Document:

Exhibit
10.56

    

    THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT

    OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE

    DISPOSED
OF UNLESS REGISTERED UNDER THAT ACT

    OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.

     

    NEPHROS,
INC.

     

    Senior
Secured Note

    Due April 1, 2011

     

    
      
        	
                $500,000

              	
                No.
      R-2010-A-1

              	
                October
      1, 2010

              

      

    

     

    Nephros,
Inc., a Delaware corporation (the “Company”),
for value received, hereby promises to pay to the order of Lambda Investors LLC
(the “Lender”)
or its registered assigns, the principal sum of FIVE HUNDRED THOUSAND DOLLARS
And No Cents ($500,000) on or before April 1, 2011, and to pay interest
(computed on the basis of a 360-day year consisting of twelve 30-day months)
from the date hereof on the unpaid principal amount hereof at the rate of 12%
per annum (but in no event in excess of the maximum non-usurious rate of
interest permitted under applicable law), payable at the time the principal
amount hereof shall have become due and payable, whether at maturity or by
acceleration or otherwise, and thereafter at the rate of 16% per annum on any
overdue principal amount and (to the extent permitted by applicable law) on any
overdue interest until paid (but in no event in excess of the maximum
non-usurious rate of interest permitted under applicable law).

     

    All
payments of principal and interest on this Note shall be in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts.

     

    If any
payment on this Note is due on a day which is not a Business Day, it shall be
due on the next succeeding Business Day.  For purposes of this Note,
“Business
Day” shall mean any day other than a Saturday, Sunday or a legal holiday
or day on which banks are authorized or required to be closed in New
York.

     

    1.     
       Definitions.  As
used herein, the term “Note”
shall mean this Senior Secured Note Due April 1, 2011 and any Senior Secured
Note or Notes subsequently issued upon exchange or transfer hereof, and shall
include all amendments, supplements and other modifications
thereto.  The term “Security
Documents” shall mean (a) the Security Agreement by and between the
Company and the Lender that was executed and delivered on the date of the
original issuance of this Note, including all amendments, supplements and other
modifications thereto, (b) the Intellectual Property Security Agreement by and
between the Company and the Lender that was executed and delivered on the date
of the original issuance of this Note, including all amendments, supplements and
other modifications thereto, and (c) all other documents, agreements and
instruments now or hereafter executed and delivered by the Company or any other
person or entity (each, a “Person”)
as security for the payment or performance of the Note, including all
amendments, supplements and other modifications thereto.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.             Transfer, Etc. of
Note.  The holder of this Note may transfer this Note or sell
participations herein without the consent of the Company.  The holder
shall provide the Company with written notice of any transfer of this Note,
which notice shall include the name and address of the transferee, and such
other identification and other verification as the Company may reasonably
request, whereupon the Company shall register the transferee as the owner and
holder of this Note for all purposes.

     

    3.             Loss, Theft, Destruction or
Mutilation of Note.  In the case of any loss, theft or
destruction of this Note, upon receipt of an affidavit of loss from the holder
thereof, or, in the case of mutilation of this Note, upon surrender and
cancellation of this Note, the Company will make and deliver, in lieu of this
Note, a substitute Note of like tenor and unpaid principal amount and dated as
of the date hereof.

     

    4.             Persons Deemed Owners;
Holders.  The Company may deem and treat the person in whose
name this Note is registered as the owner and holder of this Note for the
purpose of receiving payment of principal of and interest on this Note and for
all other purposes whatsoever, whether or not this Note shall be
overdue.  The terms “Noteholder”
or “holder,”
as used herein, shall be deemed to mean the person in whose name the Note is
registered as aforesaid at such time.

     

    5.             Prepayments.

     

    (a)         
 Optional
Prepayment.  Upon notice given as provided in Section 5(c), the
Company may, at its option, prepay this Note, without premium or penalty, as a
whole at any time or in part from time to time in principal amounts which shall
be integral multiples of $1,000, together with any accrued and unpaid interest
thereon through the date of such prepayment.

     

    (b)        
 Mandatory
Prepayments.

     

    (i)           
If on any date the Company or any subsidiary shall receive any Cash Proceeds (X)
from the Rights Offering (as defined in Section 7(n), below), (Y) from any other
issuance of debt or equity securities of the Company or any subsidiary, or (Z)
from any issuance or incurrence of any other Indebtedness (excluding any
Indebtedness incurred in accordance with Section 7(j)), an amount equal to 100%
of the Cash Proceeds therefrom shall be applied on the date of such receipt,
issuance or incurrence toward the prepayment of this Note and any other amounts
payable under the Loan Documents (as defined below) until all such amounts have
been paid in full.  The provisions of this paragraph do not constitute
a consent to the incurrence of any Indebtedness not permitted by Section
7(j).

     

    (ii)           If
on any date the Company or any of its subsidiaries shall receive Cash Proceeds
from any Disposition of assets outside of the ordinary course of business, then
on the date of receipt by the Company or such subsidiary of such Cash Proceeds,
an amount equal to the amount of such Cash Proceeds shall be applied on the date
of such receipt towards the prepayment of this Note and any other amounts
payable under the Loan Documents until all such amounts have been paid in
full.  The provisions of this paragraph do not constitute a consent to
the consummation of any Disposition not permitted by Section
7(i).

    
      
         

      

      
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    (iii)           In
connection with any mandatory prepayment pursuant to this Section 5(b), the
Company shall give notice as provided in Section 5(c).

     

    For
purposes of this Note:

     

    “Cash
Proceeds” means, with respect to the Rights Offering, any other issuance
of debt or equity securities of the Company or any subsidiary, any other
issuance or incurrence of any Indebtedness by the Company or any subsidiary, or
any Disposition, the cash proceeds received by the Company and its subsidiaries
in connection with such transaction (including any cash received in respect of
non-cash proceeds, but only as and when received).

     

     “Disposition”
means the sale, assignment, transfer, license, lease or other disposition
(including any sale and leaseback transaction) of any property by the Company or
any of its subsidiaries, including any sale, assignment, transfer or other
disposal, with or without recourse, of any intellectual property or any rights
and claims associated therewith.  “Dispose
of” has a corresponding meaning.

     

     (c)          Notice of
Prepayment.  The Company shall give written notice of any
prepayment of this Note or any portion hereof pursuant to Section 5(a) or
Section 5(b) not less than five (5) nor more than sixty (60) days prior to the
date fixed for such prepayment.  Such notice of prepayment and all
other notices to be given to the holder of this Note shall be given by
registered or certified mail to the Person in whose name this Note is registered
at its address designated on the register maintained by the Company on the date
of mailing such notice of prepayment or other notice.  Upon notice of
prepayment being given as aforesaid, the Company covenants and agrees that it
will prepay, on the date therein fixed for prepayment, this Note or the portion
hereof, as the case may be, so called for prepayment.

     

    (d)           Allocation of All
Payments.  Payments hereunder shall be applied first to unpaid
fees and expenses, next to accrued and unpaid interest, and thereafter to the
unpaid principal of this Note.

     

    (e)           Interest After Date Fixed
for Prepayment.  If this Note or a portion hereof is called for
prepayment as herein provided, whether optional or mandatory, this Note or such
portion shall cease to bear interest on and after the date fixed for such
prepayment unless, upon presentation for such purpose, the Company shall fail to
pay this Note or such portion, as the case may be, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate per annum provided herein for overdue
amounts.

     

    (f)    
       Surrender of Note; Notation
Thereon.  Upon any prepayment of a portion of the principal
amount of this Note, the holder hereof, at its option, may require the Company
to execute and deliver at the expense of the Company (other than for transfer
taxes, if any), upon surrender of this Note, a substitute Note registered in the
name of such Person as may be designated by such holder for the principal amount
of this Note then remaining unpaid, dated as of the date hereof, or may present
this Note to the Company for notation hereon of the payment of the portion of
the principal amount of this Note so prepaid.

     

    
      
         

      

      
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    6.  
          Representations and
Warranties.  The Company hereby represents and warrants
that:

     

    (a)           Organization, Qualifications
and Corporate Power.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly licensed or qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which it is required to
be so licensed or qualified with respect to the operations of its business,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the business, assets, results of operations or
condition (financial or other) of the Company and its business.  The
Company has all requisite power and authority to own, operate and lease its
assets and to carry on its business as it is now being conducted and to execute
and deliver this Note and the Security Documents, and to perform its obligations
hereunder and thereunder.

