Filed by Bowne Pure Compliance

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, INS4dzZCu52jJHbaYOFKTSv+zBTSQuLcvFru9uBHtobh3gtSUkEPIBHh9d6OtqfI veOMofVUvW6HKgP3/Y+70A== 0001362310-08-001552.txt : 20080321 0001362310-08-001552.hdr.sgml : 20080321 20080320192630 ACCESSION NUMBER: 0001362310-08-001552 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20080321 DATE AS OF CHANGE: 20080320 GROUP MEMBERS: J. BRYAN KING GROUP MEMBERS: J. LUTHER KING, JR. GROUP MEMBERS: LKCM ALTERNATIVE MANAGEMENT, LLC GROUP MEMBERS: LKCM PRIVATE DISCIPLINE MANAGEMENT, L.P. GROUP MEMBERS: LKCM PRIVATE DISCIPLINE MASTER FUND, SPC GROUP MEMBERS: PDLP DISTRIBUTION, LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INDUSTRIAL DISTRIBUTION GROUP INC CENTRAL INDEX KEY: 0001042351 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 582299339 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52071 FILM NUMBER: 08703815 BUSINESS ADDRESS: STREET 1: 950 E PACES FERRY RD STREET 2: STE 1575 CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 7709492100 MAIL ADDRESS: STREET 1: 950 E PACES FERRY RD STREET 2: STE 1575 CITY: ATLANTA STATE: GA ZIP: 30326 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KING LUTHER CAPITAL MANAGEMENT CORP CENTRAL INDEX KEY: 0000310051 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 75163030 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 301 COMMERCE SUITE 1600 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173323235 MAIL ADDRESS: STREET 1: 301 COMMERCE SUITE 1600 CITY: FORT WORTH STATE: TX ZIP: 76102 SC 13D/A 1 c72770sc13dza.htm SCHEDULE 13D/A Filed by Bowne Pure Compliance


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 5)*

Industrial Distribution Group, Inc.

(Name of Issuer)

Common Stock, $0.01 par value

(Title of Class of Securities)

456061100

(CUSIP Number)

Jacob D. Smith
General Counsel
Luther King Capital Management Corporation
301 Commerce Street, Suite 1600
Fort Worth, Texas 76102
(817) 332-3235

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

March 20, 2008

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No.		456061100		Page		2		of		12


1	NAMES OF REPORTING PERSONS PDLP Distribution, LLC


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC/BK

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Texas

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


CUSIP No.		456061100		Page		3		of		12


1	NAMES OF REPORTING PERSONS LKCM Private Discipline Master Fund, SPC


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Cayman Islands

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


CUSIP No.		456061100		Page		4		of		12


1	NAMES OF REPORTING PERSONS LKCM Private Discipline Management, L.P.


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	N/A

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	PN


CUSIP No.		456061100		Page		5		of		12


1	NAMES OF REPORTING PERSONS LKCM Alternative Management, LLC


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	N/A

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


CUSIP No.		456061100		Page		6		of		12


1	NAMES OF REPORTING PERSONS Luther King Capital Management Corporation


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	N/A

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	IA/CO


CUSIP No.		456061100		Page		7		of		12


1	NAMES OF REPORTING PERSONS J. Luther King, Jr.


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	N/A

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	United States

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	IN


CUSIP No.		456061100		Page		8		of		12


1	NAMES OF REPORTING PERSONS J. Bryan King


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	N/A

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	United States

		7	SOLE VOTING POWER

NUMBER OF			1,434,000

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			1,434,000

WITH		10	SHARED DISPOSITIVE POWER

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,434,000

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	14.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	IN

This Amendment No. 5 to Schedule 13D amends and supplements the Schedule 13D, as amended, filed by the Reporting Persons with respect to the common stock, par value $0.01 (“Common Stock”), of Industrial Distribution Group, Inc. (the “Issuer”). Except as set forth below, all previous Items remain unchanged. Capitalized terms used herein but not defined herein shall have the meanings given to them in the Schedule 13D, as amended, filed with the Securities and Exchange Commission. Each of the Reporting Persons hereby expressly disclaims beneficial ownership of the securities reported herein, except to the extent of its pecuniary interest therein, and this Schedule 13D shall not be deemed to be an admission that any such Reporting Person is the beneficial owner of the securities reported herein for purposes of the Securities Exchange Act of 1934 or for any other purpose.

