Exhibit 10.7


    EXHIBIT
      10.7

    
 

    SECURITY
      AGREEMENT

    


    THIS
      SECURITY AGREEMENT (this “Agreement”)
      is
      made as of May 25, 2006, by
      and
      among U.S. Bank National
      Association, as Collateral Agent for the Purchasers (as that term is defined
      in
      the Securities Purchase Agreement defined below) (together with its successors
      and assigns in such capacity, the “Agent”);
      Nestor, Inc., a Delaware corporation (together with its successors
      and permitted assigns, the “Borrower”);
      and
      Nestor Traffic Systems, Inc., a Delaware corporation, and CrossingGuard, Inc.,
      a
      Delaware corporation (together with their successors and permitted assigns,
      collectively and jointly and severally, the “Subsidiary
      Guarantors”,
      and
      together with the Borrower, collectively and jointly and severally, the
“Grantors”).

    


    Background

    


    The
      Agent, the Borrower and the Purchasers entered into that certain Securities
      Purchase Agreement dated as of May 24, 2006 (as the same may be amended,
      restated, modified, supplemented and/or replaced from time to time, the
“Securities
      Purchase Agreement”),
      pursuant to which the Purchasers agreed to purchase secured convertible
      promissory notes of the Borrower on the terms and conditions described therein.
      The Borrower may, among other things, use the proceeds of the securities
      purchased thereunder to extend credit to, and make capital contributions in,
      the
      Subsidiary Guarantors. Therefore, as a result of the Securities Purchase
      Agreement, the Subsidiary Guarantors can obtain capital on terms more favorable
      to them as part of this borrowing group than they could acting alone. The
      Subsidiary Guarantors have guaranteed the obligations of the Borrower arising
      out of the Securities Purchase Agreement and related agreements and
      instruments.

    


    One
      of
      the conditions to the obligations of the Purchasers under the Securities
      Purchase Agreement is that payment of the Secured Obligations (as defined below)
      shall be secured by, among other things, a security interest in favor of the
      Agent and the Purchasers in the Collateral (as defined below). In order to
      induce the Purchasers to purchase the Notes from the Borrower, the Grantors
      are
      willing to grant to the Agent, for the benefit of the Purchasers, a security
      interest in the Collateral.

    


    Accordingly,
      each Grantor, intending to be legally bound, hereby agrees with the Agent as
      follows:

    


    1.  DEFINITIONS.
      Capitalized terms used but not otherwise defined herein shall have the meanings
      assigned to such terms in the Securities
      Purchase Agreement.
      The
      following terms, as used herein, shall have the following meanings:

     

    “Account”
shall
      be used herein as defined in the Uniform Commercial Code, but in any event
      shall
      include, but not be limited to, credit card receivables, lottery winnings,
      health-care-insurance receivables, any right to payment arising out of goods
      or
      other property (including, without limitation, intellectual property) sold
      or
      leased, licensed, assigned or disposed of or for services rendered which is
      not
      evidenced by an instrument or chattel paper, whether or not it has been earned
      by performance including all rights to payment of rents under a lease or license
      and payment under a charter or other contract and all rights incident to such
      lease, charter or contract.

    


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    “Additional
      Grantor”
shall
      have the meaning ascribed to such term in Section 5(p).

    


    “Chattel
      Paper”
shall
      be used herein as defined in the Uniform Commercial Code, but in any event
      shall
      include, but not be limited to, a writing or writings which evidence both a
      

    monetary
      obligation and a security interest in, or a lease of, specific
      goods.

    


    “Collateral”
shall
      have the meaning ascribed to such term in Section 2.

    


    “Commercial
      Tort Claims”
shall
      be used herein as defined in the Uniform Commercial Code and shall include
      those
      claims listed (including plaintiff, defendant and a description of the claim)
      on
Schedule
      10
      attached
      hereto.

    


    “Deposit
      Account” shall
      be
      used herein as defined in the Uniform Commercial Code, but in any event shall
      include, but not be limited to, any demand, time, savings, passbook or similar
      account.

    


    “Document”
      shall be
      used herein as defined in the Uniform Commercial Code, but in any event shall
      include, but not be limited to, a bill of lading, dock warrant, dock receipt,
      warehouse receipt or order for the delivery of goods, and also any other
      document which in the regular course of business or financing is treated as
      adequately evidencing that the Person in possession of it is entitled to
      receive, hold and dispose of the document and the goods it covers.

    


    “Equipment”
shall
      be used herein as defined in the Uniform Commercial Code, but in any event
      shall
      include, but not be limited to, tangible personal property held by any Grantor
      for use primarily in business and shall include equipment, machinery, furniture,
      vehicles, fixtures, furnishings, dyes, tools, and all accessories and parts
      now
      or hereafter affixed thereto as well as all attachments, replacements,
      substitutes, accessories, additions and improvements to any of the foregoing,
      but Equipment shall not include Inventory.

    


    “Event
      of Default”
shall
      be used herein as defined in the Notes.

    


    “Fixtures” shall
      be
      used herein as defined in the Uniform Commercial Code.

    


    “General
      Intangibles”
shall
      be used herein as defined in the Uniform Commercial Code but in any event shall
      include, but not be limited to, all personal property of every kind and
      description of any Grantor other than Goods, Accounts, Fixtures, Documents,
      Letter-of-Credit Rights, Chattel Paper, Deposit Accounts, Instruments,
      Investment Property, Commercial Tort Claims and Supporting Obligations, and
      shall include, without limitation, payment intangibles, contract rights (other
      than Accounts), franchises, licenses, choses in action, books, records, customer
      lists, tax, insurance and other kinds of refunds, patents, trademarks, trade
      names, service marks, slogans, trade dress, copyrights, other intellectual
      property rights and applications for intellectual property rights, goodwill,
      plans, licenses, software (to the extent it does not constitute Goods) and
      other
      rights in personal property.

    


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    “Goods”
shall
      be used herein as defined in the Uniform Commercial Code, but in any event
      shall
      include, but not be limited to, all computer programs imbedded in goods and
      any
      supporting information provided in connection with the transaction relating
      to
      the program and all other things that are movable.

    


    “Instruments”
shall
      be used herein as defined in the Uniform Commercial Code, but in any event
      shall
      include, but not be limited to, promissory notes, negotiable certificates of
      deposit, a negotiable instrument or a security or any other writing which
      evidences a right to the payment of money and is not itself a security agreement
      or lease and is of a type which is, in the ordinary course of business,
      transferred by delivery with any necessary endorsement or
      assignment.

    


    “Inventory”
shall
      be used herein as defined in the Uniform Commercial Code but in any event shall
      include, but not be limited to, tangible personal property held by or on behalf
      of any Grantor (or in which any Grantor has an interest in mass or a joint
      or
      other interest) for sale or lease or to be furnished under contracts of service,
      tangible personal property which any Grantor has so leased or furnished, and
      raw
      materials, work in process and materials used, produced or consumed in any
      Grantor’s business, and shall include tangible personal property returned to
      such Grantor by the purchaser following a sale thereof by such Grantor and
      tangible personal property represented by Documents. All equipment, accessories
      and parts at any time attached or added to items of Inventory or used in
      connection therewith shall be deemed to be part of the Inventory.

    


    “Investment
      Property”
shall
      be used herein as defined in the Uniform Commercial Code but in any event shall
      include, but not be limited to, all securities, whether certificated or
      uncertificated, all financial assets, all security entitlements, all securities
      accounts, all commodity contracts and all commodity accounts.

    


    “Letter-of-Credit
      Right”
shall
      be used herein as defined in the Uniform Commercial Code, but in any event
      shall
      include, but not be limited to, any right to payment or performance under a
      letter of credit, whether or not the beneficiary has demanded or is at the
      time
      entitled to demand payment or performance.

    


    “Organizational
      Documents”
shall
      mean, with
      respect to any Person other than a natural person, the documents by which such
      Person was organized (such as a certificate of incorporation, certificate of
      limited partnership or articles of organization, and including, without
      limitation, any certificates of designation for preferred stock or other forms
      of preferred equity) and which relate to the internal governance of such Person
      (such as bylaws, a partnership agreement or an operating, limited liability
      or
      members agreement).

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    “Proceeds”
shall
      be used herein as defined in the Uniform Commercial Code but, in any event,
      shall include, but not be limited to, (a) any and all proceeds of any insurance
      (whether or not the Agent is named as the loss payee thereof), indemnity,
      warranty or guaranty payable to any Grantor or the Agent from time to time
      with
      respect to any of the Collateral, (b) any and all payments (in any form
      whatsoever) made or due and payable to any Grantor from time to time in
      connection with any requisition, confiscation, condemnation, seizure or
      forfeiture of all or any part of the Collateral by any Governmental Authority
      (or any person acting under color of Governmental Authority), (c) any and all
      amounts received when Collateral is sold, leased, licensed, exchanged, collected
      or disposed of, (d) any rights arising out of Collateral, and (e) any and all
      other amounts from time to time paid or payable under or in connection with
      any
      of the Collateral.

