Exhibit 4.2 Warrant


    
      

    


    EXHIBIT
      4.2

     

    THE
      TERMS OF THIS WARRANT ARE SUBJECT TO THE TERMS OF A SUBSCRIPTION AGREEMENT
      AND A
      6% SECURED CONVERTIBLE NOTE DUE 2012 AND ANY TRANSFEREE OF SUCH SECURITIES
      SHALL
      BE BOUND BY THE PROVISIONS OF SAID AGREEMENTS, COPIES OF WHICH ARE ON FILE
      WITH,
      AND AVAILABLE FROM, THE SECRETARY OF NEPHROS, INC. 

     

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
      “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE
      SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN
      THE
      ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES
      UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
      COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

     

    THE
      SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE ISSUED SUBJECT TO THE
      PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT, AND ANY TRANSFEREE OF SUCH
      SECURITIES SHALL BE BOUND BY THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH
      IS ON FILE WITH, AND AVAILABLE FROM, THE SECRETARY OF NEPHROS,
      INC.

     

    FORM
      OF

     

    COMMON
      STOCK PURCHASE WARRANT

     

    No.:
      W-
      __ Number
      of
      Shares: ___________

    Date
      of
      Issuance: _____ __, 2006

     

    FOR
      VALUE
      RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
      NEPHROS, INC., a Delaware corporation (together with its successors and assigns,
      the “Company”),
      hereby certifies that _______________________________ or its registered assigns
      (the “Holder”)
      is
      entitled to subscribe for and purchase, during the Term (as hereinafter
      defined), up to ___________________ (_________) shares (subject to adjustment
      as
      hereinafter provided) of the duly authorized, validly issued, fully paid and
      non-assessable Common Stock of the Company, at an exercise price per share
      equal
      to the Warrant Price then in effect on the terms and conditions hereinafter
      set
      forth. Capitalized terms used in this Warrant and not otherwise defined herein
      shall have the respective meanings specified in Section 7 hereof.

     

    1. Term.
      The
      term of this Warrant shall commence upon issuance and shall expire at 6:00
      p.m.,
      eastern time, on June __, 2012 (such period being the “Term”).

     

     

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      	2.  	
              Method
                of Exercise; Payment; Issuance of New Warrant; Transfer and
                Exchange.

            


    

     

    (a) Time
      of Exercise.
      The
      purchase rights represented by this Warrant may be exercised in whole or in
      part
      during the Term. 

     

    (b) Method
      of Exercise.
      The
      Holder hereof may exercise this Warrant, in whole or in part, by the surrender
      of this Warrant (with the exercise form attached hereto as Exhibit
      A
      duly
      executed) at the principal office of the Company, and by the payment to the
      Company of an amount of consideration therefor equal to the Warrant Price in
      effect on the date of such exercise multiplied by the number of shares of
      Warrant Stock with respect to which this Warrant is then being exercised,
      payable by certified or official bank check or by
      wire
      transfer to an account designated by the Company.

     

    (c) Issuance
      of Stock Certificates.
      The
      Company shall, within 15 days after such exercise and compliance with any other
      conditions herein contained, deliver to the Holder the number of full shares
      of
      Common Stock to which such person shall be entitled as aforesaid.

     

    (d) Transferability
      of Warrant.
      Subject
      to Section 2(f) hereof, this Warrant, and the rights evidenced hereby, may
      be
      transferred by a Holder, without the consent of the Company, only if it is
      transferred in its entirety, it is transferred together with the Notes (as
      defined below) pursuant to which it was issued and the transferee is an
“accredited investor” as defined in Regulation D under the Securities Act and
      agrees to be bound by all of the provisions of this Warrant and the Registration
      Rights Agreement. Any Warrants issued upon the transfer or exercise in part
      of
      this Warrant shall be numbered and shall be registered in a Warrant Register
      as
      they are issued. If transferred pursuant to this paragraph, this Warrant may
      be
      transferred on the books of the Company (the “Warrant
      Register”)
      by the
      Holder hereof in person or by duly authorized attorney, upon surrender of this
      Warrant at the principal office of the Company, properly endorsed (by the Holder
      executing an assignment in the form attached hereto) and upon payment of any
      necessary transfer tax or other governmental charge imposed upon such transfer.
      The Company shall be entitled to treat the registered holder of any Warrant
      on
      the Warrant Register (the “Registered
      Holder”)
      as the
      owner in fact thereof for all purposes and shall not be bound to recognize
      any
      equitable or other claim to or interest in such Warrant on the part of any
      other
      person. This Warrant is exchangeable at the principal office of the Company
      for
      Warrants to purchase the same aggregate number of shares of Warrant Stock,
      each
      new Warrant to represent the right to purchase such number of shares of Warrant
      Stock as the Holder hereof shall designate at the time of such exchange. All
      Warrants issued on transfers or exchanges shall be dated as of the date of
      this
      Warrant and shall be identical with this Warrant except as to the number of
      shares of Warrant Stock issuable pursuant thereto.

