19
NESTOR, INC.
One Richmond Square
Providence, Rhode Island 02906
(401) 331-9640
April 14, 1999
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
Wednesday, May 12, 1999, at 1:00 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,
/s/David Fox
President and Chief Executive
Officer
Directions to Days Hotel:
Function Room: Bayview
South (from New North (from Boston) East (from Cape Cod)
York) 95 South 195 West
95 North 195 East (Cape Cod) Exit 3 (Gano Street)
195 East (Cape Cod) Exit 3 (Gano Street) Left off exit ramp
Exit 3 (Gano Street) Left off exit ramp Second right into
Left off exit ramp Second right into hotel parking lot
Second right into hotel parking lot
hotel parking lot
NESTOR, INC.
One Richmond Square
Providence, Rhode Island 02906
(401) 331-9640
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 12, 1999
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 May 12, 1999, at 1:00 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 their successors are elected and qualified;
2. To approve the selection of independent auditors
for the Company for the year ending December 31, 1999; 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 March 12, 1999, will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/Herbert S. Meeker, Secretary
Providence, Rhode Island
April 14, 1999
IMPORTANT: THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES
OF COMMON STOCK AND SERIES B 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 May 12, 1999
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 Convertible Preferred Stock, par
value $1.00 per share (the "Convertible 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 May 12, 1999, at 1:00 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 April 14, 1999 to stockholders of the
Company entitled to vote.
PROXIES
The shares represented by each properly executed and
dated proxy that 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 Convertible 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 Convertible 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 Convertible Preferred Stock at the close of
business on March 12, 1999, (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, the Common Stock and
Series B Convertible Preferred Stock are entitled to vote as a
group the equivalent of an aggregate of 17,552,730 shares of
Common Stock on the basis of one vote per share of Common Stock.
See "Security Ownership of Certain Beneficial Owners and
Management."
The presence, in person or by proxy, of the holders of
a majority of the outstanding shares of the Common Stock and
Convertible 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 March 12, 1999,
the beneficial ownership of shares of the Common Stock and
Convertible 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 calendar year
ended December 31, 1998 (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 herein indicated, the Company believes, based on
information furnished by such owners, that the beneficial owners
of shares of the Company's Common and Convertible Preferred Stock
described below have sole investment voting power with respect to
such shares, subject to any applicable community property laws:
Name and address Amount and nature of
of beneficial owner beneficial ownershipPercent of class
Bruce W. Schnitzer 6,550,396 (1) 32.9
471 Broadway
New York, NY
Transaction Systems
Architects, Inc. 5,000,000 (2) 24.9
224 South 108 Avenue
Omaha, Nebraska 68154
Charles Elbaum 943,796(3) 5.4
85 Lorraine Avenue
Providence, RI
Leon Cooper 904,074 (3) 5.1
49 Intervale Road
Providence, RI
David Fox 707,410 (4) 4.0
29 Orchard Avenue
Providence, RI
Herbert S. Meeker 269,363(5) 1.5
233 Reeder Street
Easton, PA
Douglas L. Reilly 230,006 (6) 1.3
9 Island View Road
Narragansett, RI
Thomas F. Hill 136,250 (7) *
320 East 57th Street
New York, NY
Jeffrey B. Harvey 133,483 (8) *
114 Woodbury Drive
Amherst, NY
Michael T. Glier 120,000 (6) *
74 Southwest Avenue
Jamestown, RI
Sushmito Ghosh 66,326 (6) *
25 Brookway Road
Providence, RI
Nigel P. Hebborn 40,500 (6) *
171 Charlotte Drive
East Greenwich, RI
Sam Albert 15,798 (9) *
27 Kingwood Road
Scarsdale, NY
All executive officers 10,117,402 (10) 48.6
and directors as a group
(15 persons)
* Less than 1%.
________________
(1) 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., Wand/Nestor Investments II
L. P. and Wand/Nestor Investments III L.P., Delaware
limited partnerships, which hold an aggregate of 4,467,155
shares of Common Stock, and Common Stock Purchase Warrants
to acquire 2,161,540 shares of Common Stock of the
Company. 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 10.7103%
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. Common Stock totaling 291,597 shares is held by holders
subject to the Bank Holding Company Act of 1958, as
amended, and have no voting rights.