    


    “Software” shall
      be
      used herein as defined in the Uniform Commercial Code but in any event, shall
      include, but not be limited to, any computer program or supporting information
      provided in connection with the transaction relating to the
      program.

    


    “Supporting
      Obligations”
shall
      be used herein as defined in the Uniform Commercial Code but in any event shall
      include, but not be limited to, guarantees and letters of credit that support
      payment of another obligation.

    


    “Uniform
      Commercial Code”
shall
      mean the Uniform Commercial Code in effect on the date hereof and as amended
      from time to time, and as enacted in the State of New York or in any state
      or
      states which, pursuant to the Uniform Commercial Code as enacted in the State
      of
      New York, has jurisdiction with respect to all, or any portion of, the
      Collateral or this Agreement, from time to time. It is the intent of the parties
      that the definitions set forth above should be construed in their broadest
      sense
      so that Collateral will be construed in its broadest sense. Accordingly if
      there
      are, from time to time, changes to defined terms in the Uniform Commercial
      Code
      that broaden the definitions, they are incorporated herein and if existing
      definitions in the Uniform Commercial Code are broader than the amended
      definitions, the existing ones shall be controlling. Similarly, where the phrase
      “as defined in the Uniform Commercial Code, but in any event shall include,
      but
      not be limited to . . .” is used above, it means as defined in the Uniform
      Commercial Code except that if any of the enumerated types of items specified
      thereafter would not fall within the Uniform Commercial Code definition, they
      shall nonetheless be included in the applicable definition for purposes of
      this
      Agreement.

    


    2.  GRANT
      OF SECURITY INTEREST.
      As
      security for the payment and performance of the Secured Obligations, each
      Grantor hereby pledges, hypothecates, delivers and assigns to the Agent, for
      the
      benefit of the Purchasers, and creates in favor of the Agent for the benefit
      of
      the Purchasers, a security interest in and to, all of such Grantor’s right,
      title and interest in and to all the following property, in all its forms,
      in
      each case whether now or hereafter existing, whether now owned or hereafter
      acquired, created or arising, and wherever located (collectively, but without
      duplication, the “Collateral”):

     

    (a) All
      Equipment;

    


    (b) All
      Inventory and other Goods;

    


    (c) All
      Accounts;

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (d) All
      General Intangibles, including, without limitation, the patents and patent
      applications listed on Schedule
      5
      attached
      hereto, the trademarks and trademark applications listed on Schedule
      6
      attached
      hereto, the registered copyrights listed on Schedule
      7
      attached
      hereto, the domain names listed on Schedule
      8
      attached
      hereto, the licenses for the use of any patents, trademarks, copyrights and
      domain names listed on Schedule
      9
      attached
      hereto; 

    


    (e) All
      Fixtures;

    


    (f) All
      Documents, Letter-of-Credit Rights, and Chattel Paper;

    


    (g) All
      Deposit Accounts;

    


    (h) All
      Instruments and Investment Property;

    


    (i) All
      Commercial Tort Claims;

    


    (j) All
      Supporting Obligations; and

    


    (k) All
      Proceeds of any and all of the foregoing.

    


    Notwithstanding
      the foregoing, contracts entered into by any of the Grantors after
      October 1, 2006 and all assets related thereto and all Proceeds thereof shall
      not be “Collateral” hereunder; however, for
      the
      sake of clarity, any and all contracts entered into by Grantors on or before
      October 1, 2006 and any and all renewals of or amendments to contracts of any
      of
      the Grantors existing as of the date of this Agreement or entered into on or
      before October 1, 2006 shall be “Collateral” hereunder. Notwithstanding
      the foregoing, nothing herein shall be deemed to constitute an assignment of
      any
      asset which, in the event of an assignment, becomes void by operation of
      applicable Law or the assignment of which (a) is otherwise prohibited by
      applicable Law (in each case to the extent that such applicable Law is not
      overridden by Sections 9-406, 9-407 and/or 9-408 of the Uniform Commercial
      Code
      or other similar applicable Law) or (b) would result in the abandonment,
      invalidation or unenforceability of any right, title or interest of any Grantor
      therein; provided,
      however, that to the extent permitted by applicable Law, this Agreement shall
      create a valid security interest in such asset and, to the extent permitted
      by
      applicable Law, this Agreement shall create a valid security interest in the
      Proceeds of such asset. 

    


    3.  SECURITY
      FOR OBLIGATIONS.
      The
      security interest created hereby in the Collateral constitutes continuing
      collateral security for all of the following obligations, whether now existing
      or hereafter incurred (collectively, the “Secured
      Obligations”):

     

    (a)  (i)
      the
      payment by the Borrower, as and when due and payable (by scheduled maturity,
      required prepayment, acceleration, demand or otherwise), of all amounts from
      time to time owing by it in respect of the Securities Purchase Agreement, the
      Notes, this Agreement, and the other Transaction Documents (as defined in the
      Securities Purchase Agreement), including, without limitation, (A) all principal
      of and interest on the Notes (including, without limitation, all interest that
      accrues after the commencement of any bankruptcy, reorganization or similar
      proceeding (an “Insolvency
      Proceeding”)
      involving any Grantor, whether or not the payment of such interest is
      unenforceable or is not allowable due to the existence of such Insolvency
      Proceeding), and (B) all fees, commissions, expense reimbursements,
      indemnifications and all other amounts due or to become due under the Securities
      Purchase Agreement or any of the Transaction Documents; and

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (b)  the
      due
      performance and observance by each Grantor of all of its other obligations
      from
      time to time existing in respect of any of the Transaction Documents, including
      without limitation, with respect to any conversion or redemption rights of
      the
      Purchasers under the Notes, for so long as they are outstanding.

     

    4.  REPRESENTATIONS
      AND WARRANTIES OF THE GRANTORS.
      Each
      Grantor represents and warrants as follows. The following representations and
      warranties shall survive execution of this Agreement and shall not be affected
      or waived by any examination or
      inspection made by the Agent:

     

    (a)  Status.
      Each
      Grantor is a duly organized and validly existing Delaware corporation.
      Borrower’s organizational number is 2005153, Nestor Traffic Systems, Inc.’s
      organizational number is 2698828, and CrossingGuard, Inc.’s
      organizational number is 368331.
      Each
      Grantor has perpetual existence and the power and authority to own its property
      and assets and to transact the business in which it is engaged or presently
      proposes to engage. Each Grantor has qualified to do business in each state
      or
      jurisdiction where its business or operations so require.

     

    (b)  Authority
      to Execute Agreement; Binding Agreement.
      Each
      Grantor has the corporate or other power to execute, deliver and perform its
      obligations under this Agreement and each Transaction Document to which it
      is,
      or is to be, a party (including, without limitation, the right and power to
      give
      the Agent a security interest in the Collateral) and has taken all necessary
      corporate and other action to authorize the execution, delivery and performance
      of this Agreement and each Transaction Document to which it is, or is to be,
      a
      party. This Agreement has been duly executed by each Grantor. This Agreement
      constitutes the valid and binding obligation of each Grantor, enforceable
      against each Grantor in accordance with its terms except as such enforceability
      may be limited by applicable bankruptcy, insolvency, reorganization and similar
      laws of general application relating to or affecting the rights and remedies
      of
      creditors.

     

    (c)  Grantors’
      Title.
      Except
      for the security interests granted hereunder, each Grantor is, as to all
      Collateral presently owned, and shall be as to all Collateral hereafter
      acquired, the owner or, in the case of leased or licensed assets, the lessee
      or
      licensee, of said Collateral free from any Lien other than Permitted Liens
      (as
      defined in the Notes) and such Liens as will be discharged on the Closing Date
      in connection with repayment of indebtedness as contemplated by Section 7(m)
      of
      the Securities Purchase Agreement.

     

    (d)  Taxes
      and Assessments.
      All
      assessments and taxes, due or payable by, or imposed, levied or assessed against
      each Grantor or any of its property, real or personal, tangible or intangible,
      have been paid.

     

    (e)  Location
      of Collateral.
      All
      Equipment, Inventory and other Goods are located within the states specified
      on
Schedule
      1
      hereto.


     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (f)  Location
      of Grantors.
      The
      location of the chief executive office of each Grantor as well as its state
      of
      formation are specified on Schedule
      2
      attached
      hereto. Also listed on Schedule
      2
      is each
      other location where each Grantor maintains a place of business.

     

    (g)  Instruments
      and Certificates.
      All
      Instruments and all certificates representing securities that are included
      in
      the Collateral, together with all necessary endorsements, have been delivered
      to
      the Agent.