     

     

    (e) Limitation
      on Exercise.
      Notwithstanding anything to the contrary set forth herein, unless and until
      the
      Stockholder Approval (as defined below) has been obtained, the Company shall
      not
      issue in excess of an aggregate of 2,452,280 shares of Common Stock upon
      conversion of its 6% Secured Convertible Notes Due 2012 (“Notes”)
      or
      exercise of any Common Stock Purchase Warrants issued pursuant thereto (of
      which
      this Warrant is one), subject to adjustment upon any Change of Shares (such
      number of shares, as the same may be adjusted, the “Issuable
      Maximum”).
      The
      Issuable Maximum equals approximately 19.9% of the number of shares of Common
      Stock outstanding immediately prior to the first issuance of any Notes. If
      at
      any time the Holder hereof seeks to exercise this Warrant pursuant to Section
      2,
      and (A) the aggregate

     

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    number
      of
      shares of Common Stock previously issued upon conversion of the Notes with
      respect to which this Warrant was issued (the “Subject
      Notes”)
      or
      exercise of Warrants issued pursuant thereto (the “Exercising
      Holder’s Previous Shares”),
      together with the shares of Warrant Stock which such Holder requests that this
      Warrant be exercised pursuant to Section 2(b), would equal or exceed the pro
      rata share of the Issuable Maximum to which the Subject Notes are entitled,
      calculated based on the portion of $5,000,000 represented by the principal
      amount outstanding under the Subject Notes (the “Exercising
      Holder’s Maximum”),
      and
      (B) the Company shall not have previously obtained the vote of stockholders
      (the
“Stockholder
      Approval”),
      if
      any, as may be required by the applicable rules and regulations of the American
      Stock Exchange (or any successor entity or any other Stock Market on which
      the
      Common Stock is then listed or quoted) applicable to approve the issuance of
      shares of Common Stock in excess of the Issuable Maximum pursuant to the terms
      hereof, then the converting Holder’s request for exercise shall be deemed a
      request to exercise only that portion of this Warrant surrendered for exercise
      that is exercisable into a number of shares of Common Stock equal to the
      positive excess of the Exercising Holder’s Maximum above the Exercising Holder’s
      Previous Shares and, with respect to the remainder of the Warrant such Holder
      surrendered for conversion (the “Excess
      Warrant”),
      the
      Company shall deliver such Holder a new Warrant representing the Excess
      Warrant.

     

    (f)     Compliance
      with Securities Laws.

     

    (i) The
      Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
      and
      the shares of Warrant Stock to be issued upon exercise hereof are being acquired
      solely for the Holder’s own account and not as a nominee for any other party,
      and for investment, and that the Holder will not offer, sell or otherwise
      dispose of this Warrant or any shares of Warrant Stock to be issued upon
      exercise hereof except pursuant to an effective registration statement, or
      an
      exemption from registration, under the Securities Act and any applicable state
      securities laws.

     

    (ii) All
      certificates representing shares of Warrant Stock issued upon exercise hereof
      shall be stamped or imprinted with a legend in substantially the following
      form:

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
      SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
      OR
      HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
      IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT OR AN
      AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
      ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE STATE
      SECURITIES LAWS.

     

    THE
      SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A REGISTRATION
      RIGHTS AGREEMENT, AND ANY TRANSFEREE OF SUCH SECURITIES SHALL BE BOUND BY THE
      PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON FILE WITH, AND AVAILABLE
      FROM, THE SECRETARY OF NEPHROS, INC. 

     

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    (g)     Accredited
      Investor.
      In no
      event may the Holder exercise this Warrant in whole or in part unless the Holder
      is an “accredited investor” as defined in Regulation D under the Securities Act.