Bruce W. Schnitzer holds 5,798 vested stock options, and
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
207,500 shares of Common Stock of the Company exercisable
until April 1, 2004 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.
(2) Includes a Common Stock Purchase Warrant to acquire
2,500,000 shares of Common Stock of the Company,
exercisable until March 1, 2002, at a price of $3.00 per
share.
(3) Includes 3,777 vested stock options.
(4) Includes 311,936 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.
(5) Includes 36,250 shares of Common Stock which Mr. Meeker
may acquire on a fully vested basis upon the exercise of
options granted by the Company
(6) Includes 160,000, 120,000, 66,043 and 37,500 shares of
Common Stock which Messrs. Reilly, Glier, Ghosh and
Hebborn, respectively, may acquire on a fully vested basis
upon the exercise of options granted under the Company's
Incentive Stock Option Plan.
(7) Includes 6,250 vested stock options and 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 Thomas F. Hill, Inc.
of which Mr. Hill is President and sole owner.
(8) Includes 16,250 shares of common stock that may be
acquired on a fully vested basis.
(9) Includes 15,798 shares of Common Stock which Mr. Albert
may acquire on a fully vested basis upon exercise of
options granted by the Company.
(10) Includes 3,282,419 vested options and warrants owned or
controlled by officers and directors of the Company.
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,
John F. Guinan, Jeffrey B. Harvey, 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:
Director/ Capacities
Officer in which
Name Age Since Served
Sam Albert 65 1991 Director*
Leon N Cooper 69 1983 Co-Chairman and
Director*
Charles Elbaum 72 1983 Co-Chairman and
Director*
David Fox 63 1983 President, CEO
and Director*
John F. Guinan 52 1998 Director*
Jeffrey B. Harvey 49 1993 Director*
Thomas F. Hill 53 1994 Director*
Herbert S. Meeker 74 1983 Secretary and Director*
Bruce W. Schnitzer 54 1994 Director*
Nigel P. Hebborn 40 1996 Chief Financial Officer
Sushmito Ghosh 40 1995 Vice President
Financial Solutions
Michael T. Glier 51 1992 Vice President
Nestor Traffic
Systems, Inc.
Douglas L. Reilly 47 1983 Senior Vice President
Strategic Analysis
& Technology
* Nominee
Sam Albert became a Director of the Company as of April
1991. 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 is a former IBM Corporation executive who retired
after thirty years in 1989, as IBM Director of Business and
Management Services Industries. These segments included the CPA,
legal and consulting professions and the software and services
industries. 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
Board of Cross Access Corporation. He is also a member of the
Executive Committee of the New York Venture Group and a member of
the Independent Computer Consultants Association (ICCA). Mr.
Albert also writes Albert's Analysis for Midrange Systems and is
the creator, producer and on-air talent for CompuTips carried on
the CBS radio New York affiliate, 1010 WINS.
Leon N Cooper is the Thomas J. Watson Senior Professor
of Science at Brown University, his principal occupation. He
specializes in theoretical physics including low-temperature
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 and 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. He
is also chairman of the Scientific Advisory Board of Spectra
Science, a company that commercializes innovative laser products.
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
Associates ("Nestor"), the predecessor of the Company 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.
John F. Guinan joined Applied Communications, Inc.
(ACI) in 1979 and held various marketing and senior management
positions. With ACI, he was involved with domestic and
international market development. Mr. Guinan was a founder of
Prairie Systems and served as senior vice president from 1990
through 1997.
He returned to Transaction Systems Architects, Inc. (TSAI), the
parent company of Applied Communications Worldwide, in 1997 and
presently heads TSA's Internet Products business. Mr. Guinan
earned a Bachelor's degree from the University of Iowa and lives
in Omaha, Nebraska, with his wife and six children. He also
serves on the Board of Directors of Prairie Systems and VSS
Catholic Communications, an Omaha-based radio station.
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 Division 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.
