Form 8K (Klowan employment agreement)

0000720851-07-000005.txt : 20070207 0000720851-07-000005.hdr.sgml : 20070207 20070207160618 ACCESSION NUMBER: 0000720851-07-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070205 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070207 DATE AS OF CHANGE: 20070207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NESTOR INC CENTRAL INDEX KEY: 0000720851 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133163744 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12965 FILM NUMBER: 07588216 BUSINESS ADDRESS: STREET 1: 42 ORIENTAL STREET STREET 2: THIRD FLOOR CITY: PROVIDENCE STATE: RI ZIP: 02908 BUSINESS PHONE: 4012745658 MAIL ADDRESS: STREET 1: 42 ORIENTAL STREET STREET 2: THIRD FLOOR CITY: PROVIDENCE STATE: RI ZIP: 02908 8-K 1 form8k.htm FORM 8K 2-7-2007 Form 8K (Klowan employment agreement)

UNITED STATES

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): February 1, 2007

NESTOR, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

0-12965	13-3163744
(Commission File Number)	(IRS Employer Identification Number)

42 Oriental Street; Third Floor, Providence, Rhode Island

(Address of principal executive offices)

(401) 274-5658

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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ITEM 1.01.

ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On February 1, 2007, Nestor, Inc., a Delaware corporation (together with its subsidiaries, the “Registrant”), entered an employment agreement with Teodor Klowan, Jr., the Registrant’s Vice President, Corporate Controller and Chief Accounting Officer.

Mr. Klowan’s employment agreement provides as follows:

·	base salary of $125,000 per year;

previously granted options to purchase the Registrant’s Common Stock have been amended to provide for automatic vesting and immediate vesting and lifting of all exercise restrictions (a) upon a Change in Control Event (as defined in the Employment Agreement), and (b) if Mr. Klowan’s employment is terminated without cause or for a good reason (each as defined in the Employment Agreement);

·	bonuses in the Compensation Committee’s sole discretion;

·	term from its date until December 31, 2008 and by its own terms renews for one year unless the Company elects not to renew by October 31, 2008.

·	in the event of Mr. Klowan’s termination without cause or resignation for good reason, Mr. Klowan will receive one year’s base salary and three years of accelerated vesting with respect to his option

On February 7, 2007 the Registrant entered an employment agreement with Brian R. Haskell, Esq., the Registrant’s Vice President, General Counsel and Secretary.

Mr. Haskell’s employment agreement provides as follows:

·	base salary of $ 148,500 per year;

grant of an option to purchase 135,000 shares of the Registrant’s Common Stock vesting in 5 annual installments beginning on February 1, 2008 and ending on February 1, 2012, however, the option will immediately and fully vest upon (a) a Change in Control Event (as defined in the Employment Agreement), and (b) Mr. Haskell’s employment is terminated without cause or for a good reason (each as defined in the Employment Agreement);

·	bonuses in the Compensation Committee’s sole discretion;

·	term from its date until December 31, 2008 and by its own terms renews for one year unless the Company elects not to renew by October 31, 2008.

·	in the event of Mr. Haskell’s termination without cause or resignation for good reason, Mr. Haskell will receive one year’s base salary and three years of accelerated vesting with respect to his option.

On February 1, 2007, Registrant, entered into restricted stock agreements with George L. Ball, Clarence A. Davis, Michael C. James, David N. Jordan, Nina R. Mitchell, Thodore Petroulas and Daryl Silzer, each a non-employee director of the Registrant elected at the annual meeting of stockholders held in 2006. Pursuant to those agreements, each of Messrs. Ball, Davis, James, Jordan, Petroulas, Silzer and Ms. Mitchell received 5,000 shares of the Registrant’s common stock in consideration of their services as directors of the Registrant, subject to forfeiture if they did not continue to serve until the earlier of the next annual meeting of the Registrant's stockholders or December 31, 2007.

On February 7, 2007, the Registrant entered into a consultancy agreement with Clarence A. Davis, a member of the Registrant’s Audit Committee. Mr. Davis reports directly to the Board of Directors and will provide assistance to the management team in determining, articulating and executing the Registrant’s strategic plan. In exchange for his services, Mr. Davis will be paid a monthly fee of $25,000.00 and will be reimbursed for his reasonable expenses. Mr. Davis’s services are expected to last between 2 and 4 months, though the agreement may be terminated by either party at any time. As part of this letter agreement, Mr. Davis has resigned from the Registrant’s Audit Committee, though he remains a member of the Registrant’s Board of Directors.

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ITEM 8.01.

OTHER EVENTS

Clarence A. Davis has resigned as a member of the Audit Committee because his new position as a consultant to the Registrant disqualifies him as an independent director for purposes of Audit Committee membership. The Registrant will seek a replacement for Mr. Davis on the Audit Committee in due course. Mr. Davis remains a member of the Registrant’s Board of Directors.

