exv10w19w8



 






Exhibit 10.19.8




FIFTH AMENDMENT

TO

LOAN DOCUMENTS




     This Fifth Amendment to Loan Documents is entered into as of March 11,
2005 (the “Amendment”), by and among COMERICA BANK (“Bank”), ALLIANCE
CONSULTING GROUP ASSOCIATES, INC. (“Consulting”) and ALLIANCE HOLDINGS, INC.,
(“Holdings”; Consulting and Holdings are referred to herein individually as a
“Borrower” and collectively, the “Borrowers”).



RECITALS




     Borrowers and Bank are parties to that certain Loan and Security Agreement
dated as of September 25, 2003, as amended, including without limitation by
that certain First Amendment to Loan and Security Agreement dated as of
December 12, 2003, that certain Second Amendment to Loan and Security Agreement
dated as of May 27, 2004, that certain Third Amendment to Loan Documents dated
as of August 9, 2004, and that certain Fourth Amendment to Loan Documents dated
as of September 30, 2004 (collectively, the “Agreement”) and that certain LIBOR
Addendum to Loan and Security Agreement dated as of September 25, 2003 (the
“LIBOR Addendum”). The parties desire to amend the Agreement in accordance
with the terms of this Amendment.



     NOW, THEREFORE, the parties agree as follows:



     1. The following defined terms in Section 1.1 of the Agreement are hereby
added or amended to read as follows:



               “Borrowing
Base” means an amount equal to $15,000,000 plus
eighty percent (80%) of Eligible Accounts, as determined by Bank
with reference to the most recent Borrowing Base Certificate
delivered by Borrowers.



               “Eligible Accounts” means those net billed trade Accounts
that arise in the ordinary course of a Borrower’s business that
comply with all of such Borrower’s representations and warranties
to Bank set forth in Section 5.4 (it being recognized that
pre-billed Accounts do not comply with such representations);
provided, that standards of eligibility may be fixed and revised
from time to time by Bank in Bank’s reasonable judgment and upon
notification thereof to Borrowers in accordance with the
provisions hereof. Unless otherwise agreed to by Bank, Eligible
Accounts shall not include the following:



               (a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;



               (b) Accounts with respect to an account debtor, twenty-five
percent (25%) of whose Accounts the account debtor has failed to
pay within ninety (90) days of invoice date;



               (c) Accounts with respect to which the account debtor is an
officer, employee, or agent of a Borrower;



               (d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval,
bill and hold, or other terms by reason of which the payment by
the account debtor may be conditional;



               (e) Accounts with respect to which the account debtor is an
Affiliate of a Borrower;



1









 





               (f) Accounts with respect to which the account debtor does
not have its principal place of business in the United States,
except for Eligible Foreign Accounts;



               (g) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the
United States, except for Accounts of the United States if the
payee has assigned its payment rights to Bank and the assignment
has been acknowledged under the Assignment of Claims Act of 1940
(31 U.S.C. 3727);



               (h) Accounts with respect to which a Borrower is liable to
the account debtor for goods sold or services rendered by the
account debtor to such Borrower or for deposits or other property
of the account debtor held by such Borrower, but only to the
extent of any amounts owing to the account debtor against amounts
owed to such Borrower, provided that, unless otherwise agreed to
by Bank in writing, instead of deducting unapplied cash and
customer deposits from Eligible Accounts, a reserve of $943,000
for unapplied cash and $1,199,000 for customer deposits shall
permanently be deducted from Eligible Accounts (which reserve may
be changed by Bank based on the results of a Collateral audit);



               (i) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrowers
exceed twenty-five percent (25%) of all Accounts, to the extent
such obligations exceed the aforementioned percentage, except as
approved in writing by Bank;



               (j) Accounts with respect to which the account debtor
disputes liability or makes any claim with respect thereto as to
which Bank believes, in its sole discretion, that there may be a
basis for dispute (but only to the extent of the amount subject to
such dispute or claim), or is subject to any Insolvency
Proceeding, or becomes insolvent, or goes out of business;



               (k) Credit balances over ninety (90) days from invoice date;
and



               (l) Accounts the collection of which Bank reasonably
determines to be doubtful.



