Document:

Form of Post-Termination Agreement

 EXHIBIT 10(o) 
  
 This
                         is entered into this
             day of              by and between Wal-Mart Stores, Inc. (hereinafter “Wal-Mart”) and
                         (hereinafter “the Associate”). The parties agree as follows: 
  
 1. ACKNOWLEDGMENTS. As part of this Agreement, the parties
specifically acknowledge that 
  
 (A) Wal-Mart is a major retail
operation, with stores located throughout the United States and in certain foreign locations; 
  
 (B) the Associate has accepted a position as                          of Wal-Mart and is a
key executive as defined by the Executive Committee; 
  
 (C) as an
essential part of its business, Wal-Mart has cultivated long term customer and vendor relationships and goodwill, which are difficult to develop and maintain, which require a significant investment of time, effort, and expense, and which can suffer
significantly upon the departure of key executives; 
  
 (D) in the
development of its business, Wal-Mart has also expended a significant amount of time, money, and effort in developing and maintaining confidential, proprietary, and trade secret information which, if disclosed or misused, could harm Wal-Mart’s
business and its competitive position in the retail marketplace; 
  
 (E) as                         , the Associate has access to confidential and proprietary trade secret
information and other confidential information, including business plans and strategies, that would be of considerable value to Wal-Mart’s competitors; and 
  

(F) Wal-Mart is entitled to take appropriate steps to ensure (i) that its Associates do not make use of confidential information gained during the
course of their employment with Wal-Mart and (ii) that no individual associate or competing entity gains an unfair competitive advantage over Wal-Mart. 
  
 2. TRANSITION PAYMENTS. In the event that Wal-Mart should initiate the termination of the Associate’s employment, Wal-Mart will, for a period
of two (2) years from the effective date of such termination (“the Transition Period”), continue to pay the Associate his or her base salary at the rate in effect on the date of termination, subject to such withholding as may be required
by law and subject to the following conditions and offsets: 
  
 (A) Transition Payments will not be payable if the Associate is terminated as the result of a violation of Wal-Mart policy; 
  
 (B) In the event that the Associate is demoted or reassigned so that he or she ceases to be a key executive as defined or determined by the Executive
Committee, the Associate will no longer be bound by the Covenant Not to Compete set forth in Paragraph 3 below and will cease to be eligible for any of the benefits or payments (e.g., Transition Payments) provided by this Agreement. In addition, it
is understood that, upon ceasing to be a key executive, the Associate would forfeit the stock options granted by this Agreement, but only to the extent that those options have not vested as of the date of demotion or reassignment. 
  
 (C) No Transition Payments will be payable if the Associate voluntarily
resigns or retires from his or her employment with Wal-Mart; 
  
 (D) Given the availability of other programs designed to provide financial protection in such circumstances, Transition Payments will not be payable under this Agreement in the event of the Associate’s death or disability. If the
Associate should die during the Transition Period, Transition Payments will cease at that time, and his or her heirs will have no entitlement to the 

 continuation of such payments. Transition Payments will not be affected by the disability of the Associate during the
Transition Period. 
  
 (E) Transition Payments will be offset by
any amounts that the Associate may earn during the Transition Period by virtue of self-employment or employment with, or involvement in, an entity other than a Competing Business as defined in Paragraph 3(B) below. Violation by the Associate of his
obligations under Paragraph 3 or Paragraph 4 below, or any other act that is materially harmful to Wal-Mart’s business interests, during the Transition Period will result in the immediate termination of Transition Payments in addition to any
other remedies that may be available to Wal-Mart; 
  
 (F)
Transition Payments will be payable on such regularly scheduled paydays as may be adopted and instituted by Wal-Mart for its other salaried employees. 
  
 (G) Receipt of Transition Payments will not entitle the Associate to participate during the Transition Period in any of the other incentive, stock option,
profit sharing, or other associate benefit plans or programs maintained by Wal-Mart, and the Associate shall be entitled to participate in such plans or programs only to the extent that the terms of the plan or program provide for participation by
former associates. Such participation, if any, shall be governed by the terms of the applicable plan or program. 
  
 3. COVENANT NOT TO COMPETE. In exchange for
                        , for his or her inclusion in the Transition Payment program set forth in Paragraph 2, and for
other good and valuable consideration, the Associate agrees, promises, and covenants as follows: 
  
 (A) For a period of two (2) years from the date on which his or her employment with Wal-Mart terminates, and regardless of the cause or reason for such
termination, the Associate will not directly or indirectly 
  
 (i)
own, manage, operate, finance, join, control, advise, consult, render services to, have a current or future interest in, or participate in the ownership, management, operation, financing, or control of, or be employed by or connected in any manner
with, any Competing Business as defined below in Paragraph 3(B); or 
  
 (ii) solicit for employment, hire or offer employment to, or otherwise aid or assist any person or entity other than Wal-Mart in soliciting for employment, hiring, or offering employment to, any employee of Wal-Mart or any of its
affiliates; 
  
 (B) For purposes of this Agreement, the term
“Competing Business” shall include any general or specialty retail, wholesale, or merchandising business that sells goods or merchandise of the types sold by Wal-Mart at retail to consumers that (i) is located within the United States or
any other country in which Wal-Mart or its affiliates either operate a store or are known to the Associate to have plans to open or acquire an operation within the next twenty-four (24) months, and (ii) that has gross annual sales volume or revenues
attributable to its retail operations in excess of U.S. $2 billion or is reasonably expected to have gross sales volume or revenues of more than U.S. $2 billion in either the current fiscal year or the next following fiscal year. “Competing
Business” as of the date of this Agreement shall specifically include, but is not limited to, such entities as Target/Dayton Hudson, Costco, K-Mart, Home Depot, Dollar General, Family Dollar, Kohls, Hudson Bay Company, Carrefour, HEB, and Fred
Meyers. 
  