The Registrant's program in Davenport, Iowa has been suspended by the city indefinitely, following a district court ruling that the city's ordinance authorizing automated traffic enforcement exceeds the city's home rule authority. The city is appealing the district court ruling and has informed the Registrant that it intends to seek a change in state law to allow the program to continue should the district court ruling be upheld.

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS

(c)

Exhibits

Exhibit No.

Exhibit

10.1	Employment Agreement between Nestor, Inc. and Teodor Klowan, Jr., dated February 1, 2007

10.2	Employment Agreement between Nestor, Inc. and Brian R. Haskell, dated February 7, 2007

10.3	Consulting Letter Agreement between Nestor, Inc. and Clarence A. Davis, dated February 7, 2007

10.4	Form of Restricted Stock Agreement dated February 1, 2007

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		NESTOR, INC.


	By:	/s/ Nigel P. Hebborn
		Nigel P. Hebborn
		Executive Vice President, Treasurer and CFO




Date: February 7, 2007

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EX-10.1 2 klowanempagrmt.htm KLOWAN EMPLOYMENT AGREEMENT Klowan Employment Agreement

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made as of this 1st day of February 2007, is entered into by Nestor, Inc. a Delaware corporation (the “Company”), and Teodor Klowan, Jr. (the “Employee”).

The Company desires to employ the Employee, and the Employee desires to be employed by the Company. In consideration of the mutual covenants and promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties to this Agreement, the parties agree as follows:

1. Term of Employment. The Company hereby agrees to employ the Employee, and the Employee hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on the date hereof (the “Commencement Date”) and ending on December 31, 2008 (such period, the “Initial Employment Period” and as it may be extended, the “Employment Period”), unless sooner terminated in accordance with the provisions of Section 4. On December 31, 2008, if not previously terminated, this Agreement shall automatically renew and the Employment Period be extended until December 31, 2009 unless the Company shall elect not to so extend the Employment Period and shall have given written notice to the Employee of such election on or before October 1, 2008.

2. Title; Capacity. The Employee shall serve as Chief Accounting Officer and Corporate Controller of the Company or in such other position as the Company’s Board of Directors (the “Board”) or its Chief Executive Officer may determine from time to time. The Employee shall be based at the Company’s headquarters in Rhode Island or at such place or places in the continental United States as the Board and the Employee shall mutually determine. The Employee shall be subject to the supervision of, and shall have such authority as is delegated to the Employee by, the Board or the Chief Executive Officer of the Company.

The Employee hereby accepts such employment and agrees to undertake the duties and responsibilities inherent in such position and such other duties and responsibilities as the Board or the Chief Executive Officer shall from time to time reasonably assign to the Employee. The Employee agrees to devote his entire business time, attention and energies to the business and interests of the Company during the Employment Period. The Employee agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company.

3. Compensation and Benefits.

3.1 Salary. The Company shall pay the Employee, in periodic installments in accordance with the Company’s customary payroll practices, an annual base salary $125,000. Such salary shall be subject to increase but not decrease thereafter as determined by the Board and shall be reviewed at least annually by the Board.

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3.2 Bonus. The Compensation Committee, in its sole discretion, may award the Employee bonuses during the term hereof.

3.3 Equity Incentive. Options to purchase shares of Company stock previously granted to Employee by the Company and currently outstanding shall be amended to provide that after a Change in Control Event (as defined in Schedule A hereto), all restrictions on the exercise thereof shall lift and such options shall vest upon (a) the termination by the Company of the Employee’s employment, unless such termination is for Cause (as defined in Section 4.2) or (b) the resignation of Employee for Good Reason (as defined in Section 4.3).

3.4 Fringe Benefits. The Employee shall be entitled to participate in all bonus and benefit programs that the Company establishes and makes available to its employees, if any, to the extent that Employee’s position, tenure, salary, age, health and other qualifications make him eligible to participate.

3.5 Reimbursement of Expenses. The Company shall reimburse the Employee for all reasonable travel, entertainment and other expenses incurred or paid by the Employee in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement, in accordance with policies and procedures, and subject to limitations, adopted by the Company from time to time.

3.6 Withholding. All salary, bonus and other compensation payable to the Employee shall be subject to applicable withholding taxes.

