EXHIBIT 10.1
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Execution Copy
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NESTOR, INC., THAT SUCH
REGISTRATION IS NOT REQUIRED.
SECURED PROMISSORY NOTE
FOR
VALUE RECEIVED,
NESTOR, INC., 42 Oriental Street, Third Floor,
Providence, Rhode Island 02908, a Delaware
corporation
(hereinafter called the
"Borrower"), hereby promises to pay to
Edward F. Heil, 8052 Fisher Island Drive,
Fisher Island, FL 33109 (the "Holder"),
or his registered
assigns or successors
in interest, on order, without demand, the sum
of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000), together
with any accrued and unpaid interest and
fees on October 25, 2006 (the "Maturity
Date").
The following terms shall apply to this
Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1
INTEREST RATE.
Interest payable on
unpaid principal
amount and of
this Note and any unpaid interest payments
shall accrue at a rate of one percent
(1.00%) per month (the "Contract Rate") until the Note is paid in full,
commencing on the date hereof and shall be
due and payable, in
arrears, on the
last business day of each calendar month during the term hereof and on the
earlier of the Maturity Date, accelerated or otherwise, or the date of the
prepayment in full hereof.
1.2
PRINCIPAL. The Borrower shall repay the principal on the Note in
full
on the Maturity Date. Borrower may prepay this Note,
in whole or part, on
the
last business day of any calendar month
during the term hereof at any time prior
to the Maturity Date.
ARTICLE II
SECURITY
2.1
GRANT. To secure all
of Borrower's
obligation to Holder
hereunder
(the "Obligations"), Borrower grants Holder
a security interest in that property
identified on EXHIBIT 2.1 attached hereto
(the "Collateral").
2.2
DEFAULT. Upon the
occurrence of any Event of Default and at any time
thereafter, Holder may declare all Obligations
immediately due and
payable and
Holder shall have the remedies of a secured party provided in the Uniform
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Commercial Code as in effect in the State of
Rhode Island , this Note and other
applicable law. Upon the occurrence of any Event of Default
and at any time
thereafter, Holder shall have the right to
take possession of the Collateral and
to maintain such possession on Borrower's
premises or to remove
the Collateral
or any part thereof to such other
premises as Holder may
desire. Upon
Holder's
request, Borrower shall assemble the
Collateral and make it available to Holder
at a place designated by Holder. If any
notification of intended disposition of
any Collateral is required by law, such
notification, if mailed, shall be deemed
properly and reasonably given if mailed at least ten days before such
disposition, postage prepaid, addressed to
Borrower at Borrower's address shown
herein. Any proceeds of any disposition of any of the Collateral shall be
applied by Borrower to the payment of all
expenses in connection
with the sale
of the Collateral, including reasonable
attorneys' fees and other legal expenses
and disbursements and the reasonable
expense of retaking, holding, preparing for
sale, selling, and the like, and any balance of
such proceeds may be applied by
Holder toward the payment of the
Obligations
in such order of
application
as
Holder may elect, and Borrower shall be
liable for any deficiency.
2.3
APPOINTMENT OF HOLDER.
Borrower appoints Holder, any of Holder's
officers, employees or any other person or
entity whom Holder may
designate as
Borrower's attorney, with power to execute such
documents on Borrower's behalf
and to supply any omitted information and
correct patent errors in any documents
executed by Borrower or on Borrower's behalf; to file financing statements
against Borrower covering the Collateral; to sign Borrower's name on public
records; and to do all other things Holder deems necessary to carry out the
Obligations. Borrower hereby ratifies and
approves all acts of the attorney and,
excepting recklessness or willful
misconduct,
neither Holder nor the
attorney
will be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law.
This power being
coupled with an
interest,
is irrevocable so long as any Obligations
remains unpaid.
2.4 NO WAIVER. No delay or failure on Holder's part in exercising
any
right, privilege or option hereunder shall
operate as a waiver of such or of any
other right, privilege, remedy or option,
and no waiver whatever shall be valid
unless in writing, signed by Holder and
then only to the extent therein set
forth, and no waiver by Holder of any
default shall operate as a waiver of any
other default or of the same default on a
future occasion. Holder's books and
records containing entries with respect to
the Obligations shall be admissible
in evidence in any action or proceeding,
shall be binding upon Borrower for the
purpose of establishing the items therein
set forth and shall constitute prima
facie proof thereof. Holder shall have the
right to enforce any one or more of
its remedies, successively, alternately or
concurrently. Borrower agrees to join
with Holder in executing financing
statements or other instruments to the extent
required by the Uniform Commercial Code in
form satisfactory to Holder and in
executing such other documents or
instruments as may be required or deemed
necessary by Holder for purposes of
effecting or contin
