NESTOR INC
EX10.47 PLEDGE AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>e10_47.txt
<DESCRIPTION>EX10.47 PLEDGE AND SECURITY AGREEMENT
<TEXT>

                          PLEDGE AND SECURITY AGREEMENT

     This Pledge and Security  Agreement (this "Agreement") dated as of July 31,
2003 between Laurus Master Fund,  Ltd.  ("Pledgee") and  CrossingGuard,  Inc., a
Delaware corporation ("Pledgor").

                                   BACKGROUND
                                   ----------

     Pledgee and  Pledgor's  ultimate  parent  corporation,  Nestor,  Inc.  have
entered or are entering into a Securities  Purchase  Agreement  dated as of July
31, 2003 (as amended, modified,  restated or supplemented from time to time, the
"Purchase Agreement") pursuant to which Pledgee provides or will provide certain
financial accommodations to Pledgor's ultimate parent corporation.

     In order to induce Pledgee to enter into the  transactions  contemplated by
the  Purchase  Agreement,  Pledgor  has  agreed to pledge  and grant a  security
interest  in the  collateral  described  herein  to  Pledgee  on the  terms  and
conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows:

1.   Definitions.  All capitalized terms used herein which are not defined shall
     have the meanings given to them in the Purchase Agreement.

2.   Pledge and Grant of Security Interest.

     To  secure  the  full  and  punctual  payment  and  performance  of (a) all
     indebtedness  obligations and  liabilities of Pledgor's  ultimate parent to
     Pledgee under the Purchase Agreement and (b) all indebtedness,  obligations
     and  liabilities  of  Pledgor's  parent to Pledgee  whether now existing or
     hereafter arising, direct or indirect, liquidated or unliquidated, absolute
     or contingent,  due or not due and whether under,  pursuant to or evidenced
     by  the  Purchase  Agreement  or  any  other  note,  agreement,   guaranty,
     instrument or otherwise (collectively, the "Indebtedness"),  Pledgor hereby
     assigns, transfers and pledges, assigns, hypothecates, transfers and grants
     to Pledgee a continuing  security interest in all of the property described
     on Schedule A annexed hereto, now owned or at any time hereafter  racquired
     by us, or in which we now have or at any time in the future may acquire any
     right, title or interest (collectively, the "Collateral").

3.   Representations and Warranties of Pledgor.  Pledgor represents and warrants
     to  Pledgee  (which  representations  and  warranties  shall be  deemed  to
     continue  to be made until all of the  Indebtedness  has been paid in full)
     that:

     (a)  The execution,  delivery and  performance by Pledgor of this Agreement
          and the pledge of the Collateral  hereunder do not and will not result
          in any violation of any  agreement,  indenture,  instrument,  license,
          judgment, decree, order, law, statute, ordinance or other governmental
          rule or regulation applicable to Pledgor.

     (b)  This Agreement constitutes the valid and binding obligation of Pledgor
          enforceable against Pledgor in accordance with its terms.

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<PAGE>

     (c)  Other than a deposit  account  control  agreement to be executed on or
          prior to the date  hereof  in  favor of and on terms  satisfactory  to
          Pledgee by the financial  institution at which the Pledged Account (as
          defined in Schedule A hereto) is maintained, no consent or approval of
          any person,  corporation,  governmental body,  regulatory authority or
          other entity, is or will be necessary for the execution,  delivery and
          performance  of this  Agreement  or,  the  exercise  by Pledgee of any
          rights with respect to the Collateral or for the pledge and assignment
          of, and the grant of a security interest in, the Collateral hereunder.

     (d)  There  are  no  pending  or,  to  the  best  of  Pledgor's  knowledge,
          threatened  actions or  proceedings  before any court,  judicial body,
          administrative  agency or arbitrator  which may  materially  adversely
          affect the Collateral.

     (e)  Pledgor  has the  requisite  power and  authority  to enter  into this
          Agreement  and to pledge  and  assign  the  Collateral  to  Pledgee in
          accordance with the terms of this Agreement.

     (f)  Pledgor owns each item of the  Collateral  and,  except for the pledge
          and security interest granted to Pledgee hereunder,  the Collateral is
          free and clear of any other security  interest,  pledge,  claim, lien,
          charge,  hypothecation,  assignment,  offset or encumbrance whatsoever
          (collectively, "Liens").

     (g)  The  pledge  and  assignment  of the  Collateral  and the  grant  of a
          security  interest  under this Agreement vest in Pledgee all rights of
          Pledgor in the Collateral as contemplated by this Agreement.