4. Termination of Employment Period. The employment of the Employee by the Company pursuant to this Agreement shall terminate upon the occurrence of any of the following:

4.1 Expiration of the Employment Period;

4.2 At the election of the Company, for Cause (as defined below), immediately upon written notice by the Company to the Employee, which notice shall identify the Cause upon which the termination is based. For the purposes of this Section 4.2, “Cause” shall mean (a) a good faith finding by the Company that (i) the Employee has failed in any material respect to perform his reasonably assigned duties for the Company and has failed to remedy such failure within 10 days following written notice from the Company to the Employee notifying him of such failure, or (ii) the Employee has engaged in dishonesty, gross negligence or misconduct with respect to the Company, or (b) the conviction of the Employee of, or the entry of a pleading of guilty or nolo contendere by the Employee to, any crime involving moral turpitude or any felony;

4.3 At the election of the Employee, for Good Reason (as defined below), immediately upon written notice by the Employee to the Company, which notice shall identify the Good Reason upon which the termination is based. For the purposes of this Section 4.3, “Good Reason” for termination shall mean (i) a material adverse change in the Employee’s authority, duties or compensation without the prior consent of the Employee or (ii) a material breach by the Company of the terms of this Agreement, which breach is not remedied by the Company within 10 days following written notice from the Employee to the Company notifying it of such breach.

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4.4 Upon the death or disability of the Employee. As used in this Agreement, the term “disability” shall mean the inability of the Employee, due to a physical or mental disability, for a period of 90 days, whether or not consecutive, during any 360-day period to perform the services contemplated under this Agreement, with or without reasonable accommodation as that term is defined under state or federal law. A determination of disability shall be made by a physician satisfactory to both the Employee and the Company, provided that if the Employee and the Company do not agree on a physician, the Employee and the Company shall each select a physician and these two together shall select a third physician, whose determination as to disability shall be binding on all parties;

4.5 At the election of either party, upon not less than 30 days’ prior written notice of termination.

5. Effect of Termination.

5.1 At-Will Employment. If the Employment Period expires pursuant to Section 1 hereof, then, unless the Company notifies the Employee to the contrary, the Employee shall continue his employment on an at-will basis following the expiration of the Employment Period. Such at-will employment relationship may be terminated by either party at any time and shall not be governed by the terms of this Agreement.

5.2 Payments Upon Termination.

(a) In the event the Employee’s employment is terminated pursuant to Section 4.1, Section 4.2 or by the Employee pursuant to Section 4.5, the Company shall pay to the Employee the compensation and benefits otherwise payable to him under Section 3 through the last day of his actual employment by the Company.

(b) In the event the Employee’s employment is terminated by the Employee pursuant to Section 4.3 or by the Company pursuant to Section 4.5, the Company shall continue to pay to the Employee his salary as in effect on the date of termination and continue to provide to the Employee the other benefits owed to him under Section 3.4 (to the extent such benefits can be provided to non-employees, or to the extent such benefits cannot be provided to non-employees, then the cash equivalent thereof) until the date one year after the date of termination and for the purposes of the vesting of options to purchase common stock granted to the Employee pursuant to Section 3.3, the Employee shall be deemed to be employed by the Company until the date one year after the date of termination. The payment to the Employee of the amounts payable under this Section 5.2(b) (i) shall be contingent upon the execution by the Employee of a release in a form reasonably acceptable to the Company and (ii) shall constitute the sole remedy of the Employee in the event of a termination of the Employee’s employment in the circumstances set forth in this Section 5.2(b).

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(c) In the event the Employee’s employment is terminated pursuant to Section 4.4, the Company shall continue to pay to the Employee (or his estate) his salary as in effect on the date of termination and the amount of the annual bonus paid to him for the fiscal year immediately preceding the date of termination (payable in annualized monthly installments) and, if such termination was on account of disability, continue to provide to the Employee the other benefits owed to him under Section 3.4 (to the extent such benefits can be provided to non-employees, or to the extent such benefits cannot be provided to non-employees, then the cash equivalent thereof) until the date one year after the date of termination and for the purposes of the vesting of options to purchase common stock granted to the Employee pursuant to Section 3.3, the Employee shall be deemed to be employed by the Company until the date one year after the date of termination. The amounts payable to the Employee under this Section 5.2(c) shall be reduced by the aggregate amount of all insurance proceeds paid to the Employee or his beneficiaries pursuant to insurance policies paid for by the Company.

5.3 Survival. The provisions of Sections 5.2, 6 and 7 shall survive the termination of this Agreement.

6. Non-Competition and Non-Solicitation.

6.1 Restricted Activities. While the Employee is employed by the Company and for a period of one year after the termination or cessation of such employment for any reason, the Employee will not directly or indirectly:

(a) Engage in any business or enterprise (whether as owner, partner, officer, director, employee, consultant, investor, lender or otherwise, except as the holder of not more than 1% of the outstanding stock of a publicly-held company) that develops, manufactures, markets, licenses, sells or provides any product or service that competes with any product or service developed, manufactured, marketed, licensed, sold or provided, or planned to be developed, manufactured, marketed, licensed, sold or provided, by the Company while the Employee was employed by the Company; or

(b) Either alone or in association with others (i) solicit, or permit any organization directly or indirectly controlled by the Employee to solicit, any employee of the Company to leave the employ of the Company, or (ii) solicit for employment or permit any organization directly or indirectly controlled by the Employee to solicit for any person who was employed by the Company at any time during the term the Employee’s employment with the Company; provided, that this clause (ii) shall not apply to the solicitation, hiring or engagement of any individual whose employment with the Company has been terminated for a period of six months or longer.

