Options and Warrants.
(a) Each option to purchase, or other award of, shares of California
Class A Common Stock granted under the Amended and Restated Inference
California 1993 Stock Option Plan, the Fourth Amended and Restated
Inference California Incentive Stock Option Plan and Inference California
Nonstatutory Stock Option Plan, and any stock option agreements
(collectively, the "Plans") which is outstanding immediately prior to the
Effective Time, shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become an option to
purchase, or award of, the same number of shares of Delaware Class A Common
Stock at the same option price per share, and upon the same terms and
subject to the same conditions as set forth in each of the respective
Plans, as in effect at the Effective Time. The same number of shares of
Delaware Class A Common Stock shall be reserved for purposes of said Plans
as is equal to the number of shares of California Class A Common Stock so
reserved as of the Effective Time. As of the Effective Time, Inference
Delaware hereby assumes the Plans and all obligations of Inference
California under the Plans, including the outstanding options or awards or
portions thereof granted pursuant to the Plans.
Exhibit 2.1-4
<PAGE>
(b) Each stock purchase warrant providing for the issuance of
Inference California Class A Common Stock or Class B Common Stock which is
outstanding immediately prior to the Effective Time, shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and become a stock purchase warrant providing for the
issuance of the same number of shares of Inference Delaware Class A Common
Stock or Class B Common Stock, as applicable, at the same exercise price
per share, and upon the same terms and conditions as set forth in each of
the respective stock purchase warrants.
10. Other Employee Benefit Plans. As of the Effective Time, Inference
Delaware hereby assumes all obligations under any and all employee benefit plans
of Inference California in effect as of the Effective Time or with respect to
which employee rights or accrued benefits are outstanding as of the Effective
Time.
11. Amendment. Subject to applicable law, this Agreement may be amended,
modified or supplemented by written agreement of the parties hereto at any time
prior to the Effective Time with respect to any of the terms contained herein;
provided, however, that no such amendment, modification or supplement not
adopted and approved by the shareholders of Inference California and Inference
Delaware shall affect the rights of either or both of such shareholders in a
manner which is materially adverse to either or both of them or change any of
the principal terms of this Agreement of Merger.
12. Abandonment. At any time prior to the Effective Time, this Agreement
may be terminated and the Merger may be abandoned by the Board of Directors of
Inference California, notwithstanding approval of this Agreement by the
stockholder of Inference Delaware or by the shareholders of Inference
California, or both, if, in the opinion of the Board of Directors of Inference
California, circumstances arise which, in the opinion of such Board of
Directors, make the Merger for any reason inadvisable.
13. Counterparts. In order to facilitate the filing and recording of this
Agreement, the same may be executed in two or more counterparts, each of which
shall be deemed to be an original and the same agreement.
Exhibit 2.1-5
<PAGE>
IN WITNESS WHEREOF, Inference California and Inference Delaware have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first above written.
INFERENCE CORPORATION,
a California corporation
By: /s/ Peter R. Tierney
--------------------
Peter R. Tierney
Chief Executive Officer
ATTEST:
By: /s/ William D. Griffin
----------------------
William D. Griffin
Secretary
INFR, INC.,
a Delaware corporation
By: /s/ Peter R. Tierney
--------------------
Peter R. Tierney
Chief Executive Officer
ATTEST:
By: /s/ William D. Griffin
----------------------
William D. Griffin
Secretary
Exhibit 2.1-6
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
INFR, INC.
ARTICLE I. NAME.
----
The name of the corporation is INFR, Inc. (hereinafter referred to as
the "Corporation").
ARTICLE II. REGISTERED OFFICE AND AGENT.
---------------------------
The address of the registered office of the Corporation in the State
of Delaware is Paracorp Inc., 15 East North Street, Dover, County of Kent. The
name of the registered agent of the Corporation at such address is Paracorp Inc.
ARTICLE III. NATURE OF BUSINESS.
------------------
The nature of the business or purposes to be conducted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the Delaware General Corporation Law.
ARTICLE IV. CAPITAL STOCK.
-------------
The Corporation is authorized to issue three classes of capital stock,
designated Class A Common Stock, Class B Common Stock and Preferred Stock. The
total number of shares of stock which the Corporation shall have authority to
issue is Nineteen Million (19,000,000) shares, consisting of Fifteen Million
(15,000,000) shares of Class A Common Stock, par value $.01 (the "CLASS A COMMON
STOCK"), Two Million (2,000,000) shares of Class B Common Stock, par value $.01
(the "CLASS B COMMON STOCK"), and Two Million (2,000,000) shares of Preferred
Stock, par value $.01 (the "PREFERRED STOCK"). The Class A Common Stock and the
Class B Common Stock are collectively referred to herein as the "COMMON SHARES."
Section 1: Common Stock. A statement of the designations, powers,
------------
preferences, rights, qualifications, limitations and restrictions in respect of
the Common Shares is as follows:
(A) Dividends. The Board of Directors of the Corporation may cause
---------
dividends to be paid to the holders of shares of Class A Common Stock or Class B
Common Stock out of funds legally available for the payment of dividends by
declaring an amount per share as a dividend. When and as dividends or other
distributions are declared, whether
Exhibit 3.1-1
<PAGE>
payable in cash, in property or in shares of stock of the Corporation, other
than in shares of Class A Common Stock or Class B Common Stock, the holders of
Class A Common Stock and the holders of Class B Common Stock shall be entitled
to share equally, share for share, in such dividends or other distributions. No
dividends or other distributions shall be declared or paid in shares of Class A
Common Stock or Class B Common Stock or options, warrants or rights to acquire
such stock or securities convertible into or exchangeable for shares of such
stock, except dividends or other distributions payable ratably according to the
number of shares of Class A Common Stock and Class B Common Stock held by the
holders thereof, in shares of, or options, warrants or rights to acquire or
securities convertible into or exchangeable for, Class A Common Stock to holders
of that class of stock and Class B Common Stock to holders of that class of
stock.
(B) Liquidation Rights. Subject to the prior rights of holders of any
------------------
shares of stock of the Corporation ranking prior to the Common Shares upon
liquidation, dissolution or winding up (voluntary or otherwise), in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holders of Common Shares shall be entitled to
share, ratably according to the number of shares of Class A Common Stock and
Class B Common Stock held by them, in all assets of the Corporation available
for distribution to its stockholders.
(C) Voting Rights.
-------------
(1) Except as otherwise provided in this Certificate of Incorporation
or required by applicable law, the holders of Class A Common Stock shall be
entitled to vote on each matter on which the stockholders of the
Corporation shall be entitled to vote, and each holder of Class A Common
Stock shall be entitled to one vote for each share of such stock held by
such holder.
(2) The holders of Class B Common Stock shall not have any voting
rights except as otherwise provided in this Certificate of Incorporation or
required by applicable law and except that such holders shall be entitled
to vote as a separate class on any amendment to this paragraph (C)(2) and
on any amendment, repeal or modification of any provision of this
Certificate of Incorporation that adversely affects the powers, preferences
or special rights of holders of Class B Common Stock.
(3) In addition to any affirmative vote required by law or by this
Certificate of Incorporation, the affirmative vote of the holders of not
less than a majority of the then outstanding shares of both classes of
Common Shares, voting together as a single class, shall be required for any
of the following actions: (i) any increase, reduction or other change in
the authorized number of shares of any class of Common Shares, (ii) except
as provided in Section 2 of this Article IV, the authorization of any new
series or class of stock of the Corporation senior to or on a parity with
Common Shares with respect to the payment of dividends or the distribution
of assets on liquidation, and increases in the authorized shares of any
such series or class, and (iii) any amendment to this Certificate of
Incorporation that adversely affects the rights of the Class A Common
Exhibit 3.1-2
<PAGE>
Stock or the Class B Common Stock. The affirmative vote or written consent
specified in the preceding sentence shall be required notwithstanding the
fact that no vote may be required, or that a lesser percentage vote may be
specified by law or otherwise.
(D) Conversion.
----------
(1) Upon compliance with the provisions of paragraph (D)(3) below, any
Regulated Stockholder (as defined below) shall be entitled to convert, at
any time and from time to time, any or all of the shares of Class A Common
Stock held by such stockholder into the same number of shares of Class B
Common Stock. The term "Regulated Stockholder" shall mean (a) any
stockholder that is a Federal licensee under the Small Business Investment
Act of 1958 or that is subject to the provisions of Regulation Y of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 225) or
any successor to such regulation ("REGULATION Y"), and that holds shares of
Class A Common Stock and Class B Common Stock issued on or prior to
December 1, 1996 ("SUBJECT DATE") or upon exercise of warrants or options
that were outstanding on or prior to the Subject Date, or shares issued
upon conversion(s) of such shares, so long as such stockholder shall hold
any such shares of Class A Common Stock or Class B Common Stock or shares
issued upon conversion(s) of such shares, (b) any Affiliate (as defined
below) of any such Regulated Stockholder specified in clause (a) above that
is a transferee of any shares of Class A Common Stock or Class B Common
Stock of the Corporation, so long as such Affiliate shall hold any such
shares of Class A Common Stock or Class B Common Stock or shares issued
upon conversion(s) of such shares and (c) any individual, partnership,
joint venture, corporation, association, trust, or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof (a "PERSON") (i) to which any such Regulated
Stockholder specified in clause (a) above or any of its Affiliates has
transferred such shares, so long as such transferee shall hold, and only
with respect to, any shares transferred by such Regulated Stockholder or
Affiliate or any shares issued upon conversion(s) of such shares, and (ii)
which transferee is, or any Affiliate of which is, subject to the
provisions of Regulation Y. As used in this Certificate of Incorporation,
the term "AFFILIATE" shall mean with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common
control with such Person. For the purpose of this definition, the term
"CONTROL" (including with correlative meanings, the terms "CONTROLLING",
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract
or otherwise.
(2) Upon compliance with the provisions of paragraph (D)(3) below, any
stockholder shall be entitled to convert, at any time and from time to
time, any and all shares of Class B Common Stock held by such stockholder
into the same number of shares of Class A Common Stock; provided, however,
-------- -------
that no holder of any shares of Class B Common Stock that is a Regulated
Stockholder shall be entitled to convert any such shares into shares of
Class A Common Stock, to the extent that, as a result of such
Exhibit 3.1-3
<PAGE>
conversion, such holder and its Affiliates, directly or indirectly, would
own, control or have the power to vote more than five percent (5%) of the
outstanding shares of Class A Common Stock.
