Document:

Unassociated Document

    Exhibit
4.9

     

    
      
        
          	
                  NUMBER

                	
                  (SEE
      REVERSE SIDE FOR LEGEND)

                	
                  WARRANTS

                
	
                  _________

                	
                   

                  THIS
      WARRANT WILL BE VOID IF NOT EXERCISED

                  PRIOR
      TO 5:00 P.M. EASTERN TIME,

                  [•]

                	
                   ___________

                

        

      

    

     

    
      NEPHROS,
INC.

    

     

    CUSIP
_______________

    

    WARRANT

    
    

    THIS
CERTIFIES THAT, for value received
____________________________________________________ is the registered holder of
a warrant or warrants expiring [•] (the “Warrant”) to purchase 0.924532845 fully
paid and non-assessable shares of Common Stock, $0.001 par value
(“Shares”), of Nephros, Inc., a Delaware corporation (the “Company”), for each
Warrant evidenced by this Warrant Certificate. The Warrant entitles the holder
thereof to purchase from the Company, commencing on [•], such number of Shares
of the Company at the price of $0.02 per share, upon surrender of this Warrant
Certificate and payment of the Warrant Price (as defined below) at the office or
agency of the Warrant Agent, Continental Stock Transfer & Trust Company (the
“Warrant Agent”), but only subject to the terms and conditions set forth herein
and in the Warrant Agreement between the Company and the Warrant Agent (as may
be amended from time to time, the “Warrant Agreement”). In no event will the
Company be required to settle the Warrant for cash. The Warrant Agreement
provides that upon the occurrence of certain events the Warrant Price and the
number of Shares purchasable hereunder, set forth on the face hereof, may,
subject to certain terms and conditions, be adjusted. The term “Warrant
Price” as used in this Warrant Certificate refers to the price per Share at
which Shares may be purchased at the time the Warrant is exercised.

     

    
            
THE WARRANT WILL NOT BE EXERCISABLE AND THE COMPANY WILL NOT BE OBLIGATED TO
ISSUE ANY SHARES UNLESS AT THE TIME THE HOLDER HEREOF SEEKS TO EXERCISE THE
WARRANT THE COMPANY HAS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, IN EFFECT COVERING THE SHARES ISSUABLE UPON THE EXERCISE OF
THE WARRANT AND A CURRENT PROSPECTUS RELATING TO THE COMPANY’S COMMON
STOCK.

       

            
THE WARRANT WILL NOT BE EXERCISABLE AND THE COMPANY WILL NOT BE OBLIGATED TO
ISSUE ANY SHARES UNLESS THE SHARES ISSUABLE UPON SUCH EXERCISE HAVE BEEN
REGISTERED OR QUALIFIED OR DEEMED TO BE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES LAWS OF THE STATE OF RESIDENCE OF THE HOLDER OF THE
WARRANT.

       
 No fraction of a Share will be
issued upon any exercise of a Warrant. If the holder of a Warrant would be
entitled to receive a fraction of a Share upon any exercise of a Warrant, the
Company shall, upon such exercise round down to the nearest whole number the
number of Shares to be issued to such holder.

     

    Upon any
exercise of the Warrant for less than the total number of full Shares provided
for herein, there shall be issued to the registered holder hereof or the
registered holder’s assignee a new Warrant Certificate covering the number of
Shares for which the Warrant has not been exercised.

     

    Warrant
Certificates, when surrendered at the office or agency of the Warrant Agent by
the registered holder hereof in person or by attorney duly authorized in
writing, may be exchanged in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service charge, for another
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants.

    

    Upon due
presentment for registration of transfer of the Warrant Certificate at the
office or agency of the Warrant Agent, 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 in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any applicable tax or other governmental
charge.

     

    The
Company and the Warrant Agent may deem and treat the registered holder as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the registered holder, and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.

     

    This
Warrant does not entitle the registered holder to any of the rights of a
stockholder of the Company.

    

    
      
        
          
            
              	
                      COUNTERSIGNED
      AND REGISTERED

                    	
                      NEPHROS,
      INC.

                    
	 
      	 
      
	
                      CONTINENTAL
      STOCK TRANSFER & TRUST

                    	
                      By:

                    	 
      
	
                      COMPANY

                    	
                      Acting
      Chief Executive Officer

                    
	 
      	 
      
	
                      By:

                    	  
      	 
      	
                      By:

                    	 
      
	 
      	 
      	
                      Secretary

                    

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SUBSCRIPTION
FORM

     

    To Be
Executed by the Registered Holder in Order to Exercise Warrants

    

    The
undersigned Registered Holder irrevocably elects to exercise _________ Warrants
represented by this Warrant Certificate, and to purchase the shares of Common
Stock issuable upon the exercise of such Warrants, and requests that
Certificates for such shares shall be issued in the name of

     

    
      	 
      
	
              (PLEASE
      TYPE OR PRINT NAME AND ADDRESS)

            

    

    

    
      	 
      
	
              (SOCIAL
      SECURITY OR TAX IDENTIFICATION
NUMBER)

            

    

     

    
      	
              and
      be

              delivered
      to

            	 
      	 
      
	 
      	 
      	
              (PLEASE
      PRINT OR TYPE NAME AND ADDRESS)

            

    

     

    
      	 
      
	
              and,
      if such number of Warrants shall not be all the Warrants evidenced by this
      Warrant Certificate, that a new Warrant Certificate for the balance of
      such Warrants be registered in the name of, and delivered to, the
      Registered Holder at the address stated
below:

            

    

    

    
      	
              Dated:

            	 
      	 
      	 
      	 
      
	 
      	 
      	
              (SIGNATURE)

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              (ADDRESS)

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              (SOCIAL
      SECURITY OR TAX IDENTIFICATION
NUMBER)

            

    

    

    ASSIGNMENT

    To Be
Executed by the Registered Holder in Order to Assign Warrants

    

    For Value
Received, ____________________________ hereby sells, assigns, and transfers
unto

     

    
      	 
      
	
              (PLEASE
      TYPE OR PRINT NAME AND ADDRESS)

            
	 
      
	 
      

    

    (SOCIAL
SECURITY OR TAX IDENTIFICATION NUMBER)

    
      	
              and
      be

              delivered
      to

            	 
      	 
      
	 
      	 
      	
              (PLEASE
      PRINT OR TYPE NAME AND ADDRESS)

            

    

     

    ___________
of the Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints __________________________ Attorney to transfer this
Warrant Certificate on the books of the Company, with full power of substitution
in the premises.

     

    
      	
              Dated:

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              (SIGNATURE)

            	 
      

    

    

    THE
SIGNATURE TO THE ASSIGNMENT OF THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME
WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK
EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR CHICAGO STOCK
EXCHANGE.Unassociated Document

    Exhibit
4.10

    

    WARRANT
AGREEMENT

    

    Agreement
made as of [•], 2010 between Nephros, Inc., a Delaware corporation, with offices
at 41 Grand Avenue, River Edge, New Jersey 07661 (together with its successors
and permitted assigns under Section 8.11, “Company”), and Continental Stock
Transfer & Trust Company, a New York corporation, with offices at 17 Battery
Place, 8th Floor,
New York, New York 10004 (together with its successors and permitted assigns
under Section 7.2, “Warrant Agent”).