6.2 Extension. If the Employee violates the provisions of Section 6.1, the Employee shall continue to be bound by the restrictions set forth in Section 6.1 until a period of two years has expired without any violation of such provisions.

6.3 Interpretation. If any restriction set forth in Section 6.1 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

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6.4 Equitable Remedies. The restrictions contained in this Section 6 are necessary for the protection of the business and goodwill of the Company and are considered by the Employee to be reasonable for such purpose. The Employee agrees that any breach of this Section 6 is likely to cause the Company substantial and irrevocable damage which is difficult to measure. Therefore, in the event of any such breach or threatened breach, the Employee agrees that the Company, in addition to such other remedies which may be available, shall have the right to obtain an injunction from a court restraining such a breach or threatened breach and the right to specific performance of the provisions of this Section 6 and the Employee hereby waives the adequacy of a remedy at law as a defense to such relief.

7. Proprietary Information and Developments.

7.1 Proprietary Information.

(a) The Employee agrees that all information, whether or not in writing, of a private, secret or confidential nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) is and shall be the exclusive property of the Company. By way of illustration, but not limitation, Proprietary Information may include inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects, developments, plans, research data, clinical data, financial data, personnel data, computer programs, customer and supplier lists, and contacts at or knowledge of customers or prospective customers of the Company. The Employee will not disclose any Proprietary Information to any person or entity other than employees of the Company or use the same for any purposes (other than in the performance of his duties as an employee of the Company) without written approval by an officer of the Company, either during or after his employment with the Company, unless and until such Proprietary Information has become public knowledge without fault by the Employee.

(b) The Employee agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, laboratory notebooks, program listings, or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Employee or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company to be used by the Employee only in the performance of his duties for the Company. All such materials or copies thereof and all tangible property of the Company in the custody or possession of the Employee shall be delivered to the Company, upon the earlier of (i) a request by the Company or (ii) termination of his employment. After such delivery, the Employee shall not retain any such materials or copies thereof or any such tangible property.

(c) The Employee agrees that his obligation not to disclose or to use information and materials of the types set forth in paragraphs (a) and (b) above, and his obligation to return materials and tangible property, set forth in paragraph (b) above, also extends to such types of information, materials and tangible property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to the Company or to the Employee.

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7.2 Developments.

(a) The Employee will make full and prompt disclosure to the Company of all inventions, improvements, discoveries, methods, developments, software, and works of authorship, whether patentable or not, which are created, made, conceived or reduced to practice by him or under his direction or jointly with others during his employment by the Company, whether or not during normal working hours or on the premises of the Company (all of which are collectively referred to in this Agreement as “Developments”).

(b) The Employee agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his right, title and interest in and to all Developments and all related patents, patent applications, copyrights and copyright applications. However, this paragraph (b) shall not apply to Developments which do not relate to the business or research and development conducted or planned to be conducted by the Company at the time such Development is created, made, conceived or reduced to practice and which are made and conceived by the Employee not during normal working hours, not on the Company’s premises and not using the Company’s tools, devices, equipment or Proprietary Information. The Employee understands that, to the extent this Agreement shall be construed in accordance with the laws of any state which precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this paragraph (b) shall be interpreted not to apply to any invention which a court rules and/or the Company agrees falls within such classes. The Employee also hereby waives all claims to moral rights in any Developments.

(c) The Employee agrees to cooperate fully with the Company, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and foreign countries) relating to Developments. The Employee shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, which the Company may deem necessary or desirable in order to protect its rights and interests in any Development. The Employee further agrees that if the Company is unable, after reasonable effort, to secure the signature of the Employee on any such papers, any executive officer of the Company shall be entitled to execute any such papers as the agent and the attorney-in-fact of the Employee, and the Employee hereby irrevocably designates and appoints each executive officer of the Company as his agent and attorney-in-fact to execute any such papers on his behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Development, under the conditions described in this sentence.

7.3 United States Government Obligations. The Employee acknowledges that the Company from time to time may have agreements with other parties or with the United States Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work under such agreements or regarding the confidential nature of such work. The Employee agrees to be bound by all such obligations and restrictions which are made known to the Employee and to take all appropriate action necessary to discharge the obligations of the Company under such agreements.