(3)(a) Each conversion of Common Shares into another class of Common
Shares shall be effected by the surrender of the certificate(s) evidencing
the shares of the class of stock to be converted (the "CONVERTING SHARES")
at the principal office of the Corporation (or such other office or agency
of the Corporation as the Corporation may designate by notice in writing to
the holders of Common Shares) at any time during its usual business hours,
together with written notice by the holder of such Converting Shares, (i)
stating that the holder desires to convert the Converting Shares or a
specified number of such Converting shares, evidenced by such
certificate(s) into an equal number of shares of the class into which such
shares may be converted (the "CONVERTED SHARES"), and (ii) giving the
name(s) (with addresses) and denominations in which the certificate(s)
evidencing the Converted Shares shall be issued, and instructions for the
delivery thereof. The Corporation shall promptly notify each stockholder
of record of its receipt of such notice. Upon receipt of the notice
described in the first sentence of this paragraph (D)(3)(a), together with
the certificate(s) evidencing the Converting Shares, the Corporation shall
be obligated to, and shall, issue and deliver in accordance with such
instructions the certificate(s) evidencing the Converted Shares issuable
upon such conversion and a certificate (which shall contain such legends,
if any, as were set forth on the surrendered certificate(s)) representing
any shares which were represented by the certificate(s) surrendered to the
Corporation in connection with such conversion but which were not
Converting Shares and, therefore, were not converted; provided, however,
-------- -------
that if such conversion is subject to paragraph (D)(3)(c) below, the
Corporation shall not issue said certificate(s) until the expiration of the
Deferral Period referred to therein. Such conversion shall be deemed to
have been effected as of the close of business on the date on which such
certificate(s) shall have been surrendered and such written notice shall
have been received by the Corporation, and at such time the rights of the
holder of such Converting Shares as such holder shall cease (except that in
the case of a conversion subject to paragraph (D)(3)(c) below, the
conversion shall be deemed effective upon expiration of the Deferral Period
referred to therein), and the person(s) in whose name or names any
certificate(s) evidencing the Converted Shares are to be issued upon such
conversion shall be deemed to have become the holder(s) of record of the
Converted Shares.
(b) Upon the issuance of the Converted Shares in accordance with this
paragraph (D), such shares shall be deemed to be duly authorized, validly
issued, fully paid and non-assessable.
(c) The Corporation shall not convert or directly or indirectly
redeem, purchase or otherwise acquire any shares of Class A Common Stock or
take any other action affecting the voting rights of such shares, if such
action will increase the percentage of outstanding voting securities owned
or controlled by any Regulated Stockholder (other than the stockholder
which requested that the Corporation take such
Exhibit 3.1-4
<PAGE>
action, or which otherwise waives in writing its rights under this
paragraph (D)) unless the Corporation gives written notice (the "FIRST
NOTICE") of such action to each such holder. The Corporation will defer
making any conversion, redemption, purchase or other acquisition or taking
any such other action for a period of 30 days (the "DEFERRAL PERIOD") after
giving the First Notice in order to allow each such holder to determine
whether it wishes to convert or take any other action with respect to the
Common Shares it owns, controls or has the power to vote, and if any such
holder then elects to convert any shares of Class A Common Stock, it shall
notify the Corporation in writing within 20 days of the issuance of the
First Notice, in which case the Corporation (i) shall promptly notify from
time to time each other Regulated Stockholder holding shares of each
proposed conversion and the proposed transactions, and (ii) effect the
conversion requested by each holder of Class B Common Stock in response to
the notices issued pursuant to this paragraph (D)(3)(c) at the end of the
Deferral Period or as soon thereafter as is reasonably practicable.
(d) The Corporation will at all times reserve and keep available out
of its authorized but unissued shares of Class A Common Stock and Class B
Common Stock or its treasury shares, solely for the purpose of issue upon
conversion of shares of Class A Common Stock and Class B Common Stock, such
number of shares of such class as shall then be issuable upon the
conversion of all outstanding shares of Class A Common Stock and Class B
Common Stock.
(e) The issue of certificates evidencing shares of any class of Common
Shares upon conversion of shares of any other class of Common Shares shall
be made without charge to the holders of such shares for any issue tax in
respect thereof or other cost incurred by the Corporation in connection
with such conversion; provided, however, the Corporation shall not be
-------- -------
required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other
than that of the holder of the Common Shares converted.
(4) If the Corporation shall in any manner subdivide (by stock split,
stock dividend or otherwise) or combine (by reverse stock split or
otherwise) the outstanding shares of the Class A Common Stock or the Class
B Common Stock, the outstanding shares of each other class of Common Shares
shall be proportionately subdivided or combined, as the case may be, and
effective provision shall be made for the protection of all conversion
rights hereunder. In case of any reorganization, reclassification or
change of shares of Class A Common Stock or Class B Common Stock, or in
case of any consolidation of the Corporation with one or more other
corporations or a merger of the Corporation with another corporation (other
than a merger in which the Corporation is the continuing corporation and
which does not result in any reclassification or change of outstanding
shares of Class A Common Stock or Class B Common Stock), or in case of any
sale, lease or other disposition to another corporation (other than a
wholly-owned subsidiary of the Corporation) of all or substantially all the
assets of the Corporation, each holder of Common Shares, irrespective of
class, shall have the right at any time thereafter, so long as the
conversion right hereunder with respect to such Common
Exhibit 3.1-5
<PAGE>
Shares would exist had such event not occurred, to convert such shares into
the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reorganization, reclassification,
change, consolidation, merger, sale, lease or other disposition by a holder
of the number of shares of the class of Common Shares into which such
Common Shares might have been converted immediately prior to such
reorganization, reclassification, change, consolidation, merger, sale,
lease or other disposition. In the event of such a reorganization,
reclassification, change, consolidation, merger, sale, lease or other
disposition, effective provision shall be made in the Certificate of
Incorporation of the resulting or surviving corporation or otherwise for
the protection of the conversion rights of the Common Shares of each class
that shall be applicable, as nearly as reasonably may be, to any such other
shares of stock and other securities and property deliverable upon
conversion of Common Shares into which such Common Shares might have been
converted immediately prior to such event. The Corporation shall not be a
party to any merger, consolidation or recapitalization pursuant to which
any Regulated Stockholder would be required to take (i) any voting
securities which would cause such holder to violate any law, regulation or
other requirement of any governmental body applicable to such Regulated
Stockholder, or (ii) any securities convertible into voting securities
which if such conversion took place would cause such holder to violate any
law, regulation or other requirement of any governmental body applicable to
such Regulated Stockholder other than securities which are specifically
provided to be convertible only in the event that such conversion may occur
without any such violation.
SECTION 2. Preferred Stock. The Board of Directors is authorized,
---------------
subject to the limitations prescribed by law and the provisions of Section 2 of
this Article IV, to provide for the issuance of shares of Preferred Stock from
time to time in one or more series, and by filing any certificate of
designations required under Section 151(g) of the Delaware General Corporation
Law (or its successor statute as in effect from time to time), to fix or alter
the number of shares of any series of Preferred Stock, and to fix the powers,
designations, preferences and relative, participating, optional or other rights,
and the qualifications, limitations or restrictions granted to or imposed upon
the shares of any wholly unissued series of Preferred Stock. The authority of
the Board of Directors with respect to each series shall include, but not be
limited to, the determination of the following:
(a) the number of shares constituting and the distinctive designation
of such series;
(b) the dividend rights of the shares of such series, including
whether dividends shall be cumulative and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of such series;
(c) whether such series shall have voting rights, and, if so, the
terms of such voting rights, including the number of votes per share, the
number of
Exhibit 3.1-6
<PAGE>
members of the Board of Directors or the percentage of members of the Board
of Directors each class or series of Preferred Stock may be entitled to
elect;
(d) whether such series shall have conversion rights and, if so, the
terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall
determine;
(e) whether or not the shares of such series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date
or date upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary as the Board of
Directors determines under different conditions and at different redemption
dates;
(f) whether such series shall have a sinking fund for the redemption
or purchase of shares of such series, and, if so, the terms and amount of
such sinking fund;
(g) the rights of the shares of such series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of such
series; and
(h) any other relative rights, preferences and limitations of such
series.
The Board of Directors may, within the limits and restrictions stated
in any resolution or resolutions of the Board of Directors originally fixing the
number of shares constituting any series, increase or decrease (but not below
the number of shares of such series then outstanding) the number of shares of
any such series subsequent to the issue of shares of that series. Preferred
Shares that are redeemed, purchased or otherwise acquired by the Corporation may
be reissued except as otherwise provided by law or the applicable certificate of
designations.
ARTICLE V. INCORPORATOR.
------------
The name and mailing address of the incorporator is Susanna Kim, 610
Newport Center Drive, Suite 1700, Newport Beach, California 92660.
ARTICLE VI. BOARD OF DIRECTORS.
------------------
SECTION 1. Number of Directors. The properties, business and affairs
-------------------
of the Corporation shall be managed and controlled by a Board of Directors of
not less than five (5) nor more than eleven (11) members. The number of
directors which shall constitute the whole Board of Directors shall be six (6)
unless and until otherwise determined in the manner provided in the Bylaws of
the Corporation. Notwithstanding any other provision of this Article VI, and
except as otherwise required by law, whenever the holders of any one or more
series of Preferred Stock or other securities of the Corporation shall have the
right, voting separately as a
Exhibit 3.1-7
<PAGE>
class, to elect one or more directors of the Corporation, such directorship or
directorships shall be in addition to the number of directors as determined in
the manner provided in the Bylaws of the Corporation, such director or directors
shall not be classified pursuant to Section 2 of this Article VI, and, unless
otherwise provided by law or by resolution of the Board of Directors authorizing
such series of Preferred Stock or other securities of the Corporation, the
filling of vacancies and other features of any such directorship shall be
governed by the terms of this Certificate of Incorporation applicable thereto,
except that, unless otherwise provided by law or by resolution of the Board of
Directors authorizing such series of Preferred Stock or other securities of the
Corporation, any such director shall hold office for a term expiring at the next
succeeding annual meeting of stockholders and until such director's successor
shall be elected and qualified, or until such director's death, resignation or
removal, whichever occurs earlier.
SECTION 2. Classified Board -- Three Classes. The directors, other
---------------------------------
than those directors not classified pursuant to Section 1 of this Article VI,
shall be divided into three (3) classes, designated Class I, Class II and Class
III, such classes to be as nearly equal in number as possible. Each director of
Class I shall hold office for a term expiring at the next annual meeting of
stockholders and until such director's successor is duly elected and qualified,
or until such director's earlier death, resignation or removal, each director of
Class II shall hold office for a term expiring at the second annual meeting of
stockholders and until such director's successor is duly elected and qualified,
or until such director's earlier death, resignation or removal, and each
director of Class III shall hold office for a term expiring at the third annual
meeting of stockholders and until such director's successor is duly elected and
qualified, or until such director's earlier death, resignation or removal.