               “Eligible Foreign Accounts” means Accounts with respect to
which the account debtor does not have its principal place of
business in the United States and that (i) are supported by one or
more letters of credit or credit insurance in an amount and of a
tenor, and issued by a financial institution, acceptable to Bank,
or (ii) that Bank approves on a case-by-case basis.



     2. Section 2.3(a) of the Agreement is hereby amended in its entirety to
read as follows:



                    (i) Advances. Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding Daily Balance
thereof, at a rate equal to the Prime Rate.



     3. A new Section 2.8 is hereby added to the Agreement to read as follows:



          2.8. Lockbox.



               (a) Effective as of April 11, 2005 and at all times
thereafter, Borrowers shall maintain an account at Bank (the “Lock
Box Account”) into which all funds received by a Borrower from any
source shall immediately be deposited. Borrowers shall direct all
customers to mail or deliver all checks or other forms of payment
for amounts owing to a Borrower to a post office box designated by
Bank, over which Bank shall have exclusive and unrestricted
access. Bank shall collect the mail delivered to such post office
box, open such mail, and endorse and credit all items to the Lock
Box Account. Borrowers shall direct all customers or other
persons owing money to a Borrower who make payments by electronic
transfer of funds to wire such



2









 





funds directly to the Lock Box Account. Borrowers shall hold
in trust for Bank all amounts that a Borrower receives despite the
directions to make payments to the post office box or Lock Box
Account, and immediately deliver such payments to Bank in their
original form as received from the customer, with proper
endorsements for deposit into the Lock Box Account. Each Borrower
irrevocably authorizes Bank to transfer to the Lock Box Account
any funds that have been deposited into any other accounts or that
Bank has received by wire transfer, check, cash, or otherwise. No
Borrower shall establish or maintain any accounts with any Person
other than Bank except for accounts opened in the ordinary course
of business from which all funds are transferred on a daily basis
to the Lock Box Account. Bank shall have all right, title and
interest in all of the items from time to time in the Lock Box
Account and their proceeds. Neither Borrowers nor any person
claiming through a Borrower shall have any right or control over
the use of, or any right to withdraw any amount from, the Lock Box
Account, which shall be under the sole control of Bank.



               (b) Bank may apply amounts held in the Lock Box Account to
the outstanding balance of the Obligations on a daily basis.
Borrowers shall open an operating account or operating accounts at
Bank (collectively, the “Operating Account”), and any remaining
balance in the Lock Box Account shall be transferred by Bank to
the Operating Account. Bank may from time to time in its
discretion make Advances to Borrowers to cover checks or other
items or charges which a Borrower has drawn or made against such
Operating Account or to cause payment of principal, interest,
fees, or other charges due and payable by Borrowers under the Loan
Documents. Each Borrower hereby irrevocably requests and
authorizes Bank to make such Advances from time to time by means
of appropriate entries of credits to the Operating Account
sufficient to cover any such checks, items, and other charges then
presented. Borrowers acknowledge and agree that the making of
such Advances pursuant to this Section shall, in each case, be
subject in all respects to the provisions of this Agreement,
including without limitation the applicable conditions precedent
to each Advance contained in this Agreement as if each of such
Advances were covered by a Payment/ Advance Form signed or
otherwise approved by Borrowers. Borrowers absolutely and
unconditionally understand and agree that each Advance so made
pursuant to this Section by entry of credits to the Operating
Account or otherwise shall, for all purposes of this Agreement and
the other Loan Documents, be treated as and deemed to be an
Advance made directly to a Borrower.



               (c) Notwithstanding anything to the contrary contained in
this Agreement, “Revolving Line” shall mean a credit extension of
up to $15,000,000 until such time as Borrower has set up a Lockbox
in accordance with this Section.