 (C) Ownership of an investment of less than the
greater of $25,000 or 1% of any class of equity or debt security of a Competing Business will not be deemed ownership or participation in ownership of a Competing Business for purposes of this Agreement. 

 (D) The covenant not to compete contained in this Paragraph 3 shall be binding upon the Associate, and
shall remain in full force and effect, regardless of whether the Associate qualifies, or continues to remain eligible, for the Transition Payments described in Paragraph 2 above. Termination of the Transition Payments pursuant to Paragraph 2 will
not release the Associate from his or her obligations under this Paragraph 3. 
  
 4. PRESERVATION OF CONFIDENTIAL INFORMATION. The Associate agrees that he or she will not at any time, directly or indirectly, use or disclose any Confidential Information obtained during the course of his or
her employment with Wal-Mart except as may be authorized by Wal-Mart. “Confidential Information” shall include any non-public information pertaining to Wal-Mart’s business, and shall include information obtained by the Associate
during the course of, or as a result of, his or her employment with Wal-Mart, including, without limitation, information regarding Wal-Mart’s processes, suppliers (including the terms, conditions, or other business arrangements with such
suppliers), advertising and marketing plans and strategies, profit margins, seasonal plans, goals, objectives and projections, compilations, analyses, and projections regarding Wal-Mart’s business, trade secrets, salary, staffing, compensation,
and other employment data, and any “know-how,” techniques, practice or any technical information not of a published nature regarding Wal-Mart’s business. 
  
 5. REMEDIES FOR BREACH. The parties shall each be entitled to pursue all legal and equitable rights and remedies to
secure performance of their respective obligations and duties under this Agreement, and enforcement of one or more of these rights and remedies will not preclude the parties from pursuing any other rights and remedies. The Associate acknowledges
that a breach of the provisions of Paragraph 3 or Paragraph 4 above could result in substantial and irreparable damage to Wal-Mart’s business, and that the restrictions contained in Paragraphs 3 and 4 are a reasonable attempt by Wal-Mart to
protect its rights and to safeguard its confidential information. The Associate expressly agrees that upon a breach or a threatened breach by the Associate of the provisions of Paragraph 3 or Paragraph 4, Wal-Mart will be entitled to injunctive
relief to restrain such violation, and the Associate hereby expressly consents to the entry of such temporary, preliminary, and/or permanent injunctive relief as may be necessary to enjoin the violation of Paragraph 3 or Paragraph 4. The parties
further agree that any action relating to the interpretation, validity, or enforcement of this Agreement shall be brought in the appropriate state or federal court encompassing Benton County, Arkansas, and the parties hereby expressly consent to the
jurisdiction of such courts. The Associate further agrees that in any claim or action involving the execution, interpretation, validity, or enforcement of this Agreement, he or she will seek satisfaction exclusively from the assets of Wal-Mart, and
will hold harmless all of Wal-Mart’s individual directors, officers, employees, and representatives. 
  
 6. SEVERABILITY. In the event that a court of competent jurisdiction shall determine that any portion of this Agreement is invalid or otherwise
unenforceable, the parties agree that the remaining portions of the Agreement shall remain in full force and effect. The parties also expressly agree that if any portion of the covenant not to compete set forth in Paragraph 3 shall be deemed
unenforceable, then the Agreement shall automatically be deemed to have been amended to incorporate such terms as will render the covenant enforceable to the maximum extent permitted by law. 
  
 7. NATURE OF THE RELATIONSHIP. Nothing contained in this Agreement
shall be deemed or construed to constitute a contract of employment for a definite term. The parties acknowledge that the Associate is not employed by Wal-Mart for a definite term, and that either party may sever the employment relationship at any
time and for any reason not otherwise prohibited by law. 

 8. ENTIRE AGREEMENT. This document contains the entire understanding and agreement between the
Associate and Wal-Mart regarding the subject matter of this Agreement. This Agreement supersedes and replaces any and all prior understandings or agreements between the parties regarding this subject, and no representations or statements by either
party shall be deemed binding unless contained herein. 
  
 9.
MODIFICATION. This Agreement may not be amended, modified, or altered except in a writing signed by both parties or their designated representatives. 
  
 10. SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of, and will be binding upon, Wal-Mart, its successors and assigns, and on the
Associate and his or her heirs, successors, and assigns. No rights or obligations under this Agreement may be assigned to any other person without the express written consent of all parties hereto. 
  
