Document:

EX-10.1

 Exhibit 10.1 

EXECUTION VERSION 
 AMENDMENT
NO. 3 
 TO CREDIT AGREEMENT 

AMENDMENT NO. 3, dated as of August 28, 2014 (this “Amendment”), to the Credit Agreement, dated as of July 19,
2011, as amended by Amendment No. 1 thereto, dated as of December 19, 2013 and Amendment No. 2 thereto, dated as of March 25, 2014 (as so amended, the “Credit Agreement”), among Dynacast International LLC,
a Delaware limited liability company (“Borrower”), Dynacast International Inc., a Delaware corporation (“Holdings”), the Subsidiary Guarantors, the Lenders, J.P. MORGAN SECURITIES LLC, as joint lead arranger,
MACQUARIE CAPITAL (USA) INC., as syndication agent, JPMORGAN CHASE BANK, N.A., as swingline lender and issuing bank, and JPMORGAN CHASE BANK, N.A. as administrative agent (in such capacity, “Administrative Agent”) for
the Lenders and as collateral agent for the Secured Parties and the Issuing Bank. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement. 

W I T N E S S E T H : 

WHEREAS, Borrower has requested an amendment to the Credit Agreement pursuant to which (a) commitments for delayed draw term loans will
be established on the Third Amendment Effective Date and (b) certain other provisions of the Credit Agreement will be amended pursuant to the terms hereof. 

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

ARTICLE I 
 AMENDMENTS 

SECTION 1.1 Certain Definitions. The following terms shall be added to Section 1.01 of the Credit Agreement in appropriate
alphabetical order (such meanings to be equally applicable to the singular and plural form thereof): 
 “Anti-Corruption
Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption. 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to
time, and any successor statute. 
 “Delayed Draw Commitment Period” shall mean the period beginning on the
Third Amendment Effective Date and ending on the Delayed Draw Commitment Termination Date. 
 “Delayed Draw Commitment
Termination Date” shall mean October 7, 2014. 
 “Delayed Draw Funding Date” shall mean
the date that Delayed Draw Term Loans are made hereunder, subject to the terms and conditions applicable thereto. 
 “Delayed
Draw Term Loan Commitment” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make a Delayed Draw Term Loan hereunder (subject to the terms and conditions hereof) up to the amount set forth on
Exhibit A to the Third Amendment or in the Assignment and Assumption pursuant to which such Lender assumed its Delayed Draw Term Loan Commitment, as applicable, as the same may be reduced from time to time pursuant to
Section 2.07. The aggregate principal amount of the Delayed Draw Term Loan Commitments as of the Third Amendment Effective Date is $50,000,000. 

 “Delayed Draw Term Loan Lender” shall mean a Lender with a Delayed
Draw Term Loan Commitment or an outstanding Delayed Draw Term Loan. 
 “Delayed Draw Term Loans” shall have
the meaning assigned to such term in Section 2.01. 
 “Delayed Draw Ticking Fee” shall have the
meaning assigned to such term in Section 2.05(f). 
 “Delayed Draw Upfront Fee” shall have the
meaning assigned to such term in Section 2.05(e). 
 “Excluded Swap Obligation” means, with
respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or
becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to
constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such
Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is
or becomes illegal. 
 “Impacted Interest Period” shall have the meaning set forth in the definition of
“LIBOR Rate”. 
 “Interpolated Rate” shall mean, at any time, for any Interest Period, the rate
per annum (rounded to the same number of decimal places as the LIBOR Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from
interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period (for which the LIBOR Screen Rate is available) that is shorter than the Impacted Interest Period; and (b) the LIBOR Screen Rate for the shortest
period (for which the LIBOR Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time. 

“Kinetics” shall mean Kinetics Climax, Inc., a Delaware corporation, 

“Kinetics Acquisition” shall mean the acquisition by Borrower of all of the outstanding shares of capital stock
of Kinetics from Kinetics Seller pursuant to the Kinetics Acquisition Agreement, 
 “Kinetics Acquisition
Agreement” shall mean the Stock Purchase Agreement, dated as of the 27th day of August, 2014, by and among Kinetics Seller, Freeport Minerals Corporation, Borrower and Holdings. 

“Kinetics Acquisition Agreement Material Adverse Effect” shall mean a “Material Adverse Effect” as
defined in the Kinetics Acquisition Agreement. 

  
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 “Kinetics Seller” shall mean Climax Engineered Materials, LLC, a
Colorado limited liability company. 
 “LIBOR Screen Rate” shall have the meaning set forth in the definition
of “LIBOR Rate”.  
 “Qualified ECP Guarantor” shall mean, at any time, each
Loan Party that has total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify
as an “eligible contract participant” at such time by entering into a keepwell or guarantee pursuant to Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. 

“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of any
territorial-based Sanctions (at the time of this Agreement, Cuba, Iran, North Korea, Sudan and Syria). 
 “Sanctions” shall
have the meaning assigned to such term in Section 3.22(d). 
 “Specified DDTL Representations”
shall mean the representations and warranties of Borrower and the Guarantors set forth in Sections 3.01, 3.02, 3.03(b), in each case, related to the performance of this Agreement, 3.10, 3.11, 3.16,
3.22, 3.23 and 3.24. 
 “Specified Loan Party” means any Loan Party that is not an
“eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 7.11). 

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement,
contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act. 

“Third Amendment” shall mean Amendment No. 3 to this Agreement, dated as of August 28, 2014, among
Borrower, Holdings, the Subsidiary Guarantors, the Lenders party thereto and the Administrative Agent. 
 “Third Amendment
Effective Date” shall mean the date the conditions set forth in Section 2.1 of the Third Amendment are satisfied (which date shall be August 28, 2014). 