    

    WHEREAS,
the Company is offering subscription rights (“Rights”) to its stockholders as of
5:00 p.m., Eastern Time, on [• ], 2010, to purchase up to 175,000,000 Units,
each Right entitling the holder thereof to purchase 4.185496618 Units at a
subscription price of $0.02 per Unit; and

    

    WHEREAS,
each Unit consists of one share of the Company’s common stock, par value $0.001
per share (“Common Stock”), and a warrant to purchase 0.924532845 shares of
Common Stock at the exercise price of $0.02 per share (“Warrant”) for a period
of five years following [•], subject to adjustment as described herein;
and

    

    WHEREAS,
the Company has filed with the Securities and Exchange Commission a Registration
Statement on Form S-1, No. [•] (the “Registration Statement”), for the
registration, under the Securities Act of 1933, as amended (the “Act”), of the
Rights, the Common Stock and Warrants issuable upon exercise of the Rights, and
the Common Stock issuable upon exercise of the Warrants; and

    

    WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants; and

    

    WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the
holders of the Warrants; and

    

    WHEREAS,
all acts and things have been done and performed which are necessary to make the
Warrants, when executed on behalf of the Company and countersigned by or on
behalf of the Warrant Agent, as provided herein, the valid, binding and legal
obligations of the Company, and to authorize the execution and delivery of this
Agreement.

    

    NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:

    

    
      	
              1.

            	
              Appointment of Warrant
      Agent. The Company hereby appoints the Warrant Agent to act as
      agent for the Company for the Warrants, and the Warrant Agent hereby
      accepts such appointment and agrees to perform the same in accordance with
      the terms and conditions set forth in this
  Agreement.

            

    

    

    
      	
              2.

            	
              Warrants.

            

    

    

    
      	
            	
              2.1.

            	
              Form of
      Warrant. Each Warrant shall be issued in registered form only,
      shall be in substantially the form of Exhibit A hereto (“Warrant
      Certificate”), the provisions of which are incorporated herein and shall
      be signed by or bear the facsimile signature of the Acting Chief Executive
      Officer and of the Secretary of the Company and shall bear a facsimile of
      the Company’s seal. In the event the person whose facsimile signature has
      been placed upon any Warrant shall have ceased to serve in the capacity in
      which such person signed the Warrant before such Warrant is issued, it may
      be issued with the same effect as if he or she had not ceased to be such
      at the date of issuance.

            

    

    

    
      	
            	
              2.2.

            	
              Effect of
      Countersignature. Unless and until countersigned by the Warrant
      Agent pursuant to this Agreement, a Warrant shall be invalid and of no
      effect and may not be exercised by the holder
  thereof.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      	
              2.3.

            	
              Registration.

            

    

    

    
      	
               
      

            	
              2.3.1.

            	
              Warrant
      Register. The Warrant Agent shall maintain books (“Warrant
      Register”) at the location specified in the first paragraph of this
      Agreement or at such other location in the Borough of Manhattan, the City
      and State of New York, notice of which the Warrant Agent shall have given
      to the Company and the holders in accordance with Section 8.2, for the
      registration of original issuance and the registration of transfer of the
      Warrants, in which the Company shall record the name and address of the
      person in whose name each Warrant has been registered. Upon the initial
      issuance of the Warrants, the Warrant Agent shall issue and register the
      Warrants in the names of the respective holders thereof in such
      denominations and otherwise in accordance with instructions delivered to
      the Warrant Agent by the Company.

            

    

    

    
      	
               
      

            	
              2.3.2.

            	
              Registered
      Holder. Prior to due presentment for registration of transfer of
      any Warrant, the Company and the Warrant Agent may deem and treat the
      person in whose name such Warrant shall be registered upon the Warrant
      Register (“registered holder”) as the absolute owner of such Warrant and
      of each Warrant represented thereby (notwithstanding any notation of
      ownership or other writing on the Warrant Certificate made by anyone other
      than the Company or the Warrant Agent), for the purpose of any exercise
      thereof and for all other purposes, and neither the Company nor the
      Warrant Agent shall be affected by any notice to the
    contrary.

            

    

    

    
      	
              3.

            	
              Terms and Exercise of
      Warrants.

            

    

    

    
      	
            	
              3.1.

            	
              Warrant Price.
      Each Warrant shall, when countersigned by the Warrant Agent, entitle the
      registered holder thereof, subject to the provisions of such Warrant and
      of this Warrant Agreement, to purchase from the Company the number of
      shares of Common Stock stated therein, at the price of $0.02 per whole
      share, subject to the adjustments provided in Section 4 hereof. The term
      “Warrant Price” as used in this Warrant Agreement refers to, subject to
      Section 4.4, the price per share at which Common Stock may be purchased at
      the time a Warrant is exercised.

            

    

    

    
      	
            	
              3.2.

            	
              Duration of
      Warrants. A Warrant may be exercised only during the period
      (“Exercise Period”) commencing at 9:00 a.m., Eastern Time, on [•] and
      terminating at 5:00 p.m., Eastern Time on [•] (“Expiration Date”). Each
      Warrant not exercised on or before the Expiration Date shall become void,
      and all rights thereunder and all rights in respect thereof under this
      Agreement shall cease at the close of business on the Expiration
      Date.

            

    

    

    
      	
              3.3.

            	
              Exercise of
      Warrants.

            

    

    

    
      	
               
      

            	
              3.3.1.

            	
              Payment.
      Subject to the provisions of the Warrant and this Warrant Agreement, a
      Warrant, when countersigned by the Warrant Agent, may be exercised by the
      registered holder thereof by surrendering it, at the office of the Warrant
      Agent in the Borough of Manhattan, City and State of New York, with the
      subscription form, as set forth in the Warrant, duly executed, and by
      paying in full the Warrant Price for each full share of Common Stock as to
      which the Warrant is exercised and any and all applicable taxes due in
      connection with the exercise of the Warrant (other than those taxes
      payable by the Company as specified in Section 7.1) by (A) delivery of
      cash to the Warrant Agent at the location at which the Warrant Register is
      maintained, (B) certified bank check or official bank check payable to the
      order of the Company and delivered to the Warrant Agent at the location at
      which the Warrant Register is maintained, or (C) wire transfer in
      immediately available funds, to the account (No. __________; ABA No.
      _________; Reference: __________; Attention: _______________) of the
      Company at the Warrant Agent or such other account of the Company at such
      banking institution in the United States of America as the Company shall
      have given notice to the Warrant Agent and such holder in accordance with
      Section 8.2 (or as otherwise agreed to by the Company). The delivery
      of the Warrant and duly executed subscription form and payment of the
      Warrant Price and any such taxes are the only procedures required of, and
      no legal opinion or other information or instructions shall be required to
      be delivered by, the holder to exercise any
  Warrant.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      
        	
                 
      

              	
                3.3.2.