 11. COUNTERPARTS. This Agreement may be executed in counterparts, in
which case each of the two counterparts will be deemed to be an original and the final counterpart will be deemed to have been executed in Bentonville, Arkansas. 
  
 12. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Arkansas. 
  
 13. STATEMENT OF UNDERSTANDING. By signing
below, the Associate acknowledges (a) that he or she has received a copy of this Agreement, (b) that he or she has read the Agreement carefully before signing it, (c) that he or she has had ample opportunity to ask questions concerning the Agreement
and has had the opportunity to discuss the Agreement with legal counsel of his or her own choosing, and (d) that he or she understands his or her rights and obligations under this Agreement, and enters into this Agreement voluntarily. 
  

									
	 WAL-MART STORES, INC.
	 	 	 	 
	 	 	 	 	 
					
	By:	 	 	 	 	 	 	 	 
					
	 	 	 	 	 	 	 	 	 
	 	 	 Date
	 	 	 	 	 	 Date

 SCHEDULE TO EXHIBIT 
  
 This Schedule of Executive Officers Who Have Executed a Post-Termination Agreement and Covenant Not to Compete, Together with Summary of
Material Differences From Form of Agreement Filed Herewith is included pursuant to Instruction 2 of Item 601(a) of Regulation S-K for the purposes of setting forth the material details in which the specific agreements differ from the form of
agreement filed herewith as Exhibit 10(o). 
  

					
	Executive Officer	  	Date of Agreement	  	 Provision For Equity Award at Time
 of Execution of Agreement

			
	 Thomas M. Coughlin
	  	September 3, 1998	  	Option Equal to 100% of Base Salary
			
	 Michael T. Duke
	  	May 6, 1998	  	Option Equal to 100% of Base Salary
			
	 Charles M. Holley
	  	March 30, 2000	  	Restricted Stock Grant of 6,522 shares
			
	 Thomas D. Hyde
	  	July 14, 2001	  	Restricted Stock Grant of 65,455 shares
			
	 John B. Menzer
	  	July 23, 1998	  	Option Equal to 100% of Base Salary
			
	 Thomas M. Schoewe
	  	January 31, 2000	  	N/A
			
	 H. Lee Scott, Jr.
	  	June 30, 1998	  	Option Equal to 100% of Base Salary
			
	 B. Kevin Turner
	  	September 20, 1998	  	Restricted Stock Grant of 6,531 shares<PAGE>

                                                                     Exhibit 4.2
                                                                     -----------

                                     FORM OF

                                WARRANT AGREEMENT

     WARRANT AGREEMENT dated as of ______ __, 2004, between Nephros, Inc., a
Delaware corporation (the "Company"), and The Shemano Group, Inc. (the
"Underwriter").

                              W I T N E S S E T H:
                              - - - - - - - - - --

     WHEREAS, the Company proposes to issue to the Underwriter warrants
("Warrants") to purchase up to an aggregate of 190,000 shares (the "Shares") of
common stock of the Company, par value $.001 per share (the "Common Stock"); and

     WHEREAS, the Underwriter has agreed pursuant to the underwriting agreement
(the "Underwriting Agreement") dated ________, 2004 between the Underwriter and
the Company, to act as the underwriter in connection with the Company's proposed
public offering (the "Public Offering") of 2,500,000 shares of Common Stock at
an initial public offering price of $____ per share, with an option to purchase
up to an additional 375,000 shares of Common Stock for the purpose of covering
over-allotments; and

     WHEREAS, the Warrants issued pursuant to this Agreement are being issued by
the Company to the Underwriter or its officers, directors or partners and
members of the selling group (the "Selling Group") and/or their officers,
directors or partners, in consideration for, and as part of the Underwriter's
compensation in connection with, the Underwriter acting as the underwriter
pursuant to the Underwriting Agreement;

     NOW, THEREFORE, in consideration of the foregoing premises, the payment by
the Underwriter to the Company of an aggregate of One Hundred Dollars and No
Cents ($100.00), the agreements herein set forth and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

     1. Grant. The Underwriter, and/or its designees who are officers or
partners of the Underwriter or members of the Selling Group in connection with
the Public Offering, are hereby granted the right to purchase, at any time from
_______, 2005 until 5:00 P.M., New York City time, on ________, 2009 (the
"Warrant Exercise Term"), up to an aggregate of 190,000 Shares at an initial
exercise price (subject to adjustment as provided in Article 8 hereof) of $_____
per Share (125% of the public offering price of the Shares). Notwithstanding the
foregoing, the Warrants shall become immediately exercisable upon a change in
control of the Company. Except as set forth herein, the Shares issuable upon
exercise of the Warrants are in all respects identical to the shares of Common
Stock being purchased by the Underwriter for resale to the public pursuant to
the terms and provisions of the Underwriting Agreement.

     2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth as Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement.

<PAGE>

     3. Exercise of Warrants.

     3.1 Cash Exercise. The Warrants initially are exercisable at a price of
$____ per Share, payable in cash or by check to the order of the Company, or any
combination of cash or check, subject to adjustment as provided in Article 8
hereof. Upon surrender of the Warrant Certificate with the duly executed Form of
Election to Purchase in the form set forth on Exhibit B attached hereto and made
a part hereof, together with payment of the Exercise Price (as hereinafter
defined) for the Shares purchased at the Company's principal offices, currently
located at 3960 Broadway, New York, New York 10032, the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock underlying the Warrants). In the case of the purchase of less than
all the Shares purchasable under any Warrant Certificate, the Company shall
cancel said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the Shares
purchasable thereunder.

