Secured
Promissory Note


(Single
Advance – Non-Revolving)


 


	$1,187,000.00	March
    27, 2018


 


FOR
VALUE RECEIVED, NEPHROS, INC., a Delaware corporation (“Borrower”), promises to pay to TECH CAPITAL,
LLC, a California limited liability company (“Lender”), or order, at Lender’s place of business at
2010 North First Street, Suite 300, San Jose, California 95131, or at such other place as may be designated in writing to Borrower
by the holder of this Secured Promissory Note (this “Note”), the principal sum of One Million One Hundred
Eighty-Seven Thousand and 00/100 Dollars ($1,187,000.00) (as such amount shall change from time to time, the “Loan
Amount”), which shall be subject to and disbursed under the additional terms and conditions of that certain Loan
and Security Agreement dated August 16, 2017 and all of the riders and amendments thereto by and between Borrower and Lender
(the “Loan Agreement“), together with interest from the date of the Advance (as defined below) on the unpaid
principal balance at a rate (the “Rate”) of eight percent (8.00%) per annum. Upon the occurrence of
a default or an event of default under this Note, the rate of interest on the Note shall be increased at the option of Lender
by an additional three percent (3.00%). Interest shall be computed on the basis of a 360-day year and shall be charged
to Borrower’s Revolving Line (as defined below) on the first day of the following month, and, if not so paid, it shall thereafter
bear like interest as the principal.


 


1.
The amount to be advanced under this Note shall be made in one advance (the “Advance”) of $1,187,000.00 on
or about the date hereof. The Advance under this Note will be used: (a) to repay all obligations of Borrower to Lambda Investors
LLC (and other creditors) (the “Incumbent Loan” and such creditors, collectively, the “Incumbent Lender”)
under that certain existing Note and Warrant Agreement entered into on or about June 7, 2016, and (b) for working capital purposes..


 


2.
Lender may, at its option, charge Borrower’s Revolving Line for the principal, interest, and fees hereunder, which are due
and payable on the dates and in the manner that follows:


 


(a)
Interest payments will be due and payable in arrears commencing on the first day of the first month following disbursement of
the Advance hereunder and continuing on the first day of each month thereafter while amounts hereunder are due and owing;


 


(b)
Principal payments will be due and payable follows:


 


	 	[  ]	Per
    the following schedule: ———-n/a———
	 	 	 
	 	X	monthly
    commencing on May 1, 2018 and continuing on the first day of each month thereafter for fifty-nine months, an amount equal
    to Twenty Four Thousand Sixty Eight and 8/100 Dollars ($24,068.08), with a final monthly installment of Twenty Four Thousand
    Sixty Eight and 4/100 Dollars ($24,068.04) due on the Maturity Date.
	 	 	 
	 	[  ]	one
    (1) payment of ———-n/a——— Dollars ($———-n/a———)
    due on the Maturity Date.


 


(c)
A loan fee of one-half percent (0.50%) of $1,187,000.00, which equals the sum of Five Thousand Nine Hundred Thirty-Five and
00/100 Dollars ($5,935.00) (the “Loan Fee”), shall be charged at the time of the execution hereof;


 


(d)
A administrative fee of ———-n/a——— percent (——n/a——%) of $
———-n/a——— per month of the daily outstanding balance of the Loan Amount during the preceding
month, (the “Administrative Fee”) shall be charged on the first day of each month following disbursement of
the Advance and monthly thereafter while amounts hereunder are due and owing;


 




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(e)
An appraisal fee of ———-n/a——— and 00/100 Dollars ($———-n/a———)
(the “Appraisal Fee”) shall be charged for each appraisal of the Collateral performed by Lender or its agents;


 


(f)
On the first day of each month, Lender will transfer all loan payments due under this Note, including principal payments and all
accrued interest and Administrative Fees, to the accounts receivable line of credit (the “Revolving Line”)
extended to Borrower pursuant to the Loan Agreement;


 


(g)
Borrower shall pay all fees and legal and other costs, not to exceed $500.00, incurred by Lender in connection with the
negotiation and preparation of this Note and the documents executed in connection herewith and the perfection of any security
interest in any collateral granted by Borrower or any third party to Lender in connection with this Note, including but not limited
to attorneys’ fees and legal and other costs, which Lender shall charge to the Revolving Line;


 


(h)
On April 1, 2023 (the “Maturity Date”), the entire principal balance hereof, together with any and all unpaid
and/or accrued interest, loan fees, monthly Administrative Fees, and attorneys’ fees and legal and other costs due hereunder,
shall be due, owing and payable in full, unless earlier due and payable pursuant to the terms of Section 6;


