NESTOR, INC.
One Richmond Square Providence, Rhode Island 02906
(401) 331-9640
November 10, 1995
To Our Stockholders:
You are cordially invited to attend the annual
meeting of stockholders of Nestor, Inc. (the "Company") to be
held at the DAYS HOTEL, located at 220 INDIA STREET,
PROVIDENCE, RI, on Tuesday, December 5, 1995, at 2:00 p.m.,
local time. The accompanying Notice of Annual Meeting of
Stockholders and proxy statement describe the matters to be
acted upon at the annual meeting.
A proxy card is also enclosed. Whether or not you
plan to attend the annual meeting, it is important that your
shares be represented and voted at the annual meeting.
Accordingly, after reading the enclosed proxy statement, you
are urged to complete, date, sign and return the enclosed proxy
in the envelope provided, which requires no postage if mailed
in the United States. If you attend the annual meeting, you
may then revoke your proxy by voting in person.
We look forward to greeting personally as many of our
stockholders as possible at the annual meeting.
Sincerely yours,
David Fox
President and
Chief Executive Officer
<TABLE>
Directions to Days Hotel:
Function Room: Bayview
<CAPTION>
<C> <C> <C>
South (from New York) North (from Boston) East (from Cape Cod)
95 North 95 South 195 West
195 East (Cape Cod) 195 East (Cape Cod) Exit 3 (Gano Street)
Exit 3 (Gano Street) Exit 3 (Gano Street) Left off exit ramp
Left off exit ramp Left off exit ramp Second right into Second
right into Second right into hotel parking lot
hotel parking lot hotel parking lot
</TABLE>
NESTOR, INC.
One Richmond Square
Providence, Rhode Island 02906 (401) 331-9640
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held
on December 5, 1995
To the Stockholders of Nestor, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of the
stockholders of Nestor, Inc., a Delaware corporation (the
"Company"), will be held at the DAYS HOTEL located at 220 India
Street, Providence, Rhode Island, on December 5, 1995, at 2:00
p.m. local time, to act upon the following:
1. To consider and vote upon the election of nine
directors, each to hold office until the next annual meeting
and until his successor is elected and qualified;
2. To approve the selection of independent auditors
for the Company for its fiscal year ending June 30, 1996; and
3. To transact such other business as may properly
come before the meeting or any adjournments or postponements
thereof.
Only stockholders of record as of the close of
business on October 20, 1995, will be entitled to vote at the
meeting.
By Order of the Board of Directors,
Herbert S. Meeker, Secretary
Providence, Rhode Island
November 10, 1995
IMPORTANT: THE HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES OF COMMON STOCK AND SERIES B, SERIES C AND SERIES D
CONVERTIBLE PREFERRED STOCK, VOTING AS A GROUP, MUST BE
REPRESENTED AT THE ANNUAL MEETING IN PERSON OR BY PROXY IN
ORDER TO HAVE A QUORUM. THEREFORE, WE URGE YOU TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. IF YOU ATTEND THE MEETING, YOU MAY THEN REVOKE YOUR
PROXY BY VOTING IN PERSON.
PROXY STATEMENT
NESTOR, INC.
One Richmond Square
Providence, Rhode Island 02906 (401) 331-9640
ANNUAL MEETING OF STOCKHOLDERS To Be Held December 5, 1995
This proxy statement is being furnished to holders of
shares of (i) common stock, par value $.01 per share (the
"Common Stock") and (ii) the Series B, Series C and Series D
Convertible Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), of Nestor, Inc., a Delaware corporation
(the "Company"), in connection with the solicitation of proxies
by the Company's Board of Directors for use at the annual
meeting of stockholders to be held December 5, 1995, at 2:00
p.m. local time at the DAYS HOTEL located at 220 India Street,
Providence, Rhode Island. This proxy statement and the enclosed
form of proxy are first being mailed on or about November 10,
1995 to stockholders of the Company entitled to vote.