SECTION 1.2 Other Amendments. The Credit Agreement shall be modified by the following: 

(a) The definition of “Applicable ECF Percentage” in Section 1.01 of the Credit Agreement is hereby amended by replacing
both instances of “2.50” with “3.00.” 
 (b) The definition of “Assignment and Assumption” in
Section 1.01 of the Credit Agreement is hereby amended by adding the following sentence at the end of such definition: “The form of the Assignment and Assumption may be modified in a manner determined by the Administrative Agent in
order to facilitate the assignment by any Lender of its Delayed Draw Term Loan Commitment.” 
 (c) The definition of “Class”
in Section 1.01 of the Credit Agreement is hereby amended by adding (A) immediately after the term “Term Loan Commitment” appearing therein, the following: “, Delayed Draw Term Loan Commitment” and (B) a new
sentence at the end thereof stating “After the Delayed Draw Funding Date, the Term Loan and Delayed Draw Term Loans will be a single Class for all purposes.” 

  
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 (d) The definition of “Commitment” in Section 1.01 of the Credit Agreement
is hereby amended by adding, immediately after the term “Term Loan Commitment” appearing therein, the following: “, Delayed Draw Term Loan Commitment”. 

(e) The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended by
(A) removing the word “and” at the end of clause (g), (B) adding, immediately following clause (h), a new clause (i) thereto, which shall state: “(i) costs and expenses directly incurred in connection with the Kinetics
Acquisition, the Third Amendment and related transactions (not to exceed $3.0 million), and”, and (C) adding the following new sentence at the end of the last paragraph thereof: “In addition, notwithstanding the foregoing, following
the consummation of the Kinetics Acquisition, Consolidated EBITDA attributed to Kinetics for the fiscal quarters ended September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014 shall be deemed to be $1,325,000,
$1,325,000, $1,325,000 and $1,325,000, respectively.”. 
 (f) The definition of “Defaulting Lender” in
Section 1.01 of the Credit Agreement shall be amended by replacing such definition in its entirety with the following: ““Defaulting Lender” shall mean any Lender, as determined by the Administrative
Agent, that (a) has failed to fund any portion of its Loans or participations in Letters of Credit or Swingline Loans required to be funded by it hereunder within two Business Days of the date required to be funded by it hereunder unless such
Lender notifies the Administrative Agent and Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable
default, shall be specifically identified in such writing) has not been satisfied, (b) has notified the Administrative Agent, the Issuing Bank, the Swingline Lender, any Lender and/or Borrower in writing that it does not intend to comply with
any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such
Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be
specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after request by the Administrative Agent or Borrower, to confirm in writing to the Administrative Agent and Borrower
that it will comply with the terms of this Agreement relating to its prospective obligations to fund Loans and participations in Letters of Credit and Swingline Loans (provided that such Lender shall cease to be a Defaulting Lender pursuant
to this clause (c) upon receipt of such written confirmation by the Administrative Agent and Borrower), (d) has otherwise failed to pay over to the Administrative Agent, the Issuing Bank, the Swingline Lender or any other Lender any other
amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) in the case of a Lender that has a Commitment, LC Exposure or Swingline Exposure outstanding at such
time, shall take, or is the Subsidiary of any person that has taken, any action or be (or is) the subject of any action or proceeding of a type described in Section 8.01(g) or (h) (or any comparable proceeding initiated by a
regulatory authority having jurisdiction over such Lender or such person); provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or
writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.” 

  
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 (g) The definition of “Embargoed Person” in Section 1.01 of the Credit
Agreement shall be amended by replacing such definition in its entirety with the following: ““Embargoed Person” shall mean at any time, (a) any person listed in any Sanctions-related list of designated
persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any
person operating, organized or resident in a Sanctioned Country or (c) any person owned or controlled by any such person or persons.” 

(h) The definition of “Fees” in Section 1.01 of the Credit Agreement is hereby amended by adding, immediately following
the term “the LC Participation Fees” appearing therein, the following: “, the Delayed Draw Ticking Fees, the Delayed Draw Upfront Fee,”. 

(i) The definition of “Interest Period” in Section 1.01 of the Credit Agreement is hereby amended by (A) deleting
“or nine” and (B) adding the following sentence at the end thereof: “Notwithstanding the foregoing, the initial Interest Period for the Delayed Draw Term Loans will end on the last day of the Interest Period in effect for the
Term Loans outstanding on the Delayed Draw Funding Date, and if the outstanding Term Loans have more than one Interest Period in effect, the initial Interest Periods for the Delayed Draw Term Loans will end on the last day of such Interest Periods
in effect (divided among such Interest Periods on a ratable basis).” 
 (j) The definition of “LIBOR Rate” in
Section 1.01 of the Credit Agreement is hereby amended by replacing such definition in its entirety with the following: ““LIBOR Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other person that takes over the administration of such rate) for dollars for a period equal in length to such Interest Period as displayed on
page LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of
such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; in each case the “LIBOR Screen Rate”) at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period; provided that if the LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; provided further that if the
LIBOR Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBOR Rate shall be the Interpolated Rate; provided, that, if any Interpolated Rate shall be less
than zero, such rate shall be deemed to be zero for purposes of this Agreement.” 
 (k) The definition of “Secured
Obligations” in Section 1.01 of the Credit Agreement is hereby amended by adding the following sentence at the end thereof: “Secured Obligations shall exclude any Excluded Swap Obligations.” 

