Exhibit 10_10


    EXHIBIT
      10.10

    
 

    Execution
      Copy

    


    SECURITY
      AGREEMENT -- TRADEMARKS,

    PATENTS
      AND COPYRIGHTS

    


    THIS
      SECURITY AGREEMENT -- TRADEMARKS, PATENTS AND COPYRIGHTS (this "IP
      Security Agreement")
      is
      made as of May 25, 2006, between Nestor, Inc., a Delaware corporation (the
      “Company”),
      and
      the Secured Party (as defined below). As used herein, "Secured
      Party"
      means
      U.S. Bank National Association, in its capacity as Collateral Agent for the
      benefit of the Purchasers (as that term is defined in the Securities Purchase
      Agreement defined below), together with its successors and assigns in such
      capacity. 

    


    WHEREAS,
      the Company has adopted and is using the trademarks, trade names and designs
      listed in Schedule
      A
      annexed
      to this IP Security Agreement and made a part hereof; and

    


    WHEREAS,
      the Company has informed the Secured Party that it owns the patents, patent
      applications and copyrights listed in Schedule
      A
      hereto;
      and

    


    WHEREAS,
      pursuant to a 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")
      by and
      among the Company, the Secured Party and the Purchasers identified therein,
      the
      Purchasers have agreed to purchase from the Company certain of its Senior
      Secured Convertible Notes (individually, a “Note”
and
      collectively, the “Notes”)
      in the
      aggregate amount and on the terms and conditions set forth in the Securities
      Purchase Agreement substantially in the form attached hereto as Exhibit
      1
      and
      dated as of the date hereof; and

    


    WHEREAS,
      as a condition to the Purchasers' purchase from the Company of any of the
      aforementioned Notes, the Purchasers require the execution and delivery of
      this
      IP Security Agreement by the Company.

     

    Accordingly,
      the Company and the Secured Party, intending to be legally bound hereby, agree
      that, as security for the full and timely payment of the obligations under
      the
      Notes and the performance of the obligations of the Company under the Notes
      and
      this IP Security Agreement (collectively, the “Obligations”),
      the
      Company hereby mortgages and pledges to the Secured Party and assigns and grants
      to the Secured Party a lien and security interest in, all its right, title
      and
      interest in and to all of the following:

    


    (A)
       (i)
      each
      of the trademarks, trade names and designs described in Schedule
      A
      to this
      IP Security Agreement, and any other trademarks, trade names and designs that
      the Company may adopt and use, in the United States or foreign countries, in
      connection with its business after the date of this IP Security Agreement
      (collectively, the “Trademarks”),
      together with the good will of the business symbolized thereby; (ii) all
      registrations and pending trademark applications owned presently or obtained
      or
      filed hereafter, both in the United States and in foreign countries; (iii)
      all
      records of the Company relating to the distribution of products bearing the
      Trademarks; and (iv) any and all proceeds of the foregoing, including, without
      limitation, any royalties, claims for infringement and proceeds of sale or
      other
      disposition (collectively, the “Trademarks
      Collateral”);
      and

    


    (B) (i)
      each
      of the patents and patent applications, including the inventions disclosed
      or
      claimed therein, described in Schedule
      A
      to this
      IP Security Agreement, and any other patents and patent applications and similar
      legal protection, both domestic and foreign, including all continuations,
      extensions, renewals, substitutes, divisions or reissues thereof, that the
      Company may acquire after the date of this IP Security Agreement (collectively,
      the “Patents”);
      and
      (ii) any and all proceeds of the Patents, including, without limitation, any
      royalties, fees, claims for past, present and future infringement and proceeds
      of sale or other disposition (the “Proceeds”
and,
      together with the Patents, the “Patents
      Collateral”);
      and

    