     3.2 Cashless Exercise. At any time during the Warrant Exercise Term, the
Holder may, at its option, exchange this Warrant, in whole or in part (a
"Warrant Exchange"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering this Warrant at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
(i) such Holder's intent to effect such exchange, (ii) the number of Shares to
be exchanged and (iii) the date on which the Holder requests that such Warrant
Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall take place
on the date specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new Warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within five (5) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "Total Number") less (ii) the number of Shares equal
to the quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price (as hereinafter defined) by (B) the current market value
of a share of Common Stock. For purposes of this Section 3.2, the term "current
market value" shall mean the (i) last reported sale price on the last trading
day or, in case no such reported sale takes place on such day, the average last
reported sale price for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or by the Nasdaq National Market or
SmallCap Market (referred to hereinafter as "NASDAQ") if the Common Stock is not
listed or admitted to trading on any national securities exchange but is listed
or quoted upon NASDAQ, or (ii) if the Common Stock is not traded on a national
securities exchange or NASDAQ, the closing bid price on the last trading day,
or, in case no such reported bid takes place on such day, the average closing
bid price for the last three (3) trading days, as furnished by NASDAQ or similar
organization if NASDAQ is no longer reporting such information, or (iii) if the
Common Stock is not listed upon a principal exchange or quoted on NASDAQ, but
quotes for the Common Stock are available in the OTC Bulletin Board, or any
successor organization, or "pink sheets" the closing bid price on the last
trading day, or, in case

                                      - 2 -

<PAGE>

no such bid takes place on such day, the average closing bid price for the last
three (3) trading days as furnished on the OTC Bulletin Board, or any successor
organization, or (iv) in the event the Common Stock is not traded upon a
principal exchange and not listed on NASDAQ and quotes are not available on the
OTC Bulletin Board, or any successor organization, the price as determined in
good faith by resolution of the Board of Directors of the Company, based on the
best information available to it.

     4. Issuance of Certificates.

        4.1 Issuance. Upon the exercise of the Warrants, the issuance of
certificates for the Shares shall be made forthwith (and in any event within
five (5) business days thereafter) without any charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall (subject to the provisions of
Article 5 hereof) be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

        4.2 Form of Certificates. The Warrant Certificates and certificates
representing the Shares shall be executed on behalf of the Company by the manual
or facsimile signature of the then present Chairman or Vice Chairman of the
Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer. The Warrant
Certificates and, upon exercise of the Warrants, in part or in whole,
certificates representing the Shares shall bear a legend substantially similar
to the following:

     "The securities represented by this certificate have not been registered
     under the Securities Act of 1933, as amended (the "Act"), and may not be
     offered or sold except (i) pursuant to an effective registration statement
     under the Act, (ii) to the extent applicable, pursuant to Rule 144 under
     the Act (or any similar rule under such Act relating to the disposition of
     securities), or (iii) upon the delivery by the holder to the Company of an
     opinion of counsel, reasonably satisfactory to counsel to the Company,
     stating that an exemption from registration under such Act is available."

     5. Restriction on Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof, and that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for a period of 180
days from the date hereof, pursuant to Corporate Financing Rule 2710, except to
officers or partners (but not directors) of the Underwriter and to any member of
the Selling Group participating in the distribution to the public of the Common
Stock and/or their respective

                                      - 3 -

<PAGE>

officers or partners (each of which is hereinafter referred to as a
"Transferee"), in which case such Transferee shall be entitled to receive a
replacement Warrant Certificate in accordance with Section 9 hereof upon
presentment of a properly executed Form of Assignment in the form set forth on
Exhibit C attached hereto and made a part hereof.

     In connection with the transfer or exercise of Warrants, the Transferee and
Holder agree to execute any documents which may be reasonably required by
counsel to the Company to comply with the provisions of the Act (as defined
below) and applicable state securities laws.

     6. Price.

        6.1 Initial and Adjusted Exercise Price. The initial exercise price of
each Warrant shall be $_____ per Share. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Article 8 hereof.

        6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.

     7. Registration Rights.

     7.1 Registrable Securities. As used herein the term "Registrable Security"
means each of the Shares and any shares of Common Stock issued upon any stock
split or stock dividend in respect of such Shares; provided, however, that with
respect to any particular Registrable Security, such security shall cease to be
a Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Act and disposed of pursuant thereto, (ii)
registration under the Act is no longer required for the immediate public
distribution of all or any portion of such security or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Article 7.