Item 2. Identity and Background

Item 2 is hereby amended and restated in its entirety as follows:

(a) The names of the persons filing this Schedule 13D are PDLP Distribution, LLC, a Texas limited liability company (“PDLP Distribution”), LKCM Private Discipline Master Fund, SPC, a Cayman Islands segregated portfolio company (“Master Fund”), LKCM Private Discipline Management, L.P., a Delaware limited partnership (“PD Management”), LKCM Alternative Management, LLC, a Delaware limited liability company (“PD Alternative”), Luther King Capital Management Corporation, a Delaware corporation (“LKCM”), J. Luther King, Jr. and J. Bryan King. PDLP Distribution, Master Fund, PD Management, PD Alternative, LKCM, J. Luther King, Jr. and J. Bryan King are collectively referred to herein as the “Reporting Persons.”

(b) The principal business address of Master Fund is P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, and the principal business address of the other Reporting Persons is 301 Commerce Street, Suite 1600, Fort Worth, Texas 76102.

(c) PDLP Distribution holds the shares of Common Stock reported herein. Master Fund owns all of the membership interests in PDLP Distribution. PD Management owns all of the management shares of Master Fund. PD Alternative is the general partner of PD Management. J. Luther King, Jr. and J. Bryan King are controlling members of PD Alternative. LKCM is the investment manager for Master Fund, and J. Luther King, Jr. is the controlling shareholder of LKCM. The principal business of PDLP Distribution and Master Fund is purchasing, holding, and selling securities for investment purposes, and the principal business of the other Reporting Persons is investment management.

(d) and (e) During the past five years, none of the Reporting Persons has been convicted in a criminal proceeding or been a party to a civil proceeding, in either case of the type specified in Items 2(d) or (e) of Schedule 13D.

(f) PDLP Distribution is organized under the laws of Texas. Master Fund is organized under the laws of the Cayman Islands. PD Management, PD Alternative, and LKCM are organized under the laws of Delaware. J. Luther King, Jr. and J. Bryan King are citizens of the United States.

Item 3. Source and Amount of Funds or Other Consideration

Item 3 is hereby supplemented as follows:

On March 19, 2008, Master Fund contributed 934,000 shares of Common Stock to PDLP Distribution in exchange for membership interests in PDLP Distribution.

On March 20, 2008, PDLP Distribution acquired 500,000 shares of Common Stock in an open market transaction for a purchase price of $5,050,000. As further described in Item 6, PDLP Distribution borrowed the funds used to purchase such shares of Common Stock from Encore Bank, N.A.

Page 9 of 12

Item 4. Purpose of Transaction

Item 4 is hereby supplemented as follows:

Since the most recent filing of Schedule 13D, the Reporting Persons have continued to review and evaluate their investment in the Issuer as well as the Issuer’s business and prospects. The Reporting Persons have also reviewed the adequacy of the $10.30 per share cash offer made by Platinum Equity Advisors, LLC and its affiliates to acquire the Issuer, particularly in light of the significant margin expansion the Reporting Persons believe the Issuer will realize in future periods from management’s recently implemented information technology infrastructure enhancements, strategic pricing initiatives, ongoing facility rationalization, and other expense management and margin improvement initiatives. Based on the foregoing, the Reporting Persons are considering strategic plans and proposals that, if effected, could result in a competing acquisition proposal for the Issuer or one or more of the matters identified in Item 4(a)-(j) of Schedule 13D. The Reporting Persons anticipate engaging in communications with the Issuer’s Board of Directors, financial advisors, shareholders, and/or other persons with respect to such plans and proposals. The Reporting Persons reserve their right to take such actions in the future as they deem appropriate in light of the circumstances.

