Nayna enters into settlement agreement with holders of notes issued November 2005

By Sheri Kasprzak

New York, May 29 - Nayna Networks, Inc. reached agreements with six of the nine holders of its convertible notes and warrants issued in November 2005.

According to a form 8-K filed Tuesday with the Securities and Exchange Commission, the lenders agreed to accept stock as payment for their holdings.

AJW Partners LLC, which holds $237,111.04 of the notes, will receive 1,825,525 shares; AJW Offshore Ltd., which holds $1,076,999.62 of the notes, will receive 1,303,454 shares; and AJW Qualified Partners LLC, which holds $649,555.33 of the notes, will receive 533,034 shares.

New Millennium Capital Partners II LLC, holder of $29,925,92 of the notes, will receive 53,580 shares and Harborview Master Fund, holder of $170,300 of the notes, will receive 2,429,487 shares.

Whalehaven Fund, which holds $372,196.96 of the notes, will receive 2,148,949 shares.

Of the total, 15% is due within 30 days of the May 10 settlement date and the remainder is due within 180 days of the settlement date.

The lenders also agreed to waive any defaults related to the notes.

The company is still in negotiations with the three remaining holders of the notes - Alpha Capital, Nite Capital and Bristol Investment Fund Ltd.

The notes were issued in November 2005 in principal of $4.8 million. The 8% notes are due in 2008 and are convertible at $0.68 each.

Based in San Jose, Calif., Nayna Networks is a hardware and software development company focused on broadband-access products.

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