8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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): August 13, 2003

Commission File Number: 000-12739

AESP, INC.

(Exact Name of Registrant as Specified in its Charter)

Florida
(State or Other Jurisdiction
of Incorporation) 59-2327381
(I.R.S. Employer Identification No.)

1810 N.E. 144th Street
North Miami, Florida 33181
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (305) 944-7710

Item 5. Other Events and Required FD Disclosure.

     On August 15, 2003, AESP, Inc. (the “Company”) entered into a Fifth Amendment to Loan Agreement (the “Amendment”) with its current lender, CommerceBank, N.A. Pursuant to the terms of the Amendment, the Company’s existing $1.9 million line of credit was extended through September 30, 2003, with an additional extension until November 30, 2003 if the Company is able to reduce its outstanding line of credit with CommerceBank by at least $1.0 million by such date.

     Under the Amendment, the interest rate payable on the line of credit has been increased from prime plus 3% to prime from 4% per annum for the period between July 22, 2003 until September 30, 2003, and prime plus 6% for the period between September 30, 2003 and November 30, 2003. In addition the Amendment, amends and resets the financial covenants that the Company is obligated to meet at June 30 and September 30, 2003. The Amendment also requires that the Company satisfy all of its obligations to CommerceBank under the line of credit by December 1, 2003.

     The foregoing is a summary of the information contained in the Amendment and the related Renewal Promissory Note and Side Letter Agreement. Reference is made to the more detailed information contained therein and attached hereto as Exhibits 10.24, 10.25 and 10.26, respectively.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

     (c)  Exhibits.

Exhibit No.	Description
10.24	Fifth Amendment to Loan Agreement by and between the Company and CommerceBank, N.A. dated as of August 15, 2003.
10.25	Renewal Promissory Note dated as of August 15, 2003
10.26	Side Letter Agreement dated August 15, 2003
99.1	Press Release dated August 13, 2003

Item 12. Results of Operations and Financial Condition.

     On August 13, 2003, AESP, Inc. issued a press release (the “Press Release”) announcing its financial results for the three and six month periods ended June 30, 2003. A copy of the Press Release is attached as Exhibit 99.1. The Press Release is incorporated herein by reference.

2

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized, this 18th day of August, 2003.

AESP, INC

/s/ John F. Wilkens
John F. Wilkens, Chief Financial
Officer

3

EXHIBIT INDEX

Exhibit No.	Description
10.24	Fifth Amendment to Loan Agreement by and between the Company and CommerceBank, N.A. dated as of August 15, 2003.
10.25	Renewal Promissory Note dated as of August 15, 2003
10.26	Side Letter Agreement dated August 15, 2003
99.1	Press Release dated August 13, 2003

