<PAGE>
As filed with the Securities and Exchange Commission on September 2, 1999
Registration No. 333-
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
___________________
INFERENCE CORPORATION
(Exact name of Registrant as specified in its charter)
___________________
Delaware 95-3436352
__________________________ _______________________________
(State of incorporation) (I.R.S. Employer Identification Number)
100 Rowland Way
Novato, California 94945
(Address, including zip code, of Registrant's principal executive offices)
Inference Corporation Amended and Restated 1993 Stock Option Plan
Inference Corporation 1998 Non-Management Stock Option Plan
Inference Corporation 1998 New Hire Stock Option Plan
Inference Corporation Private Placement Stock Option Plan
Inference Corporation Charles W. Jepson Stock Option Plan
(Full titles of the plans)
___________________
Mark A. Wolf
Chief Financial Officer
INFERENCE CORPORATION
100 Rowland Way
Novato, California 94945
(415) 893-7200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
___________________
Copy to:
Thomas C. DeFilipps, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94303
(650) 493-9300
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to To be Price Offering Registration
be Registered Registered Per Share Price Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, $0.01 par value
To be issued under:
- -------------------------------------------------------------------------------------------------------------------------
Inference Corporation Amended and
Restated 1993 Stock Option Plan 325,000 $3.16 (1) $1,027,000.00 $ 285.51
- -------------------------------------------------------------------------------------------------------------------------
Inference Corporation 1998 Non-
Management Stock Option Plan 510,000 $3.16 (1) $1,611,600.00 $ 448.02
- -------------------------------------------------------------------------------------------------------------------------
Inference Corporation 1998 New
Hire Stock Option Plan 162,500 $5.11 (2) $ 830,375.00 $ 230.84
------------------------------------------------------------------------------------------------------------------------
Inference Corporation Private Placement
Stock Option Plan 107,673 $4.06 (2) $ 437,152.38 $ 121.53
- -------------------------------------------------------------------------------------------------------------------------
Inference Corporation Charles W. Jepson
Stock Option Plan 400,000 $4.50 (2) $1,800,000.00 $ 500.40
- -------------------------------------------------------------------------------------------------------------------------
Totals 1,505,173 $5,706,127.38 $1,586.30
</TABLE>
/(1)/ Estimated in accordance with Rule 457(c) and (h) solely for the purpose
of calculating the registration fee based upon the average of the high
and low prices of the Common Stock as reported on the Nasdaq National
Market on August 30, 1999.
/(2)/ Estimated in accordance with Rule 457(h) for the purpose of calculating
the registration fee based on a weighted average of all options granted
thereunder and the applicable exercise prices for each such granted
option.
===============================================================================
<PAGE>
PART II
Information Required in the Registration Statement
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Inference Corporation (the "Company") hereby incorporates by reference in
this registration statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1999 filed pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(b) The Company's Current Reports on Form 8-K and Form 8-K/A
regarding its acquisition of Verix Software, a California corporation, filed on
May 17, 1999 as amended on July 9, 1999, pursuant to Section 13 of the Exchange
Act.
(c) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1999 filed pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(d) The description of the Company's Common Stock contained in the
Company's Current Report on Form 8-K filed July 17, 1996, pursuant to Section 13
of the Exchange Act.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment to this registration statement which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation provides that to the fullest
extent permitted by the Delaware General Corporation Law (the "DGCL") a director
of the Company shall not be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director. Under the current
provisions of the DGCL, liability of a director may not be limited (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) in respect
II-1
<PAGE>
of certain unlawful dividend payments or stock redemptions or repurchases and
(iv) for any transaction from which the director derives an improper personal
benefit. This provision does not limit or eliminate the rights of the Company or
any stockholder to seek nonmonetary relief such as an injunction or rescission
in the event of a breach of a director's duty of care.
The Certificate of Incorporation of the Company further provides that the
Company is authorized to provide for the indemnification of agents (including
directors and officers) of the Company to the fullest extent permitted under
applicable law. The DGCL gives the Company the power to indemnify directors,
officers, employees and agents of the Company in terms sufficiently broad to
permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act. In addition, the Company's Bylaws provide that the Company shall indemnify
its directors, officers, employees and agents against losses incurred by any
such person by reason of the fact that such person was acting in such capacity.
In addition, the Company has obtained directors' and officers' liability
insurance.