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    (C) (i)
      all
      United States original works or authorship fixed in any tangible medium of
      expression, all right, title and interest therein and thereto, and all United
      States registrations and recordings thereof, including without limitation,
      applications, registrations, and recordings in the United States Copyright
      Office or in any similar office or agency in the United States, or any State
      thereof, all whether now owned or hereafter acquired by the Company, including,
      but not limited to, those described on Schedule
      A
      annexed
      hereto and made a part hereof; and (ii) all extensions and renewals thereof
      (collectively, the “Copyrights
      Collateral”);
      and

    


    (D)
       certain
      other intellectual property, which shall include, without limitation, all
      designs, concepts, discoveries, ideas, improvements, inventions, formulae,
      processes, techniques, works of authorship, mask works, data (whether or not
      patentable or registrable under copyright or similar statutes), object code,
      algorithms, blueprints, layouts, integrated circuit die or wafers, marks,
      microcode, programs, procedures, schematics, sketches, source code,
      specifications, strategies, subroutines, research, test results, hardware,
      software (as such term is defined in the Uniform Commercial Code as enacted
      in
      the State of Delaware (the “UCC”)),
      license rights, trade secrets and any material constituting a trade secret,
      methods, know-how, specifications, and customer lists, proprietary technology
      and any information relating thereto, regardless of any contrary interpretation
      of such term as now or hereafter used in the UCC; or which relates to or arises
      out of the use, function, development, improvement or any additions or
      modifications to the Patents Collateral, the Trademarks Collateral or the
      Copyrights Collateral (collectively, the “General
      Intangibles Collateral”)
      and
      pertains to the Company’s business enterprise.

    


    NOW,
      THEREFORE, the parties hereto, intending to be legally bound hereby, agree
      as
      follows:

    


    1. As
      security for the full and prompt payment and performance of all Obligations,
      the
      Company does hereby pledge to the Secured Party and assign and grant to the
      Secured Party a security interest in, all of the right, title and interest
      of
      the Company in and to all of the following, now owned or hereafter arising
      or
      acquired: (i) the Trademarks Collateral; (ii) the Patents Collateral; (iii)
      the
      Copyrights Collateral; (iv) any claims by the Company against third parties
      for
      infringement of the Trademarks, Patents or Copyrights; (v) the General
      Intangibles Collateral; and (vi) any and all products and proceeds of the
      foregoing (collectively, the “Intellectual
      Property Collateral”).

    


    
      
        
        

      

      
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    2. The
      Company represents and warrants that it is the owner of its Intellectual
      Property Collateral and has the right and power to make the pledge and grant
      the
      security interest granted in this IP Security Agreement; and that the
      Intellectual Property Collateral is free of all liens and encumbrances. Further,
      the Company represents and warrants that the Intellectual Property Collateral
      constitutes all of the intellectual property owned by the Company. The Company
      shall retain the full legal and equitable title to the Intellectual Property
      Collateral and, provided there exists no Event of Default (as defined in the
      Notes) under the Notes (or any of them) or hereunder, the Company shall have
      the
      right to use and register the Intellectual Property Collateral in the ordinary
      course of its business. The Company agrees that it will not sell, transfer,
      assign or grant a lien or security interest in any of the Intellectual Property
      Collateral except as permitted hereunder. At such time as all Obligations in
      respect of the Notes have been indefeasibly paid and performed in full
      (including the conversion in full of the Notes), this IP Security Agreement
      shall terminate and be of no further force and effect and the Secured Party
      shall thereupon terminate its security interest in the Intellectual Property
      Collateral. Until such time, however, this IP Security Agreement shall be
      binding upon and inure to the benefit of the parties, their successors and
      assigns.

    


    3. (a)
       The
      Company will take all reasonable steps required to maintain and defend full
      effect, title and right in and to keep in force (i) the Trademarks and
      registrations of the Trademarks in the United States Patent and Trademark
      Office, or any similar office, including, without limitation, filing of
      affidavits of use and incontestability and renewal applications, prosecution
      of
      trademark applications, and taking part in opposition, interference and
      cancellation proceedings; (ii) the Patents in the United States Patent and
      Trademark Office and foreign patent offices, or any similar office, including
      without limitation, prosecution of patent applications, payment of maintenance
      fees and annuities; and (iii) the Copyrights in the United States Copyright
      Office or any similar office.