     

    (h)  Names
      Used by Grantors.
      (i) The
      actual corporate name of each Grantor is the name set forth in the preamble
      above; (ii) no Grantor has any trade names except as set forth on Schedule
      3
      attached
      hereto; (iii) no Grantor has used any name other than that stated in the
      preamble hereto or as set forth on Schedule
      3
      for the
      preceding five years; and (iv) no entity has merged into any Grantor or been
      acquired by any Grantor within the past five years except as set forth on
Schedule
      3.

     

    (i)  Perfected
      Security Interest.
      This
      Agreement creates a valid, first priority security interest in the Collateral,
      subject only to Permitted Liens (as defined in the Notes), securing payment
      of
      the Secured Obligations. Upon the filing of Uniform Commercial Code financing
      statements in the offices set forth on Schedule
      4
      hereto
      and the recordation of this Agreement (or a short form hereof) at the United
      States Copyright Office and the United States Patent and Trademark Office,
      all
      security interests which may be perfected by filing shall have been duly
      perfected. Except for the filing of the Uniform Commercial Code financing
      statements referred to in the preceding sentence and the delivery of the
      Instruments referred to in paragraph (g) above, no action is necessary to
      create, perfect or protect such security interest. Without limiting the
      generality of the foregoing, except for the filing of said financing statements
      and such recordation and except for customer contracts which may contain
      limitations on assignment, no consent of any third parties and no authorization,
      approval or other action by, and no notice to or filing with any Governmental
      Authority or regulatory body is required for (i) the execution, delivery and
      performance of this Agreement, (ii) the creation or perfection of the security
      interest in the Collateral or (iii) the enforcement of the Agent’s rights
      hereunder.

     

    (j)  Absence
      of Conflicts with Other Agreements, Etc.
      Neither
      the pledge of the Collateral hereunder nor any of the provisions hereof
      (including, without limitation, the remedies provided hereunder) violates any
      of
      the provisions of any Organizational Documents of any Grantor, or any other
      agreement to which any Grantor or any of its property is a party or is subject,
      or any judgment, decree, order or award of any court, governmental body or
      arbitrator or any applicable law, rule or regulation applicable to the
      same.

     

    (k)  Account
      Debtors.
      None of
      the account debtors or other Persons obligated on any of the Collateral is
      a
      Governmental Authority covered by the Federal Assignment of Claims Act or any
      similar federal, state or local statute or rule in respect of such
      Collateral.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (l)  Intellectual
      Property.
      Schedules
      5, 6, 7 and 8
      list all
      of the patents, patent applications, trademarks, trademark applications,
      registered copyrights, and domain names owned by any of the Grantor as of the
      date hereof. Schedule
      9
      lists
      all licenses in favor of any Grantor for the use of any patents, trademarks,
      copyrights and domain names as of the date hereof other than commercial
      off-the-shelf software. All material patents and trademarks of the Grantors
      have
      been duly recorded at the United States Patent and Trademark Office. The
      Grantors have no material copyrights, whether or not recorded at the United
      States Copyright Office.

     

    5.  COVENANTS
      OF GRANTORS.
      Each
      Grantor covenants that:

     

    (a)  Filing
      of Financing Statements and Preservation of Interests.
      Immediately upon execution hereof, each Grantor shall file (i) in each office
      set forth on Schedule
      4
      Uniform
      Commercial Code financing statements and (ii) all filings with the United States
      Copyright Office and the United States Patent and Trademark Office, including
      an
      intellectual property collateral agreement in favor of the Agent, pursuant
      to
      which each Grantor shall grant to the Agent for the benefit of the Purchasers
      a
      security interest in all of its service marks, trademarks and trade names and
      the goodwill associated therewith, and in all of its patents, patent
      applications and patent license agreements, as therein provided, in each case
      in
      form and substance satisfactory to the Agent. Without limiting the obligation
      of
      the Grantors set forth in the preceding sentence, each Grantor hereby authorizes
      the Agent, and appoints the Agent as its attorney-in-fact, to file in such
      office or offices as the Agent deems necessary or desirable such financing
      and
      continuation statements and amendments and supplements thereto (including,
      without limitation, an “all assets” filing), and such other documents as the
      Agent may require to perfect, preserve and protect the security interests
      granted herein and ratifies all such actions taken by the Agent. Each Grantor
      also ratifies its authorization for the Lender to have filed in any jurisdiction
      any like initial financing statements or amendments thereto filed prior to
      the
      date of this Agreement.

     

    (b)  Delivery
      of Instruments, Etc.
      At any
      time and from time to time that any Collateral consists of Instruments,
      certificated securities or other items that require or permit possession by
      the
      secured party to perfect the security interest created hereby, the applicable
      Grantor shall deliver such Collateral to the Agent.

     

    (c)  Chattel
      Paper.
      Each
      Grantor shall cause all Chattel Paper constituting Collateral to be delivered
      to
      the Agent, or, if such delivery is not possible, then to cause such Chattel
      Paper to contain a legend noting that it is subject to the security interest
      created by this Agreement. To the extent that any Collateral consists of
      electronic Chattel Paper, the applicable Grantor shall cause the underlying
      Chattel Paper to be “marked” within the meaning of Section 9-105 of the Uniform
      Commercial Code (or successor section thereto).

     

    (d)  Investment
      Property and Deposit Accounts.
      If
      there are any Investment Property or Deposit Accounts included as Collateral
      that can be perfected by “control” through an account control agreement, the
      applicable Grantor shall cause such an account control agreement, in form and
      substance in each case satisfactory to the Agent, to be entered into and
      delivered to the Agent.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (e)  Letter-of-Credit
      Rights.
      To the
      extent that any Collateral consists of Letter-of-Credit Rights, the applicable
      Grantor shall cause the issuer of each underlying letter of credit to consent
      to
      the assignment to the Agent.

     

    (f)  Collateral
      In Possession of Third Parties.
      To the
      extent that any Collateral is in the possession of any third party other than
      agencies of state and local governments or except in the ordinary course of
      business, the applicable Grantor shall join with the Agent in notifying such
      third party of the Agent’s security interest and shall make commercially
      reasonable efforts to obtain an acknowledgement from such third party that
      it is
      holding the Collateral for the benefit of the Agent.

     

    (g)  Commercial
      Tort Claims.
      If any
      Grantor shall at any time hold or acquire a Commercial Tort Claim, such Grantor
      shall promptly notify the Agent in a writing signed by such Grantor of the
      particulars thereof and grant to the Agent in such writing a security interest
      therein and in the proceeds thereof, all upon the terms of this Agreement,
      with
      such writing to be in form and substance satisfactory to the Agent.

     

    (h)  Notice
      of Changes in Representations.
      Each
      Grantor shall notify the Agent in advance of any event or condition which could
      cause any representations set forth in Section 4 above applicable to such
      Grantor to fail to be true, correct and complete. Without limiting the
      generality of the foregoing:

     

    (i)  without
      providing at least thirty (30) days prior written notice to the Agent, no
      Grantor will change its name in any respect, its place of business or, if more
      than one, chief executive office, or its mailing address or organizational
      identification number (if it has one);

     

    (ii)  if
      any
      Grantor does not have an organizational identification number and obtains one
      after the date of this Agreement, such Grantor will forthwith notify the Agent
      in writing of such organizational identification number; and

     

    (iii)  no
      Grantor will change its type of organization, jurisdiction of organization
      or
      other legal structure without prior written notice to the Agent.

     

    (i)  Use
      and Condition of Equipment.
      Each
      item of Equipment will be maintained in good repair, working order and
      condition, ordinary wear and tear excepted, and the applicable Grantor will
      provide all maintenance service and repairs necessary for such purpose. The
      Agent may examine and inspect the Collateral at any reasonable time or times
      wherever located.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (j)  Insurance.
      Each
      Grantor shall maintain with financially sound and reputable insurers, insurance
      with respect to the Collateral against loss or damage of the kinds and in the
      amounts customarily insured against by entities of established reputation having
      similar properties similarly situated and in such amounts as are customarily
      carried under similar circumstances by other such Persons and otherwise as
      is
      prudent for Persons engaged in similar businesses. Each Grantor shall cause
      each
      insurance policy issued in connection herewith to provide, and the insurer
      issuing such policy to certify to the Agent that (a) the Agent will be named
      as
      lender loss payee and additional insured under each such insurance policy;
      (b)
      if such insurance be proposed to be cancelled or materially changed for any
      reason whatsoever, such insurer will promptly notify the Agent and such
      cancellation or change shall not be effective as to the Agent for at least
      thirty (30) days after receipt by the Agent of such notice, unless the effect
      of
      such change is to extend or increase coverage under the policy; and (c) the
      Agent will have the right (but no obligation) at its election to remedy any
      default in the payment of premiums within thirty (30) days of notice from the
      insurer of such default. Unless the Securities Purchase Agreement or the Notes
      expressly provides otherwise, the following sentence will control application
      of
      proceeds. If no Event of Default exists, loss payments in each instance will
      be
      applied by the applicable Grantor to the repair and/or replacement of property
      with respect to which the loss was incurred to the extent reasonably feasible,
      and any loss payments or the balance thereof remaining, to the extent not so
      applied, shall be payable to the applicable Grantor, provided,
      however, that payments received by any Grantor after an Event of Default occurs
      and is continuing shall be paid to the Agent and, if received by such Grantor,
      shall be held in trust for and immediately paid over to the Agent unless
      otherwise directed in writing by the Agent. Copies of such policies or the
      related certificates, in each case, naming the Agent as lender loss payee shall
      be delivered to the Agent at least annually and at the time any new policy
      of
      insurance is issued.