Thereafter, at each annual meeting of stockholders, directors shall be chosen
for a term of three years to succeed those whose terms then expire and shall
hold office until the third annual meeting of stockholders following the annual
meeting of stockholders at which each such director was elected and until such
director's successor is duly elected and qualified, or until such director's
earlier death, resignation or removal.
SECTION 3. Board Reclassification. Unless otherwise agreed to by a
----------------------
two-thirds majority of the existing directors, the determination of the
selection of directors in each class upon changes in the number of directors
shall be determined in the manner provided in the Bylaws of the Corporation.
SECTION 4. Vacancies. Any vacancy on the Board of Directors for any
` ---------
reason, whether arising through death, resignation or removal of a director or
through an increase in the number of directors of any class, shall be filled by
a majority vote of the remaining directors, although less than a quorum, or by a
sole remaining director. The term of office of any director elected to fill
such a vacancy shall, except as provided in Section 3 of this Article VI, expire
at the expiration of the term of office of directors of the class in which the
vacancy occurred.
SECTION 5. Elections. Elections of directors need not be by written
---------
ballot except and to the extent provided in the Bylaws of the Corporation.
Exhibit 3.1-8
<PAGE>
SECTION 6. Stockholder Nominees. Nominations by stockholders of
--------------------
persons for election to the Board of Directors shall be made only in accordance
with the procedures set forth in the Bylaws of the Corporation.
SECTION 7. Removal. Subject to the rights of the holders of any
-------
series of Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause.
Notwithstanding the foregoing, and except as otherwise required by law, whenever
the holders of any one or more series of Preferred Stock shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the provisions of this Section 7 shall not apply with respect to such director
or directors.
ARTICLE VII. BYLAWS.
------
A majority of the Board of Directors is expressly authorized to make,
alter, amend or repeal the Bylaws of the Corporation. The stockholders of the
Corporation may adopt, amend or repeal Bylaws of the Corporation.
ARTICLE VIII. STOCKHOLDER MEETINGS; BOOKS.
---------------------------
Meetings of stockholders shall be held at such time, on such date and
at such place (within or without the State of Delaware) as provided in the
Bylaws of the Corporation. Any action required or permitted to be taken by the
stockholders of the Corporation must be taken at a duly called and noticed
meeting of stockholders and may not be taken by consent in writing. The books
of the Corporation may be kept, subject to any applicable statutory provision,
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE IX. DIRECTOR LIABILITY; INDEMNIFICATION.
-----------------------------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. The liability of a
director of the Corporation to the Corporation or its stockholders for monetary
damages shall be eliminated to the fullest extent permissible under applicable
law in the event it is determined that Delaware law does not apply. The
Corporation is authorized to provide by bylaw, agreement or otherwise for
indemnification of directors, officers, employees and agents for breach of duty
to the Corporation and its stockholders to the fullest extent permitted by
applicable law. Any repeal or modification of this Article IX shall not result
in any liability for a director with respect to any action or omission occurring
prior to such repeal or modification.
Exhibit 3.1-9
<PAGE>
ARTICLE X. AMENDMENTS.
----------
The Corporation reserves the right to amend this Certificate of
Incorporation in any manner permitted by the Delaware General Corporation Law
and all rights and powers conferred upon stockholders, directors and officers
herein are granted subject to this reservation. Notwithstanding the foregoing,
the provisions set forth in Articles VI, VIII, IX and this Article X may not be
repealed or amended in any respect, and no other provision may be adopted,
amended or repealed which would have the effect of modifying or permitting the
circumvention of the provisions set forth in Articles VI, VIII, IX and this
Article X, unless such action is approved by the affirmative vote of the holders
of not less than 80% of the outstanding shares of the Corporation entitled to
vote on the matter.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinabove named for the purpose of forming a corporation to do business both
within and without the State of Delaware, do make and file this Certificate,
hereby declaring under penalties of perjury that it is my act and deed and that
the facts stated herein are true.
/s/ Susanna Kim
--------------------
Susanna Kim
Exhibit 3.1-10
<PAGE>
EXHIBIT 3.2
BYLAWS
of
INFERENCE CORPORATION
(a Delaware corporation)
<PAGE>
I N D E X
- - - - -
<TABLE>
<CAPTION>
Page
-----
<S> <C>
ARTICLE I. OFFICES.................................................. 1
Section 1. Registered Office................................... 1
Section 2. Principal Executive Office.......................... 1
Section 3. Other Offices....................................... 1
ARTICLE II. STOCKHOLDERS............................................ 1
Section 1. Place of Meetings................................... 1
Section 2. Annual Meetings..................................... 1
Section 3. Special Meetings.................................... 1
Section 4. Notice of Annual or Special Meeting................. 2
Section 5. Notice of Business.................................. 2
Section 6. Notice of Board Candidate........................... 3
Section 7. Quorum and Adjournment.............................. 3
Section 8. Voting.............................................. 4
Section 9. Record Date......................................... 4
Section 10. Proxies............................................. 4
Section 11. Inspectors of Election.............................. 5
Section 12. Stockholder Lists................................... 5
ARTICLE III. DIRECTORS.............................................. 5
Section 1. Powers.............................................. 5
Section 2. Number of Directors................................. 6
Section 3. Election and Term of Office......................... 6
Section 4. Board Reclassification. 6
Section 5. Vacancies........................................... 8
Section 6. Place of Meeting.................................... 8
Section 7. Regular Meetings.................................... 8
Section 8. Special Meetings.................................... 8
Section 9. Quorum.............................................. 9
Section 10. Participation in Meeting by Conference Telephone.... 9
Section 11. Waiver of Notice.................................... 9
Section 12. Adjournment......................................... 9
Section 13. Fees and Compensation............................... 9
Section 14. Action Without Meeting.............................. 9
Section 15. Committees.......................................... 10
Section 16. Rights of Inspection................................ 10
Section 17. Advisory Directors.................................. 11
ARTICLE IV. OFFICERS................................................ 11
Section 1. Officers............................................. 11
</TABLE>
Exhibit 3.2
i
<PAGE>
<TABLE>
<S> <C>
Section 2. Election............................................. 11
Section 3. Removal and Resignation.............................. 11
Section 4. Vacancies............................................ 11
Section 5. Duties and Compensation.............................. 11
ARTICLE V. STOCK.................................................... 12
Section 1. Form of Stock Certificate............................ 12
Section 2. Transfers of Stock................................... 12
Section 3. Lost, Stolen or Destroyed Certificates............... 12
Section 4. Registered Stockholders.............................. 12
ARTICLE VI. OTHER PROVISIONS........................................ 13
Section 1. Endorsement of Documents; Contracts.................. 13
Section 2. Representation of Shares of Other Corporations....... 13
Section 3. Seal................................................. 13
Section 4. Fiscal Year.......................................... 13
Section 5. Dividends............................................ 13
ARTICLE VII. INDEMNIFICATION........................................ 14
Section 1. Right to Indemnification............................. 14
Section 2. Right of Claimant to Bring Suit...................... 15
Section 3. Non-Exclusivity of Rights............................ 15
Section 4. Insurance............................................ 15
Section 5. Expenses as a Witness................................ 15
Section 6. Indemnity Agreements................................. 15
Section 7. Effect of Amendment.................................. 16
</TABLE>
Exhibit 3.2
ii
<PAGE>
BYLAWS
of
INFERENCE CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I. OFFICES.
SECTION 1. REGISTERED OFFICE. The registered office of Inference
-----------------
Corporation (the "Corporation") in the State of Delaware shall be at
Incorporating Services, Ltd., 15 East North Street, Dover, County of Kent and
the name of the registered agent at that address shall be Incorporating
Services, Ltd.
SECTION 2. PRINCIPAL EXECUTIVE OFFICE. The principal executive
--------------------------
office of the Corporation shall be fixed and located at 100 Rowland Way, City of
Novato, State of California. The Board of Directors of the Corporation (the
"Board") is granted full power and authority to change said principal executive
office from one location to another within or without the State of California.
Any such change shall be noted in the Bylaws of the Corporation opposite this
Section 2 or this Section 2 may be amended to state the new location.
SECTION 3. OTHER OFFICES. Branch or subordinate offices may be
-------------
established at any time by the Board at any place or places.
ARTICLE II. STOCKHOLDERS.
SECTION 1. PLACE OF MEETINGS. Meetings of stockholders shall be held
-----------------
either at the principal executive office of the Corporation or at any other
place within or without the State of Delaware which may be designated by the
Board.
SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders
---------------
shall be held on such date and at such time as may be fixed by the Board. At
such meetings, directors shall be elected and any other proper business may be
transacted.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders
----------------
may be called at any time by a majority of the entire Board, the Chairman of the
Board or the President. Special meetings may not be called by any other person
or persons. Upon request in writing to the Chairman of the Board, the
President, any Vice President or the Secretary by any person (other than the
Board) entitled to call a special meeting of stockholders, the officer forthwith
shall cause notice to be given to the stockholders entitled to vote that a
meeting will be held at a time requested by the person or persons calling the
meeting, not less than thirty-five (35) nor more than sixty (60) days after the
receipt of the request. If the notice is not
Exhibit 3.2-1
<PAGE>
given within twenty (20) days after receipt of the request, the persons entitled
to call the meeting may give the notice.
SECTION 4. NOTICE OF ANNUAL OR SPECIAL MEETING. Except as otherwise
-----------------------------------
required by law, written notice of each annual or special meeting of
stockholders shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting to each stockholder entitled to vote thereat.
Such notice shall state the place, date and hour of the meeting and, in the case
of a special meeting, shall also state the purpose or purposes for which the
meeting is called. Except as otherwise expressly required by law, notice of any
adjourned meeting of the stockholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken.
Notice of a stockholders' meeting shall be given either personally or
by mail or by other means of written communication, addressed to the stockholder
at the address of such stockholder appearing on the books of the Corporation or
given by the stockholder to the Corporation for the purpose of notice. Notice
by mail shall be deemed to have been given at the time a written notice is
deposited in the United States mail, postage prepaid. Any other written notice
shall be deemed to have been given at the time it is personally delivered to the
recipient or is delivered to a common carrier for transmission, or actually
transmitted by the person giving the notice by electronic means, to the
recipient.
