X0303 4 2011-03-10 0 0001196298 NEPHROS INC NEP 0001413621 Lambda Investors LLC 411 WEST PURNAM AVENUE SUITE 125 GREENWICH CT 06830 1 0 1 0 0001048462 WEXFORD CAPITAL LP 411 WEST PUTNAM AVENUE SUITE 125 GREENWICH CT 06830 0 0 1 0 0001001391 DAVIDSON CHARLES E 411 WEST PURNAM AVENUE SUITE 125 GREENWICH CT 06830 0 0 1 0 0001048485 JACOBS JOSEPH 411 WEST PUTNAM AVENUE SUITE 125 GREENWICH CT 06830 0 0 1 0 0001472112 Wexford GP LLC 411 WEST PUTNAM AVENUE SUITE 125 GREENWICH CT 06830 0 0 1 0 Common Stock, par value $0.001 per share 2011-03-10 4 A 0 3009711 0 A 3728792 I Held directly by Lambda Investors LLC Common Stock Warrants (right to buy) 0.40 2011-03-10 4 A 0 60194226 0 A 2011-03-10 2016-03-09 Common Stock, par value $0.001 per share 2782578 60194226 I Held directly by Lambda Investors LLC Class D Common Stock Warrants (right to buy) 0.40 2011-03-10 4 D 0 0 0 D 2007-11-14 2012-11-14 Common Stock, par value $0.001 per share 7372749 0 I Held directly by Lambda Investors LLC Class D Common Stock Warrants (right to buy) 0.40 2011-03-10 4 D 0 0 0 D 2012-11-14 Common Stock, par value $0.001 per share 8806575 0 I Held directly by Lambda Investors LLC Class D Common Stock Warrants (right to buy) 0.40 2011-03-10 4 A 0 0 0 A 2016-03-09 Common Stock, par value $0.001 per share 8806575 0 I Held directly by Lambda Investors LLC On March 10, 2011, Lambda Investors LLC ("Lambda") purchased, pursuant to a purchase agreement (the "Purchase Agreement") with Nephros, Inc. (the "Issuer"), 60,194,226 units ("Units") for a purchase price of $0.02 per Unit. Each Unit consists of one share of common stock, par value $0.001 per share ("Common Stock"), of the Issuer and one warrant to purchase 0.924532845 shares of Common Stock at an exercise price of $0.02 per share until March 9, 2016. As a result of this transaction, Lambda acquired 60,194,226 shares of Common Stock and warrants to purchase 55,651,575 shares of Common Stock. On March 11, 2011, the Issuer effected a 1-for-20 reverse stock split (the "Reverse Stock Split"). After giving effect to the Reverse Stock Split, the numbers of shares and warrants acquired by Lambda in the transaction described in Footnote 1 were automatically adjusted to 3,009,711 shares of Common Stock and warrants to purchase 2,782,578 shares of Common Stock at an exercise price of $0.40 per share. The securities reported on this Form 4 are owned by Lambda. Wexford Capital LP ("Wexford Capital"), as managing member of Lambda, and Wexford GP LLC ("Wexford GP"), as general partner of Wexford Capital, may be deemed to beneficially own the reported securities. Charles E. Davidson ("Davidson"), the Chairman and a managing member of Wexford GP, and Joseph M. Jacobs ("Jacobs"), the President and a managing member of Wexford GP, may also be deemed to beneficially own the reported securities. Each of Wexford Capital, Wexford GP, Davidson and Jacobs disclaims beneficial ownership of the reported securities, and this report shall not be deemed to be an admission that any of Wexford Capital, Wexford GP, Davidson or Jacobs is the beneficial owner of the reported securities except in the case of Davidson and Jacobs to the extent of their respective interests in each member of Lambda. On March 10, 2011, the Issuer completed a rights offering to its existing stockholders except Lambda which triggered the full-ratchet anti-dilution provisions of the Class D warrants ("Class D Warrants") to purchase Common Stock. As a result, the 7,190,811 Class D Warrants held by Lambda became exercisable for 323,586,495 shares of Common Stock at an exercise price of $0.02 per share. In connection with the rights offering and the Purchase Agreement, Lambda surrendered for cancellation Class D Warrants to purchase 147,454,988 shares of Common Stock (or 7,372,749 shares after giving effect to the Reverse Stock Split). After giving effect to the Reverse Stock Split and the anti-dilution provisions, Lambda's remaining Class D Warrants are exercisable for 8,806,575 shares of Common Stock at an exercise price of $0.40 per share. In connection with the transactions described in Footnotes 1 and 4, the terms of the remaining Class D Warrants held by Lambda to purchase 8,806,575 shares of Common Stock (after giving effect to the Reverse Stock Split) were amended so that such remaining Class D Warrants expire on March 9, 2016, which is the same expiration date as the warrants issued in the rights offering and under the Purchase Agreement. /s/ Arthur Amron, Vice President and Assistant Secretary of Lambda Investors LLC 2011-03-14 /s/ Arthur Amron, Vice President and Assistant Secretary of Wexford Capital LP 2011-03-14 /s/ Charles E. Davidson 2011-03-14 /s/ Joseph M. Jacobs 2011-03-14 /s/ Arthur Amron, Vice President and Assistant Secretary of Wexford GP LLC 2011-03-14