              	
                Issuance of
      Certificates. As soon as practicable (and, in any event, within
      [___] Business Days) after the exercise of any Warrant and the
      clearance of the funds in payment of the Warrant Price, the Company shall
      issue to, or upon the order of, the registered holder of such Warrant a
      certificate or certificates for the number of full shares of Common Stock
      to which such registered holder is entitled, registered in such name or
      names as may be directed by him, her or it, and if such Warrant shall not
      have been exercised in full, a new countersigned Warrant for the number of
      shares as to which such Warrant shall not have been
      exercised.  Notwithstanding the foregoing, the Company shall not
      be obligated to deliver any securities pursuant to the exercise of a
      Warrant and shall have no obligation to settle such Warrant exercise
      unless a registration statement under the Act with respect to the Common
      Stock issuable upon exercise of such Warrant is effective, subject to the
      Company’s satisfying its obligations under Section 6.4 hereof to use its
      best efforts.  In the event that a registration statement with
      respect to the Common Stock underlying a Warrant is not effective under
      the Act, the holder of such Warrant shall not be entitled to exercise such
      Warrant and such Warrant may have no value and expire worthless. Further,
      no Warrant will be exercisable and the Company will not be obligated to
      issue any shares of Common Stock unless the shares of Common Stock
      issuable upon such exercise have been registered or qualified or deemed to
      be exempt from registration under the securities laws of the state of
      residence of the holder of the Warrant. In no event will the Company be
      required to net cash settle the Warrant
  exercise.

              

      

    

    

    
      	
               
      

            	
              3.3.3.

            	
              Valid Issuance.
      All shares of Common Stock issued upon the proper exercise of a Warrant in
      conformity with this Agreement shall be validly issued, fully paid and
      non-assessable and free from all liens and charges with respect to
      the issue thereof.

            

    

    

    
      	
               
      

            	
              3.3.4.

            	
              Date of
      Issuance. Each person in whose name any such certificate for shares
      of Common Stock is issued shall for all purposes be deemed to have become
      the holder of record of such shares, and the Warrant Agent shall cancel
      such Warrant, immediately prior to the close of business on the date on
      which the Warrant was surrendered and payment of the Warrant Price was
      made, irrespective of the date of delivery of such certificate, except
      that, if the date of such surrender and payment is a date when the stock
      transfer books of the Company are closed, such person shall be deemed to
      have become the holder of such shares, and the Warrant Agent shall cancel
      such surrendered Warrant, immediately prior to the close of business on
      the next succeeding date on which the stock transfer books are
      open.

            

    

    

    
      	
              4.

            	
              Adjustments.

            

    

    

    
      	
            	
              4.1.

            	
              Stock Dividends —
      Split-Ups. If, after the date hereof, and subject to the provisions
      of Section 4.7, the number of outstanding shares of Common Stock is
      increased by a stock dividend payable in shares of Common Stock, or by a
      split-up of shares of Common Stock, or other similar event (in each
      case, other than upon (x) a reclassification or reorganization involving
      other than solely a change in the number of outstanding shares of Common
      Stock or (y) a merger or consolidation or sale or transfer to which
      Section 4.4 applies), then, immediately after the date for determination
      of the holders of Common Stock entitled to receive such stock dividend or
      the effective date of such split-up or similar event, the number of shares
      of Common Stock issuable on exercise of each Warrant shall be increased in
      proportion to such increase in outstanding shares of Common
      Stock.

            

    

    

    
      	
            	
              4.2.

            	
              Aggregation of
      Shares. If, after the date hereof, and subject to the provisions of
      Section 4.7, the number of outstanding shares of Common Stock is decreased
      by a consolidation, combination, reverse stock split or reclassification
      of shares of Common Stock or other similar event (in each case, other
      than upon (x) a reclassification or reorganization involving other than
      solely a change in the number of outstanding shares of Common Stock or (y)
      a merger or consolidation or sale or transfer to which Section 4.4
      applies), then, immediately after the effective date of such
      consolidation, combination, reverse stock split, reclassification or
      similar event, the number of shares of Common Stock issuable on exercise
      of each Warrant shall be decreased in proportion to such decrease in
      outstanding shares of Common Stock.

            

    

    

    
      	
            	
              4.3.

            	
              Adjustments in
      Exercise Price. Whenever the number of shares of Common Stock
      purchasable upon the exercise of the Warrants is adjusted, as provided in
      Section 4.1, 4.2, 4.11 or 4.12, the Warrant Price shall be adjusted (to
      the nearest tenth of a cent) by multiplying such Warrant Price immediately
      prior to such adjustment by a fraction (x) the numerator of which shall be
      the number of shares of Common Stock purchasable upon the exercise of the
      Warrants immediately prior to such adjustment, and (y) the denominator of
      which shall be the number of shares of Common Stock so purchasable
      immediately thereafter.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
            	
              4.4.

            	
              Replacement of
      Securities upon Reorganization, etc. In case of any
      reclassification or reorganization of the outstanding shares of Common
      Stock (other than a change covered by Section 4.1 or 4.2 hereof), or in
      the case of any merger or consolidation of the Company with or into
      another corporation (other than a consolidation or merger in which the
      Company is the continuing corporation and that does not result in any
      reclassification or reorganization of, or dividend or distribution on, the
      outstanding shares of Common Stock), or in the case of any sale or
      transfer to another corporation or entity of the assets or other property
      of the Company as an entirety or substantially as an entirety, (i) (x) the
      Warrant holders shall thereafter have the right to purchase and receive,
      upon the basis and upon the terms and conditions specified in the Warrants
      and in lieu of the shares of Common Stock of the Company immediately
      theretofore purchasable and receivable upon the exercise of the rights
      represented thereby, the kind and amount of shares of stock or other
      securities or property (including cash) receivable upon such
      reclassification, reorganization, merger or consolidation, or upon such
      sale or transfer, that the Warrant holder would have received if such
      Warrant holder had exercised his, her or its Warrant(s) immediately prior
      to such event; and (y) in any such case, if necessary, the obligations of
      the Company (or, in the case of any such merger or consolidation in which
      the Company is not the continuing corporation or such a sale or transfer
      (each, a “Non-Surviving Transaction”), the other person) set forth herein
      with respect to the rights of the Warrant holder to exercise a Warrant in
      exchange for the shares of Common Stock theretofore purchasable upon
      exercise of a Warrant shall be appropriately adjusted so as to be
      applicable, as nearly as may reasonably be, to such Warrant holder’s right
      to exercise a Warrant in exchange for shares of stock or other securities
      or property pursuant to this paragraph; and (ii) as a condition to the
      consummation of any such merger or consolidation or sale or transfer, the
      Company shall (or, in the case of a Non-Surviving Transaction, the Company
      shall cause such other person to) execute and deliver to the Warrant Agent
      a written instrument providing as set forth in clause (i)(x) and (y) above
      and for adjustments which, for events subsequent to the effective date of
      such written instrument, shall be as nearly equivalent as may be
      practicable to the adjustments provided for in this Section 4. The
      provisions of this Section 4.4 shall similarly apply to successive
      reclassifications, reorganizations, mergers or consolidations, sales or
      other transfers. In determining the kind and amount of stock,
      securities or the property receivable upon exercise of a Warrant following
      the consummation of such reclassification, reorganization, merger or
      consolidation or sale or other transfer, if the holders of Common Stock
      have the right to elect the kind or amount of consideration receivable
      upon consummation of such reclassification, reorganization, merger or
      consolidation or sale or other transfer, then the consideration that a
      Warrant holder shall be entitled to receive upon exercise shall be deemed
      to be the kinds and amounts of consideration received by the majority of
      all holders of the shares of Common Stock (excluding any holder that is a
      person into which the Company consolidated or into which the Company
      merged or which merged into the Company or to which such sale or other
      transfer is made or an Affiliate of any thereof) that affirmatively make
      an election.