SECTION 5. NOTICE OF BUSINESS. At any meeting of stockholders, only
------------------
such business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board, (b) in accordance with Rule 14a-8 under
the Securities Exchange Act of 1934, or (c) by a stockholder of record entitled
to vote at such meeting who complies with the notice procedures set forth in
this Section 5. For business to be properly brought before a meeting by such a
stockholder, the stockholder shall have given timely notice thereof in writing
to the Secretary. To be timely, such notice shall be delivered to or mailed and
received at the principal executive office of the Corporation not less than
thirty (30) days nor more than ninety (90) days prior to the meeting; provided,
--------
however, that in the event that less than forty (40) days' notice of the date of
- -------
the meeting is given by the Corporation, notice by the stockholder to be timely
must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
otherwise given. Such stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting, and in the
event that such business includes a proposal to amend either the Certificate of
Incorporation (the "Certificate of Incorporation") or the Bylaws (the "Bylaws")
of the Corporation, the language of the proposed amendment, (b) the name and
address of the stockholder proposing such business, (c) the class and number of
shares of stock of the Corporation which are owned by such stockholder and (d)
any material personal interest of such stockholder in such business. If notice
has not been given pursuant to this Section 5, the Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that the
proposed business was not properly brought before the meeting, and such business
may not be transacted at the meeting. The foregoing provisions of this Section
5 do not relieve any
Exhibit 3.2-2
<PAGE>
stockholder of any obligation to comply with all applicable requirements of the
Securities Exchange Act of 1934 and rules and regulations thereunder.
SECTION 6. NOTICE OF BOARD CANDIDATE. At any meeting of
-------------------------
stockholders, a person may be a candidate for election to the Board only if such
person is nominated (a) by or at the direction of the Board, (b) by any
nominating committee or person appointed by the Board or (c) by a stockholder of
record entitled to vote at such meeting who complies with the notice procedures
set forth in this Section 6. To properly nominate a candidate, a stockholder
shall give timely notice of such nomination in writing to the Secretary. To be
timely, such notice shall be delivered to or mailed and received at the
principal executive office of the Corporation not less than thirty (30) days nor
more than ninety (90) days prior to the meeting; provided, however, that in the
-------- -------
event that less than forty (40) days' notice of the date of the meeting is given
by the Corporation, notice of such nomination to be timely must be so received
not later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or otherwise given. Such
stockholder's notice to the Secretary shall set forth (a) as to each person whom
the stockholder proposes to nominate (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the class and number of shares of stock of the Corporation
which are owned by the person and (iv) any other information relating to the
person that would be required to be disclosed in a solicitation of proxies for
election of directors pursuant to Rule 14a under the Securities Exchange Act of
1934; and (b) as to the stockholder giving the notice (i) the name and address
of such stockholder and (ii) the class and number of shares of stock of the
Corporation owned by such stockholder. The Corporation may require such other
information to be furnished respecting any proposed nominee as may be reasonably
necessary to determine the eligibility of such proposed nominee to serve as a
director of the Corporation. No person shall be eligible for election by the
stockholders as a director at any meeting unless nominated in accordance with
this Section 6.
SECTION 7. QUORUM AND ADJOURNMENT. The holders of a majority of the
----------------------
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for holding all meetings of
stockholders except as otherwise provided by applicable law or by the
Certificate of Incorporation; provided, however, that the stockholders present
-------- -------
at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum. If it shall appear that such quorum is not present or
represented at any meeting of stockholders, the Chairman of the meeting shall
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. The Chairman of the
meeting may determine that a quorum is present based upon any reasonable
evidence of the presence in
Exhibit 3.2-3
<PAGE>
person or by proxy of stockholders holding a majority of the outstanding votes,
including without limitation, evidence from any record of stockholders who have
signed a register indicating their presence at the meeting.
SECTION 8. VOTING. In all matters, when a quorum is present at any
------
meeting, the vote of the holders of a majority of the capital stock having
voting power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of applicable law or of the Certificate of Incorporation, a different
vote is required in which case such express provision shall govern and control
the decision of such question. Such vote may be by voice vote or by written
ballot; provided, however, that the Board may, in its discretion, require a
-------- -------
written ballot for any vote.
Unless otherwise provided in or pursuant to the Certificate of
Incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder.
SECTION 9. RECORD DATE. The Board may fix, in advance, a record date
-----------
for the determination of the stockholders entitled to notice of any meeting or
to vote at such meeting, entitled to vote by written consent on matters approved
by the Board or entitled to receive payment of any dividend or other
distribution, or any allotment of rights, or to exercise rights in respect of
any other lawful actions. The record date so fixed shall be not more than sixty
(60) days nor less than ten (10) days prior to the date of the meeting, not
prior to nor more than ten (10) days after the date of the resolution fixing the
record date for votes by written consent and not more than sixty (60) days prior
to any other action.
SECTION 10. PROXIES. Every person entitled to vote shares has the
-------
right to do so either in person or by one or more persons authorized by a proxy,
in any form which constitutes a valid means of authorization under the Delaware
General Corporation Law, which proxy shall be filed with the Secretary. Any
proxy duly authorized shall continue in full force and effect until revoked by
the person authorizing it prior to the vote pursuant thereto by a writing
delivered to the Corporation stating that the proxy is revoked, by the
authorization of a subsequent proxy or by attendance at the meeting; provided,
--------
however, that no proxy shall be valid after expiration of three (3) years from
- -------
the date of its execution unless otherwise provided in the proxy.
SECTION 11. INSPECTORS OF ELECTION. The Board shall appoint one or
----------------------
more inspectors of election for any meeting of stockholders. The inspectors
shall, in accordance with the provisions of the Delaware General Corporation
Law, (i) ascertain the number of shares outstanding and the voting power of
each, (ii) determine the shares represented at a meeting and the validity of
proxies and ballots, (iii) count all votes and ballots, (iv) determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors,and (v) certify their determination
by the number of shares represented at the meeting, and their count of all votes
and ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors. The
date and time of the opening and the closing of the polls for each matter upon
which the
Exhibit 3.2-4
<PAGE>
stockholders will vote at a meeting shall be announced at the meeting. No
ballot, proxies or votes, nor any revocations thereof or changes thereto, shall
be accepted by the inspectors after the closing of the polls unless the Court of
Chancery of the State of Delaware upon application by a stockholder shall
determine otherwise.
SECTION 12. STOCKHOLDER LISTS. The officer who has charge of the
-----------------
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting or at the place of the meting, and the list shall also be
available at the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
ARTICLE III. DIRECTORS.
SECTION 1. POWERS. Subject to the limitations of the Certificate of
------
Incorporation or the Bylaws or the Delaware General Corporation Law relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board. The Board may
delegate the management of the day-to-day operation of the business of the
Corporation to management or other persons provided that the business and
affairs of the Corporation shall be managed and all corporate powers shall be
exercised under the ultimate direction of the Board. Without prejudice to such
general powers, but subject to the same limitations, it is hereby expressly
declared that the Board shall have the following powers in addition to the other
powers enumerated in the Bylaws:
(a) To select and remove all the officers, agents and employees of the
Corporation, to prescribe the powers and duties for them as may not be
inconsistent with law, with the Certificate of Incorporation or the Bylaws
and to fix their compensation.
(b) To conduct, manage and control the affairs and business of the
Corporation and to make such rules and regulations therefor not
inconsistent with law or with the Certificate of Incorporation or the
Bylaws, as they may deem best.
(c) To adopt, make and use a corporate seal, and to prescribe the
forms of certificates of stock, and to alter the form of such seal and such
certificates from time to time as in their judgment they may deem best.
(d) To authorize the issuance of shares of stock of the Corporation
from time to time, upon such terms and for such consideration as may be
lawful.
Exhibit 3.2-5
<PAGE>
(e) To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and
securities therefor.
SECTION 2. NUMBER OF DIRECTORS. The authorized number of directors
-------------------
of the Corporation shall not be less than five (5) nor more than eleven (11)
until changed by amendment of the Certificate of Incorporation. The exact number
of directors shall be six (6) until changed by an amendment hereof duly adopted
by the Board amending this Section 2.
SECTION 3. ELECTION AND TERM OF OFFICE. The directors shall be
---------------------------
elected in accordance with the Certificate of Incorporation.
SECTION 4. BOARD RECLASSIFICATION. At such time as there is any
----------------------
change in the number of directors of the Corporation, the determination of the
selection of directors in each class shall be determined in accordance with the
provisions of this Section 4, unless otherwise agreed to by a two-thirds
majority of the existing directors.
(i) Increase in Number of Directors. At such time as there is an
--------------------------------
increase in the number of directors of the Corporation, such increase shall
be accomplished by adding directors, one director at a time, as follows:
i) to such class of directors as may add a director consistent
with the requirement that each class of directors be as nearly equal
in number as possible;
ii) to the extent that two or more classes of directors are
eligible to add such director under the immediately preceding clause,
to the class of directors among such classes, the terms of the
directors of which is to expire sooner than the terms of the directors
of any other such class.
(j) Decrease in Number of Directors. To the extent that the division
--------------------------------
of the directors of the Corporation into classes as nearly equal in number
as possible requires a reduction of the number of directors any class, such
reduction shall be accomplished by reclassifying, pursuant to the criteria
set forth in clause (c) of this Section 4, one director at a time, such
directors of the class, the terms of the directors of which is to expire
later than the term of the directors of any other class, to the class of
directors, the directors of which whose term is to expire one year earlier
than the term of the directors being reclassified, as shall be required
until the class being transferred from shall contain the maximum number of
directors possible while being at the same time as nearly equal in number
as possible, provided, however, that no director shall be reclassified from
-------- -------
Class III to Class I.
(k) Reduction of Number of Directors in Class. Whenever
------------------------------------------
reclassification of directors is required under this clause (c) to
accomplish a reduction in the number of directors in a class, the directors
shall be reclassified, one director at a time, as follows:
Exhibit 3.2-6
<PAGE>
i) such director within a class as has been a director of the
Corporation for the fewest number of continuous days immediately
preceding such reclassification shall be the next director to be
reclassified;
ii) to the extent that two or more directors would be the next
director to be reclassified under the immediately preceding clause,
such director as has been a director of the Corporation for the fewest
number of days, whether or not such days have been continuous, shall
be the next director to be reclassified; and
iii) to the extent that two or more directors would be the next
director to be reclassified under the immediately preceding clause,
such director as is the youngest in age shall be the next director to
be reclassified.