     4. The second paragraph of Section 6.3 of the Agreement is hereby amended
in its entirety to read as follows:



               Within twenty (20) days after the last day of each month and
with each request for a Credit Extension which brings the
aggregate outstanding balance of all Credit Extensions to an
amount in excess of $15,000,000, Borrowers shall deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit C hereto, together with aged
listings of accounts receivable and accounts payable, provided
that such reporting shall be delivered on a weekly basis at any
time that the aggregate balance of all outstanding Credit
Extensions is in excess of $15,000,000.



     5. Section 6.8 of the Agreement is hereby amended in its entirety to read
as follows:



          6.8 Current Ratio. Borrowers shall maintain at all times a
ratio of Current Assets to Current Liabilities plus, to the extent
not already included therein, all Indebtedness (including without
limitation any Contingent Obligations) owing from Borrowers to
Bank, less deferred revenue, of at least 1.00 to 1.00.



     6. New Sections 6.11, 6.12, 6.13, and 6.14 are hereby added to the
Agreement to read as follows:



3









 







          6.11 Consultant Utilization. Borrowers’ Consultant
Utilization (salaried and hourly) shall be equal to or greater
than 85% at all times. As used herein, “Consultant Utilization”
means (a) all hours billed by Borrower to a client for consulting
work divided by (b) all hours billed to Borrower by an hourly
consultant or worked by Borrower’s salaried employees which
perform consulting services.



          6.12 EBITDA. Beginning May 31, 2005 and as of the last day
of each month thereafter, Borrowers’ monthly EBITDA shall be at
least $50,000 for one of the two months immediately preceding each
date of measurement.



          6.13 Net Profit. Borrowers’ net profit for the month ending
October 31, 2005 shall be at least One Dollar ($1.00). Borrowers’
net profit for the two months ending November 30, 2005 shall be at
least One Dollar ($1.00). As of the month ending December 31,
2005, and as of the last day of each month thereafter, Borrowers’
net profit for the three months immediately preceding each date of
measurement shall be at least One Dollar ($1.00).



          6.14 Net Loss. As of March 31, 2005 and as of the last day
of each month thereafter, Borrowers’ trailing three month net loss
plus taxes shall not be greater than ($750,000).



          Borrowers shall only be required to comply with Sections 6.8,
6.11, 6.12, 6.13 and 6.14 (the “Financial Covenants”) when the
aggregate balance of the outstanding Credit Extensions is in
excess of $15,000,000. It shall be a condition precedent to
Borrowers’ request of any Credit Extension which would bring the
aggregate balance of the outstanding Credit Extensions in excess
of $15,000,000 that Borrowers be in compliance with the Financial
Covenants on the date of such request and on a pro forma basis for
the month ended immediately prior to such request. Borrowers
shall have the ability to cure any failure to comply with a
Financial Covenant by immediately repaying such Credit Extensions
as are necessary to bring the aggregate balance of the outstanding
Credit Extensions to an amount which is $15,000,000 or less,
provided that, notwithstanding anything to the contrary in this
Agreement, unless otherwise agreed to by Bank in writing,
thereafter, “Revolving Line” shall mean a credit extension of up
to Fifteen Million Dollars ($15,000,000).



          The calculation of all Financial Covenants shall exclude the
impact of noncash stock compensation expenses.



     7. Exhibit C to the Agreement is hereby amended and replaced in its
entirety by Exhibit C attached hereto.



     8. Exhibit D to the Agreement is hereby amended and replaced in its
entirety by Exhibit D attached hereto.



     9. Unless otherwise defined, all initially capitalized terms in this
Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remains in full force and effect in accordance with its
terms and hereby is ratified and confirmed in all respects. Except as
expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of
all promissory notes, guaranties, security agreements, mortgages, deeds of
trust, environmental agreements, and all other instruments, documents and
agreements entered into in connection with the Agreement.



     10. Except as set forth in the Schedule of Exceptions originally provided
by Borrowers to Bank in connection with the Agreement and the updated Schedule
of Exceptions provided by Borrowers to Bank in connection with this Amendment,
each Borrower represents and warrants that the representations and warranties
contained in the Agreement are true and correct as of the date of this
Amendment, and that no Event of Default has occurred and is continuing.



