SC 13D/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 5)*

                                     Nephros, Inc.                                 

(Name of Issuer)

   Common Stock, $0.001 par value   

(Title of Class of Securities)

                       640671103                       

(CUSIP Number)

Kristopher M. Hansen, Esq.

Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, New York  10038

                          (212) 806-5400                      

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

      May 24, 2011      

(Date of Event which Requires Filing

of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ].

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or

Page 2 of 11 Pages

otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Continued on following pages

Page 3 of 11 Pages

1	NAMES OF REPORTING PERSONS I.R.S. Identification Nos. of above persons (entities only).
	SOUTHPAW ASSET MANAGEMENT LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
	a. o
	b. x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
	OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Delaware
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			0
		8	SHARED VOTING POWER
			1,291,549
		9	SOLE DISPOSITIVE POWER
			0
		10	SHARED DISPOSITIVE POWER
			1,291,549
11	AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON:
	1,291,549
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES  OF COMMON STOCK (See Instructions)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	11.9%
14	TYPE OF REPORTING PERSON (See Instructions)
	PN

Page 4 of 11 Pages

1	NAMES OF REPORTING PERSONS I.R.S. Identification Nos. of above persons (entities only).
	SOUTHPAW HOLDINGS LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
	a. o
	b. x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
	OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	Delaware
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			0
		8	SHARED VOTING POWER
			1,291,549
		9	SOLE DISPOSITIVE POWER
			0
		10	SHARED DISPOSITIVE POWER
			1,291,549
11	AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
	1,291,549
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES OF COMMON STOCK (See Instructions)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	11.9%
14	TYPE OF REPORTING PERSON  (See Instructions)
	OO

Page 5 of 11 Pages

1	NAMES OF REPORTING PERSONS I.R.S. Identification Nos. of above persons (entities only).
	KEVIN WYMAN
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
	a. o
	b. x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
	OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	United States
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			0
		8	SHARED VOTING POWER
			1,291,549
		9	SOLE DISPOSITIVE POWER
			0
		10	SHARED DISPOSITIVE POWER
			1,291,549
11	AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
	1,291,549
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES OF COMMON STOCK (See Instructions)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	11.9%
14	TYPE OF REPORTING PERSON  (See Instructions)
	IN

Page 6 of 11 Pages

1	NAMES OF REPORTING PERSONS I.R.S. Identification Nos. of above persons (entities only).
	HOWARD GOLDEN
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
	a. o
	b. x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
	OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	United States
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			0
		8	SHARED VOTING POWER
			1,291,549
		9	SOLE DISPOSITIVE POWER
			0
		10	SHARED DISPOSITIVE POWER
			1,291,549
11	AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
	1,291,549
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES OF COMMON STOCK (See Instructions)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	11.9%
14	TYPE OF REPORTING PERSON  (See Instructions)
	IN

Page 7 of 11 Pages

1	NAMES OF REPORTING PERSONS I.R.S. Identification Nos. of above persons (entities only).
	SOUTHPAW CREDIT OPPORTUNITY MASTER FUND L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
	a. o
	b. x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions)
	OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	United States
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER
			0
		8	SHARED VOTING POWER
			442,669
		9	SOLE DISPOSITIVE POWER
			0
		10	SHARED DISPOSITIVE POWER
			442,669
11	AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
	442,669
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES OF COMMON STOCK (See Instructions)
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	8.8%
14	TYPE OF REPORTING PERSON  (See Instructions)
	OO

Page 8 of 11 Pages

This Amendment No. 5 (this “Amendment No. 5”) amends and supplements the Schedule 13D filed on October 17, 2007 (the “Original Schedule 13D”), as amended and supplemented by the Amendment No. 1 to the Original Schedule 13D filed on May 30, 2008 (the “Amendment No. 1”), the Amendment No. 2 to the Original Schedule 13D filed on August 31, 2008 (the “Amendment No. 2”), the Amendment No. 3 to the Original Schedule 13D filed on August 31, 2009 (the “Amendment No. 3”) and the Amendment No. 4 to the Original Schedule 13D filed on March 24, 2011 (the “Amendment No. 4”).  The Original Schedule 13D, the Amendment No. 1, the Amendment No. 2, the Amendment No. 3, the Amendment No. 4 and this Amendment No. 5 are collectively referred to herein as the “Schedule 13D”.  Unless otherwise indicated, all capitalized terms used herein shall have the meanings given to such terms in the Schedule 13D.  Unless amended or supplemented hereby, all information previously filed remains in effect.