(l) Increase in Number of Directors in Class. Whenever
-----------------------------------------
reclassification of directors is required under this clause (d) to
accomplish an increase in the number of directors in a class, the directors
shall be reclassified, one director at a time, as follows:
i) such director within a class as has been a director of the
Corporation for the greatest number of continuous days immediately
preceding such reclassification shall be the next director to be
reclassified;
ii) to the extent that two or more directors would be the next
director to be reclassified under the immediately preceding clause,
such director as has been a director of the Corporation for the
greatest number of days, whether or not such days have been
continuous, shall be the next director to be reclassified; and
iii) to the extent that two or more directors would be the next
director to be reclassified under the immediately preceding clause,
such director as is the oldest in age shall be the next director to be
reclassified.
SECTION 5. VACANCIES. Any director may resign effective upon giving
---------
written notice to the Chairman of the Board, the President, the Secretary or the
Board, unless the notice specifies a later time for the effectiveness of such
resignation. Vacancies in the Board shall be filled in accordance with the
Certificate of Incorporation.
SECTION 6. PLACE OF MEETING. Regular or special meetings of the
----------------
Board shall be held at any place designated from time to time by the Board. In
the absence of such designation, regular meetings shall be held at the principal
executive office of the Corporation.
SECTION 7. REGULAR MEETINGS. Regular meetings of the Board shall be
----------------
held without call at such dates, times and places as the Board may establish
from time to time. Call and notice of all regular meetings of the Board are
hereby dispensed with.
Exhibit 3.2-7
<PAGE>
SECTION 8. SPECIAL MEETINGS. Special meetings of the Board for any
----------------
purpose or purposes may be called at any time by the Chairman of the Board, the
President, the Secretary or by any two (2) directors.
Special meetings of the Board shall be held upon four (4) days'
written notice or forty-eight (48) hours' notice given personally or by
telephone, telegraph, telex, telecopier or other similar means of communication.
Any such notice shall be addressed or delivered to each director at such
director's address as it is shown upon the records of the Corporation or as may
have been given to the Corporation by the director for purposes of notice or, if
such address is not shown on such records or is not readily ascertainable, at
the place in which the meetings of the directors are regularly held.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone or wireless, to
the recipient or to a person at the office of the recipient who the person
giving the notice has reason to believe will promptly communicate it to the
recipient.
SECTION 9. QUORUM. A majority of the whole Board shall constitute a
------
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided that
such majority shall constitute at least one-third of the whole Board. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the
Board, unless a greater number be required by law or by Certificate of
Incorporation. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action is
approved by at least a majority of the required quorum for such meeting.
SECTION 10. PARTICIPATION IN MEETING BY CONFERENCE TELEPHONE.
------------------------------------------------
Members of the Board may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all members
participating in such meeting can hear one another.
SECTION 11. WAIVER OF NOTICE. The transactions of any meeting of the
----------------
Board, however called and noticed, and wherever held, are as valid as though a
meeting had been duly held after regular call and notice if a quorum be present
and if, either before or after the meeting, each of the directors not present
signs a written waiver of notice, a consent to holding such meeting or an
approval of the minutes thereof. All such waivers, consents or approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
SECTION 12. ADJOURNMENT. A majority of the directors present,
-----------
whether or not a quorum is present, may adjourn any directors' meeting to
another time and place. Notice of
Exhibit 3.2-8
<PAGE>
the time and place of holding an adjourned meeting need not be given to absent
directors if the time and place be fixed at the meeting adjourned. If the
meeting is adjourned for more than twenty-four (24) hours, notice of any
adjournment to another time or place shall be given prior to the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.
SECTION 13. FEES AND COMPENSATION. Directors and members of
---------------------
committees may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board.
SECTION 14. ACTION WITHOUT MEETING. Any action required or permitted
----------------------
to be taken by the Board or committee thereof may be taken without a meeting if
all members of the Board or committee shall individually or collectively consent
in writing to such action. Such consent or consents shall have the same effect
as a unanimous vote of the Board or committee and shall be filed with the
minutes of the proceedings of the Board or committee.
SECTION 15. COMMITTEES. The Board may appoint one (1) or more
----------
committees, each consisting of one (1) or more directors, and delegate to such
committees any of the authority of the Board except with respect to:
(i) The approval of any action for which the Delaware General
Corporation Law also requires stockholders' approval or approval of the
outstanding shares, including but not limited to amending the Certificate
of Incorporation (except as otherwise permitted by the Delaware General
Corporation Law with respect to shares of stock) and adopting an agreement
of merger or consolidation under Section 251 or 252 of the Delaware General
Corporation Law;
(ii) The recommending to the Corporation's stockholders of the sale,
lease or exchange of all or substantially all of the Corporation's property
and assets or a dissolution of the Corporation or a revocation of a
dissolution;
(iii) The filling of vacancies on the Board or on any committee;
(iv) The fixing of compensation of the directors for serving on the
Board or on any committee;
(v) The amendment or repeal of Bylaws or the adoption of new Bylaws;
(vi) The amendment or repeal of any resolution of the Board which by
its express terms is not so amendable or repealable; or
(vii) The appointment of other committees of the Board or the members
thereof.
Exhibit 3.2-9
<PAGE>
Any such committee must be appointed by resolution adopted by a
majority of the whole Board and may be designated an Executive Committee or by
such other name as the Board shall specify. The Board shall have the power to
prescribe the manner in which the proceedings of any such committee shall be
conducted. In the absence of any such prescription such committee shall have
the power to prescribe the manner in which its proceedings shall be conducted.
Unless the Board or such committee shall otherwise provide, the regular and
special meetings and other actions of any such committee shall be governed by
the provisions of this Article III applicable to meetings and actions of the
Board. Minutes shall be kept of each meeting of each committee.
SECTION 16. RIGHTS OF INSPECTION. Every director shall have the
--------------------
absolute right at any reasonable time to inspect and copy all the books, records
and documents of every kind and to inspect physical properties of the
Corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
SECTION 17. ADVISORY DIRECTORS. The Board may appoint such
------------------
additional advisory directors (by whatever name designated) to advise the Board
on such matters and in such fashion as the Board may from time to time request.
Such advisory directors shall be entitled to notice of, and to attend, regular
and special meetings of the Board, but shall not be entitled to vote at such
meetings and may be appointed or removed at the pleasure of the Board. Such
advisory directors shall not be deemed to be regular members of the Board or
employees of the Corporation for any purpose whatsoever.
ARTICLE IV. OFFICERS.
SECTION 1. OFFICERS. The officers of the Corporation shall be a
--------
Chief Executive Officer, a President, a Secretary, and a Chief Financial
Officer. The Corporation may also have, at the discretion of the Board, a
Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Financial Officers. Any number of offices
may be held by the same person.
SECTION 2. ELECTION. The officers of the Corporation shall serve at
--------
the pleasure of, the Board, and shall hold their respective offices until their
resignation, removal, or other disqualification from service, or until their
respective successors shall be elected.
SECTION 3. REMOVAL AND RESIGNATION. Any officer may be removed, with
-----------------------
or without cause, by the Board at any time and, except in the case of an officer
chosen by the Board, by any officer upon whom such power of removal may be
conferred by the Board. Any such removal shall be without prejudice to the
rights, if any, of the officer under any contract of employment of the officer.
Any officer may resign at any time by giving written notice to the
Corporation, but without prejudice to the rights, if any, of the Corporation
under any contract to which the
Exhibit 3.2-10
<PAGE>
officer is a party. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 4. VACANCIES. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular election or appointment to such
office.
SECTION 5. DUTIES AND COMPENSATION. Officers of the Corporation
-----------------------
shall have such powers and duties, and shall receive such compensation therefor,
as may be specified from time to time by the Board of Directors. In the absence
of any contrary determination by the Board of Directors, the President shall be
the General Manager and Chief Executive Officer of the Corporation and shall,
subject to the power and authority of the Board of Directors, have general
supervision, direction, and control of the officers, employees, business, and
affairs of the Corporation.
ARTICLE V. STOCK.
SECTION 1. FORM OF STOCK CERTIFICATE. Every holder of stock in the
-------------------------
Corporation shall be entitled to have a certificate signed by, or in the name
of, the Corporation by the Chairman of the Board, the President or a Vice
President, and by the Chief Financial Officer or an Assistant Financial Officer
or the Secretary or an Assistant Secretary certifying the number of shares owned
in the Corporation. Any or all of the signatures on the certificate may be a
facsimile signature. If any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of the
issuance.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preference and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the Corporation shall
issue to represent such class or series of stock. Except as otherwise provided
in Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
SECTION 2. TRANSFERS OF STOCK. Upon surrender of a certificate for
------------------
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer,
Exhibit 3.2-11
<PAGE>
it shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board may
--------------------------------------
direct a new certificate or certificates be issued in place of any certificate
theretofore issued alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of the fact by the person claiming the certificate to be
lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board may, in its discretion and as a condition precedent to the issuance,
require the owner of such certificate or certificates, or such person's legal
representative, to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the lost, stolen or destroyed certificate.
SECTION 4. REGISTERED STOCKHOLDERS. The Corporation shall be
-----------------------
entitled to treat the holder of record of any share or shares of stock of the
Corporation as the holder in fact thereof and shall not be bound to recognize
any equitable or other claim to or interest in such share on the part of any
other person, whether or not it shall have express or other notice thereof,
except as expressly provided by applicable law.
ARTICLE VI. OTHER PROVISIONS.
SECTION 1. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the
-----------------------------------
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance or other instrument in writing and any
assignment or endorsements thereof executed or entered into between the
Corporation and any other person, when signed by the Chief Executive Officer,
the President or any Vice President and the Secretary, any Assistant Secretary,
the Chief Financial Officer or any Assistant Financial Officers of the
Corporation shall be valid and binding on the Corporation in the absence of
actual knowledge on the part of the other person that the signing officers had
no authority to execute the same. Any such instruments may be signed by any
other person or persons and in such manner as from time to time shall be
determined by the Board, and, unless so authorized by the Board, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or amount.
SECTION 2. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
----------------------------------------------
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, Secretary or any other officer or officers authorized by the Board or
the Chairman of the Board are each authorized to vote, represent and exercise on
behalf of the Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of the Corporation. The
authority herein granted may be exercised either by any such officer or by any
other person authorized so to do by proxy or power of attorney duly executed by
said officer.
SECTION 3. SEAL. It shall not be necessary to the validity of any
----
instrument executed by any authorized officer or officers of the Corporation
that the execution of such instrument be evidenced by the corporate seal, and
all documents, instruments, contracts and
Exhibit 3.2-12
<PAGE>
writings of all kinds signed on behalf of the Corporation by any authorized
officer or officers shall be as effectual and binding on the Corporation with
the corporate seal, as if the execution of the same had been evidenced by
affixing the corporate seal thereto. The Board may give general authority to
any officer to affix the seal of the Corporation and to attest the affixing by
signature.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall be
-----------
fixed by resolution of the Board.