Item 5. Interest in Securities of the Issuer

Item 5 is hereby amended and restated in its entirety as follows:

(a) As of March 20, 2008, the Reporting Persons may be deemed to beneficially own 1,434,000 shares of Common Stock (which represents approximately 14.9% of the outstanding Common Stock based upon information contained in the Issuer’s Form 10-K for the year ended December 31, 2007).

(b)


	Sole		Shared		Sole		Shared
	Voting		Voting		Dispositive		Dispositive
	Power		Power		Power		Power
PDLP Distribution, LLC		1,434,000		0		1,434,000		0
LKCM Private Discipline Master Fund, SPC		1,434,000		0		1,434,000		0
LKCM Private Discipline Management, L.P.		1,434,000		0		1,434,000		0
LKCM Alternative Management, LLC		1,434,000		0		1,434,000		0
Luther King Capital Management Corporation		1,434,000		0		1,434,000		0
J. Luther King, Jr.		1,434,000		0		1,434,000		0
J. Bryan King		1,434,000		0		1,434,000		0

(c) Since the most recent filing of Schedule 13D, PDLP Distribution purchased 500,000 shares of Common Stock in an open market transaction at a purchase price of $10.10 per share on March 20, 2008.

(d) Not applicable.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Item 6 is hereby supplemented as follows:

On March 20, 2008, PDLP Distribution purchased 500,000 shares of Common Stock using funds borrowed from Encore Bank, N.A. (“Encore”) pursuant to a Promissory Note, dated March 20, 2008, in the principal amount of $5,650,000 (the “Note”). Under the terms of the Note, interest on the unpaid principal amount thereof will accrue at an annual rate equal to the greater of the prime rate for commercial banks in effective from time to time and 5.25%. The term of the Note is eighteen months, unless otherwise extended by Encore. The foregoing description of the terms and provisions of the Note is qualified in its entirety by reference to the Note attached as Exhibit 2 and incorporated by reference herein.

Page 10 of 12

In connection with the Note, PDLP Distribution and Encore also entered into a Stock Pledge and Security Agreement, dated March 20, 2008 (the “Pledge Agreement”). Pursuant to the Pledge Agreement, PDLP Distribution granted a security interest in all of the shares of Common Stock reported herein to Encore on the terms and conditions set forth therein. The Pledge Agreement provides that as long as PDLP Distribution has any outstanding obligations under the Note, it will not, without the prior written consent of Encore, take certain actions with respect to the shares of Common Stock reported herein, including, without limitation, (i) transferring, selling, pledging, assigning, or encumbering such shares of Common Stock or (ii) voting or taking any consensual action with respect to such shares of Common Stock that would materially and adversely affect Encore’s security interest therein. If an Event of Default (as defined in the Pledge Agreement) occurs and is not cured as provided in the Pledge Agreement, Encore will be entitled to exercise certain rights and remedies with respect to such shares of Common Stock, including, without limitation, (i) voting such shares of Common Stock on any matter Encore deems advisable for or against any matter that may be submitted to a vote of the Issuer’s shareholders and (ii) transferring, selling, or otherwise disposing of such shares of Common Stock in a private or public sale. The foregoing description of the terms and provisions of the Pledge Agreement is qualified in its entirety by reference to the Pledge Agreement attached as Exhibit 3 and incorporated by reference herein.

