Exhibit
      10.3

     

     

    SATISFACTION
      AND RELEASE AGREEMENT

    


    This
      Satisfaction and Release Agreement (this “Agreement”)
      is
      entered into as of May 10, 2007 by and between Nayna Networks, Inc., a Nevada
      corporation (the “Borrower”)
      and
      Whalehaven Fund (the “Lender”).

    


    WHEREAS,
      the Borrower is indebted to the Lender pursuant to the loan agreements and
      debt
      instruments set forth on Schedule
      I
      hereto
      (together with all other loan or collateral agreements related thereto, the
      “Loan
      Documents;”
and
      all indebtedness and liabilities, including without limitation all principle,
      interest, fees, expenses and penalties, under such Loan Documents being referred
      to herein as the “Indebtedness”);

    


    WHEREAS,
      in connection with the issuance of the Indebtedness or otherwise the Lender
      has
      been issued certain warrants, as set forth on Schedule
      II
      hereto,
      which
      are
      exercisable or convertible into shares of the Borrower’s capital stock (the
“Equity
      Instruments”).
      

    


    WHEREAS,
      the Borrower intends to raise a new round of equity financing (the “Equity
      Financing”);
      and

    


    WHEREAS,
      the Borrower has been advised that in order to raise necessary funds in the
      Equity Financing, Borrower must (i) obtain a satisfaction statement with respect
      to the Indebtedness, (ii) terminate the Equity Instruments, and (iii) obtain
      a
      full release of claims from Lender.

    


    NOW,
      THEREFORE, in consideration of the premises and of the mutual agreements and
      covenants set forth herein and for other good and valuable consideration, the
      receipt and adequacy of which are hereby acknowledged, and intending to be
      legally bound hereby, the parties hereto agree as follows:

    


    1. The
      Lender and the Borrower have agreed that the Lender shall accept $374,786.00
      (the
      “Pay-Off
      Payment”),
      as
      settlement in satisfaction of the Indebtedness. In addition, the Borrower agrees
      to honor and the Lender agrees to limit the exercise of the Lender’s right of
      conversion under the Loan Documents to a number of shares which when combined
      with all shares obtained upon conversion of the Loan Documents by all of its
      affiliates (including any past conversions by Lender or its affiliates) will
      not
      exceed 4.99% of the total issued and outstanding shares of the Borrower as
      of
      December 31, 2006. The Lender further agrees that upon receipt of the Pay-Off
      Payment by way of wire transfer in immediately available funds, (a) the Borrower
      will not be indebted to the Lender for any reason under the Loan Documents,
      including without limitation indebtedness relating to principle, interest,
      fees,
      expenses or penalties, and the Lender’s commitment to extend further credit to
      Borrower under the Loan Documents will terminate, (b) the Loan Documents and
      all
      of the Lender’s security interests in, security titles to and other liens on all
      real and personal property of the Borrower will be automatically and without
      any
      further action by any party terminated and released, (c) all guarantors of
      the
      Indebtedness will be automatically and without any further action by any party
      released from their obligations to the Lender, (d) the Lender will deliver
      each
      promissory note or other instrument evidencing such Indebtedness to the Borrower
      for cancellation and (e) the Lender will, and hereby does, authorize the
      Borrower to prepare and file, and to the extent the Lender’s signature is
      required, the Lender will execute within three (3) business days of receipt
      of
      such document, any and all Uniform Commercial Code financing statement
      terminations, mortgage releases and other such lien release documents as the
      Borrower may request in order to evidence or otherwise give public notice of
      such lien terminations and releases (provided, however, that any and all such
      termination statements, mortgage releases and other such documents shall be
      prepared and recorded at Borrower’s expense). The Lender further acknowledges
      that it will rely on this letter and the acknowledgments, certifications,
      confirmations and agreements of the Lender contained herein in connection with
      raising the Equity Financing.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2. Upon
      the
      signing of this Agreement, the Lender hereby agrees to waive any past, existing
      and future defaults under the Loan Documents for a period of 180 days from
      the
      date of this Agreement. In addition, the Lender further agrees that for a period
      of 180 days from the date of this Agreement the Lender will not exercise its
      right of conversion under the Loan Documents except as per Section 1 above.
      The
      Borrower agrees to pay the Lender 15% of the $374,786.00
      within
      30
      days of signing this Agreement. In addition, the Borrower shall issue the Lender
      certificates for 391,225 and 1,557,647 shares of Common Stock at the conversion
      rates specified in the previously submitted conversion notices and shall cause
      its legal counsel to provide a legal opinion covering the sale of a number
      of
      shares equal to 1% of the current number of shares outstanding under Rule 144.
      