SECTION 5. DIVIDENDS. Dividends on the capital stock of the
---------
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board at any regular or special meeting, pursuant to
law, and may be paid in cash, in property or in shares of capital stock.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
directors shall determine to be in the best interest of the Corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE VII. INDEMNIFICATION.
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is a
------------------------
party or is threatened to be made a party or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the laws of Delaware as the same
exist or may hereafter be amended (but in the case of such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than said laws permitted the Corporation to provide prior
to such amendment) against all costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement and amounts expended in seeking
indemnification granted to such person under applicable law, this bylaw or any
agreement with the Corporation) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of his or her heirs, executors and administrators; provided,
--------
however, that except as provided in Section 2 of this Article VII, the
- -------
Exhibit 3.2-13
<PAGE>
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was initiated or authorized by one or more
members of the Board. The right to indemnification conferred in this Section 1
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that if the Delaware General
-------- -------
Corporation Law so requires, the payment of such expenses incurred by a director
or officer in his or her capacity as a director of officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section 1 or otherwise. The Corporation may, by action of the Board,
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
SECTION 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section
-------------------------------
1 of this Article VII is not paid in full by the Corporation within thirty (30)
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has failed to meet a standard of
conduct which makes it permissible under Delaware law for the Corporation to
indemnify the claimant for the amount claimed. Neither the failure of the
Corporation (including the Board, independent legal counsel or its stockholders)
to have made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances because he
or she has met such standard of conduct, nor an actual determination by the
Corporation (including the Board, independent legal counsel or its stockholders)
that the claimant has not met such standard of conduct, shall be a defense to
the action or create a presumption that the claimant has failed to meet such
standard of conduct.
SECTION 3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification
-------------------------
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article VII shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under Delaware law.
Exhibit 3.2-14
<PAGE>
SECTION 5. EXPENSES AS A WITNESS. To the extent that any director,
---------------------
officer, employee or agent of the Corporation is by reason of such position, or
a position with another entity at the request of the Corporation, a witness in
any action, suit or proceeding, he or she shall be indemnified against all costs
and expenses actually and reasonably incurred by him or her or on his or her
behalf in connection therewith.
SECTION 6. INDEMNITY AGREEMENTS. The Corporation may enter into
--------------------
indemnity agreements with the persons who are members of the Board from time to
time, and with such officers, employees and agents as the Board may designate,
such indemnity agreements to provide in substance that the Corporation will
indemnify such persons to the full extent contemplated by this Article VII.
SECTION 7. EFFECT OF AMENDMENT. Any amendment, repeal or
-------------------
modification of any provision of this Article VII by the stockholders and the
directors of the Corporation shall not adversely affect any right or protection
of a director or other of the Corporation existing at the time of the amendment,
repeal or modification.
Exhibit 3.2-15
<PAGE>
CERTIFICATE OF SECRETARY
of
INFERENCE CORPORATION
(a Delaware corporation)
I hereby certify that I am the duly elected and acting Secretary of
said corporation and that the foregoing Bylaws, comprising 15 pages, constitute
the Bylaws of said corporation as duly adopted by unanimous written consent of
the Board of Directors thereof effective on June 30, 1996.
/s/ William D. Griffin
----------------------
Name: William D. Griffin
Title: Secretary
Exhibit 3.2-16
<PAGE>
EXHIBIT 10.1
INFERENCE CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. DEFINITIONS.
(a) "Base Pay" means a Qualified Employee's gross pay for a 40-hour week,
excluding overtime payments, incentive compensation, bonuses, sales commission,
relocation or attributed types of compensation, and other special payments, fees
or allowances.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended and as it
may hereafter be amended from time to time.
(d) "Committee" has the meaning set forth in Section 13 hereof.
(e) "Common Stock" means the Class A Common Stock of the Company, no par
value per share.
(f) "Company" means Inference Corporation, a California corporation, and
its successors.
(g) "Effective Date" means the effective date of this Plan as set forth in
Section 14 of this Plan.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and as it may hereafter be amended from time to time.
(i) "Exercise Date" has the meaning set forth in Section 4(a) hereof.
(j) "Fair Market Value" means the closing price of the Common Stock on the
NASDAQ National Market System as reported and published in the Western Edition
of The Wall Street Journal, or if there is no trading of the Common Stock on the
date in question, then the average of the high and low price of the Common
Stock, as so reported and published, on the next preceding date on which there
was trading in the Common Stock; provided, however, that the Committee, in
determining such Fair Market Value, may utilize such other exchange, market or
other factors affecting value of the Common Stock as it may deem appropriate.
(k) "Grant Date" has the meaning set forth in Section 4(a) hereof.
Exhibit 10.1-1
<PAGE>
(l) "Offering Period" has the meaning set forth in Section 4(a) hereof.
(m) "Option Price" has the meaning set forth in Section 5(b) hereof.
(n) "Participant" means a Qualified Employee who elects to participate in
this Plan during an Offering Period.
(o) "Personal Representative" means the person or persons who, upon the
death or Total Disability of a Participant, shall have acquired, on behalf of
the Participant by legal proceeding or under the laws of descent and
distribution or otherwise, the right to exercise the Participant's rights under,
or to receive the benefits specified in, this Plan.
(p) "Plan" means this Inference Corporation Employee Stock Purchase Plan,
as it may be amended from time to time.
(q) "Plan Year" means the calendar year; provided, however that the first
Plan Year shall be a short year of 5 months commencing on August 1, 1996 and
ending on December 31, 1996.
(r) "Qualified Employee" means any employee of the Company or any
Subsidiary who has completed 12 months of continuous service with the Company or
a Subsidiary as of the Grant Date and who is customarily employed for more than
20 hours per week and more than five months in a calendar year. Notwithstanding
the foregoing, the term "Qualified Employee" does not include any employee who,
immediately after the option is granted, owns (within the meaning of Sections
423(b)(3) and 424(d) of the Code) stock representing 5% or more of the total
combined voting power or value of all classes of stock of the Company or a
Subsidiary.
(s) "Retirement" means the voluntary termination of employment of a
Participant who either (i) is at least 55 years of age and has completed at
least ten (10) years of service with the Company or a Subsidiary, or (ii) is at
least 65 years of age.
(t) "Subsidiary" means any corporation or other entity, at least a majority
of whose outstanding voting stock or voting power is beneficially owned directly
or indirectly by the Company.
(u) "Total Disability" means the total and permanent physical or mental
disability of a Participant, evidenced by an inability to engage in any
substantial gainful activity, as determined by the Committee.
All references herein to the masculine shall also be references to the
feminine or neuter as appropriate.
2. PURPOSE, SUMMARY. The purpose of this Plan is to assist Qualified
Employees in acquiring a stock ownership interest in the Company pursuant to a
plan which is
Exhibit 10.1-2
<PAGE>
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code. Under this Plan, Participants are deemed to have been granted options
to purchase shares of Common Stock. Participants may designate a certain amount
of their Base Pay to be set aside during the Offering Period for the purpose of
purchasing Common Stock. At the end of the Offering Period, the Participants
are deemed to have exercised their options using the funds set aside for them
and the Company issues share certificates to them. The plan is intended, among
other things, to provide an additional incentive to Participants, through the
ownership of Common Stock, to achieve business goals that would increase stock
values and to remain in the employ of the Company or a Subsidiary.
3. STOCK SUBJECT TO THIS PLAN. Subject to the provisions of Section 10
hereof (relating to adjustments upon changes in capitalization), the total
number of shares available under this Plan is 500,000 shares of Common Stock.
Such shares may be authorized but unissued shares.
4. GRANT OF OPTIONS.
(a) IN GENERAL. Commencing August 1, 1996 and continuing while this
Plan remains in force, the Company will offer on the first day of each quarter
of a calendar year (and on August 1, 1996) options to purchase shares of Common
Stock under this Plan to all Participants (each a "Grant Date"). The term of
each option ("Offering Period") shall be 3 months (2 months for the third
quarter of the 1996 calendar year), the last day of which shall be the last day
of the calendar quarter in which such option was granted (each an "Exercise
Date"). The number of shares subject to each option and deemed to be purchased
by each Participant shall be the quotient, rounded down to the nearest whole
number, of (i) the aggregate payroll deductions authorized by each Participant
in accordance with Section 4(b) below made during the Offering Period, divided
by (ii) the Option Price. The grant of options hereunder is subject to the
approval of the Plan by the shareholders of the Company. If shareholder
approval is not received by or before August 1, 1996, this Plan shall be deemed
to be terminated and no options shall be granted hereunder.
(b) ELECTION TO PARTICIPATE; PAYROLL DEDUCTION AUTHORIZATION. Except
as provided in Section 4(d) below, a Qualified Employee may participate in this
Plan only by means of payroll deductions. Each Qualified Employee who elects to
participate in this Plan shall deliver to the Company, no later than the 15th
day of the month next preceding a Grant Date (or July 15 for the third quarter
of the 1996 calendar year, or the next business day following such date if such
day is not a business day), a written payroll deduction authorization in a form
approved by the Company pursuant to which he gives notice of his election to
participate in this Plan as of the next following Grant Date, and whereby he
designates a stated amount to be deducted from his Base Pay on each payday
during the next Offering Period and credited to his account under this Plan
("Account"). The stated amount to be deducted from a Participant's Base Pay may
not be less than $10.00 per pay period. The aggregate stated amount for any
Offering Period may not exceed either of the following: (i) ten percent (10%)
of the Participant's Base Pay during
Exhibit 10.1-3
<PAGE>
the Offering Period; or (ii) an amount which will result in noncompliance with
the $25,000 limitation stated in Section 4(c) below. Payroll deduction
authorizations may not be changed during the Offering Period. In the event the
number of shares of Common Stock subject to options during a Offering Period
exceeds the number of shares then available under this Plan, the available
shares shall be allocated among the Participants in proportion to the balance of
their Accounts at the end of the Offering Period, and any amounts credited to
their Accounts after giving effect to shares purchased that year shall be
refunded to the Participants.
(c) $25,000 LIMITATION. No Participant shall be deemed to have been
granted options under this Plan which would permit his rights to purchase Common
Stock under this Plan or any other employee stock purchase plan of the Company
or any Subsidiary to accrue at a rate which exceeds $25,000 of Fair Market Value
of Common Stock for any calendar year. For purposes of this subsection (c), the
right to purchase Common Stock under an option accrues when the option (or any
portion thereof) becomes exercisable, and the right to purchase Common Stock
which has accrued during one Offering Period may not be carried over to any
subsequent Offering Period.