PROXIES
The shares represented by each properly executed and
dated proxy which is not revoked as set forth below will be
voted at the annual meeting in accordance with the instructions
given. If no instructions are given on the proxy, the proxy
will be voted FOR each of the nominees for director listed
herein, FOR the approval of the selection of independent
auditors and, in the discretion of the proxy holders, on such
other business as may properly come before the annual meeting
or any adjournments or postponements thereof, as further
described herein.
REVOCABILITY OF PROXIES
A proxy executed in the form enclosed may be revoked
at any time prior to its exercise by notifying in writing the
Secretary of the Company of such revocation at the Company's
principal executive offices, by delivering a duly executed
proxy bearing a later date or by attending the annual meeting
and voting in person.
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited on behalf
of the Company's Board of Directors. In addition to mailing
the proxy materials, solicitation may be made in person or by
telephone or telegraph by directors, officers or regular
employees of the Company, none of whom will receive additional
compensation in connection with such solicitation. The expense
of the solicitation of proxies for the annual meeting will be
borne by the Company. The Company will request banks, brokers
and other nominees to forward proxy materials to beneficial
owners of the Common Stock and Preferred Stock held by them and
will reimburse such banks, brokers and other nominees for their
reasonable out-of-pocket expenses in doing so.
VOTING SECURITIES
The Common Stock and the Preferred Stock are the only
outstanding classes of securities of the Company entitled to
vote at the meeting. Holders of record of the Common Stock and
the Preferred Stock at the close of business on October 20,
1995, (the "Record Date") will be entitled to vote on the
matters to be voted upon at the annual meeting. At the close
of business on the Record Date, 7,774,908 shares of the Common
Stock, 2,495,000 shares of Series B Preferred Stock, 2,470
shares of Series C Preferred Stock and 192,288 shares of Series
D Preferred Stock were outstanding and entitled to vote as a
group at the meeting.
The 2,470 shares of Series C Convertible Preferred
Stock is convertible subject to adjustment into an aggregate of
2,313,332 shares of Common Stock and each holder of the Series
C Preferred is entitled to vote a number of shares equal to the
greatest number of whole shares of Common Stock into which the
holders of the shares of Series C Preferred could be converted
at the Record Date and the holders of shares of Common Stock
and Series B and Series D Convertible Preferred Stock, which
are convertible on a share for share basis, are entitled to one
vote per share of Common Stock held or into which the Series B
and Series D Preferred Stock could be converted.
The presence, in person or by proxy, of the holders
of a majority of the outstanding shares of the Common
Stock and
Preferred Stock voting as a group will constitute a quorum for
the transaction of business at the annual meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 20,
1995, the beneficial ownership of shares of the Common Stock
and Preferred Stock of (i) any person who is known by the
Company to own more than 5% of the voting securities of the
Company, (ii) the Chief Executive Officer and each of the
Company's other four most highly compensated executive officers
whose salary and bonus exceed $100,000 for the fiscal year
ended June 30, 1995 (collectively, the "Names of Executive
Officers"), (iii) each director, and (iv) all directors and
executive officers of the Company as a group. Except as
otherwise indicated, the Company believes, based on information
furnished by such owners, that the beneficial owners of the
Company's common stock listed below have sole investment voting
power with respect to such shares, subject to any applicable
community property laws:
<TABLE>
<CAPTION>
Name and address Amount and nature of Percent
of beneficial owner beneficial ownership of class
<S> <C> <C>
Leon Cooper 989,640 (1) 7.84
49 Intervale Road
Providence, RI
Charles Elbaum 1,104,819 (1) 8.76
85 Lorraine Ave.
Providence, RI
David Fox 678,074 (2) 5.27
265 West Trail
Stamford, CT
Simon N. Heifetz 360,000 (1) (3) 2.84
100 Riverside Drive
New York, NY
Herbert S. Meeker 278,113 (1) 2.20
115 East 35th St.
New York, NY
Reliance Group 872,078 6.91
Holdings, Inc.