     7.2 Demand Registration. At any time commencing after ________, 2005
through and including _______, 2009, the Majority Holders (as defined below)
shall have the right (which right is in addition to the registration rights
under Section 7.3 hereof), exercisable by written notice to the Company, to have
the Company prepare and file with the Commission, on one occasion, a
Registration Statement ("Demand Registration") and such other documents,
including a prospectus, as may be necessary in order to comply with the
provisions of the Act, so as to permit a public offering and sale of the
Registrable Securities during a period equal to the longer of (i) nine (9)
months and (ii) the unexpired term of the Warrants by the Majority Holders
demanding such registration and any other Holders of Warrants who shall notify
the Company within ten (10) days after receiving notice from the Company of such
Demand Registration; provided, however, that after the right to such Demand
Registration is exercised by the Majority Holders, the Company shall have the
right, instead of filing such Demand Registration, to redeem any Warrants
exercisable to purchase, and any Shares

                                      - 4 -

<PAGE>

constituting, Registrable Securities sought to be included in such Demand
Registration at a redemption price equal to: (A) in the case of Warrants, the
difference between the Exercise Price of the Warrants and the current market
value as of the date of the Redemption Notice (as defined below); and (B) in the
case of Shares, the current market value as of the date of the Redemption
Notice. The Company may exercise its redemption right by sending notice (the
"Redemption Notice") to each Holder of Warrants exercisable to purchase, or
Shares constituting, Registrable Securities sought to be included in such Demand
Registration within twenty (20) days after the Company delivers notice of the
Demand Registration to the Holders. Such Redemption Notice shall state the
redemption price for the Warrants and Shares and the closing date for such
redemption, which shall be within sixty (60) days of the Redemption Notice.

     7.3 Piggyback Registration. If, at any time during the five years following
the effective date of the Public Offering, the Company proposes to prepare and
file any new registration statement or post-effective amendment thereto with the
Securities and Exchange Commission ("Commission") covering equity or debt
securities of the Company, or any such securities of the Company held by its
shareholders (other than pursuant to a Form S-4 or pursuant to a Form S-8 or
comparable forms) (for purposes of this Article 7, collectively, a "Registration
Statement"), it will, with respect to each such registration statement and
amendment, give written notice of its intention to do so by registered mail
("Notice"), at least thirty (30) days prior to the filing of each such
Registration Statement, to all holders of the Registrable Securities. Upon the
written request of such a holder (a "Requesting Holder"), made within twenty
(20) days after receipt of the Notice, that the Company include any of the
Requesting Holder's Registrable Securities in the proposed Registration
Statement, the Company shall, as to each such Requesting Holder, use its best
efforts to effect the registration under the Act of the Registrable Securities
which it has been so requested to register ("Piggyback Registration"), at the
Company's sole cost and expense and at no cost or expense to the Requesting
Holders (other than underwriting discounts and commissions applicable to the
sale of such Registrable Securities and the fees and disbursements, if any, of
counsel or any advisor to the Requesting Holders), provided that, if such
Registration Statement relates to an underwritten public offering and the
managing underwriter advises the Company and the Requesting Holders that the
number of Registrable Securities which can be included in such offering must be
limited, priority will be given to any securities proposed to be offered and
sold by the Company, and, thereafter, the Requesting Holders will agree to
reduce the number of Registrable Securities included in such Registration
Statement on a pro rata basis with any other selling security holder on whose
behalf other securities of the Company may be included therein for registration.
Notwithstanding the provisions of this Section 7.3, the Company shall have the
right at any time after it shall have given written notice pursuant to this
Section 7.3 (irrespective of whether any written request for inclusion of
Registrable Securities shall have already been made) to elect not to file any
such proposed Registration Statement, or to withdraw the same after the filing
but prior to the effective date thereof.

     7.4 Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:

          (a) The Company shall pay all costs, fees and expenses in connection
     with all Registration Statements filed pursuant to Sections 7.2 and 7.3
     hereof (excluding any underwriting discounts and commissions which may be
     incurred in connection

                                      - 5 -

<PAGE>

     with the sale of any Registrable Securities and fees of counsel or any
     advisor to the Holders of Registrable Securities) including, without
     limitation, the Company's legal and accounting fees, printing expenses,
     blue sky fees and expenses and the reasonable fees and expenses (not to
     exceed $____) of one counsel to the Holders of Registrable Securities.

          (b) The Company shall take all reasonably necessary action which may
     be required in qualifying or registering the Registrable Securities
     included in a Registration Statement for offering and sale under the
     securities or blue sky laws of such states as are reasonably requested by
     the holders of such securities, provided that the Company shall not be
     obligated to execute or file any general consent to service of process or
     to qualify as a foreign corporation to do business under the laws of any
     such jurisdiction.

          (c) The Company shall indemnify any holder of the Registrable
     Securities to be sold pursuant to any Registration Statement and any
     underwriter or person deemed to be an underwriter under the Act and each
     person, if any, who controls such holder or underwriter or person deemed to
     be an underwriter within the meaning of Section 15 of the Act or Section
     20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
     against all loss, claim, damage, expense or liability (including all
     expenses reasonably incurred in investigating, preparing or defending
     against any claim whatsoever) to which any of them may become subject under
     the Act, the Exchange Act or otherwise, arising from such Registration
     Statement to the same extent and with the same effect as the provisions
     pursuant to which the Company has agreed to indemnify the Underwriter in
     Section ____ of the Underwriting Agreement and to provide for just and
     equitable contribution as set forth in Section ____ of the Underwriting
     Agreement.