    


    (b) The
      Company will perform all acts and execute any documents, 

    including
      without limitation, assignments suitable for filing with the United States
      Patent and Trademark Office or the United States Copyright Office, and Uniform
      Commercial Code financing statements, reasonably requested of it by the Secured
      Party at any time to evidence, perfect and maintain the rights in the
      Intellectual Property Collateral granted to the Secured Party under this IP
      Security Agreement. The Company will promptly notify the Secured Party at the
      time the Company adopts for use in its business any trademarks, patents or
      registered copyrights not described on Schedule
      A
      to this
      IP Security Agreement and files any applications to register a trademark or
      copyright, or files any patent applications. To the extent permitted by law,
      the
      Company hereby authorizes the Secured Party to execute and file such assignments
      and financing statements (and/or similar documents) with respect to the
      Intellectual Property Collateral, or copies thereof or of this IP Security
      Agreement, signed only by the Secured Party.

    


    
      
        
        

      

      
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    4. Concurrently
      with the execution and delivery of this IP Security Agreement, the Company
      is
      executing and delivering to the Secured Party two originals of a Special Power
      of Attorney, each in the form of Exhibit
      2
      to this
      IP Security Agreement, for the Secured Party’s use in executing on behalf of the
      Company an Assignment for Security in the form of Exhibit
      3
      to this
      IP Security Agreement, which Assignment for Security shall be suitable for
      recording in the United States Patent and Trademark Office and in the United
      States Copyright Office, to provide Secured Party with access to the Patents
      or
      Trademarks (or any applications or registrations thereof), all in accordance
      with paragraph 3(b) of this IP Security Agreement. The Company hereby releases
      the Secured Party from any claims, causes of action and demands at any time
      arising out of or with respect to any actions taken or omitted to be taken
      by
      the Secured Party under the powers of attorney granted therein other than gross
      negligence or willful misconduct of the Secured Party. 

    


    5. If
      an
      Event of Default (as defined in the Notes) has occurred, then, in addition
      to
      all other rights and remedies of the Secured Party, whether under law, the
      Notes
      or otherwise, the Secured Party may, without notice to, or consent by, the
      Company, (a) grant itself a license to use the Patents, Trademarks and
      Copyrights, or any of them, without payment of any kind, until all inventories
      of finished goods produced for the Company are sold or consumed; (b) assign,
      sell or otherwise dispose of or use the Intellectual Property Collateral, or
      any
      of it, either with or without special or other conditions or stipulations,
      with
      power to buy the Intellectual Property Collateral or any part of it, and with
      power also to execute assurances, and to do all other acts and things for
      completing the assignment, sale or disposition which the Secured Party shall,
      in
      its sole discretion, deem appropriate or proper; and (c) in order to implement
      any such assignment, sale or other disposal of any of the Intellectual Property
      Collateral, pursuant to the authority granted in the Power of Attorney described
      in paragraph 4 of this IP Security Agreement (such authority becoming effective
      on the occurrence of an Event of Default), execute and deliver on behalf of
      the
      Company, one or more instruments of assignment of the Patents, Trademarks or
      Copyrights (or any application or registration thereof), in a form suitable
      for
      filing, recording or registration in the United States Patent and Trademark
      Office or the United States Copyright Office. 

    


    6. No
      failure or delay on the part of Secured Party in exercising any right, remedy,
      power or privilege under this IP Security Agreement shall operate as a waiver
      thereof or of any other right, remedy, power or privilege of Secured Party
      under
      this IP Security Agreement or the Notes, nor shall any single or partial
      exercise of any such right, remedy, power or privilege preclude any other or
      further exercise thereof or the exercise of any other right, remedy, power
      or
      privilege. The rights, remedies, powers and privileges of the Secured Party
      under this IP Security Agreement are cumulative and not exclusive of any rights
      or remedies which it may otherwise have.