(l) Clause (ix) contained in the proviso of the definition of “Permitted Acquisition” in Section 1.01 of the Credit
Agreement is hereby amended by adding immediately after the term “for such acquisition” appearing therein, the following: “(other than the Kinetics Acquisition).” 

(m) The definition of “Required Class Lenders” in Section 1.01 of the Credit Agreement shall be amended by adding,
immediately following each of the first two instances of the term “Term Loans”, the following: “and Delayed Draw Term Loan Commitments”. 

(n) The definition of “Revolving Maturity Date” in Section 1.01 of the Credit Agreement shall be amended by replacing
such definition in its entirety with the following: ““Revolving Maturity Date” shall mean September 30, 2017 or, if such date is not a Business Day, the first Business Day thereafter.” 

  
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 (o) The definition of “Term Loan” in Section 1.01 of the Credit Agreement
shall be amended by adding the following sentence at the end thereof: “After the Delayed Draw Funding Date, the Delayed Draw Term Loans shall comprise Term Loans to the extent set forth in Section 2.01.” 

(p) The definition of “Term Loan Lender” in Section 1.01 of the Credit Agreement shall be amended by adding the
following sentence at the end thereof: “After the Delayed Draw Funding Date, the Delayed Draw Term Loan Lenders shall comprise Term Loan Lenders to the extent set forth in Section 2.01.” 

(q) The definition of “Term Loan Maturity Date” in Section 1.01 of the Credit Agreement shall be amended by replacing
such definition in its entirety with the following: ““Term Loan Maturity Date” shall mean September 30, 2017 or, if such date is not a Business Day, the first Business Day thereafter.” 

(r) A new paragraph shall be added to the end of Section 2.01 of the Credit Agreement which shall read as follows: “Subject
to the terms and conditions set forth herein, at any time during the Delayed Draw Commitment Period, each Delayed Draw Term Loan Lender agrees, severally and not jointly, to make one term loan (a “Delayed Draw Term
Loan”) in an aggregate principal amount not to exceed the amount of such Delayed Draw Term Loan Lender’s Delayed Draw Term Loan Commitment at such time. Amounts paid or prepaid in respect of Delayed Draw Term Loans may not be
reborrowed. Except for purposes of Sections 2.01, 2.05, 2.07, 3.12, 4.03, 10.02(b) and 10.04(h) and Annex II of the Credit Agreement (in each case to the extent Delayed Draw Term
Loans are explicitly mentioned in such Sections and Annex) or as the context otherwise requires, the Delayed Draw Term Loans shall be deemed Term Loans and Delayed Draw Term Loan Lenders shall be deemed Term Loan Lenders, in each case for all
purposes of the Loan Documents from and after the making of the Delayed Draw Term Loans.” 
 (s) Section 2.05 of the Credit
Agreement is hereby amended by re-lettering current clause (e) as clause (g) and: 
 (i) adding a new clause
(e) which shall state: “(e) On the Delayed Draw Funding Date, Borrower shall pay upfront fees to each Delayed Draw Term Loan Lender in an amount up to 0.25% of the stated principal amount of such Delayed Draw Term Loan Lender’s
Delayed Draw Term Loans (the “Delayed Draw Upfront Fee”).”; and 
 (ii) adding a new
clause (f) which shall state: “(f) Delayed Draw Ticking Fee. Borrower agrees to pay to the Administrative Agent for the account of each Delayed Draw Term Loan Lender a ticking fee (a “Delayed Draw Ticking
Fee”) at a per annum rate equal to 50% of the Applicable Margin with respect to Eurodollar Term Loans on the average daily amount of such Delayed Draw Term Loan Lender’s Delayed Draw Term Loan Commitment from August 27,
2014 until paid pursuant to the next sentence. Accrued Delayed Draw Ticking Fees shall be payable in arrears on the earlier to occur of (A) the Delayed Draw Funding Date, or (B) the date (or, if such date is not a Business Day, the
Business Day immediately following such date) on which all of the Delayed Draw Term Loan Commitments shall have expired or been terminated. Delayed Draw Ticking Fees shall be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last day).” 

  
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 (t) Section 2.07 of the Credit Agreement is hereby amended by adding a new clause
(d) to the end of such Section 2.07 which shall state: “(d) Automatic Termination of Delayed Draw Term Loan Commitments. The unused Delayed Draw Term Loan Commitments shall be terminated automatically on the earlier to occur of
(i) 5:00 p.m., New York City time, on the Delayed Draw Commitment Termination Date and (ii) the Delayed Draw Funding Date, upon the making of the Delayed Draw Term Loans on such date.”. 

(u) Section 2.12(b) of the Credit Agreement is hereby amended by adding immediately after the term “regarding capital”
appearing therein, the following: “or liquidity”. 
 (v) Section 3.12 of the Credit Agreement is hereby amended by
adding the following sentence at the end of such Section: “Borrower will use the proceeds of the Delayed Draw Term Loans to finance the Kinetics Acquisition and/or pay fees and expenses in connection therewith.” 

(w) Section 3.22(d) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “(d) Borrower
represents and covenants that it will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Embargoed Person, (A) in
furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Anti-Corruption Law, (B) to fund or facilitate any activities of or business or
transaction with any Embargoed Person or in any Sanctioned Country, or (C) in any other manner that will result in a violation of any sanctions administered or enforced by OFAC, the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority by any party hereto (such sanctions regimes, collectively referred to as “Sanctions”).” 

(x) Section 3.23 of the Credit Agreement is hereby amended by deleting the last sentence of such Section in its entirety and
adding the following new sentence at the end thereof: “Holdings, Borrower and their Subsidiaries have conducted their businesses in compliance with Anti-Corruption Laws and Sanctions and have instituted and maintained and will enforce policies
and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith by Holdings, Borrower, their respective Subsidiaries and their respective directors, officers, employees and agents.”

