Exhibit 10.1


    EXHIBIT
      10.1

    

      

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

         

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

         

        


        
          	 Grantee:	 Number
                  of Shares:
	
                  Benjamin
                    M. Alexander

                	
                  25,000

                
	
                  Nigel
                    P. Hebborn

                	
                  10,000

                
	
                  Teodor
                    Klowan, Jr.

                	
                  10,000

                


        

      

    

     

     

    
 

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      



    NESTOR,
      INC.

     

    Incentive
      Stock Option Agreement

     

    Granted
      Under 2004 Stock Incentive Plan

     

    
      	1.  	
              Grant
                of Option.

            


    

     

    This
      agreement evidences the grant by Nestor, Inc. a Delaware corporation (the
“Company”), on November 1, 2006 (the
      “Grant Date”) to Benjamin
      Alexander, an employee of the Company (the “Participant”), of an option to
      purchase, in whole or in part, on the terms provided herein and in the Company’s
      2004 Stock Incentive Plan (the “Plan”), a total of 25,000 shares (the “Shares”)
      of common stock, $.01 par
      value
      per share, of the Company (“Common Stock”) at $2.16 per Share. Unless earlier
      terminated, this option shall expire at 5:00 p.m., Eastern time, on November
      1,
      2014 (the “Final Exercise Date”).

     

    It
      is
      intended that the option evidenced by this agreement shall be an incentive
      stock
      option as defined in Section 422 of the Internal Revenue Code of 1986, as
      amended, and any regulations promulgated thereunder (the “Code”). Except as
      otherwise indicated by the context, the term “Participant”, as used in this
      option, shall be deemed to include any person who acquires the right to exercise
      this option validly under its terms.

     

    2.  Vesting
      Schedule.

     

    Subject
      to Section 8 hereof, this option will become exercisable (“vest”) as to 25% of
      the original number of Shares on the first anniversary of the Grant Date and
      as
      to an additional 25% of the original number of Shares at the end of each
      successive one-year period following the first anniversary of the Grant Date
      until the fourth anniversary of the Grant Date.

     

    The
      right
      of exercise shall be cumulative so that to the extent the option is not
      exercised in any period to the maximum extent permissible it shall continue
      to
      be exercisable, in whole or in part, with respect to all Shares for which it
      is
      vested until the earlier of the Final Exercise Date or the termination of this
      option under Section 3 hereof or the Plan.

     

    3.  Exercise
      of Option.

     

    (a)  Form
      of Exercise.
      Each
      election to exercise this option shall be in writing, signed by the Participant,
      and received by the Company at its principal office, accompanied by this
      agreement, and payment in full (i) in cash, (ii) by (A) delivery of an
      irrevocable and unconditional undertaking by a creditworthy broker to deliver
      promptly to the Company sufficient funds to pay the exercise price and any
      required tax withholding or (B) delivery by the Participant to the Company
      of a
      copy of irrevocable and unconditional instructions to a creditworthy broker
      to
      deliver promptly to the Company cash or a check sufficient to pay the exercise
      price and any required tax withholding, (iii) if the fair market value of a
      share of Common Stock as determined by (or in a manner approved by) the Board
      in
      good faith ("Fair Market Value") is greater than the per share exercise price,
      by surrender of this Option in which event the Company shall issue to the
      Participant a number of shares of Common Stock equal to the product of the
      number of Shares as to which this Option is being exercised multiplied by the
      quotient of the difference between the Fair Market Value less the per share
      exercise price divided by the Fair Market Value, or (iv) by any combination
      of
      the above permitted forms of payment. The Participant may purchase less than
      the
      number of shares covered hereby, provided that no partial exercise of this
      option may be for any fractional share or for fewer than one hundred whole
      shares.

     

     

    
      
        
        

      

      
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    (b)  Continuous
      Relationship with the Company Required.
      Except
      as otherwise provided in this Section 3, this option may not be exercised
      unless the Participant, at the time he or she exercises this option, is, and
      has
      been at all times since the Grant Date, an employee or officer of, the Company
      or any parent or subsidiary of the Company as defined in Section 424(e) or
      (f)
      of the Code (an “Eligible Participant”).

     

    (c)  Termination
      of Relationship with the Company.
      If the
      Participant ceases to be an Eligible Participant for any reason, then, except
      as
      provided in paragraphs (d) and (e) below, the right to exercise this option
      shall terminate three
      months after such cessation (but in no event after the Final Exercise Date),
      provided that
      this
      option shall be exercisable only to the extent that the Participant was entitled
      to exercise this option on the date of such cessation (except as limited by
      Section 8 hereof). Notwithstanding the foregoing, if the Participant, prior
      to
      the Final Exercise Date, violates the non-competition or confidentiality
      provisions of any employment contract, confidentiality and nondisclosure
      agreement or other agreement between the Participant and the Company, the right
      to exercise this option shall terminate immediately such violation.