Park Avenue Plaza
New York, NY
Jeffrey B. Harvey 156,800 (4) 1.23
114 Woodbury Drive
Amherst, New York 14226
Bruce W. Schnitzer 4,201,530 (5) 29.34
929 Park Avenue
New York, New York 10028
Thomas F. Hill 130,000 (6) 1.02
320 East 57th Street
New York, New York 10022
All executive officers 8,450,004 (7) 55.48
and directors as a group
(13 persons)
</TABLE>
________________
(1)Includes 60,000 shares of Series B Convertible Preferred
Stock.
(2)Includes 68,000 shares of common stock which Mr. Fox may
acquire upon the exercise of a warrant, 175,000 shares of
common stock which he may acquire on a fully vested basis
upon the exercise of options granted under the Company's
incentive stock option plan and 20,000 shares of Series B
Convertible Preferred Stock.
(3)Includes 60,000 shares of common stock which Mr. Heifetz may
acquire on a fully vested basis upon the exercise of an
option granted under the Company's incentive stock option
plan.
(4)Includes 100,000 shares of Series B Convertible Preferred
Stock and 50,000 Preferred Warrants, and 5,000 shares of
common stock which may be acquired on a fully vested basis.
(5)Bruce W. Schnitzer is the Chairman and owns 66% of the
outstanding Common Stock of Wand (Nestor) Inc., a Delaware
corporation, which, as a general partner, controls
Wand/Nestor Investments L. P. and Wand/Nestor Investments L.
P. II, Delaware limited partnerships, which purchased an
aggregate of 2,470 shares of Series C Convertible Preferred
Stock (convertible, subject to adjustment, into 2,313,332
shares of Common Stock of the Company), an aggregate of
20,000 shares of Series D Convertible Preferred Stock
(convertible into shares of Common Stock on a share-for-
share basis after January 1, 1996) and the Common Stock
Purchase Warrant to acquire 1,000,000 shares of Common Stock
of the Company in a private placement transaction. Bruce W.
Schnitzer disclaims beneficial ownership of these securities
except to the extent of his "pecuniary interest," as such
term is defined in Rule 16a-1 of the Securities Exchange
Act, therein as owner of a 6.2303% limited partnership
interest in Wand/Nestor Investments L.P. and as the owner of
66% of Wand (Nestor) Inc.'s 1% general partnership interest
in
Wand/Nestor Investments L. P.
Bruce W. Schnitzer is the Chairman and owns 66% of the
outstanding Common Stock of Wand Partners Inc., a Delaware
corporation, which, as general partner controls Wand
Partners L. P., a Delaware limited partnership, which has
been granted by the Company a Common Stock Fee Purchase
Warrant to acquire 250,000 shares of Common Stock of the
Company at a price of $2.00 per share. Bruce W. Schnitzer
disclaims beneficial ownership of this Warrant except to the
extent of his "pecuniary interest," as defined in Rule 16a-
1, therein, as the indirect owner of a 33% partnership
interest in Wand Partners L. P.
(6)Includes a Common Stock Fee Purchase Warrant to acquire
130,000 shares of the Common Stock of the Company
exercisable until August 1, 2004, at a price of $2.00 per
share issued to Hill & Partners of which Mr. Hill is
President and sole owner.
(7)(i) includes 663,000 shares of Common Stock of the Company
which may be acquired on a fully vested basis upon the
exercise of the options granted to employees of the Company
under the Company's Incentive Stock Option Plan, (ii)
200,000 shares of Series B Convertible Preferred Stock owned
by four officers and directors of the Company and (iii)
88,000 shares of Common Stock which may be acquired upon the
exercise of Warrants issued to two directors.
