Document:

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                                                                    EXHIBIT 10.6
                              INFERENCE CORPORATION
                      1998 NON-MANAGEMENT STOCK OPTION PLAN
                        (amended as of January 19, 1999)

     1.  Purpose.  The purposes of this Plan are to attract and retain the best
         -------
available personnel for positions of substantial responsibility, to provide
additional incentive to the Employees of the Company and to promote the success
of the Company's business. Options granted hereunder shall be Nonstatutory Stock
Options.

     2.  Definitions.  As used herein, the following definitions shall apply:
         -----------

     (a) "Board" shall mean the Board of Directors of the Company.
          -----

     (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
          ----

     (c) "Committee" shall mean the Committee appointed by the Board of
          ---------
Directors in accordance with paragraph (b) of Section 3 of the Plan, if one is
appointed.

     (d) "Common Stock" shall mean the Company's Class A Common Stock, par value
          ------------
$0.01.

     (e) "Company" shall mean Inference Corporation, a Delaware corporation.
          -------

     (f) "Continuous Status as an Employee" shall mean the absence of any
          --------------------------------
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of sick leave, military
leave, or any other leave of absence approved by the Board; provided that such
leave is for a period of not more than 90 days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.

     (g) "Disability" shall mean a total and permanent disability as that term
          ----------
is defined in Section 22(e)(3) of the Code.

     (h) "Employee" shall mean any person, excluding officers and directors,
          --------
employed by the Company or any Parent or Subsidiary of the Company.

     (i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------ amended.

     (j) "Fair Market Value" shall mean: (i) if Shares are exchange-traded or
          -----------------
traded on the NASDAQ National Market System ("NMS"), the closing sale or last
sale price per share of the Shares; (ii) if Shares are regularly traded in any
over-the-counter market other than NMS, the average of the bid and asked prices
per share of the Shares; and (iii) if Shares are not traded as described in (i)
and (ii) of this Section 2(j), 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. Fair Market Value as of a given date with respect to
subparagraphs (i), (ii) and (iii) shall be determined as of the close of
business on the date of determination, 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.
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     (k) "Incentive Stock Option" shall mean an Option intended to qualify as an
          ----------------------
incentive stock option within the meaning of Section 422(b) of the Code.

     (l) "Nonstatutory Stock Option" shall mean an Option not intended to
          -------------------------
qualify as an Incentive Stock Option.

     (m) "Option" shall mean a stock option granted pursuant to the Plan.
          ------

     (n) "Optionee" shall mean an Employee who receives an Option.
          --------

     (o) "Option Termination Date" shall mean the date of expiration of the term
          -----------------------
of such Option as set forth in the written option agreement.

     (p) "Parent" shall mean a "parent corporation", whether now or hereafter
          ------
existing, as defined in Section 424(e) of the Code.

     (q) "Plan" shall mean this Inference Corporation 1998 Non-Management Stock
          ----
Option Plan.

(r) "Share" shall mean a share of Common Stock, as adjusted in
accordance with ----- Section 10 of the Plan.

     (s) "Subsidiary" shall mean a "subsidiary corporation", whether now or
          ----------
hereafter existing, as defined in Section 424(f) of the Code.

     3. Administration.
        --------------

     (a) The Plan shall be administered by the Board, which shall have sole
authority in its absolute discretion, subject to the terms of Section 3(b)
herein, (i) to determine which Employees shall receive Options, (ii) subject to
the express provisions of the Plan, to determine the time when Options shall be
granted, the number of Shares subject to the Options, the exercise prices, and
the terms and conditions of Options other than those terms and conditions fixed
under the Plan, and (iii) to interpret the provisions of the Plan and any Option
granted under the Plan. The Board shall adopt by resolution such rules and
regulations as may be required to carry out the purposes of the Plan and shall
have authority to do everything necessary or appropriate to administer the Plan.
All decisions, determinations and interpretations of the Board shall be final
and binding on all Optionees.