4 EX-10.24 3 g84610exv10w24.txt FIFTH AMENDMENT TO LOAN AGREEMENT DATED 8-15-2003 Exhibit 10.24 EX-10.24 Fifth Amendment to Loan Agreement by and between the Company and CommerceBank, N.A. dated as of August 15, 2003. FIFTH AMENDMENT TO LOAN AGREEMENT THIS FIFTH AMENDMENT to LOAN AGREEMENT is entered into as of the 15th day of August, 2003, by and between AESP, INC. (formerly known as Advanced Electronic Support Products, Inc.), a Florida corporation (the "Borrower") and COMMERCEBANK, N.A. (the "Bank"). RECITALS: A. Borrower and Bank entered into that certain loan agreement (the "Loan Agreement") dated September 23, 1999 under the terms of which Bank agreed to lend Borrower $3,500,000. B. Borrower and Bank executed and delivered that certain First Amendment to Loan Agreement (the First Amendment") dated September 2, 2000 between them. In connection with the First Amendment, Borrower executed and delivered to Bank that certain Renewal Promissory Note dated September 2, 2000 (the "Renewal Note") in the original principal amount of $3,500,000. C. Borrower and Bank executed and delivered that certain Second Amendment to Loan Agreement (the Second Amendment") dated March 16, 2001 between them. In connection with the Second Amendment, Borrower executed and delivered to Bank that certain Renewal Promissory Note dated March 16, 2001 (the "Second Renewal Note") in the original principal amount of $4,000,000. D. Borrower and Bank executed and delivered that certain Third Amendment to Loan Agreement (the Third Amendment") dated September 21, 2001 between them. In connection with the Third Amendment, Borrower executed and delivered to Bank that certain Renewal Promissory Note dated September 21, 2001 (the "Third Renewal Note") in the original principal amount of $4,000,000. E. Borrower and Bank executed and delivered that certain Extension Letter Agreement (the "Letter Agreement") dated September 18, 2002 between them, which, among other things, extended the term of the Line of Credit until January 23, 2003 and reduced the Maximum Line of Credit Amount to $1,900,000. F. Borrower and Bank executed and delivered that certain Fourth Amendment to Loan Agreement (the Fourth Amendment") dated January 17, 2003 between them. In connection with the Fourth Amendment, Borrower executed and delivered to Bank that certain Renewal Promissory Note dated January 17, 2003 (the "Fourth Renewal Note") in the original principal amount of $1,900,000. F. Borrower and Bank desire to amend certain terms of the Loan Agreement, as amended, pursuant to the terms hereof to among other things extend the term of the Line of Credit. NOW, THEREFORE, in consideration of the agreements set forth herein and other good and valuable consideration, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS. All capitalized terms used herein shall have the same meanings as used in Section 1 of the Loan Agreement, unless otherwise defined in this Fifth Amendment. SECTION 2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended in the following respects: (a) PERMANENT REDUCTION AND TERMINATION OF LINE OF CREDIT. The existing section 2.9 of the Loan Agreement shall be deleted and replaced by the following: "2.9 Permanent Reduction and Termination of Line of Credit. (a) Borrower shall be make a principal payment on or before September 30, 2003 of not less than One Million Dollars ($1,000,000). If Borrower obtains a new lending arrangement to enable it to make such principal payment, all of the available credit under such financing arrangement shall be utilized to make such principal payment. Such prepayment shall permanently reduce the Maximum Line of Credit Amount by the amount of such prepayment. In the event that the Borrower makes the minimum prepayment described above, but fails to pay the Line of Credit in full by September 30, 2003, Borrower shall pay to Lender an extension fee of Ten Thousand Dollars ($10,000) by September 30, 2003. Bank agrees to consider in good faith any request from Borrower for the Bank to release it's lien on Receivables; provided that (1) Borrower provides Bank with copies of all documentation associated with such financing in advance to facilitate Bank's credit evaluation of such transaction and the final documentation for such transaction shall be satisfactory to Bank, (2) the Receivables being released are being pledged to a lender who is providing financing to enable Borrower to make the payments required by this Section 2.9, (3) Bank 's internal credit committee is satisfied in its sole and absolute discretion with the terms of such new transaction and it' s impact on the Borrower's credit position with the Bank, and (4) Borrower agrees to execute and deliver to Bank any amendments, documents or certificates deemed necessary by Bank as a result of such transaction. (b) On or before December 1, 2003 Borrower shall satisfy all outstanding Obligations to Lender under the Line of Credit. On the earlier to occur of a prepayment of all Obligations hereunder or December 1, 2003, the Lender's obligations to make Advances under the Line of Credit shall be terminated, the Maximum Line of Credit Amount shall be reduced to zero ($0), and all of Borrower's Obligations under the Loan Agreement shall be immediately due and payable. Borrower acknowledges that Borrower's obligations under this section 2 are not dependent on the availability of any particular form of credit or any other condition. (b) INVENTORY LIMITATION. Section 2.1(b)(ii)(1) of the Loan Agreement shall be amended by deleting "Six Hundred Thousand ($600,000)" and inserting "Five Hundred Thousand ($500,000)" as a replacement. (c) FINANCIAL COVENANTS. Sub-sections 5.14 (a) and (b) of the Loan Agreement shall be amended and restated as follows: "(a) Debt to Tangible Net Worth. As of the end of each quarter, the Borrower shall have a debt to Tangible Net Worth ratio of not more than 3:1. For the quarters ending June 30, 2003 and September 30, 2003, the Borrower shall have a debt to Tangible Net Worth ratio of not more than 3.25:1.00. Such ratio shall be tested quarterly based on the Borrower's financial statements. (b) Tangible Net Worth. Borrower shall at all times maintain a Tangible Net Worth of not less than $3,250,000. For the quarters ending June 30, 2003 and September 30, 2003, Borrower shall at all times maintain a Tangible Net Worth of not less than $2,850,000" (d) OTHER CONFORMING CHANGES: The Loan Agreement is amended as follows: (i) Definition of Line of Credit Note. The definition of Line of Credit Note shall be amended and restated to read as follows: "Line of Credit Note" shall mean that certain Fifth Renewal Promissory Note, dated August 15, 2003, of Borrower to Lender in the aggregate principal amount of One Million Nine Hundred Thousand Dollars ($1,900,000) which Fifth Renewal Promissory Note amended, renewed and updated that certain Fourth Renewal Promissory Note, dated January 17, 2003 executed by Borrower, in favor of Lender. (ii) Definition of Line of Credit Maturity Date. The definition of Line of Credit Maturity Date shall be amended and restated to read as follows: "Line of Credit Maturity Date" shall mean September 30, 2003, or such earlier date as payment of the Line of Credit shall be due and payable in full, whether by mandatory prepayment, acceleration or otherwise; 3 provided, that such date shall be extended to December 1, 2003 if Borrower makes the minimum principal payment described in Section 2.9(a) of this Agreement and an Event of Default shall not have otherwise occurred and be continuing. (iii) Definition of Loan Documents. The definition of the term "Loan Documents" in the Loan Agreement shall include this Fifth Amendment, the Fourth Amendment, the Letter Agreement, the Third Amendment, the Second Amendment, the First Amendment, the Line of Credit Note, The Fifth Renewal Note, the Security Agreement, the Commitment Letter and all other documents executed and delivered by the parties which evidence, secure or otherwise relate to the transaction contemplated by this Fifth Amendment. (iv) Definition of Maximum Line of Credit Amount. The definition of Maximum Line of Credit Amount shall be amended and restated to read as follows: "Maximum Line of Credit Amount" shall mean One Million Nine Hundred Thousand Dollars ($1,900,000), subject to reduction as described in Section 2.9 of this Agreement". (v) Addition to Events of Default. Add the following to Section 6.1 of the Loan Agreement: "(m) Borrower's failure to make the prepayments required under Section 2.9 of the Loan Agreement SECTION 3. NO EVENT OF DEFAULT. Borrower hereby certifies to Bank that (a) it has kept, observed, performed and fulfilled each and every covenant, provision and condition of the Loan Agreement and the other Loan Documents on its part to be performed, (b) that all representations and warranties of the Borrower made in the Loan Agreement are true and correct as of the date hereof except for those representations and warranties which are made as of a particular date, which such representations and warranties are true and correct as of such date, (c) that no Event of Default or event which, with the passage of time or the giving of notice or both, would constitute an Event of Default has occurred and is continuing under the Loan Agreement, both before and after giving effect to the amendment contemplated hereby, except any Event of Default that has previously occurred and which has been specifically waived in writing by the Bank, and (d) as of the date of this Fifth Amendment, Borrower has no defenses or counterclaims with respect to Bank's rights to collect all amounts due to it under the Loan Documents. SECTION 4. LOAN AGREEMENT CONFIRMED. The Loan Agreement, as amended hereby, is reaffirmed and restated herein by Borrower and Bank, and said Loan Agreement is hereby incorporated herein by reference as fully as if set forth in its entirety in this Fifth Amendment. 