 


(i)
Interest not paid when due shall bear interest at the same rate as principal. All principal and interest due hereunder is payable
in lawful money of the United States of America; and


 


(j)
In no event shall the interest rate or rates payable under this Note, plus any other amounts paid in connection herewith, exceed
the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.
Borrower and Lender intend legally to agree upon the rate or rates of interest (and the other amounts paid in connection herewith)
and manner of payment stated within this Note; provided, however, that anything contained herein to the contrary notwithstanding,
if said interest rate or rates of interest (or other amounts paid in connection herewith) or the manner of payment exceeds the
maximum allowable under applicable law, then, ipso facto as of the date of this Note, Borrower is and shall be liable only
for the payment of such maximum as allowed by law, and payment received from Borrower in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of this Note to the extent of such excess.


 


3.
Voluntary prepayments of the principal balance of this Note shall be permitted at any time. Also, a prepayment may be deemed to
have occurred regardless of whether such payment or other reduction (i) is voluntary or involuntary; (ii) is occasioned by Lender’s
acceleration of the obligations hereunder or a demand hereunder; (iii) is made by Borrower or other third party, including a guarantor
of Borrower’s obligation hereunder; (iv) results from Lender’s receipt or collection of proceeds of its collateral,
including insurance proceeds and condemnation awards; (v) results from Lender’s exercise of its rights of setoff; and/or
(iv) is made during an insolvency proceeding, or is made pursuant to any plan of reorganization or liquidation. Any such voluntary
or involuntary prepayment shall be accompanied by all interest and any Administrative Fees that have accrued and remain unpaid
with respect to the amount of principal being repaid and a prepayment fee equal to the following:


 


(a)
———-N/A———- percent (———-N/A———-%) of the amount
prepaid with respect to any prepayments made during the first 12 months of the term of this Note; and


 


(b)
———-N/A———- percent (———-N/A———-%) of the amount
prepaid with respect to any prepayments made thereafter.


 


Amounts
repaid or prepaid with respect to this Note may not be reborrowed. Partial prepayments of principal shall be applied to scheduled
payments of principal in the inverse order of their maturity.


 




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4.
If any installment of principal, interest, or Administrative Fee hereunder is not paid when due, the holder shall have the following
rights in addition to the rights set forth herein, in the Loan Agreement, and under law:


 


(a)
the right to compound interest and the Administrative Fee by adding the unpaid interest and/or Administrative Fee to principal,
with such amount thereafter bearing interest and the Administrative Fee at the rates provided in this Note; and


 


(b)
if any installment is more than ten (10) days past due, the right to collect a charge equal to the greater of Fifteen and 00/100
Dollars ($15.00) or five percent (5.00%) of the late payment for each month in which it is late. This charge is a result of
a reasonable endeavor by Borrower and the holder to estimate the holder’s added legal and other costs and damages resulting
from Borrower’s failure to make timely payments under this Note; hence Borrower agrees that the charge shall be presumed
to be the amount of damage sustained by the holder since it is extremely difficult to determine the actual amount necessary to
reimburse the holder for damages.


 


5.
Borrower expressly waives presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice
of protest, presentment for the purpose of accelerating maturity, diligence in collection, the benefit of any exemption under
the homestead exemption laws, and all other notices and demands in connection with the delivery, acceptance, performance, or enforcement
of this Note. Borrower agrees that Lender may release, surrender, exchange, or substitute any collateral now held or which may
hereafter be held as security for the payment of this Note, and may extend the time for payment or otherwise modify the terms
of payment of any part or the whole of the debt evidenced hereby. Borrower irrevocably waives the right to direct the application
of all payments at any time hereafter received by Lender on behalf of Borrower, and Borrower agrees that Lender shall have the
continuing exclusive right to apply any such payments against the then due and owing obligations of Borrower to Lender as Lender
may deem advisable.


 


6.
It is expressly agreed that if a default or breach occurs in the payment of any principal or interest, or other fee as provided
above, or in the payment or performance of any other of Borrower’s Obligations (as that term is defined in the Loan Agreement),
at Lender’s option, the unpaid principal balance of this Note, together with interest accrued thereon, and other fees as
provided above shall forthwith be due and payable. Notwithstanding anything to the contrary in this Note, in the event the
Revolving Line is due, owing and payable, all amounts due under this Note shall also be due, owing, and payable.


 


7.
This Note is made subject to the terms and conditions of and is secured by security interests granted by Borrower in favor of
Lender, and all covenants, conditions, and agreements contained in the Loan Agreement, and ———-N/A———-——-,
all of which are hereby incorporated and made a part hereof. All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings ascribed to them in the Loan Agreement.