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7.4 Equitable Remedies. The restrictions contained in this Section 7 are necessary for the protection of the business and goodwill of the Company and are considered by the Employee to be reasonable for such purpose. The Employee agrees that any breach of this Section 7 is likely to cause the Company substantial and irrevocable damage which is difficult to measure. Therefore, in the event of any such breach or threatened breach, the Employee agrees that the Company, in addition to such other remedies which may be available, shall have the right to obtain an injunction from a court restraining such a breach or threatened breach and the right to specific performance of the provisions of this Section 7 and the Employee hereby waives the adequacy of a remedy at law as a defense to such relief.

8. Other Agreements. The Employee represents that his performance of all the terms of this Agreement and the performance of his duties as an employee of the Company do not and will not breach any agreement with any prior employer or other party to which the Employee is a party (including without limitation any nondisclosure or non-competition agreement). Any agreement to which the Employee is a party relating to nondisclosure, non-competition or non-solicitation of employees or customers is listed on Schedule B attached hereto.

9. Miscellaneous.

9.1 Notices. Any notices delivered under this Agreement shall be deemed duly delivered four business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, in each case to the address of the recipient set forth in the introductory paragraph hereto. Either party may change the address to which notices are to be delivered by giving notice of such change to the other party in the manner set forth in this Section 9.1.

9.2 Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

9.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement; provided, however, that it is acknowledged and agreed by the Company and the Employee that stock option grants made by the Company to the Employee on or prior to the date hereof are not superseded hereby and each such grant remains in full force and effect in accordance with its terms.

9.4 Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee.

9.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Rhode Island (without reference to the conflicts of laws provisions thereof). Any action, suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the State of Rhode Island (or, if appropriate, a federal court located within Rhode Island), and the Company and the Employee each consents to the jurisdiction of such a court. The Company and the Employee each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement.

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9.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to the Company’s assets or business, provided, however, that the obligations of the Employee are personal and shall not be assigned by him. Notwithstanding the foregoing, if the Company is merged with or into a third party which is engaged in multiple lines of business, or if a third party engaged in multiple lines of business succeeds to the Company’s assets or business, then for purposes of Section 6.1(a), the term “Company” shall mean and refer to the business of the Company as it existed immediately prior to such event and as it subsequently develops and not to the third party’s other businesses.

9.7 Waivers. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

9.8 Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

9.9 Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

[Signatures appear on following page.]

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THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

	NESTOR, INC.

	By: /s/William B. Danzell
	William B. Danzell
	President and Chief Executive Officer


	EMPLOYEE

	/s/ Ted Klowan, Jr.
	Teodor Klowan, Jr.

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SCHEDULE A

Change in Control Definition

A “Change in Control Event” shall mean:

(i)

the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 30% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control Event: (A) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition, or (D) any acquisition by Silver Star Partners I, LLC or its affiliates (each such party is referred to herein as an “Exempt Person”) of any shares of capital stock of the Company; or

(ii)

such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date hereof or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

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(iii)

the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding Exempt Persons, the Acquiring Corporation or any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination).

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TK employment agreement v1

SCHEDULE B

Prior Agreements

None.

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EX-10.2 3 ex10_2.htm EXHIBIT 10.2 HASKELL EMPLOYMENT AGREEMENT Exhibit 10.2 Haskell Employment Agreement

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made as of this 7^th day of February 2007, is entered into by Nestor, Inc. a Delaware corporation (the “Company”), and Brian R. Haskell (the “Employee”).

2. Title; Capacity. The Employee shall serve as Vice President and General Counsel or in such other position as the Company’s Board of Directors (the “Board”) or its Chief Executive Officer may determine from time to time. The Employee shall be based at the Company’s headquarters in Rhode Island or at such place or places in the continental United States as the Board and the Employee shall mutually determine. The Employee shall be subject to the supervision of, and shall have such authority as is delegated to the Employee by, the Board or the Chief Executive Officer of the Company.

3. Compensation and Benefits.

3.1 Salary. The Company shall pay the Employee, in periodic installments in accordance with the Company’s customary payroll practices, an annual base salary $148,500. Such salary shall be subject to increase but not decrease thereafter as determined by the Board and shall be reviewed at least annually by the Board..

3.2 Bonus. The Compensation Committee, in its sole discretion, may award the Employee a bonus or bonuses during the term hereof.

brh employment agreement

3.3 Equity Incentive.

(a) The Company shall, upon the execution hereof, grant to the Employee an option to purchase 135,000 shares of the common stock of the Company (“Common Stock”). To the extent permitted by the Internal Revenue Code, said options shall be incentive stock options. Said options shall be granted at the fair market value and expire on the eighth anniversary of their grant. Said options shall vest as follows:

Number of Shares	Vesting Date
25,000	February 1, 2008
20,000	February 1, 2009
25,000	February 1, 20010
30,000	February 1, 2011
35,000	February 1, 2012

Such grants shall provide that after a Change in Control Event (as defined in Schedule A hereto), all restrictions on the exercise thereof shall lift and such options shall vest upon (a) the termination by the Company of the Employee’s employment, unless such termination is for Cause (as defined in Section 4.2) or (b) the resignation of Employee for Good Reason (as defined in Section 4.3).