     

    
      
        
        

      

      
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    7. The
      provisions of this IP Security Agreement are intended to be severable. If any
      provision of this IP Security Agreement shall for any reason be held invalid
      or
      unenforceable in whole or in part in any jurisdiction, such provision shall,
      as
      to such jurisdiction, be ineffective to the extent of such invalidity or
      unenforceability without in any manner affecting the validity or enforceability
      of such provision in any other jurisdiction or any other provision of this
IP
      Security Agreement in any jurisdiction.

     

    8. All
      notices, statements, requests and demands given to or made upon either party
      in
      accordance with the provisions of this IP Security Agreement shall be deemed
      to
      have been given or made when given or made in accordance with any of the
      Notes.

    


    9. All
      rights of the Secured Party hereunder shall inure to the benefit of its
      successors and assigns. This IP Security Agreement shall bind all persons who
      become bound as a debtor to this IP Security Agreement. The Company shall not
      assign any of its interest under this IP Security Agreement without the prior
      written consent of the Secured Party. Any purported assignment inconsistent
      with
      this provision shall, at the option of the Secured Party, be null and
      void.

     

    10. The
      parties hereto consent to the exclusive jurisdiction and venue of the federal
      and state courts located in the Borough of Manhattan, State of New York in
      any
      action on, relating to or mentioning this IP Security Agreement.

    


    11. This
      IP
      Security Agreement shall be deemed to be a contract under the laws of the State
      of New York and the execution and delivery of this IP Security Agreement and
      the
      terms and provisions of this IP Security Agreement shall be governed by and
      construed in accordance with the laws of that State (without regard to its
      conflict of laws rules) and, to the extent applicable or governing, the laws
      of
      the United States of America; provided, however, that to the extent the UCC
      provides for the application of the law of another State for purposes of
      perfection and the effect of perfection of the security interest granted to
      the
      Secured Party hereunder, then the IP Agreement shall be governed by that State's
      law.

    


    12. This
      IP
      Security Agreement may be executed in one or more counterparts, each of which
      shall be deemed an original, but all of which shall together constitute one
      agreement.

    


    13. This
      IP
      Security Agreement or any provision hereof may be changed, waived or terminated
      only by a statement in writing signed by the party against which such change,
      waiver or termination is sought to be enforced.

    


    14. The
      Company and the Secured Party request that the Commissioner of Patents and
      Trademarks, and the Register of Copyrights record this IP Security Agreement
      with respect to the applicable Intellectual Property Collateral.  


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties have executed and delivered this Security
Agreement
      as of the day and year first above written.

    


    


    
      	 	
              The
                Company:

            
	 	 
	 	
              NESTOR,
                INC.

            
	 	 
	 	
              By:/s/Nigel
                P. Hebborn

            
	 	
              Name:
                Nigel P. Hebborn

            
	 	
              Title:
                CFO

            
	 	 
	
              Secured
                Party:

            	 
	 	 
	
              U.S.
                Bank National Association

            	 
	 	 
	
              By:
                /s/Arthur L. Blakeslee

            	 
	
              Name:
                Arthur L. Blakeslee

            	 
	
              Title: 
                Vice President

            	 


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    [Signature
      Page to Security Agreement - Trademarks, Patents and Copyrights]

    


    



    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

        
          


        

      

    



    Patents

    


    
      	
              US
                

            
	
              A.  6,970,102

            	
              Traffic
                violation detection, recording and evidence processing system
                

            
	
              B.  6,950,789

            	
              Traffic
                violation detection at an intersection employing a virtual violation
                line
                

            
	
              C.  6,760,061

            	
              Traffic
                sensor 

            
	
              D.  6,754,663

            	
              Video-file
                based citation generation system for traffic light violations
                

            
	
              E.  6,647,361

            	
              Non-violation
                event filtering for a traffic light violation detection system
                

            
	
              F.  6,573,929

            	
              Traffic
                light violation prediction and recording system 

            
	