ELECTION OF DIRECTORS
At the Annual Meeting, nine directors will be elected
to hold office until their successors have been duly elected
and qualified as provided in the Company's Certificate of
Incorporation and By-Laws. The following persons have
consented to be nominated and, if elected, to serve as
directors of the Company: Sam Albert, Leon N Cooper, Charles
Elbaum, David Fox, Jeffrey B. Harvey, Simon N. Heifetz, Thomas
F. Hill, Herbert S. Meeker and Bruce W. Schnitzer. None of
the nominees is related by blood, marriage or adoption to any
other director, executive officer or nominee.
Directors and Executive Officers
The following table sets forth information, regarding
the directors, nominees and executive officers of the Company:
<TABLE>
Director/ Capacities
Officers in which
Name Age Since Served
<CAPTION>
<S> <C> <C> <C>
Sam Albert 62 1991 Director
Leon N Cooper 65 1983 Co-Chairman and
Director
Charles Elbaum 69 1983 Co-Chairman and
Director
David Fox 59 1983 President, CEO
and Director
Jeffrey B. Harvey 46 1993 Director
Simon N. Heifetz 64 1983 Vice-Chairman
Chief Financial Officer
Treasurer and Director
Thomas F. Hill 50 1994 Director
Herbert S. Meeker 70 1983 Secretary and
Director
Bruce W. Schnitzer 51 1994 Director
Sushmito Ghosh 36 1995 Vice President
Risk Management
Michael T. Glier 47 1992 Vice President
Embedded Systems
Thomas Halket 47 1993 Assistant
Secretary
Kevin C. Hughes 42 1991 Vice President
Finance & Administration
Douglas L. Reilly 43 1983 Sr. Vice
President Strategic
Analysis & Technology
Christopher Scofield 38 1989 Vice President
Applied Systems
</TABLE>
Sam Albert became a Director of the Company as of
April 1991. Mr. Albert is a former IBM Corporation executive
who retired after thirty years in 1989, as IBM Director of
Business and Management Services Industries. Mr. Albert is
currently President of Sam Albert Associates, an independent
management consulting firm specializing in developing marketing
strategies and facilitating strategic relationships for the
information technology industry. Mr. Albert also serves on the
Boards of the Outsourcing Institute, the Information Technology
Services Division of the Information Technology Association of
America (ITAA), the Computer Museum (Boston) as well as the
Advisory Boards of Cross Access and Quantum Development Corp.
Leon N Cooper is the Thomas J. Watson Senior
Professor of Science at Brown University which represents his
principal occupation. He specializes in theoretical physics
including lowtemperature physics, and has also done theoretical
work in modeling neural networks, which are networks of nerve
cells. Dr. Cooper is the Director of the Brown University
Institute for Brain and Neural Systems which consists of a
group of scientists applying various disciplines to the study
of the brain as well as Professor in the Departments of Physics
and Neuroscience. He was awarded the Comstock Prize by the
National Academy of Science in 1968 and the Nobel Prize in
Physics in 1972 for his contributions to the theory of
superconductivity. He is a Fellow of the American Physical
Society of the American Academy of Arts and Sciences, a member
of the American Philosophical Society and the National Academy
of Sciences, and is the author of many publications. Professor
Cooper was a general partner of Nestor Associates ("Nestor"),
the predecessor of the Company, from its inception until May
1983, and is currently a part-time consultant to the Company.
Charles Elbaum has been a Professor of Physics at
Brown University since 1963, specializing in experimental solid-
state physics, including the design of circuits and information
processing systems, which represents his principal occupation.
He was also Chairman of the Physics Department at Brown. He is
a Fellow of the American Physical Society, a member of several
scientific and professional societies and is the author of many
publications, and is the Hazard Professor of Physics at Brown
University. Professor Elbaum was a general partner of Nestor
from its inception until May 1983, and is currently a part-time
consultant to the Company.
David Fox was President of Container Transport
International, a container leasing concern, from 1971 to 1982.