Nigel P. Hebborn, Chief Financial Officer, joined the
Company in October 1996. He is responsible for the Company's
financial and corporate development activities, including working
with the Company's management in the development and roll-out of
commercial applications. He was most recently President of
Wolffish Consulting Services, Inc., a consulting and background
reporting firm. Prior to forming Wolffish Consulting Services,
Inc., Mr. Hebborn served as Vice President Finance of Nova
American Group, Inc., in Buffalo, New York and as President of
various subsidiaries of this insurance and banking holding
company. Earlier in his career, Mr. Hebborn, a CPA, was
associated with Price Waterhouse.
Thomas F. Hill joined the Company's Board of Directors
in August 1994. He is President of Thomas F. Hill, Inc., a
consulting firm with broad experience in marketing, sales and
business planning. Thomas F. Hill, Inc. is an operating
affiliate of Wand Partners. Mr. Hill's clients during his
twenty-five year career have included Marsh & McLennan, Bristol
Meyers, Royal Dutch Shell, CBS, Nestle, Procter & Gamble, Toyota
and Unilever. Mr. Hill serves as a director of Diagraph
Corporation, a manufacturer of automated product identification
systems; Information Management Associates, a customer
interaction software provider; and Yankelovich Partners, a
marketing and social 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 a director and Secretary of the
Company.
Bruce W. Schnitzer joined the Company's Board of
Directors in August 1994 and has been Chairman of the Executive
Committee of the Board of the Company since December 1996. Mr.
Schnitzer is Chairman of Wand Partners, a private investment
firm, engaged 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: Penn Corp. Financial
Group (a life insurance holding company); and AMRESCO Inc. (real
estate investment manager).
Sushmito Ghosh joined the company as a software
engineer in 1986 and was named an officer of the company in 1995.
Mr. Ghosh was the principal designer of Nestor's internal
Research and Development environment. He has an in-depth
knowledge of Nestor's technology and has developed neural network
models for machine vision, character recognition, mortgage
portfolio analysis, securities trading and financial risk
assessment. Mr. Ghosh serves as the Vice President of Financial
Solutions and is responsible for the Marketing, Sales and
Delivery of Nestor's products in the financial markets, namely
the PRISM suite of risk management products and CampaignOne for
customer relationship management. Mr. Ghosh holds a Masters
Degree in Engineering from the University of Rhode Island. He
has co-authored a number of papers and technical publications.
Michael T. Glier Michael T. Glier joined the Company in
December 1990. He was named an officer of the Company in
December 1992, and currently serves as Vice President of Nestor
Traffic Systems, Inc., a subsidiary of the Company. He is
responsible for managing all Operations components of the
subsidiary, which includes Product Development, Customer Service,
and Manufacturing of the CrossingGuard and TrafficVision product
families. Mr. Glier was a co-recipient of the 1994 Discover
Award for Computer Hardware and Electronics. Mr. Glier's
experience spans 30 years in computer and electronics industry,
from space-based systems to multiprocessor design. He has
authored four patents, several technical papers and has co-
authored several technical articles.
Douglas L. Reilly is Senior 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. He is currently responsible
for marketing, sales and research activities for the traffic
products subsidiary. 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 co-author on four of
the Company's patents and has written numerous articles in the
field of neural network design and application.
Committees and Meetings of the Board of Directors
The Company's Board of Directors held seven meetings
during the year ended December 31, 1998. The incumbent directors
attended all of these meetings. In 1998, the Directors did not
receive fees for attending meetings of the Board, but certain
directors were granted an aggregate of 30,000 options under the
Company's 1997 Option Plan during such fiscal year. The Company
does not have a Nominating Committee.
The Company has an Audit and Finance Committee. This
committee generally selects and reviews recommendations made by
the Company's independent public accountants. The Audit and
Finance Committee, consisting of Herbert Meeker and Sam Albert
met once during the year ended December 31, 1998. 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 calendar
years ended December 31, 1998, 1997, and 1996 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 $100,000.