              G.  6,560,360

            	
              Feed
                forward feed back multiple neural network with context driven recognition
                

            
	
              H.  6,281,808

            	
              Traffic
                light collision avoidance system 

            
	
              I.  6,188,329

            	
              Integrated
                traffic light violation citation generation and court date scheduling
                system 

            
	
              J.  5,701,398

            	
              Adaptive
                classifier having multiple subnetworks 

            
	
              K.  5,479,574

            	
              Method
                and apparatus for adaptive classification 

            
	
              L.  5,054,093

            	
              Parallel,
                multi-unit, adaptive, nonlinear pattern class separator and
                identifier

            
	
              M.  4,958,375

            	
              Parallel,
                multi-unit, adaptive pattern classification system using inter-unit
                correlations and an intra-unit class separator methodology
                

            
	
              N.  4,897,811

            	
              N-dimensional
                coulomb neural network which provides for cumulative learning of
                internal
                representations 

            


    

    


    
      	
              Australian
                

            
	
              A.  761,072

            	
              Traffic
                light violation prediction and recording system 

            
	
              B.  775,840

            	
              Traffic
                light collision avoidance system 

            


    

    


    
      	
              Japanese
                

            
	
              A.  2,976,053

            	
              Parallel,
                multi-unit, adaptive, nonlinear pattern class separator and
                identifier

            


    

    



    
      
        
        

      

      
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        Security
          Agreement - Trademarks,

        Patents
          and Copyrights

        


        Schedule
          A

        


      

    


    Patent
      Applications

    


    
      	
              EPO
                

            
	
              A.
                99 962 818.3

            	
              Traffic
                light violation prediction and recording system 

            
	
              B.
                99 959 067.2

            	
              Traffic
                light collision avoidance system 

            


    

    


    


    Trademarks

    


    
      	
              US
                

            
	
              A.  2655921

            	
              Citation
                Composer

            
	
              B.  2138538

            	
              CrossingGuard

            
	
              C.  2679829

            	
              Nestor
                Traffic Systems

            
	
              D.  2290068

            	
              Nestor

            
	
              E.  2118342

            	
              Nestor
                System

            
	
              F.  2568931

            	
              Nestor
                logo (human head design)

            
	
              G.  2118342

            	
              Traffic
                Vision

            
	
              H.  2439643

            	
              E-Fraud

            
	
              I.  2324092

            	
              Prism
                Merchant

            
	
              J.  2324091

            	
              Prism
                Debit

            
	
              K.  2324090

            	
              Prism
                Credit

            
	
              L.  2327365

            	
              CampaignOne

            
	
              M.  2160597

            	
              Merchant
                Alert

            
	
              N.  2050701

            	
              Prism

            


    

    


    “NESTOR
      SYSTEM” is also a registered trademark in Canada (327,283), France (1,317,788),
      Germany (1,091,726) and Japan (2,054,809)

    


    Trademark
      Applications

    


    
      	
              US
                

            
	
              A.  78/865051

            	
              NTS
                VIDEO VASCAR 

            


    

    


    Copyrights
      Collateral

    


    None.

    



    
      
        
        

      

      
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          Security
            Agreement - Trademarks,

          Patents
            and Copyrights

          


          Schedule
            A

          


        

      

    



    


    Security
      Agreement - Trademarks,

    Patents
      and Copyrights

    


    Exhibit
      1

    


    Form
      of Note Purchase Agreement

    


    


    See
      attached.

    


    


    



    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

        
          


          


        

      

    



    


    Security
      Agreement - Trademarks,

    Patents
      and Copyrights

    


    Exhibit
      2

    


    Form
      of Special Power of Attorney

    


    


    See
      attached.

    


    



    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

        
          


        

      

    



    


    Security
      Agreement - Trademarks,

    Patents
      and Copyrights

    


    Exhibit
      3

    


    Form
      of Assignment for Security

    


    


    See
      attached.

    


    


    
      
        
        

      

      
        -11-