          (d) Any holder of Registrable Securities to be sold pursuant to a
     Registration Statement, and its successors and assigns, shall severally,
     and not jointly, indemnify, the Company, its officers and directors and
     each person, if any, who controls the Company within the meaning of Section
     15 of the Act or Section 20(a) of the Exchange Act, against all loss,
     claim, damage or expense or liability (including all expenses reasonably
     incurred in investigating, preparing or defending against any claim
     whatsoever) to which they may become subject under the Act, the Exchange
     Act or otherwise, arising from information furnished in writing by or on
     behalf of such holder, or its successors or assigns, for specific inclusion
     in such Registration Statement to the same extent and with the same effect
     as the provisions contained in Section __ of the Underwriting Agreement
     pursuant to which the Underwriter has agreed to indemnify the Company and
     to provide for just and equitable contribution as set forth in Section ____
     of the Underwriting Agreement.

          (e) Nothing contained in this Agreement shall be construed as
     requiring any Holder to exercise his Warrants prior to the initial filing
     of any Registration Statement or the effectiveness thereof.

          (f) The Company shall deliver promptly to each holder of Registrable
     Securities participating in the offering copies of all correspondence
     between the Commission and the Company, its counsel or auditors and all
     memoranda relating to discussions with the Commission or its staff with
     respect to the Registration Statement and permit each holder of Registrable
     Securities and underwriter to do such investigation, upon reasonable

                                     - 6 -

<PAGE>

     advance notice, with respect to information contained in or omitted from
     the Registration Statement as it deems reasonably necessary to comply with
     applicable securities laws or rules of the National Association of
     Securities Dealers, Inc. ("NASD"); provided that each such holder of
     Registrable Securities agrees not to disclose such information without the
     prior consent of the Company. Such investigation shall include access to
     books, records and properties and opportunities to discuss the business of
     the Company with its officers and independent auditors, all to such
     reasonable extent and at such reasonable times and as often as any such
     holder of Registrable Securities or underwriter shall reasonably request.

          (g) If required by the underwriters in connection with an underwritten
     offering which includes Registrable Securities pursuant to Article 7, the
     Company shall enter into an underwriting agreement with one or more
     underwriters selected for such underwriting, such agreement shall contain
     such representations, warranties and covenants by the Company and such
     other terms as are customarily contained in agreements of that type used by
     the underwriters. If required by the underwriters, the holders of
     Registrable Securities shall be parties to any underwriting agreement
     relating to an underwritten sale of their Registrable Securities and may,
     at their option, require that any or all the representations and warranties
     of the Company to or for the benefit of such underwriters shall, to the
     extent that they may be applicable, also be made to and for the benefit of
     such holders of Registrable Securities. Such holders of Registrable
     Securities shall not be required to make any representations or warranties
     to or agreements with the Company or the underwriters except as they may
     relate to such holders of Registrable Securities and their intended methods
     of distribution.

          (h) In connection with any Registration Statement filed pursuant to
     Sections 7.2 and 7.3 hereof, the Company shall furnish, or cause to be
     furnished, to each Holder participating in any underwritten offering and to
     each underwriter, a signed counterpart, addressed to such Holder or
     underwriter, of (i) an opinion of counsel to the Company, dated the
     effective date of such Registration Statement (and, if such registration
     includes an underwritten public offering, an opinion dated the date of the
     closing under the underwriting agreement), and (ii) a "cold comfort"
     letter, dated the effective date of such Registration Statement (and, if
     such registration includes an underwritten public offering, a letter dated
     the date of the closing under the underwriting agreement), signed by the
     independent public accountants who have issued a report on the Company's
     financial statements included in such Registration Statement, in each case
     covering substantially the same matters with respect to such Registration
     Statement (and the prospectus included therein) and, in the case of such
     accountants' letter, with respect to events subsequent to the date of such
     financial statements, as are customarily covered in opinions of issuer's
     counsel and in accountants' letters delivered to underwriters in
     underwritten public offerings of securities.

          (i) The Company shall promptly notify each Holder of Registrable
     Securities covered by such Registration Statement, at any time when a
     prospectus relating thereto is required to be delivered under the Act, upon
     the Company's discovery that, or upon the happening of any event as a
     result of which, the prospectus included in such Registration Statement, as
     then in effect, includes an untrue statement of a material fact or omits to
     state any material fact required to be stated therein or necessary to make
     the statements therein not misleading in the light of the circumstances
     under which they were made, and upon receipt of such notice each Holder
     shall not effect any sale of Shares and shall immediately cease

                                      - 7 -

<PAGE>

utilizing or distributing such prospectus. At the request of any such Holder,
the Company shall promptly prepare and furnish to such Holder and each
underwriter, if any, a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include 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 not
misleading in the light of the circumstances under which they were made.

            (j) For purposes of this Agreement, the term "Majority Holders"
means the Holders of Registrable Securities and/or Warrants exerciseable for
Registrable Securities which constitute in excess of fifty percent (50%) of the
then outstanding Registrable Securities and/or Warrants exerciseable for
Registrable Securities.