4









 







     11. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.



     12. As a condition to the effectiveness of this Amendment, Bank shall have
received, in form and substance satisfactory to Bank, the following:



               (a) this Amendment, duly executed by Borrowers;



               (b) Affirmation of Subordination;



               (c) two Amendment and Affirmation of Guaranties;



               (d) an amount equal to all Bank Expenses incurred through the date of this
Amendment; and



               (e) such other documents, and completion of such other matters, as Bank
may reasonably deem necessary or appropriate.



5









 





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



	 	 	 
	ALLIANCE HOLDINGS, INC.
	 
	 	 
	 
	 	 
	By:

	 	/s/ James Dandy
	

	 	 
	 
	 	 
	Title:

	 	Authorized Signer
	

	 	 
	 
	 	 
	ALLIANCE CONSULTING
GROUP
ASSOCIATES, INC.
	 
	 	 
	 
	 	 
	By:

	 	/s/ James Dandy
	

	 	 
	 
	 	 
	Title:

	 	Vice President, Finance
	

	 	 
	 
	 	 
	COMERICA BANK
	 
	 	 
	 
	 	 
	By:

	 	/s/ Elizabeth Kinsey
	

	 	 
	 
	 	 
	Title:

	 	SVP
	

	 	 







6









 






EXHIBIT C




BORROWING BASE CERTIFICATE





 




Borrower: ALLIANCE CONSULTING GROUP ASSOCIATES, INC. & ALLIANCE HOLDINGS, INC. Lender: Comerica Bank



Commitment Amount: $20,000,000




 




	 	 	 	 	 	 	 	 	 
	ACCOUNTS RECEIVABLE	 	 	 	 
	

	 	1.
	 	Accounts Receivable Book Value as of      
	 	 	 	$                    
	

	 	2.
	 	Additions (please explain on reverse)
	 	 	 	$                    
	

	 	3.
	 	TOTAL ACCOUNTS RECEIVABLE
	 	 	 	$                    
	 
	 	 	 	 	 	 	 	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	 	 	 	 
	

	 	4.
	 	Amounts over 90 days due
	 	$                    	 	 
	

	 	5.
	 	Balance of 25% over 90 day accounts
	 	$                    	 	 
	

	 	6.
	 	Concentration Limits	 	$                    	 	 
	

	 	7.
	 	Foreign Accounts
	 	$                    	 	 
	

	 	8.
	 	Governmental Accounts
	 	($2,142,000)	 	 
	

	 	9.
	 	Reserves for unapplied cash and
customer deposits
	 	$                    	 	 
	

	 	10.
	 	Unbilled Accounts
	 	$                    	 	 
	

	 	11.
	 	Intercompany/Employee Accounts
	 	$                    	 	 
	

	 	12.
	 	Other (please explain on reverse)
	 	$                    	 	 
	

	 	13.
	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	 	 	$                    
	

	 	14.
	 	Eligible Accounts (#3 minus #13)
	 	 	 	$                    
	

	 	15.
	 	LOAN VALUE OF ACCOUNTS (80% of #14)
	 	 	 	$                    
	 
	 	 	 	 	 	 	 	 
	BALANCES	 	 	 	 
	

	 	16.
	 	Maximum Loan Amount
	 	 	 	$20,000,000  
	

	 	17.
	 	Total Funds Available [Lesser
of #16 or #15 plus $15,000,000]
	 	 	 	$                    
	

	 	18.
	 	Present balance owing on Line of Credit
	 	 	 	$                    
	

	 	19.
	 	Outstanding under Sublimits	 	 	 	$                    
	

	 	20.
	 	RESERVE POSITION (#17 minus #18 and #19)
	 	 	 	$                    





The undersigned each represents and warrants that the foregoing is true,
complete and correct, and that the information reflected in this Borrowing Base
Certificate complies with the representations and warranties set forth in the
Loan and Security Agreement between the undersigned and Comerica Bank.