            

    

    

    
      	 	
              4.5.

            	
              [Reserved.]

            

    

    

    
      	
            	
              4.6.

            	
              Notices of Changes in
      Warrant. Upon every adjustment of the Warrant Price or the number
      of shares issuable upon exercise of a Warrant, the Company shall give
      written notice thereof to the Warrant Agent and to the holders of
      Warrants, which notice shall state the Warrant Price resulting from such
      adjustment and the increase or decrease, if any, in the number of shares
      purchasable at such price upon the exercise of a Warrant, setting forth in
      reasonable detail the method of calculation and the facts upon which such
      calculation is based. Failure to give such notice, or any defect therein,
      shall not affect the legality or validity of such
  event.

            

    

    

    
      	
            	
              4.7.

            	
              No Fractional
      Shares. Notwithstanding any provision contained in this Warrant
      Agreement to the contrary, the Company shall not issue fractional shares
      upon exercise of Warrants. If, by reason of any adjustment made pursuant
      to this Section 4, the holder of any Warrant would be entitled, upon the
      exercise of such Warrant, to receive a fractional interest in a share, the
      Company shall, upon such exercise, round down to the nearest whole number
      the number of shares of Common Stock to be issued to the Warrant
      holder.

            

    

    

    
      	
            	
              4.8.

            	
              Form of
      Warrant. The form of Warrant need not be changed because of any
      adjustment pursuant to this Section 4, and Warrants issued after such
      adjustment may state the same Warrant Price and the same number of shares
      as is stated in the Warrants initially issued pursuant to this Agreement.
      However, the Company may at any time in its sole discretion make any
      change in the form of Warrant that the Company may deem appropriate and
      that does not affect the substance thereof, and any Warrant thereafter
      issued or countersigned, whether in exchange or substitution for an
      outstanding Warrant or otherwise, may be in the form as so
      changed.

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
            	
              4.9.

            	
              Notice of Certain
      Transactions. In the event that the Company shall propose to (a)
      offer the holders of its Common Stock rights to subscribe for or to
      purchase any securities convertible into shares of Common Stock or shares
      of stock of any class or any other securities, rights or options, (b)
      issue any rights, options or warrants entitling the holders of Common
      Stock to subscribe for shares of Common Stock, (c) make a tender offer,
      redemption offer or exchange offer with respect to the Common Stock, (d)
      take any action of the type described in Sections 4.1, 4.2, 4.4, 4.10,
      4.11 or 4.12 (but only if the action of the type described in Sections
      4.1, 4.2, 4.4, 4.10, 4.11 or 4.12 would result in an adjustment in the
      Warrant Price or the number of shares of Common Stock purchasable upon
      exercise of Warrants or a change in the kind or amount of securities or
      property (including cash) to be delivered upon exercise of a Warrant) or
      (e) effect the voluntary or involuntary dissolution, liquidation or
      winding-up of the Company, then, in each such case, the Company shall send
      to the Warrant holders a notice of such proposed action or offer. Such
      notice shall be mailed to the registered holders at their addresses as
      they appear in the Warrant Register, which shall specify the record date
      for the purposes of such dividend, distribution or rights, or the date
      such issuance or event is to take place and the date of participation
      therein by the holders of Common Stock, if any such date is to be fixed,
      and shall briefly indicate the effect of such action on the Common Stock
      and on the number and kind of shares of Common Stock and any other shares
      of stock and other property, if any, issuable upon exercise of each
      Warrant and the Warrant Price after giving effect to any adjustment
      pursuant to this Section 4 which would be required as a result of such
      action. Such notice shall be given as promptly as practicable after the
      Board of Directors of the Company (the “Board”) has determined to take any
      such action and (x) in the case of any dividend or distribution at least
      10 days prior to the record date for determining the holders of the Common
      Stock for purposes of such action or (y) in the case of any other such
      action at least 20 days prior to the date of the taking of such proposed
      action or the date of participation therein by the holders of Common
      Stock, whichever shall be the
earlier.

            

    

    

    
      	
            	
              4.10.

            	
              Adjustment for
      Property Dividends. If the Company declares a dividend or any other
      distribution upon the Common Stock that is payable in any of its assets
      (including cash) or debt securities or any rights, options or warrants to
      purchase debt securities, assets or other securities of the Company (other
      than (i) a distribution of Common Stock pursuant to which Section 4.1
      applies or (ii) a distribution upon a reclassification, reorganization,
      merger or consolidation or sale or transfer to which Section 4.4 applies)
      (a “Property Dividend”), then and in each such event the Warrant Price for
      this Warrant in effect immediately prior to the close of business on the
      date for the determination of the holders of Common Stock entitled to
      receive such dividend or distribution shall be decreased by the fair
      market value (as determined in good faith by the Board, whose
      determination shall be conclusive and evidenced by a board resolution
      filed with the Company) on the ex date for such distribution of such
      Property Dividend so distributed for each share of Common Stock (after
      taking into account, in the case of rights, warrants or options, the
      consideration required to be paid upon exercise
  thereof).

            

    

    

    
      Any
adjustment under this Section 4.10 shall become effective immediately after the
date for the determination of the holders of Common Stock entitled to receive
the Property Dividend. If the Board determines the fair market value of any
Property Dividend for purposes of this Section 4.10 or Section 4.11 by reference
to the actual or when issued trading market for any securities comprising such
Property Dividend, the Board must in doing so consider the prices in such market
on the same Trading Day that is or would be required to be used pursuant to
Section 4.11 in computing the VWAP for “M” in the formula in Section
4.11.

    

    

    
      For
purposes of clarity, if a declared Property Dividend would have reduced the
Warrant Price to an amount below the par value per share of the Common Stock,
the Warrant Price will be reduced to the par value per share of the Common Stock
and any remaining fair market value of the Property Dividend that would have
resulted in a reduction of the Warrant Price below the par value per share of
the Common Stock shall be reflected in an increase of the number of shares
issuable upon exercise of this Warrant pursuant to Section 4.11
hereto.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
            	
              4.11.