     8. Adjustments of Exercise Price and Number of Shares.

        8.1 Computation of Adjusted Price. In case the Company shall at any time
after the date hereof pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock, then upon such dividend or distribution
the Exercise Price in effect immediately prior to such dividend or distribution
shall forthwith be reduced to a price determined by dividing:

            (a) an amount equal to the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution multiplied by the
Exercise Price in effect immediately prior to such dividend or distribution, by

            (b) the total number of shares of Common Stock outstanding
immediately after such issuance or sale. For the purposes of any computation to
be made in accordance with the provisions of this Section 8.1, the following
provisions shall be applicable: Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the date following the date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution.

        8.2 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.

        8.3 Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Article 8, the number of Shares
issuable upon the exercise of each Warrant shall be adjusted to the nearest full
Share, by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.

        8.4 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or

                                      - 8 -

<PAGE>

combination), or in the case of any consolidation of the Company with, or merger
of the Company into, another corporation (other than a consolidation or merger
in which the Company is the surviving corporation and which does not result in
any reclassification or change of the outstanding shares of Common Stock, except
a change as a result of a subdivision or combination of such shares or a change
in par value, as aforesaid), or in the case of a sale or conveyance to another
corporation of the property of the Company as an entirety, the Holders shall
thereafter have the right to purchase the kind and number of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holders were the owners of
the shares of Common Stock underlying the Warrants immediately prior to any such
events at a price equal to the product of (x) the number of shares issuable upon
exercise of the Warrants and (y) the Exercise Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance as if such Holders had exercised the Warrants.

        8.5 Determination of Outstanding Shares of Common Stock. The number of
shares of Common Stock at any one time outstanding shall include the aggregate
number of shares issued or issuable upon the exercise of options, rights,
warrants and upon the conversion or exchange of convertible or exchangeable
securities (excluding shares issuable upon the exercise of options and warrants
outstanding on the date hereof).

        8.6 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend consisting
solely of shares of Common Stock or a cash dividend or distribution payable out
of current or retained earnings) or otherwise distribute to its shareholders any
monies, assets, property, rights, evidences of indebtedness, securities (other
than shares of Common Stock), whether issued by the Company or by another person
or entity, or any other thing of value, the Holder or Holders of the unexercised
Warrants shall thereafter be entitled to receive, upon the exercise of such
Warrants, in addition to the shares of Common Stock or other securities
receivable upon the exercise thereof, the same monies, property, assets, rights,
evidences of indebtedness, securities or any other thing of value that they
would have been entitled to receive at the time of such dividend or
distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Section 8.6. 8.7 Subscription Rights for Shares of Common
Stock or Other Securities. In the case the Company or an affiliate of the
Company shall at any time after the date hereof and prior to the exercise of all
the Warrants issue any rights to subscribe for shares of Common Stock or any
other securities of the Company or of such affiliate to all the shareholders of
the Company, the Holders of the unexercised Warrants shall be entitled, in
addition to the shares of Common Stock or other securities receivable upon the
exercise of the Warrants, to receive such rights at the time such rights are
distributed to the other shareholders of the Company.

     9. Exchange and Replacement of Warrant Certificates.

        9.1 Exchange. Each Warrant Certificate is exchangeable without expense,
upon the surrender hereof by the registered Holder at the principal executive
office of

                                      - 9 -

<PAGE>

the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.

        9.2 Replacement. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.

     10. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock and shall
not be required to issue scrip or pay cash in lieu of fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of shares of
Common Stock.

     11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock as shall be issuable upon the exercise thereof. The
Company covenants and agrees that, upon exercise of the Warrants and payment of
the Exercise Price thereof, all shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any shareholder. As long as the Warrants
shall be outstanding, the Company shall use its best efforts to cause all shares
of Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted by the exchange upon which the Company's Common Stock is then listed or
quoted.

     12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holder or Holders the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:

            (a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or

            (b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or

                                     - 10 -

<PAGE>

            (c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; or

            (d) a change in control of the Company occurs;

then, in any one or more of said events, the Company shall give written notice
of such event at least twenty (20) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up, sale or change of
control. Such notice shall specify such record date or the date of closing of
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up, sale
or change of control.

     13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, telecopied or mailed by registered or certified mail, return receipt
requested:

            (a) If to a registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or

            (b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.

     14. Supplements and Amendments. The Company and the Underwriter may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem not to
adversely affect the interests of the Holders of Warrant Certificates.

     15. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.

     16. Termination. This Agreement shall terminate at the close of business on
_______, 2009. Notwithstanding the foregoing, the indemnification provisions of
Section 7 shall survive such termination until the close of business on _______,
2010.

     17. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York with respect to contracts made and to be wholly performed in said State
and for all purposes shall be construed in accordance with the laws of said
State. The Company, the Underwriter and any other registered holder or holders
of the Warrant Certificates (i) agree that any legal Suit, action

                                     - 11 -

<PAGE>

or proceeding arising out of or relating to this Agreement shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (ii) waive
any objection which the they may have now or hereafter to the venue of any such
suit, action or proceeding, and (iii) irrevocably consent to the jurisdiction of
the New York State Supreme Court, County of New York and the United States
District Court for the Southern District of New York in any such suit, action or
procedure. The Company, the Underwriter and any other registered holder or
holders of the Warrant Certificates, Warrants or the Shares further agree to
accept and acknowledge service of any and all process which may be served in any
suit, action or proceeding in the New York State Supreme Court, County of New
York and the United States District Court for the Southern District of New York,
and agree that service of process upon them mailed by certified mail to their
respective addresses shall be deemed in every respect effective service of
process upon them in any such suit, action or proceeding. In the event of
litigation between the parties arising hereunder, the prevailing party shall be
entitled to costs and reasonable attorney's fees.