PDLP Distribution and Encore have also entered into an Interest Reserve and Security Agreement, dated March 20, 2008 (the “Interest Reserve Agreement”). Under the Interest Reserve Agreement, PDLP Distribution agreed to deposit $500,000 of the funds borrowed pursuant to the Note into an interest reserve account maintained with Encore. The Interest Reserve Agreement provides that accrued interest on the unpaid principal amount of the Note will be paid using funds on deposit in the interest reserve account. Under the Interest Reserve Agreement, PDLP Distribution has also granted Encore a security interest in funds deposited in the interest reserve account to provide additional security for PDLP Distribution’s obligations under the Note. The foregoing description of the terms and provisions of the Interest Reserve Agreement is qualified in its entirety by reference to the Interest Reserve Agreement attached as Exhibit 4 and incorporated by reference herein.

Item 7. Material to Be Filed as Exhibits

Item 7 is hereby amended and restated in its entirety as follows:


Exhibit 1		Joint Filing Agreement, dated March 20, 2008, by and among the Reporting Persons.

Exhibit 2		Promissory Note, dated March 20, 2008, made by PDLP Distribution, LLC in favor of Encore Bank, N.A.

Exhibit 3		Stock Pledge and Security Agreement, dated March 20, 2008, by and between PDLP Distribution, LLC and Encore Bank, N.A.

Exhibit 4		Interest Reserve and Security Agreement, dated March 20, 2008, by and between PDLP Distribution, LLC and Encore Bank, N.A.

Page 11 of 12

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 20, 2008


		PDLP Distribution, LLC

		By:		LKCM Private Discipline Master Fund, SPC, its sole member
		By:		LKCM Private Discipline Management, L.P., its manager
		By:		LKCM Alternative Management, LLC, its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		LKCM Private Discipline Master Fund, SPC

		By:		LKCM Private Discipline Management, L.P., its manager
		By:		LKCM Alternative Management, LLC, its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		LKCM Private Discipline Management, L.P.

		By:		LKCM Alternative Management, LLC, its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		LKCM Alternative Management, LLC

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		Luther King Capital Management Corporation

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		/s/ J. Bryan King

		J. Bryan King

		/s/ J. Luther King, Jr.

		J. Luther King, Jr.

Page 12 of 12

EXHIBIT INDEX


Exhibit
No.		Description
Exhibit 1		Joint Filing Agreement, dated March 20, 2008, by and among the Reporting Persons.

Exhibit 2		Promissory Note, dated March 20, 2008, made by PDLP Distribution, LLC in favor of Encore Bank, N.A.

Exhibit 3		Stock Pledge and Security Agreement, dated March 20, 2008, by and between PDLP Distribution, LLC and Encore Bank, N.A.

Exhibit 4		Interest Reserve and Security Agreement, dated March 20, 2008, by and between PDLP Distribution, LLC and Encore Bank, N.A.

EX-1 2 c72770exv1.htm EXHIBIT 1 Filed by Bowne Pure Compliance

EXHIBIT 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them a Statement on Schedule 13D (including amendments thereto) with regard to the Common stock, $0.01 par value, of Industrial Distribution Group, Inc. and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filings. In evidence thereof, the undersigned, being duly authorized, hereby execute this Agreement as of March 20, 2008.


		PDLP Distribution, LLC

		By:		LKCM Private Discipline Master Fund, SPC, its sole member
		By:		LKCM Private Discipline Management, L.P., its manager
		By:		LKCM Alternative Management, LLC, its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		LKCM Private Discipline Master Fund, SPC

		By:		LKCM Private Discipline Management, L.P., its manager
		By:		LKCM Alternative Management, LLC, its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		LKCM Private Discipline Management, L.P.

		By:		LKCM Alternative Management, LLC, its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		LKCM Alternative Management, LLC

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		Luther King Capital Management Corporation

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

		/s/ J. Bryan King

		J. Bryan King

		/s/ J. Luther King, Jr.