     

    3.     Stock
      Fully Paid; Reservation and Listing of Shares; Covenants.

     

    (a)     Reservation
      of Shares; Etc.
      The
      Company shall at all times reserve and keep available, out of its authorized
      and
      unissued shares of Common Stock, solely for the purpose of effecting the
      exercise of this Warrant, such number of shares of its Common Stock free of
      preemptive rights as shall be sufficient to effect the exercise of this Warrant.
      The Company shall use its reasonable best efforts from time to time, in
      accordance with the laws of the State of Delaware, to increase the authorized
      number of shares of Common Stock if at any time the number of shares of Common
      Stock not outstanding shall not be sufficient to permit the exercise of this
      Warrant.

     

    (b)     Payment
      of Taxes.
      The
      Company shall pay any and all issue or other taxes (other than income taxes)
      that may be payable in respect of any issue or delivery of shares of Warrant
      Stock on exercise of the Warrant. The Company shall not, however, be required
      to
      pay any tax which may be payable in respect of any transfer involved in the
      issue or delivery of Warrant Stock (or other securities or assets) in a name
      other than that in which Warrant was registered, and no such issue or delivery
      shall be made unless and until the person requesting such issue has paid to
      the
      Company the amount of such tax or has established, to the satisfaction of the
      Company, that such tax has been paid.

     

    (c)     Loss,
      Theft, Destruction of Warrants.
      Upon
      receipt of evidence satisfactory to the Company of the ownership of and the
      loss, theft, destruction or mutilation of any Warrant and, in the case of any
      such loss, theft or destruction, upon receipt of indemnity or security
      satisfactory to the Company or, in the case of any such mutilation, upon
      surrender and cancellation of such Warrant, the Company will make and deliver,
      in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant
      of
      like tenor and representing the right to purchase the same number of shares
      of
      Common Stock.

     

    4.     Adjustment
      of Warrant Price.
      The
      price at which such shares of Warrant Stock may be purchased upon exercise
      of
      this Warrant shall be subject to adjustment from time to time as set forth
      in
      this Section 4. The Company shall give the Holder notice of any event described
      below which requires an adjustment pursuant to this Section 4 in accordance
      with
      the notice provisions set forth in Section 5. 

     

    (a)     Change
      of Shares Adjustments.
      In the
      event the Company shall, at any time or from time to time after the date hereof
      (i) issue any shares of Common Stock as a stock dividend to the holders of
      Common Stock or (ii) subdivide or combine the outstanding shares of Common
      Stock
      into a greater or lesser number of shares (any such issuance, subdivision or
      combination being herein called a “Change
      of Shares”),
      then
      (1) the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event would own or be entitled to receive after the
      happening of such event, and (2) the Warrant Price in effect immediately prior
      to the occurrence 

     

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    of
      such
      event shall be adjusted to equal (A) the Warrant Price in effect immediately
      prior to the occurrence of such event multiplied by the number of shares of
      Common Stock for which this Warrant is exercisable immediately prior to the
      adjustment divided by (B) the number of shares of Common Stock for which this
      Warrant is exercisable immediately after such adjustment.

     

    (b)     Fractional
      Interests.
      In
      computing ad-justments under this Section 4, fractional interests in Common
      Stock shall be taken into account to the near-est one one-hundredth
      (1/100th)
      of a
      share.

     

    (c)     When
      Adjustment Not Required.
      If the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or distribution or subscription or
      purchase rights and shall, thereafter and before the distribution to
      stockholders thereof, legally abandon its plan to pay or deliver such dividend,
      distribution, subscription or purchase rights, then thereafter no adjustment
      shall be required by reason of the taking of such record and any such adjustment
      previously made in respect thereof shall be rescinded and annulled.

     

    (d)     Form
      of Warrant after Adjustments.
      The
      form of this Warrant need not be changed because of any adjustments in the
      Warrant Price or the number and kind of Securities purchasable upon the exercise
      of this Warrant.