4 SECTION 5. CONDITIONS PRECEDENT TO BANK'S OBLIGATIONS. Banks obligations under this Fifth Amendment shall be subject to the satisfaction of each of the following conditions precedent: (a) Borrower shall have executed and deliver this Fifth Amendment, the Fifth Renewal Note and all other documents requested by Bank and all Loan Documents shall be in full force and effect. (b) Bank shall have received (i) a certificate of the secretary of Borrower certifying that attached thereto are true and correct copies of (A) the bylaws of Borrower, as amended through the date of such certification and (B) resolutions duly adopted by Borrower' s board of directors authorizing the execution, delivery and performance of the Loan Documents to which Borrower is a party, which resolutions have not been altered or amended in any respect and remain in full force and effect, (ii) the names of each of the officers of Borrower authorized to execute and deliver the Loan Documents; (iii) a certificate of the applicable State authority, dated as of a recent date, as to the good standing of Borrower; and (iv) a certificate of the Florida Department of State, dated as of a recent date, certifying that attached are true and correct copies of the articles of incorporation of the Borrower filed with such agency. (c) Borrower shall cause to be delivered to Bank such other documents, certificates or affidavits as may be reasonably requested by Bank in connection with consummating the transaction evidenced by this Fifth Amendment. (d) An opinion of counsel from counsel to Borrower in a form reasonably satisfactory to Lender. (e) Borrower shall pay to lender an extension fee in the amount of Fifteen Thousand Dollars ($15,000) on the date of this Fifth Agreement. SECTION 6. MISCELLANEOUS. (a) INVALIDITY. In the event that any one or more of the provisions contained in this Fifth Amendment shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Fifth Amendment. (b) COUNTERPARTS. This Fifth Amendment may be executed in several counterparts, and it shall not be necessary that the signatures of all parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all of which together shall constitute one and the same instrument. (c) REFERENCE. From and after the effective date hereof, all references to the Loan Agreement shall be deemed to be references to the Loan Agreement as amended by this Fifth Amendment. 5 (d) GOVERNING LAW. THIS Fifth AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAW PRINCIPLES. (e) GOVERNING DOCUMENT. In the event of a conflict between the terms and conditions of this Fifth Amendment and the Commitment Letter, the terms and conditions of this Fifth Amendment shall control in all respects. SIGNATURE PAGE TO FOLLOW IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to Loan Agreement to be duly executed and delivered by their respective representatives thereunto duly authorized as of the date first above written. Borrower: AESP, INC. By: /s/ Roman Briskin ------------------------------------- Name: Roman Briskin Its: Vice President Bank: COMMERCEBANK, N.A. By: /s/ Alan L. Hills ------------------------------------- Name: Alan L. Hills Its: Vice President EX-10.25 4 g84610exv10w25.txt RENEWAL PROMISSORY NOTE DATED 8-15-2003 Exhibit 10.25 EX-10.25 Renewal Promissory Note dated as of August 15, 2003 RENEWAL PROMISSORY NOTE $1,900,000.00 Executed on board the vessel "Palm Breeze Express" outside the State of Florida as of August 15, 2003 FOR VALUE RECEIVED, the undersigned, AESP, INC., a Florida corporation, (the "Maker"), promises to pay to the order of COMMERCEBANK, N.A. and assigns (collectively "Lender"), the principal sum of the lesser of (i) One Million Nine Hundred Thousand and 00/100 DOLLARS ($1,900,000) on the terms set forth herein, or (ii) the amount actually advanced to the Maker and outstanding in accordance with the terms of the Line of Credit described in that certain loan agreement (the "Loan Agreement"), dated September 23, 1999 between Maker and the Lender, as it may be amended, supplemented, modified or restated from time to time, plus interest on the unpaid principal balance on the terms set forth herein. All defined terms used herein shall have the meanings assigned in the Loan Agreement except to the extent such terms are defined or limited herein. This renewal promissory note (this "Note") renews the outstanding principal amount of that certain renewal promissory note (the "Fourth Renewal Note") in the original principal amount of $1,900,000, from Borrower to Lender, dated January 17, 2003, and is not intended to be a novation of the obligations evidenced by the Fourth Renewal Note. Principal and interest shall be payable, as follows: From the date of this Note through September 30, 2003, interest shall be due on the outstanding principal amount of this Note at a floating rate equal to the Wall Street Journal Prime Rate (hereinafter defined) plus four percent (4%) (the "Initial Note Rate"). Beginning on October 1, 2003 and continuing until December 1, 2003 (the "Maturity Date"), interest shall be due on the outstanding principal amount of this Note at a floating rate equal to the Wall Street Journal Prime Rate (hereinafter defined) plus six percent (6%) (the "Final Note Rate"). The Initial Note Rate and the Final Note Rate shall hereinafter be collectively referred to as the "Note Rate". The Note Rate shall be a floating rate and shall initially be set as of the date of this promissory note and shall be adjusted daily based on changes to the Wall Street Journal Prime Rate as of such date. All changes in the Note Rate shall be effective as of the date of change in the Wall Street Journal Prime Rate. Interest shall be payable on the twentieth (20th) day of each consecutive calendar month prior to the Maturity Date (hereinafter defined), commencing August 20, 2003. All remaining unpaid principal and interest due thereon and all other amounts owing under this Note and the Loan Documents (hereinafter defined), shall be due and payable in full in no event later than the Maturity Date. "Wall Street Journal Prime Rate" shall mean the prime rate as reported in the money rate column of the "Wall Street Journal" on the date of determination. Interest shall be computed on the basis of a 360 day year for the actual number of days in the applicable period. Prepayments shall be made and shall be applied as described in the Loan Agreement. Maker may prepay the principal amount outstanding hereunder without penalty. All installments of principal and/or interest are payable at the offices of CommerceBank, 220 Alhambra Circle, Coral Gables, FL 33134, or at such other place as Lender hereof may, from time to time, designate in writing, in lawful money of the United States of America, which shall be in legal tender for public and private debts at the time of payment. Maker may prepay this Note at any time without penalty. If default is made in the payment of any part of the principal of or interest due under the terms of this Note or upon an Event of Default under the Loan Agreement (and such default is not cured after notice thereof, if required under the applicable loan document, and the expiration of any applicable grace period), then this Note shall be in default and the entire principal sum and accrued interest shall become due and payable at once without notice and demand at the option of Lender. While in default, the principal of this Note shall bear interest at a rate equal to the maximum rate permitted under applicable law (the "Default Rate"). In addition to the above, Lender may collect a late charge not to exceed an amount equal to five percent (5%) of any installment which is not paid within twenty (20) days of the due date thereof to cover the extra expense involved in handling delinquent payments, provided that: (i) collection of said late charge shall not be deemed a waiver by Lender of any of its other rights under this Note and the Loan Agreement, the Security Agreement or any other instrument given to secure this indebtedness, and (ii) such late charge shall not apply to any payment of principal under Section 2.9 of the Loan Agreement. It is agreed that each maker and endorser, jointly and severally, shall pay all reasonable costs of collection, including reasonable attorneys' fees, on failure to pay any principal or interest when due on this Note. Such costs and attorneys' fees shall include, but not be limited to, reasonable attorneys' fees and paralegal fees incurred by Lender hereof in any and all judicial proceedings, including appellate proceedings, arising out of enforcement and/or collateral securing this indebtedness, whether such proceedings arise before or after entry of final judgment. In case any provision (or any part of any provision) contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or enforceability shall not affect any other provision (or remaining part of the affected provision) of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision (or part thereof) had never been contained herein, but only to the extent it is invalid, illegal or unenforceable. Notwithstanding any provision of this Note and/or any instrument securing payment of this Note to the contrary, it is the intent of the undersigned Maker and Lender that Lender hereof shall never be entitled to receive, collect or apply as interest on principal of the indebtedness any amount in excess of the maximum rate of interest permitted to be charged by applicable law; and 2 in the event Lender ever receives, collects, or applies as interest any such