 


8.
Borrower hereby consents to any and all renewals, replacements, and/or extensions of time for payment of this Note before, at,
or after maturity. This Note shall be binding upon all legal representatives, successors, and assigns of Borrower. However, Borrower
may not assign this Note or any rights hereunder without Lender’s prior written consent. Neither an unconsented assignment
nor an assignment consented to by Lender shall release Borrower or any guarantor of any Obligation or indebtedness hereunder.
Lender reserves the right to sell, assign, transfer, negotiate, or grant participations in all or any part of, or any interest
in, Lender’s rights and benefits under each of the documents executed herewith or hereafter. In connection therewith, Lender
may disclose all documents and information which Lender now has or may hereafter acquire relating to any credit extended by Lender
to Borrower, or about Borrower or its business, any guarantor or the business of any guarantor, or any Collateral required hereunder.
Any waiver of any rights under this Note, the Loan Agreement, or under any other agreement, instrument, or paper signed by Borrower
is neither valid nor effective unless made in writing and signed by Lender. No delay or omission on the part of the Lender in
exercising any right shall operate as a waiver thereof or of any other right.


 


9.
Borrower promises to pay all legal and other costs and expenses of collection of this Note and to pay all reasonable attorneys’
fees incurred in such collection or in any suit or action to collect this Note or any appeal thereof. Borrower and Lender agree
that this Note is entered into and Borrower’s performance to Lender occurs at San Jose, California. This Note shall be governed
by, construed under, and enforced in accordance with the laws of the State of California.


 




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10.
Any collateral pledged to secure any obligation of Borrower shall also secure any other obligation of Borrower except that any
real property pledged to secure any obligation of Borrower shall only secure any other obligation of Borrower if Lender specifically
so agrees in writing.


 


11.
An Event of Default under this Note or the Loan Agreement, or any other agreement referenced in Section 7 above shall be an Event
of Default under each of such loan documents, and vice versa.


 


12.
In the event any one or more of the provisions contained in this Note is held to be invalid, illegal or unenforceable in any respect,
then such provision shall be ineffective only to the extent of such prohibition or invalidity, and the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.


 


13.
This Note, or a signature page thereto intended to be attached to a copy of this Note, signed and transmitted by facsimile machine,
telecopier, or other electronic means (including via transmittal of a “pdf” file) shall be deemed and treated as an
original document. The signature of any person thereon, for purposes hereof, is to be considered as an original signature, and
the document transmitted is to be considered to have the same binding effect as an original signature on an original documents.
At the request for any party hereto, any facsimile, telecopy or other electronic document is to be re-executed in original form
by the persons who executed the facsimile, telecopy or other electronic document is to be re-executed in original form by the
persons who executed, the facsimile, telecopy or other electronic document. No party hereto may raise the use of a facsimile machine,
telecopy, or other electronic means or the fact that any signature was transmitted through the use of a facsimile machine, telecopier,
or other electronic means as a defense to the enforcement of this Note.


 


14.
This is an integrated Note and supersedes all prior agreements or negotiations regarding the subject matter hereof. This Note
may only be amended in writing. This Note amends and restates that certain Secured Promissory Note dated as of ———-n/a———
by BORROWER, however, this Note is not a novation of the obligations under such prior Secured Promissory Note or the terms
contained therein.


 


This
Note is subject to the terms and conditions set forth in Addendum A attached hereto and made a part hereof by this reference.


 


IN
WITNESS HEREOF, this Note has been executed and delivered on the date first set forth above.


 


	NEPHROS,
    INC.,	 
	a
    Delaware corporation	 
	 	 	 
	 	/s/
Daron Evans	 
	By:	Daron
    Evans	 
	Title:	President
    & Chief Executive Officer	 



 



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ADDENDUM
A


 


Pursuant
to this Addendum A to Secured Promissory Note (this “Addendum”) executed by NEPHROS, INC., a Delaware
corporation (“Borrower”) and TECH CAPITAL, LLC, a California limited liability company (“Lender”),
the foregoing Secured Promissory Note (the “Note”) is hereby amended and/or supplemented by the following terms
and conditions, which are incorporated by this reference in the Note as the following additional paragraphs to the Note:


 


15.
As a condition precedent to Lender’s making of the Advance, Lender shall have received a payoff letter from the Incumbent
Lender (in form acceptable to Lender) specifying the amount required to repay the Incumbent Loan in full, with such repayment
amount not to exceed the amount of the Advance, and with Borrower by its execution of the Note irrevocably authorizing Lender
to use proceeds from the Advance to directly repay the Incumbent Loan to the Incumbent Lender.


 




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