     

    (b)           Authorization of Agreements,
Etc.  The execution and delivery by the Company of this Note
and Security Documents, and the performance by the Company of its respective
obligations hereunder and thereunder have been duly authorized by all requisite
corporate action.

     

    (c)           Validity.  This
Note and the Security Documents have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors’ rights generally and to general equity
principles.

     

    (d)           Non-Contravention.  The
execution, delivery and performance by the Company of this Note and the Security
Documents will not:  (i) violate any provision of any law, any order
of any court or other agency of government or permits currently in effect to
which the Company is subject; (ii) result in a breach of, or constitute a
default under, the provisions of any indenture, loan or credit agreement or any
other agreement, lease or instrument to which the Company is subject or by which
it or any of its assets is bound; or (iii) result in, or require, the creation
or imposition of any lien, security interest, mortgage, pledge, charge or
encumbrance of any nature whatsoever (each, a “Lien”)
with respect to any of the assets of the Company or any of its subsidiaries,
except as created pursuant to the Security Documents.

     

    (e)           Governmental
Approvals.  No registration or filing with, or consent or
approval of, or other action by, any Federal, state or other governmental agency
or instrumentality is or will be necessary for the valid execution, delivery and
performance of the Security Documents or the issuance, sale and delivery of this
Note, except as contemplated by the Security Documents.

     

    7.       
     Covenants Relating to the
Note.  The Company covenants and agrees that so long as the
Note shall be outstanding:

    
      
         

      

      
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    (a)           Maintenance of
Office.  The Company will maintain an office or agency in such
place in the United States of America as the Company may designate in writing to
the registered holder of this Note, where this Note may be presented for
registration of transfer and for exchange as herein provided, where notices and
demands to or upon the Company in respect of this Note may be served and where
this Note may be presented for payment.  Until the Company otherwise
notifies the holder hereof, said office shall be the principal office of the
Company located at 41 Grand Avenue, River Edge, New Jersey 07661.

     

    (b)           Payment of
Taxes.  The Company will promptly pay and discharge or cause to
be paid and discharged, before the same shall become in default, all material
taxes and assessments imposed upon the Company or any of its subsidiaries or
upon the income and profits of the Company or any of its subsidiaries, or upon
any property, real, personal or mixed, belonging to the Company or any of its
subsidiaries, or upon any part thereof by the United States or any State
thereof, as well as all material claims for labor, materials and supplies which,
if unpaid, would become a Lien upon such property or any part thereof; provided, however, that neither
the Company nor any of its subsidiaries shall be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as both (i) the Company has established adequate reserves for such
tax, assessment, charge, levy or claim and (ii) the Company or a subsidiary
shall be contesting the validity thereof in good faith by appropriate
proceedings.

     

    (c)           Corporate
Existence.  The Company will do or cause to be done all things
necessary and lawful to preserve and keep in full force and effect (i) its
corporate existence and the existence of each of its subsidiaries and (ii) the
material rights and franchises of the Company and each of its subsidiaries under
the laws of the United States or any state thereof, or, in the case of
subsidiaries organized and existing outside the United States, under the laws of
the applicable jurisdiction; provided, however, that,
subject to Section 7(i) below, nothing in this paragraph (c) shall prevent the
abandonment or termination of any rights or franchises of the Company, or the
liquidation or dissolution of, or a Disposition (whether through merger,
consolidation, sale or otherwise) of all or any substantial part of the property
and assets of, any subsidiary or the abandonment or termination of the
existence, rights and franchises of any subsidiary if such abandonment,
termination, liquidation, dissolution or Disposition is, in the good faith
business judgment of the Company, in the best interests of the Company and not
materially disadvantageous to the holder of this Note.

     

    (d)           Maintenance of
Property.  The Company will at all times maintain and keep, or
cause to be maintained and kept, in good repair, working order and condition
(reasonable wear and tear excepted) all significant properties of the Company
and its subsidiaries used in the conduct of the business of the Company and its
subsidiaries, and will from time to time make or cause to be made all needful
and proper repairs, renewals, replacements, betterments and improvements thereto
necessary so that the business of the Company and its subsidiaries may be
conducted at all times in the ordinary course consistent with past
practice.

     

    (e)           Insurance.  The
Company will, and will cause each of its subsidiaries to, (i) keep
adequately insured, by financially sound and reputable insurers, all property of
a character usually insured by corporations engaged in the same or a similar
business similarly situated against loss or damage of the kinds customarily
insured against by such corporations and (ii) carry, with financially sound
and reputable insurers, such other insurance (including without limitation
liability insurance) in such amounts as are available at reasonable expense and
to the extent believed advisable in good faith business judgment of the
Company.

    
      
         

      

      
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    (f)           Keeping of
Books.  The Company will at all times keep, and cause each of
its subsidiaries to keep, proper books of record and account in which proper
entries will be made of its transactions in accordance with generally accepted
accounting principles consistently applied.

     

    (g)           Transactions with
Affiliates.  Except for transactions with Lender and its
affiliates, the Company shall not enter into, and shall not permit any of its
subsidiaries to enter into, any transaction with any of its or any subsidiary’s
officers, directors, employees or any person related by blood or marriage to any
such person or any entity in which any such person owns any beneficial interest,
except for normal employment arrangements, benefit programs and employee
incentive option programs on reasonable and customary terms.

     

    (h)           Notice of Certain
Events.  The Company shall, immediately after it becomes aware
of the occurrence of (i) any Event of Default (as hereinafter defined) or any
event which, upon notice or lapse of time or both, would constitute such an
Event of Default, or (ii) any action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or agency which could
reasonably be expected to materially impair the right of the Company to carry on
its business substantially as then conducted, or could reasonably be expected to
have a material adverse effect on the properties, assets, financial condition,
operating results or business of the Company and its subsidiaries taken as a
whole, give notice to the holder of this Note, specifying the nature of such
event.

     

    (i)          
 Consolidation,
Merger and Sale.  The Company shall not, and shall not permit
any of its subsidiaries to, consolidate or merge with or into, or sell or
otherwise Dispose of all or any material portion of its property or the property
of the Company and its subsidiaries taken as a whole in one or more related
transactions to, any other Person or Persons.

     

    (j)       
    Limitation on Indebtedness
and Disqualified Stock.  The Company shall not, and shall not
permit any of its subsidiaries to, (i) incur or permit to remain outstanding any
indebtedness for money borrowed (“Indebtedness”),
except (A) the Note, (B) Indebtedness existing on the date of original issuance
of this Note (or, if applicable, the earliest predecessor Note) and described in
the Company’s public SEC filings prior to such date, and (C) such Indebtedness
as may be mutually agreed upon by the Company and the holder of the Note, or
(ii) issue any capital stock (“Disqualified
Stock”) of the Company or any of its subsidiaries which by its terms, or
upon the happening of any event, matures, or is mandatorily redeemable, whether
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder thereof, in whole or in part, on or prior to January
1, 2012.  The term “Indebtedness” shall not include trade or
other payables of or extensions of credit to the Company to or by the Company’s
vendors in the ordinary course of business.

    
      
         

      

      
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    (k)           Restricted
Payments.  The Company shall not, and shall not permit any of
its subsidiaries to: (i) declare or pay any dividends on, or make any other
distribution or payment on account of, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, any shares of any class of stock of the Company
or any option, warrant or other security, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash, property or in obligations of the Company or any of
its subsidiaries, except for (Y) distributions of shares of the same class of
stock pro rata to all holders of shares of a class of stock and (Z) dividends,
distributions or payments by any subsidiary to the Company or to any
wholly-owned subsidiary of the Company, or (ii) make any payments of principal
of, or retire, redeem, purchase or otherwise acquire any Indebtedness other than
the Note (such declarations, payments, purchases, redemptions, retirements,
acquisitions or distributions being herein called “Restricted
Payments”).