 (y) Article IV of the Credit Agreement is hereby amended by adding thereto a new Section 4.03 which shall state: 

“SECTION 4.03 Additional Conditions to the Delayed Draw Funding Date. The obligation of each Delayed Draw
Term Loan Lender to make a Delayed Draw Term Loan on any date shall be subject to, and to the satisfaction of, each of the conditions precedent set forth below (and only such conditions precedent, it being understood and agreed that the conditions
set forth in Section 4.02 shall not be required to be satisfied in connection with the making of any Delayed Draw Term Loans): 

(a) Notice. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or
such notice shall have been deemed given in accordance with Section 2.03), provided that clauses (e) and (g) of Section 2.03 shall not apply to such Borrowing Request. 

(b) Payment of Fees. The payment by Borrower of (x) any accrued and unpaid Delayed Draw Ticking Fees to the
Administrative Agent on behalf of the Delayed Draw Term Loan Lenders and (y) the Delayed Draw Upfront Fee. 

  
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 (c) Officers’ Certificate. Borrower shall have delivered to the
Administrative Agent an Officer’s Certificate to the effect that the proceeds of the Delayed Draw Term Loans to be made on such date shall be used to finance the Kinetics Acquisition and/or any fees or expenses related thereto. 

(d) Delayed Draw Commitment Termination Date. Such date shall be on or before the Delayed Draw Commitment Termination
Date. 
 (e) Kinetics Acquisition. Substantially concurrently with the borrowing to be made on the Delayed Draw
Funding Date, the Kinetics Acquisition shall be consummated in all material respects in accordance with the terms of the Kinetics Acquisition Agreement, without giving effect to any amendments, waivers or consents by Borrower that are materially
adverse to the interests of the Delayed Draw Term Loan Lenders in their respective capacities as such unless the Delayed Draw Term Loan Lenders have given their consent thereto, such consent not to be unreasonably withheld, delayed or conditioned.

 (f) Accuracy of Kinetics Acquisition Agreement Representations and Specified DDTL Representations. (i) The
representations made by Kinetics Seller in the Kinetics Acquisition Agreement that are material to the interests of the Delayed Draw Term Loan Lenders, but only to the extent that Borrower or Holdings has the right to terminate its obligations under
the Kinetics Acquisition Agreement as a result of a breach of such representations (the “Kinetics Acquisition Agreement Representations”), and (ii) the Specified DDTL Representations, shall be true and correct in all
material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) on and as of the Delayed Draw Funding Date with the same
effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. 

(g) Lack of Kinetics Acquisition Agreement Material Adverse Effect. Since the date of the Kinetics Acquisition
Agreement, no Kinetics Acquisition Agreement Material Adverse Effect shall have occurred and be continuing. 
 (h) No
Default. At the time of and immediately after giving effect to such Credit Extension and the application of the proceeds thereof, no Default under clauses (a), (b), (g) or (h) of Section 8.01 shall have occurred and be
continuing on such date. 
 (z) Section 5.01 of the Credit Agreement is hereby amended by deleting the text of clause
(c) thereof in its entirety and replacing it with “[Reserved].” 
 (aa) Section 7.01 of the Credit Agreement is
hereby amended by adding at the end of the first sentence thereof immediately before the period, the following: “; provided that the Guaranteed Obligations shall exclude any Excluded Swap Obligations with respect to each Guarantor”

 (bb) The following new section shall be added to Article VII of the Credit Agreement: “SECTION 7.11.
Keepwell. Each Loan Party that is a Qualified ECP Guarantor at the time the Guarantee or the grant of the security interest under the Loan Documents, in each case, by any Specified Loan Party, becomes effective with respect to any Swap
Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Loan Party with respect to such Swap Obligation as may be needed by such Specified Loan Party
from time to time to honor all of its obligations under its Guarantee and the other Loan Documents in respect of such 

  
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Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantor’s obligations and undertakings
under this Article VII voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this
Section 7.11 shall remain in full force and effect until the Obligations have been paid and performed in full, the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or cash
collateralized in accordance with the terms of this Agreement. Each Qualified ECP Guarantor intends this Section to constitute, and this Section 7.11 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell,
support, or other agreement” for the benefit of, each Specified Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.” 

(cc) Section 8.01(d) of the Credit Agreement is hereby amended by adding immediately after the phrase “contained in
Section”, the following: “3.22(d),” 
 (dd) Section 8.02 of the Credit Agreement is hereby amended
by adding the following sentence to the end thereof: “Notwithstanding the foregoing, no payment from any Guarantor shall be used to pay Excluded Swap Obligations of such Guarantor.” 

(ee) Section 9.09 of the Credit Agreement is hereby amended by adding the following new paragraph to the end thereof: “Each
Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that (i) the facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between Borrower and its Affiliates, on the one hand, and the Agents, the Arranger, the Syndication Agent, the Swingline
Lender, the Issuing Bank and the Lenders, on the other hand, and Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents
(including any amendment, waiver or other modification hereof or thereof), (ii) in connection with the process leading to such transaction, each of the Agents, the Arranger, the Syndication Agent, the Swingline Lender, the Issuing Bank and the
Lenders is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary for Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person and (iii) none of the Agents, the
Arranger, the Syndication Agent, the Swingline Lender, the Issuing Bank or the Lenders has assumed or will assume an advisory, agency or fiduciary responsibility in favor of Borrower with respect to any of the transactions contemplated hereby or the
process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether the Arranger or any Lender has advised or is currently advising Borrower or any of its
Affiliates on other matters).” 
 (ff) Section 10.02(b) of the Credit Agreement is hereby amended by (A) removing the
“or” at the end of clause (xv) of such Section 10.02(b), (B) replacing the period at the end of clause (xvi) thereof with “;” and (C) adding, immediately following clause (xvi), new clauses
(xvii) and (xviii) thereto, which shall state: “(xvii) extend any Delayed Draw Term Loan Commitment beyond the last day of the Delayed Draw Commitment Period, without the written consent of each Delayed Draw Term Loan Lender; or
(xviii) expressly change or waive any condition precedent in Section 4.03 to any Borrowing of Delayed Draw Term Loans, without the written consent of each Delayed Draw Term Loan Lender;” 