     

    (k)  Transfer
      of Collateral.
      Other
      than the disposition of inventory and licensing of Intellectual Property in
      the
      ordinary course of the applicable Grantor’s business as presently conducted or
      as otherwise permitted under the terms of the Securities Purchase Agreement,
      no
      Grantor shall sell, assign, transfer, encumber or otherwise dispose of any
      Collateral in excess of $25,000 per year without the prior written consent
      of
      the Agent and the Agent does not authorize any such disposition. For purposes
      of
      this provision, “dispose of any Collateral” shall include, without limitation,
      the creation of a security interest or other encumbrance (whether voluntary
      or
      involuntary) on such Collateral, except for Permitted Liens (as defined in
      the
      Notes).

     

    (l)  Taxes
      and Assessments.
      Each
      Grantor shall promptly pay when due and payable, all taxes and assessments
      imposed upon the Collateral or operations or business of such
      Grantor.

     

    (m)  Inventory.
      No
      Grantor shall return any Inventory to the supplier thereof, except for damaged
      or unsalable Inventory or otherwise in the ordinary course of such Grantor’s
      business. Without limiting the generality of the foregoing, in the event any
      Grantor becomes a “debtor in possession” as defined in 11 U.S.C. §1101 (or any
      successor thereto), such Grantor agrees, to the extent permitted by applicable
      Law, not to move pursuant to 11 U.S.C. §546 (or any successor thereto) for
      permission to return goods to any creditor which shipped such goods to such
      Grantor without the Agent’s written consent and each Grantor hereby waives any
      rights to return such Inventory arising under 11 U.S.C. §546(h), or any
      successor section thereto.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (n)  Defense
      of Agent’s Rights.
      Each
      Grantor warrants and will defend the Agent’s right, title and security interest
      in and to the Collateral against the claims of any Person.

     

    (o)  Cash
      Management.
      At any
      time following an Event of Default that the Agent so requests, the Grantors
      will
      work with the Agent to set up such lock boxes and segregated accounts as the
      Agent may request in order to better perfect the security interest created
      hereunder in Proceeds.

     

    (p)  Additional
      Grantors.
      Each
      Grantor shall cause each Subsidiary of such Grantor including (i) any Person
      that shall at any time become a Subsidiary of such Grantor, and (ii) Nestor
      Interactive, Inc. (“NII”),
      if at
      any time after the date of this Agreement NII ceases to be inactive or has
      significant assets other than net operating losses, to immediately become a
      party hereto (an “Additional
      Grantor”)
      or to
      a similar security agreement, as appropriate, by executing and delivering an
      Additional Grantor Joinder in substantially the form of Annex
      A
      attached
      hereto and comply with the provisions hereof applicable to the Grantors or
      by
      signing a similar security agreement. If the Additional Grantor becomes a party
      hereto, concurrent therewith, the Additional Grantor shall deliver replacement
      schedules for, or supplements to all other Schedules to (or referred to in)
      this
      Agreement, as applicable, which replacement schedules shall supersede, or
      supplements shall modify, the Schedules then in effect. The Additional Grantor
      shall also deliver such opinions of counsel, authorizing resolutions, good
      standing certificates, incumbency certificates, Organizational Documents,
      financing statements and other information and documentation as the Agent may
      reasonably request. Upon delivery of the foregoing to the Agent, the Additional
      Grantor shall be and become a party to this Agreement with the same rights
      and
      obligations as the Grantors, for all purposes hereof as fully and to the same
      extent as if it were an original signatory hereto and shall be deemed to have
      made the representations, warranties and covenants set forth herein as of the
      date of execution and delivery of such Additional Grantor Joinder and thereafter
      at any time that such representations and covenants must be restated pursuant
      to
      the terms of the Transaction Documents, and all references herein to the
“Grantors” shall be deemed to include each Additional Grantor.

     

    (q)  Inspections.
      Upon
      reasonable notice to the Grantors (and for this purpose no more than two
      business days’ notice shall be required under any circumstances) if
      no
      Event of Default shall exist, and at any time with or without notice after
      the
      occurrence of an Event of Default, each
      Grantor will permit the Agent, or its designee, to inspect the Collateral,
      wherever located, and to discuss the affairs, business, finances and accounts
      of
      the Grantors with their personnel and accountants.
      In the
      event that no Event of Default exists and is continuing, such inspections shall
      not be held more than twice in any six-month period. For the sake of clarity,
      during any time when an Event of Default shall exist and is continuing, the
      Agent may conduct an unlimited number of inspections, subject to the first
      sentence of this Section 5(q). The Agent acknowledges that such inspections
      and
      discussions may result in the Agent, or its designee, receiving material
      nonpublic information. The Agent shall, and shall cause its designee, to keep
      confidential such information as is specifically marked or otherwise identified
      as material nonpublic information by the Grantors.

     

    (r)  Intellectual
      Property.
      Without
      limiting the generality of the other obligations of the Grantors hereunder,
      each
      Grantor shall promptly (i) cause to be registered at the United States Copyright
      Office all of its material copyrights and shall cause the security interest
      contemplated hereby with respect to such copyrights to be duly recorded at
      such
      office, (ii) cause the security interest contemplated hereby with respect to
      all
      Intellectual Property registered at the United States Copyright Office or United
      States Patent and Trademark Office to be duly recorded at the applicable office,
      and (iii) give the Agent notice whenever it acquires (whether absolutely or
      by
      license) or creates any additional material Intellectual Property.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (s)  Power
      of Attorney.
      Each
      Grantor has duly executed and delivered to the Agent a power of attorney (a
      “Power
      of Attorney”)
      in
      substantially the form attached hereto as Annex
      B.
      The
      power of attorney granted pursuant to the Power of Attorney is a power coupled
      with an interest and shall be irrevocable until full and indefeasible payment
      of
      the Secured Obligations. The powers conferred on the Agent (for the benefit
      of
      the Agent and the Purchasers) under the Power of Attorney are solely to protect
      the Agent’s interests (for the benefit of the Agent and the Purchasers) in the
      Collateral and shall not impose any duty upon the Agent or any Purchaser to
      exercise any such powers. The Agent agrees that (i) except for the powers
      granted in clause (i) of the Power of Attorney, it shall not exercise any power
      or authority granted under the Power of Attorney unless an Event of Default
      has
      occurred and is continuing, and (ii) the Agent shall account for any moneys
      received by the Agent in respect of any foreclosure on or disposition of
      Collateral pursuant to the Power of Attorney provided that none of the Agent
      or
      any Purchaser shall have any duty as to any Collateral, and the Agent and the
      Purchasers shall be accountable only for amounts that they actually receive
      as a
      result of the exercise of such powers. NONE OF THE AGENT, THE PURCHASERS OR
      THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
      REPRESENTATIVES SHALL BE RESPONSIBLE TO THE GRANTORS FOR ANY ACT OR FAILURE
      TO
      ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
      ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
      FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
      EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

     

    (t)  Other
      Assurances.
      Each
      Grantor agrees that from time to time, at the joint and several expense of
      the
      Grantors and any Additional Grantors, it will promptly execute and deliver
      all
      such further instruments and documents, and take all such further action as
      may
      be necessary or desirable, or as the Agent may reasonably request, in order
      to
      perfect and protect any security interest granted or purported to be granted
      hereby or to enable the Agent to exercise and enforce its rights and remedies
      hereunder and with respect to any Collateral or to otherwise carry out the
      purposes of this Agreement.

