SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549-1004
______________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15 (d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported):
October
3, 2006
Porta
Systems Corp.
(Exact
name of registrant as specified in its charter)
Commission
File Number: 1-8191
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Delaware
(State
or other jurisdiction of
incorporation
or organization)
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11-2203988
(IRS
Employer Identification No.)
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6851
Jericho Turnpike, Syosset, New York
(Address
of principal executive offices)
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11791
(Zip
Code)
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516-364-9300
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement
On
October 3, 2006, the Company entered into an agreement with SHF IX, LLC, which
amended its Amended and Restated Loan and Security Agreement, dated as of
November 28, 1994, as amended, to extend the maturity of the Company’s
senior debt to November 30, 2006, subject to the Company’s reaching an agreement
with the senior debt holder and attaining certain milestones discussed in the
following paragraph. The agreement provides for monthly payments of $112,500
to
the senior debt and provides for the Company to pay the legal expenses and
certain other expenses of the senior debt holder. As part of the extension,
the
senior debt holder agreed to continue the current deferral of interest on most
of the senior debt.
As
a
condition to the extension, the Company agreed to continue to take steps to
effect a restructuring of the senior debt in a manner which results in a
reduction of a significant portion of the senior debt and the issuance of equity
to the senior debt holder. Additionally, the Company would attempt to achieve
a
restructuring of debt which is junior to the senior debt. The agreement requires
that the Company reach an agreement with the senior debt holder for such
restructuring by October 31, 2006 and to meet certain other milestones directed
at effecting such restructuring. If the Company does not reach an agreement
with
the senior debt holder by October 31, 2006 or otherwise fails to achieve the
milestones, the senior debt holder has the right to immediately accelerate
the
maturity date.
As
previously announced, the Company has retained an investment banker and is
actively seeking an investor. Company cannot give any assurance that it will
be
able to obtain an investor on terms that are acceptable to the senior debt
holder or otherwise reach an agreement with the senior debt holder regarding
a
restructuring of the senior debt. In the event that the Company is successful
in
negotiating an agreement with an investor and the senior debt holder, it is
likely that the Company will be required to issue a significant number of shares
of common stock or convertible securities which would result in very significant
dilution to the Company’s present stockholders. However, the Company cannot give
any assurance that any such restructuring will be consummated outside of
bankruptcy reorganization.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
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Porta Systems Corp.
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Date:
October 6, 2006
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By:
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/s/ Edward B.
Kornfeld
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Edward B. Kornfeld
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Chief Executive Officer
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Chief Financial Officer
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