excess, such amount which should be excessive interest shall be deemed a partial prepayment of principal and treated hereunder as such; and, if the principal of the indebtedness secured hereby is paid in full, any remaining excess funds shall forthwith be paid to Maker. In determining whether or not the interest paid or payable under any specific contingency exceeds the highest lawful rate, Maker and Lender shall, to the maximum extent permitted under applicable law (a) characterize any non-principal payment as an expense, fee or premium rather than as interest (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the indebtedness so that the interest rate is uniform throughout the entire term of the indebtedness; provided that if the indebtedness is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the maximum lawful rate, Lender shall refund to Maker the amount of such excess or credit the amount of such excess against the principal portion of the indebtedness, and in such event, Lender shall not be subject to any penalties provided by any laws for contracting for, charging, or receiving interest in excess of the maximum lawful rate. In no contingency or event whatsoever shall the amount paid or agreed to be paid to Lender for the use, forbearance or detention of the indebtedness collateralized hereby exceed the maximum amount permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or any provision of any instrument securing the primary obligation at the time performance of such provision shall be due shall involve transcending the limit of validity prescribed by applicable law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity. This provision shall control every other provision of this Note. Maker, and each surety, endorser, guarantor and other party liable for the payment of any sums of money payable on this Note, severally waive the right of exemption under the Constitution and Laws of Florida, presentment and demand for payment, protest and notice of protest and nonpayment, notice of dishonor, notice of demand or intent to demand, notice of maturity and all requirements necessary to hold each of them liable as maker, surety, endorser, guarantor and any other party liable for the payment of sums of money hereunder, and agree that their liability on this Note shall not be affected by any renewal or extension in the time of payment thereof or by any release or change in any security for the payment of this Note, regardless of the number of such renewals, extensions, releases or changes. Maker and Lender mutually understand, covenant and agree that the provisions of this Note (i) shall be binding upon Maker and its successors and assigns (except as herein otherwise set forth) and shall inure to the benefit of Lender and its assigns including any subsequent holder of this Note and (ii) shall be construed, governed and enforced in all respects by the laws of the State of Florida, including the Usury Laws of said state. Time shall be of the essence of each and every covenant and promise contained in this Note and every other instrument securing the repayment of this Note. This Note is secured by that certain collateral described in that certain Security Agreement (the "Security Agreement") dated September 23, 1999 between Maker and Lender and is to be construed according to the Laws of Florida. Any default occurring under the Loan 3 Agreement (which default is not cured after notice thereof, if required under the applicable Loan Document, and the expiration of any applicable grace period) shall constitute a default under this Note, and Lender, at its option, may declare this Note due and payable in full and may exercise its remedies under the Security Agreement. Maker hereby submits to the jurisdiction of the courts of the State of Florida in the event any litigation arising from or related to this Note is commenced. Maker agrees that the Lender may institute any cause of action against Maker involving this Note in the courts of Miami-Dade County, Florida, and hereby waives any venue privilege or right to be sued in any other forum. THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION, PROCEEDINGS, OR COUNTERCLAIMS ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS OR ANY OF THE LOAN DOCUMENTS. FURTHER, THE MAKER HEREBY CERTIFIES THAT NO REPRESENTATIVES OR AGENTS OF THE LENDER NOR THE MAKER'S OR THE LENDER'S COUNSEL HAS REPRESENTED, EXPRESSED OR OTHERWISE, THAT THE LENDER WOULD NOT IN THE EVENT OF SUCH LITIGATION SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. MAKER ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS TRANSACTION BY, INTER ALIA, THE PROVISIONS OF THIS SECTION. THE MAKERS AGREE NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION BY WHICH A JURY TRIAL CANNOT BE WAIVED. IN WITNESS WHEREOF, the undersigned have executed and delivered this Note the day and year first hereinabove provided. AESP, INC. By: /s/ Roman Briskin ------------------------------------- Name: Roman Briskin Title: Vice President EX-10.26 5 g84610exv10w26.txt SIDE LETTER AGREEMENT DATED 8-15-2003 Exhibit 10.26 Exhibit 10.26 Side Letter Agreement dated August 15, 2003 AESP, INC. 1810 N.E. 144th Street North Miami, Florida 33181 August 15, 2003 VIA HAND DELIVERY - ----------------- CommerceBank, N.A. 220 Alhambra Circle Coral Gables, FL 33146 Attention: Alan L. Hills, Vice President Re: Fifth Amendment to Loan Agreement Dear Alan: This letter will confirm the mutual agreement and understanding of AESP, Inc. ("AESP") and CommerceBank, N.A. ("CommerceBank") regarding the Fifth Amendment to Loan Agreement, dated as of the 15th day of August, 2003 ("Loan Agreement") and entered into between AESP and CommerceBank and that certain $1,900,000 Renewal Promissory Note, dated as of August 15, 2003 ("Note") that AESP has delivered to CommerceBank. It is agreed by the parties that, even though the Loan Agreement and the Note, and all related documents delivered by the parties in connection with such Loan Agreement and Note, are dated "as of August 15, 2003" or "August 15, 2003," it is the intention of the parties that the Fifth Amendment and the Note, and all related documents, shall be effective as of July 22, 2003. Please confirm your understanding as to the agreements and understandings set forth herein by signing where indicated in the space below. Very truly yours, AESP, INC. By: /s/ Roman Briskin ------------------------------------- Roman Briskin, Vice President AGREED AND ACKNOWLEDGED this 15th day of August, 2003 COMMERCEBANK, N.A. By: /s/ Alan L. Hills ------------------------------- Alan L. Hills, Vice President EX-99.1 6 g84610exv99w1.txt PRESS RELEASE DATED 8-13-2003 Exhibit 99.1 EX-99.1 Press Release dated August 13, 2003 MIAMI, Aug. 13 /PRNewswire-FirstCall/ -- AESP, Inc (Nasdaq: AESP - News) today announced its results of operations for the three and six months ended June 30, 2003. Sales for the 2003 second quarter were $7.4 million, compared with sales of $6.8 million for the quarter ended June 30, 2002. For the six months ended June 30, 2003, sales were $15.5 million, compared with sales of $14.3 million for the six months ended June 30, 2002. The net loss for the second quarter of 2003 was $499,000, compared to a net loss of $712,000 for the second quarter of 2002. For the six months ended June 30, 2003, the net loss was $580,000, compared to a net loss of $707,000 for the six months ended June 30, 2002. The Company's loss per common share and diluted loss per common share were both $(0.08) for the second quarter of 2003. For the second quarter of 2002, the Company posted a loss per common share and diluted loss per common share of $(0.15). The Company's loss per common share and diluted loss per common share were both $(0.10) for the six months ended June 30, 2003. For the six months ended June 30, 2002, the Company recorded a loss per common share and diluted loss per common share of $(0.16). Slav Stein, the Company's President and CEO, stated: "In spite of the difficult business environment, where our primary worldwide markets of telecommunications and datacom continue to struggle, we were able to increase our sales in 2003, primarily in the U.S. Looking forward, we remained focused on improving our results, both through sales growth and expense reductions. Toward that end, in 2003, we have introduced several product line extensions for our Signamax networking line, consistent with our goal of becoming a single source provider of network connectivity products. On the expense side, we have expanded our cost reduction efforts in the U.S. to include across-the- board salary reductions and other cuts that we believe will reduce our U.S. overhead by more than $500,000 per annum, beginning in the third quarter of 2003." AESP, Inc. designs, manufactures, markets and distributes network connectivity products under the brand name Signamax Connectivity Systems as well as customized solutions for original equipment manufacturers worldwide. The Company offers a complete line of active networking and premise cabling products for copper and fiber optic based networks, as well as computer connectivity products. Safe Harbor Disclosure under the 1995 Securities Litigation Reform Act This news release contains forward-looking statements, which involve risks and uncertainties. The Company's actual future results could differ materially from the results anticipated herein. For information regarding factors that could impact the Company's future performance, see the Company's future filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the second quarter of 2003. Signamax is a trademark of AESP, Inc. For product information, please link to www.signamax.com. -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.24