(gg) Section 10.04 of the Credit Agreement is hereby amended by: 

(i) in clause (d) thereof, adding the following sentence to the end thereof: “No Lender shall have any
obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any 

  
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commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment,
loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.”; and 

(ii) adding the following new clause after clause (g) thereof: “(h) Delayed Draw Term Loan Assignments.
Unless otherwise agreed by the Administrative Agent, any Assignment and Assumption used to assign Delayed Draw Term Loan Commitments or Delayed Draw Term Loans shall designate the Delayed Draw Term Loans or Delayed Draw Term Loan Commitments as such
in such Assignment and Assumption and the Administrative Agent shall be entitled to rely thereon.” 
 (hh) Section 10.12(b)
of the Credit Agreement is hereby amended by adding immediately after the phrase “to the extent requested”, the following: “or required”. 

(ii) Annex II of the Credit Agreement shall be amended and restated as follows: 

Amortization Table1 

 

					
	 	  	Term Loan	 
	 Date
	  	Amount	 
	 September 30, 2014
	  	$	0	  
	 December 31, 2014
	  	$	5,000,000	  
	 March 31, 2015
	  	$	5,000,000	  
	 June 30, 2015
	  	$	5,000,000	  
	 September 30, 2015
	  	$	5,000,000	  
	 December 31, 2015
	  	$	5,000,000	  
	 March 31, 2016
	  	$	5,000,000	  
	 June 30, 2016
	  	$	5,000,000	  
	 September 30, 2016
	  	$	5,000,000	  
	 December 31, 2016
	  	$	5,000,000	  
	 March 31, 2017
	  	$	5,000,000	  
	 June 30, 2017
	  	$	5,000,000	  
	 Term Loan Maturity Date
	  	$	27,500,000	  

 ARTICLE II 

CONDITIONS PRECEDENT TO EFFECTIVENESS 

SECTION 2.1 Conditions to the Third Amendment Effective Date. This Amendment shall become effective as of the first date (such date
being referred to as the “Third Amendment Effective Date”) when each of the following conditions shall have been satisfied: 
  

 

	1 	Notwithstanding the foregoing table, if less than $50,000,000 of Delayed Draw Term Loans are made, then the amounts listed above will be automatically reduced on a ratable basis to take account of the lesser amount.

  
 - 10 - 

 (a) Execution of Documents. The Administrative Agent shall have received this Amendment,
duly executed and delivered by each Loan Party, the Required Lenders, each Revolving Lender, the Swingline Lender and the Issuing Bank. 

(b) Consent Fee. The Administrative Agent shall have received a consent fee payable in dollars for the account of each Lender that has
returned an executed signature page to this Amendment to the Administrative Agent prior to the Third Amendment Effective Date equal to (x) 0.15% of the aggregate principal amount of outstanding Term Loans, if any, held by such Lender as of the
Third Amendment Effective Date plus (y) 0.15% of the aggregate amount of the Revolving Commitment, if any, of such Lender as of the Third Amendment Effective Date. 

(c) Secretary’s Certificates; Good Standing Certificates. The Administrative Agent shall have received (i) such certificates
of resolutions or other action, incumbency certificates and/or other certificates of authorized officers of Borrower as the Administrative Agent may reasonably request evidencing the identity, authority and capacity of each authorized officer
thereof authorized to act in connection with this Amendment and the transactions contemplated hereby and (ii) good standing certificates (or equivalent documents) from the applicable Governmental Authority of the respective jurisdiction of
organization of each Loan Party dated as of a recent date prior to the Third Amendment Effective Date. 
 (d) Officer’s
Certificate. The representations and warranties set forth Article III hereof shall be true and correct in all material respects (except that any such representation and warranty that is qualified as to “materiality” or “Material
Adverse Effect” shall be true and correct in all respects) as of the Third Amendment Effective Date, and the Administrative Agent shall have received an Officer’s Certificate to such effect (in reasonable detail in respect of the
representation and warranty set forth in Section 3.3 hereof). 
 (e) Expenses. The reasonable and documented fees and expenses
of Cahill Gordon & Reindel LLP as counsel to the Administrative Agent shall have been paid, to the extent invoiced at least one Business Day prior to the Third Amendment Effective Date. 

(f) Notes. Each Delayed Draw Term Loan Lender (as defined in the Credit Agreement, as amended by this Amendment) that requests a Note
at least three (3) Business Days prior to the Third Amendment Effective Date shall have received an executed Note. 
 (g) Legal
Opinion. The Administrative Agent shall have received a customary legal opinion of Hughes Hubbard & Reed LLP, counsel to the Loan Parties, addressed to it and the Delayed Draw Term Loan Lenders. 

