Exhibit
      10.4

     

     

    WARRANT
      CANCELLATION AGREEMENT

    


    This
      Warrant Cancellation Agreement (this “Agreement”)
      is
      entered into effective as of 

    May
      10,
      2007 (the “Effective
      Date”)
      by and
      among the investors set forth on the signature page (the “Investors”)
      and
      Nayna Networks, Inc., a Nevada corporation (“Nayna”
and
      collectively with the Investors, the “Parties”).

    


    WHEREAS,
      the
      Parties previously entered into that certain Waiver Agreement, dated as of
      January 18, 2007 (the “Waiver
      Agreement”);
      and

    


    WHEREAS,
      pursuant
      to the terms set forth in the Waiver Agreement, Nayna
      issued to the Investors, warrants exercisable for the purchase of up to an
      aggregate of 10,000,000 shares of Nayna common stock (each, in the amount set
      forth opposite the name of each respective Investor on Schedule
      A
      hereto)
      with an exercise price of $0.06 per share (the “Warrants”).

     

    NOW,
      THEREFORE, the
      Parties hereto, for good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged, hereby agree as follows:

    


    1.    
Nayna
      shall have the option to purchase from the Investors, in cash or same day funds,
      each of the Warrants at any time from the Effective Date until the expiration
      of
      the Warrants, for an aggregate purchase price of $500,000 (such payment shall
      be
      allocated among the Investors in the manner set forth on Schedule
      A
      hereto)
      (the “Cash
      Amount”).
      Upon
      each Investor’s receipt of its portion of the Cash Amount, each Investor shall
      immediately return its Warrant to Nayna for cancellation.

    


    2.    
The
      terms
      of this Agreement are contractual in nature and not mere recitals. This
      Agreement contains the entire understanding of the parties with respect to
      the
      subject matter hereof, and there are no representations, warranties, covenants
      or undertakings, oral or otherwise, that are not expressly set forth herein.
      No
      modification of this Agreement is valid and enforceable unless executed in
      writing with the same formality as this present Agreement and by the same
      parties. This Agreement shall be construed and governed in accordance with
      the
      laws of the State of California. If any court shall subsequently deem any
      portion of this Agreement to be invalid, such designation shall not affect
      the
      remaining provisions of this Agreement, which will continue in full force and
      effect. This Agreement is binding upon the parties hereto, their respective
      agents, heirs, estates, legal representatives, attorneys, successors and
      assigns. Each party shall pay his or its fees and expenses in connection with
      the preparation and execution of this Agreement.

    


    3.    The
      parties to this Agreement hereby state that they have read the foregoing
      Agreement, that they have the requisite authority to enter into this Agreement,
      that they understand the contents hereof, that their execution of this Agreement
      is voluntary and that they have relied upon or have had the opportunity to
      seek
      the legal advice of the attorneys of their own choice prior to executing this
      Agreement.

    


    


    [Remainder
      of Page Intentionally Left Blank]

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the Parties have caused this Warrant Cancellation Agreement
      to
      be duly executed as of the date first above written.

    


    


    NAYNA
      NETWORKS, INC. 

    a
      Nevada
      corporation 

     

    /s/
      Naveen S. Bisht

    Name:
      Naveen S. Bisht 

    Title:
      President & CEO 

     

    


    AJW
      PARTNERS, LLC

    By:
      SMS
      Group, LLC 

     

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager

     

    


    AJW
      OFFSHORE, LLC

    By:
      First
      Street Manager II, LLC

     

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager

     

    


    AJW
      QUALIFIED PARTNERS, LLC

    By:
      AJW
      Manager, LLC

     

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager

    


    


    NEW
      MILLENNIUM CAPITAL PARTNERS II, LLC

    By:
      First
      Street Manager II, LLP

     

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky

    Manager 

    

 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
      A

    


    


    
      	
              Investor

            	
              Warrant
                Shares

            	
              Allocation
                of Cash Amount

            
	
              AJW
                PARTNERS, LLC

            	
              1,220,000

            	
              $61,000

            
	
              AJW
                OFFSHORE, LLC

            	
              5,960,000

            	
              $298,000

            
	
              AJW
                QUALIFIED PARTNERS, LLC

            	
              2,700,000

            	
              $135,000

            
	
              NEW
                MILLENNIUM CAPITAL PARTNERS II, LLC

            	
              120,000

            	
              $6,000