(d) LEAVES OF ABSENCE. During leaves of absence approved by the
Company and meeting the requirements of Regulation Section 1.421-7(h)(2) under
the Code, a Participant may continue participation in this Plan by making cash
payments to the Company on the Company's normal paydays equal to the reduction
in his payroll deduction attributable to his leave.
5. EXERCISE OF OPTIONS.
(a) IN GENERAL. On each Exercise Date, each Participant automatically
and without any act on his part will be deemed to have exercised his option to
the extent that the balance then credited to his Account is sufficient to
purchase whole shares of Common Stock at the Option Price. The Company shall
promptly refund to the Participant any balance remaining in his Account, without
interest thereon, after giving effect to the purchase of such whole shares.
(b) "OPTION PRICE" DEFINED. The Option Price per share to be paid by
each Participant upon exercise of his option shall be an amount equal to 85% of
the Fair Market Value of Common Stock on the Grant Date or on the Exercise Date
(or the date of the Participant's Retirement, death or Total Disability if any
such event occurs), whichever amount is less.
(c) DELIVERY OF SHARE CERTIFICATES. Subject to Section 5(d) below,
the Company will deliver to each Participant a certificate issued in the
Participant's name for the number of shares with respect to which his option was
exercised. The Company will deliver the certificate as soon as practicable
following the Exercise Date.
Exhibit 10.1-4
<PAGE>
(D) GOVERNMENT REGULATIONS. This Plan, the granting of options under
this Plan and the issuance of Common Stock pursuant hereto are subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any regulatory or governmental agency which may, in the opinion of counsel
for the Company, be necessary or advisable in connection therewith. Without
limiting the generality of the foregoing, no options may be granted under this
Plan, and no shares may be issued by the Company, unless and until, in each such
case, all legal requirements applicable to the grant or issuance have, in the
opinion of counsel to the Company, been complied with. In connection with the
issuance of Common Stock hereunder, the Participant shall, if requested by the
Company, give assurances satisfactory to counsel to the Company in respect of
such matters as the Company may deem desirable to assure compliance with all
applicable legal requirements.
6. WITHDRAWAL FROM THIS PLAN.
(a) IN GENERAL. Any Participant may completely withdraw from this
Plan at any time. A Participant who desires to withdraw from this Plan must
deliver to the Company a notice of withdrawal in a form approved by the Company.
Promptly following the time when the notice of withdrawal is delivered, the
Company will refund to the Participant the amount of the balance of his Account,
without interest thereon, and the Participant's payroll deduction authorization,
interest in this Plan and option under this Plan shall thereupon terminate.
(b) ELIGIBILITY FOLLOWING WITHDRAWAL. A Participant who has withdrawn
from this Plan shall again be eligible to participate in this Plan upon
expiration of the Offering Period during which the Participant withdrew.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF EMPLOYMENT OTHER THAN BY RETIREMENT, DEATH OR TOTAL
DISABILITY. If the employment of a Participant by the Company or a Subsidiary
terminates during an Offering Period other than by reason of Retirement, death
or Total Disability, his participation in this Plan automatically and without
any act on his part shall terminate as of the date of the termination of the
Participant's employment. The Company promptly will refund to the Participant
the amount of the balance of his Account, without interest thereon, and
thereupon his interest in and option under this Plan shall terminate. Nothing
in this Plan shall prevent the Company or any Subsidiary from terminating any
Participant's employment.
(b) TERMINATION BY RETIREMENT. If a Participant's employment
terminates during an Offering Period because of Retirement of the Participant,
the Participant may, at his election by written notice to the Company, either
(i) exercise his option as of his Retirement date, in which event the Company
shall apply the balance of his Account to the purchase, at the Option Price, of
whole shares of Common Stock and refund the excess, if any, or (ii) request
payment of the balance of his Account, in which event the Company
Exhibit 10.1-5
<PAGE>
promptly shall make such payment, without interest thereon, and thereupon his
interest in and option under this Plan shall terminate. If the Participant
elects to exercise his option, the date of his Retirement shall be deemed to be
the Exercise Date for the purpose of computing the Option Price.
(c) TERMINATION BY DEATH OR TOTAL DISABILITY. If a Participant dies
or suffers a Total Disability during an Offering Period, the Participant or his
Personal Representative, as the case may be, by written notice to the Company,
may either (i) exercise the Participant's option as of the date of death or
Total Disability, in which event the Company shall apply the balance of his
Account to the purchase, at the Option Price, of whole shares of Common Stock
and refund the excess, if any, or (ii) request payment of the balance of the
Participant's Account, in which event the Company promptly shall make such
payment to the Participant or his Personal Representative, and thereupon the
Participant's interest in and option under this Plan shall terminate. If the
option is exercised, the date of death or Total Disability shall be deemed to be
the Exercise Date for the purpose of computing the Option Price. If the Company
does not receive such notice within 90 days of the date of Participant's death
or Total Disability, the Participant or his Personal Representative shall be
conclusively presumed to have elected alternative (ii) above and requested the
payment of the balance of the Participant's Account.
8. RESTRICTION UPON ASSIGNMENT. An option granted under this Plan shall
not be transferable otherwise than by will or the laws of descent and
distribution pursuant to Section 7(c) hereof, and is exercisable during the
Participant's lifetime only by the Participant (or his Personal Representative
in the event of the Participant's Total Disability). The Company will not
recognize any assignment or purported assignment by a Participant of his option
or of any rights under his option or under this Plan.
9. NO RIGHTS AS SHAREHOLDER. With respect to shares of Common Stock
subject to an option, a Participant shall not be deemed to be a shareholder and
shall not have any of the rights or privileges of a shareholder until a
certificate for shares of Common Stock has been issued to the Participant
following the exercise of his option.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the outstanding shares
of Common Stock are increased, decreased or changed into, or exchange for, a
different number or kind of shares or securities of the Company through a
reorganization or merger in which the Company is the surviving entity, or
through a combination, recapitalization, reclassification, stock split, stock
dividend, stock consolidation or otherwise, an appropriate adjustment shall be
made in the number and kind of shares that may be issued under this Plan.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of all or substantially all of the property of the Company to
another corporation, this Plan shall terminate, and any outstanding options
shall terminate and the Company thereupon will
Exhibit 10.1-6
<PAGE>
promptly refund the balance of the Participants' Accounts to the Participants,
without interest thereon, unless (i) the Committee shall determine, in its sole
and absolute discretion, that any or all options under this Plan shall
accelerate and become immediately exercisable or (ii) provision shall be made in
connection with such transaction for the assumption of options theretofore
granted hereunder, or the substitution for such options or new options covering
the stock of a successor employer corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to number and kind of shares and
prices. If the Committee determines to accelerate any or all of the options,
the acceleration date designated by the Committee shall be deemed to be the
Exercise Date for the purpose of computing the option price of the accelerated
option.
In so adjusting Common Stock to reflect such changes, or in
determining that no such adjustment is necessary, the Committee may rely upon
the advice of independent counsel and accountants of the Company, and the
determination of the Committee shall be conclusive. No fractional shares of
stock shall be issued under this Plan on account of any such adjustment.
11. USE OF FUNDS; NO INTEREST PAID. All amounts withheld from
Participants' paychecks hereunder and credited to their Accounts will be
included in the general funds of the Company free of any trust or other
restriction and may be used by the Company for any corporate purpose. Under no
circumstances shall interest on such amounts be paid to any Participant or
credited to his Account.
12. AMENDMENT OF THIS PLAN. The Board may amend, suspend or terminate
this Plan at any time and from time to time; provided, however, that, if any
amendment would (i) materially increase the benefits accruing to Participants
under this Plan, (ii) materially increase the aggregate number of shares of
Common Stock that may be issued under this Plan, or (iii) materially modify the
requirements as to eligibility for participation in this Plan, then to the
extent required by Rule 16b-3 under the Exchange Act to secure benefits
thereunder or to avoid liability under Section 16 of the Exchange Act (and Rules
thereunder) or required under Section 423 of the Code or any other applicable
law, or deemed necessary or advisable by the Board, such amendment shall be
subject to shareholder approval.
13. ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS. This Plan may, in
the direction of the Company, be administered by a committee composed of not
less than two directors of the Company (the "Committee"), each of whom shall be
a "disinterested person" as such term is defined in Rule 16b-3(c)(2)(i) under
the Exchange Act or any successor provision of the Exchange Act so that the
Committee members are qualified to administer this Plan under such provision.
Each member shall serve for a term commencing on a date specified by the Board
and continuing until he dies or resigns or is removed from office by the Board.
The Committee shall have the power to make, amend and repeal rules and
regulations for the interpretation and administration of this Plan consistent
with the qualification of this Plan under Section 423 of the Code and consistent
with Rule 16b-3 under the Exchange Act.
Exhibit 10.1-7
<PAGE>
14. EFFECTIVE DATE. The Plan shall become effective as of August 1, 1996,
subject to approval by the holders of the majority of the Common Stock present
and represented at a special or annual meeting of the stockholders held prior to
August 1, 1996.
15. TERM. No option may be granted during any period of suspension nor
after termination of this Plan, and in no event may any option be granted under
this Plan after the date on which all of the Common Stock available under this
Plan has been purchased.
16. EFFECT UPON OTHER PLANS. The adoption of this Plan shall not affect
any other compensation or incentive plans in effect for the Company or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company or any Subsidiary (a) to establish any other forms of incentives or
compensation for employees of the Company or any Subsidiary or (b) to grant or
assume options otherwise than under this Plan in connection with any proper
corporate purpose.
17. HEADINGS. Headings are provided herein for convenience only and shall
not serve as a basis for interpretation or construction of this Plan.
18. GOVERNING LAW; SEVERABILITY. This Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of California.
If any provisions shall be held by a court of competent jurisdiction to be
invalid and unenforceable, the remaining provisions of this Plan shall continue
to be in full force and effect.
19. NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
20. EFFECT OF PLAN. The provisions of the Plan shall, in accordance with
its terms, be binding upon, and inure to the benefit of, all successors of each
Employee participating in the Plan, including, without limitation, such
Employee's estate and the executors, administrators or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
Exhibit 10.1-8
<PAGE>
This Plan is adopted February 14, 1996, effective however as of the
Effective Date.