     (b) The Board may delegate administration of the Plan to a Committee of no
less than two Directors. The Board may from time to time remove members from, or
add members to, the Committee, and vacancies on the Committee shall be filled by
the Board. Furthermore, the Board at any time by resolution may abolish the
Committee and revest in the Board the administration of the Plan. (For purposes
of this Plan document, the term "Board" shall mean the Committee to the extent
that the Board's powers have been delegated to the Committee.)

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     4. Eligibility.
        -----------

     (a) Options may be granted only to Employees who render services which
contribute to the Company.

     (b) The Plan shall not confer upon any Optionee any right to continue as an
Employee of the Company, nor shall it interfere in any way with an Optionee's
right or the Company's right to terminate Optionee's employment at any time,
with or without cause.

     (c) The determination as to whether an Employee is eligible to receive
Options hereunder shall be made by the Board in its sole discretion, and the
decision of the Board shall be binding and final.

     5. Number of Shares. The maximum aggregate number of Shares which may be
        ----------------
optioned and sold under this Plan is Five Hundred Ten Thousand (510,000) Shares
of authorized but unissued Common Stock of the Company. In the event that
Options granted under the Plan shall terminate or expire without being
exercised, in whole or in part, the Shares subject to such unexercised Options
may again be optioned and sold under this Plan.

     6. Term of the Plan. The Plan shall be effective as of June 18, 1998, and
        ----------------
shall continue in effect until June 17, 2008, unless terminated earlier.

     7.  Exercise Price and Consideration.
         --------------------------------

     (a) The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board in its
sole discretion, but shall be no less than 100% of the Fair Market Value per
Share on the date of grant.

     (b) The consideration to be paid for the Shares to be issued upon exercise
of an Option shall consist of full payment in cash or cash equivalents or, with
the consent of the Board, one of the alternative forms specified below:

          (i) full payment in shares of Common Stock (duly endorsed for transfer
     to the Company) held by the Optionee for the requisite period necessary to
     avoid a charge to the Company's earnings for financial reporting purposes
     and valued at Fair Market Value on the date of delivery; or

          (ii) full payment through a combination of cash or cash equivalents
     and shares of Common Stock (duly endorsed for transfer to the Company) held
     by the Optionee for the requisite period necessary to avoid a charge to the
     Company's earnings for financial reporting purposes and valued at Fair
     Market Value on the date of delivery; or

          (iii) full payment effected through a broker-dealer sale and
     remittance procedure pursuant to which the Optionee (A) shall provide
     irrevocable written instructions to a designated brokerage firm to effect
     the immediate sale of the purchased shares and remit to the Company, out of
     the sale proceeds available on the settlement date, sufficient funds to
     cover the

                                      -3-
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     aggregate option price payable for the purchased Shares plus all applicable
     Federal and State income and employment taxes required to be withheld by
     the Company by reason of such purchase and (B) shall provide written
     directives to the Company to deliver the certificates for the purchased
     Shares directly to such brokerage firm in order to complete the sale
     transaction; or

          (iv) any other legal consideration that may be acceptable to the
     Board.

     8. Exercise of Options.
        -------------------

     (a) Vesting of Options. Any Option granted hereunder shall be exercisable
         ------------------
at such times and under such conditions as determined by the Board, including
performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of the Plan.

     (b) Procedure for Exercise. An Option may be exercised at any time as to
         ----------------------
all or any portions of the Shares as to which it is then exercisable, except
that an Option may not be exercised for a fraction of a Share and shall be
subject to any provision in the written option agreement governing the minimum
number of Shares as to which the Option may be exercised. An Option shall be
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment may, as
authorized by the Board, consist of any consideration and method of payment
allowable under Section 7(b) of the Plan.

     (c) Termination of Options. All installments of an Option shall expire and
         ----------------------
terminate on such date(s) as the Board shall determine, but in no event later
than ten (10) years from the date such Option was granted.