3.6 Withholding. All salary, bonus and other compensation payable to the Employee shall be subject to applicable withholding taxes.

3.7 Professional Liability Coverage. During the Employment Period, Company shall maintain professional liability coverage covering employed lawyers’ professional liability reasonable satisfactory to Employee in an amount not less than $1,000,000.

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brh employment agreement

4. Termination of Employment Period. The employment of the Employee by the Company pursuant to this Agreement shall terminate upon the occurrence of any of the following:

4.1 Expiration of the Employment Period;

4.3 At the election of the Employee, for Good Reason (as defined below), immediately upon written notice by the Employee to the Company, which notice shall identify the Good Reason upon which the termination is based. For the purposes of this Section 4.3, “Good Reason” for termination shall mean (i) a material adverse change in the Employee’s authority, duties or compensation without the prior consent of the Employee, (ii) a material breach by the Company of the terms of this Agreement (other than of Section 3.7), which breach is not remedied by the Company within 10 days following written notice from the Employee to the Company notifying it of such breach or (iii) any requirement imposed by Section 307 of the Sarbanes-Oxley Act or any rule promulgated thereunder.

4.5 At the election of either party, upon not less than 30 days’ prior written notice of termination.

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brh employment agreement

5. Effect of Termination.

5.2 Payments Upon Termination.

(b) In the event the Employee’s employment is terminated by the Employee pursuant to Section 4.3 or by the Company pursuant to Section 4.5, the Company shall continue to pay to the Employee his salary as in effect on the date of termination and continue to provide to the Employee the other benefits owed to him under Section 3.4 (to the extent such benefits can be provided to non-employees, or to the extent such benefits cannot be provided to non-employees, then the cash equivalent thereof) until the date one year after the date of termination and for the purposes of the vesting of options to purchase common stock granted to the Employee pursuant to Section 3.3, the Employee shall be deemed to be employed by the Company until the date three years after the date of termination. The payment to the Employee of the amounts payable under this Section 5.2(b) (i) shall be contingent upon the execution by the Employee of a release in a form reasonably acceptable to the Company and (ii) shall constitute the sole remedy of the Employee in the event of a termination of the Employee’s employment in the circumstances set forth in this Section 5.2(b).

5.3 Survival. The provisions of Sections 5.2, 6 and 7 shall survive the termination of this Agreement.

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brh employment agreement

6. Non-Competition and Non-Solicitation.

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brh employment agreement

7. Proprietary Information and Developments.

7.1 Proprietary Information.

7.2 Developments.

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brh employment agreement

9. Miscellaneous.

9.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement; provided, however, that it is acknowledged and agreed by the Company and the Employee that stock option grants made by the Company to the Employee prior to the date hereof are not superseded hereby and each such grant remains in full force and effect in accordance with its terms.

9.4 Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee.

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brh employment agreement

9.8 Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

	NESTOR, INC.

	By: /s/ Nigel P. Hebborn
	Chief Financial Officer


	EMPLOYEE

	By: /s/ Brian R. Haskell
	Brian R. Haskell

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brh employment agreement

SCHEDULE A

Change in Control Definition

A “Change in Control Event” shall mean:

(i)

(ii)

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(iii)

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SCHEDULE B

Prior Agreements

None.

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brh employment agreement

EX-10.3 4 ex10_3.htm EXHIBIT 10.3 DAVIS CONSULTING AGREEMENT Exhibit 10.3 Davis Consulting Agreement

EXHIBIT 10.3

February 7, 2007

Mr. Clarence A. Davis

c/o Nestor, Inc.

42 Oriental Street

Third Floor

Providence RI 02908

Re: Consulting Agreement

Dear Mr. Davis:

This will confirm our engagement of you as an independent consultant to Nestor, Inc. (“Nestor”), on the following terms and conditions:

Services and Reporting

You will assist the management team in determining, articulating and executing its strategic plan. In this connection, you will you will exercise your professional business judgment and devote such time as you deem necessary to the fulfillment of your task. In connection with the services you will provide pursuant to this letter agreement, you will serve at the pleasure of Nestor’s Board of Directors and will report to such Board of Directors or any committee of the Board of Directors established or designated for that purpose.

Term

It is anticipated that you will provide services to Nestor under this letter agreement for a period of between 2 and 4 months, though this letter agreement may be extended by mutual agreement or terminated by either party at any time for any reason.