            	
              Adjustment for
      Property Dividend In Special Circumstances.  In the event
      that the Warrant Price is or has been reduced to the par value per share
      of the Common Stock or a price that rounds to the par value per share of
      the Common Stock due to adjustments to the Warrant Price pursuant to
      Section 4.10 and the Company declares a dividend or any other distribution
      upon the Common Stock that is a Property Dividend, this Section 4.11 shall
      apply and the number of shares of Common Stock issuable upon exercise of
      the Warrant shall be adjusted in accordance with the
    formula:

            

    

    

    N’ = N x
    M    

              M
- F

    

    where:

    

    
      	
            	
              N’     =

            	
              the
      adjusted number of shares of Common Stock issuable upon exercise of this
      Warrant.

            

    

    

    
      	
            	
              N      =

            	
              the
      current number of shares of Common Stock issuable upon exercise of this
      Warrant.

            

    

    

    
      	
            	
              M     =

            	
              the
      VWAP for the Trading Day immediately preceding the ex date for such
      distribution.

            

    

    

    
      
        	
              	
                F      =

              	
                the
      fair market value on the ex date for such distribution of the Property
      Dividend distributable to one share of Common Stock after taking into
      account, in the case of any rights, options or warrants, the consideration
      required to be paid upon exercise thereof. The Board shall reasonably
      determine the fair market value in good
faith.

              

      

    

     

    
      The
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the date for the determination of
holders of Common Stock entitled to receive such
distribution.

    

    

    
      If any
adjustment is made pursuant to this Section 4.11 as a result of the issuance of
rights, options or warrants and at the end of the period during which any such
rights, options or warrants are exercisable, not all such rights, options or
warrants shall have been exercised, this Warrant (to the extent not then
exercised) shall be immediately readjusted as if “F” in the above formula was
the fair market value on the ex date for such distribution of the indebtedness
or assets actually distributed upon exercise of such rights, options or warrants
divided by the number of shares of Common Stock outstanding on the ex-dividend
date for such distribution and taking into account the consideration paid upon
exercise thereof.

    

    

    
      “ex date”
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the VWAP was obtained
without the right to receive such issuance or distribution.

    

    

    
      	
            	
              4.12.

            	
              Certain Repurchases of
      Common Stock.  In the case the Company effects a Pro Rata
      Repurchase of Common Stock, then the number of shares of Common Stock
      issuable upon exercise of each Warrant shall be increased to the amount
      determined by multiplying the number of shares of Common Stock issuable
      upon exercise of each Warrant in effect immediately prior to the Effective
      Date of such Pro Rata Repurchase by a fraction of which the numerator
      shall be the product of (i) the number of shares of Common Stock
      outstanding immediately prior to such Pro Rata Repurchase minus the number
      of shares of Common Stock so repurchased and (ii) the VWAP on the Trading
      Day immediately preceding the first public announcement by the Company or
      any of its Affiliates of the intent to effect such Pro Rata Repurchase and
      of which the denominator shall be (i) the product of (x) the number of
      shares of Common Stock outstanding immediately before such Pro Rata
      Repurchase and (y) the VWAP on the Trading Day immediately preceding the
      first public announcement by the Company or any of its Affiliates of the
      intent to effect such Pro Rata Repurchase, minus (ii) the aggregate
      purchase price of the Pro Rata
Repurchase.

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      “Pro Rata
Repurchase” means any purchase of shares of Common Stock by the Company or any
Affiliate thereof pursuant to (A) any tender offer or exchange offer subject to
Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated
thereunder or (B) any other offer available to substantially all holders of
Common Stock, in the case of both (A) and (B), whether for cash, shares of
Capital Stock of the Company, other securities of the Company, evidences of
indebtedness of the Company or any other Person or any other property
(including, without limitation, shares of Capital Stock, other securities or
evidences of indebtedness of a subsidiary), or any combination thereof, effected
while any Warrant is outstanding.  The “Effective Date” of a Pro Rata
Repurchase shall mean the date of acceptance of shares for purchase or exchange
by the Company under any tender or exchange offer which is a Pro Rata Repurchase
or the date of purchase with respect to any Pro Rata Repurchase that is not a
tender or exchange offer.

    

    

    
      	
            	
              4.13.

            	
              Adjustment
      Rules.  Any adjustments pursuant to this Section 4 shall
      be made successively whenever an event referred to herein shall
      occur.  If an adjustment in Warrant Price made hereunder would
      reduce the Warrant Price to an amount below the par value per share of the
      Common Stock, then such adjustment in Warrant Price made hereunder shall
      reduce the Warrant Price to the par value per share of the Common
      Stock.

            

    

    

    
      	
            	
              4.14.

            	
              Other Events.
      If any event occurs as to which the foregoing provisions of this Section 4
      are not strictly applicable or, if strictly applicable, would not, in the
      good faith judgment of the Board, fairly and adequately protect the
      purchase rights of the registered holders of the Warrants in accordance
      with the essential intent and principles of such provisions, then the
      Board shall make such adjustments in the application of such provisions,
      in accordance with such essential intent and principles, that result
      solely in a decrease in the Warrant Price or an increase in the number of
      shares of Common Stock and other property, if any, issuable upon exercise
      of a Warrant as shall be reasonably necessary, in the good faith opinion
      of the Board, to protect such purchase rights as
  aforesaid.

            

    

    

    
      	
              5.

            	
              Transfer and Exchange
      of Warrants.

            

    

    

    
      	
            	
              5.1.

            	
              Registration of
      Transfer. The Warrant Agent shall register the transfer, from time
      to time, of any outstanding Warrant upon the Warrant Register, upon
      surrender of such Warrant for transfer, properly endorsed with signatures
      properly guaranteed and accompanied by appropriate instructions for
      transfer. Upon any such transfer, a new Warrant representing an equal
      aggregate number of Warrants shall be issued and the old Warrant shall be
      cancelled by the Warrant Agent. The Warrants so cancelled shall be
      delivered by the Warrant Agent to the Company from time to time upon
      request.

            

    

    

    
      	
            	
              5.2.

            	
              Procedure for
      Surrender of Warrants. Warrants may be surrendered to the Warrant
      Agent, together with a written request for exchange or transfer, and
      thereupon the Warrant Agent shall issue in exchange therefor one or more
      new Warrants as requested by the registered holder of the Warrants so
      surrendered, representing an equal aggregate number of Warrants, and the
      Warrant Agent shall cancel the surrendered
  Warrant.

            

    

    

    
      	
            	
              5.3.

            	
              Fractional
      Warrants. The Warrant Agent shall not be required to effect any
      registration of transfer or exchange which will result in the issuance of
      a warrant certificate for a fraction of a
  Warrant.

            

    

    

    
      	
            	
              5.4.