Item 1.  Security and Interest

Item 1 of Schedule 13D is amended and restated in its entirely as follows:

This Amendment No. 5 relates to the common stock, par value $0.001 per share (the “Common Stock”), of Nephros, Inc. (the “Company”), and is being filed on behalf of the Reporting Persons (as defined below).  The address of the principal executive offices of the Company is 41 Grand Avenue, River Edge, NJ 07661.

Item 5.  Interest in Securities of the Issuer

Item 5 of Schedule 13D is amended by deleting the last paragraph thereof.

The Reporting Persons have not effected any transactions in the Common Stock during the 60 days preceding the date of this Amendment No. 5.

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Item 6 of Schedule 13D is amended and restated in its entirety as follows:

The disclosure concerning the Registration Rights Agreement contained in Item 4 of Schedule 13D and the disclosure concerning the Warrants contained in Item 5 of Schedule 13D are incorporated herein by reference.  In addition, the Registration Rights Agreement and the Warrants contain customary provisions relating to the transfer of securities subject to those agreements.

On May 24, 2011, the Investor Rights Agreement was amended to remove GPC 76, LLC and Southpaw Credit Opportunity Master Fund L.P. as parties to such agreement.  As a result, the Reporting Persons have no further obligations under the Investor Rights Agreement.

Except for the Registration Rights Agreement and the Warrants, none of the Reporting Persons are a party to any contract, arrangement, understanding or relationship (legal or otherwise) with any person with respect to any securities of the Company,

Page 9 of 11 Pages

including, but not limited to, any agreement concerning (i) transfer or voting of any securities of the Company, (ii) finder’s fees, (iii) joint ventures, (iv) loan or option arrangements, (v) puts or calls, (vi) guarantees of profits, (vii) divisions of profits or losses, or (viii) the giving or withholding of proxies.

Item 7.  Material to be Filed as Exhibits

Exhibit No.	Description
1	Joint Filing Agreement, dated as of May 24, 2011, by and among the Reporting Persons.
2	Amendment to Investor Rights Agreement, dated as of May 24, 2011, by and among the Company, Lambda Investors LLC, GPC 76, LLC and Southpaw Credit Opportunity Master Fund L.P.

Page 10 of 11 Pages

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date:  May 24, 2011

Southpaw Credit Opportunity Master Fund L.P.

By:  Southpaw GP LLC,

        its general partner

By: /s/ Kevin Wyman

Name: Kevin Wyman

Title: Managing Member

Southpaw Asset Management LP

By:   Southpaw Holdings LLC,

         its general partner

By: /s/ Kevin Wyman

Name: Kevin Wyman

Title: Managing Member

Southpaw Holdings, LLC

By: /s/ Kevin Wyman

Name: Kevin Wyman

Title: Managing Member

/s/ Kevin Wyman

Kevin Wyman

/s/ Howard Golden

Howard Golden

Page 11 of 11 Pages

Exhibit Index

Exhibit No.	Description
1	Joint Filing Agreement, dated as of May 24, 2011, by and among the Reporting Persons.
2	Amendment to Investor Rights Agreement, dated as of May 24, 2011, by and among the Company, Lambda Investors LLC, GPC 76, LLC and Southpaw Credit Opportunity Master Fund L.P.

EX-1

Exhibit 1

JOINT FILING AGREEMENT

The undersigned hereby agree that the Amendment No. 5 to Schedule 13D with respect to the Common Stock of Nephros, Inc., dated as of May 24, 2011, is, and any amendments thereto (including amendments on Schedule 13G) signed by each of the undersigned shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934.

Date:  May 24, 2011

Southpaw Credit Opportunity Master Fund L.P.