     

    (l)      
     Limitation on
Liens.  The Company shall not, and shall not permit any of its
subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist any Liens on any asset now owned or hereafter acquired,
or on any income or profits therefrom or assign or convey any right to receive
income therefrom, except for (i) liens for current taxes not yet due, (ii)
landlord’s liens, (iii) purchase money liens, (iv) workman’s, materialman’s,
warehouseman’s and similar liens arising by law or statute, and (v) liens in
favor of the Noteholder pursuant to the Security Documents.

     

    (m)           Inspection of
Property.  The Company shall permit the holder hereof to visit
and inspect any of the properties of the Company and any subsidiaries and their
books and records and to discuss the affairs, finances and accounts of any of
such entities with the principal officers of the Company and such subsidiaries
and their independent public accountants, all at such reasonable times and as
often as such holders may reasonably request.

     

    (n)           Rights
Offering.  The Company shall undertake an SEC registered rights
offering to raise $3.5 million from its existing common stock shareholders (the
“Rights
Offering”) on the following terms:

     

    (i)          
 All existing shareholders of the Company shall be eligible to participate
in the Rights Offering pro rata based upon their common stock interest in the
Company.

     

    (ii)           The
Rights Offering shall be for the right to purchase up to an aggregate of 175
million new shares of common stock at a price of $0.02/share plus a pro rata
share of new $0.02 common stock warrants (the “New
Warrants”).  The number of New Warrants available for issuance
in the rights offering will be equal to 50% of the number of $0.90 full ratchet
common stock warrants held by the Noteholders or their affiliates (the “Wexford
Warrants”), after application of the full ratchet adjustment applicable
to the Wexford Warrants as a result of the Rights Offering. The New Warrants
shall have a term of five (5) years.

     

    (iii)           The
Noteholder shall surrender or cause to be surrendered to the Company a number of
Wexford Warrants equal to the total number of New Warrants issued in the Rights
Offering.  The Wexford Warrants surrendered to the Company shall be
cancelled.  The term of the remaining Wexford Warrants will be
increased to equal the term of the New Warrants.

    
      
         

      

      
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    (iv)           The
Noteholder, any other shareholder of the Company or any third party will have
the right to oversubscribe for any unsubscribed shares/warrants in the Rights
Offering.  Any party that seeks to subscribe for such interests shall
provide the Company with a binding commitment not later than the date of the
closing of the Rights Offering.  If there are not enough unsubscribed
shares/warrants to meet the amounts requested by such parties, the unsubscribed
shares/warrants shall be allocated among them pro rata based on the amounts
requested (the “Oversubscription
Process”).  The closing on the Oversubscription Process shall
occur not more than ten (10) business days following the closing of the Rights
Offering.

     

    (v)           The
Company shall have obtained shareholder approval for the authorized shares of
common stock required in connection with the Rights Offering and for the
transactions contemplated thereby.

     

    (vi)           The
Company shall have obtained board and SEC approval of a registration statement
for the issuance of shares of common stock in connection with the Rights
Offering.

     

    (vii)         The
Lender’s exercise of its basic subscription privilege in the Rights Offering
shall be subject to the Company’s satisfaction of its obligations under this
clause (n) (other than under subclause (x) which obligations arise after the
closing of the Rights Offering) as well as the requirement that at least 50% of
the shares available in the Rights Offering shall have been subscribed for by
non-Wexford affiliated shareholders of the Company.

     

    (viii)        The
Company shall have received all other required approvals and
consents.

     

    (ix)           The
definitive agreements relating to the Rights Offering shall include customary
representations and warranties by the Company and customary covenants
satisfactory to the Noteholders.

     

    (x)           The
Company shall file with the SEC a registration statement on Form S-1 (or other
appropriate form if the Company is not then eligible to use Form S-3) covering
the resale by the Noteholders of the common stock and New Warrants issued in
connection with the Rights Offering, and if requested by any Noteholder, the
Wexford Warrants (the “Registration
Statement”) and shall use its commercially reasonable efforts to cause
the Registration Statement to be declared effective within ninety (90) calendar
days after the filing date, or within one-hundred and eighty (180) calendar
days after the filing date in the event the Registration Statement is reviewed
by the SEC.  The Company shall use its commercially reasonable efforts
to keep the Registration Statement continuously effective until such time as all
the securities have been sold thereunder or the securities may be sold without
restriction under applicable securities laws, subject to normal and customary
blackout periods.  The registration rights specified in this clause
(x) shall be embodied in a registration rights agreement in customary form
between the Company and the Noteholders.

    
      
         

      

      
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    (o)           Fees &
Expenses.  Without limitation of the last sentence of Section
10, the Company shall pay the Lender in respect of the legal fees and other
expenses of the  Lender in connection with the issuance of this Note a
payment in the amount of $50,000, and in connection with the Rights
Offering, a payment of an additional $50,000.  Such amounts shall be
due and payable in full, in cash, upon the consummation of the Rights Offering
or, if earlier, upon the maturity of any principal of this Note (whether at
stated maturity, at a date fixed for optional or mandatory prepayment, upon
acceleration pursuant to Section 9 or otherwise), and, if then unpaid, shall
thereafter constitute additional principal amounts under this Note, bearing
interest at the rate provided herein for overdue principal amounts.

     

    8.           Modification by Holders;
Waiver.  The Company may, with the written consent of the
holder of this Note, modify the terms and provisions of this Note or the rights
of the holder of this Note or the obligations of the Company hereunder, and the
observance by the Company of any term or provision of this Note may be waived
with the written consent of the holder.  Notwithstanding the
foregoing, no amendment, modification, or waiver of any provision of this Note
will be valid unless the same is in a writing expressly stating that the intent
of such writing is to amend, modify or waive a right under this
Note.

     

    Any such
modification or waiver shall apply and shall be binding upon each future holder
of this Note and upon the Company, whether or not such Note shall have been
marked to indicate such modification or waiver, but any substitute Note issued
thereafter shall bear a notation referring to any such modification or
waiver.

     

    9.           Events of
Default.  If any one or more of the following events, herein
called “Events
of Default,” shall occur (for any reason whatsoever, and whether such
occurrence shall, on the part of the Company or any of its subsidiaries, be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority) and such Event of Default shall be
continuing:

     

    (i)           default
shall be made in the payment of the principal of this Note when and as the same
shall become due and payable, whether at maturity or at a date fixed for
prepayment or repurchase (including default of any optional or mandatory
prepayment in accordance with the requirements of Section 5) or by acceleration
or otherwise; or

     

    (ii)           default
shall be made in the payment of any installment of interest on this Note
according to its terms when and as the same shall become due and payable;
or

     

    (iii)           default
shall be made in the prompt observance or performance of any covenant, condition
or agreement on the part of the Company contained herein in Section 7, and such
default shall continue for ten (10) days after written notice thereof;
or

    
      
         

      

      
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    (iv)           default
shall be made in the prompt observance or performance of any other covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to the terms hereof, and such default shall continue for ten (10) days
after written notice thereof, specifying such default and requesting that the
same be remedied; or

     

    (v)           any
representation or warranty made by or on behalf of the Company herein or in any
Security Document shall prove to have been false or incorrect in any material
respect on the date on or as of which made; or

     

    (vi)           default
shall be made in the performance of or compliance with any term contained in any
fee letter related to the Note, any Security Document or any other document,
instrument or agreement (collectively, the “Loan
Documents”) delivered by the Company or any subsidiary in order to grant
or perfect Liens on any assets thereof as security for all or any of the
obligations of the Company under the Loan Documents, or to govern or evidence
any such obligations, and such default shall continue for ten (10) days after
written notice thereof; or

     

    (vii)         the
entry of a decree or order for relief by a court having jurisdiction in the
premises in respect of the Company or any of its subsidiaries in any involuntary
case under the federal bankruptcy laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or other similar
laws, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or any of its subsidiaries for
any substantial part of any of their property or ordering the winding-up or
liquidation of any of their affairs and the continuance of any such decree or
order unstayed and in effect for a period of ninety (90) consecutive days;
or

     

    (viii)        the
commencement by the Company or any of its subsidiaries of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar laws,
or the consent by any of them to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or any of its subsidiaries for any substantial
part of any of their property, or the making by any of them of any general
assignment for the benefit of creditors, or the failure of the Company or of any
of its subsidiaries on a regular or continuing basis to pay its debts as such
debts become due, or the taking of corporate action by the Company or any of its
subsidiaries in furtherance of or which might reasonably be expected to result
in any of the foregoing; or