                                                                   Exhibit 10.24


EX-10.24 Fifth Amendment to Loan Agreement by and between the Company and
CommerceBank, N.A. dated as of August 15, 2003.

                                 FIFTH AMENDMENT
                                TO LOAN AGREEMENT


         THIS FIFTH AMENDMENT to LOAN AGREEMENT is entered into as of the 15th
day of August, 2003, by and between AESP, INC. (formerly known as Advanced
Electronic Support Products, Inc.), a Florida corporation (the "Borrower") and
COMMERCEBANK, N.A. (the "Bank").

                                    RECITALS:

A.       Borrower and Bank entered into that certain loan agreement (the "Loan
         Agreement") dated September 23, 1999 under the terms of which Bank
         agreed to lend Borrower $3,500,000.

B.       Borrower and Bank executed and delivered that certain First Amendment
         to Loan Agreement (the First Amendment") dated September 2, 2000
         between them. In connection with the First Amendment, Borrower executed
         and delivered to Bank that certain Renewal Promissory Note dated
         September 2, 2000 (the "Renewal Note") in the original principal amount
         of $3,500,000.

C.       Borrower and Bank executed and delivered that certain Second Amendment
         to Loan Agreement (the Second Amendment") dated March 16, 2001 between
         them. In connection with the Second Amendment, Borrower executed and
         delivered to Bank that certain Renewal Promissory Note dated March 16,
         2001 (the "Second Renewal Note") in the original principal amount of
         $4,000,000.

D.       Borrower and Bank executed and delivered that certain Third Amendment
         to Loan Agreement (the Third Amendment") dated September 21, 2001
         between them. In connection with the Third Amendment, Borrower executed
         and delivered to Bank that certain Renewal Promissory Note dated
         September 21, 2001 (the "Third Renewal Note") in the original principal
         amount of $4,000,000.

E.       Borrower and Bank executed and delivered that certain Extension Letter
         Agreement (the "Letter Agreement") dated September 18, 2002 between
         them, which, among other things, extended the term of the Line of
         Credit until January 23, 2003 and reduced the Maximum Line of Credit
         Amount to $1,900,000.

F.       Borrower and Bank executed and delivered that certain Fourth Amendment
         to Loan Agreement (the Fourth Amendment") dated January 17, 2003
         between them. In connection with the Fourth Amendment, Borrower
         executed and delivered to Bank that certain Renewal Promissory Note
         dated January 17, 2003 (the "Fourth Renewal Note") in the original
         principal amount of $1,900,000.

F.       Borrower and Bank desire to amend certain terms of the Loan Agreement,
         as amended, pursuant to the terms hereof to among other things extend
         the term of the Line of Credit.





         NOW, THEREFORE, in consideration of the agreements set forth herein and
other good and valuable consideration, the parties hereto hereby agree as
follows:

         SECTION 1. DEFINITIONS. All capitalized terms used herein shall have
the same meanings as used in Section 1 of the Loan Agreement, unless otherwise
defined in this Fifth Amendment.

         SECTION 2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby
amended in the following respects:

                  (a) PERMANENT REDUCTION AND TERMINATION OF LINE OF CREDIT. The
existing section 2.9 of the Loan Agreement shall be deleted and replaced by the
following:

                           "2.9 Permanent Reduction and Termination of Line of
                  Credit. (a) Borrower shall be make a principal payment on or
                  before September 30, 2003 of not less than One Million Dollars
                  ($1,000,000). If Borrower obtains a new lending arrangement to
                  enable it to make such principal payment, all of the available
                  credit under such financing arrangement shall be utilized to
                  make such principal payment. Such prepayment shall permanently
                  reduce the Maximum Line of Credit Amount by the amount of such
                  prepayment. In the event that the Borrower makes the minimum
                  prepayment described above, but fails to pay the Line of
                  Credit in full by September 30, 2003, Borrower shall pay to
                  Lender an extension fee of Ten Thousand Dollars ($10,000) by
                  September 30, 2003. Bank agrees to consider in good faith any
                  request from Borrower for the Bank to release it's lien on
                  Receivables; provided that (1) Borrower provides Bank with
                  copies of all documentation associated with such financing in
                  advance to facilitate Bank's credit evaluation of such
                  transaction and the final documentation for such transaction
                  shall be satisfactory to Bank, (2) the Receivables being
                  released are being pledged to a lender who is providing
                  financing to enable Borrower to make the payments required by
                  this Section 2.9, (3) Bank 's internal credit committee is
                  satisfied in its sole and absolute discretion with the terms
                  of such new transaction and it' s impact on the Borrower's
                  credit position with the Bank, and (4) Borrower agrees to
                  execute and deliver to Bank any amendments, documents or
                  certificates deemed necessary by Bank as a result of such
                  transaction.

                           (b) On or before December 1, 2003 Borrower shall
                  satisfy all outstanding Obligations to Lender under the Line
                  of Credit. On the earlier to occur of a prepayment of all
                  Obligations hereunder or December 1, 2003, the Lender's
                  obligations to make Advances under the Line of Credit shall be
                  terminated, the Maximum Line of Credit Amount shall be reduced
                  to zero ($0), and all of Borrower's Obligations under the Loan
                  Agreement shall be immediately due and payable. Borrower
                  acknowledges that Borrower's obligations under this section


                                       2


                  are not dependent on the availability of any particular form
                  of credit or any other condition.

                  (b) INVENTORY LIMITATION. Section 2.1(b)(ii)(1) of the Loan
Agreement shall be amended by deleting "Six Hundred Thousand ($600,000)" and
inserting "Five Hundred Thousand ($500,000)" as a replacement.

                  (c) FINANCIAL COVENANTS. Sub-sections 5.14 (a) and (b) of the
Loan Agreement shall be amended and restated as follows:

                                                     "(a) Debt to Tangible Net
                                    Worth. As of the end of each quarter, the
                                    Borrower shall have a debt to Tangible Net
                                    Worth ratio of not more than 3:1. For the
                                    quarters ending June 30, 2003 and September
                                    30, 2003, the Borrower shall have a debt to
                                    Tangible Net Worth ratio of not more than
                                    3.25:1.00. Such ratio shall be tested
                                    quarterly based on the Borrower's financial
                                    statements.