    


    3. The
      Lender hereby represents and warrants to the Borrower that (i) Schedule
      I
      sets
      forth all of the documents, instruments, promissory notes, contracts or other
      agreements (whether written or oral) pursuant to which the Borrower has any
      obligation or liability to Lender for or in respect of borrowed money
      (including, without limitation, any guarantee of the indebtedness or other
      obligation of any other party); (ii) all of the indebtedness of Borrower to
      Lender for borrowed money is set forth on Schedule
      I and
      Borrower has no obligation or liability to Lender except as set forth on
Schedule
      I;
      (iii)
      all of the warrants, options, convertible securities or other contracts,
      instruments or other agreements exercisable for, exchangeable for or convertible
      into (x) any equity security issued or issuable by Borrower or (y) any document,
      instrument or agreement exercisable for, exchangeable for or convertible into
      any equity security issued or issuable by the Borrower are identified on
      Schedule II; (iv) Lender agrees that Schedule II shall be modified to include
      any additional issuance of such instruments as noted in subsection (iii) above
      after the date of this agreement to the date of the receipt of the Pay-Off
      Payment by the Lender; and (v) except as set forth on Schedule
      II,
      Lender
      does not have any right to acquire any equity security issued or issuable by
      Borrower to Lender.

    


    4. The
      Lender hereby agrees and certifies to the Borrower that effective immediately
      the receipt of the Pay-Off Payment by the Lender that any and all Equity
      Instruments held by the Lender will without any further action by any party
      terminate and will be of no further force or effect, and the Lender will deliver
      each such Equity Instrument to the Borrower for cancellation and will thereafter
      execute any and all further documents as the Borrower may request in order
      to
      evidence such termination. For the avoidance of doubt, Equity Instruments shall
      not include any shares held by the Lender as of the date of this Agreement
      or
      shares issued to the Lender pursuant to Section 2 above, all of which are not
      subject to cancellation.

    


    5. Lender
      hereby agrees not to transfer or assign any of the Loan Documents or related
      warrants unless such transferee or assignee agrees in writing to be bound by
      and
      subject to the terms and conditions of this Agreement, including, without
      limitation, the provisions of Section 2 above. 

    


    6. Upon
      receipt of the Pay-Off Payment, each party (for itself and on behalf of its
      successors and assigns) hereby releases and forever discharges the other party
      (and all predecessors, successors and assigns of the other party, and the
      respective directors, officers, employees, owners, agents and representatives
      of
      the other party and its predecessors, successors and assigns) of and from any
      and all actions, causes of action, suits, claims, demands, agreements, debts,
      liabilities and obligations of any nature, fixed or contingent, known or
      unknown, whether at law or in equity, by reason of any event, occurrence,
      circumstances or matter of any nature arising out of the Loan Documents that
      occurred or existed at any time on or before the date of this
      Agreement.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7. 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 New York. 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.

    


    8. 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.

    


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    



    IN
      WITNESS WHEREOF, the parties hereto have executed this Satisfaction and Release
      Agreement as of the date first set forth above.

     

    
      	 	
              BORROWER:

            
	 	 
	 	
              Nayna
                Networks, Inc.

            
	 	 
	 	 
	 	
              By:
                /s/ Naveen S. Bisht

            
	 	 
	 	
              Naveen
                S. Bisht

            
	 	
              Chief
                Executive Officer

            
	 	 
	 	 
	 	 
	 	 
	 	
              LENDER:

            
	 	 
	 	
              WHALEHAVEN
                CAPITAL FUND LTD.

            
	 	 
	 	
              By:
                /s/ Arthur Jones

            
	 	 
	 	
              Arthur
                Jones

            
	 	Director


    

      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
      I (Whalehaven Fund)

    


    Loan
      Documents

    


    (All
      Documents issued on November 17, 2005 and December 21, 2005 to following
      entities related to Convertible Debenture Financing)

    


    


    
      	
              NOTEHOLDER

            	
              ISSUED

            	
              PRINCIPAL

              AMOUNT

            
	
              Whalehaven
                Fund

            	 	
              $374,786.00

            


    

    


    


    Lender
      Wire Instructions

    


    


    Schedule
      II

    


    Equity
      Instruments

    


    
      	
              HOLDERS
                OF SECURITIES

            	
              Warrants

            
	
              Whalehaven
                Fund

            	
              200,000