The Company has entered into agreements (the "Indemnification Agreements")
with each director and executive officer of the Company pursuant to which the
Company has agreed to indemnify such director or executive officer from claims,
liabilities, damages, expenses, losses, costs, penalties or amounts paid in
settlement incurred by such director or executive officer in or arising out of
his capacity as a director, executive officer, employee and/or agent of the
Company or any other corporation of which he is a director or executive officer
at the request of the Company to the maximum extent provided by applicable law.
In addition, such director or executive officer is entitled to an advance of
expenses to the maximum extent authorized or permitted by law. It is anticipated
that similar contracts may be entered into, from time to time, with future
directors and executive officers of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See "Index to Exhibits"
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of
II-2
<PAGE>
the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Novato, State of California, on September 2, 1999.
INFERENCE CORPORATION
By: /s/ Mark A. Wolf
-----------------------
Mark A. Wolf
Vice President and Chief Financial Officer
II-4
<PAGE>
POWER OF ATTORNEY
Each such person whose signature appears below constitutes and appoints
Charles W. Jepson and Mark A. Wolf, and each of them, as his true and
lawful attorney-in-fact, with full power of substitution, for him in any
and all capacities, to sign any amendments (including post-effective amendments)
to this Registration Statement on Form S-8, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------- --------------------------------------- ------------------
<S> <C> <C>
/s/ Charles W. Jepson President and Chief Executive Officer September 2, 1999
- ----------------------------- Principal Executive Officer) and Director
Charles W. Jepson
/s/ Mark A. Wolf Vice President and Chief Financial Officer September 2, 1999
- ----------------------------- (Principal Financial and Accounting Officer)
Mark A. Wolf
/s/ Louis C. Cole Director September 2, 1999
- -----------------------------
Louis C. Cole
/s/ C. Scott Gibson Director September 2, 1999
- -----------------------------
C. Scott Gibson
/s/ John J. Katsaros Director September 2, 1999
- -----------------------------
John J. Katsaros
/s/ Raymond A. Smelek Director September 2, 1999
- -----------------------------
Raymond A. Smelek
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
-------
Number Exhibit
------ -------
5.1 Opinion of counsel as to legality of securities being registered
10.1/1/ Inference Corporation Amended and Restated 1993 Stock Option
Plan and Forms of Agreement thereunder
10.6/2/ Inference Corporation 1998 Non-Management Stock Option Plan
10.7 Inference Corporation 1998 New Hire Stock Option Plan and
Private Placement Stock Option Plan
10.9/3/ Inference Corporation Charles W. Jepson Stock Option Plan
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (See Page II-5)
___________________
/1/ Incorporated by reference from Registrant's Registration Statement on Form
S-1, as amended (file no. 33-92386) as filed with the Securities and Exchange
Commission (the "Commission") as filed on May 17, 1995.
/2/ Incorporated by reference from Registrant's Annual report on Form 10-K,
filed with the Commission on April 29, 1999.
/3/ The Charles W. Jepson Stock Option Plan is an option grant made to Charles
W. Jepson under the Executive Employment Agreement, effective as of March 4,
1998 between the Registrant and Charles W. Jepson, as filed with the Commission
on April 30, 1998 under the Registrant's Annual Report on Form 10-K.
<PAGE>
Exhibit 5.1
September 2, 1999
Inference Corporation
100 Rowland Way
Novato, California 94945
Re: Registration Statement on Form S-8 covering Inference Corporation's
Amended and Restated 1993 Stock Option Plan,
1998 Non-Management Stock Option Plan,
1998 New Hire Stock Option Plan,
Private Placement Stock Option Plan, and
Charles W. Jepson Stock Option Plan
---------------------------------------------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by you
with the Securities and Exchange Commission on or about September 2, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, for an aggregate of 325,000 shares of your
Series A Common Shares under your Amended and Restated 1993 Stock Option Plan,
510,000 shares of your Series A Common Shares under your 1998 Non-Management
Stock Option Plan, 162,500 shares of your Series A Common Stock under your 1998
New Hire Stock Option Plan, 107,673 shares of your Series A Common Stock under
your Private Placement Stock Option Plan, and 400,000 shares of your Series A
Common Stock under the Charles W. Jepson Stock Option Plan. Such shares of
Common Stock are referred to herein as the "Shares," and such plans are referred
to herein as the "Plans." As your counsel in connection with these Plans, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the issuance and sale of the
Shares pursuant to the Plans.