                                                     (b) Tangible Net Worth.
                                    Borrower shall at all times maintain a
                                    Tangible Net Worth of not less than
                                    $3,250,000. For the quarters ending June 30,
                                    2003 and September 30, 2003, Borrower shall
                                    at all times maintain a Tangible Net Worth
                                    of not less than $2,850,000"

                           (d) OTHER CONFORMING CHANGES: The Loan Agreement is
amended as follows:

                                    (i) Definition of Line of Credit Note. The
                  definition of Line of Credit Note shall be amended and
                  restated to read as follows:

                           "Line of Credit Note" shall mean that certain Fifth
                           Renewal Promissory Note, dated August 15, 2003, of
                           Borrower to Lender in the aggregate principal amount
                           of One Million Nine Hundred Thousand Dollars
                           ($1,900,000) which Fifth Renewal Promissory Note
                           amended, renewed and updated that certain Fourth
                           Renewal Promissory Note, dated January 17, 2003
                           executed by Borrower, in favor of Lender.

                                    (ii) Definition of Line of Credit Maturity
                  Date. The definition of Line of Credit Maturity Date shall be
                  amended and restated to read as follows:

                           "Line of Credit Maturity Date" shall mean September
                           30, 2003, or such earlier date as payment of the Line
                           of Credit shall be due and payable in full, whether
                           by mandatory prepayment, acceleration or otherwise;



                                       3


                           provided, that such date shall be extended to
                           December 1, 2003 if Borrower makes the minimum
                           principal payment described in Section 2.9(a) of this
                           Agreement and an Event of Default shall not have
                           otherwise occurred and be continuing.

                                    (iii) Definition of Loan Documents. The
                  definition of the term "Loan Documents" in the Loan Agreement
                  shall include this Fifth Amendment, the Fourth Amendment, the
                  Letter Agreement, the Third Amendment, the Second Amendment,
                  the First Amendment, the Line of Credit Note, The Fifth
                  Renewal Note, the Security Agreement, the Commitment Letter
                  and all other documents executed and delivered by the parties
                  which evidence, secure or otherwise relate to the transaction
                  contemplated by this Fifth Amendment.

                                    (iv) Definition of Maximum Line of Credit
                  Amount. The definition of Maximum Line of Credit Amount shall
                  be amended and restated to read as follows:

                            "Maximum Line of Credit Amount" shall mean One
                           Million Nine Hundred Thousand Dollars ($1,900,000),
                           subject to reduction as described in Section 2.9 of
                           this Agreement".

                                    (v) Addition to Events of Default. Add the
                  following to Section 6.1 of the Loan Agreement:

                           "(m) Borrower's failure to make the prepayments
                           required under Section 2.9 of the Loan Agreement

         SECTION 3. NO EVENT OF DEFAULT. Borrower hereby certifies to Bank that
(a) it has kept, observed, performed and fulfilled each and every covenant,
provision and condition of the Loan Agreement and the other Loan Documents on
its part to be performed, (b) that all representations and warranties of the
Borrower made in the Loan Agreement are true and correct as of the date hereof
except for those representations and warranties which are made as of a
particular date, which such representations and warranties are true and correct
as of such date, (c) that no Event of Default or event which, with the passage
of time or the giving of notice or both, would constitute an Event of Default
has occurred and is continuing under the Loan Agreement, both before and after
giving effect to the amendment contemplated hereby, except any Event of Default
that has previously occurred and which has been specifically waived in writing
by the Bank, and (d) as of the date of this Fifth Amendment, Borrower has no
defenses or counterclaims with respect to Bank's rights to collect all amounts
due to it under the Loan Documents.

         SECTION 4. LOAN AGREEMENT CONFIRMED. The Loan Agreement, as amended
hereby, is reaffirmed and restated herein by Borrower and Bank, and said Loan
Agreement is hereby incorporated herein by reference as fully as if set forth in
its entirety in this Fifth Amendment.




                                       4


         SECTION 5. CONDITIONS PRECEDENT TO BANK'S OBLIGATIONS. Banks
obligations under this Fifth Amendment shall be subject to the satisfaction of
each of the following conditions precedent:

                  (a) Borrower shall have executed and deliver this Fifth
Amendment, the Fifth Renewal Note and all other documents requested by Bank and
all Loan Documents shall be in full force and effect.

                  (b) Bank shall have received (i) a certificate of the
secretary of Borrower certifying that attached thereto are true and correct
copies of (A) the bylaws of Borrower, as amended through the date of such
certification and (B) resolutions duly adopted by Borrower' s board of directors
authorizing the execution, delivery and performance of the Loan Documents to
which Borrower is a party, which resolutions have not been altered or amended in
any respect and remain in full force and effect, (ii) the names of each of the
officers of Borrower authorized to execute and deliver the Loan Documents; (iii)
a certificate of the applicable State authority, dated as of a recent date, as
to the good standing of Borrower; and (iv) a certificate of the Florida
Department of State, dated as of a recent date, certifying that attached are
true and correct copies of the articles of incorporation of the Borrower filed
with such agency.

                  (c) Borrower shall cause to be delivered to Bank such other
documents, certificates or affidavits as may be reasonably requested by Bank in
connection with consummating the transaction evidenced by this Fifth Amendment.

                  (d) An opinion of counsel from counsel to Borrower in a form
reasonably satisfactory to Lender.

                  (e) Borrower shall pay to lender an extension fee in the
amount of Fifteen Thousand Dollars ($15,000) on the date of this Fifth
Agreement.

         SECTION 6.  MISCELLANEOUS.

                  (a) INVALIDITY. In the event that any one or more of the
provisions contained in this Fifth Amendment shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Fifth Amendment.

                  (b) COUNTERPARTS. This Fifth Amendment may be executed in
several counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

                  (c) REFERENCE. From and after the effective date hereof, all
references to the Loan Agreement shall be deemed to be references to the Loan
Agreement as amended by this Fifth Amendment.



                                       5


                  (d) GOVERNING LAW. THIS Fifth AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF FLORIDA
WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAW PRINCIPLES.

                  (e) GOVERNING DOCUMENT. In the event of a conflict between the
terms and conditions of this Fifth Amendment and the Commitment Letter, the
terms and conditions of this Fifth Amendment shall control in all respects.

                            SIGNATURE PAGE TO FOLLOW









IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to Loan
Agreement to be duly executed and delivered by their respective representatives
thereunto duly authorized as of the date first above written.

                                       Borrower:


                                       AESP, INC.


                                       By: /s/ Roman Briskin
                                           -------------------------------------
                                       Name: Roman Briskin
                                       Its:  Vice President


                                       Bank:


                                       COMMERCEBANK, N.A.