     (d) Death or Termination of Service of Optionee. The following provisions
         -------------------------------------------
shall govern the exercise period applicable to any Options held by an Optionee
at the time of his or her death or termination of service with the Company or
any Parent or Subsidiary of the Company:

          (i) Termination of Continuous Status as an Employee. In the event of
              -----------------------------------------------
     termination of an Optionee's Continuous Status as an Employee for any
     reason other than Optionee's death or Disability, such Optionee may only
     exercise the Option within three (3) months (or such shorter period as
     specified in the written option agreement, but in no event less than thirty
     (30) days) after the date of such termination.

          (ii) Disability of Optionee. In the event of termination of an
               ----------------------
     Optionee's Continuous Status as an Employee as a result of the Optionee's
     Disability, the Optionee may only exercise the Option within twelve (12)
     months (or such shorter period as is specified in the written option
     agreement, but in no event less than six (6) months) from the date of such
     termination.

          (iii) Death of Optionee. In the event of termination of an Optionee's
                -----------------
     Continuous Status as an Employee as a result of the Optionee's death, the
     Option may only be exercised any time within twelve (12) months (or such
     shorter period as is specified in the written

                                      -4-
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     option agreement, but in no event less than six (6) months) following the
     date of death by the Optionee's estate or by a person who acquired the
     right to exercise the Option by bequest or inheritance.

          (iv) Limitations. Each Option shall, during the limited exercise
               -----------
     period under this Section 8(d), be exercisable only as to the Shares for
     which the Option is exercisable on the date of the Optionee's death or
     termination of service with the Company. Under no circumstances shall any
     Option become exercisable under this Section 8(d) after the Option
     Termination Date. Upon the earlier of the expiration of such limited
     exercise period or the Option Termination Date, the Option shall terminate
     and cease to be exercisable.

          (v) Immediate Termination. Should (A) the Optionee's Continuous Status
              ---------------------
     as an Employee be terminated for misconduct (including, but not limited to,
     any act of dishonesty, willful misconduct, fraud or embezzlement) or (B)
     the Optionee make any unauthorized use or disclosure of confidential
     information or trade secrets of the Company or any Parent or Subsidiary,
     then in any such event all outstanding Options granted to the Optionee
     under this Plan shall terminate immediately and cease to be exercisable.

          (vi) Board Discretion to Accelerate. The Board shall have complete
               ------------------------------
     discretion, exercisable either at the time the Option is granted or at any
     time the Option remains outstanding, to permit one or more Options granted
     under this Plan to be exercised during the limited exercise period
     applicable under this Section 8(d), not only for the number of Shares for
     which each such Option is exercisable at the time of the Optionee's death
     or termination of service but also for one or more subsequent installments
     of Shares for which the Option would otherwise have become exercisable had
     such death or termination of service not occurred.

     (e) Extensions. Notwithstanding the provisions covering the exercisability
         ----------
of Options following death or termination of service, as described in Section
8(d), 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 the Option shall remain exercisable, provided that in no
event shall such extension go beyond the Option Termination Date.

     9. Restrictions on Grants of Options and Issuance of Shares.
        --------------------------------------------------------

     (a) Regulatory Approvals. No Shares shall be issued or delivered upon
         --------------------
exercise of an Option unless and until there shall have been compliance with all
applicable requirements of the Securities Act of 1933, as amended, (the "1933
Act"), and any other requirement of law or of any regulatory body having
jurisdiction over such issuance and delivery. The inability of the Company to
obtain any required permits, authorizations or approvals necessary for the
lawful issuance and sale of any Shares hereunder on terms deemed reasonable by
the Board shall relieve the Company, the Board, and any Committee of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite permits, authorizations, or approvals shall not have been obtained.

     (b) Representations and Warranties. As a condition to the granting or
         ------------------------------
exercise of any Option, the Board may require the person receiving or exercising
such Option to make any representation and/or warranty to the Company as may be
required (or deemed appropriate by the

                                      -5-
<PAGE>

Board, in its discretion) under any applicable law or regulation, including but
not limited to a representation that the Option and/or Shares are being acquired
only for investment and without any present intention to sell or distribute such
Option and/or Shares, if such a representation is required under the 1933 Act or
any other applicable law, rule, or regulation.