     

    6.  REMEDIES
      UPON EVENT OF DEFAULT.

     

    (a)  Upon
      the
      occurrence and during the continuation of an Event of Default, the Agent may
      exercise, in addition to any other rights and remedies provided herein, under
      other contracts and under law, all the rights and remedies of a secured party
      under the Uniform Commercial Code. Without limiting the generality of the
      foregoing, upon the occurrence and during the continuation of an Event of
      Default, (i) at the request of the Agent, each Grantor shall, at its cost and
      expense, assemble the Collateral owned or used by it as directed by the Agent;
      (ii) the Agent shall have the right (but not the obligation) to notify any
      account debtors and any obligors under Instruments or Accounts to make payments
      directly to the Agent and to enforce the Grantors’ rights against account
      debtors and obligors; (iii) the Agent may (but is not obligated to), without
      notice except as provided below, sell the Collateral at public or private sale,
      on such terms as the Agent deems to be commercially reasonable; (iv) the Agent
      may (but is not obligated to) direct any financial intermediary or any other
      Person holding Investment Property to transfer the same to the Agent or its
      designee; and (v) the Agent may (but is not obligated to) transfer any or all
      Intellectual Property registered in the name of any Grantor at the United States
      Patent and Trademark Office and/or Copyright Office into the name of the Agent
      or any designee or any purchaser of any Collateral. Each Grantor agrees that
      ten
      (10) days notice of any sale referred to in clause (iii) above shall constitute
      sufficient notice. The Agent or any Purchaser may purchase Collateral at any
      such sale. The Grantors shall be liable to the Agent and the Purchasers for
      any
      deficiency amount.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (b)  The
      Agent
      may comply with any applicable Law in connection with a disposition of
      Collateral and compliance will not be considered adversely to affect the
      commercial reasonableness of any sale of the Collateral. The Agent may sell
      the
      Collateral without giving any warranties and may specifically disclaim such
      warranties. If the Agent sells any of the Collateral on credit, the Borrower
      will only be credited with payments actually made by the purchaser. In
      addition, each Grantor waives any and all rights that it may have to a judicial
      hearing in advance of the enforcement of any of the Agent’s rights and remedies
      hereunder, including, without limitation, its right following an Event of
      Default to take immediate possession of the Collateral and to exercise its
      rights and remedies with respect thereto.

     

    (c)  For
      the
      purpose of enabling the Agent to further exercise rights and remedies under
      this
      Section 6 or elsewhere provided by agreement or applicable Law, each Grantor
      hereby grants to the Agent, for the benefit of the Agent and the Purchasers,
      an
      irrevocable, nonexclusive license (exercisable without payment of royalty or
      other compensation to such Grantor) to use, license or sublicense following
      an
      Event of Default, any Intellectual Property now owned or hereafter acquired
      by
      such Grantor, and wherever the same may be located, and including in such
      license access to all media in which any of the licensed items may be recorded
      or stored and to all computer software and programs used for the compilation
      or
      printout thereof.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    7.  OBLIGATIONS
      ABSOLUTE.

     

    (a)  Change
      of Circumstance.
      THE
      RIGHTS OF THE AGENT HEREUNDER AND THE OBLIGATIONS OF THE GRANTORS HEREUNDER
      SHALL BE ABSOLUTE AND UNCONDITIONAL, SHALL NOT BE SUBJECT TO ANY COUNTERCLAIM,
      SETOFF, RECOUPMENT OR DEFENSE BASED UPON ANY CLAIM THAT ANY GRANTOR OR ANY
      OTHER
      PERSON MAY HAVE AGAINST ANY PURCHASER AND SHALL REMAIN IN FULL FORCE AND EFFECT
      UNTIL FULL AND INDEFEASIBLE SATISFACTION OF THE SECURED OBLIGATIONS AFTER OR
      CONCURRENT WITH THE TERMINATION OF ANY COMMITMENT OF THE PURCHASERS PURSUANT
      TO
      THE SECURITIES PURCHASE AGREEMENT. Without limiting the generality of the
      foregoing, the obligations of the Grantors shall not be released, discharged
      or
      in any way affected by any circumstance or condition (whether or not the
      applicable Grantor shall have any notice or knowledge thereof) including,
      without limitation, any amendment or modification of or supplement to the
      Securities Purchase Agreement, any Notes or any other Transaction Document
      (including, without limitation, increasing the amount or extending the maturity
      of the Secured Obligations); any waiver, consent, extension, indulgence or
      other
      action or inaction under or in respect of any such agreements or instruments,
      or
      any exercise or failure to exercise of any right, remedy, power or privilege
      under or in respect of any such agreements or instruments, or any exercise
      or
      failure to exercise of any right, remedy, power or privilege under or in respect
      of any such agreements or instruments; any invalidity or unenforceability,
      in
      whole or in part, of any term hereof or of the Securities Purchase Agreement,
      any Notes or any other Transaction Document; any failure on the part of Borrower
      or any other Person for any reason to perform or comply with any term of the
      Securities Purchase Agreement, any Note or any other Transaction Document;
      any
      furnishing or acceptance of any additional security or guaranty; any release
      of
      any Grantor or any other Person or any release of any or all security or any
      or
      all guarantees for the Secured Obligations, whether any such release is granted
      in connection with a bankruptcy or otherwise; any bankruptcy, insolvency,
      reorganization, arrangement, readjustment, composition, liquidation or similar
      proceeding with respect to any Grantor or any other Person or their respective
      properties or creditors; the application of payments received by the Agent
      or
      any Purchaser from any source that were lawfully used for some other purpose,
      which lawfully could have been applied to the payment, in full or in part,
      of
      the Secured Obligations; or any other occurrence whatsoever, whether similar
      or
      dissimilar to the foregoing. Without limiting the generality of the foregoing,
      at any time that the Securities Purchase Agreement or the Notes are amended
      to
      increase the amount of the Obligations thereunder, the amount of the Secured
      Obligations shall be accordingly increased.

     

    (b)  No
      Duty To Marshal Assets.
      The
      Agent shall have no obligation to marshal any assets in favor of any Grantor
      or
      any other Person or against or in payment of any or all of the Secured
      Obligations.

     

    (c)  Waiver
      of Right of Subrogation, Etc.
      Each
      Grantor hereby waives any and all rights of subrogation, reimbursement, or
      indemnity whatsoever in respect of such Grantor arising out of remedies
      exercised by the Agent hereunder until full and indefeasible payment of the
      Secured Obligations.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    (d)  Other
      Waivers.
      Each
      Grantor hereby waives promptness, diligence and notice of acceptance of this
      Agreement. In connection with any sale or other disposition of Collateral,
      to
      the extent permitted by applicable Law, each Grantor waives any right of
      redemption or equity of redemption in the Collateral. Each Grantor further
      waives presentment and demand for payment of any of the Secured Obligations,
      protest and notice of protest, dishonor and notice of dishonor or notice of
      default or any other similar notice with respect to any of the Secured
      Obligations, and all other similar notices to which any Grantor might otherwise
      be entitled, except as otherwise expressly provided in the Transaction
      Documents. The Agent is under no obligation to pursue any rights against third
      parties with respect to the Secured Obligations and each Grantor hereby waives
      any right it may have to require otherwise. Each Grantor (to the extent that
      it
      may lawfully do so) covenants that it shall not at any time insist upon or
      plead, or in any manner claim or take the benefit of, any stay, valuation,
      appraisal or redemption now or at any time hereafter in force that, but for
      this
      waiver, might be applicable to any sale made under any judgment, order or decree
      based on this Agreement; and each Grantor (to the extent that it may lawfully
      do
      so) hereby expressly waives and relinquishes all benefit of any and all such
      laws and hereby covenants that it will not hinder, delay or impede the execution
      of any power in this Agreement delegated to the Agent, but that it will suffer
      and permit the execution of every such power as though no such law or laws
      had
      been made or enacted.

     

    (e)  Each
      Grantor further waives to the fullest extent permitted by law any right it
      may
      have under the constitution of the State of New York (or under the constitution
      of any other state in which any of the Collateral or any Grantor may be
      located), or under the Constitution of the United States of America, to notice
      (except for notice specifically required hereby) or to a judicial hearing prior
      to the exercise of any right or remedy provided by this Agreement to the Agent,
      and waives its rights, if any, to set aside or invalidate any sale duly
      consummated in accordance with the foregoing provisions hereof on the grounds
      (if such be the case) that the sale was consummated without a prior judicial
      hearing.

     

    (f)  EACH
      GRANTOR’S WAIVERS UNDER THIS SECTION 7 HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY
      AND KNOWINGLY AND AFTER SUCH GRANTOR HAS BEEN APPRISED AND COUNSELED BY ITS
      ATTORNEY AS TO THE NATURE THEREOF AND ITS POSSIBLE ALTERNATIVE
      RIGHTS.

     

    8.  NO
      IMPLIED WAIVERS.
      No
      failure or delay on the part of the Agent in exercising any right, power or
      privilege under this Agreement or the other Transaction Documents and no course
      of dealing between the Grantor, on the one hand, and the Agent or the
      Purchasers, on the other hand, shall operate as a waiver of any such right,
      power or privilege. No single or partial exercise of any right, power or
      privilege under this Agreement or the other Transaction Documents precludes
      any
      other or further exercise of any such right, power or privilege or the exercise
      of any other right, power or privilege. The rights and remedies expressly
      provided in this Agreement and the other Transaction Documents are cumulative
      and not exclusive of any rights or remedies which the Agent or the Purchasers
      would otherwise have. No notice to or demand on any Grantor in any case shall
      entitle the Grantors to any other or further notice or demand in similar or
      other circumstances or shall constitute a waiver of the right of the Agent
      or
      the Purchasers to take any other or further action in any circumstances without
      notice or demand. Any waiver that is given shall be effective only if in writing
      and only for the limited purposes expressly stated in the applicable
      waiver.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    9.  STANDARD
      OF CARE.