                                       By: /s/ Alan L. Hills
                                           -------------------------------------
                                       Name: Alan L. Hills
                                       Its:  Vice President

EX-10.25

Exhibit 10.25

EX-10.25 Renewal Promissory Note dated as of August 15, 2003

                             RENEWAL PROMISSORY NOTE

$1,900,000.00
                              Executed on board the vessel "Palm Breeze Express"
                                                    outside the State of Florida
                                                           as of August 15, 2003

         FOR VALUE RECEIVED, the undersigned, AESP, INC., a Florida corporation,
(the "Maker"), promises to pay to the order of COMMERCEBANK, N.A. and assigns
(collectively "Lender"), the principal sum of the lesser of (i) One Million Nine
Hundred Thousand and 00/100 DOLLARS ($1,900,000) on the terms set forth herein,
or (ii) the amount actually advanced to the Maker and outstanding in accordance
with the terms of the Line of Credit described in that certain loan agreement
(the "Loan Agreement"), dated September 23, 1999 between Maker and the Lender,
as it may be amended, supplemented, modified or restated from time to time, plus
interest on the unpaid principal balance on the terms set forth herein.

         All defined terms used herein shall have the meanings assigned in the
Loan Agreement except to the extent such terms are defined or limited herein.

         This renewal promissory note (this "Note") renews the outstanding
principal amount of that certain renewal promissory note (the "Fourth Renewal
Note") in the original principal amount of $1,900,000, from Borrower to Lender,
dated January 17, 2003, and is not intended to be a novation of the obligations
evidenced by the Fourth Renewal Note.

         Principal and interest shall be payable, as follows:

         From the date of this Note through September 30, 2003, interest shall
be due on the outstanding principal amount of this Note at a floating rate equal
to the Wall Street Journal Prime Rate (hereinafter defined) plus four percent
(4%) (the "Initial Note Rate"). Beginning on October 1, 2003 and continuing
until December 1, 2003 (the "Maturity Date"), interest shall be due on the
outstanding principal amount of this Note at a floating rate equal to the Wall
Street Journal Prime Rate (hereinafter defined) plus six percent (6%) (the
"Final Note Rate"). The Initial Note Rate and the Final Note Rate shall
hereinafter be collectively referred to as the "Note Rate". The Note Rate shall
be a floating rate and shall initially be set as of the date of this promissory
note and shall be adjusted daily based on changes to the Wall Street Journal
Prime Rate as of such date. All changes in the Note Rate shall be effective as
of the date of change in the Wall Street Journal Prime Rate. Interest shall be
payable on the twentieth (20th) day of each consecutive calendar month prior to
the Maturity Date (hereinafter defined), commencing August 20, 2003. All
remaining unpaid principal and interest due thereon and all other amounts owing
under this Note and the Loan Documents (hereinafter defined), shall be due and
payable in full in no event later than the Maturity Date. "Wall Street Journal
Prime Rate" shall mean the prime rate as reported in the money rate column of
the "Wall Street Journal" on the date of determination. Interest shall be
computed on the basis of a 360 day year for the actual number of days in the
applicable period.






         Prepayments shall be made and shall be applied as described in the Loan
Agreement. Maker may prepay the principal amount outstanding hereunder without
penalty.

         All installments of principal and/or interest are payable at the
offices of CommerceBank, 220 Alhambra Circle, Coral Gables, FL 33134, or at such
other place as Lender hereof may, from time to time, designate in writing, in
lawful money of the United States of America, which shall be in legal tender for
public and private debts at the time of payment.

         Maker may prepay this Note at any time without penalty.

         If default is made in the payment of any part of the principal of or
interest due under the terms of this Note or upon an Event of Default under the
Loan Agreement (and such default is not cured after notice thereof, if required
under the applicable loan document, and the expiration of any applicable grace
period), then this Note shall be in default and the entire principal sum and
accrued interest shall become due and payable at once without notice and demand
at the option of Lender. While in default, the principal of this Note shall bear
interest at a rate equal to the maximum rate permitted under applicable law (the
"Default Rate").

         In addition to the above, Lender may collect a late charge not to
exceed an amount equal to five percent (5%) of any installment which is not paid
within twenty (20) days of the due date thereof to cover the extra expense
involved in handling delinquent payments, provided that: (i) collection of said
late charge shall not be deemed a waiver by Lender of any of its other rights
under this Note and the Loan Agreement, the Security Agreement or any other
instrument given to secure this indebtedness, and (ii) such late charge shall
not apply to any payment of principal under Section 2.9 of the Loan Agreement.

         It is agreed that each maker and endorser, jointly and severally, shall
pay all reasonable costs of collection, including reasonable attorneys' fees, on
failure to pay any principal or interest when due on this Note. Such costs and
attorneys' fees shall include, but not be limited to, reasonable attorneys' fees
and paralegal fees incurred by Lender hereof in any and all judicial
proceedings, including appellate proceedings, arising out of enforcement and/or
collateral securing this indebtedness, whether such proceedings arise before or
after entry of final judgment.

         In case any provision (or any part of any provision) contained in this
Note shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or enforceability shall not affect any
other provision (or remaining part of the affected provision) of this Note, but
this Note shall be construed as if such invalid, illegal or unenforceable
provision (or part thereof) had never been contained herein, but only to the
extent it is invalid, illegal or unenforceable.

         Notwithstanding any provision of this Note and/or any instrument
securing payment of this Note to the contrary, it is the intent of the
undersigned Maker and Lender that Lender hereof shall never be entitled to
receive, collect or apply as interest on principal of the indebtedness any
amount in excess of the maximum rate of interest permitted to be charged by
applicable law; and



                                       2


in the event Lender ever receives, collects, or applies as interest any such
excess, such amount which should be excessive interest shall be deemed a partial
prepayment of principal and treated hereunder as such; and, if the principal of
the indebtedness secured hereby is paid in full, any remaining excess funds
shall forthwith be paid to Maker. In determining whether or not the interest
paid or payable under any specific contingency exceeds the highest lawful rate,
Maker and Lender shall, to the maximum extent permitted under applicable law (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of the indebtedness so that the
interest rate is uniform throughout the entire term of the indebtedness;
provided that if the indebtedness is paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the maximum lawful rate, Lender shall
refund to Maker the amount of such excess or credit the amount of such excess
against the principal portion of the indebtedness, and in such event, Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging, or receiving interest in excess of the maximum lawful rate. In no
contingency or event whatsoever shall the amount paid or agreed to be paid to
Lender for the use, forbearance or detention of the indebtedness collateralized
hereby exceed the maximum amount permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof or any provision
of any instrument securing the primary obligation at the time performance of
such provision shall be due shall involve transcending the limit of validity
prescribed by applicable law, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity. This provision shall control
every other provision of this Note.

         Maker, and each surety, endorser, guarantor and other party liable for
the payment of any sums of money payable on this Note, severally waive the right
of exemption under the Constitution and Laws of Florida, presentment and demand
for payment, protest and notice of protest and nonpayment, notice of dishonor,
notice of demand or intent to demand, notice of maturity and all requirements
necessary to hold each of them liable as maker, surety, endorser, guarantor and
any other party liable for the payment of sums of money hereunder, and agree
that their liability on this Note shall not be affected by any renewal or
extension in the time of payment thereof or by any release or change in any
security for the payment of this Note, regardless of the number of such
renewals, extensions, releases or changes.