Remuneration

For your services, you will be paid a flat fee of $25,000 per month, which amount shall be prorated for any partial month in which you provide services. For avoidance of doubt, you will be paid a prorated amount only if you or Nestor terminates this agreement other than at the end of a month. You will be paid by Nestor on the first business day of each month following the month in which you provide services pursuant to this letter agreement.

Expenses

You will be reimbursed by Nestor for all of your reasonable expenses incurred by you in connection with the services you provide under this letter agreement, including travel, transportation and meal expenses. You will be required to comply with Nestor’s current expense reimbursement policy.

Independent Contractor

In acting as a consultant to Nestor under this letter greement, you will be acting at all times as an independent contractor and not as an agent or employee of Nestor. You agree not to hold yourself out as an agent or employee of Nestor except and to the extent specifically authorized in a prior writing by Nestor. As an independent contractor, you will have discretion over the means and method of the performance of the consulting services, which you provide. You agree to comply with and abide by all applicable laws and regulations in the performance of your services.

Taxes and Withholding

Unless otherwise required by applicable law, you will be solely and exclusively liable for all Federal, State and local taxes levied against amounts earned by you hereunder. Nestor will not withhold any portion of amounts due to you pursuant to this letter agreement for payment of any taxes. You are solely responsible for the payment of any such taxes and the filing of any returns or other required documents with the proper taxing authorities.

Indemnification

In connection with the performance of your services hereunder, Nestor will indemnify you in accordance with and in the manner provided Exhibit A attached to this letter agreement.

Resignation from Audit Committee

You and NESTOR recognize that your retention by the Nestor as a consultant impairs your ability to meet the independence requirements for members of Nestor’s Audit Committee. Accordingly, upon acceptance of this letter agreement by you, you automatically, and without any further action on your part, resign from the Audit Committee. By executing a counterpart to this letter agreement, Nestor accepts your resignation from the Audit Committee. You and Nestor acknowledge that you remain a member of Nestor’s Board of Directors and will continue to do so until the expiration or earlier termination in accordance with Nestor’s governing documents and applicable law.

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Nestor, Inc. Consulting Agreement 2/7/2007

Miscellaneous

This letter agreement contains the complete agreement concerning the arrangement between the parties and supersedes all other prior agreements between the parties.

No waiver or modification of this letter agreement may be made except in writing duly executed by the party against whom enforcement of such waiver or modification is sought.

This letter agreement has been entered into, delivered and is to be governed by, construed, interpreted and enforced in accordance with the laws of the State of Rhode Island (without giving reference to choice-of-law provisions) from time to time in effect.

Kindly sign and return the enclosed copy of this letter confirming the Consultant's acceptance of the foregoing Agreement.

	Very truly yours,
	NESTOR, INC.

	By: /s/ Nigel P. Hebborn
	Nigel P. Hebborn
	Executive Vice President and CFO


ACCEPTED AND AGREED TO THIS
7^th Day of February 2007


By: /s/ Clarence A. Davis
Clarence A. Davis

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Nestor, Inc. Consulting Agreement 2/7/2007

EXHIBIT A

INDEMNIFICATION

Nestor shall (a) indemnify you if you were or are a party or are threatened to be made a party to any threatened, pending or completed action or suit by or in the right of Nestor to procure a judgment in its favor by reason of the fact that you are or were a consultant of Nestor against expenses (including attorneys’ fees) actually and reasonably incurred by you in connection with the defense or settlement of such action or suit, and (b) indemnify you if you were or are a party or are threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of Nestor), by reason of the fact that you are or were a consultant of Nestor expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any such action, suit or proceeding, in each case to the fullest extent permissible under subsections (a) through (e) of Section 145 of the General Corporation Law of the State of Delaware or the indemnification provisions of any successor statute. The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which you may be entitled, under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, and shall inure to the benefit of your, executors and administrators.

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EX-10.4 5 ex10_4.htm EXHIBIT 10.4 RESTRICTED STOCK AGREEMENT Exhibit 10.4 Restricted Stock Agreement

EXHIBIT 10.4

Schedule Prepared in Accordance with Instruction 2 to Item 601 of Regulation S-K

The Restricted Stock Agreements are substantially identical in all material respects except as to the grantee and the number of shares.

Grantee:	Number of Shares:
George L. Ball	5,000
Clarence A. Davis	5,000
Michael C. James	5,000
David N. Jordan	5,000
Nina R. Mitchell	5,000
Thodore Petroulas	5,000
Daryl Silzer	5,000

RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement (this “Agreement”) is made as of this 1^st day of February 2007 (the “Effective Date”) between Nestor, Inc., a Delaware corporation (the “Company”), and Clarence A. Davis (the “Director”).

