Re: 12% Subordinated Notes

This AGREEMENT AND ACCORD AND SATISFACTION (this “ Agreement ”) is made as of ______, 2008 by and between PORTA SYSTEMS CORP, a Delaware corporation (“the Corporation ”) and the undersigned (the “ Registered Holder ”).

           WHEREAS, the Registered Holder owns those certain 12% Subordinated Notes due January 3, 2000 in the original principal amount set forth on the signature page hereto (the “ Notes “); and

WHEREAS, the Notes are one or more of a series of 12% Subordinated Notes due January 3, 2000 (the “ Original Notes ”), and the outstanding unpaid principal and accrued interest on all such notes as of March 31, 2006 was approximately $12,351,600; and

WHEREAS, the obligation of the Corporation to pay the Notes is subordinated to the Corporation’s obligation to make certain payments under certain senior indebtedness in the outstanding amount of approximately $23,400,000 (the “Senior Debt”); and

WHEREAS, the Senior Debt holder has served notice on the Corporation that the Corporation is precluded from making any payments on the Original Notes until the Senior Debt  is paid in full; and

WHEREAS, the Corporation has obtained an extension on its obligation to pay the Senior Debt holder until May 1, 2008; and

WHEREAS, unless the Corporation can renegotiate and restructure the Senior Debt by May 1, 2008, it is very likely that the Corporation will default on payment of the Senior Debt  and will have to file bankruptcy; and

WHEREAS, in order to avoid bankruptcy and with the consent of the Senior Debt holder, the Corporation has developed a comprehensive plan (the “Restructuring Plan”) to reduce and restructure its senior and subordinated debt as well as amounts due certain creditors; and

WHEREAS, as part of the Restructuring Plan, the Senior Debt holder will reduce its debt to $10,000,000 plus any interest accrued on such $10,000,000 after January 1, 2007 and any additional advances made by Senior Debt holder to the Corporation after January 1, 2007 and any accrued interest on such advances made after January 1, 2007 and will receive approximately 70% of the shares of the Corporation’s common stock after giving effect to the Restructuring Plan; and

WHEREAS, in order for the Restructuring Plan to become effective the holders of subordinated debt will significantly reduce their debt and receive shares of the Corporation’s common stock and the stock ownership of the Corporation's existing shareholders will be very significantly diluted by more than ninety-one (91%) percent; and

WHEREAS, as part of the Restructuring Plan, the holders of the Original Notes will accept, in full payment and satisfaction of the Corporation’s obligations under the Original Notes, new notes in the aggregate principal amount of $1,750,000 (the "New Notes") and approximately 14% of the Corporation’s common stock after giving effect to the Restructuring Plan; and

WHEREAS, the New Notes will bear interest at ten (10%) percent per annum payable quarterly in arrears and will be amortized based upon a twenty five year amortization schedule with a final payment at $1,620,174.67 due seven and one-half years after issuance of the New Notes.

NOW, THEREFORE, in consideration of the foregoing and the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.            Representations .  The Registered Holder represents and warrants that:

(a)           the Registered Holder has good and marketable title to, and is the sole record and beneficial owner of, all right, title and interest in and to the Notes;

(b)           the Registered Holder has not previously transferred the Notes or granted to any other person or entity (“ Person ”) any right or option to purchase or any security or other interest in, the Notes or entered into any agreement or understanding with any Person to sell, option or transfer the Notes or grant any security or other interest therein;

(c)           the Notes are not subject to any judgment, tax or other lien or encumbrance or subject to any restriction on transfer, other than the restrictions on transfer provided in the Notes and applicable federal and state securities laws.

2.            Payment in Full and Final Satisfaction of All Obligations With Respect to the Note .

(a)            Surrender of Note; Performance Subject to Approval .  At the time the Registered Holder executes and delivers this Agreement, it shall also deliver to the Corporation either (i) the original of the Notes, if it has the Notes in its possession, or (ii) a Lost Note Affidavit in form and substance attached as Exhibit A hereto.  The Notes shall be held by the Corporation in escrow pending delivery of the Replacement Securities (as hereafter defined) or return of the Notes as provided herein.  The right of the Registered Holder to receive and the obligation of the Corporation to deliver, the Replacement Securities under this Agreement are subject to (i) the approval of this Agreement by the Senior Debt holder, (ii) the approval by the stockholders of the Corporation of (x) a one-for-11.11 reverse split of the common stock and the (y) the Restructuring Plan, and (iii) the acceptance by all the other holders of Original Notes.  The date on which the last of such approvals and acceptances has been obtained by the Corporation is referred to herein as the “ Approval Date .”  If the approvals of the Senior Debt and the Corporation’s stockholders and the Acceptances have not been obtained by the Corporation by July 1, 2008, or such later date as may be extended by the Corporation, but no later than by August 31, 2008, this Agreement will be terminated and be null and void and the Corporation will promptly return to the Registered Holder the original of the Notes or, if the Registered Holder delivered a Lost Note Affidavit, a replacement Note (bearing the same number as the  original but with the letter “R” in front of it to indicate that it is a replacement) in the name of the Registered Holder.

(b)            Effect of Approval .  Effective immediately upon the Approval Date, all obligations of the Corporation to the Registered Holder under the Note will be canceled and terminated and the Corporation will be obligated to deliver the Replacement Securities to the Registered Holder, which shall be delivered to the Registered Holder within twenty (20) business days after the Approval Date.  Delivery of the Replacement Securities to the Registered Holder shall constitute full and final payment of all obligations of the Corporation to the Registered Holder under the Note.  The Registered Holder acknowledges that upon the Approval Date, the Registered Holder will have no right or claim to any other payments, losses, expenses or any other amounts from the Corporation under the Notes, and that such Notes and all obligations relating thereto are satisfied in full, released and canceled immediately upon the Approval Date, the Corporation’s only obligation being to deliver the Replacement Securities to the Registered Holder.