     10. Option Adjustments.
         ------------------

     (a) Change 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 reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, upon authorization by the Board an appropriate and proportionate
adjustment shall be made in the number or kind of shares, and the per-share
option price thereof, which may be issued in the aggregate and to any individual
Optionees under the Plan upon exercise of Options granted under the Plan;
provided, however, that no such adjustment need be made if, upon the advice of
counsel, the Board determines that such adjustment may result in the receipt of
federal taxable income to holders of Options granted under the Plan or the
holders of Common Stock or other classes of the Company's securities.

     (b) Dissolution or Liquidation: Merger or Asset Sale. In the event of the
        -------------------------------------------------
proposed dissolution or liquidation of the Company, the Board shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Board in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the optioned stock covered thereby, including shares as
to which the Option would not otherwise be exercisable. To the extent it has not
been previously exercised, an Option will terminate immediately prior to the
consummation of such proposed action.

     In the event of a merger of the Company with or into another corporation,
or the sale of substantially all of the assets of the Company, each outstanding
Option shall be assumed or an equivalent option substituted by the successor
corporation or a parent or subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option,
the Optionee shall fully vest in and have the right to exercise the Option as to
all of the optioned stock, including shares as to which it would not otherwise
be vested or exercisable. If an Option becomes fully vested and exercisable in
lieu of assumption or substitution in the event of a merger or sale or assets,
the Board shall notify the Optionee in writing or electronically that the Option
shall be full vested and exercisable for a period of fifteen (15) days from the
date of such notice, and the Option shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option confers the right
to purchase or receive, for each share of optioned stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its parent,
the Board may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the

                                      -6-
<PAGE>

Option, for each share of optioned stock subject to the Option, to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.

     11. Option Agreement. The terms and conditions of Options granted under the
         ----------------
Plan shall be evidenced by a written option agreement executed by the Company
and the person to whom the Option is granted. Each option agreement shall
incorporate the Plan by reference and shall include such provisions as are
determined to be necessary or appropriate by the Board.

     12. Amendment or Termination of the Plans.
         -------------------------------------

     (a) Board Authority. The Board may amend, suspend, alter, or terminate the
         ---------------
Plan at any time. To the extent necessary or desirable to comply with the Code
or any other applicable law or regulation, the Company may obtain shareholder
approval of any amendment to the Plan only in such a manner and to such a degree
as required under applicable law.

     (b) Limitation on Board Authority. Notwithstanding the foregoing, no
         -----------------------------
amendment, suspension or termination of the Plan shall adversely affect Options
granted on or prior to the date thereof, as evidenced by the execution of an
option agreement by both the Company and the Optionee, without the consent of
such Optionee.

     13. Options Not Transferable. Options granted under this Plan may not be
         ------------------------
sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily by
operation of law, other than by will or the laws of descent or distribution, and
may be exercised during the lifetime of an Optionee only by such Optionee.

     14. No Rights in Shares Before Issuance and Delivery. Neither the Optionee,
         ------------------------------------------------
his or her estate nor his or her transferees by will or the laws of descent and
distribution shall be, or have any rights or privileges of, a shareholder of the
Company with respect to any Shares issuable upon exercise of the Option unless
and until certificates representing such Shares shall have been issued and
delivered notwithstanding exercise of the Option. No adjustment will be made for
a dividend or other rights where the record date is prior to the date such stock
certificates are issued, except as provided in Section 10.

     15. Taxes. The Board shall make such provisions and take such steps as it
         -----
deems necessary or appropriate for the withholding of any federal, state, local
and other tax required by law to be withheld with respect to the grant or
exercise of an Option under the Plan, including, without limitation, the
deduction of the amount of any such withholding tax from any compensation or
other amounts payable to an Optionee by the Company, or requiring an Optionee
(or the Optionee's beneficiary or legal representative) as a condition of
granting or exercising an Option to pay to the Company any amount required to be
withheld, or to execute such other documents as the Board deems necessary or
desirable in connection with the satisfaction of any applicable withholding
obligation. The Optionee may request the Company to withhold from the Shares to
be issued upon such exercise that number of Shares (based on the Fair Market
Value of the Shares as of the day notice of exercise is received by the Company)
that would satisfy any tax withholding requirement.