Mr. Fox was President of Cognitive Systems, Inc. ("CSI"), a
computer software company, from 1983 until 1986 and a director
of CSI from 1983 until 1987. On July 17, 1989, Mr. Fox was
appointed President and Chief Executive Officer of the Company.
Jeffrey B. Harvey joined the Company's Board of
Directors in September 1993. Mr. Harvey has been in the
brokerage business since 1976 and is currently Assistant Vice
President of Paine Webber. He is a graduate of the
Massachusetts Institute of Technology where he received his
Master of Science Degree in Nuclear Engineering. Mr. Harvey is
also a director of Nova American Group an insurance underwriter
in Buffalo, NY.
Simon N. Heifetz is the Chief Financial Officer of
the Company, and served as its President from 1983 to August
1986, when he was elected Vice Chairman of the Company. Mr.
Heifetz was a general partner of Nestor from its inception
until May 1983. Mr. Heifetz is principally engaged in
fulfilling his duties as Vice Chairman and Chief Financial
Officer of the Company.
Thomas F. Hill joined the Company's Board of
Directors in August 1994. He is President of Hill & Partners,
a consulting firm with broad experience in marketing, sales and
business planning, and a director of the private investment
firm, Wand Partners. Mr. Hill works closely with the
management of companies invested in or acquired by Wand to
improve their business strategies, sales and marketing
productivity, and overall performance. Hill's clients during
his twenty-five year career have included Marsh & McLennan,
Bristol Meyers, Royal Dutch Shell, CBS, Nestle, Proctor &
Gamble, Toyota and Unilever. Mr. Hill serves as a director of
Diagraph Corporation, a manufacturer of automated industrial
marking systems; Old American Insurance Services, a specialty
insurance provider; Information Management Associates, a
marketing, sales and customer service software provider; and
Yankelovich Partners, a marketing research company.
Herbert S. Meeker is an attorney and partner in the
law firm of Baer Marks & Upham, which is general counsel to the
Company. Mr. Meeker was a general partner of Nestor from its
inception until May 1983, and is Secretary of the Company. He
is currently Secretary and a director of Oratronics, Inc., a
manufacturer of titanium dental implants and instruments.
Bruce W. Schnitzer joined the Company's Board of
Directors in August 1994. Mr. Schnitzer is Chairman of Wand
Partners, a private investment firm in which the principal
limited partners are S. G. Warburg, a leading international
investment bank and Mercury Asset Management, a prominent
international investment manager. Wand engages in management
buy-outs and growth capital investments with a portfolio
weighted in favor of information service and financial service
companies.
Mr. Schnitzer's experience prior to establishing Wand in 1987
includes having served as President and CEO of Marsh &
McLennan, Inc. and head of the Merger and Acquisition Advisory
Department of J. P. Morgan. Mr. Schnitzer presently serves as
director of the following U. S. companies with publicly quoted
securities: Chartwell Re Corporation (a property and casualty
insurance holding company) Life Partners Group, Inc. (a life
insurance holding company); Penn Corp Financial Group (a life
insurance holding company); and AMRESCO Inc. (real estate
investment manager). From 1985 to 1987, Mr. Schnitzer was
engaged principally as a private merchant banker in New York
city. From 1983 to 1985, Mr. Schnitzer served as President and
Chief Executive Officer or Marsh & McLennan, Incorporated, an
insurance brokerage firm.
Sushmito Ghosh, the newest member of the Company's
executive team, has actually been with Nestor since 1986 when
he joined the Company as a software engineer and was named an
officer of the company in 1995. As a principal designer of
Nestor's internal R&D software environment, Mr. Ghosh has an in
depth knowledge of Nestor's technology and has developed neural
network models for machine vision, on-line character
recognition, mortgage portfolio analysis and securities
trading. He has served as project manager, overseeing all
phases of development, customization and implementation of
Nestor's fraud detection system solutions. As Vice President
of Risk Management, Mr. Ghosh's responsibilities include
delivery of Nestor's proactive fraud risk management system
PRISM, and the development and implementation of a marketing
and sales plan. Mr. Ghosh holds a Masters Degree in
Engineering from the University of Rhode Island and has
completed the Neural Networks and Machine Learning Program
offered at the Massachusetts Institute of Technology. He has
co-authored a number of technical publications.