INFERENCE CORPORATION
By: /s/ William D. Griffin
-----------------------------------------
William D. Griffin, Senior Vice President
and Chief Financial Officer
Exhibit 10.1-9
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED INFERENCE CORPORATION
1993 STOCK OPTION PLAN
The Amended and Restated Inference Corporation 1993 Stock Option Plan
(the "Plan") shall be and hereby is amended by Inference Corporation, a
California corporation (the "Company"), pursuant to this Amendment No. 1
("Amendment") as follows:
1. The last sentence of Section 5 of the Plan is hereby deleted and
replaced by the following:
"The term 'fair market value' shall mean: (i) if shares are exchange-
traded or traded on the NASDAQ National Market, the closing sales price per
share of the shares; (ii) if shares are regularly traded in any over-the-counter
market other than the NASDAQ National Market, the average of the bid and asked
prices per share of the shares; and (iii) if shares are not traded as described
in (i) or (ii) above, the per share fair market value of the shares as
determined in good faith by the Board on such basis as the Board in its sole
discretion shall choose. The date of determination of fair market value with
respect to (i) and (ii) above shall be the date of the option grant, or if no
trading in the shares takes place on such date, on the next preceding trading
day on which there has been such trading. The date of determination of fair
market value with respect to (iii) above shall be the date of the option grant."
2. Paragraph (a) of Section 7 of the Plan is hereby amended in its
entirety to read as follows:
"(a) General. Subject to the other provisions of this Section 7,
-------
Options shall vest and become exercisable at such times and in such installments
as the Board shall provide in each individual Stock Option Agreement; provided,
however, that options must vest at a rate of at least 20% per year over a five-
year period from the date the option is granted. Notwithstanding the foregoing,
the Board may in its sole discretion, accelerate the time at which an Option or
installment thereof may be exercised. For purposes of these Plans, any vested
installment of an Option granted hereunder shall be referred to as an 'Accrued
Installment'."
3. Paragraph (c) of Section 7 of the Plan is hereby amended in its
entirety to read as follows:
Exhibit 10.2-1
<PAGE>
"(c) Sale or Reorganization.
----------------------
(i) Upon the dissolution or liquidation of the Company, or upon
a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company goes out of existence or becomes a
subsidiary of another corporation (other than any reorganization, merger or
consolidation effected to change the Company's state of incorporation), or upon
a sale of substantially all of the property or a sale of more than eighty
percent (80%) of the then outstanding stock of the Company to another
corporation, an Option shall become immediately exercisable with respect to the
full number of shares subject to that Option during the period commencing as of
the date an agreement providing for such transaction is executed and ending as
of the earlier of:
(A) The applicable expiration date for such Option as
provided for in the Stock Option Agreement, or
(B) The date on which the disposition of assets or stock
contemplated by any such agreement is consummated.
(ii) Upon the consummation of any transaction specified in
Section 7(c)(i) of the Plans, these Plans and any unexercised Options issued
hereunder (or any unexercised portion thereof) shall terminate and cease to be
effective, unless provision is made in connection with such transaction for
assumption of Options previously granted or the substitution for such Options of
new options covering the securities of a successor corporation or an affiliate
thereof, with appropriate adjustments as to the number and kind of securities
and prices. Any change or adjustment made pursuant to the terms of this Section
7(c)(ii) shall be made in such a manner so as not to constitute a "modification"
as defined in Section 424(h) of the Internal Revenue Code and so as not to cause
any Incentive Stock Option issued hereunder to fail to continue to qualify as an
Incentive Stock Option as defined in Section 422(b) of the Code."
4. Except as expressly provided hereinabove, the provisions of the
Plan shall remain in full force and effect as set forth therein.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Amendment on the date hereof.
Dated: February 14, 1996 INFERENCE CORPORATION,
a California corporation
By: /s/ William D. Griffin
--------------------------
William D. Griffin, Senior
Vice President and Chief
Financial Officer
Exhibit 10.2-2
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 2 TO THE
AMENDED AND RESTATED INFERENCE CORPORATION
1993 STOCK OPTION PLAN
The Amended and Restated Inference Corporation 1993 Stock Option Plan
(the "Plan") shall be and hereby is amended by Inference Corporation, a
California corporation (the "Company"), pursuant to this Amendment No. 2
("Amendment") as follows:
1. Subject to the approval of the Company's share-holders, Section 4
of the Plan is hereby deleted and replaced by the following:
"4. Number of Shares. The maximum aggregate number of shares
----------------
which may be optioned and sold under these Plans is One Million Three
Hundred Thousand (1,300,000) shares of authorized but unissued Common Stock
of the Company. If Options granted under the Plans shall terminate or expire
without being exercised, in whole or in part, the shares subject to such
unexercised Options may again be subjected to an Option under these Plans."
2. Except as expressly provided hereinabove, the provisions of the
Plan shall remain in full force and effect as set forth therein.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Amendment as of the date hereof.
Dated: March 28, 1996 INFERENCE CORPORATION,
a California corporation
By: /s/ William D. Griffin
---------------------------------------
William D. Griffin, Senior
Vice President and Chief
Financial Officer
Exhibit 10.3-1
<PAGE>
EXHIBIT 99.1
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Inference Corporation, a Delaware
corporation (the "Company"), consists of 17,000,000 shares of Common Stock,
$0.01 par value, and 2,000,000 shares of Preferred Stock, $0.01 par value. The
following description of capital stock gives effect to the reincorporation of
the Company into Delaware.
COMMON STOCK
The Common Stock consists of two classes, Class A Common Stock and
Class B Common Stock. There are 15,000,000 shares of Class A Common Stock
authorized and 2,000,000 shares of Class B Common Stock authorized.
Class A Common Stock. The holders of the Class A Common Stock are
entitled to one vote per share on all matters submitted to a vote of the
stockholders. The holders of shares of Class A Common Stock do not have any
preemptive rights or rights to subscribe for additional securities of the
Company. Dividends are payable on the Class A Common Stock, when, as and if
declared by the Board of Directors out of funds legally available therefor.
Each share of Common Stock, irrespective of class, will be treated equally in
respect of rights upon liquidation of the Company and rights to dividends,
except that, in the case of dividends in the form of Common Stock, shares of any
class of Common Stock will be payable only to the holders of that class. Upon
liquidation or dissolution of the Company, the holders of the Class A Common
Stock and Class B Common Stock are entitled to share ratably in all assets
available for distribution to stockholders after payment of all prior claims.
Class B Common Stock. The rights of the holders of the Class B Common
Stock are identical to those of the Class A Common Stock except with respect to
voting and conversion rights. The holders of Class B Common Stock have no right
to vote on matters submitted to a vote of stockholders, except (i) as to an
amendment of a provision of the Certificate of Incorporation that adversely
affects the powers, preferences or special rights of the holders of the Class B
Common Stock and (ii) as otherwise required by law.
Holders may convert shares of Class B Common Stock into Class A Common
Stock, except that no Regulated Holder (as defined below) of shares of Class B
Common Stock may convert any such shares to the extent that, as a result, the
Regulated Holder and its affiliates, directly or indirectly, would own, control
or have the power to vote more than 5% of the outstanding shares of the Common
Stock. A Regulated Holder of Class A Common Stock also may convert its Class A
Common Stock into Class B Common Stock. Each conversion will be on a one-for-
one basis. The term "Regulated Holder" means (a) any stockholder that is a
Federal licensee under the Small Business Investment Act of
Exhibit 99.1-1
<PAGE>
1958 or that is subject to the provisions of Regulation Y of the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 225) or any successor to
such regulation ("REGULATION Y"), and that holds shares of Common Stock issued
on or prior to December 1, 1996 ("SUBJECT DATE") or upon exercise of warrants or
options that were outstanding on or prior to the Subject Date, (b) any affiliate
of any such Regulated Holder specified in clause (a) above that is a transferee
of any shares of Common Stock of the Company, and (c) any person which is, or
any affiliate of which is, subject to Regulation Y and is a transferee of any
shares of Common Stock from any Regulated Holder specified in clauses (a) or (b)
above.
The Company may not redeem, purchase or otherwise acquire any shares of
Class A Common Stock or take any other action affecting the voting rights of
such shares if such action would increase the percentage of voting securities
owned or controlled by any Regulated Holder of Class B Common Stock without
first providing notice of such action to each Regulated Holder of Class B Common
Stock. The Company is prohibited from being a party to any merger or similar
transaction pursuant to which holders of Class B Common Stock would be required
to take any voting securities or securities convertible into voting securities
which would cause such holder to violate any law, regulation or other
requirement of any governmental body applicable to such holder.
PREFERRED STOCK
The Company's Certificate of Incorporation authorized 2,000,000 shares
of Preferred Stock. The Board of Directors has the authority to issue the
Preferred Stock in one or more series and to fix the powers, designations,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, including without
limitation dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series or the designation of such series, without
further vote or action by the stockholders. The issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders and may adversely affect the
voting and other rights of the holders of Common Stock. The issuance of
Preferred Stock with voting and conversion rights may adversely affect the
voting power of the holders of Class A Common Stock, including the loss of
voting control to others. At present, the Company has no plans to issue any of
the Preferred Stock.
CERTAIN CHARTER PROVISIONS
Certain provisions of the Company's Certificate of Incorporation and
Bylaws may have the effect of deterring or preventing hostile takeovers,
including those that might result in a premium over the then-current trading
price, or delaying or preventing changes in control or management of the
Company.
Exhibit 99.1-2
<PAGE>
Classified Board of Directors. The Company's Certificate of
Incorporation provides that the Board of Directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist
of one-third of the directors and the initial class designation of a particular
director shall initially be determined by the Board of Directors. All of the
directors shall have three-year terms, provided that the term of office of the
directors of Class I shall expire at the 1997 annual meeting and the term of
office of the directors of Class II shall expire at the 1998 annual meeting.
Limitation on Actions By Written Consent. The Company's Certificate of
Incorporation requires that any action required or permitted to be taken by
stockholders of the Company must be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent in writing.
Amendments to Certificate of Incorporation. The Certificate of
Incorporation of the Company may not be amended, modified or rescinded by the
stockholders with respect to the matters described above without the vote of the
holders of at least 80% of the Company's outstanding voting stock.
Advance Notice of Actions. The Bylaws establish procedures, including
advance notice procedures, in order for business to be properly brought before a
meeting by a stockholder or for a person to be nominated as a director by a
stockholder.
CERTAIN PROVISIONS OF DELAWARE LAW
As a Delaware corporation, the Company is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both of officers and
directors of the corporation and shares held by certain employee stock ownership
plans); or (iii) following the transaction in which such person became an
interested stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders by the
affirmative vote of the holders of at least two-thirds of the outstanding voting
stock of the corporation not owned by the interested stockholder.
Exhibit 99.1-3