                                      -7-
<PAGE>

     16. Legends on Options and Stock Certificates. Each option agreement and
         -----------------------------------------
each certificate representing Shares acquired upon exercise of an Option shall
be endorsed with all legends, if any, required by applicable federal and state
securities laws to be placed on the option agreement and/or the certificate. The
determination of which legends, if any, shall be placed upon option agreements
and/or the certificates representing Shares shall be made by the Board in its
sole discretion and such decision shall be final and binding.

     17. Availability of Plan and Financial Statements. A copy of this Plan
         ---------------------------------------------
shall be delivered to the Secretary of the Company and shall be shown by the
Secretary to any eligible person making reasonable inquiry concerning the Plan.
The Company shall also provide Optionees with financial statements of the
Company at least annually.

     18. Applicable Law. This Plan shall be governed by and construed in
         --------------
accordance with the laws of the State of Delaware.

                                    /s/ Charles W. Jepson
                                    --------------------------------------
                                    Charles W. Jepson, President and Chief
                                    Executive Officer

Date Plan approved by Board: June 18, 1998.

                                      -8-<PAGE>

                                                                   Exhibit 10.45

                        EXECUTIVE EMPLOYMENT AGREEMENT

          This Executive Employment Agreement ("Agreement") is dated as of
January 20, 2000, between Inference Corporation, a Delaware corporation (the
"Company"), and Phil Ranger (the "Executive").

          WHEREAS, the Company has determined that it is in the best interests
of the Company and its stockholders to reinforce and encourage the continued
attention and dedication of certain key members of the Company's management,
including the Executive, to their assigned duties without distraction in
uncertain circumstances arising from the possibility of a change in control of
the Company.

          WHEREAS, the Company also has determined that it is in the best
interests of the Company and its stockholders to minimize the personal
considerations of certain key members of management in their evaluation of any
offers for a change in control of the Company.

          WHEREAS, the Company has determined that the loss of the Executive's
services would have a detrimental effect on an effort to effect a change in
control of the Company (in the event the Company determines to effect such a
change in control of the Company).

          NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and conditions contained herein, the parties hereto agree as follows:

                                   ARTICLE I
                                  TERMINATION

          I.1  Definitions.  For purposes of this Article I, the following
               -----------
definitions shall be applicable to the terms set forth below:

               (a)  Cause.  "Cause" shall mean only the following: (i) the
                    -----
Executive's death or Disability; (ii) the willful and continued failure by the
Executive to substantially perform his duties hereunder (other than such failure
resulting from the Executive's incapacity due to physical or mental illness)
after demand for substantial performance is delivered by the Company that
specifically identifies the manner in which the Company believes the Executive
has not substantially performed his duties; (iii) willful misconduct by the
Executive which is materially injurious to the Company; (iv) conviction of a
felony under the laws of the State of California; (v) habitual drunkenness by
the Executive; or (vi) a willful, material breach of this Agreement by the
Executive. For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without a reasonable belief that such
action or omission by the Executive was in the best interests of the Company.
Notwithstanding anything to the contrary in the foregoing, no termination or
other action shall be considered to be for Cause under this Agreement unless the
Executive first shall have received at least 5 days written notice setting forth
the reasons for the Company's intention to terminate or take other action.