     

    (a)  In
      General.
      No act
      or omission of the Agent or any Purchaser (or agent or employee of any of the
      foregoing) hereunder or related hereto or related to the transactions
      contemplated by this Agreement or the other Transaction Documents shall give
      rise to any defense, counterclaim or offset in favor of any Grantor or any
      claim
      or action against the Agent or such Purchaser (or agent or employee thereof),
      in
      the absence of gross negligence or willful misconduct of the Agent or such
      Purchaser (or agent or employee thereof) as determined in a final, nonappealable
      judgment of a court of competent jurisdiction. The Agent shall be deemed to
      have
      exercised reasonable care in the custody and preservation of the Collateral
      in
      its possession if the Collateral is accorded treatment substantially equal
      to
      that which the Agent accords to other Collateral it holds, it being understood
      that it has no duty to take any action with respect to calls, conversions,
      exchanges, maturities, tenders or other matters relative to any Collateral
      or to
      preserve any rights of any parties and shall only be liable for losses which
      are
      a result of it gross negligence or willful misconduct as determined in a final,
      nonappealable judgment of a court of competent jurisdiction.

     

    (b)  No
      Duty to Preserve Rights.
      Without
      limiting the generality of the foregoing, the Agent has no duty (either before
      or after an Event of Default) to collect any amounts in respect of the
      Collateral or to preserve any rights relating to the Collateral.

     

    (c)  No
      Duty to Prepare for Sale.
      Without
      limiting the generality of the foregoing, the Agent has no obligation to
      clean-up or otherwise prepare the Collateral for sale.

     

    (d)  Duties
      Relative to Contracts.
      Without
      limiting the generality of the foregoing, each Grantor shall remain obligated
      and liable under each contract or agreement included in the Collateral to be
      observed or performed by such Grantor thereunder. The Agent shall not have
      any
      obligation or liability under any such contract or agreement by reason of or
      arising out of this Agreement or the receipt by the Agent of any payment
      relating to any of the Collateral, nor shall the Agent be obligated in any
      manner to perform any of the obligations of any Grantor under or pursuant to
      any
      such contract or agreement, to make inquiry as to the nature or sufficiency
      of
      any payment received by the Agent in respect of the Collateral or as to the
      sufficiency of any performance by any party under any such contract or
      agreement, to present or file any claim, to take any action to enforce any
      performance or to collect the payment of any amounts which may have been
      assigned to the Agent or to which the Agent may be entitled at any time or
      times.

     

    (e)  Reliance
      on Advice of Counsel.
      In
      taking any action under this Agreement or any other Transaction Document, the
      Agent shall be entitled to rely upon the advice of counsel of Agent’s choice and
      shall be fully protected in acting on such advice whether or not the advice
      rendered is ultimately determined to have been accurate.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (f)  No
      Obligation to Act.
      The
      Agent shall be entitled to act or to refrain from acting (and shall be fully
      protected in so acting or refraining from acting) upon the written instructions
      of the Required Holders (as defined below) and such instructions shall be
      binding upon all the Purchasers; provided,
      however,
      that the
      Agent shall not be under any obligation to exercise any of the rights or powers
      vested in it by this Agreement or any Security Document in the manner so
      requested unless, if so requested by the Agent, it shall have been provided
      indemnity from the Borrower satisfactory to it against the costs, expenses
      and
      liabilities which may be incurred by it in compliance with or in performing
      such
      request or direction. No provisions of this Agreement or any Security Document
      shall otherwise be construed to require the Agent to expend or risk its own
      funds or take any action that could in its judgment cause it to incur any cost,
      expenses or liability for which it is not specifically indemnified hereunder
      or
      under the Securities Purchase Agreement. No provision of this Agreement or
      of
      any Security Document shall be deemed to impose any duty or obligation on the
      Agent to perform any act or acts or exercise any right, power, duty or
      obligation conferred or imposed on it, in any jurisdiction in which it shall
      be
      illegal, or in which the Agent shall be unqualified or incompetent, to perform
      any such act or acts or to exercise any such right, power, duty or obligation
      or
      if such performance or exercise would constitute doing business by the Agent
      in
      such jurisdiction or impose a tax on the Agent by reason thereof.

     

    (g)  Action
      By Agent.
      Absent
      written instructions from the Required Holders at a time when an Event of
      Default shall have occurred and be continuing, the Agent shall have no
      obligation to take any actions under the Security Documents.

     

    10.  MISCELLANEOUS.

     

    (a)  Assignment.
      Except
      as otherwise provided in the Securities Purchase Agreement, the Agent and each
      Purchaser may assign or transfer this Agreement and any or all rights or
      obligations hereunder without the consent of any Grantor and without prior
      notice. No Grantor shall assign or transfer this Agreement or any rights or
      obligations hereunder without the prior written consent of the Agent or as
      expressly provided in the Securities Purchase Agreement. Notwithstanding
      the foregoing, if there should be any assignment of any rights or obligations
      by
      operation of law or in contravention of the terms of this Agreement or
      otherwise, then all covenants, agreements, representations and warranties made
      herein or pursuant hereto by or on behalf of any Grantor shall bind the
      successors and assigns of such Grantor, together with the preexisting Grantor,
      whether or not such new or additional Persons execute a joinder hereto or
      assumption hereof (without the same being deemed a waiver of any default caused
      thereby) which condition shall not be deemed to be a waiver of any Event of
      Default arising out of such assignment.
      The
      rights and privileges of the Agent under this Agreement shall inure to the
      benefit of its successors and assigns.

     

    (b)  Joint
      and Several Liability.
      All
      Grantors shall jointly and severally be liable for the obligations of each
      Grantor to the Agent and the Purchasers hereunder.

     

    (c)  Notices.
      All
      notices, requests, demands, directions and other communications provided for
      herein shall be in writing and shall be delivered or mailed in the manner
      specified in the Securities Purchase Agreement addressed to a party at its
      address set forth in or determined pursuant to the Securities Purchase
      Agreement, as the case may be.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    (d)  Severability.
      Every
      provision of this Agreement is intended to be severable. If any term or
      provision of this Agreement shall be invalid, illegal or unenforceable for
      any
      reason, the validity, legality and enforceability of the remaining provisions
      shall not be affected or impaired thereby. Any invalidity, illegality or
      unenforceability in any jurisdiction shall not affect the validity, legality
      or
      enforceability of any such term or provision in any other
      jurisdiction.

     

    (e)  Costs
      and Expenses.
      Without
      limiting any other cost reimbursement provisions in the Transaction Documents,
      upon demand, the
      Grantors shall pay to
      the
      Agent and the Purchasers, as applicable, the amount of any and all reasonable
      expenses incurred by the Agent and the Purchasers hereunder or in connection
      herewith, including, without limitation, reasonable fees of counsel to the
      Agent
      and the Purchasers and those other expenses that may be incurred in connection
      with (i) the execution and delivery of this Agreement and any amendments,
      waivers and supplements hereto, (ii) the administration of this Agreement,
      (iii)
      the custody or preservation of, or the sale of, collection from, or other
      realization upon, any of the Collateral, (iv) the exercise or enforcement of
      any
      of the rights of the Agent or the Purchasers hereunder or (v) the failure of
      any
      Grantor to perform or observe any of the provisions hereof.

     

    (f)  Indemnification
      by Grantors.
      Each
      Grantor shall indemnify, reimburse and hold harmless all Indemnitees from and
      against any and all losses, claims, liabilities, damages, penalties, suits,
      costs and expenses, of any kind or nature, (including fees relating to the
      cost
      of investigating and defending any of the foregoing) imposed on, incurred by
      or
      asserted against such Indemnitee in any way related to or arising from or
      alleged to arise from this Agreement or the Collateral, except any such losses,
      claims, liabilities, damages, penalties, suits, costs and expenses which result
      from the gross negligence or willful misconduct of the Indemnitee as determined
      by a final nonappealable decision of a court of competent jurisdiction. This
      indemnification provision is in addition to, and not in limitation of, any
      other
      indemnification provision in any other Transaction Document.

     

    (g)  Counterparts;
      Integration.
      This
      Agreement may be executed in counterparts (and by different parties hereto
      in
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract. This Agreement
      and
      the other Transaction Documents constitute the entire contract among the parties
      relating to the subject matter hereof and supersede any and all previous
      agreements and understandings, oral or written, relating to the subject matter
      hereof. Delivery of an executed counterpart of a signature page of this
      Agreement by telecopy shall be effective as delivery of a manually executed
      counterpart of this Agreement.