It is our opinion that, when issued and sold in the manner described in the
Plans and pursuant to the agreements which accompany each grant under the Plans,
the Shares will be legally and validly issued, fully-paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
Exhibit 10.7
EXPLANATORY NOTE
The Inference Corporation 1998 New Hire Stock Option Plan and Private
Placement Plan are comprised of individual stock option agreements entered into
between Inference Corporation and individual option holders (each an "Option
Agreement"). Each Option Agreement is entered into in the form provided below,
which is identical except for terms relating to the number of shares of Common
Stock granted thereunder, the exercise price at which such options are granted,
the applicable vesting schedule and the applicable expiration date. A list of
those individuals who have entered into an Option Agreement under the 1998 New
Hire Stock Option Plan or the Private Placement Stock Option Plan is made in an
Annex attached at the end of the form of the Option Agreement provided below.
FORM OF OPTION AGREEMENT
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT
FOR THE HOLDER'S OWN ACCOUNT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH ANY DISTRIBUTION OF THE SECURITIES. THE SECURITIES HAVE NOT BEEN REGISTERED
OR QUALIFIED, AS APPLICABLE, UNDER THE SECURITIES ACT OF 1933 ("ACT") OR UNDER
ANY APPLICABLE STATE SECURITIES LAWS OR ANY APPLICABLE FOREIGN LAW ("BLUE SKY
LAWS"). AN OFFER TO SELL OR TRANSFER OR THE SALE OR TRANSFER OF THESE SECURITIES
IS UNLAWFUL UNLESS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PERMIT, AS APPLICABLE, UNDER THE ACT OR APPLICABLE BLUE SKY LAWS OR UNLESS AN
EXEMPTION FROM REGISTRATION AND/OR QUALIFICATION UNDER THE ACT AND APPLICABLE
BLUE SKY LAWS IS AVAILABLE AND AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY IS PROVIDED TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED UNDER THE ACT AND APPLICABLE BLUE SKY LAWS.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is entered into as of Legal_Date
("Option Grant Date") by and between Inference Corporation, a Delaware
corporation ("Company"), and ((First_Name)) ((Last_Name)) ("Optionee").
Pursuant to action of the Board of Directors of the Company ("Board") taken at a
meeting held on ((Legal_Date)) the Board granted Optionee options ("Options") to
purchase the Company's Class A Common Stock, $0.01 par value ("Common Stock") as
evidenced by this Agreement and upon the terms and conditions hereof. These
options are not intended to qualify as incentive stock options within the
meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code").
<PAGE>
In consideration of the foregoing and of the mutual covenants set forth herein
and other good and valuable consideration, the parties hereto agree as set forth
below.
1. Grant of Options. The Company hereby grants to Optionee the right to
----------------
purchase all or any part of an aggregate of ((Shares_)) shares of the Common
Stock, at a price of ((Price)) per share, with adjustments provided for herein
("Exercise Price").
2. Vesting of Options. Except as provided below, the Options granted
------------------
pursuant to this Agreement shall be exercisable at the Exercise Price as to the
specified number of shares (Optioned Shares) on and after the "Start" dates and
on or before the "Termination" date as set forth on Exhibit A which is attached
hereto and incorporated herein by this reference. When the Options (or portions
thereof) become exercisable, the Options (or such portions) shall be considered
"vested."
3. Exercise of Options.
-------------------
(a) In order to exercise an Option, Optionee shall deliver a written
notice of exercise to the Company at its principal business office, which notice
shall specify the number of shares to be purchased and shall be accompanied by
payment in cash or check made payable to the order of the Company in the full
amount of the Exercise Price of the shares to be purchased.
(b) In lieu of paying the total purchase price by cash or check,
Optionee shall have the right to pay all or any portion of the total purchase
price with shares of Common Stock of the Company held by Optionee for at least
six months. The amount of the purchase price deemed paid in this manner shall be
the fair market value as of the date of exercise of the shares surrendered, as
determined by the Board of Directors of the Company in its sole discretion,
exercised in good faith. If Optionee elects to pay all or any portion of the
total purchase price in this manner, he shall accompany his notice of exercise
with the stock certificates he desires to surrender, duly endorsed for transfer
to the Company.
(c) Optionee acknowledges that, if Common Stock is used to pay the
Exercise Price of the Options, Optionee has been advised to consult with a
competent tax advisor regarding the applicable tax consequences prior to
utilizing such shares to exercise an Option.