(h) Solvency Certificate. The Administrative Agent shall have received a solvency certificate substantially in the form of Exhibit
O to the Credit Agreement, dated the Third Amendment Effective Date and signed by the principal financial officer of Borrower, which shall assume the maximum principal amount of Delayed Draw Term Loans that can ever be made have been made as of
the Third Amendment Effective Date. 
 (i) Amendment Fee. The Administrative Agent shall have received an amendment fee payable in
dollars for the account of each Delayed Draw Term Loan Lender equal to 0.25% of the aggregate principal amount of Delayed Draw Term Loan Commitments of such Delayed Draw Term Loan Lender as of the Third Amendment Effective Date. 

  
 - 11 - 

 ARTICLE III 

REPRESENTATIONS AND WARRANTIES 

SECTION 3.1 Representations and Warranties. Each of the representations and warranties made by any Loan Party set forth in any Loan
Document is true and correct in all material respects (except that any such representation and warranty that is qualified by “materiality” or “Material Adverse Effect” is true and correct in all respects) on and as of the Third
Amendment Effective Date; provided that to the extent any such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date (except that any such
representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” is true and correct in all respects on such earlier date). 

SECTION 3.2 Due Authorization, Non-Contravention, etc. This Amendment, the borrowing of the Delayed Draw Term Loans and all the
transactions contemplated hereby to be entered into by each Loan Party are within such Loan Party’s powers and have been duly authorized by all necessary action on the part of such Loan Party. This Amendment constitutes a legal, valid and
binding obligation of each Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law. This Amendment, the Delayed Draw Term Loans and the transactions contemplated hereby (a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created by the Loan Documents and (iii) consents, approvals,
registrations, filings, permits or actions the failure to obtain or perform which could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the Organizational Documents of any Company, (c) will not
violate any Requirement of Law except with respect to violations that could not reasonably be expected to have a Material Adverse Effect, (d) will not violate or result in a default or require any consent or approval under any indenture,
agreement or other instrument binding upon any Company or its property, or give rise to a right thereunder to require any payment to be made by any Company, except for violations, defaults or the creation of such rights that could not reasonably be
expected to result in a Material Adverse Effect, and (e) will not result in the creation or imposition of any Lien on any property of any Company, except Liens created by the Loan Documents and Permitted Liens. 

SECTION 3.3 Pro Forma Covenant Compliance. After giving pro forma effect to the maximum possible principal amount of the Delayed
Draw Term Loans that could ever be made pursuant to this Amendment (and assuming that the Delayed Draw Term Loans were made, and the Kinetics Acquisition was consummated, as of the first day of the most recent Test Period), as of the date of the
most recent financial statements delivered pursuant to Section 5.01(a) or (b) of the Credit Agreement, Borrower would be in compliance on a Pro Forma Basis with each of the covenants set forth in Sections 6.09(a) and
(b) of the Credit Agreement. 
 SECTION 3.4 No Default. Both immediately before and after giving effect to this
Amendment, no Default has occurred and is continuing as of the Third Amendment Effective Date. 

  
 - 12 - 

 ARTICLE IV 

AFFIRMATION AND ACKNOWLEDGMENT 

Each Loan Party hereby (i) expressly acknowledges the terms of this Amendment and the making of the Delayed Draw Term Loan Commitments,
(ii) ratifies and affirms, after giving effect to this Amendment and all Delayed Draw Term Loans that may be made, its obligations under the Loan Documents (including guarantees and security agreements) executed by such Loan Party and
(iii) after giving effect to this Amendment, acknowledges, renews and extends its continued liability under all such Loan Documents and agrees such Loan Documents remain in full force and effect, as amended hereby. Each Loan Party hereby
(a) affirms and confirms its guarantees, pledges, grants and other obligations under the Security Documents to which it is a party, after giving effect to this Amendment and the making of all Delayed Draw Term Loans, and (b) agrees that,
notwithstanding the effectiveness of this Amendment, (i) each Security Document to which such Loan Party is a party shall continue to be in full force and effect and (ii) all guarantees, pledges, grants and other obligations of such Loan
Party thereunder shall continue to be in full force and effect with respect to the Obligations (as the Obligations are modified pursuant to this Amendment and including and all Delayed Draw Term Loans) and shall accrue to the benefit of the Secured
Parties. Each of the Loan Parties further agrees to take any action that may be required or that is reasonably requested by the Administrative Agent to effect the purposes of this Amendment and the transactions contemplated hereby. 

ARTICLE V 
 MISCELLANEOUS
PROVISIONS 
 SECTION 5.1 No Other Amendments; References to the Credit Agreement. Other than as specifically provided herein, this
Amendment shall not operate as a waiver or amendment of any right, power or privilege of the Lenders under the Credit Agreement or any other Loan Document or of any other term or condition of the Credit Agreement or any other Loan Document; nor
shall the entering into of this Amendment preclude the Lenders from refusing to enter into any further waivers or amendments with respect to the Credit Agreement. All references to the Credit Agreement in any Loan Document or other document,
instrument, agreement, or writing shall from and after the Third Amendment Effective Date be deemed to refer to the Credit Agreement, as amended by this Amendment, and the terms “this Agreement,” “herein,” “hereunder,”
“hereto” and words of similar import contained in the Credit Agreement shall mean, from and after the Third Amendment Effective Date, the Credit Agreement, as amended by this Amendment. The execution of this Amendment by the Loan Parties
and the Administrative Agent shall serve as the instrument which shall bind the Lenders, the other Secured Parties, the Loan Parties and the Administrative Agent to the Credit Agreement, as amended by this Amendment. This Amendment shall constitute
a Loan Document. 
 SECTION 5.2 Certain Tax Matters. Borrower shall, unless otherwise required by applicable law, treat (a) the
Delayed Draw Term Loans as a “qualified reopening” of the existing Term Loans for U.S. federal income tax purposes and (b) all of the Term Loans (including the Delayed Draw Term Loans) as “grandfathered obligations” for
purposes of FATCA; provided, however, nothing in this Section 5.2 shall modify or otherwise affect the definition of “Excluded Taxes” under the Credit Agreement. 