     

    (h)  Amendments
      and Waivers. The
      Purchasers holding 75% of the total outstanding principal balance of the Notes
      (the “Required
      Holders”)
      shall
      have the right to direct the Agent, from time to time, to consent to any
      amendment, modification or supplement to or waiver of any provision of this
      Agreement and to release any Collateral from any lien or security interest
      held
      by the Agent; provided,
      however,
      that
      (i) no such direction shall require the Agent to consent to the modification
      of
      any provision or portion thereof which (in the sole judgment of the Agent)
      is
      intended to benefit the Agent, (ii) the Agent shall have the right to decline
      to
      follow any such direction if the Agent shall determine in good faith that the
      directed action is not permitted by the terms of this Agreement or may not
      lawfully be taken and (iii) no such direction shall waive or modify any
      provision of this Agreement the waiver or modification of which requires the
      consent of all Purchasers unless all Purchasers consent thereto. The Agent
      may
      rely on any such direction given to it by the Required Holders and shall be
      fully protected in relying thereon, and shall under no circumstances be liable,
      except in circumstances involving the Agent's gross negligence or willful
      misconduct as shall have been determined in a final nonappealable judgment
      of a
      court of competent jurisdiction, to any holder of the Notes or any other person
      or entity for taking or refraining from taking action in accordance with any
      direction or otherwise in accordance with this Agreement.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    (i)  Headings.
      Headings to this Agreement are for purposes of reference only and shall not
      limit or otherwise affect the meaning hereof

     

    11.  SPECIFIC
      PERFORMANCE.
      Each
      Grantor hereby authorizes the Agent to demand specific performance of this
      Agreement at any time when any Grantor shall have failed to comply with any
      provision hereof, and each Grantor hereby irrevocably waives any defense based
      on the adequacy of a remedy at law which might be asserted as a bar to the
      remedy of specific performance hereof in any action brought therefor. Each
      Grantor that is not a party to the Securities Purchase Agreement hereby
      acknowledges receipt from the Borrower of a correct and complete copy of the
      Securities Purchase Agreement and consents to all of the provisions of the
      Securities Purchase Agreement as in effect on the date hereof and agrees that
      its consent is not required for any amendments, modifications, restatements
      or
      waivers of it or any of the provisions thereof.

     

    12.  RELATIONSHIP
      WITH SECURITIES PURCHASE AGREEMENT.
      To the
      extent that any of the terms hereof is inconsistent with any provision of the
      Securities Purchase Agreement, the provisions of the Securities Purchase
      Agreement shall control.

     

    13.  TERMINATION;
      PARTIAL RELEASE.

     

    (a)  At
      such
      time as all the Secured Obligations in respect of the Notes have been
      indefeasibly paid and performed in full (including the conversion in full of
      the
      Notes) then the security provided for herein shall terminate, provided,
      however, that all indemnities of the Borrower and each other Grantor contained
      in this Agreement or any other Transaction Document shall survive and remain
      operative and in full force and effect regardless of the termination of this
      Agreement. 

     

    (b)  Effective
      upon the closing of a disposition of any Collateral in conformity with the
      provisions of the Securities Purchase Agreement and the Notes, and receipt
      by
      the Agent of a certification to such effect from an authorized officer of the
      Borrower, the security interest in the Collateral so disposed of shall terminate
      and the Agent shall deliver such releases as may be appropriate, provided,
      however, the security interest in all remaining Collateral shall remain in
      full
      force and effect.

     

    14.  GOVERNING
      LAW; JURISDICTION; WAIVER OF JURY TRIAL.

     

    (a)  Governing
      Law.
      This
      Agreement and the rights and obligations of the parties hereunder shall be
      construed and interpreted in accordance with the laws of the State of New York
      (excluding the laws applicable to conflicts or choice of law).

     

    (b)  Submission
      to Jurisdiction.
      Each
      Grantor irrevocably and unconditionally submits, for itself and its property,
      to
      the nonexclusive jurisdiction of the courts of the State of New York sitting
      in
      New York County and of the United States District Court of the Southern
District
      of New York, and any appellate court from any thereof, in any action or
      proceeding arising out of or relating to this Agreement or any other Transaction
      Document, or for recognition or enforcement of any judgment, and each of the
      parties hereto irrevocably and unconditionally agrees that all claims in respect
      of any such action or proceeding may be heard and determined in such
New
      York
      state
      court or, to the fullest extent permitted by applicable law, in such federal
      court. Each of the parties hereto agrees that a final judgment in any such
      action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      Nothing in this Agreement or in any other Transaction Document shall affect
      any
      right that the Agent or any Purchaser may otherwise have to bring any action
      or
      proceeding relating to this Agreement or any other Transaction Document against
      any Grantor or its properties in the courts of any jurisdiction.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    (c)  Waiver
      of Venue.
      Each
      Grantor irrevocably and unconditionally waives, to the fullest extent permitted
      by applicable law, any objection that it may now or hereafter have to the laying
      of venue of any action or proceeding arising out of or relating to this
      Agreement or any other Transaction Document in any court referred to in
      paragraph (b) above. Each of the parties hereto hereby irrevocably waives,
      to
      the fullest extent permitted by applicable law, the defense of an inconvenient
      forum to the maintenance of such action or proceeding in any such court. Each
      Grantor irrevocably waives, to the fullest extent permitted by applicable law,
      any right to bring any action or proceeding against the Agent in any court
      outside the county of New York, New York.

     

    (d)  Service
      of Process.
      Each
      party hereto irrevocably consents to service of process in the manner provided
      for notices in Section 10. Nothing in this Agreement will affect the right
      of
      any party hereto to serve process in any other manner permitted by applicable
      law.

     

    (e)  Waiver
      of Jury Trial.
      EACH
      PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
      APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
      DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
      OTHER
      TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
      BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
      (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON
      HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT,
      IN
      THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
      (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
      ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER
      THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     

    



    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

        
          


        

      

    



    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      in
      the name and on behalf of the parties hereto as of the date first above
      written.

    


    


    
      	 	
              NESTOR,
                INC.

            
	 	 
	 	
              By:
                /s/ Nigel P. Hebborn

            
	 	
              Name:
                Nigel P. Hebborn

            
	 	
              Title: 
                CFO

            
	 	 
	 	
              NESTOR
                TRAFFIC SYSTEMS, INC.

            
	 	 
	 	
              By:
                /s/ Nigel P. Hebborn

            
	 	
              Name:
                Nigel P. Hebborn

            
	 	
              Title:
                CFO

            
	 	 
	 	
              CROSSINGGUARD,
                INC.

            
	 	 
	 	
              By:
                /s/ Nigel P. Hebborn

            
	 	
              Name:
                Nigel P. Hebborn

            
	 	
              Title:
                CFO

            
	 	 
	 	
              U.S.
                BANK NATIONAL ASSOCIATION

              in
                its capacity as Agent

            
	 	 
	 	
              By: 
                /s/ Arthur L. Blakeslee

            
	 	
              Name:
                Arthur L. Blakeslee

            
	 	
              Title:
                Vice President

            


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    [Signature
      Page to Security Agreement]


    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

        
          


        

      

    



    Annex
      A

    


    FORM
      OF ADDITIONAL GRANTOR JOINDER

    


    Security
      Agreement dated as of May 25, 2006 made by

    Nestor,
      Inc.

    and
      its subsidiaries party thereto from time to time, as Grantors

    to
      and
      in favor of

    U.S.
      Bank National Association, as Collateral Agent (the “Security
      Agreement”)

    


    Reference
      is made to the Security Agreement as defined above; capitalized terms used
      herein and not otherwise defined herein shall have the meanings given to such
      terms in, or by reference in, the Security Agreement.

    


    The
      undersigned hereby agrees that upon delivery of this Additional Grantor Joinder
      to the Agent referred to above or its successor, the undersigned shall (a)
      be an
      Additional Grantor under the Security Agreement, (b) have all the rights and
      obligations of the Grantors under the Security Agreement as fully and to the
      same extent as if the undersigned was an original signatory thereto and (c)
      be
      deemed to have made the representations and warranties set forth in Section
      4
      therein as of the date of execution and delivery of this Additional Grantor
      Joinder and at any future dates that such representations must be restated
      pursuant to the terms of the Transaction Documents. WITHOUT LIMITING THE
      GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE AGENT,
      FOR THE BENEFIT OF THE PURCHASERS, A SECURITY INTEREST IN THE COLLATERAL AS
      MORE
      FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
      WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.

    


    Attached
      hereto are supplemental and/or replacement Schedules to the Security Agreement,
      as applicable.

    


    Each
      Additional Grantor that is not a party to the Securities Purchase Agreement
      hereby acknowledges receipt from the Grantor of a correct and complete copy
      of
      the Securities Purchase Agreement and consents to all of the provisions of
      the
      Securities Purchase Agreement as in effect on the date hereof and agrees that
      its consent is not required for any amendments, modifications, restatements
      or
      waivers of it or any of the provisions thereof.