4. Termination of Options.
----------------------
(a) Termination Date. Except as provided below, this Agreement and
----------------
the then unexercised Options, whether vested or unvested, granted herein shall
terminate as of the date which is ten years from the date of this Agreement
("Option Termination Date").
(b) Termination of Employment Other Than by Death or Disability. In
-----------------------------------------------------------
the event that the employment of an Optionee with the Company is terminated for
any reason, with or without cause, other than death or permanent and total
disability, any installments under the Option which have not vested as of the
date the Optionee's employment is terminated ("Employment Termination Date")
shall expire and become unexercisable as of the Employment Termination Date.
All vested Options as of the
<PAGE>
Employment Termination Date shall remain exercisable for a period not to exceed
the earlier of (i) the Option Termination Date or (ii) three (3) months
following the Employment Termination Date.
(c) Death or Disability of Optionee While Employed. In the event that
----------------------------------------------
the employment of an Optionee with the Company is terminated by reason of death
or permanent and total disability, any unexercised vested Options granted
hereunder to such Optionee shall expire and become unexercisable as of the
earlier of:
(i) The Option Termination Date; or
(ii) The first anniversary of the Employment Termination Date of
such Optionee by reason of his or her death or permanent and total
disability. Any such vested Options of a deceased Optionee may be
exercised prior to their expiration only by the person or persons to whom
the Optionee's Option rights pass by will or by laws of descent and
distribution. Any installments under such a deceased or disabled
Optionee's Option that have not vested as of his or her Employment
Termination Date due to death or permanent and total disability shall
expire and become unexercisable as of said termination date. For purposes
of this Agreement, the term "permanent and total disability" shall be
defined under Section 22(e)(3) of the Code.
(d) Extensions. Notwithstanding the provisions covering the
----------
exercisability of Options following termination of employment, as described in
Sections 4(b) and (c), respectively, the Board may, in its sole discretion, with
the consent of the Optionee or the Optionee's estate (in the case of the death
of Optionee), extend the period of time during which vested Options shall remain
exercisable, provided that in no event shall such extension go beyond the Option
Termination Date.
5. Representations and Warranties. Optionee represents and warrants to
------------------------------
the Company that Optionee is acquiring these Options and the underlying shares
of Common Stock to be issued upon exercise of these Options for Optionee's own
account and not with a view to or for sale in connection with any distribution
of these Options or the shares of Common Stock which may be acquired upon
exercise of these Options. As a condition to the exercise of any portion of
these Options, the Company may require Optionee to make any representations and
warranties to the Company as may, in the judgment of counsel to the Company, be
required under applicable laws, rules or regulations, including but not limited
to a representation and warranty that the shares of Common Stock are being
acquired only for investment and without present intention to sell or distribute
such shares if, in the opinion of counsel for the Company, such a representation
is required under the Securities Act of 1933, as amended ("Securities Act"), or
any applicable foreign, state securities laws, or any rule or regulation of any
governmental agency ("Blue Sky Laws"). The exercise of the Options and the
issuance of shares of Common Stock shall be conditioned upon satisfaction of
appropriate exemptions from the registration and/or qualification requirements
of the Securities Act and applicable Blue Sky Laws. The inability to satisfy the
requirements of such exemptions shall relieve the Company of its obligation to
issue the Common Stock and shall relieve the Company of any liability with
respect to the nonissuance of the Common Stock upon exercise of the Options.
<PAGE>
6. Adjustments Upon Changes In Capitalization. If the outstanding shares
------------------------------------------
of Common Stock of the Company are increased, decreased, changed into or
exchanged for a different number or kind of shares of the Company through
recapitalization, reclassification, stock dividend, stock split, or reverse
stock split, an appropriate and proportionate adjustment shall be made in the
number or kind of shares of Common Stock subject to the Options granted by this
Agreement and in the per share Exercise Price thereof.
7. Sale or Reorganization.
----------------------
(a) 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 all or substantially all the property or
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:
(i) The applicable expiration date for such Option as provided
for in Section 4 hereof; or
(ii) The date on which the disposition of assets or stock
contemplated by any such agreement is consummated.
(b) Upon the consummation of any transaction specified in Section
7(a) hereof, 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.
8. No Stockholder Rights. This Agreement shall not entitle Optionee to
---------------------
any voting rights or other rights as a stockholder of the Company, or to any
other rights whatsoever except the rights herein expressed, and no cash dividend
paid out of earnings or surplus or interest shall be payable or accrued in
respect of the Options granted herein or the interest represented hereby or the
shares which may be purchased hereunder until and unless and only to the extent
that the Options represented by this Agreement shall be exercised. No
adjustments shall be made for dividends or other rights for which the record
date is prior to the date of issuance of a certificate representing the shares
of Common Stock acquired upon exercise of the Options.
