Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported) October 1, 2010
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NEPHROS,
INC.
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(Exact
name of registrant as specified in its charter)
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Delaware
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(State
or other jurisdiction of
incorporation)
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001-32288
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13-3971809
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(Commission
File Number)
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(IRS
Employer ID Number)
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| 41 Grand Avenue, River Edge, New
Jersey |
07661
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of principal executive offices) |
(Zip Code)
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Registrant's
telephone number, including area code (201)
343-5202
__________________
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement.
The information provided in Item 2.03
below is incorporated by reference herein.
Item
2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
On
October 1, 2010, we issued a senior secured note to Lambda Investors LLC in
the principal amount of $500,000. We expect that the proceeds from
the note will allow us to fund our operations through February
2011.
The note
bears interest at the rate of 12% per annum and matures on April 1, 2011, at
which time all principal and accrued interest will be due. However,
we have agreed to prepay amounts due under the note with the cash proceeds from
(a) the planned rights offering (referenced in Item 8.01, below), (b) any
other equity or debt financing, or (c) the sale of any assets outside the
ordinary course of business in each case prior to the maturity
date. If we do not pay principal and interest under the note when
due, the interest rate increases to 16% per annum. We may prepay the
note without penalty at any time.
The note
is secured by a first priority lien on all of our property, including our
intellectual property.
As long
as indebtedness remains outstanding under the note, we will be subject to
certain covenants which, among other things, restrict our ability to merge with
another company, sell a material amount of our assets, incur any additional
indebtedness, repay any existing indebtedness, or declare or pay any dividends
in cash, property or securities.
In
connection with the note, we have agreed to pay Lambda Investors an 8%, or
$40,000, sourcing/transaction fee. In addition, we will pay Lambda
Investors’ legal fees and other expenses incurred in connection with the note in
the amount of $50,000 as well as Lambda Investors’ legal fees and other expenses
incurred in connection with the rights offering in the amount of
$50,000. Those payments will be paid upon the completion of the
rights offering or, if earlier, upon the maturity of the note.
Lambda
Investors is our largest stockholder and beneficially owns approximately 44% of
our outstanding common stock, including warrants to purchase an aggregate of
7,190,811 shares of our
common stock. The
warrants held by Lambda
Investors have an exercise price of $0.90 per
share and have full ratchet
anti-dilution protection. The shares beneficially owned by Lambda
Investors may be deemed beneficially owned by Wexford Capital LP, which is the managing member of Lambda
Investors. One of our directors is a partner and
general counsel of Wexford Capital. Another of our directors and
Acting Chief Executive Officer is a vice president of Wexford
Capital.
The
description of the note is qualified in its entirety by reference to the full
text of the note, a copy of which was filed as Exhibit 10.56 to our Registration
Statement on Form S-1 (File No. 333-169728) and which exhibit is
incorporated herein by reference. A copy of the press release
announcing the debt financing by Lambda Investors and the proposed rights
offering is attached hereto as Exhibit 99.1.
Item
8.01 Other Events.
On
October 1, 2010, we filed
with the Securities and Exchange Commission a Registration Statement on
Form S-1 relating to a proposed rights offering to raise up to $3.5 million from
our existing stockholders. A copy of the press release announcing the
debt financing by Lambda Investors and the proposed rights offering is attached
hereto as Exhibit 99.1 and incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
No.
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Description
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Exhibit
10.56
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Senior
Secured Note dated October 1, 2010 issued to Lambda Investors LLC
(incorporated by reference to Exhibit 10.56 in the Registration Statement
on Form S-1 filed by Nephros, Inc. on October 1, 2010).
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Exhibit
99.1
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Press
release dated October 1, 2010.
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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Nephros,
Inc. |
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By:
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/s/
Gerald J. Kochanski
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Dated: October
1, 2010
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Gerald
J. Kochanski
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Chief
Financial Officer
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