<TABLE>
<CAPTION>
Long-Term Compensation Awards
Name and Other Restricted All
Principal Calendar Annual Stock Options/ Other
Position Year Salary ($) Bonus ($) Comp. (1) Awards SARs Payouts Comp.($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Fox 1998 156,875 0 340 0 0 0 24,551 (2)
President and CEO 1997 150,000 0 1,193 0 40,000 0 0
1996 127,084 64,316 1,193 0 250,000 0 0
Sushmito Ghosh 1998 118,205 36,000 265 0 30,000 0 0
Vice President 1997 105,000 67,876 73 0 60,000 0 0
1996 97,217 20,870 73 0 60,000 0 0
Michael Glier 1998 100,667 0 244 0 20,000 0 0
Vice President 1997 104,461 0 164 0 30,000 0 0
1996 96,305 7,500 139 0 20,000 0 0
Nigel P. Hebborn 1998 101,875 0 239 0 0 0 0
CFO 1997 95,000 0 112 0 30,000 0 0
1996(3) 15,833 0 --- 0 30,000 0 12,000 (2)
Douglas Reilly 1998 106,875 0 252 0 20,000 0 0
Vice President 1997 100,000 0 102 0 30,000 0 0
1996 96,789 7,500 88 0 20,000 0 0
(1) Payment of group term life insurance premiums.
(2) Reimbursement of relocation expenses
(3) Hired October 1, 1996
</TABLE>
Options and Warrants
The shareholders of the Company approved on May 6,
1997, the 1997 Stock Option Plan ("1997 Plan") of the Company
authorizing the granting to employees, officers, directors, and
others options to acquire up to a maximum of 1,000,000 shares of
Common Stock of the Company. The shares issued by the Company
upon the exercise of the options granted under the 1997 Plan were
registered on June 6, 1997 on Form S-8 (Registration No. 333-
27271) under the Securities Act of 1933 as amended. During the
year ended December 31, 1998, 309,583 options were granted under
the 1997 Plan and 253,250 options were cancelled or expired.
4,250 were exercised and there was an aggregate of 556,083
options outstanding on December 31, 1998 of which 217,659 were
vested as of that date. There were, in addition, 1,058,999
options of which 900,187 were vested and outstanding as at
December 31, 1998 granted to employees under an option plan
previously adopted by the Company. The shares issued under such
previously adopted plan were registered on Form S-8 under the
Securities Act of 1933 as amended pursuant to Registration No. 01-
12965. No new options have been issued under such plan since the
adoption of the 1997 Plan.
PROPOSAL TO APPROVE THE SELECTION
OF INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP is recommended
for election to serve as the Company's independent auditors for
the year ending December 31, 1999.
Representatives of Ernst & Young LLP are expected to
be present at the annual meeting.
ANNUAL REPORT
THE ANNUAL REPORT TO STOCKHOLDERS CONCERNING THE
OPERATIONS OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 1998,
INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals for consideration at the 1999
annual meeting, expected to be held in May 2000, must be received
by the Company no later than December 31, 1999 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
1999 annual meeting.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1933
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholders are required
by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms
furnished to the Company, or written representations that no
Forms 5 were required, the Company believes that during the
period from January 1, 1998 through December 31, 1998, all
Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were
complied with.
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 above notice and proxy statement are sent by order
of the Board of Directors.
/s/Herbert S. Meeker
Secretary
Providence, Rhode Island
April 14, 1999
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 the full power of substitution), proxies for
the undersigned to represent and to vote, as designated on this
proxy card, all shares of common stock, par value $.01 per share,
and all shares of Series B 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 stockholders to be held on
May 12, 1999, and at any and all adjournment of postponement
thereof.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1.ELECTION OF DIRECTORS TO SERVE FOR A TERM EXPIRING AT THE NEXT
ANNUAL MEETING OF STOCKHOLDERS
NOMINEES: Sam Albert, Leon N Cooper, Charles Elbaum,
David Fox, John F. Guinan, Jeffrey B. Harvey, Thomas F. Hill,
Herbert S. Meeker, Bruce W. Schnitzer
FOR all nominees listed except as noted to the contrary below
______________________________________________________________
WITHHOLD AUTHORITY to vote for all nominees listed.
2.PROPOSAL TO APPROVE THE SELECTION OF ACCOUNTANTS
____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 of the related proxy
statement
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE:__________________________________________________
PRINT NAME/TITLE:___________________________________________
DATE:_______________________________________________________
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.