     

    (e)     Prior
      Notice of Certain Events.
      In
      case:

     

    (i)     the
      Company shall declare any dividend (or any other distribution);

     

    (ii)     the
      Company shall authorize the granting to the holders of Common Stock of rights
      or
      warrants to subscribe for or purchase any shares of stock of any class or of
      any
      other rights or warrants;

     

    (iii)     of
      any
      reclassification of Common Stock (other than a subdivision or combination of
      the
      outstanding Common Stock, or a change in par value, or from par value to no
      par
      value, or from no par value to par value); 

     

    (iv)     of
      any
      consolidation or merger to which the Company is a party and for which approval
      of any stockholders of the Company shall be required, or of the sale or transfer
      of all or substantially all of the assets of the Company or of any compulsory
      share exchange whereby the Common Stock is converted into other securities,
      cash
      or other property; or

     

    (v)     of
      any
      Liquidation Event (as defined in the Notes);

     

    then
      the
      Company shall cause to be mailed to the Registered Holders, at their last
      addresses as they shall appear upon the stock transfer books of the Company,
      at
      least ten days prior to the applicable date hereinafter specified, a notice
      stating (x) the date on which a record (if any) is to be taken for the purpose
      of such dividend. distribution or granting of rights or warrants or, if a record
      is not to be taken, the date as of which the holders of Common Stock of record
      to be entitled to such dividend, distribution, rights or warrants are to be
      determined and a description of the cash, securities or other property to be
      received by such holders upon such dividend, distribution or granting of rights
      or warrants or (y) the date on which such reclassification, 

     

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    consolidation,
      merger, sale, transfer, share exchange or Liquidation Event is expected to
      become effective, the date as of which it is expected that holders of Common
      Stock of record shall be entitled to exchange their shares of Common Stock
      for
      securities or other property deliverable upon such exchange or Liquidation
      Event
      and the consideration, including securities or other property, to be received
      by
      such holders upon such exchange; provided,
      however,
      that no
      failure to mail such notice or any defect therein or in the mailing thereof
      shall affect the validity of the corporate action required to be specified
      in
      such notice.

     

    5.     Notice
      of Adjustments.
      Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant
      to
      Section 4 hereof (for purposes of this Section 5, each an “adjustment”), the
      Company shall cause its Chief Financial Officer to prepare and execute a
      certificate setting forth, in reasonable detail, the event requiring the
      adjustment, the amount of the adjustment, the method by which such adjustment
      was calculated (including a description of the basis on which the Board made
      any
      determination hereunder), and the Warrant Price and Warrant Share Number after
      giving effect to such adjustment, and shall cause copies of such certificate
      to
      be delivered to the Holder of this Warrant promptly after each adjustment.
      Such
      certificate shall be binding and conclusive absent manifest error.

     

    6.     Fractional
      Shares.
      No
      fractional shares or scrip representing fractional shares of Warrant Stock
      shall
      be issued upon conversion of this Warrant. If more than one certificate
      evidencing Warrants shall be surrendered for conversion at one time by the
      same
      Holder, the number of full shares issuable upon conversion thereof shall be
      computed on the basis of the aggregate principal amount of the Warrants so
      surrendered. Instead of any fractional share of Warrant Stock which would
      otherwise be issuable upon conversion of this Warrant (or of such aggregate
      number of Warrants), the Company may elect, in its sole discretion,
      independently for each Holder, whether such number of shares of Warrant Stock
      will be rounded to the nearest whole share (with a .5 of a share rounded upward)
      or whether such Holder will be given cash, in lieu of any fractional share,
      in
      an amount equal to the same fraction of the Per Share Market Value as of the
      close of business on the day of conversion.

     

    7.     Definitions.
      For the
      purposes of this Warrant, the following terms have the following
      meanings:

     

    “Board”
shall
      mean the Board of Directors of the Company.

     

    “Capital
      Stock”
means
      and includes (i) any and all shares, interests, participations or other
      equivalents of or interests in (however designated) corporate stock, including,
      without limitation, shares of preferred or preference stock, (ii) all
      partnership interests (whether general or limited) in any Person which is a
      partnership, (iii) all membership interests or limited liability company
      interests in any limited liability company, and (iv) all equity or ownership
      interests in any Person of any other type.

     

    “Common
      Stock”
means
      the Common Stock, par value $.001 per share, of the Company and any other
      Capital Stock into which such stock may hereafter be changed.

     

    “Governmental
      Authority”
means
      any governmental, regulatory or self-regulatory entity, department, body,
      official, authority, commission, board, agency or instrumentality, whether
      federal, state or local, and whether domestic or foreign.

     

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    “Nasdaq”
means
      the Nasdaq National Market or the Nasdaq Capital Market.

     

    “Noteholders”
means
      the holders of the 6% Secured Convertible Notes due 2012 issued by the Company
      pursuant to the Subscription Agreement.