Michael T. Glier joined the Company in December 1990
to provide architectural direction and manage the
implementation of a DARPA funded project to develop the Ni1000
Recognition Accelerator neural network chip with Intel. He was
named an officer of the Company in December 1992, and currently
serves as Vice President of the Embedded Systems Division. He
is responsible for managing the development and marketing of
products utilizing commodity hardware to accelerate the
Company's proprietary software products. Mr. Glier was a co-
recipient of the 1994 Discover Award for Computer Hardware and
Electronics. Mr. Glier's experience spans 27 years in the
electronics industry, from space-based systems to
multiprocessor design. He has authored two patents, two
technical papers and has coauthored several technical articles.
Thomas D. Halket became Assistant Secretary of the
Company in 1993. Mr. Halket is an outside counsel for the
Company. For the last six years, he has been in solo private
practice in Larchmont, New York. Prior to that, he was
affiliated with law firms in New York City and Boston,
Massachusetts and was Assistant General Counsel to Engelhard
Corporation. Mr. Halket holds a law degree from Columbia
University and a Bachelors Degree and a Masters Degree in
Physics from the Massachusetts Institute of Technology.
Kevin C. Hughes became an officer and Comptroller of
the Company during 1991, and was appointed Vice President,
Finance and Administration in February 1995. He has been
employed by the Company since December 1, 1987, and prior to
that he was Comptroller of Comco, Inc., a wholesaler and
retailer of tapes, compact disks and records, during 1984.
Between 1985 and 1987 he attended the University of Rhode
Island from which he
received an M.B.A. during May 1987.
Douglas L. Reilly is Sr. Vice President Strategic
Analysis & Technology. From 1989 to 1994, he served as Vice
President for Product Development and Financial Applications
for the Company and served as its Vice President for Research
and Development from 1983 until 1989. Dr. Reilly received his
Doctoral Degree in Physics from Brown University in 1980,
working with Leon Cooper and Charles Elbaum to design neural
network systems for pattern recognition. Dr. Reilly continued
this work as a Research Associate until 1982 and as Assistant
Professor for Research at Brown from 1982 to 1983, and co-
authored a patent with Dr. Cooper and Dr. Elbaum on the RCE
neural network paradigm. Dr. Reilly became the Company's first
full time employee in 1983, with responsibility for the hiring,
development and day-to-day management of the Company's
technical organization. He developed the first prototype
systems of the Company's technology in character recognition,
and led all research and development of the Company from 1983
until 1989, producing prototypes and products for character
recognition, machine vision, and applications of the technology
to decision making and risk assessment in financial services.
He is a coauthor on three of the Company's patents and has
written numerous articles in the field of neural network design
and application.
Christopher Scofield became an officer of the Company
during December 1989, when he was named Vice President of the
Applied Systems Division of the Company. He earned a Doctoral
Degree in Physics at Brown University in 1984 and has served as
Adjunct Associate Professor at the University's Center for
Neural Sciences since 1987. He has been actively employed by
the Company since 1984 when he became Manager of System Design,
working to design/code the Company's proprietary neural network
system. In 1986 he was named Director of Research and managed
all research and development of new applications in the
industrial vision and financial risk assessment fields. He has
co-authored four of the Company's patents and together with
David Morgan has co-authored the text "Neural Networks and
Speech Processing".