    


    An
      executed copy of this Joinder shall be delivered to the Agent, and the Agent
      and
      the Purchasers may rely on the matters set forth herein on or after the date
      hereof. This Joinder shall not be modified, amended or terminated without the
      prior written consent of the Agent.

    


     


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
      the
      name and on behalf of the undersigned.

    


    
      	 	
              [Name
                of Additional Grantor]

            
	 	 
	 	
              By:

            
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	
              Address:

            
	 	 
	 	 
	 	 
	
              Dated:

            	 	 


    

    


    


    


    


    


    



    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

        
          


        

      

    



    Annex
      B

    


    FORM
      OF POWER OF ATTORNEY

    


    This
      Power of Attorney is executed and delivered by ___________________, a
      ______________________ (“Grantor”),
      to
      U.S. Bank National Association as Agent for itself and Purchasers as such term
      is defined in the Securities Purchase Agreement referred to below (“Attorney”).
      This
      Power of Attorney is delivered in connection with and pursuant to a certain
      Securities Purchase Agreement dated as of even date herewith (as the same may
      be
      amended, modified, restated and/or supplemented from time to time, the
“Securities
      Purchase Agreement”)
      and
      that certain Security Agreement delivered in connection therewith (the
“Security
      Agreement”).
      Capitalized terms used but not otherwise defined herein shall have the meanings
      assigned to such terms in the Security Agreement. No person to whom this Power
      of Attorney is presented, as authority for Attorney to take any action or
      actions contemplated hereby, shall be required to inquire into or seek
      confirmation from Grantor as to the authority of Attorney to take any action
      described below, or as to the existence of or fulfillment of any condition
      to
      this Power of Attorney, which is intended to grant to Attorney unconditionally
      the authority to take and perform the actions contemplated herein, and Grantor
      irrevocably waives any right to commence any suit or action, in law or equity,
      against any person or entity which acts in reliance upon or acknowledges the
      authority granted under this Power of Attorney. The power of attorney granted
      hereby is coupled with an interest, and may not be revoked or canceled by
      Grantor without Attorney’s written consent.

    


    Grantor
      hereby irrevocably constitutes and appoints Attorney (and all officers,
      employees or agents designated by Attorney), with full power of substitution,
      as
      Grantor’s true and lawful attorney-in-fact with full irrevocable power and
      authority in the place and stead of Grantor and in the name of Grantor or in
      its
      own name, from time to time in Attorney’s discretion, to take any and all
      appropriate action and to execute and deliver any and all documents and
      instruments which may be necessary or desirable to accomplish the purposes
      of
      the Securities Purchase Agreement, the Security Agreement and any and all
      agreements, documents and instruments executed, delivered or filed in connection
      therewith from time to time (collectively, the “Transaction
      Documents”)
      and,
      without limiting the generality of the foregoing, Grantor hereby grants to
      Attorney the power and right, on behalf of Grantor, without notice to or assent
      by Grantor, and at any time, to do the following:

    


    (a)  change
      the mailing address of Grantor, open a post office box on behalf of Grantor,
      open mail for Grantor, and ask, demand, collect, give acquittances and receipts
      for, take possession of, endorse any invoices, freight or express bills, bills
      of lading, storage or warehouse receipts, drafts against debtors, assignments,
      verifications, and notices in connection with any property of
      Grantor;

     

    (b)  receive,
      endorse Grantor’s name on, and collect, any checks, notes, acceptances, money
      orders, drafts and any other forms of payment or security payable to Grantor,
      and hold all amounts or proceeds so received or collected as cash collateral
      in
      a restricted account for the benefit of the Purchasers, or apply such amounts
      or
      proceeds to the Secured Obligations in accordance with the terms of the
      Securities Purchase Agreement;

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    (c)  effect
      any repairs to any asset of Grantor, or continue or obtain any insurance and
      pay
      all or any part of the premiums therefor and costs thereof, and make, settle
      and
      adjust all claims under such policies of insurance, and make all determinations
      and decisions with respect to such policies;

     

    (d)  pay
      or
      discharge any taxes, liens, security interests, or other encumbrances levied
      or
      placed on or threatened against Grantor or its property;

     

    (e)  defend
      any suit, action or proceeding brought against Grantor if Grantor does not
      defend such suit, action or proceeding or if Attorney believes that Grantor
      is
      not pursuing such defense in a manner that will maximize the recovery to
      Attorney, and settle, compromise or adjust any suit, action, or proceeding
      described above and, in connection therewith, give such discharges or releases
      as Attorney may deem appropriate;

     

    (f)  file
      or
      prosecute any claim, litigation, suit or proceeding in any court of competent
      jurisdiction or before any arbitrator, or take any other action otherwise deemed
      appropriate by Attorney for the purpose of collecting any and all such moneys
      due to Grantor whenever payable and to enforce any other right in respect of
      Grantor’s property;

     

    (g)  cause
      the
      certified public accountants then engaged by Grantor to prepare and deliver
      to
      Attorney at any time and from time to time, promptly upon Attorney’s request,
      the following reports: (i) a reconciliation of all accounts, (ii) an aging
      of
      all accounts, (iii) trial balances, (iv) test verifications of such accounts
      as
      Attorney may request, and (v) the results of each physical verification of
      inventory;

     

    (h)  communicate
      in its own name with any party to any contract with regard to the assignment
      of
      the right, title and interest of Grantor in and under the contracts and other
      matters relating thereto;

     

    (i)  to
      the
      extent that Grantor’s authorization given in the Security Agreement is not
      sufficient, to file such financing statements with respect to the Security
      Agreement as Attorney may deem appropriate and to execute in Grantor’s name such
      financing statements and amendments thereto and continuation statements which
      may require the Grantor’s signature;

     

    (j)  to
      transfer any Intellectual Property or provide licenses respecting any
      Intellectual Property; and

     

    (k)  execute,
      deliver and/or record, as applicable, in connection with any sale or other
      remedy provided for in any Transaction Document, any endorsements, assignments
      or other applications for or instruments of conveyance or transfer with respect
      to the Collateral and to otherwise direct such sale or resale, all as though
      Attorney were the absolute owner of the property of Grantor for all purposes,
      and to do, at Attorney’s option and Grantor’s expense, at any time or from time
      to time, all acts and other things that Attorney reasonably deems necessary
      to
      perfect, preserve, or realize upon Grantor’s property or assets and Attorney’s
      liens thereon, all as fully and effectively as Grantor might do. Grantor hereby
      ratifies, to the extent permitted by law, all that Attorney shall lawfully
      do or
      cause to be done by virtue hereof. Without limiting the generality of the
      foregoing, Attorney is specifically authorized to execute and file any
      applications for or instruments of transfer and assignment of any patents,
      trademarks, copyrights or other Intellectual Property with the United States
      Patent and Trademark Office and the United States Copyright Office.

     


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    


    


    IN
      WITNESS WHEREOF, this Power of Attorney is duly executed on behalf of Grantor
      this ____ day of ____________, 20___.

    


    
      	 	
              [
                ]

            
	 	 
	 	 
	 	 
	 	
              By:

            
	 	
              Name:

            
	 	
              Title:

            


    

    


    


    


    NOTARY
      PUBLIC CERTIFICATE

    


    On
      this
      _____ day of ____________, 20___, [officer’s name] who is personally known to me
      appeared before me in his/her capacity as the [title] of [name of Grantor]
      (“Grantor”)
      and
      executed on behalf of Grantor the Power of Attorney in favor of _______________,
      as Agent, to which this Certificate is attached.

    


    


    
      	 	 
	 	
              Notary
                Public

            


    

    


    



    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

        
          


        

      

    



    Schedule
      1

    


    LOCATIONS
      OF COLLATERAL


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      2

    


    LOCATIONS
      OF GRANTORS


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      3

    


    NAMES
      USED BY GRANTORS


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      4

    


    FILING
      OFFICES


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      5

    


    PATENTS
      AND PATENT APPLICATIONS

    


    


    
      	
              Grantor

            	
              Inventor(s)

            	
              Title

            	
              Patent
                or Application Number

            	
              Patent
                Date or Filing Date

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      6

    


    TRADEMARKS
      AND TRADEMARK APPLICATIONS

    


    


    
      	
              Grantor

            	
              Mark
                or Application

            	
              Registration
                Number or Serial Number

            	
              Date
                of Registration

              or
                Application

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      7

    


    REGISTERED
      COPYRIGHTS

    


    


    
      	
              Grantor

            	
              Copyrighted
                Work

            	
              Author(s)

            	
              Title

            	
              Registration
                Number

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      8

    


    DOMAIN
      NAMES

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      9

    


    INTELLECTUAL
      PROPERTY LICENSES

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      10

    


    COMMERCIAL
      TORT CLAIMS

    


    
      	
              Plaintiff

            	
              Defendant

            	
              Description
                of the Claim