By:  Southpaw GP LLC,

        its general partner

By: /s/ Kevin Wyman

Name: Kevin Wyman

Title: Managing Member

Southpaw Asset Management LP

By:   Southpaw Holdings LLC,

         its general partner

By: /s/ Kevin Wyman

Name: Kevin Wyman

Title: Managing Member

Southpaw Holdings, LLC

By: /s/ Kevin Wyman

Name: Kevin Wyman

Title: Managing Member

/s/ Kevin Wyman

Kevin Wyman

/s/ Howard Golden

Howard Golden

EX-2

EXHIBIT 2

AMENDMENT TO INVESTOR RIGHTS AGREEMENT

This AMENDMENT TO INVESTOR RIGHTS AGREEMENT (this “Amendment”) is entered into as of May 24, 2011, by and among NEPHROS, INC. (the “Company”), LAMBDA INVESTORS LLC (“Lambda”), GPC 76, LLC (“GPC”) and SOUTHPAW CREDIT OPPORTUNITIES MASTER FUND LP (“Master Fund”, and together with GPC, “Southpaw”).  Capitalized terms not defined elsewhere in this Amendment have the meanings set forth in the Investor Rights Agreement (as defined below).

RECITALS

WHEREAS, on September 19, 2007, the Company, Lambda, Southpaw and the other parties signatory thereto entered into that certain Investor Rights Agreement (the “Investor Rights Agreement”);

WHEREAS, Section 10(a) of the Investor Rights Agreement provides that the Investor Rights Agreement may be amended by a written instrument duly executed by the Company, Lambda and Covered Holders holding a majority of all shares of Common Stock then held by the Covered Holders;

WHEREAS, Southpaw holds a majority of all shares of Common Stock currently held by the Covered Holders; and

WHEREAS, subject to the terms and conditions set forth herein, the Company, Lambda and Southpaw have agreed to amend the Investor Rights Agreement.

NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties and covenants set forth herein, and other good and valuable consideration, the Company, Lambda and Southpaw agree as follows:

1.Amendment to the Investor Rights Agreement.  From and after the date hereof, Southpaw shall be removed as a party to the Investor Rights Agreement and none of the provisions of the Investor Rights Agreement shall hereafter apply to Southpaw.

2.Condition to Effectiveness.  The effectiveness of this Amendment is subject to each of the parties to this Amendment having received a duly executed counterpart of this Amendment from each of the other parties to this Amendment;

3.Miscellaneous.

3.1.The headings in this Amendment are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Amendment.

3.2.This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

3.3.This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles governing conflicts of law that would defer to the substantive law of another jurisdiction.

3.4.In the event that any provision of this Amendment shall be determined to be illegal or unenforceable, that provision will be limited or eliminated to the minimum extent necessary so that this Amendment shall otherwise remain in full force and effect and enforceable.

3.5.Each party hereto consents and submits to the exclusive jurisdiction of any state court sitting in the County of New York or federal court sitting in the Southern District of the State of New York in connection with any dispute arising out of or relating to this Amendment, and agrees that all suits, actions and proceedings brought by such party hereunder shall be brought only in such jurisdictions. Each party hereto waives any objection to the laying of venue in such courts and any claim that any such action has been brought in an inconvenient forum. To the extent permitted by law, any judgment in respect of a dispute arising out of or relating to this Amendment may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of such judgment being conclusive evidence of the fact and amount of such judgment. Each party hereto agrees that personal service of process may be effected by any of the means specified in Section 10(b) of the Investor Rights Agreement, addressed to such party. The foregoing shall not limit the rights of any party to serve process in any other manner permitted by law.

3.6.From time to time after the date of this Amendment, the parties hereto will execute, acknowledge and deliver to the other parties hereto such other documents, instruments and certificates, and will take such other actions, as any other party hereto may reasonably request in order to consummate the transactions contemplated by the Amendment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

NEPHROS, INC.
By:	/s/ Gerald J. Kochanski
	Name:	Gerald J. Kochanski
	Title:	CFO and Treasurer

LAMBDA INVESTORS LLC
By:	/s/ Arthur Amron
	Name:	Arthur Amron
	Title:	Vice President and Assistant Secretary

GPC 76, LLC
By: Southpaw Asset Management LP
By:	/s/ Kevin Wyman
	Name:	Kevin Wyman
	Title:	Managing Member

SOUTHPAW CREDIT OPPORTUNITIES MASTER FUND LP
By: Southpaw GP LLC
By:	/s/ Kevin Wyman
	Name:	Kevin Wyman
	Title:	Managing Member