4.   Affirmative Covenants.  Until such time as all of the Indebtedness has been
     paid in full, Pledgor shall:

     (a)  Defend the  Collateral  against  the  claims and  demands of all other
          parties and keep the  Collateral  free from all Liens,  except for the
          Liens granted to Pledgee under this Agreement.

     (b)  In the event  Pledgor  comes  into  possession  of any  portion of the
          Collateral in violation of the terms of this Agreement,  hold the same
          in trust for  Pledgee and deliver to Pledgee  such  Collateral  in the
          form received no later than one (1) business day  following  Pledgor's
          receipt thereof.

     (c)  In the event any portion of the  Collateral  is held by a third party,
          take all  action  that  Pledgee  may  request  so as to  maintain  the
          validity,   enforceability,   perfection  and  priority  of  Pledgee's
          security interest in the Collateral.

     (d)  Within five (5) business days of receipt  thereof by Pledgor,  deliver
          to Pledgee  all  notices and  statements  relating  to the  Collateral
          received by Pledgor or any third party holding the Collateral.

     (e)  Notify  Pledgee  promptly  of (a) any  adverse  event  relating to the
          Collateral or any adverse  change in the value of the  Collateral  and
          (b) Pledgee's  intention to commence a voluntary  case under any state
          or federal bankruptcy laws (as now or hereafter in effect).

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     (f)  At the  written  request of Pledgee at any time and from time to time,
          at Pledgor's  sole expense,  promptly take such action and execute and
          deliver such  financing  statements,  control  agreements  and further
          instruments  and documents as Pledgee may reasonably  request in order
          to  more  fully  perfect,   evidence  or  effectuate  the  pledge  and
          assignment  hereunder and the security  interest granted hereby and to
          enable  Pledgee to  exercise  and  enforce  its  rights  and  remedies
          hereunder.  Pledgee is hereby authorized to file one or more financing
          or continuation  statements  under the applicable  Uniform  Commercial
          Code (as in  effect  from time to time,  the  "UCC")  relating  to the
          Collateral, naming Pledgee as "secured party."

     (g)  Furnish to Pledgee such other  information  relating to the Collateral
          as Pledgee may from time to time reasonably request.

5.   Negative   Covenants.   Until  such  time  as  the  Indebtedness  has  been
     irrevocably  paid in full,  Pledgor shall not: sell,  convey,  or otherwise
     dispose of any of the Collateral or any interest therein or incur or permit
     to exist any Lien with  respect to any of the  Collateral  or the  proceeds
     thereof  other than the Lien  granted to Pledgee  under this  Agreement.nor
     shall it change the ownership of the Pledged  Account,  other than with the
     prior written consent of Pledgee. Notwithstanding the immediately foregoing
     sentence,  if no Event of Default under the Note shall have occurred and be
     continuing  Pledgee  may have  access to funds on  deposit  in the  Pledged
     Account,  make or cause to be made any transfers from the Pledged  Account,
     and/or make or cause to be made any withdrawals from the Pledged Account.

6.   Events of Default.

     The term "Event of Default"  wherever used herein shall mean the occurrence
     of any one of the following events:

     (a)  An "Event of Default" under the Note Agreement shall have occurred and
          shall not have been cured during any applicable cure or grace period;

     (b)  Pledgor's failure to comply with or perform any of its undertakings or
          obligations   under  any  agreement   between   Pledgor  and  Pledgee,
          including,  without limitation, this Agreement, and such failure shall
          not be cured for a period of twenty (20)  business  days after written
          notice thereof is received by the Pledgor from Pledgee;

     (c)  Any representation,  warranty, statement or covenant made or furnished
          to  Pledgee  by or on  behalf  of  Pledgor  in  connection  with  this
          Agreement  and/or the Purchase  Agreement proves to have been false in
          any material  respect when made or furnished or is breached,  violated
          or not complied with and such breach, violation or noncompliance shall
          not be cured for a period of twenty (20)  business  days after written
          notice thereof is received by the Pledgor from Pledgee;

     (d)  Pledgor  shall  (i)  apply  for,  consent  to,  or suffer to exist the
          appointment of, or the taking of possession by, a receiver, custodian,
          trustee,  liquidator  or  other  fiduciary  of  itself  or of all or a
          substantial part of its property,  (ii) make a general  assignment for
          the benefit of  creditors,  (iii)  commence  or inform  Pledgee of its
          intention  to  commence  a  voluntary  case under any state or federal
          bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a


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          bankrupt or insolvent,  (v) file a petition  seeking to take advantage
          of any other law providing for the relief of debtors,  (vi)  acquiesce
          to, or fail to have  dismissed,  within ninety (90) days, any petition
          filed against it in any involuntary  case under such bankruptcy  laws,
          or (vii)  take any  action for the  purpose  of  effecting  any of the
          foregoing; or

     (e)  The  Collateral  is  subjected  to  levy  of  execution,   attachment,
          distraint or other judicial process;  or the Collateral is the subject
          of a  claim  (other  than by  Pledgee)  of a Lien or  other  right  or
          interest in or to the  Collateral  and such levy or claim shall not be
          cured,  disputed  or stayed  within a period of thirty (30) days after
          written notice thereof.