     

    “OTC
      Bulletin Board”
means
      the over-the-counter electronic bulletin board.

     

    “Other
      Common”
means
      any other Capital Stock of the Company of any class which shall be authorized
      at
      any time after the date of this Warrant (other than Common Stock) and which
      shall have the right to participate in the distribution of earnings and assets
      of the Company without limitation as to amount.

     

    “Person”
means
      an individual, corporation, limited liability company, partnership, joint stock
      company, trust, unincorporated organization, joint venture, Governmental
      Authority or other entity of whatever nature.

     

    “Per
      Share Market Value”
means
      on any particular date (a) the closing bid price per share of the Common Stock
      on such date on Nasdaq
      or
      another registered national stock exchange on which the Common Stock is then
      listed, or if there is no such price on such date, then the closing bid price
      on
      such exchange or quotation system on the date nearest preceding such date,
      or
      (b) if the Common Stock is not listed then on Nasdaq or any registered national
      stock exchange, the closing bid price for a share of Common Stock in the
      over-the-counter market, as reported by the OTC Bulletin Board or in the
      National Quotation Bureau Incorporated (or similar organization or agency
      succeeding to its functions of reporting prices) at the close of business on
      such date, or (c) if the Common Stock is not then reported by the OTC Bulletin
      Board or the National Quotation Bureau Incorporated (or similar organization
      or
      agency succeeding to its functions of reporting prices), then the average of
      the
“Pink Sheet” quotes for the five days preceding such date of determination, or
      (d) if the Common Stock is not then publicly traded the fair market value of
      a
      share of Common Stock as determined by the Board, whose determination shall
      be
      final and binding, absent manifest error; and provided,
      further
      that all
      determinations of the Per Share Market Value shall be appropriately adjusted
      for
      any stock dividends, stock splits or other similar transactions during such
      period.

     

    “Securities”
means
      any debt or equity securities of the Company, whether now or hereafter
      authorized, any instrument convertible into or exchangeable for Securities
      or a
      Security, and any option, warrant or other right to purchase or acquire any
      Security. “Security” means one of the Securities.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any similar federal statute then
      in
      effect.

     

    “Subscription
      Agreements”
means
      the Subscription Agreements dated as of June __, 2006, among the Company and
      the
      Noteholders.

     

    “Term”
has
      the
      meaning specified in Section 1 hereof.

     

    “Warrants”
means
      the Warrants issued pursuant to the Notes, including, without limitation, this
      Warrant, and any other warrants of like tenor issued in substitution or


     

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     exchange
      for any thereof pursuant to the provisions hereof or of any of such other
      Warrants. 

     

    “Warrant
      Price”
      initially means U.S. $0.01, as such price may be adjusted from time to time
      as
      shall result from the adjustments specified in this Warrant, including Section
      4
      hereto.

     

    “Warrant
      Share Number”
means
      at any time the aggregate number of shares of Warrant Stock which may at such
      time be purchased upon exercise of this Warrant, after giving effect to all
      prior adjustments and increases to such number made or required to be made
      under
      the terms hereof.

     

    “Warrant
      Stock”
means
      Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
      issuable pursuant to any Warrant or Warrants.

     

    8.     Miscellaneous

     

    (a)     This
      Warrant may be amended only by mutual written agreement of the Company and
      the
      Holder or, if such amendment shall apply to all outstanding Warrants, with
      the
      written consent of the Company and the Secured Party (as defined in the Notes).
      Furthermore, the Company may take any action herein prohibited or omit to take
      any action herein required to be performed by it, and any breach of any
      covenant, agreement, warranty or representation may be waived, if the Company
      has obtained the written consent or waiver of the Holder or, if such consent
      or
      waiver shall apply to all outstanding Warrants, the Secured Party. Any
      amendments approved in compliance with this Section 8 shall bind the Holder’s
      successors and assigns.

     

    (b)     This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York, without giving effect to principles governing conflicts
      of
      law that would defer to the substantive law of another
      jurisdiction.

     

    (c)     Notice.
      Any
      notice or other communication required or permitted to be given hereunder shall
      be in writing and shall be mailed by certified mail, return receipt requested,
      or by Federal Express, Express Mail or similar guaranteed overnight delivery
      or
      courier service or delivered in person against receipt to the party to whom
      it
      is to be given,

     

    (i)   
if
      to the
      Company, 

     

     Nephros,
      Inc.