R E C I T A L S

A. The Company believes it to be in the best interests of the Company and its stockholders to take action to promote the stability of its Board of Directors and otherwise align the interests of the members of the Board of Directors with those of the Company; and

B. Accordingly the Company has determined to issue restricted shares of stock in accordance with the provisions of this Agreement and the 2004 Stock Incentive Plan of the Company (the “Plan”).

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

1. Issuance of Restricted Stock.

Pursuant to the provisions of the Plan, and subject to the terms and conditions of the Plan and the terms and conditions herein, upon execution of this Agreement (the “Grant Date”), the Company will issue to the Director 5,000 shares of Common Stock, $0.01 par value per share, of the Company (the “Common Stock”) in consideration of the Director’s services to the Company for the term ending at the 2007 annual meeting of stockholders. All of such Common Stock issued to the Director hereby is referred to herein as “Restricted Stock”. The Restricted Stock will also include equity interests of the Company issued with respect to the Restricted Stock by way of an equity split, dividend of equity or other recapitalization. To secure the restrictions on the Restricted Stock, the Company will retain possession of the certificates representing the Restricted Stock, together with executed stock powers in blank, and will provide the Director with copies thereof.

2. Vesting of Restricted Stock.

All of the Restricted Stock is non-vested and forfeitable as of the Grant Date. The Restricted Stock granted hereunder will be deemed “vested” on earlier of (i) the date of the annual meeting of the stockholders of the Company in 2007 or (ii) December 31, 2007.

3. Forfeiture of Restricted Stock.

If the Director’s service with the Company ceases for any reason, all Restricted Stock that is not then vested and non-forfeitable will be immediately forfeited to the Company upon such cessation for no consideration.

4. Non-Transferability; Legend.

Until the Restricted Stock becomes vested and non-forfeitable, it may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.

The certificates representing the Restricted Stock will bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS AND OTHER TERMS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF JULY 3, 2006, BETWEEN THE COMPANY AND THE OTHER SIGNATORY THERETO. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

5. Rights as Stockholder.

Except as otherwise provided in this Agreement with respect to the non-vested and forfeitable Restricted Stock, the Director is entitled to all rights of a stockholder of the Company, including the right to vote the Restricted Stock and receive dividends and/or other distributions declared on the Restricted Stock.

6. General Provisions.

(a) Severability. The parties agree that each provision herein shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of any other clauses of this Agreement. If any one or more provisions of this Agreement is held to be invalid or unenforceable for any reason, including due to being overbroad in scope activity, subject or otherwise: (i) this Agreement shall be considered divisible; (ii) such provision shall be deemed inoperative to the extent it is deemed invalid or unenforceable; and (iii) in all other respects this Agreement shall remain in full force and effect; provided, however, that if any such provision maybe made valid or enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall be valid and/or enforceable to the maximum extent permitted by applicable law.

(b) Entire Agreement. This Agreement, together with the Plan, constitutes the entire agreement and understanding of the parties hereto concerning the subject matter hereof and from and after the date of this Agreement, this Agreement shall supersede any other prior negotiations, discussions, writings, agreements or understandings, both written and oral, between the parties with respect to such subject matter.

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(c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d) Successors and Assigns.

(i)

This Agreement is personal to the Director and without the prior written consent of the Company shall not be assignable by the Director. This Agreement shall inure to the benefit of and shall be enforceable by the Director and the Director’s legal representatives.

(ii)

This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(iii)

Nothing in this Agreement, express or implied, is intended to or shall confer upon any person other than the parties hereto, and their respective heirs, legal representatives, successors, and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement.

(e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Rhode Island, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Rhode Island or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Rhode Island.

(f) Remedies. Each of the parties to this Agreement and any such Person granted rights hereunder whether or not such Person is a signatory hereto shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs (including reasonable attorneys’ fees) for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party and any such Person granted rights hereunder whether or not such Person is a signatory hereto may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement.

(g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and the Director and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

(h) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via facsimile, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via facsimile, five (5) days after deposit in the U.S. mail and one (1) day after deposit with a reputable overnight courier service.

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If to the Company, to:

Nestor, Inc.

42 Oriental Street

Providence, Rhode Island 02906

Attention: President

With a copy to:

Nestor, Inc.

42 Oriental Street

Providence, Rhode Island 02906

Attention: General Counsel

If to the Director, to:

Clarence A. Davis

7 Hibernia Road

Savannah, GA 31411

(i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period for giving notice or taking action shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(j) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

(k) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(l) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

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(m) Nouns and Pronouns. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

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

	NESTOR, INC.

	By: /s/ Nigel P. Hebborn
	Nigel P. Hebborn
	Executive Vice President, Treasurer and CFO



	DIRECTOR

	By: /s/ Clarence A. Davis
	Clarence A. Davis

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