     

    (ix)           a
default or an event of default as defined in any instrument evidencing or under
which the Company or any of its subsidiaries has outstanding at the time any
Indebtedness in excess of $100,000 in aggregate principal amount shall occur,
and as a result thereof the maturity of any such Indebtedness shall have been,
or at the option of the holder thereof could be, accelerated so that the same
shall have become or could be declared to be due and payable prior to the date
on which the same would otherwise have become due and payable;
or

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (x)           final
judgment (not reimbursed by insurance policies of the Company or any of its
subsidiaries) for the payment of money in excess of $100,000 shall be rendered
against the Company or any of its subsidiaries and the same shall remain
undischarged for a period of thirty (30) days during which execution shall not
be effectively stayed; or

     

    (xi)           any
Loan Document shall, at any time, cease to be in full force and effect (other
than by reason of a release thereunder in accordance with the terms hereof or
thereof, the satisfaction in full of the obligations thereunder or any other
termination of such Loan Document in accordance with the terms hereof or
thereof) in any material respect, shall be declared null and void, or the
validity or enforceability thereof shall be contested in writing by the Company
or any subsidiary, or the holder of this Note shall not have or shall cease to
have a valid security interest in any collateral purported to be covered
thereby, perfected and with the priority contemplated by the Loan
Documents;

     

    then any
holder may, at its option, by a notice in writing to the Company declare the
Note to be, and the Note shall thereupon be and become, immediately due and
payable together with interest accrued thereon, without diligence, presentment,
demand, protest, notice of acceleration, notice of intent to accelerate or
further notice of any kind, all of which are expressly waived by the Company to
the extent permitted by law; provided, however, that upon
the occurrence of an Event of Default under paragraphs (vii) or (viii) above,
the Note shall automatically become due and payable, together with interest
accrued thereon, without any further action of the holder.

     

    At any
time after any declaration of acceleration has been made as provided in this
Section 9, the holder of the Note may, by notice to the Company, rescind such
declaration and its consequences with respect to the Note, provided, however, that no such
rescission shall extend to or affect any subsequent default or Event of Default
or impair any right consequent thereon.

     

    10.           Suits for
Enforcement.  In case any one or more of the Events of Default
shall happen and be continuing (subject to any applicable cure period expressly
set forth herein), the holder of this Note may proceed to protect and enforce
its rights by suit in equity, action at law and/or by other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Note or in aid of the exercise of any power granted in this
Note, or may proceed to enforce the payment of this Note or to enforce any other
legal or equitable right of the holder of this Note.

     

    In case
of any default under this Note, the Company will pay to the holder hereof
collection costs and attorneys’ fees, to the extent actually
incurred.

     

    11.           Remedies
Cumulative.  No remedy herein conferred upon the holder of this
Note is intended to be exclusive of any other remedy and each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    12.           Remedies Not
Waived.  No course of dealing between the Company and the
holder of this Note nor any delay on the part of the holder hereof in exercising
any rights hereunder shall operate as a waiver of any right of the holder of
this Note.

     

    13.           Successors and
Assigns.  All the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.

     

    14.           Notices.  All
notices, requests, demands and other communications required or permitted under
this Note shall be in writing (which shall include notice by facsimile
transmission) and shall be deemed to have been duly made and received when
personally served, or when delivered by Federal Express or a similar overnight
courier service, expenses prepaid, or by facsimile communications equipment,
addressed as set forth below:

    

    If to the
Lender:

    

    Lambda
Investors LLC

    Attn:
Arthur Amron

    c/o
Wexford Capital LP

    Wexford
Plaza

    411 West
Putnam Avenue

    Greenwich,
CT 06830

    Tel:
(203) 862-7012

    Fax:
(203) 862-7312

    

    Copy to
(which will not constitute notice):

    

    Akin Gump
Strauss Hauer & Feld LLP

    Attn:
Seth R. Molay, P.C.

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Tel:
(214) 969-4780

    Fax:
(214) 969-4343

    

    If to the
Company:

    

    Nephros,
Inc.

    Attn:
Gerald J. Kochanski, Chief Financial Officer

    41 Grand
Ave.

    River
Edge, NJ 07661

    Tel:
(201) 343-5202

    Fax:
(201) 343-5207

    
      
         

      

      
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    Any party
may alter the address to which communications are to be sent by giving the other
parties written notice of such change of address in conformity with the
provisions providing for the giving of notice.

    

    15.           GOVERNING
LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING THE CONFLICTS OF
LAWS RULES THEREOF.

     

    16.           Submission To Jurisdiction;
Waivers; WAIVER OF JURY TRIAL.  THE COMPANY HEREBY
IRREVOCABLY, UNCONDITIONALLY AND WITH ADVICE OF COUNSEL:

     

    (a)           submits
for itself and its property in any legal action or proceeding relating to this
Note and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the exclusive general
jurisdiction of the courts of the State of Delaware, the courts of the United
States of America for the District of Delaware, and appellate courts from any
thereof;

     

    (b)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

     

    (c)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Company at its address set forth
in Section 7(a) or at such other address of which the holder shall have been
notified pursuant thereto;

     

    (d)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law; and

     

    (e)           WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT AND FOR
ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING.

    
      
         

      

      
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    17.           Limitation on
Interest.  It is the intention of the parties hereto that the
Company, the Lender and each other holder shall conform strictly to usury laws
applicable to it.  Accordingly, if the transactions contemplated
hereby or by any other Loan Document would be usurious as to any holder under
laws applicable to it, then, in that event, notwithstanding anything to the
contrary in this Note or any other Loan Document or any agreement entered into
in connection with or as security for this Note, it is agreed as follows: (i)
the aggregate of all consideration that constitutes interest under law
applicable to any holder that is contracted for, taken, reserved, charged or
received by the holder under this Note or any other Loan Document or agreements
or otherwise in connection with this Note shall under no circumstances exceed
the maximum amount allowed by such applicable law, any excess shall be canceled
automatically and if theretofore paid shall be credited by the holder on the
principal amount of the Note (or, to the extent that the principal amount of the
Note shall have been or would thereby be paid in full, refunded by the holder to
the Company); and (ii) in the event that the maturity of this Note is
accelerated by reason of any Event of Default under this Note or otherwise, or
in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to the holder may never include
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Note or otherwise shall be canceled
automatically by the holder as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by the holder on the principal
amount of the Note (or, to the extent that the principal amount of the Note
shall have been or would thereby be paid in full, refunded by the holder to the
Company).  All sums paid or agreed to be paid to the holder for the
use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to the holder, be amortized, prorated, allocated and
spread throughout the full term of the Note until payment in full so that the
rate or amount of interest on account of the Note does not exceed the maximum
amount allowed by such applicable law.

     

    18.           Entire
Agreement.  This Note, together with the Security Agreement and
the Intellectual Property Security Agreement referred to in Section 1 hereof
(collectively, the “Closing
Date Documents”), constitute the final agreement between the Company and
the Lender.  The Closing Date Documents are the complete and exclusive
expression of the parties’ agreement on the matters contained in the Closing
Date Documents.  All prior and contemporaneous negotiations, writings
and agreements between the parties and their counsel on the matters contained in
the Closing Date Documents are expressly merged into and superseded by the
Closing Date Documents.  The provisions of the Closing Date Documents
may not be explained, supplemented, interpreted or qualified through evidence of
trade usage, a prior course of dealings or correspondence between the parties or
their counsel, and no such trade usage, prior course of dealings or
correspondence shall give rise to any implied covenants or other implied
terms.  In entering into the Closing Date Documents, neither party has
relied upon any statement, representation, warranty, or agreement of the other
party or any of its agents or attorneys except for those expressly contained in
the Closing Date Documents.

     

    19.           Headings.  The
headings of the sections and paragraphs of this Note are inserted for
convenience only and do not constitute a part of this Note.

     

    [Remainder
of Page Intentionally Left Blank]

    
      
         

      

      
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    IN
WITNESS WHEREOF, Nephros, Inc. has caused this Note to be signed in its
corporate name by one of its officers thereunto duly authorized and to be dated
as of the day and year first above written.