		J. Luther King, Jr.

EX-2 3 c72770exv2.htm EXHIBIT 2 Filed by Bowne Pure Compliance

EXHIBIT 2

PROMISSORY NOTE


US $5,650,000.00		March 20, 2008

FOR VALUE RECEIVED, PDLP DISTRIBUTION, LLC, a Texas limited liability company (“Borrower”), promises to pay ENCORE BANK, N.A. (together with its successors and assigns, “Lender”), or order, at 9 Greenway Plaza, Suite 1000, Houston, Texas 77046, Attn: David Webster or such other place as the holder hereof may designate in writing, the amount of FIVE MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($5,650,000.00) or such lesser amount as Lender may have actually advanced to Borrower, with interest on the unpaid principal balance from the date of such advance, until paid, at the Stated Rate (as hereinafter defined). This Promissory Note may be referred to herein as the “Note,” and the loan evidenced hereby may be referred to herein as the “Loan.” The Loan evidenced by this Note is secured by, among other things, that certain Stock Pledge and Security Agreement of even date herewith (the “Instrument”), executed by Borrower, encumbering certain property more particularly described therein, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note, the Instrument, and all other documents or instruments given by Borrower or any guarantor and accepted by Lender for purposes of evidencing, securing, perfecting, or guaranteeing the indebtedness evidenced by this Note may be referred to as the “Loan Documents.” Unless otherwise indicated, all capitalized terms used herein shall have the meanings indicated in the Instrument.

1. RATE OF INTEREST. The unpaid principal balance shall bear interest during each day of the term of the Loan at the per annum rate equal to the greater of: (a) the rate from time to time published by the Wall Street Journal as the prime rate for commercial banks, which interest rate shall change when and as said prime rate shall change, effective at the close of business on the day of such change; or (b) five and one-quarter percent (5.25%) per annum (herein called “Stated Rate”). All computations of interest shall be made by the Lender on the basis of a year of 360 days for the actual number of days elapsed; provided, however, that if such computation shall cause the amount of interest payable hereunder to exceed the maximum rate of interest permitted by applicable law, all computations of interest shall be made on the basis of a year of 365 or 366 days.

2. DEFAULT RATE. Notwithstanding the foregoing, after the occurrence of an Event of Default and for so long as such Event of Default continues and in any event from and after the maturity of the Loan, the Loan and all other obligations under the Loan Documents (collectively, the “Obligations”) shall bear interest until paid in full at a rate per annum that is equal to the lesser of (i) the Highest Lawful Rate (as defined below), or (ii) five percent (5.00%) (calculated on the principal balance) in excess of the Stated Rate otherwise applicable under this Note (the “Default Rate”).

3. LATE CHARGES. If any payment of principal, interest or other sums due hereunder or under any of the other Loan Documents is not paid within ten (10) days after the due date thereof, Borrower shall pay to Lender in addition to all sums otherwise due and payable, a late fee in an amount equal to five percent (5.00%) of such principal, interest or other sums due hereunder.

4. REPAYMENT.

A. Monthly Payments of Interest. Interest only at the Stated Rate is due and payable monthly as it accrues on the 15^th day of each month, beginning April 15, 2008 and continuing through the Maturity Date (as defined below). Payments will be applied first to accrued and unpaid interest and the remainder to reduction of the principal balance of the Loan. Payments of interest shall be made in accordance with that certain Interest Reserve and Security Agreement between Borrower and Lender dated as of the date hereof.

B. Payment at Maturity. The unpaid principal balance and all accrued and unpaid interest hereunder shall be due and payable on the Maturity Date.

C. Date and Time of Payment. Borrower shall receive credit for payments on the Loan which are transferred to the account of Lender as provided below (i) on the day that such funds are received by Lender if such receipt occurs by 3:00 p.m. (Houston time) on such day, or (ii) on the next succeeding Business Day after such funds are received by Lender if such receipt occurs after 3:00 p.m. (Houston time). Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the payment may be made on the next succeeding Business Day.