7.   Remedies.

     Upon the occurrence of an Event of Default, Pledgee may:

          (i)  Demand,  collect,  receipt for, settle,  compromise,  adjust, sue
               for, foreclose, realize upon the Collateral (or any part thereof)
               or debit the  Pledged  Account (as defined in Schedule A hereto),
               in each case as Pledgee may determine in its sole discretion;

          (ii) Transfer  the  Collateral  into  its name or into the name of its
               nominee or nominees;

          (iii)Subject to the  requirements of applicable law, sell,  assign and
               deliver  the  whole  or,  from  time  to  time  any  part  of the
               Collateral,  with or without demand,  advertisement  or notice of
               the time or place of sale or  adjournment  thereof  or  otherwise
               (all of  which  are  hereby  waived,  except  such  notice  as is
               required by applicable law and cannot be waived),  for such price
               or prices and on such terms as Pledgee in its sole discretion may
               determine.

     Pledgor acknowledges and agrees that ten (10) days' prior written notice of
     the time and place of any public sale of any of the Collateral or any other
     intended  disposition  thereof shall be reasonable and sufficient notice to
     Pledgor  within the meaning of the UCC.  Pledgor hereby waives and releases
     any and all right or equity of  redemption,  whether  before or after  sale
     hereunder.  In addition  to the  foregoing,  Pledgee  shall have all of the
     rights and remedies of a secured party under applicable law and the UCC.

8.   Proceeds of Collateral  Agreement.  The proceeds of any  disposition of the
     Collateral under this Agreement shall be applied as follows:

     (a)  First,  to the payment of all costs,  expenses  and charges of Pledgee
          and to the  reimbursement  of  Pledgee  for the prior  payment of such
          costs,  expenses and charges  incurred in connection with the care and
          safekeeping  of the Collateral  (including,  without  limitation,  the
          expenses  of  any  sale  or  any  other  disposition  of  any  of  the
          Collateral), the expenses of any taking, attorneys' fees and expenses,
          court costs,  any other fees or expenses  incurred or  expenditures or
          advances made by Pledgee in the protection, enforcement or exercise of
          its rights,  powers or remedies  hereunder,  with interest on any such
          reimbursement  at the rate  prescribed  in the  Note  from the date of
          payment;

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<PAGE>

     (b)  Second,  to the payment of the  Obligations,  in whole or in part,  in
          such order as Pledgee  may elect,  whether or not such  Obligation  is
          then due;

     (c)  Third,  to such  persons,  firms  corporations  or other  entities  as
          required by applicable law including, without limitation the UCC; and

     (d)  Fourth,  to the  extent of any  surplus  to  Pledgor  or as a court of
          competent jurisdiction may direct.

     In the  event  that the  proceeds  of any  collection,  recovery,  receipt,
     appropriation,   realization  or  sale  are  insufficient  to  satisfy  the
     Indebtedness,  Pledgor  shall be liable for the  deficiency  together  with
     interest  thereon at the rate  prescribed  in the Note plus the  reasonable
     costs  and fees of any  attorneys  employed  by  Pledgee  to  collect  such
     deficiency.

9.   Waiver of  Marshaling.  Pledgor  hereby  waives  any  right to  compel  any
     marshaling of any of the Collateral.

10.  No  Waiver.  Any and all of  Pledgee's  rights  with  respect  to the Liens
     granted under this Agreement shall continue  unimpaired,  and Pledgor shall
     be  and   remain   obligated   in   accordance   with  the  terms   hereof,
     notwithstanding  (a)  the  bankruptcy,   insolvency  or  reorganization  of
     Pledgor,  (b) the release or  substitution of any item of the Collateral at
     any  time,  or of any  rights  or  interests  therein,  or (c)  any  delay,
     extension  of time,  renewal,  compromise  or other  indulgence  granted by
     Pledgee in reference to any of the Indebtedness.  Pledgor hereby waives all
     notice  of any  such  delay,  extension,  release,  substitution,  renewal,
     compromise or other  indulgence,  and hereby consents to be bound hereby as
     fully and  effectively  as if  Pledgor  had  expressly  agreed  thereto  in
     advance.  No delay or extension of time by Pledgee in exercising  any power
     of sale,  option or other  right or remedy  hereunder,  and no  failure  by
     Pledgee to give notice or make demand,  shall  constitute a waiver thereof,
     or limit,  impair or prejudice  Pledgee's  right to take any action against
     Pledgor or to exercise  any other power of sale,  option or any other right
     or remedy.