9. Options Not Transferable. Except as provided in Section 4(c), the
------------------------
Options granted herein may be exercised only during the lifetime of the Optionee
and only by the Optionee. Optionee's rights and interests under this Agreement
and in and to the Options
<PAGE>
may not be sold, pledged, hypothecated, assigned, encumbered, gifted or
otherwise transferred in any manner, either voluntarily or involuntarily by
operation of law, whether by will or the laws of descent or distribution.
10. No Enlargement of Employee Rights.
---------------------------------
(a) Nothing in this Agreement shall be construed to create any
contract of employment between Optionee and the Company, any subsidiary of the
Company, or parent of the Company (each a "Participating Company") or confer
upon Optionee any right to continue in the employ of the Participating Company.
The Participating Company shall have the right to deal with Optionee as an
employee of the Participating Company in the same manner as if this Agreement
did not exist (including without limitation Optionee's hiring, discharge,
compensation and conditions of employment). Unless otherwise expressly set
forth in a separate employment agreement between the Participating Company and
Optionee, the employment of Optionee by the Participating Company is at will,
and the Company may terminate Optionee's employment by the Company at any time
for any reason, with or without cause.
(b) Any disputes as to whether and when there has been a termination
of Optionee's employment, the reason (if any) for such termination, and/or the
consequences thereof shall be determined by the Board in its sole discretion,
and the determination thereof shall be final and binding.
11. Withholding of Taxes. Optionee authorizes the Company to withhold, in
--------------------
accordance with any applicable law, from any compensation payable to Optionee
any taxes required to be withheld by federal, state, local or foreign law as a
result of the grant of the Options or the issuance of Common Stock pursuant to
the exercise of the Options.
12. Governing Law. This Agreement shall be governed by, interpreted
-------------
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California. In the event a judicial proceeding is necessary, the sole
forum for resolving disputes arising under or relating to this Agreement shall
be the Municipal and Superior Courts for the County of Marin, California, or the
federal district court encompassing said county and all related appellate
courts, and the parties hereby consent to the jurisdiction of such courts, and
that venue shall be in Marin County, California.
13. Entire Agreement. The terms of this Agreement are intended by the
----------------
parties as a final expression of their agreement with respect to such terms as
are included in this Agreement and may not be contradicted by evidence of any
prior or contemporaneous agreement. The parties further intend that this
Agreement constitutes the complete and exclusive statement of its terms and that
no extrinsic evidence may be introduced in any judicial proceeding involving
this Agreement.
14. Modifications, Amendments, Waivers, and Extensions. This Agreement
--------------------------------------------------
may not be modified, changed or supplemented, nor may any obligations hereunder
be waived or extensions of time for performance granted, except by written
instrument signed by the party to be charged or by its agent duly authorized in
writing or as otherwise expressly permitted herein. No waiver of any breach of
any agreement or
<PAGE>
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof or of any other agreement or provision herein
contained. No extension of time for performance of any obligations or acts shall
be deemed an extension of the time for performance of any other obligations or
acts.
15. Legends on Stock Certificates. Unless an appropriate registration
-----------------------------
statement is filed pursuant to the Securities Act with respect to the shares of
Common Stock issuable under this Agreement, each certificate representing such
Common Stock shall be endorsed with the following legend or its equivalent:
"The securities represented by this Certificate have been acquired for
investment for the holder's own account and not with a view to or for
sale in connection with any distribution of the securities. The
securities have not been registered or qualified, as applicable, under
the Securities Act of 1933 ("Act") or under any applicable state
securities laws or any applicable foreign law ("Blue Sky Laws"). An
offer to sell or transfer or the sale or transfer of these securities
is unlawful unless made pursuant to an effective registration
statement or permit, as applicable, under the Act or applicable Blue
Sky Laws or unless an exemption from registration and/or qualification
under the Act and applicable Blue Sky Laws is available and an opinion
of counsel reasonably satisfactory to the Company is provided to the
Company to the effect that such registration or qualification is not
required under the Act and applicable Blue Sky Laws."
In addition to the foregoing legend, each certificate representing shares
of Common Stock acquired upon exercise of an Option shall be endorsed with all
legends, if any, required by applicable securities or other laws to be placed on
the certificate.