     

    
      
        
          
            	
                    NEPHROS,
      INC.

                  
	 
      	 
      
	
                    By:

                  	
                     /s/ Gerald J.
    Kochanski

                  
	 
      	
                    Name:

                  	
                    Gerald
      J. Kochanski

                  
	 
      	
                    Title:

                  	
                    CFO
      and Treasurer

                  

          

        

      

    

     

    
      Signature
Page

      Nephros,
Inc. - Promissory NoteExhibit
10.57

     

    FORM OF REGISTRATION
RIGHTS AGREEMENT

     

    This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
__________, 2010, by and between NEPHROS, INC., a Delaware corporation (the
“Company”), and LAMBDA INVESTORS LLC (“Lambda”).

     

    WHEREAS,
Lambda is the beneficial owner of certain securities issued by the Company;
and

     

    WHEREAS,
the Company and Lambda deem it to be in their respective best interests to set
forth the rights of the Holders in connection with the Registrable Securities
(as defined below).

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants and obligations
hereinafter set forth, the Company and Lambda, intending legally to be bound,
hereby agree as follows.

     

    Section
1.  Definitions. As used
in this Agreement, the following terms shall have the following
meanings:

     

    “Affiliate”
of any person means any other person who either directly or indirectly is in
control of, is controlled by, or is under common control with such
person.

     

    “Business
Day” shall mean any Monday, Tuesday, Wednesday, Thursday or Friday that is not a
day on which banking institutions in The City of New York are authorized by law,
regulation or executive order to close.

     

    “Common
Stock” shall mean the common stock, par value $0.001 per share, of the
Company.

     

    “Effectiveness
Date” shall mean, with respect to the Resale Registration Statement, the
ninetieth (90th) day following the Filing Date in the event the Resale
Registration Statement is not subject to review by the SEC, or the one hundred
eightieth (180th) day following the Filing Date in the event the Resale
Registration Statement is reviewed by the SEC; provided that, if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a
legal holiday or a day on which the SEC is authorized or required by law or
other government actions to close, the Effectiveness Date shall be the following
Business Day.

     

    “Effectiveness
Period” shall have the meaning set forth in Section 3(a).

     

    “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended (or any similar
successor federal statute), and the rules and regulations thereunder, as the
same are in effect from time to time.

     

    “Filing
Date” shall mean the thirtieth (30th)
day after the
closing of the Rights Offering; provided that, if the
Filing Date falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the SEC is authorized or required by law or other
government actions to close, the Filing Date shall be the following Business
Day.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Form
S-1” shall mean such long registration form under the Securities Act as in
effect on the date hereof or any successor or similar registration form under
the Securities Act subsequently adopted by the SEC which does not permit
inclusion or incorporation of certain information by reference to other document
filed by the Company with the SEC.

     

    “Form
S-3” shall mean such short registration form under the Securities Act as in
effect on the date hereof or any successor or similar registration form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.

     

    “Holder”
shall mean Lambda and any transferee or assignee of record of Registrable
Securities in accordance with Section 10(c) or any other person owning of record
Registrable Securities that have not been sold to the public.

     

    “Losses”
shall have the meaning set forth in Section 5(a).

     

    “New
Warrants” shall mean the warrants for the purchase of shares of Common Stock of
the Company issued or issuable to Lambda in the Rights Offering.

     

    “Person”
shall mean an individual, partnership, corporation, limited liability company,
joint venture, trust or unincorporated organization, a government or agency or
political subdivision thereof or any other entity.

     

    “Prospectus”
shall mean the prospectus included in any Registration Statement, as amended or
supplemented by a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.

     

    “Registrable
Securities” shall mean (i) shares of Common Stock issued or issuable to Lambda
in the Rights Offering, (ii) the New Warrants (including any shares of Common
Stock issued or issuable upon the exercise of any such New Warrants), (iii) the
Wexford Warrants (including any shares of Common Stock issued or issuable upon
the exercise of any Wexford Warrants) and (iv) any other securities issued as a
result of, or in connection with, any stock dividend, stock split or reverse
stock split, combination, recapitalization, reclassification, merger or
consolidation, exchange or distribution in respect of the Common Stock referred
to above.

     

    “Registration
Statement” shall mean any registration statement which covers any of the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included therein, all amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.

     

    “Resale
Registration Statement” shall mean the Registration Statement referred to in
Section 3(a).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Restricted
Securities” shall have the meaning set forth in Section 2 hereof.

     

    “Rights
Offering” shall mean the Company’s registered offering of up to an aggregate of
175,000,000 shares of Common Stock at a price of $0.02 per share and a certain
pro rata number of the New Warrants to its existing stockholders.

     

    “Rule
144” shall mean Rule 144 promulgated under the Securities Act, as amended from
time to time, or any similar successor rule thereto that may be promulgated by
the SEC.

     

    “Rule
415” shall mean Rule 415 promulgated under the Securities Act, as amended from
time to time, or any similar successor rule thereto that may be promulgated by
the SEC.

     

    “SEC”
shall mean the Securities and Exchange Commission, or any other federal agency
at the time administering the Securities Act.

     

    “Securities
Act” shall mean the Securities Act of 1933, as amended (or any similar successor
federal statute), and the rules and regulations thereunder, as the same are in
effect from time to time.

     

    “Underwritten
Offering” shall mean a registered offering in which securities of the Company
are sold to an underwriter for reoffering to the public.

     

    “Wexford
Warrants” shall mean the Class D Warrants, as amended to extend the term to
equal the term of the New Warrants, held by Lambda as of the date of this
Agreement.

     

    Section
2.  Securities Subject to this
Agreement. The
securities entitled to the benefits of this Agreement are the Registrable
Securities but, with respect to any particular Registrable Security, only so
long as such security continues to be a Restricted Security. A Registrable
Security that has ceased to be a Restricted Security cannot thereafter become a
Restricted Security. As used herein, a Restricted Security shall cease to be a
Restricted Security, and will no longer be a Registrable Security hereunder,
when: (i) it has been registered under the Securities Act, the registration
statement in connection therewith has been declared effective and such
Restricted Security has been disposed of pursuant to such effective registration
statement; (ii) it is eligible to be sold or distributed pursuant to Rule 144
without restriction; or (iii) it shall have ceased to be
outstanding.

     

    Section
3.  Required
Resale Registration

     

    (a)           On
or prior to the Filing Date, the Company shall prepare and file with the SEC a
“resale” Registration Statement (once declared effective by the SEC, the “Resale
Registration Statement”) providing for the resale of all Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415. The
Resale Registration Statement shall be on Form S-1 or another appropriate form
in accordance herewith and with the Securities Act and the rules promulgated
thereunder, except that if the Company is then eligible to register for resale
the Registrable Securities on Form S-3, such registration shall be on Form S-3.
Such Resale Registration Statement shall also cover, to the extent allowable
under the Securities Act and the rules promulgated thereunder (including Rule
416), such indeterminate number of additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with respect to the
Registrable Securities. The Company shall use its commercially reasonable best
efforts to cause the Resale Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep such Resale
Registration Statement continuously effective under the Securities Act until all
of the Registrable Securities have ceased to be Restricted Securities (the
“Effectiveness Period”). The Company shall immediately notify the Holders via
facsimile or electronic mail of the effectiveness of the Resale Registration
Statement on the same trading day that the Company telephonically confirms
effectiveness with the SEC, which date shall be the date effectiveness of the
Resale Registration Statement is granted by the SEC.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (b)          As
a condition to the inclusion of its Registrable Securities in the Resale
Registration Statement, each Holder shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing or as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.