     

    (d)  Exercise
      Period Upon Death or Disability.
      If the
      Participant dies or becomes disabled (within the meaning of
      Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or
      she is an Eligible Participant and the Company has not terminated such
      relationship for “cause” as specified in paragraph (e) below, this option shall
      be exercisable, within the period of one year following the date of death or
      disability of the Participant, by the Participant (or in the case of death
      by an
      authorized transferee), provided that
      this
      option shall be exercisable only to the extent that this option was exercisable
      by the Participant on the date of his or her death or disability, and further
      provided that this option shall not be exercisable after the Final Exercise
      Date.

     

    (e)  Discharge
      for Cause.
      If the
      Participant, prior to the Final Exercise Date, is discharged by the Company
      for
“cause” (as defined below), the right to exercise this option shall terminate
      immediately upon the effective date of such discharge. “Cause” shall mean
      willful misconduct by the Participant or willful failure by the Participant
      to
      perform his or her responsibilities to the Company (including, without
      limitation, breach by the Participant of any provision of any employment,
      consulting, advisory, nondisclosure, non-competition or other similar agreement
      between the Participant and the Company), as determined by the Company, which
      determination shall be conclusive. The Participant shall be considered to have
      been discharged for “Cause” if the Company determines, within 30 days after the
      Participant’s resignation, that discharge for cause was warranted.

     

    4.  Agreement
      in Connection with Public Offering.

     

    The
      Participant agrees, in connection with the initial underwritten public offering
      of the Company’s securities pursuant to a registration statement under the
      Securities Act, (i) not to sell, make short sale of, loan, grant any options
      for
      the purchase of, or otherwise dispose of any shares of Common Stock held by
      the
      Participant (other than those shares included in the offering) without the
      prior
      written consent of the Company or the underwriters managing such initial
      underwritten public offering of the Company’s securities for a period of 180
      days from the effective date of such registration statement, and (ii) to execute
      any agreement reflecting clause (i) above as may be requested by the Company
      or
      the managing underwriters at the time of such offering.

     

     

    
      
        
        

      

      
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    5.  Withholding.

     

    No
      Shares
      will be issued pursuant to the exercise of this option unless and until the
      Participant pays to the Company, or makes provision satisfactory to the Company
      for payment of, any federal, state or local withholding taxes required by law
      to
      be withheld in respect of this option. If the Company exercises its right to
      pay
      to the Participant the Cash Value in lieu of issuing Common Stock to the
      Participant, the Company shall withhold such taxes from the payment to the
      Participant.

     

    6.  Nontransferability
      of Option.

     

    This
      option may not be sold, assigned, transferred, pledged or otherwise encumbered
      by the Participant, either voluntarily or by operation of law, except by will
      or
      the laws of descent and distribution, and, during the lifetime of the
      Participant, this option shall be exercisable only by the
      Participant.

     

    7.  Provisions
      of the Plan.

     

    This
      option is subject to the provisions of the Plan, a copy of which is furnished
      to
      the Participant with this option. 

     

    8.  Limitation
      on First Exercise.

     

    Notwithstanding
      any other provisions of the Plan, no option granted hereunder can be exercised
      earlier than the earlier to occur of (i) the fourth anniversary of the date
      hereof and (ii) the date that the Participant dies, becomes disabled (within
      the
      meaning of Section 22(e)(3) of the Code) or ceases to be an Eligible
      Participant for any reason, except as provided in
      paragraphs 3(e).

     

    


     

    IN
      WITNESS WHEREOF, the Company has caused this option to be executed under its
      corporate seal by its duly authorized officer. This option shall take effect
      as
      a sealed instrument.

     

    


     

    
      	 NESTOR,
              INC.	 
	
              Dated:
                November 1, 2006

            	
              By:
                /s/William
                B. Danzell  

            
	 	 Name:
              William
              B. Danzell
	 	 Title:
              President
              and Chief Executive Officer


    

    


     

    PARTICIPANT’S
      ACCEPTANCE

     

    The
      undersigned hereby accepts the foregoing option and agrees to the terms and
      conditions thereof. The undersigned hereby acknowledges receipt of a copy of
      the
      Company’s 2004 Stock Incentive Plan.

     

    
      	
              PARTICIPANT:

            	
            
	
               

            	
              /s/
                Benjamin M. Alexander    

              Benjamin
                Alexander

            
	
               

            	
              Address:
                273
                President Avenue

            
	 	Providence,
              RI
              02906


    

    


    



    
      
        
        

      

      
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