               (b)  Change of Control "Change in Control" means and shall be
                    -----------------
deemed to have occurred with respect to the Company if: (i) there shall be
consummated (A) any consolidation, merger or other business combination of the
Company with another corporation or entity and as a result of such
consolidation, merger or other business combination less than 50% of the
outstanding voting securities of the surviving or resulting corporation or
entity shall be owned in the aggregate by the shareholders of the Company, other
than affiliates (within the meaning of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), of any party to such consolidation, merger, or
other business combination, as the same shall have existed immediately prior to
such consolidation, merger, or other business combination; or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; (ii)
the shareholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company; (iii) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the shareholders of
the Company as of the date hereof, shall become

                                      -1-
<PAGE>

the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 30% or more of the Company's outstanding Common Stock; or (iv) a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act shall
have occurred.

                                      -2-
<PAGE>

               (c)  Good Reason.  "Good Reason" shall mean each of the
                    -----------
following: (i) the failure of the Company to vest the Executive, without the
Executive's consent, with the powers and authority of the Executive's position
of employment as contemplated herein, or any removal of the Executive from,
without the Executive's consent, to a position of employment consistent with the
position and status of Executive the position of CFO and the most senior
financial executive position in the company, reporting directly to the Chief
Executive Officer; (ii) a reduction by the Company, without the Executive's
consent, in the Executive's annual base salary as it may exist from time to
time; (iii) a failure by the Company, without the Executive's consent, to
continue any Company Benefit Plans in which the Executive presently is entitled
to participate, as the same may be modified from time to time; (iv) a failure,
without the Executive's consent, by the Company to continue the Executive as a
participant in any Company Benefit Plans on at least the same basis as he
presently participates in such plans; (v) the requirement by the Company,
without Executive's consent, that the Executive be based anywhere other than
within 25 miles of the Executive's present office location, except for required
travel on the Company's business to an extent substantially consistent with the
Executive's present business travel obligations; (vi) a failure by the Company
to comply with any material provisions of this Agreement which has not been
cured within thirty (30) days after notice of such noncompliance has been given
by the Executive to the Company, or if such failure is not capable of being
cured in such time, a cure shall not have been diligently initiated by the
Company within such thirty-day period; or (vii) a failure by the Company to
obtain from any successor, before the succession takes place, an agreement to
assume and perform this Agreement; provided, however, that any of the foregoing
actions shall not be considered to be Good Reason if such action is undertaken
by the Company for Cause.

          I.2  Severance Benefits Received Upon Termination.
               ---------------------------------------------

        (b)  If at any time the Executive's employment is terminated by the
Company for Cause, the Company shall pay the Executive, in cash, his base salary
through the end of the month during which such termination occurs plus credit
for any accrued vacation.  All benefits will remain in effect until the
termination occurs.  Subject to the other provisions contained in this
Agreement, the Company may terminate this Agreement for any reason other than
Cause upon thirty (30) days' written notice to Executive.  The effective date of
termination ("Effective Date") shall be considered to be thirty (30) days
subsequent to written notice of termination; however, the Company may elect to
have Executive leave the Company immediately.

               (c)  If at any time the Executive's employment is terminated by
the Company without Cause or (ii) at any time the Executive's employment is
terminated by the Executive for Good Reason, then the Company shall:

                    (1)  Pay to the Executive within four business days
following the date of termination his base salary through the end of the month
during which such termination occurs plus credit for any vacation earned but not
taken; and

                    (2)  Pay to the Executive in a lump sum within seven
business days following the date of termination, an amount equal to three (3)
months of the Executive's annual base salary in effect as of the date of
termination. If the Executive is not employed full-time within three (3) months
of the termination date, the Company shall continue the Executive's monthly
salary for up to three (3) months or until the Executive's commencement of full
time employment with a new employer, which ever occurs first; and

                    (3)  Health Benefits.  The Company shall provide the
                         ---------------
Executive with the same level of health coverage and benefits as in effect for
the Executive on the day immediately preceding the day of the Executive's
termination of employment; provided, however, that (i) the Executive constitutes
a qualified beneficiary, as defined in Section 4980(g)(l) of the Internal
Revenue Code of 1986, as amended; and (ii) Executive elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), within the time period prescribed pursuant to COBRA. The
Company shall continue to reimburse Executive for continuation coverage until
the earlier of (i) the date Executive is no longer eligible to receive
continuation coverage pursuant to COBRA or (ii) six (6) months from the
termination of Executive's employment.