11.  Expenses.  The Collateral shall secure, and Pledgor shall pay to Pledgee on
     demand,  from  time to time,  all costs and  expenses,  (including  but not
     limited to, reasonable  attorneys' fees and costs, taxes, and all transfer,
     recording,  filing and other  charges) of, or  incidental  to, the custody,
     care,  transfer,  administration of the Collateral or any other collateral,
     or in any way relating to the  enforcement,  protection or  preservation of
     the rights or remedies of Pledgee  under this  Agreement or with respect to
     any of the Indebtedness.

12.  Pledgee  Appointed  Attorney-In-Fact  and Performance by Pledgee.  Upon the
     occurrence  and  continuance  of  an  Event  of  Default,   Pledgor  hereby
     irrevocably  constitutes and appoints  Pledgee as Pledgor's true and lawful
     attorney-in-fact,  with full power of substitution, to execute, acknowledge
     and deliver any instruments  and to do in Pledgor's name,  place and stead,
     all such  acts,  things  and  deeds for and on behalf of and in the name of
     Pledgor,  which  Pledgor  could  or  might  do or  which  Pledgee  may deem
     necessary,  desirable  or  convenient  to  accomplish  the purposes of this
     Agreement,  including,  without limitation,  to execute such instruments of
     assignment  or  transfer  or orders and to  register,  convey or  otherwise
     transfer  title to the  Collateral  into  Pledgee's  name.  Pledgor  hereby
     ratifies and confirms all that said  attorney-in-fact  may so do and hereby


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     declares  this  power  of  attorney  to be  coupled  with an  interest  and
     irrevocable.  If Pledgor fails to perform any agreement  herein  contained,
     Pledgee may itself perform or cause performance  thereof, and any costs and
     expenses  of Pledgee  incurred  in  connection  therewith  shall be paid by
     Pledgor as provided in Section 11 hereof.

13.  Captions.   All  captions  in  this  Agreement  are  included   herein  for
     convenience  of  reference  only  and  shall  not  constitute  part of this
     Agreement for any other purpose.

14.  Miscellaneous.

     (a)  This Agreement  constitutes  the entire and final  agreement among the
          parties  with  respect  to the  subject  matter  hereof and may not be
          changed,  terminated  or  otherwise  varied  except by a writing  duly
          executed by the parties hereto.

     (b)  No waiver  of any term or  condition  of this  Agreement,  whether  by
          delay, omission or otherwise, shall be effective unless in writing and
          signed by the party  sought to be charged,  and then such waiver shall
          be  effective  only in the  specific  instance and for the purpose for
          which given.

     (c)  In the event that any provision of this  Agreement or the  application
          thereof to Pledgor or any circumstance in any  jurisdiction  governing
          this Agreement shall, to any extent, be invalid or unenforceable under
          any  applicable  statute,  regulation,  or rule of law, such provision
          shall  be  deemed  inoperative  to the  extent  that  it may  conflict
          therewith  and shall be deemed  modified  to conform to such  statute,
          regulation or rule of law, and the remainder of this Agreement and the
          application of any such invalid or unenforceable provision to parties,
          jurisdictions,  or circumstances  other than to whom or to which it is
          held invalid or unenforceable shall not be affected thereby, nor shall
          same affect the validity or  enforceability  of any other provision of
          this Agreement.

     (d)  This Agreement shall be binding upon Pledgor, and Pledgor's successors
          and  assigns,  and  shall  inure to the  benefit  of  Pledgee  and its
          successors and assigns.

     (e)  Any notice or other  communication  required or permitted  pursuant to
          this Agreement shall be given in accordance with the notice provisions
          of the Purchase Agreement.

     (f)  This Agreement  shall be governed by and construed and enforced in all
          respects in accordance  with the laws of the State of New York applied
          to contracts to be performed wholly within the State of New York.