Committees and Meetings of the Board of Directors
The Company's Board of Directors held nine meetings
during the fiscal year ended June 30, 1995. The incumbent
directors attended all of these meetings. Directors did not,
during the last fiscal year, receive fees for attending
meetings of the Board. The Company does not have a Nominating
Committee.
The Company has an Audit and Finance Committee
consisting of Sam Albert, Herbert S. Meeker and Simon N.
Heifetz. This committee generally selects and reviews
recommendations made by the Company's independent public
accountants. The Audit and Finance Committee met once during
the fiscal year ended June 30, 1995. The Company also has a
Management Compensation Committee consisting of Jeffrey B.
Harvey, Sam Albert and Herbert S. Meeker. The Committee meets
periodically to review and consider compensation matters
relating to employees of the Company.
Compensation of Executive Officers
The following table sets forth information for the fiscal
year ended June 30, 1995, 1994 and 1993 compensation paid by
the Company to the chief executive officer and to each of the
four most highly compensated officers of the Company whose
total annual salary and bonus exceed $100,000.
<TABLE>
Long-Term Compensation
Annual Compensation Awards Payouts
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name Other Restricted All
and Annual Stock LTIP Compen-
Principal Salary Bonus Compen- Award(s) Options/ Payouts sation
Year ($) (S) sation ($) SARs (#) ($) ($)
David Fox 1995 100,000 0 30,000(1) 0 0 0 0
President and 1994 90,000 0 0 0 0 0 0
Chief Executive 1993 60,000 0 0 0 0 0 0
Officer
(1) Payment of salary deferred in prior period.
</TABLE>
Compensation Pursuant to Plans
Options and Warrants
The Board of Directors of the Company approved and
adopted on April 1, 1984, and the stockholders approved on
November 16, 1984, the Nestor, Inc. Incentive Stock Option Plan
(the "Plan") within the meaning of Section 422A of the Internal
Revenue Code. Giving effect to the adoption of amendments to
the Plan in 1985, 1987, 1989, 1993 and 1994 the Plan provides
for the granting of options to key executive and supervisory
employees for the purchase of up to an aggregate of 2,450,000
shares at fair market value at the time of grant for a term of
up to five years from the date of grant. The shares issued
under the Plan are registered on Form S-8 under the Securities
Act of 1933 as amended, Registration No. 0112965.
The Company grants warrants and options outside of
the Plan, and at the discretion of the Board of Directors, to
directors and employees at a price equal to the market price of
the Common Stock on the date of grant. No warrants or options
were granted to executive officers, other than options under
the Plan, during the fiscal year ended June 30, 1995. At
June 30, 1995, warrants
entitling David Fox to purchase an aggregate of 68,000 shares
at an exercise price of $2.56 per share were outstanding, and
warrants entitling Sam Albert, a director, to purchase an
aggregate of 20,000 shares were also outstanding.
Employment Agreement
As of July 1, 1989, the Company entered into an
Employment Agreement with David Fox pursuant to which he was
elected President and Chief Executive Officer of the Company.
The term of the Agreement ends December 31, 1994,
("Agreement"). The Agreement provides that Mr. Fox is to
receive a salary at the rate of $100,000 per annum during the
calendar year ended December 31, 1989, $125,000 per annum
during the calendar year ending December 31, 1990 and $150,000
per annum during the balance of the term. Pursuant to an
agreement dated April 12, 1990 between Mr. Fox and the Company,
Mr. Fox agreed to reduce his salary effective April 1, 1990 as
provided for under the agreement by 40% until such time as Mr.
Fox and the Board of Directors of the Company agree to a change
in the reduced salary. As partial consideration for such
reduction, the Company agreed to in effect modify the exercise
price of the 100,000 options granted to him under the Company's
Incentive Stock Option Plan and 68,000 warrants issued to him
to an exercise price of $2.56 per share.