                                      -3-
<PAGE>

          I.3  Severance Benefits Received Upon Change of Control
               --------------------------------------------------

               (1)  If at any time the Executive's employment is terminated by
the Company due to a Change of Control or if the Executive is not offered a like
position with the same compensation, benefits, position and responsibilities due
to a Change of Control, the Company shall:

Pay to the Executive in a lump sum within seven business days following the date
of termination, an amount equal to one (1) times the Executive's annual base
salary in effect as of the date of termination plus one half (1/2) the
Executive's annual bonus and;

               (2)  Health Benefits. The Company shall provide the Executive
                    ---------------
with the same level of health coverage and benefits as in effect for the
Executive on the day immediately preceding the day of the Executive's
termination of employment; provided, however, that (i) the Executive constitutes
a qualified beneficiary, as defined in Section 4980(g)(l) of the Internal
Revenue Code of 1986, as amended; and (ii) Executive elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), within the time period prescribed pursuant to COBRA. The
Company shall continue to reimburse Executive for continuation coverage until
the earlier of (i) the date Executive is no longer eligible to receive
continuation coverage pursuant to COBRA or (ii) twelve months from the date
Executive's employment with the Company terminated.

          I.4  No Obligation to Mitigate Damages; No Effect on Other
               -----------------------------------------------------
Contractual Rights.
------------------

               (a)  The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the date of termination.

               (b)  The provisions of this Agreement, and any payment or benefit
provided for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, under any Company Benefit Plan,
employment agreement or other contract, plan or arrangement.

                                      -4-
<PAGE>

                                  ARTICLE II
                       CONFIDENTIALITY AND NONDISCLOSURE

          II.1  Confidentiality.  Executive will not during Executive's
                ---------------
employment by the Company or thereafter at any time disclose, directly or
indirectly, to any person or entity or use for Executive's own benefit any trade
secrets or confidential information relating to the Company's business,
operations, Phileting data, business plans, strategies, employees, negotiations
and contracts with other companies, or any other subject matter pertaining to
the business of the Company or any of its clients, customers, consultants, or
licensees, known, learned, or acquired by Executive during the period of
Executive's employment by the Company (collectively "Confidential Information"),
except as may be necessary in the ordinary course of performing Executive's
particular duties as an employee of the Company.

          II.2  Return of Confidential Material.  Executive shall promptly
                -------------------------------
deliver to the Company on termination of Executive's employment with the
Company, whether or not for Cause and whatever the reason, or at any time the
Company may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints, Confidential Information and any other documents of a
confidential nature belonging to the Company, including all copies of such
materials which Executive may then possess or have under Executive's control.
Upon termination of Executive's employment by the Company, Executive shall not
take any document, data, or other material of any nature containing or
pertaining to the proprietary information of the Company.

          II.3  Prohibition on Solicitation of Customers.  During the term of
                ----------------------------------------
Executive's employment with the Company and for a period of one (1) year
thereafter Executive shall not, directly or indirectly, either for Executive or
for any other person or entity, solicit any person or entity to terminate such
person's or entity's contractual and/or business relationship with the Company,
nor shall Executive interfere with or disrupt or attempt to interfere with or
disrupt any such relationship.  None of the foregoing shall be deemed a waiver
of any and all rights and remedies the Company may have under applicable law.

          II.4  Prohibition on Solicitation of Employees, Agents or Independent
                ---------------------------------------------------------------
Contractors After Termination.  During the term of Executive's employment with
-----------------------------
the Company and for a period of one (1) year following the termination of
Executive's employment with the Company, Executive will not solicit any of the
employees, agents, or independent contractors of the Company to leave the employ
of the Company for a competitive company or business.  However, Executive may
solicit any employee, agent or independent contractor who voluntarily terminates
his or her employment with the Company after a period of 120 days have elapsed
since the termination date of such employee, agent or independent contractor.
None of the foregoing shall be deemed a waiver of any and all rights and
remedies the Company may have under applicable law.