            	
              Service
      Charges. No service charge shall be made for any exchange or
      registration of transfer of
Warrants.

            

    

    

    
      	
            	
              5.5.

            	
              Warrant Execution and
      Countersignature. The Warrant Agent is hereby authorized to
      countersign and to deliver, in accordance with the terms of this
      Agreement, the Warrants required to be issued pursuant to the provisions
      of Sections 3.3.2 and 6.2 and this Section 5, and the Company, whenever
      required by the Warrant Agent, will supply the Warrant Agent with Warrants
      duly executed on behalf of the Company for such
  purpose.

            

    

    

    
      	
            	
              5.6.

            	
              Warrants Deemed
      Outstanding.  The Warrants outstanding at any time are
      all Warrants evidenced on all Warrant Certificates countersigned by the
      Warrant Agent except for those canceled, or then required hereunder to be
      canceled, by the Warrant Agent.  A Warrant ceases to be
      outstanding if the Company holds the
Warrant.

            

    

    

    
      	
            	
              5.7.

            	
              Warrants To Be
      Identical.  All Warrants issued upon any registration of
      transfer or exchange, or upon exercise or replacement, pursuant to the
      terms of this Agreement shall be the valid obligations of the Company,
      entitled to the same benefits under this Agreement as the Warrants
      surrendered upon such registration for transfer or
    exchange.

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
      	
              6.

            	
              Other Provisions
      Relating to Rights of Holders of
  Warrants.

            

    

    

    
      	
            	
              6.1.

            	
              No Rights as
      Stockholder. Subject
      to Section 3.3.4, a Warrant does not entitle the registered holder thereof
      to any of the rights of a stockholder of the Company, including, without
      limitation, the right to receive dividends, or other distributions,
      exercise any preemptive rights to vote or to consent or to receive notice
      as shareholders in respect of the meetings of shareholders or the election
      of directors of the Company or any other
matter.

            

    

    

    
      	
            	
              6.2.

            	
              Lost, Stolen,
      Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen,
      mutilated, or destroyed, the Company and the Warrant Agent may on such
      terms as to indemnity or otherwise as they may in their discretion impose
      (which shall, in the case of a mutilated Warrant, include the surrender
      thereof), issue a new Warrant of like denomination, tenor, and date as the
      Warrant so lost, stolen, mutilated, or destroyed and, in the case of
      a mutilated Warrant, the Warrant Agent shall cancel the old Warrant. Any
      such new Warrant shall constitute a substitute contractual obligation of
      the Company, whether or not the allegedly lost, stolen, mutilated, or
      destroyed Warrant shall be at any time enforceable by
    anyone.

            

    

    

    
      	
            	
              6.3.

            	
              Reservation of Common
      Stock. The Company shall at all times reserve and keep available a
      number of its authorized but unissued shares of Common Stock that will be
      sufficient to permit the exercise in full of all outstanding Warrants
      issued pursuant to this Agreement.

            

    

    

    
      	
            	
              6.4.

            	
              Registration of Common
      Stock. The Company shall use its best efforts to ensure that all
      such shares of Common Stock issuable upon exercise of Warrants may be so
      issued and freely sold and transferred without violation of any applicable
      federal or state securities law (including the Act) or other applicable
      law or governmental regulation or any requirements of any domestic stock
      exchange upon which shares of Common Stock may be listed (except for
      official notice of issuance which shall be immediately delivered by the
      Company upon each such issuance).

            

    

    

    
      The
Company shall, from and after the date of original issuance of the Warrants
until the end of the Exercise Period, maintain on file with the Securities and
Exchange Commission a post-effective amendment to the Registration Statement, or
a new registration statement for registration of the offer and sale by the
Company and subsequent resale by holders upon exercise (and cause a current
prospectus to be available to holders for such resales), under the Act, of, and
it shall take such action as is necessary to qualify for sale, in those states
in which the Warrants were initially offered by the Company, the Common Stock
issuable upon exercise of the Warrants. In either case, the Company will use its
best efforts to cause the same to become effective and to maintain the
effectiveness of such registration statement until the expiration of the
Warrants in accordance with the terms of this Agreement. In no event will the
registered holder of a Warrant be entitled to receive a net-cash settlement of
shares of Common Stock or other consideration as a result of the Company’s
noncompliance with this Section 6.4.

    

    

    
      	
            	
              6.5.

            	
              Rights of
      Action.  All rights of action against the Company in
      respect of this Agreement, except rights of action vested in the Warrant
      Agent, are vested in the holders of the Warrants, and any holder of any
      Warrant, without the consent of the Warrant Agent or the holder of any
      other Warrant, may, in such holder’s own behalf and for such holder’s own
      benefit, enforce and may institute and maintain any suit, action or
      proceeding against the Company suitable to enforce, or otherwise in
      respect of, such holder’s right to exercise such holder’s Warrants in the
      manner provided in this Agreement.

            

    

    

    
      	
              7.

            	
              Concerning the Warrant
      Agent and Other Matters.

            

    

    

    
      	
            	
              7.1.

            	
              Payment of
      Taxes. The Company will from time to time promptly pay all taxes
      and charges (other than income taxes) that may be imposed upon the Company
      or the Warrant Agent or otherwise payable in respect of the issuance or
      delivery of shares of Common Stock upon the exercise of Warrants, but the
      Company shall not be obligated to pay any transfer taxes in respect of
      the issue or delivery of such shares in the name other than that in
      which the Warrants were
registered.

            

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      	
            	
              7.2.

            	
              Resignation,
      Consolidation, or Merger of Warrant
  Agent.

            

    

    

    
      	
               
      

            	
              7.2.1.

            	
              Appointment of
      Successor Warrant Agent. The Warrant Agent may resign its duties
      and be discharged from all further duties and liabilities hereunder after
      giving sixty (60) days’ notice in writing to the Company. If the office of
      the Warrant Agent becomes vacant by resignation or incapacity to act or
      otherwise, the Company shall appoint in writing a successor Warrant Agent
      in place of the Warrant Agent. If the Company shall fail to make such
      appointment within a period of 30 days after it has been notified in
      writing of such resignation or incapacity by the Warrant Agent or by the
      holder of any Warrant (who shall, with such notice, submit his Warrant for
      inspection by the Company), then the holder of any Warrant may apply to
      the Supreme Court of the State of New York for the County of New York for
      the appointment of a successor Warrant Agent at the Company’s cost. Any
      successor Warrant Agent, whether appointed by the Company or by such
      court, shall be a corporation organized and existing under the laws of the
      State of New York, in good standing and having its principal office in the
      Borough of Manhattan, City and State of New York, and authorized under
      such laws to exercise corporate trust powers and subject to supervision or
      examination by federal or state authority. After appointment, any
      successor Warrant Agent shall be vested with all the authority, powers,
      rights, immunities, duties, and obligations of its predecessor Warrant
      Agent with like effect as if originally named as Warrant Agent hereunder,
      without any further act or deed; but if for any reason it becomes
      necessary or appropriate, the predecessor Warrant Agent shall execute and
      deliver, at the expense of the Company, an instrument transferring to such
      successor Warrant Agent all the authority, powers, and rights of such
      predecessor Warrant Agent hereunder; and upon request of any successor
      Warrant Agent the Company shall make, execute, acknowledge, and deliver
      any and all instruments in writing for more fully and effectually vesting
      in and confirming to such successor Warrant Agent all such authority,
      powers, rights, immunities, duties, and
  obligations.