As additional compensation the Company has agreed
under the Agreement to pay Mr. Fox as an annual profit
incentive 5% of the first $6,000,000 or any part thereof of
annual net income before taxes of the Company and 7 1/2% of
such net income in excess of $7,000,000. The Company has
issued pursuant to the agreement to Mr. Fox in consideration of
the sum of four thousand dollars ($4,000) 400,000 shares of the
common stock of the Company, all of which shares have been
delivered to Mr. Fox.
PROPOSAL TO APPROVE THE SELECTION
OF INDEPENDENT AUDITORS
The accounting firm of Gassman, Rebhun & Co., P.C. is
recommended for election to serve as the Company's independent
auditors for the fiscal year ending June 30, 1996. Gassman,
Rebhun & Co., P.C. audited the Company's accounting records for
the fiscal year ended June 30, 1995.
Representatives of Gassman, Rebhun & Co., P.C. are
not expected to be present at the annual meeting.
ANNUAL REPORT
The annual report to stockholders concerning the
operations of the Company for the fiscal year ended June 30,
1995, including financial statements for that year, accompanies
this proxy statement.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Stockholder proposals for consideration at the annual
meeting expected to be held in December 1996 must be received
by the Company no later than August 31, 1996 and must comply
with the Rules and Regulations of the Securities and Exchange
Commission in order to be included in the proxy statement for
the 1996 annual meeting.
OTHER MATTERS
The Board of Directors is not aware of any other
matters to be presented at the annual meeting. However, if any
other matter should properly come before the annual meeting,
the persons entitled to vote on that matter will be given the
opportunity to do so.
THE COMPANY WILL PROVIDE TO EACH STOCKHOLDER, UPON
WRITTEN REQUEST, A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR
ITS FISCAL YEAR ENDING JUNE 30, 1995. SUCH REQUESTS SHOULD BE
DIRECTED TO THE COMPANY AT ONE RICHMOND SQUARE, PROVIDENCE,
RHODE ISLAND 02906.
The above notice and proxy statement are sent by
order of the Board of Directors.
Herbert S. Meeker
Secretary
Providence, Rhode Island
November 10, 1995
Nestor, Inc.
PROXY This proxy is solicited on behalf of the board of
Directors.
The undersigned hereby appoints David Fox and Charles Elbaum,
and each of them (with full power of substitution), proxies for
the undersigned to represent and to vote, as designated on the
reverse side of this proxy card, all shares of common stock,
par value $.01 per share, and all shares of Series B, Series C
and Series D Convertible Preferred Stock, par value $1.00 per
share of Nestor, Inc. (the "Company") which the undersigned
would be entitled to vote if personally present at the annual
meeting of the Company's stock holders to be held on December
5, 1995, and at any and all adjournment or postponement
thereof.
The Board of Directors recommends a vote "FOR" Proposals 1 and
2.
TO BE SIGNED ON THE REVERSE SIDE
___________________________
Please mark your votes as in this example
1. Election of Directors to serve for a term expiring at the
next annual meting of stockholders.
FOR all nominees listed below, except as noted to the contrary
below.
WITHHOLD AUTHORITY to vote for all nominees listed below.
Nominees: Sam O. Albert, Leon N Cooper, Charles Elbaum, David
Fox, Jeffrey B. Harvey, Simon N. Heifetz, Thomas F. Hill,
Herbert S. Meeker, Bruce W. Schnitzer
Instructions: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below:
_________________________________
2. Proposal to approve the selection of accountant. For
Against Abstain
3. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the annual
meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND
2.
The undersigned hereby acknowledges receipt of a copy of the
notice of the meeting of stockholders and the related proxy
statement.
PLEAS DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S) _________________________________ DATE ___________
PRINTED NAME & TITLE __________________________________________
IMPORTANT: Please date and sign as your name appears above and
return in the enclosed envelope. When signing as executor,
administrator, trustee, guardian, etc., please give full title
as such. If the stockholder is a corporation, the proxy should
be signed in full corporate name by a duly authorized officer
whose title is stated.