          II.5. Right to Injunctive and Equitable Relief.  Executive's
                ----------------------------------------
obligations not to disclose or use Confidential Information and to refrain from
the solicitations described in this Article II are of a special and unique
character which gives them a peculiar value. The Company cannot be reasonably or
adequately compensated for damages in an action at law in the event Executive
breaches such obligations. Therefore, Executive expressly agrees that the
Company shall be entitled to injunctive and other equitable relief without bond
or other security in the event of such breach in addition to any other rights or
remedies which the Company may possess or be entitled to pursue. Furthermore,
the obligations of Executive and the rights and remedies of the Company under
this Article II are cumulative and in addition to, and not in lieu of, any
obligations, rights, or remedies created by applicable law relating to
misappropriation or theft of trade secrets or Confidential Information.

          II.6  Survival of Obligations.  Executive agrees that the terms of
                -----------------------
this Article II shall survive the term of this Agreement and the termination of
Executive's employment by the Company.

                                      -5-
<PAGE>

                                  ARTICLE III
               ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY

          III.1  Assumption of Obligations.  The Company will require any
                 -------------------------
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a material breach of
this Agreement. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement becomes bound by all the
terms and provisions of this Agreement by operation of law. If at any time
during the term of this Agreement the Executive is employed by any corporation a
majority of the voting securities of which is then owned by the Company,
"Company" as used in this Agreement shall in addition include such employer. In
such event, the Company agrees that it shall pay or shall cause such employer to
pay any amounts owed to the Executive pursuant to this Agreement.

          III.2  Beneficial Interests.  This Agreement shall inure to the
                 --------------------
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.

                                  ARTICLE IV
                              GENERAL PROVISIONS

          IV.1   No Waivers.  No provision of this Agreement may be modified,
                 ----------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

          IV.2   Governing Law.  This Agreement shall be governed by and
                 -------------
construed in accordance with the laws of the State of California.

          IV.3   Severability or Partial Invalidity.  The invalidity or
                 ----------------------------------
unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

          IV.4   Counterparts.  This Agreement may be executed in one or more
                 ------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

          IV.5   Legal Fees and Expenses.  Should any party institute any
                 -----------------------
action or proceeding to enforce this Agreement or any provision hereof, or for
damages by reason of any alleged breach of this Agreement or of any provision
hereof, or for a declaration of rights hereunder, the prevailing party in any
such action or proceeding shall be entitled to receive from the other party all
costs and expenses, including reasonable attorneys' fees, incurred by the
prevailing party in connection with such action or proceeding.

          IV.6   Notice Provisions. All notices must be written and executed by
                 -----------------
registered mail with a return receipt.

                                      -6-
<PAGE>

          IV.7   Entire Agreement.  This Agreement constitutes the entire
                 ----------------
agreement of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings, and negotiations between the
parties with respect to the subject matter hereof. This Agreement is intended by
the parties as the 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.

          IV.8   Arbitration.  Any controversy, dispute, claim or other matter
                 -----------
in question arising out of or relating to this Agreement shall be settled, at
the request of either party, by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
and judgement upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof, subject to the following terms, conditions
and exceptions:

   1.1.  Notice of the demand for arbitration shall be filed in writing with the
         other party and with the AAA. There shall be a panel of three (3)
         arbitrators whose selection shall be made in accordance with the
         procedures then existing for the selection of such arbitrators by the
         AAA.

   1.2.  Discovery as allowable under California Code of Civil Procedure
         Sections 2001 et. seq. shall be allowed in arbitration.

   1.3   The costs and fees of the arbitration shall be advanced by the Company
and shall be allocated by the arbitrators after judgement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                       INFERENCE CORPORATION, a Delaware corporation

                       By: _____________________________________________________
                           Charles Jepson, President and Chief Executive Officer

                       EXECUTIVE

                           _____________________________________________________

                                      -7-

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