(c)            Replacement Securities .  The Replacement Securities consist of (i) a subordinated, unsecured promissory note (the “Subordinated Note”) made by the Corporation, dated as of the Approval Date, in the original principal amount set forth on the signature page of this Agreement and (ii) the number of shares of Common Stock set forth on the signature page of this Agreement.  The Subordinated Note shall be in substantially the form of Exhibit B to this Agreement.

(d)            Outstanding Capitalization .  Upon the completion of the Restructuring Plan, the outstanding shares of Common Stock will be held as set forth in Appendix I to this Agreement.

3.            Notices .  All notices or other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if sent by registered or certified mail, postage prepaid, and return receipt requested to the parties or by an overnight courier service that provides evidence of delivery or attempted delivery, addressed as set forth on the signature page (or at such other addresses as designated by the parties from time to time, in writing, and delivered to the parties as provided below).  Notices or other communications so delivered shall be deemed received on the day of delivery or attempted delivery if sent by overnight courier and three days after the date deposited in the U.S. mail if sent registered or certified mail, return receipt requested.

4.            No Third Party Beneficiaries .  This Agreement is solely for the benefit of the parties hereto and their successor and assigns and is not intended for the benefit of any other Person.

5.            Delay No Waiver; No Oral Changes .  No delay on the part of any party in exercising any right or remedy under this Agreement or failure to exercise the same shall operate as a waiver in whole or in part of any such right or remedy.  No amendment or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed by  party against whom such waiver or amendment is to be enforced, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

6.            Assignment .  No party may assign or transfer its rights or delegate its duties under this Agreement without the prior written consent of the other party, which may be granted or withheld in its sole discretion.

7.            Release .  Effective on the Approval Date, the Registered Holder releases and forever discharges the Corporation and each of its past and present directors, officers, employees, attorneys, agents, affiliates, successors and assigns (such group, collectively, the “ Released Persons ”), from any and all claims, actions, causes of action, suits, debts, dues, sums of money, accounts, costs, expenses, liabilities, covenants, contracts, agreements, promises, damages, judgments, executions and demands whatsoever (each a “ Claim ”), in law or equity, that the Registered Holder ever had, now has or hereafter may have against the Released Persons arising from or relating to any matter, cause or thing whatsoever from the beginning of time through the Approval Date, other than any Claims of the Registered Holder arising under this Agreement or the Subordinated Note. The Registered Holder represents and warrants that the Registered Holder has not assigned or otherwise transferred the released Claims, or any portion thereof.

8.            Gender and Number .  References to Registered Holder as an “it” herein is for convenience and shall be construed as a reference to the male, female or neuter gender or to the singular or plural number as appropriate to the identity of the Registered Holder(s) as set forth on the signature page hereto.

9.            Governing Law; Consent to Jurisdiction .  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its principles of conflict of laws.  Each of the parties hereby (i) irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement shall be brought exclusively in the United States District Court for the Southern District of New York or Supreme Court of the State of New York in the County of New York, (ii) by execution and delivery of this Agreement, irrevocably submits to and accepts, with respect to its properties and assets, generally and unconditionally, the jurisdiction of the aforesaid courts, and irrevocably waives any and all rights it may have to object to such jurisdiction under the Constitution or laws of the State of New York or the Constitution of the United States or otherwise, and (iii) irrevocably consents that service of process upon it in any such action or proceeding shall be valid and effective against it or him if made either (x) in the manner provided herein for delivery of notices hereunder or (y) any other manner permitted by law.

10.            Waiver of Trial by Jury .  ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THEIR RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE RELATING TO THIS AGREEMENT.

11.            Counterparts .  This Agreement may be executed and delivered in counterparts and by facsimile and as so executed and delivered shall be fully effective and binding once executed by all parties listed as signatories hereto.

IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement effective as of the date first written above.

***  As part of the Restructuring Plan, we agreed to issue Advicorp, PLC warrants to purchase 201,072 shares of common stock at $    per share.

The undersigned note holder (the “ Holder ”), being duly sworn, deposes and says:

1.           That the Holder is entitled to the possession, and is the legal and beneficial owner, of 12% Subordinated Note N-___, dated                            , issued by Porta Systems Corp. a Delaware corporation, in the original principal amount of $___________________ ( the “ Subordinated Note ”).

2.           That the original of the Subordinated Note cannot be found or produced.

3.           That the Holder has not sold, assigned, endorsed, pledged, transferred, deposited under any agreement, or hypothecated the Subordinated Note, or any interest therein or signed any power of attorney including a stock, bond or note power or other authorization respecting same which is now outstanding and in force, or otherwise disposed of the same; and no person, firm, corporation, agency or government has, or has asserted, any right, title, claim, equity or interest in, to or respecting the Subordinated Note or the proceeds thereof.

5.           That the Holder agrees and covenants to indemnify the Corporation and its officers, directors, employees, attorneys, agents and affiliates and their respective successors and assigns from, and to the full extent of, all demands, claims, actions, causes of actions, rights of recovery, liabilities, losses and/or damages, whether direct or consequential (including, without limitation, reasonable attorneys’ fees and expenses) of every kind and nature arising from or growing out of any matter connected with or related to the loss of the Subordinated Note and any claim which may be made thereon or as a result thereof.

6.           This Lost Note Affidavit is intended to and shall bind the undersigned as of the date hereof.

Signed and delivered this _____ day of_______________ , 2008.

STAT