     3960
      Broadway    

     New
      York, New York 10032

     Attn:
      President

     

    (ii)      
with
      a
      copy to,

     

    Kramer
      Levin Naftalis & Frankel LLP

    1177
      Avenue of the Americas

    New
      York, New York 10036

    Attention:
      Thomas D. Balliett, Esq.

     

     

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              (iii)

            	
              if
                to the Holder, at the address set forth on the Company’s
                records,

            


    

     

    or
      in
      either case, to such other address as the party shall have furnished in writing
      in accordance with the provisions of this Section 8(c). Any notice given by
      means permitted by this Section 8(c) shall be deemed given at the time of
      receipt thereof at the address specified in this Section 8(c).

     

    (d)     Interpretation.
      If any
      term or provision of this Warrant shall be held invalid, illegal or
      unenforceable, the validity of all other terms and provisions hereof shall
      in no
      way be affected thereby.

     

    (e)     Successors
      and Assigns.
      Subject
      to the restrictions on transfer contained herein, this Warrant shall be binding
      upon the Company and its successors and assigns and shall inure to the benefit
      of the Holder and its successors and registered assigns.

     

    (f)     Assignment
      by the Company.
      Neither
      this Warrant nor any of the rights, interests or obligations hereunder may
      be
      assigned, by operation of law or otherwise, in whole or in part, by the Company
      without the prior written consent of the Holder.

     

    (g)     Saturdays,
      Sundays, Holidays.
      If any
      date that may at any time be specified in this Note as a date for the taking
      of
      any action under this Warrant shall fall on Saturday, Sunday or on a day which
      in New York shall be a legal holiday, then the date for the making of that
      payment shall be the next subsequent day which is not a Saturday, Sunday or
      legal holiday.

     

    9.     Registration
      Rights.
      The
      Holder of this Warrant is entitled to the benefit of certain registration rights
      with respect to the shares of Warrant Stock issuable upon the exercise of this
      Warrant pursuant to that certain Registration Rights Agreement by and among
      the
      Company and Persons listed on Schedule I thereto (the “Registration
      Rights Agreement”)
      and
      the registration rights with respect to the shares of Warrant Stock issuable
      upon the exercise of this Warrant by any subsequent Holder may only be assigned
      in accordance with the terms and provisions of the Registrations Rights
      Agreement.

     

    10.     Headings.
      The
      headings of the Sections of this Warrant are for convenience of reference only
      and shall not, for any purpose, be deemed a part of this Warrant.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    9


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the day and year
      first above written.

     

    NEPHROS,
      INC.

     

    By:______________________________       

       Name:

       Title:

     

     

     

    10


     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          


        

      

    



    EXERCISE
      FORM

     

    NEPHROS,
      INC.

     

    The
      undersigned _______________, pursuant to the provisions of the within Warrant,
      hereby elects to purchase _____ shares of Common Stock of Nephros, Inc. covered
      by the within Warrant.

     

    Dated:
      _________________          Signature     
 ___________________________

     

         Address     
___________________________

                   
      ___________________________

     

    The
      Holder shall pay the sum of $________ to the Company in accordance with the
      terms of the Warrant. 

     

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the within Warrant and all rights evidenced thereby and
      does
      irrevocably constitute and appoint _____________, attorney, to transfer the
      said
      Warrant on the books of the within named corporation.

     

    
      Dated:
        _________________          Signature     
 ___________________________

       

           Address     
___________________________

                     
        ___________________________

       

    

     

    PARTIAL
      ASSIGNMENT

     

    FOR
      VALUE
      RECEIVED, _________________ hereby sells, assigns and transfers unto
      __________________ the right to purchase _________ shares of Warrant Stock
      evidenced by the within Warrant together with all rights therein, and does
      irrevocably constitute and appoint ___________________, attorney, to transfer
      that part of the said Warrant on the books of the within named
      corporation.

     

    
      Dated:
        _________________          Signature     
 ___________________________

       

           Address     
___________________________

                     
        ___________________________

       

    

     

    FOR
      USE
      BY THE ISSUER ONLY:

     

    This
      Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
      ___________, _____, shares of Common Stock issued therefor in the name of
      _______________, Warrant No. W-_____ issued for ____ shares of Common Stock
      in
      the name of _______________.