            

    

    

    
      	
               
      

            	
              7.2.2.

            	
              Notice of Successor
      Warrant Agent. In the event a successor Warrant Agent shall be
      appointed, the Company shall give notice thereof to the predecessor
      Warrant Agent and the transfer agent for the Common Stock not later than
      the effective date of any such
appointment.

            

    

    

    
      	
               
      

            	
              7.2.3.

            	
              Merger or
      Consolidation of Warrant Agent. Any corporation into which the
      Warrant Agent may be merged or with which it may be consolidated or any
      corporation resulting from any merger or consolidation to which the
      Warrant Agent shall be a party shall be the successor Warrant Agent under
      this Agreement without any further
act.

            

    

    

    
      	
            	
              7.3.

            	
              Fees and Expenses of
      Warrant Agent.

            

    

    

    
      	
               
      

            	
              7.3.1.

            	
              Remuneration.
      The Company agrees to pay the Warrant Agent reasonable remuneration for
      its services as such Warrant Agent hereunder and will reimburse the
      Warrant Agent upon demand for all expenditures that the Warrant Agent may
      reasonably incur in the execution of its duties
  hereunder.

            

    

    

    
      	
               
      

            	
              7.3.2.

            	
              Further
      Assurances. The Company agrees to perform, execute, acknowledge,
      and deliver or cause to be performed, executed, acknowledged, and
      delivered all such further and other acts, instruments, and assurances as
      may reasonably be required by the Warrant Agent for the carrying out or
      performing of the provisions of this
Agreement.

            

    

    

    
      	
            	
              7.4.

            	
              Liability of Warrant
      Agent.

            

    

    

    
      	
               
      

            	
              7.4.1.

            	
              Reliance on Company
      Statement. Whenever in the performance of its duties under this
      Warrant Agreement, the Warrant Agent shall deem it necessary or desirable
      that any fact or matter be proved or established by the Company prior to
      taking or suffering any action hereunder, such fact or matter (unless
      other evidence in respect thereof be herein specifically prescribed) may
      be deemed to be conclusively proved and established by a statement signed
      by the Acting Chief Executive Officer or Chairman of the Board of the
      Company and delivered to the Warrant Agent. The Warrant Agent may rely
      upon such statement for any action taken or suffered in good faith by it
      pursuant to the provisions of this
Agreement.

            

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              7.4.2.

            	
              Indemnity. The
      Warrant Agent shall be liable hereunder only for its own negligence,
      willful misconduct or bad faith. The Company agrees to indemnify the
      Warrant Agent and save it harmless against any and all liabilities,
      including judgments, costs and reasonable counsel fees, for anything done
      or omitted by the Warrant Agent in the execution of this Agreement except
      as a result of the Warrant Agent’s negligence, willful misconduct, or bad
      faith.

            

    

    

    
      	
               
      

            	
              7.4.3.

            	
              Exclusions. The
      Warrant Agent shall have no responsibility with respect to the validity of
      this Agreement or with respect to the validity or execution of any Warrant
      (except its countersignature thereof); nor shall it be responsible for any
      breach by the Company of any covenant or condition contained in this
      Agreement or in any Warrant; nor shall it be responsible to make any
      adjustments required under the provisions of Section 4 hereof or
      responsible for the manner, method, or amount of any such adjustment or
      the ascertaining of the existence of facts that would require any such
      adjustment; nor shall it by any act hereunder be deemed to make any
      representation or warranty as to the authorization or reservation of any
      shares of Common Stock to be issued pursuant to this Agreement or any
      Warrant or as to whether any shares of Common Stock will, when issued, be
      valid and fully paid and
non-assessable.

            

    

    

    
      	
            	
              7.5.

            	
              Acceptance of
      Agency. The Warrant Agent hereby accepts the agency established by
      this Agreement and agrees to perform the same upon the terms and
      conditions herein set forth and among other things, shall account promptly
      to the Company with respect to Warrants exercised and concurrently account
      for, and pay to the Company, all moneys received by the Warrant Agent for
      the purchase of shares of Common Stock through the exercise of
      Warrants.

            

    

    

    
      	
              8.

            	
              Miscellaneous
      Provisions.

            

    

    

    
      	
            	
              8.1.

            	
              Successors. All
      the covenants and provisions of this Agreement by or for the benefit of
      the Company or the Warrant Agent shall bind and inure to the benefit of
      their respective successors and
assigns.

            

    

    

    
      	
            	
              8.2.

            	
              Notices. Any
      notice, statement or demand authorized by this Warrant Agreement to be
      given or made by the Warrant Agent or by the holder of any Warrant to or
      on the Company shall be sufficiently given when so delivered, if by hand
      or overnight delivery or if sent by certified mail or private courier
      service, within five days after deposit of such notice, postage prepaid,
      addressed (until another address is filed in writing by the Company with
      the Warrant Agent and notice thereof is given to all holders of
      Warrants), as follows:

            

    

    

    Nephros,
Inc.

    41 Grand
Avenue

    River
Edge, NJ 07661

    Attn:
Paul A. Mieyal, Acting Chief Executive Officer

    

    with a
copy to:

    

    Wyrick
Robbins Yates & Ponton LLP

    4101 Lake
Boone Trail, Suite 300

    Raleigh,
NC 27607

    Attn:
Alexander M. Donaldson, Esquire

    

    Any
notice, statement or demand authorized by this Agreement to be given or made by
the holder of any Warrant or by the Company to or on the Warrant Agent shall be
sufficiently given when so delivered, if by hand or overnight delivery or if
sent by certified mail or private courier service, within five days after
deposit of such notice, postage prepaid, addressed (until another address is
filed in writing by the Warrant Agent with the Company and notice thereof is
given to all holders of Warrants), as follows:

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    Continental
Stock Transfer & Trust Company

    17
Battery Place, 8th Floor

    New York,
New York 10004

    Attn:
Compliance Department

    

    Any
notice, statement or demand authorized by this Agreement to be given or made by
the Warrant Agent or by the Company to or on the holder of any Warrant shall be
given in writing and shall be sufficiently given (unless otherwise herein
expressly provided) when so delivered, if by hand or overnight delivery or if
sent by certified mail or private courier service, within five days after
deposit of such notice, postage prepaid, addressed to such holder, at the
address of such holder as it appears in the Warrant Register.