     (g)  EACH PARTY HERETO HEREBY  EXPRESSLY  WAIVES ANY RIGHT TO TRIAL BY JURY
          OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS
          AGREEMENT OR ANY OTHER INSTRUMENT,  DOCUMENT OR AGREEMENT  EXECUTED OR
          DELIVERED IN CONNECTION HEREWITH,  OR (B) IN ANY WAY CONNECTED WITH OR
          RELATED OR  INCIDENTAL  TO THE  DEALINGS OF THE PARTIES  HERETO OR ANY
          OTHER AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION  HEREWITH,
          OR THE  TRANSACTIONS  RELATED HERETO OR THERETO,  IN EACH CASE WHETHER
          NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR


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          TORT OR  OTHERWISE  AND EACH PARTY HERETO  HEREBY  AGREES AND CONSENTS
          THAT ANY CLAIM, DEMAND,  ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
          COURT  TRIAL  WITHOUT A JURY,  AND THAT ANY PARTY MAY FILE AN ORIGINAL
          COUNTERPART  OR A COPY OF THIS  SECTION  WITH  ANY  COURT  AS  WRITTEN
          EVIDENCE  OF THE  CONSENT  OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO
          TRIAL BY JURY.

     (h)  PLEDGOR EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE OF EACH COURT
          OF  COMPETENT  JURISDICTION  LOCATED  IN THE STATE OF NEW YORK FOR ALL
          PURPOSES IN CONNECTION WITH THIS AGREEMENT. ANY JUDICIAL PROCEEDING BY
          PLEDGOR AGAINST PLEDGEE  INVOLVING,  DIRECTLY OR INDIRECTLY ANY MATTER
          OR CLAIM IN ANY WAY ARISING OUT OF,  RELATED TO OR CONNECTED WITH THIS
          AGREEMENT SHALL BE BROUGHT ONLY IN A STATE COURT LOCATED IN THE COUNTY
          OF NEW YORK,  STATE OF NEW YORK.  PLEDGOR  FURTHER  CONSENTS  THAT ANY
          SUMMONS,  SUBPOENA  OR OTHER  PROCESS  OR PAPERS  (INCLUDING,  WITHOUT
          LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE
          AFOREMENTIONED  COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION
          WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE
          STATE OF NEW YORK OR THE SOUTHERN  DISTRICT OF NEW YORK BY  REGISTERED
          OR CERTIFIED MAIL,  RETURN RECEIPT  REQUESTED,  OR BY PERSONAL SERVICE
          PROVIDED A REASONABLE  TIME FOR  APPEARANCE IS  PERMITTED,  OR IN SUCH
          OTHER  MANNER AS MAY BE  PERMISSIBLE  UNDER THE RULES OF SAID  COURTS.
          PLEDGOR WAIVES ANY OBJECTION TO  JURISDICTION  AND VENUE OF ANY ACTION
          INSTITUTED  HEREON AND SHALL NOT ASSERT ANY  DEFENSE  BASED ON LACK OF
          JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.

     (i)  This  Agreement may be executed in one or more  counterparts,  each of
          which shall be deemed an original and all of which when taken together
          shall constitute one and the same agreement.  Any signature  delivered
          by a party by  facsimile  transmission  shall be  deemed  an  original
          signature hereto.

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

                                            CROSSINGGUARD, INC.


                                            By:  /s/ Nigel P. Hebborn
                                               ---------------------------------
                                                 Name:   Nigel P. Hebborn
                                                 Its:    President


                                            LAURUS MASTER FUND, LTD.


                                            By:  /s/ David Grin
                                               ---------------------------------
                                                 Name:  David Grin
                                                 Its:  Partner




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<PAGE>




                                   SCHEDULE A

                            Description of Collateral
                            -------------------------


     All of Pledgor's  right,  title and interest in and to deposit account (the
"Pledged Account") number  7915666874maintained with Commerce Bank ("Bank"), all
contract rights,  claims and privileges in respect of the Pledged  Account,  all
cash, checks,  money orders and other items of value of Pledgor now or hereafter
paid to, deposited in, credited to, held (whether for collection,  provisionally
or otherwise) for deposit in or otherwise in the possession or under the control
of, or in transit to, Bank or any agent, bailee or custodial thereof for deposit
in the Pledged  Account,  and all interest and income  received  therefrom,  all
substitutions therefor and all proceeds thereof in any form.


     All  of  Pledgor's  accounts,   inventory,   equipment,  goods,  documents,
instruments (including, without limitation,  promissory notes), contract rights,
general intangibles (including,  without limitation,  payment intangibles and an
absolute  right to license  on terms no less  favorable  than  those  current in
effect among our affiliates, but not own intellectual property),  chattel paper,
supporting obligations, investment property, letter-of-credit rights, trademarks
and  tradestyles in which we now have or hereafter may acquire any right,  title
or interest,  all proceeds and products thereof (including,  without limitation,
proceeds of insurance) and all additions,  accessions and substitutions  thereto
or therefor.


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</TEXT>
</DOCUMENT>