     

    (c)          In
connection with the Company’s registration obligations hereunder, the Company
shall, as expeditiously as reasonably possible:

     

    (A)           Prepare
and file with the SEC such amendments, including post-effective amendments, to
the Resale Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Resale Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule 424
of the Securities Act; (iii) respond as promptly as reasonably possible to any
comments received from the SEC with respect to such Resale Registration
Statement or any amendment thereto or any document filed with the SEC that would
suspend the effectiveness of such Resale Registration Statement, and as promptly
as reasonably possible provide the Holders with true and complete copies of all
correspondence from and to the SEC relating to such Resale Registration
Statement (other than those portions of any correspondence containing material
nonpublic information); and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by such Resale Registration
Statement as so amended or in such Prospectus as so supplemented; provided, that
before filing such Resale Registration Statement or Prospectus, or any
amendments or supplements thereto, the Company shall furnish to one counsel
selected by the Holders holding a majority of the Registrable Securities covered
by such Resale Registration Statement or Prospectus copies of all documents
proposed to be filed, which documents will be subject to review of such
counsel.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (B)           Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (v) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as
promptly as reasonably possible and confirm such notice in writing no later than
one trading day following the day (i) (X) when the SEC notifies the Company
whether there will be a “review” of the Resale Registration Statement and
whenever the SEC comments in writing on such Resale Registration Statement; (Y)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Resale Registration Statement is filed and (Z) with respect to the Resale
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Resale Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Resale Registration Statement covering any
or all of the Registrable Securities or the initiation of any proceedings for
that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose; and (v) of the
occurrence of any event or passage of time that makes the financial statements
included in the Resale Registration Statement ineligible for inclusion therein
or any statement made in the Resale Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Resale
Registration Statement, Prospectus or other documents so that, in the case of
the Resale Registration Statement or the Prospectus, as the case may be, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that any and
all of such information provided pursuant to clause (v) above shall remain
confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further,
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information. Without limitation of any remedies to which the Holders
may be entitled under this Agreement, if any of the events described in this
subsection (B) occur, the Company shall use its commercially reasonable best
efforts to respond to and correct the event as promptly as
possible.

     

    (C)           Use
its commercially reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Resale Registration Statement, or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, as promptly as possible.

     

    (D)           Enter
into such customary agreements (including an underwriting agreement in customary
form) and take such other actions as the Holders of a majority of such
Registrable Securities or the underwriters, if any reasonably request in order
to expedite or facilitate the dispositions of such Registrable
Securities;

     

    (E)           In
the case of an underwritten offering, obtain a “cold comfort” letter or letters
from the Company’s independent public accountants in customary form and covering
matters of the type customarily covered by “cold comfort” letters as the Holders
of a majority of such Registrable Securities shall reasonably
request.

     

    (F)           In
the case of an underwritten offering, obtain an opinion of counsel for the
Company in customary form and covering matters of the type customarily covered
in opinions of issuer’s counsel as the Holders of a majority of such Registrable
Securities may reasonably request.

    
      
         

      

      
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    (G)           Make
available for inspection by any selling Holder of such Registrable Securities
covered by such Resale Registration Statement, by any underwriter participating
in any disposition to be effected pursuant to such Resale Registration Statement
and by any attorney, accountant or other agent retained by any such selling
Holder or any such underwriter (collectively, the “Inspectors”), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause all of the Company’s officers, directors and
employees to supply all information reasonably requested by any such selling
Holder or Inspectors in connection with such registration statement. Records
which the Company determines, in good faith, to be confidential and which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such records is necessary to avoid or
correct a misstatement or omission in such registration statement or (ii) the
release of such records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction. Each selling Holder of Registrable Securities
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public. Each selling Holder of Registrable Securities
further agrees that it will, upon learning that disclosure of such records is
sought in a court of competent jurisdiction, give notice to the Company to the
extent reasonably practicable and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the records deemed
confidential.

     

    (H)           Furnish
to the Holders and their counsel, without charge, at least one conformed copy of
any Resale Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Holder, and
all exhibits to the extent requested by such Holder (including those previously
furnished or incorporated by reference),  as promptly as possible
after the filing of such documents with the SEC.

     

    (I)           Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Holders may reasonably request in connection with
resales by the Holder of Registrable Securities. Subject to the terms of this
Agreement, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto, except after the giving of
any notice pursuant to Section 3(c)(B)(iii) through (v).

     

    (J)           Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable best efforts to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from
the registration or qualification) of such Registrable Securities for the resale
by the Holder under the securities or Blue Sky laws of such jurisdictions as any
Holder reasonably requests in writing, to keep each registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things reasonably necessary to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Resale Registration Statement; provided that the Company shall not be required
to qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this clause (K), it would not be obligated to
be so qualified or subject the Company to any material tax in any such
jurisdiction where it is not then so subject or file a general consent to
service of process in any such jurisdiction.

    
      
         

      

      
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    (K)           Use
its commercially reasonable best efforts to cause the Registrable Securities
covered by the Resale Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the selling Holders to consummate the disposition of such Registrable
Securities.

     

    (L)           Use
its commercially reasonable best efforts to cause its transfer agent to prepare
and deliver certificates representing Registrable Securities to a transferee
pursuant to the Resale Registration Statement within three (3) trading days of
delivery to the transfer agent of certificates bearing restrictive legends,
which certificates shall be free of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as any such Holders may request.

     

    (M)           Upon
the occurrence of any event contemplated by Section 3(c)(B), as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to the Resale Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Resale Registration
Statement nor such Prospectus will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. If the Company notifies the Holders in accordance
with clauses (iii) through (v) of Section 3(c)(B) above to suspend the use of
any Prospectus until the requisite changes to such Prospectus have been made,
then the Holders shall suspend use of such Prospectus. The Company will use its
commercially reasonable best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable. The Company shall be entitled to
exercise its right under this Section 3(c)(M) to suspend the availability of the
Resale Registration Statement and Prospectus for a period not to exceed 90 days
(which need not be consecutive days) in any 365-day period.

     

    (N)           Comply
in all material respects with all applicable rules and regulations of the SEC
and the OTC Bulletin Board (or any successor entity or any national securities
exchange on which the Common Stock is then listed).

     

    (O)           The
Company shall (i) as soon as reasonably practicable include in a prospectus
supplement or post-effective amendment such information as is reasonably
required to be included therein relating to any proposed sale and distribution
of Registrable Securities by such Holder, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering, and (ii) as
soon as reasonably practicable make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
included in such prospectus supplement or post-effective
amendment.

    
      
         

      

      
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    (P)           Unless
waived by Holders owning a majority of the outstanding Registrable Securities,
include in such Resale Registration Statement, amendment thereto, or prospectus
or prospectus supplement all material non-public information made available by
the Company to any Holder prior to the filing thereof, except for material
non-public information made available to a Holder to whom knowledge of a member
of the Board of Directors of the Company is attributable.

     

    (d)      
  Holder hereby covenants with the Company (i) not to make any sale of
the Registrable Securities pursuant to the Resale Registration Statement without
effectively causing the prospectus delivery requirements under the Securities
Act to be satisfied, and (ii) if such Registrable Securities are to be sold by
any method or in any transaction other than as specified in the plan of
distribution disclosed in such Resale Registration Statement, to notify the
Company at least five (5) Business Days prior to the date on which the Holder
first offers to sell any such Registrable Securities.

     

    (e)      
   Holder acknowledges and agrees that the Registrable Securities
sold pursuant to the Registration Statement described in this Agreement are not
transferable on the books of the Company unless the stock certificate submitted
to the Company’s transfer agent evidencing such Registrable Securities is
accompanied, if requested by the transfer agent, by a certificate reasonably
satisfactory to the transfer agent to the effect that (i) the Registrable
Securities have been sold in accordance with such Resale Registration Statement
and (ii) the requirement of delivering a current Prospectus has been
satisfied.

     

    (f)     
     Holder shall not take any action with respect to
any distribution deemed to be made pursuant to such Resale Registration
Statement, which would constitute a violation of Regulation M under the Exchange
Act, or any other applicable rule, regulation or law.

     

    Section
4.  Registration
Expenses. All
expenses incident to the Company’s performance of or compliance with this
Agreement will be borne by the Company, regardless of whether the Resale
Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees; (ii) all reasonable fees and expenses of
compliance with federal securities and state blue sky or securities laws; (iii)
all reasonable expenses of printing (including printing Prospectuses), messenger
and delivery services and telephone; (iv) all reasonable fees and disbursements
of counsel for the Company; (v) all reasonable fees and disbursements of one
counsel selected by the Holders holding a majority of the Registrable
Securities, (vi) all applications and filing fees in connection with
qualification of the Registrable Securities on the OTC Bulletin Board or listing
on a national securities exchange; (vii) Securities Act liability insurance, if
the Company so desires such insurance, (viii) all reasonable fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance) and (ix) all reasonable fees and expenses of an
underwriter or underwriters in connection with an Underwritten Offering of
Registrable Securities.  Notwithstanding anything in this Section 4 to
the contrary, the Company shall not be required to pay any underwriting
discounts, commissions or transfer taxes, if any, relating to the sale or
disposition of any Holder’s Restricted Securities.