    

    
      	
               
      

            	
              8.3

            	
              Applicable law.
      The validity, interpretation, and performance of this Agreement and of the
      Warrants shall be governed in all respects by the laws of the State of New
      York, without giving effect to conflicts of law principles that would
      result in the application of the substantive laws of another jurisdiction.
      The Company hereby agrees that any action, proceeding or claim against it
      arising out of or relating in any way to this Agreement shall be brought
      and enforced in any state court sitting in the County of New York or
      federal court sitting in the Southern District of the State of New York,
      and irrevocably submits to such jurisdiction, which jurisdiction shall be
      exclusive. The Company hereby waives any objection to such exclusive
      jurisdiction and that such courts represent an inconvenience forum. Any
      such process or summons to be served upon the Company may be served by
      transmitting a copy thereof by registered or certified mail, return
      receipt requested, postage prepaid, addressed to it at the address for
      notices as provided in Section 8.2 hereof. Such mailing shall be deemed
      personal service and shall be legal and binding upon the Company in any
      action, proceeding or claim.  To the extent permitted by law,
      any judgment in respect of a dispute arising out of or relating to this
      Agreement or any Warrant 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.

            

    

    

    
      	
               
      

            	
              8.4

            	
              Persons Having Rights
      under this Agreement. Nothing in this Agreement expressed and
      nothing that may be implied from any of the provisions hereof is intended,
      or shall be construed, to confer upon, or give to, any person or
      corporation other than the parties hereto and the registered holders of
      the Warrants any right, remedy, or claim under or by reason of this
      Warrant Agreement or of any covenant, condition, stipulation, promise, or
      agreement hereof. All covenants, conditions, stipulations, promises, and
      agreements contained in this Warrant Agreement shall be for the sole and
      exclusive benefit of the parties hereto and their successors and assigns
      and of the registered holders of the
Warrants.

            

    

    

    
      	
               
      

            	
              8.5

            	
              Examination of the
      Warrant Agreement. A copy of this Agreement shall be available at
      all reasonable times at the office of the Warrant Agent in the Borough of
      Manhattan, City and State of New York, for inspection by the registered
      holder of any Warrant. The Warrant Agent may require any such holder to
      submit his Warrant for inspection by
it.

            

    

    

    
      	
               
      

            	
              8.6

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

            

    

    

    
      	
               
      

            	
              8.7

            	
              Effect of
      Headings. The Section headings herein are for convenience only and
      are not part of this Warrant Agreement and shall not affect the
      interpretation thereof.

            

    

    

    
      	
               
      

            	
              8.8

            	
              Amendments.
      This Agreement may be amended by the parties hereto without the consent of
      any registered holder for the purpose of curing any ambiguity, or of
      curing, correcting or supplementing any defective provision contained
      herein or adding or changing any other provisions with respect to matters
      or questions arising under this Agreement as the parties may deem
      necessary or desirable and that shall not adversely affect the interest of
      the registered holders in any material respect. All other modifications or
      amendments, including any amendment to increase the Warrant Price or
      shorten the Exercise Period, shall require the written consent of the
      registered holders of a majority of the then outstanding
      Warrants.

            

    

    

    
      Any such
amendment to this Agreement shall be effected by a written instrument executed
and delivered by the Company and the Warrant Agent.  Promptly after
the execution by the Company and the Warrant Agent of any such amendment, the
Company shall give notice to the holders of Warrants, setting forth in general
terms the substance of such amendment, in accordance with the provisions of
Section 8.2.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              8.9

            	
              Severability.
      This Agreement shall be deemed severable, and the invalidity or
      unenforceability of any term or provision hereof shall not affect the
      validity or enforceability of this Agreement or of any other term or
      provision hereof. Furthermore, in lieu of any such invalid or
      unenforceable term or provision, the parties hereto intend that there
      shall be added as a part of this Agreement a provision as similar in terms
      to such invalid or unenforceable provision as may be possible and be valid
      and enforceable.

            

    

    

    
      	
            	
              8.10

            	
              Entire
      Agreement.  This Agreement sets forth the entire
      agreement of the parties hereto as to the subject matter hereof and
      supersedes all previous agreements among all or some of the parties hereto
      with respect thereto, whether written, oral or
  otherwise.

            

    

    

    
      	
            	
              8.11

            	
              Non-Surviving
      Transaction.  So long as Warrants remain outstanding, the
      Company will not enter into any Non-Surviving Transaction (as defined in
      Section 4.4) unless the acquirer shall expressly assume by a supplemental
      agreement, executed and delivered to the Warrant Agent, in form reasonably
      satisfactory to the Warrant Agent, the due and punctual performance of
      every covenant of this Agreement on the part of the Company to be
      performed and observed and shall have provided for exercise rights in
      accordance with Section 4.4.  Upon the consummation of such
      Non-Surviving Transaction, the acquirer shall succeed to, and be
      substituted for, and may exercise every right and power of, the Company
      under this Agreement with the same effect as if such acquirer had been
      named as the Company herein.

            

    

    

    
      Except as
provided in the preceding paragraph, neither this Agreement nor any Warrant nor
any of the rights, interests or obligations hereunder or thereunder may be
assigned, by operation of law or otherwise, in whole or in part, by the Company
without the prior written consent of holder of each Warrant affected
thereby.

    

    

    
      	
            	
              8.12

            	
              Attorneys’
      Fees.  In the event of any litigation or other proceeding
      concerning this Agreement or any Warrant or the transactions contemplated
      hereby, including any such litigation or proceeding with respect to the
      enforcement of this Agreement or any Warrant 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.

            

    

    

    
      	
            	
              8.13

            	
              Miscellaneous
      Definitions.

            

    

    

    
      “Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
legal holiday in the State of New York or a day on which banking institutions
and trust companies in the State of New York are authorized or obligated by law,
regulation or executive order to close.

    

    

    
      “VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted for trading
on the New York Stock Exchange, American Stock Exchange, Nasdaq Capital Market,
Nasdaq Global Market, Nasdaq Global Select Market or the OTC Bulletin Board, or
any successor to any of the foregoing (a “Trading Market”), the volume weighted
average price of the Common Stock on the Trading Market on which the Common
Stock is then listed or quoted for trading as reported by Bloomberg L.P. for the
immediately preceding ten (10) Trading Days; (b) if the Common Stock is not
then listed or quoted for trading on a Trading Market and if prices for the
Common Stock are then reported in the “Pink Sheets” published by Pink Sheets,
LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the average of the bid price per share of the
Common Stock so reported for the immediately preceding ten (10) Trading Days; or
(c) in all other cases, the fair market value on such date of a share of
Common Stock as determined by an independent appraiser selected in good faith by
the Company. “Trading
Day” means from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)
on each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on
which securities are not traded on the applicable securities exchange or
securities market.

         

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as
of the day and year first above written.

    

    
      
        
          
            
              	 
      	
                      CONTINENTAL
      STOCK TRANSFER & TRUST COMPANY

                    
	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    
	 
      	 
      
	 
      	
                      NEPHROS,
      INC.

                    
	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    

            

          

        

      

    

     

    
      
         

      

      
        13

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