         Maker and Lender mutually understand, covenant and agree that the
provisions of this Note (i) shall be binding upon Maker and its successors and
assigns (except as herein otherwise set forth) and shall inure to the benefit of
Lender and its assigns including any subsequent holder of this Note and (ii)
shall be construed, governed and enforced in all respects by the laws of the
State of Florida, including the Usury Laws of said state.

         Time shall be of the essence of each and every covenant and promise
contained in this Note and every other instrument securing the repayment of this
Note.

         This Note is secured by that certain collateral described in that
certain Security Agreement (the "Security Agreement") dated September 23, 1999
between Maker and Lender and is to be construed according to the Laws of
Florida. Any default occurring under the Loan



                                       3


Agreement (which default is not cured after notice thereof, if required under
the applicable Loan Document, and the expiration of any applicable grace period)
shall constitute a default under this Note, and Lender, at its option, may
declare this Note due and payable in full and may exercise its remedies under
the Security Agreement.

         Maker hereby submits to the jurisdiction of the courts of the State of
Florida in the event any litigation arising from or related to this Note is
commenced. Maker agrees that the Lender may institute any cause of action
against Maker involving this Note in the courts of Miami-Dade County, Florida,
and hereby waives any venue privilege or right to be sued in any other forum.

         THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION, PROCEEDINGS,
OR COUNTERCLAIMS ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS OR ANY OF THE
LOAN DOCUMENTS. FURTHER, THE MAKER HEREBY CERTIFIES THAT NO REPRESENTATIVES OR
AGENTS OF THE LENDER NOR THE MAKER'S OR THE LENDER'S COUNSEL HAS REPRESENTED,
EXPRESSED OR OTHERWISE, THAT THE LENDER WOULD NOT IN THE EVENT OF SUCH
LITIGATION SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. MAKER
ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS TRANSACTION BY,
INTER ALIA, THE PROVISIONS OF THIS SECTION. THE MAKERS AGREE NOT TO SEEK TO
CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION BY WHICH A JURY TRIAL CANNOT BE WAIVED.

         IN WITNESS WHEREOF, the undersigned have executed and delivered this
Note the day and year first hereinabove provided.

                                       AESP, INC.



                                       By: /s/ Roman Briskin
                                           -------------------------------------
                                       Name: Roman Briskin
                                       Title: Vice President

EX-10.26

                                                                   Exhibit 10.26



Exhibit 10.26 Side Letter Agreement dated August 15, 2003



                                   AESP, INC.
                             1810 N.E. 144th Street
                           North Miami, Florida 33181

                                 August 15, 2003

VIA HAND DELIVERY
- -----------------

CommerceBank, N.A.
220 Alhambra Circle
Coral Gables, FL  33146
Attention:  Alan L. Hills, Vice President

         Re:      Fifth Amendment to Loan Agreement

Dear Alan:

This letter will confirm the mutual agreement and understanding of AESP, Inc.
("AESP") and CommerceBank, N.A. ("CommerceBank") regarding the Fifth Amendment
to Loan Agreement, dated as of the 15th day of August, 2003 ("Loan Agreement")
and entered into between AESP and CommerceBank and that certain $1,900,000
Renewal Promissory Note, dated as of August 15, 2003 ("Note") that AESP has
delivered to CommerceBank. It is agreed by the parties that, even though the
Loan Agreement and the Note, and all related documents delivered by the parties
in connection with such Loan Agreement and Note, are dated "as of August 15,
2003" or "August 15, 2003," it is the intention of the parties that the Fifth
Amendment and the Note, and all related documents, shall be effective as of July
22, 2003.

Please confirm your understanding as to the agreements and understandings set
forth herein by signing where indicated in the space below.

                                       Very truly yours,

                                       AESP, INC.

                                       By: /s/ Roman Briskin
                                           -------------------------------------
                                           Roman Briskin, Vice President


AGREED AND ACKNOWLEDGED this 15th day of August, 2003

COMMERCEBANK, N.A.

By: /s/ Alan L. Hills
   -------------------------------
     Alan L. Hills, Vice President

EX-99.1

                                                                    Exhibit 99.1


EX-99.1  Press Release dated August 13, 2003

MIAMI, Aug. 13 /PRNewswire-FirstCall/ -- AESP, Inc (Nasdaq: AESP - News) today
announced its results of operations for the three and six months ended June 30,
2003. Sales for the 2003 second quarter were $7.4 million, compared with sales
of $6.8 million for the quarter ended June 30, 2002. For the six months ended
June 30, 2003, sales were $15.5 million, compared with sales of $14.3 million
for the six months ended June 30, 2002.

The net loss for the second quarter of 2003 was $499,000, compared to a net loss
of $712,000 for the second quarter of 2002. For the six months ended June 30,
2003, the net loss was $580,000, compared to a net loss of $707,000 for the six
months ended June 30, 2002. The Company's loss per common share and diluted loss
per common share were both $(0.08) for the second quarter of 2003. For the
second quarter of 2002, the Company posted a loss per common share and diluted
loss per common share of $(0.15). The Company's loss per common share and
diluted loss per common share were both $(0.10) for the six months ended June
30, 2003. For the six months ended June 30, 2002, the Company recorded a loss
per common share and diluted loss per common share of $(0.16).

Slav Stein, the Company's President and CEO, stated: "In spite of the difficult
business environment, where our primary worldwide markets of telecommunications
and datacom continue to struggle, we were able to increase our sales in 2003,
primarily in the U.S. Looking forward, we remained focused on improving our
results, both through sales growth and expense reductions. Toward that end, in
2003, we have introduced several product line extensions for our Signamax
networking line, consistent with our goal of becoming a single source provider
of network connectivity products. On the expense side, we have expanded our cost
reduction efforts in the U.S. to include across-the- board salary reductions and
other cuts that we believe will reduce our U.S. overhead by more than $500,000
per annum, beginning in the third quarter of 2003."

AESP, Inc. designs, manufactures, markets and distributes network connectivity
products under the brand name Signamax Connectivity Systems as well as
customized solutions for original equipment manufacturers worldwide. The Company
offers a complete line of active networking and premise cabling products for
copper and fiber optic based networks, as well as computer connectivity
products.

Safe Harbor Disclosure under the 1995 Securities Litigation Reform Act

This news release contains forward-looking statements, which involve risks and
uncertainties. The Company's actual future results could differ materially from
the results anticipated herein. For information regarding factors that could
impact the Company's future performance, see the Company's future filings with
the U.S. Securities and Exchange Commission, including its Annual Report on Form
10-K for 2002 and its Quarterly Report on Form 10-Q for the second quarter of
2003.

Signamax is a trademark of AESP, Inc. For product information, please link to
www.signamax.com.