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Exhibit 10.5
 
 
Nephros, Inc.
3960 Broadway
New York, NY 10032

                        September 18, 2007

National Securities Corporation
875 N. Michigan Avenue, Suite 1560
Chicago, IL 60611

Gentlemen:

Reference is made to the transactions contemplated in those several Subscription
Agreements (each a “Subscription Agreement”) by and among Nephros, Inc., a
Delaware corporation, (the “Company”) and each subscriber a party thereto (the
“Buyers”) pursuant to which Series A 10% Secured Convertible Notes due 2008
(collectively, the “Securities”) are being sold to the Buyers in reliance upon
the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (“1933 Act”) and Regulation D promulgated by
the Securities and Exchange Commission (the “SEC”) under the 1933
Act.  Reference is also made to that certain corporate finance engagement letter
agreement dated June 8, 2007, as amended (the “Engagement Agreement”) by and
between the Company, National Securities Corporation (“NSC”) and Dinosaur
Securities LLC (“Dinosaur”) pursuant to which the Company engaged NSC and
Dinosaur with respect to a proposed capital transaction, which has resulted in
the financing contemplated in the Subscription Agreement (“Financing”).  Any
terms used and not otherwise defined herein shall have the respective meanings
set forth in the Subscription Agreement.

1.  Representations and Warranties of the Company. For the benefit of NSC and
Dinosaur, the Company hereby incorporates by reference the representations and
warranties as set forth in Sections 3(a), (b), (c), (d), (e), (f), (g), (h),
(i), (j), (k), (o), (q) and (r) of the Subscription Agreement with the same
force and effect as if specifically set forth herein. In addition, at each
closing of the Financing (“Closing”), the Company will provide NSC with copies
of all closing documents that are furnished to the Buyers pursuant to the
Subscription Agreement, as well as the Form D promptly following its filing with
the SEC.

2.  Closing; Fees. Simultaneously with payment for and delivery of the
Securities at each Closing, the Company shall pay to NSC and Dinosaur the
compensation (cash and placement agent warrants) and expense reimbursement (NSC
only) as set forth in the Engagement Agreement (“General Expense Obligation”)
which the Company shall disclose to investors in Schedule 3(f) of the disclosure
schedules to the Subscription Agreement.  Lastly, upon the reasonable
determination by NSC that a FINRA Rule 2710 filing is required in connection
with the registration statement relating to the resale of the shares underlying
the placement agent warrants, the Company will pay all filing fees, costs and
reasonable legal fees in connection with such filing to be prepared by the
Placement Agent’s counsel (the “2710 Filing Fee and Expense
Obligation”).  Notwithstanding anything contained herein, the aggregate General
Expense Obligation and 2710 Filing Fee and Expense Obligation shall in no event
exceed $25,000 in the aggregate.

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3.  Miscellaneous.

(a).  Survival.  Notwithstanding anything contained herein, the Engagement
Agreement remains in full force and effect in accordance with its terms.

(b).  Representations, Warranties and Covenants to Survive Delivery.   The
Company acknowledges that the representations and warranties from the
Subscription Agreement incorporated by reference herein by the Company shall
survive the execution and delivery of the Subscription Agreement for a period of
one year from the First Closing (as defined in the Subscription Agreement).

(c).  Applicable Law.   This Agreement shall be governed by and construed under
the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.  Each of
the parties hereto (1) agree that any legal suit, action or proceeding arising
out of or relating to this Agreement shall be instituted exclusively in New York
State Supreme Court, County of New York, or in the United States District Court
for the Southern District of New York, (2) waive any objection which the Company
may have now or hereafter to the venue of any such suit, action or proceeding,
and (3) irrevocably consent to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding.  Each of the
parties hereto further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in the New
York State Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agree that service of process
upon it mailed by certified mail to its address shall be deemed in every respect
effective service of process upon it, in any such suit, action or
proceeding.  THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

(d).  Counterparts.  This Agreement may be signed in counterparts with the same
effect as if both parties had signed one and the same instrument.

(e).  Entire Agreement.  This Agreement, together with the Engagement Agreement,
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior and contemporaneous agreements,
understandings, documents, negotiations and discussions, whether oral or
written, of the parties hereto.

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If you find the foregoing is in accordance with our understanding, kindly sign
and return to us a counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement between us.
 
 
                                                              Very truly yours,
 
 
                                                               NEPHROS, INC.

                                                               By:  ______________________________
                                                                       Norman J.
Barta
                                           President and Chief Executive Officer

AGREED AND ACCEPTED TO
AS OF THE DATE FIRST WRITTEN ABOVE:

NATIONAL SECURITIES CORPORATION

By: __________________________________________
       Brian Friedman
       Managing Director and Head of Investment Banking

DINOSAUR SECURITIES, LLC

By: __________________________________
        Glenn Grossman
        President