Exhibit 4.2





 


AMENDMENT NO. 3 TO


SHAREHOLDER RIGHTS AGREEMENT


 


This Amendment No.
3 to Shareholder Rights Agreement (the “Amendment”), dated as of June 25, 2014, by and between NeuroMetrix,
Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC (the “Rights
Agent”), amends that certain Shareholder Rights Agreement, dated as of March 7, 2007, as amended as of September
8, 2009 and as of June 5, 2013, between the Company and the Rights Agent (as so amended, the “Rights Agreement”).


 


WHEREAS, the
Company and the Rights Agent are parties to the Rights Agreement; and


 


WHEREAS, the
Company desires to enter into Securities Purchase Agreements with the purchasers identified on the signature pages thereto (the
“Purchasers”) under which the Company will issue and sell up to 8,000 shares of preferred stock, par
value $0.001 per share, of the Company, 664,600 shares of common stock, par value $0.0001 per share (the “Common Stock”),
warrants to purchase up to 3,921,569 shares of Common Stock of the Company; and


 


WHEREAS, pursuant
to Section 27 of the Rights Agreement, the Company and the Rights Agent may from time to time supplement or amend the Rights Agreement
subject to the terms of the Rights Agreement; and


 


WHEREAS, the
Board of Directors of the Company has determined that an amendment to the Rights Agreement as set forth herein is necessary and
desirable in connection with the foregoing and the Company and the Rights Agent desire to evidence such amendment in writing.


 


NOW, THEREFORE,
in consideration of these premises and mutual agreements set forth herein, the parties agree as follows:


 


1.          Amendment
of Section 1. Section 1 of the Rights Agreement, “Certain Definitions” is supplemented to add the following definitions
in the appropriate locations:


 


“2014
Securities Purchase Agreement” shall mean the Securities Purchase Agreement, dated June 24, 2014, by and among the Company
and the Purchasers.


 




    	 



    	 



    

 


“Purchasers”
shall mean the purchasers identified on the signature pages to the 2014 Securities Purchase Agreement.


 


“2014
Transactions” shall mean the issuance of (x) 8,000 shares of Preferred Stock, and (y) the 2014 Warrants, each pursuant
to the 2014 Securities Purchase Agreement, and the exercise of the Warrants in accordance with their terms.


 


“2014
Warrants” shall mean the warrants to purchase 3,921,569 shares of Common Stock pursuant to the 2014 Securities Purchase
Agreement.


 


2.          Amendment
of the definition of “Acquiring Person”. The definition of “Acquiring Person” in Section 1 of the Rights
Agreement is amended by adding the following sentence at the end thereof:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, neither the Purchasers nor any of their Affiliates or Associates shall be deemed
to be an Acquiring Person solely as a result of (i) the execution of the 2014 Securities Purchase Agreement or the 2014 Warrants
or (ii) the consummation of the 2014 Transactions or any other transaction contemplated by the 2014 Securities Purchase Agreement
or the 2014 Warrants.”


 


3.        Amendment of the definition
of “Section 11(a)(ii) Event”. The definition of “Section 11(a)(ii) Event” in Section 1 of the Rights
Agreement is amended by adding the following sentence at the end thereof:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, a Section 11(a)(ii) Event shall not be deemed to have occurred solely as a result
of (i) the execution of the 2014 Securities Purchase Agreement or the 2014 Warrants or (ii) the consummation of the 2014 Transactions
or any other transaction contemplated by the 2014 Securities Purchase Agreement or the 2014 Warrants.”


 




    	 



    	 



    

 


4.        Amendment of the definition
of “Stock Acquisition Date”. The definition of “Stock Acquisition Date” in Section 1 of the Rights
Agreement is amended by adding the following sentence at the end thereof:


 


“Notwithstanding
anything in this Rights Agreement to the contrary, a Stock Acquisition Date shall not be deemed to have occurred solely as a result
of (i) the execution of the 2014 Securities Purchase Agreement or the 2014 Warrants or (ii) the consummation of the 2014 Transactions
or any other transaction contemplated by the 2014 Securities Purchase Agreement or the 2014 Warrants.”


 


5.           Amendment to
Section 30. Section 30 of the Rights Agreement is amended by adding the following sentence at the end thereof:


 


“Nothing
in this Agreement shall be construed to give any holder of Rights or any other Person any legal or equitable rights, remedies or
claims under this Agreement by virtue of (i) the execution of the 2014 Securities Purchase Agreement or the 2014 Warrants or (ii)
the consummation of the 2014 Transactions or any other transaction contemplated by the 2014 Securities Purchase Agreement or the
2014 Warrants.”


 


6.          Ratification.
The parties hereby ratify and confirm in all respects the Agreement, as amended by this Amendment.


 


7.          Governing
Law. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely
within such State.


 


8.          Counterparts.
This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.


 




    	 



    	 



    

 


9.          Descriptive
Headings. Descriptive headings of the several Sections of this Amendment
are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.


 


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IN WITNESS WHEREOF,
the parties have entered into this Amendment No. 3 to Shareholder Rights Agreement as of the date first stated above.


 


	NEUROMETRIX, INC.	 
	 	 	 
	By:	/s/ Thomas T. Higgins	 
	Name:	Thomas T. Higgins	 
	Title:	Senior Vice President, Chief	 
	 	Financial Officer, Treasurer and	 
	 	Principal Accounting Officer	 


 


AMERICAN STOCK TRANSFER & TRUST
COMPANY, LLC


 


	By:	/s/ Jennifer Donovan	 
	Name:	Jennifer Donovan	 
	Title:	SVP, Relationship Manager,  	 
	 	Regional Manager