SECTION 5.3 Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof. 
 SECTION 5.4 Execution in Counterparts. This Amendment may be executed
by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment by
facsimile transmission or portable document format (.pdf) shall be effective as delivery of a manually executed counterpart hereof. 

  
 - 13 - 

 SECTION 5.5 Governing Law; Jurisdiction. Section 10.09 of the Credit Agreement
is incorporated herein, mutatis mutandis, as if a part hereof. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 - 14 - 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers hereunder duly authorized as of the date and year first above written. 
  

			
	DYNACAST INTERNATIONAL LLC
		
	By:	 	 /s/ Adrian Murphy

	Name:	 	Adrian Murphy
	Title:	 	CFO
	
	DYNACAST INTERNATIONAL INC.
		
	By:	 	 /s/ Adrian Murphy

	Name:	 	Adrian Murphy
	Title:	 	CFO
	
	DYNACAST US1 LLC
		
	By:	 	 /s/ Adrian Murphy

	Name:	 	Adrian Murphy
	Title:	 	CFO
	
	DYNACAST, LLC
		
	By:	 	 /s/ Adrian Murphy

	Name:	 	Adrian Murphy
	Title:	 	CFO
	
	DYNACAST MFG. INC.
		
	By:	 	 /s/ Adrian Murphy

	Name:	 	Adrian Murphy
	Title:	 	CFO
	
	KDI ACQUISTION LLC
		
	By:	 	 /s/ Adrian Murphy

	Name:	 	Adrian Murphy
	Title:	 	CFO

 [Dynacast Amendment No. 3] 

 
			
	JPMORGAN CHASE BANK, N.A.,
	as Administrative Agent
		
	By:	 	 /s/ Brandon Watkins

	Name:	 	Brandon Watkins
	Title:	 	Vice President
	
	 JPMORGAN CHASE BANK, N.A.,

as a Lender

		
	By:	 	 /s/ Brandon Watkins

	Name:	 	Brandon Watkins
	Title:	 	Vice President

  

  
 [Dynacast Amendment No.
3] 

 
			
	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	        as a Lender
		
	By:	 	 /s/ Joel H. Turner

	Name:	 	Joel H. Turner
	Title:	 	Senior Vice President

  

  
 [Dynacast Amendment No.
3] 

 
			
	GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
		
	By:	 	 /s/ Virginie Ott-Bono

	Name:	 	Virginie Ott-Bono
	Title:	 	CFA

  
 [Dynacast Amendment No.
3] 

 
			
	BANK OF MONTREAL, as a Lender
		
	By:	 	 /s/ Jennifer Kloud

	Name:	 	Jennifer Kloud
	Title:	 	Managing Director

  
 [Dynacast Amendment No.
3] 

 Exhibit A to 

Third Amendment 
 Schedule of
Delayed Draw Term Loan Commitments 
  

					
	 Lender
	  	Delayed Term Loan Commitment	 
	 JPMorgan Chase Bank, N.A.
	  	$	12,500,000	  
	 Bank of Montreal
	  	$	12,500,000	  
	 General Electric Capital Corporation
	  	$	12,500,000	  
	 Wells Fargo Bank, National Association
	  	$	12,500,000Exhibit 10.1

 

EXECUTION COPY

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT

OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE

DISPOSED OF UNLESS REGISTERED UNDER THAT ACT

OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

NEPHROS, INC.

 

Senior Secured Note

Due February 28, 2015

 

	$1,750,000	No. R-2014-A-1	August 29, 2014

 

Nephros, Inc., a Delaware
corporation (the “Company”), for value received, hereby promises to pay to the order of LAMBDA
INVESTORS LLC (the “Lender”) or its registered assigns, the principal sum of ONE MILLION SEVEN
HUNDRED AND FIFTY THOUSAND DOLLARS AND NO CENTS ($1,750,000) on or before February 28, 2015, and to pay interest (computed on the
basis of a 360-day year consisting of twelve 30-day months) from the date hereof on the unpaid principal amount hereof at the rate
of 12% per annum (but in no event in excess of the maximum non-usurious rate of interest permitted under applicable law), payable
at the time the principal amount hereof shall have become due and payable, whether at maturity or by acceleration or otherwise,
and thereafter at the rate of 16% per annum on any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid (but in no event in excess of the maximum non-usurious rate of interest permitted under applicable
law).

 

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

 

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

 

1.          Definitions.
As used herein, the term “Note” shall mean this Senior Secured Note Due February 28, 2015 and
any Senior Secured Note or Notes subsequently issued upon exchange or transfer hereof, and shall include all amendments, supplements
and other modifications thereto. The term “Security Documents” shall mean (a) the Security Agreement
by and between the Company and the Lender that was executed and delivered on the date of the original issuance of this Note, including
all amendments, supplements and other modifications thereto, (b) the Intellectual Property Security Agreement by and between the
Company and the Lender that was executed and delivered on the date of the original issuance of this Note, including all amendments,
supplements and other modifications thereto, and (c) all other documents, agreements and instruments now or hereafter executed
and delivered by the Company or any other person or entity (each, a “Person”) as security for
the payment or performance of the Note, including all amendments, supplements and other modifications thereto.