     

    The
Company will, in any event, bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any person, including special experts, retained by the
Company.

    
      
         

      

      
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    Section
5.  Indemnification.

     

    (a)           Indemnification by the
Company.  To the fullest extent permitted by law, the Company
shall, notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder of the Registrable Securities (including, its officers,
directors, members, partners, agents, brokers, investment advisors and employees
of each of them) and each person controlling such Holder within the meaning of
Section 15 of the Securities Act (including the officers, directors, members,
partners, agent and employees of each such controlling person), with respect to
which any registration has been effected pursuant to this Agreement, against all
claims, losses, damages, liabilities, judgments, fines, penalties, charges,
costs (including, without limitation, reasonable attorneys’ fees and
disbursements) and expenses (collectively, “Losses”), as incurred, including any
Losses incurred in settlement of any litigation, commenced or threatened
(subject to Subsection 5(c) below), arising out of or based on any untrue or
alleged untrue statement of a material fact contained in the Resale Registration
Statement or Prospectus, or any amendment or supplement thereto, incident to any
such registration, or based on any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances in which they
were made; provided, that the
Company shall not be liable in any such case to the extent that any untrue or
alleged untrue statement or omission or alleged omission is made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of any Holder and stated to be specifically for use in preparation of such
Resale Registration Statement or Prospectus, or any amendment or supplement
thereto; provided, further, that the
Company shall not be liable in any such case where the Losses arise out of, or
are related to, the failure of any Holder to comply with the covenants and
agreements contained in this Agreement. The Company will also indemnify
underwriters participating in the distribution, their officers, directors,
employees, partners and agents, and each Person who controls such underwriters
(within the meaning of the Securities Act), to the same extent as provided above
with respect to the indemnification of the Holders of Registrable Securities, if
so requested. The Company shall notify the Holders promptly of the institution,
threat or assertion of any legal proceeding arising from or in connection with
the transactions contemplated by this Agreement of which the Company is
aware.

    
      
         

      

      
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    (b)           Indemnification by Holders
of Registrable Securities.  In connection with the Resale
Registration Statement or Prospectus, or any amendments or supplements thereto,
each Holder will furnish to the Company in writing such information and
affidavits regarding the Holder or such Holder’s ownership of the Company’s
securities as the Company reasonably requests for use in connection with such
Resale Registration Statement or Prospectus or any amendments or supplements
thereto. Each Holder will severally and not jointly indemnify the Company, each
of its directors and officers, each underwriter of an underwritten offering of
the Registrable Securities in which such Holder participates, each other Holder
whose Registrable Securities are included in such Resale Registration Statement
and each person who controls the Company within the meaning of Section 15 of the
Securities Act (collectively, “Holder Indemnitees”), against all Losses, as
incurred, including any Losses incurred in settlement of any litigation,
commenced or threatened (subject to Subsection 5(c) below), arising out of, or
based on, any untrue or alleged untrue statement of a material fact contained in
such Resale Registration Statement or Prospectus, or any amendment or supplement
thereof, incident to any such registration, or based on any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such untrue or alleged untrue statement or omission or alleged
omission is made in reliance upon and in conformity with written information
and/or affidavits furnished to the Company by or on behalf of such Holder; provided, that the
indemnity shall not apply to the extent that such Losses result from the fact
that a current copy of the Prospectus was not made available to the Holders and
such current copy of the Prospectus would have cured the defect giving rise to
such Losses. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities covered by such Resale
Registration Statement giving rise to such indemnification obligation. The
Holder Indemnitees shall be entitled to receive indemnities from underwriters
participating in the distribution, to the same extent as provided above, with
respect to information furnished in writing by such underwriters specifically
for inclusion in any Registration Statement, Prospectus or any amendment or
supplement thereto.

     

    (c)           Conduct of Indemnification
Proceedings.  Any Person entitled to indemnification hereunder
will (i) give prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel of such indemnifying party’s
choice; provided, however, that any
Person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (A) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to the indemnified party
in a timely manner or (B) a written opinion of counsel reasonably acceptable to
the indemnifying party, asserts that a conflict of interest exists between such
person and the indemnifying party with respect to such claims (in which case, if
the indemnified Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person). The indemnifying party will not be subject
to any liability for any settlement made without its consent. No indemnified
party will be required to consent to entry of any judgment or enter into any
settlement unless (x) such judgment or settlement includes as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation, and (y)
the only consequence to the indemnified party under such judgment or settlement
is the creation of an obligation to pay money damages, all of which are being
satisfied by the indemnifying party. An indemnifying party who is not entitled
to, or elects not to, assume the defense of the claim will not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim.

    
      
         

      

      
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    (d)           Contribution.  If
for any reason the indemnification provided for in Subsection 5(a) or Subsection
5(b) is unavailable to an indemnified party or insufficient to hold it harmless
as contemplated by Subsection 5(a) and Subsection 5(b), then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such Losses in such proportion as is appropriate to reflect not only
the relative benefits received by the indemnifying party and the indemnified
party, but also the relative fault of the indemnifying party and the indemnified
party, as well as any other relevant equitable considerations. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentations. Notwithstanding the provisions of
this Section 5(d), no Holder shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the proceeds actually received by
such Holder from the sale of the Registrable Securities subject to the
proceeding exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.

     

    Section
6.  Participation in
Underwritten Registrations.

     

    (a)           One
or more Holders may elect to retain an underwriter to conduct an Underwritten
Offering of all or a portion of the Registrable Securities held by such Holders,
which underwriter shall be selected by the Holders holding a majority of the
Registrable Securities requested for inclusion in such Underwritten Offering. In
the event any Holders elect to conduct an Underwritten Offering, such Holders
shall promptly give notice to each other Holder and each such other Holder shall
be entitled to participate in such Underwritten Offering subject to Subsection
6(b) below. Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a limitation
of the number of Registrable Securities to be underwritten, the number of
Registrable Securities that may be included in such Underwritten Offering shall
be allocated among the participating Holders on a pro rata basis based on the
total number of Registrable Securities proposed to be sold in such Underwritten
Offering by such Holders.

     

    (b)           No
Person may participate in any Underwritten Offering hereunder unless such Person
(i) agrees to sell such Person’s Registrable Securities on the basis provided in
any underwriting arrangements approved by the Holders of a majority of the
Registrable Securities included in such Underwritten Offering and (ii) completes
and executes an underwriting agreement in customary form and other documents
required under the terms of such underwriting agreement.  Nothing in
this Section 6 shall be construed to create any additional rights regarding the
registration of Registrable Securities in any Person otherwise than as set forth
herein.

     

    (c)           Nothing
in this Section 6 shall obligate the Company to pay any underwriting discounts
or commissions in connection with any underwritten offering of Registrable
Securities.

     

    Section
7.  Rule
144. The
Company agrees with each Holder, for so long as any Restricted Securities remain
outstanding and during any period in which the Company (i) is not subject to
Section 13 or 15(d) of the Exchange Act, to make available, upon request of such
Holder in connection with any sale thereof and any prospective purchaser of such
Restricted Securities designated by the Holder, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such
Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13
or 15(d) of the Exchange Act, to use reasonable efforts to make all filings
required thereby in a timely manner in order to permit resales of such
Restricted Securities pursuant to Rule 144.

    
      
         

      

      
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    Section
8.  Legend. Each
Holder consents to the placing of any legend required by the Securities Act as
well as the following legend on all certificates representing shares of
Registrable Securities and on any certificate issued at any time in exchange or
substitution for any certificate bearing such legend, for so long as the
securities represented thereby are Registrable Securities:

     

    THIS
CERTIFICATE IS ISSUED SUBJECT TO THE PROVISIONS OF A REGISTRATION RIGHTS
AGREEMENT, AND ANY TRANSFEREE OF THIS CERTIFICATE OR OF THE SHARES REPRESENTED
BY IT 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.