16. Necessary Acts. The Optionee agrees to perform all acts and execute
--------------
and deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement, including but not limited to all acts and
documents related to compliance with any securities laws.
17. Counterparts. For convenience, this Agreement may be executed in any
------------
number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for any other
purpose without the production of any other counterparts.
18. Invalid Provisions. In the event that any provision of this Agreement
------------------
is found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and
<PAGE>
effect to the same extent as though the invalid and unenforceable provision was
not contained herein.
19. Successors and Assigns. This Agreement and the provisions hereof
----------------------
shall be binding upon each of the parties, their successors and permitted
assigns.
IN WITNESS WHEREOF, the Company and the Optionee have executed this Agreement as
of the date first written above.
INFERENCE CORPORATION OPTIONEE
By: _________________________ ________________________
Mark A. Wolf Signature
Vice President and Chief Financial Officer
________________________
Printed Name
Address:
________________________
________________________
________________________
________________________
<PAGE>
Exhibit A
Notice of Grant of Stock Options
and Option Agreement
((First_Name)) ((Last_Name)) Grant Number: ((Number))
((Address_1)) ((Address_2)) Social Security # ((Social))
((City)), ((State)) ((Zip))
- ---------------------------------------------------------------------------
On ((Legal_Date)), you were granted Shares options of the Company's Class A
Common Stock at ((Price)) per share.
The total option price of the shares is ((Total Price)).
These stock options began vesting on ((Legal_Date)) and will become fully vested
on the date shown below.
Options Full Vest Vest type Expiration
------- --------- --------- ----------
((Vest_1)) ((Vest_Date_1)) ((Vest_Type_1)) ((Expire_Date_1))
((Vest_2)) ((Vest_Date_2)) ((Vest_Type_2)) ((Expire_Date_2))
<PAGE>
List of Option Holders under the 1998 New Hire Stock Option Plan
Abeyratne, Priyalal
Adams, Daniel
Baggio, Anthony
Behm, Jerry
Bodner, Jonathan
Burnes, James
Burns, Michael
Cassee, Carrie
Clark, Brad
Crimmins, David
Drouin, Stephane
Haelen, Bennie
Hagen, Jim
Harper, Mitchel
Hunt, Ross
Jain, Deepak
Keenan, Richard
Lacson, Vittorio
Laird, Cathy
Li, Catherine
Lovins, Isabella
Lutz, David
Moore, Gary
Pappas, Greg
Pettet, Richard
Ponting, Ken
Poppino, Charles
Ross, Kimberly
Sedlak, Michelle
Steward, Maria
Wadsworth, Cynthia
Watson, Robert
Whelan, Paul
<PAGE>
List of Option Holders under the Private Placement Stock Option Plan
Ahukanna, Dawn
Allen, Ralph
Barrett, Ed
Bligh, Michael
Boresjo, Dan
Boucher, Marie Laure
Burdairon, Sandrine
Calcutt, David
Charlton, Allan
Christovic, Peter
Congdon, Suzanne
Connors, John
Cross, Justin
Davies, Nicholas
Davlos, Stratos
Dittmar, Frank
Firth, Ian
Frampton, Mark
French, Mick
Goodall, Jeremy
Grove, Christopher
Harrison, Samantha
Hoppe, Holger
Jedynez, Andrew
Jones, Ian
Keen, Mike
Matthews, Paul
Mennie, Andrew
Mollin, Christian
Montgomerie, Carol
Needham, David
O'Reilly, Paul
Padfield, Phillip
Pollard, George
Purohit, Sunil
Reid, Michael
Smith, Bernadette
Spooner, James
Walton, Paul
Webb, Anthony
Yeardley, Linda
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Inference Corporation Amended and Restated 1993
Stock Option Plan, Inference Corporation 1998 Non-Management Stock Option Plan,
Inference Corporation 1998 New Hire Stock Option Plan, Inference Corporation
Private Placement Stock Option Plan, and the Inference Corporation Charles W.
Jepson Stock Option Plan of our report dated February 19, 1999, with respect to
the consolidated financial statements of Inference Corporation included in its
Annual Report (Form 10-K) for the year ended January 31, 1999, and of our report
dated June 3, 1999, with respect to the financial statements of Verix Software
included in the Current Report on Form 8-K/A dated July 9, 1999 of Inference
Corporation, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Sacramento, California
September 2, 1999