     18. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation, other than the Company and the
Underwriter and any other registered holder or holders of the Warrant
Certificates, Warrants or the Shares, any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Underwriter and any other holder or
holders of the Warrant Certificates, Warrants or the Shares.

     19. Preservation of Rights. The Company will not, by amendment of its
articles of incorporation or through any consolidation, merger, reorganization,
transfer of assets, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Agreement or the Warrants or the rights represented hereby or
thereby, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Holders of the Warrants
against dilution or other impairment.

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

                                     - 12 -

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed, as of the day and year first above written.

[SEAL]                                     NEPHROS, INC.

                                           By:__________________________________
                                           Name:
                                           Title:
Attest:

___________________________________
Name:
Title:
                                           THE SHEMANO GROUP, INC.

                                           By:__________________________________
                                           Name:
                                           Title:

                                      -13-

<PAGE>

                                    EXHIBIT A
                                    ---------

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.

THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

                            EXERCISABLE ON OR BEFORE
                    5:00 P.M., NEW YORK TIME, _________, 2009
No. W-                                                          190,000 Warrants

                               WARRANT CERTIFICATE

     This Warrant Certificate certifies that The Shemano Group, Inc. or
registered assigns is the registered holder of one hundred ninety thousand
(190,000) Warrants to purchase, at any time from ________, 2005 until 5:00 P.M.
New York City time on _________, 2009 ("Expiration Date") up to one hundred
ninety thousand (190,000) shares ("Shares") of fully-paid and nonassessable
common stock, par value $.001 per share ("Common Stock"), of Nephros, Inc., a
Delaware corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $____ per Share upon
surrender of this Warrant Certificate and payment of the Exercise Price or
notice of cashless exchange at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
________, 2004 ("Warrant Agreement") between the Company and The Shemano Group,
Inc. Payment of the Exercise Price may be made in cash, by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check, or in shares of Common Stock pursuant to a
Notice of Exchange in accordance with Section 3 of the Warrant Agreement.

     No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to

<PAGE>

in a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.

     The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and/or number of the Company's securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company
will, at the request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter, or otherwise impair, the rights of the holder as set forth in the
Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

                  [Remainder of page intentionally left blank]

                                       -2-

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.

Dated: ___________, 2004                   NEPHROS, INC.

                                           By:__________________________________
                                           Name:
                                           Title:
[SEAL]

Attest:

___________________________________
Name:
Title:

                                       -3-

<PAGE>

                                    EXHIBIT B
                                    ---------

                          FORM OF ELECTION TO PURCHASE

     The undersigned registered owner of this Warrant hereby irrevocably elects
to exercise the right, represented by this Warrant Certificate, to purchase
_______ Shares and herewith tenders in payment for such Shares cash or a
certified or official bank check payable in New York Clearing House Funds to the
order of _____________________ in the amount of $_______ all in accordance with
the terms this Warrant.

     The undersigned requests that a certificate for such Shares be registered
in the name of ____________________, whose address is _____________________ and
that such Certificate be delivered to _____________, whose address is___________
_____________.

[_]  The  Undersigned  hereby  elects to exercise  the  Warrants  held by it in
accordance with Section 3 of the Warrant Agreement dated ______ __, 2004.

Dated:                          ________________________________________________
                                Name of Registered Owner

                                ________________________________________________
                                Signature of Registered Owner
                                (Signature must conform in all respects to name
                                of holder as specified on the face of the
                                Warrant Certificate.)

                                ________________________________________________
                                Street Address

                                ________________________________________________
                                City, State, Zip

                                ________________________________________________
                                IRS Identification Number/Social Security Number

<PAGE>

                                    EXHIBIT C

                               FORM OF ASSIGNMENT

     (To be executed by the registered holder if such holder desires to transfer
the Warrant Certificate.)

     FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights,
title and interest therein of the undersigned under the within Underwriter's
Warrant, with respect to the number of shares of Common stock set forth below:

NAME OF ASSIGNEE                    ADDRESS                     NUMBER OF SHARES
----------------                    -------                     ----------------

and does hereby irrevocably constitute and appoint __________________________,
Attorney, to transfer the within Warrant Certificate on the books of Nephros,
Inc., maintained for the purpose, with full power of substitution in the
premises. The undersigned understand that compliance with the provisions of the
Underwriter's Warrant is necessary to effect any assignment or transfer.

Dated:                          ________________________________________________
                                Signature of Registered Owner
                                (Signature must conform in all respects to name
                                of holder as specified on the face of the
                                Warrant Certificate.)

                                ________________________________________________
                                Name of Registered Owner

                                ________________________________________________
                                IRS Identification Number/Social Security Number

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