     

    Section
9.  Delay Periods; Suspension of
Sales. Each
Holder shall suspend, upon request of the Company pursuant to Section 3(c)(M),
any disposition of Registrable Securities pursuant to the Resale Registration
Statement and Prospectus, or any amendments or supplements thereto, as
contemplated herein during (i) any period not to exceed two 30-day periods
within any one 12-month period the Company requires in connection with a primary
underwritten offering of equity securities and (ii) any period, not to exceed
one 45-day period per circumstance or development, when the Company determines
in good faith that offers and sales pursuant thereto should not be made by
reason of the presence of material undisclosed circumstances or developments
with respect to which the disclosure that would be required in such a prospectus
is premature, would have an adverse effect on the Company or is otherwise
inadvisable; provided, however, the
aggregate number of days that such suspensions and any suspensions under Section
3(c)(M) may apply during any 365-day period is 90 days. In the event of a delay
period or suspension, the Company will use its commercially reasonable best
efforts to ensure that the use of the Prospectus may be resumed as promptly as
is practicable. Nothing in this Section 9 shall operate to extend the
Effectiveness Date.

     

    Section
10.  Miscellaneous.

     

    (a)           Amendments and
Waivers. The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, without the written consent of the Company and the
Holders of a majority of the outstanding Registrable Securities; provided, however, that no such
amendment, modification, supplement, waiver, consent or departure shall
distinguish between Holders or groups of Holders unless any Holder adversely
affected thereby shall have consented thereto in
writing.  Notwithstanding the foregoing, no amendment, modification,
supplement, waiver or consent will be valid and binding unless it is in writing,
signed by the requisite Persons, and expressly refers to this Agreement and the
provisions intended to be amended, modified, supplemented, waived or consented
to.

     

    (b)           Notices. Except where
expressly stated otherwise herein, all notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered, return receipt requested), or air courier
guaranteeing overnight delivery:

    
      
         

      

      
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    if to any
Holder, at the address for such Holder set forth on the records of the Company;
and

     

    if to the
Company, Nephros, Inc., 41 Grand Avenue, River Edge, New Jersey 0766,
Attention:  Gerald J. Kochanski

     

    With a
copy to: Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Suite
300, Raleigh, North Carolina 27607, Attention:  Alexander M.
Donaldson

     

    All such
notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; and on the next Business Day,
if timely delivered to an air courier guaranteeing overnight
delivery.

     

    The
address or person or entity to whose attention any notice or communication shall
be given may be changed by notice to the other parties in accordance with the
provisions of this Section 10(b).

     

    (c)           Successors and Assigns;
Third Party Beneficiaries. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties and shall
inure to the benefit of each Holder, and it is not the intention of the parties
to confer upon any other person or entity any rights or remedies. The Company
may not assign its rights or obligations hereunder without the prior written
consent of the Holders of a majority of the outstanding Registrable Securities.
Each Holder may assign its respective rights hereunder to any Person to whom
such Holder transfers Registrable Securities, provided such transfer is in
accordance with all applicable securities laws. If any transferee of a Holder
shall acquire Registrable Securities in any manner, whether by operation of law
or otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement, including the
restrictions on resale set forth in this Agreement and such person shall be
entitled to receive the benefits hereof.

     

    (d)           No Inconsistent
Agreements. The Company will not hereafter enter into any agreement with
respect to its securities which is inconsistent with, adversely effects or
violates the rights granted to the Holders in this Agreement.

     

    (e)           Delays or Omissions.
It is agreed that no delay or omission to exercise any right, power, or remedy
accruing to any Holder, upon any breach, default or noncompliance of the Company
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement, by law, or
otherwise afforded to Holders, shall be cumulative and not
alternative.

     

    (f)           Counterparts. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

    
      
         

      

      
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    (g)           Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    (h)           Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF THE CONFLICT OF LAWS
THEREOF.

     

    (i)           Severability. In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

     

    (j)           JURISDICTION; FORUM.
EACH PARTY HERETO CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE COURT SITTING IN THE COUNTY OF NEW YORK OR FEDERAL COURT SITTING IN THE
SOUTHERN DISTRICT OF THE STATE OF NEW YORK IN CONNECTION WITH ANY DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND AGREES THAT ALL SUITS, ACTIONS
AND PROCEEDINGS BROUGHT BY SUCH PARTY HEREUNDER SHALL BE BROUGHT ONLY IN SUCH
JURISDICTIONS. EACH PARTY HERETO WAIVES ANY OBJECTION TO THE LAYING OF VENUE IN
SUCH COURTS AND ANY CLAIM THAT ANY SUCH ACTION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT PERMITTED BY LAW, ANY JUDGMENT IN RESPECT OF A
DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE ENFORCED IN ANY
OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT,
A CERTIFIED COPY OF SUCH JUDGMENT BEING CONCLUSIVE EVIDENCE OF THE FACT AND
AMOUNT OF SUCH JUDGMENT. EACH PARTY HERETO AGREES THAT PERSONAL SERVICE OF
PROCESS MAY BE EFFECTED BY ANY OF THE MEANS SPECIFIED IN SECTION 10(B),
ADDRESSED TO SUCH PARTY. THE FOREGOING SHALL NOT LIMIT THE RIGHTS OF ANY PARTY
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     

    (k)           WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT HE OR IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10(K).

     

    (l)           Entire Agreement.
This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto with respect to registration rights
granted with respect to Registrable Securities. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject
matter.

    
      
         

      

      
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    (m)           Independent Nature of
Holders’ Obligations and Rights. The obligations of each Holder hereunder
are several and not joint with the obligations of any other Holder hereunder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Holders are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.

     

    (n)           Attorneys’ Fees. In
the event of any litigation or other proceeding concerning this Agreement or the
transactions contemplated hereby, including any such litigation or proceeding
with respect to the enforcement of this Agreement against any defaulting party,
the prevailing party in such litigation or proceeding shall be entitled to
reimbursement from the party opposing such prevailing party for all attorneys’
fees and costs incurred by such prevailing party in such litigation or
proceeding, which shall include, without limitation, all fees, costs and
expenses of appeals.

     

    [SIGNATURE
PAGE FOLLOWS IMMEDIATELY]

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.

     

    
      
        
          	
                  NEPHROS,
      INC.

                
	 
      
	
                  By:

                	
                     

                
	
                  Name:

                	
                     

                
	
                  Title:

                	
                     

                

        

      

    

    

    
      
        
          
            
              
                
                  	
                          INITIAL HOLDER: LAMBDA
      INVESTORS LLC

                        
	 
      
	
                          By: 

                        	
                              

                        
	
                          Name: Arthur Amron

                        
	
                          Title:   Vice President

                        
	 
      
	
                          Address
      for Notices:

                        
	
                          c/o
      Wexford Capital LP

                        
	
                          411
      West Putnam Avenue (Street Address)

                        
	
                          Greenwich,
      CT 06830 (City) (State/Country) (Zip Code)

                        
	 
      
	
                          Attention:
      Arthur
Amron

                        

                

              

            

          

        

      

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    Form
of Counterpart Signature Page

     

    IN
WITNESS WHEREOF, the undersigned has caused this counterpart to the Registration
Rights Agreement among Nephros, Inc. and the Holders (as defined therein), dated
as of ___________, 2010, as amended from time to time, to be duly executed and
delivered as of _______ __, ____.

     

    
      
        	
                [__________________],
      as an additional Holder

              
	 
      
	
                By:

              	
                   

              
	
                Name:

              	
                   

              
	
                Title:

              	
                   

              
	 
      
	
                Notice
      Address:

              
	
                   

              
	
                   

              
	
                   

              
	
                Attention:

              
	
                Tel:(___)
      ___-_____

              
	
                Fax:(___)
      ___-_____

              

      

    

    

    Accepted
and agreed to as of the __ day of _________, ____:

     

    
      
        	
                NEPHROS,
      INC.

              
	 
      
	
                By:

              	
                   

              
	
                Name:

              	
                   

              
	
                Title:

              	
                   

              

      

    

    
      
         

      

      
        17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]