 

    	 

    	 

    

 

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

 

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

 

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

 

5.           Prepayments.

 

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

 

(b)          Mandatory
Prepayments.

 

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

 

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

 

    	2

    	 

    

 

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

 

For purposes of this
Note:

 

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

 

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

 

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

 

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

 

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

 

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

 

    	3

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

    	4

    	 

    

 

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

 

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

 

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

 

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

 

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

 

    	5

    	 

    

 

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

 

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

 

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

 

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

 

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

 

(j)          Limitation
on Indebtedness and Disqualified Stock. The Company shall not, and shall not permit any of its subsidiaries to, (i) incur or
permit to remain outstanding any indebtedness for money borrowed (“Indebtedness”), except (A)
the Note, (B) Indebtedness existing on the date of original issuance of this Note (or, if applicable, the earliest predecessor
Note) and described in the Company’s public SEC filings prior to such date, and (C) such Indebtedness as may be mutually
agreed upon by the Company and the holder of the Note, or (ii) issue any capital stock (“Disqualified Stock”)
of the Company or any of its subsidiaries which by its terms, or upon the happening of any event, matures, or is mandatorily redeemable,
whether pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part,
on or prior to February 28, 2015. The term “Indebtedness” shall not include trade or other payables of or extensions
of credit to the Company to or by the Company’s vendors in the ordinary course of business.

 

    	6

    	 

    

 

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

 

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

 

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

 

(n)          Rights
Offering. The Company shall undertake an SEC registered rights offering to raise $3 million from its existing common stock
shareholders and warrantholders (the “Rights Offering”) on the following terms:

 

(i)          All
existing shareholders and warrantholders of the Company shall be eligible to participate in the Rights Offering pro rata based
upon their pro rata equity interest in the Company, calculated on an as-converted to common stock, fully-diluted basis (but excluding
options).

 

(ii)         The
Rights Offering shall be for the right to purchase up to an aggregate of 5,000,000 new shares of common stock at a price of $0.60/share.

 

(iii)       The
Noteholder will participate for their full pro rata share of the Rights Offering.

 

(iv)        The
term of all the Company’s existing warrants held by the Lender (the “Lender Warrants”) will
be amended to expire on the five year anniversary of the closing of the Rights Offering.

 

    	7

    	 

    

 

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

 

(vi)        To
the extent that after the closing of the Rights Offering and the Oversubscription Process there still remain unsubscribed shares,
the Noteholder shall purchase any or all such remaining unsubscribed shares.

 

(vii)       The
Company shall have obtained shareholder approval, or provided evidence to Lender, which Lender determines in its discretion is
sufficient, that such shareholder approval is not required, for the authorized shares of common stock required in connection with
the Rights Offering and for the transactions contemplated thereby.

 

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

 

(ix)         The
Lender’s exercise of its basic subscription privilege in full in the Rights Offering shall be subject to the Company’s
satisfaction of its obligations under this clause (n) (other than under subclause (xii) which obligations arise after the closing
of the Rights Offering).

 

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

 

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

 

(xii)        The
Company shall file with the SEC a registration statement on Form S-1 or another appropriate form in accordance herewith and with
the Securities Act of 1933, as amended (except if the Company is then eligible to use Form S-3, such registration statement shall
be on Form S-3) covering the resale by the Noteholders of the common stock issued in connection with the Rights Offering (the “Registration
Statement”) and shall use its commercially reasonable efforts to cause the Registration Statement to be declared
effective within ninety (90) calendar days after the filing date, or within one-hundred and eighty (180) calendar days after
the filing date in the event the Registration Statement is reviewed by the SEC. The Company shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective until such time as all the securities have been sold thereunder
or the securities may be sold without restriction under applicable securities laws, subject to normal and customary blackout periods.
The registration rights specified in this clause (xi) shall be embodied in a registration rights agreement in customary form between
the Company and the Noteholders.

 

    	8

    	 

    

 

(o)          Fees
& Expenses. Without limitation of the last sentence of Section 10, the Company shall pay the Lender in respect of the legal
fees and other expenses of the Lender in connection with the issuance of this Note and the Rights Offering, a payment of $75,000.
Such amounts shall be due and payable in full, in cash, upon the consummation of the Rights Offering or, if earlier, upon the maturity
of any principal of this Note (whether at stated maturity, at a date fixed for optional or mandatory prepayment, upon acceleration
pursuant to Section 9 or otherwise), and, if then unpaid, shall thereafter constitute additional principal amounts under this Note,
bearing interest at the rate provided herein for overdue principal amounts.

 

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

 

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

 

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

 

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

 

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

 

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

 

    	9

    	 

    

 

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

 

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

 

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

 

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

 

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

 

    	10

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	11

    	 

    

 

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

 

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

 

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

 

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

 

If to the Lender:

 

Lambda Investors LLC

c/o Wexford Capital LP

Wexford Plaza

411 West Putnam Avenue

Greenwich, CT 06830

Attn: Arthur Amron

Tel: (203) 862-7012

Fax: (203) 862-7312

 

If to the Company:

 

Nephros, Inc.

Attn: John C. Houghton, President
and Chief Executive Officer

41 Grand Ave.

River Edge, NJ 07661

Tel: (201) 343-5202

Fax: (201) 343-5207

 

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

 

    	12

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	13

    	 

    

 

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

 

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

 

[Remainder of Page Intentionally Left
Blank]

 

    	14

    	 

    

 

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

 

	 	NEPHROS, INC.
	 	 	 
	 	By:	/s/ John C. Houghton
	 	Name:	John C. Houghton
	 	Title:	President and Chief Executive Officer

 

Signature Page

Nephros, Inc. - Promissory Note

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