	 	 	 	 	 	 	 
	ALLIANCE CONSULTING GROUP ASSOCIATES, INC.	 	ALLIANCE HOLDINGS, INC.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	

	 	 
	 	 	 	 
	

	 	Authorized Signer
	 	 	 	Authorized Signer






7













 





EXHIBIT D



COMPLIANCE CERTIFICATE




	 	 	 
	TO:

	 	COMERICA BANK
	 
	 	 
	FROM:

	 	ALLIANCE CONSULTING GROUP ASSOCIATES, INC. & ALLIANCE HOLDINGS, INC.






     The undersigned authorized officer of ALLIANCE CONSULTING GROUP
ASSOCIATES, INC. & ALLIANCE HOLDINGS, INC. hereby certifies that in accordance
with the terms and conditions of the Loan and Security Agreement among
Borrowers and Bank (the “Agreement”), (i) each Borrower is in complete
compliance for the period ending
                     with all required covenants
except as noted below and (ii) all representations and warranties of such
Borrower stated in the Agreement are true and correct as of the date hereof.
Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.



Please indicate compliance status by circling Yes/No under “Complies” column.




	 	 	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	 	 	Complies
	 
	 	 	 	 	 	 	 	 
	Monthly financial statements

Annual (CPA Audited)

10K and 10Q

A/R & A/P Agings, Borrowing Base Cert.

A/R Audit

IP Report

Financial Forecast

	 	Monthly within 30 days

FYE within 90 days

(as applicable)

Monthly within 20 days*

Initial and Semi-Annual

Quarterly within 30 days

FYE within 60 days
	 	 	 	Yes

Yes

Yes

Yes

Yes

Yes

Yes
	 	No

No

No

No

No

No

No








* Within twenty (20) days after the last day of each month and with each request for a Credit Extension which brings the aggregate outstanding balance of all Credit Extensions in
excess of $15,000,000, Borrowers shall deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in substantially the form of Exhibit C hereto, together with aged
listings of accounts receivable and accounts payable, provided that such reporting shall be delivered on a weekly basis at any time that the aggregate amount of all outstanding
Credit Extensions exceeds $15,000,000.










	 	 	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	Applicable	 	Complies

	   Minimum Current Ratio**

	 	1.00:1.00 
	 	     :1.00
	 	N/A
	 	Yes
	 	No
	   Minimum
Consultant Utilization**

	 	85%***
	 	     %
	 	N/A
	 	Yes
	 	No
	   EBITDA
for trailing 2 mo. (beg. 5/05)**

	 	$50,000 for 1 of 2
months of
measurement
	 	$     
	 	N/A
	 	Yes
	 	No
	   Minimum
Net Profit

	 	*	 	$     
	 	N/A
	 	Yes
	 	No
	   Maximum
trailing 3 mo. Net Loss (beg. 3/05)**

	 	($750,000)
	 	$     
	 	N/A
	 	Yes
	 	No







*Borrowers’ net profit for the month ending October 31, 2005 shall be at least One Dollar ($1.00). Borrowers’ net profit for the two months ending November 30, 2005 shall be at
least One Dollar ($1.00). As of the month ending December 31, 2005, and as of the last day of each month thereafter, Borrowers’ net profit for the three months immediately preceding
each date of measurement shall be at least One Dollar ($1.00).

**Borrowers shall only be required to comply when the aggregate
balance of the outstanding Credit Extensions is in excess of
$15,000,000.

***Please attach a report showing calculation of consultant utilization percentage.





	 
	Comments Regarding Exceptions:   See Attached.

	 

	 

	 

	Sincerely,

	 

	 

	 

	 
	SIGNATURE

	 

	 

	 
	TITLE

	 

	 

	 
	DATE















BANK USE ONLY




		
	Received by: 	 





AUTHORIZED SIGNER





		
	Date: 	 





		
	Verified: 	 





AUTHORIZED SIGNER





		
	Date: 	 






			
	 	 	 
	Compliance Status
 
	 	Yes                    No
















8