X0202 3 2007-09-19 0 0001196298 NEPHROS INC NEP 0001413621 Lambda Investors LLC C/O WEXFORD CAPITAL LLC 411 WEST PUTNAM AVENUE GREENWICH CT 06830 0 0 1 0 Series A 10% Secured Convertible Note due 2008 0.706 Common Stock and Warrants to Purchase Common Stock 21246459 D The Note will automatically convert on the twenty-first (21st) day after the issuer sends or gives its stockholders a definitive Schedule 14C information statement relating to certain actions taken by stockholders of the issuer by written consent (the ?Automatic Conversion Date?). The maturity date of the Note is September 19, 2008. The number reported includes 14,164,306 shares of Common Stock and warrants to purchase an additional 7,082,153 shares of Common Stock. The number of shares and warrants reported is based on the original principal amount of the Note ($10,000,000). The Note accrues interest at a rate of 10% per annum, and the accrued interest will automatically be converted into shares of Common Stock on the Automatic Conversion Date at the same conversion rate as the rate that applies to the original principal amount. The number of warrants issued upon conversion of the Note will increase by 50% of the number of shares of Common Stock issued with respect to the accrued interest. The amount reported represents the conversion price used to determine the number of shares of Common Stock issuable upon the conversion of the Note. The exercise price of the warrants that will be issued upon the conversion of the Note is $0.90 per share. Arthur H. Amron, Vice President and Assistant Secretary 2007-10-01