D. Manner of Payment. Borrower promises to pay all of the Obligations relating to the Loan as such amounts become due or are declared due pursuant to the terms of this Note. All payments by Borrower on the Loan shall be made without deduction, defense, set off or counterclaim and in immediately available funds.

5. MATURITY. To the extent not sooner due and payable in accordance with the Loan Documents, the then outstanding principal balance of the Loan, all accrued and unpaid interest thereon, and all other sums then owing to Lender pursuant to the Loan Documents, shall be due and payable on that date which is eighteen (18) months from the date hereof (the “Maturity Date”).

6. LAWFUL INTEREST. The parties hereto intend to conform strictly to the applicable usury laws. In no event, whether by reason of demand for payment, prepayment, acceleration of the maturity hereof or otherwise, shall the interest contracted for, charged or received by the holder hereof hereunder or otherwise exceed the maximum non-usurious amount permissible under applicable law. If from any circumstance whatsoever interest would otherwise be payable to the holder hereof in excess of the maximum lawful amount, the interest payable to the holder hereof shall be reduced automatically to the maximum amount permitted by applicable law (the “Highest Lawful Rate”). If the holder hereof shall ever receive anything of value deemed interest under applicable law which would apart from this provision be in excess of the maximum lawful amount, an amount equal to any amount which would have been excessive interest shall be applied to the reduction of the principal amount owing hereunder in the inverse order of its maturity and not to the payment of interest, or if such amount which would have been excessive interest exceeds the unpaid balance of principal hereof, such excess shall be refunded to Borrower. All interest paid or agreed to be paid to the holder hereof shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of such indebtedness so that the amount of interest on account of such indebtedness does not exceed the maximum permitted by applicable law. The provisions of this paragraph shall control all existing and future agreements between Borrower and the holder hereof.

7. VOLUNTARY PREPAYMENTS. Borrower shall have the right to prepay the unpaid principal balance of this Note without premium or penalty with accrued interest (including interest accrued at the Default Rate, if applicable) to the date of prepayment on the amount prepaid. Amounts paid or prepaid under this Note may not be reborrowed.

8. EVENTS OF DEFAULT; ACCELERATION. Upon and at any time following the occurrence of any Event of Default, then at the option of Lender and without an additional notice, the entire principal amount and all interest accrued and outstanding hereunder and all other amounts outstanding under any of the Loan Documents shall at once become due and payable, and Lender may exercise any and all of its rights and remedies under any of the Loan Documents or pursuant to applicable law. Lender may accelerate the Obligations and exercise such remedies at any time after the occurrence of any Event of Default, regardless of any prior forbearance (but subject to the expiration of such forbearance agreement or period).

9. CERTAIN RIGHTS AND WAIVERS. From time to time, without affecting the obligation of Borrower or its successors or assigns to pay the outstanding principal balance of this Note and observe the covenants of Borrower contained herein and in the other Loan Documents, and without affecting the guaranty of any person or entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of Borrower (where applicable), the successors or assigns of Borrower or any guarantors, and without liability on the part of Lender, Lender may, at its option, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder.

Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof.

The holder hereof shall have the right to assign or transfer, in whole or in part (including the right to grant participation interests in) any or all of its obligations under this Note, the Instrument and any or all of the other Loan Documents, as more specifically provided in the Instrument. Lender shall be released of any obligations to the extent that the same are so assigned or transferred, and the rights and obligations of “Lender” hereunder shall become the rights and obligations of the transferee holder.

10. ATTORNEYS’ FEES, COSTS OF COLLECTION. Borrower shall pay to Lender on demand all costs and expenses, including reasonable attorneys’ fees and expenses, incurred by Lender in collecting the Obligations, or in determining the rights and obligations of any parties hereto or thereto, or as a consequence of any breach or default by Borrower or any guarantor hereunder or thereunder, or otherwise as a consequence of any right evidenced or secured by this Note or the Loan Documents. Without limitation, such costs and expenses to be reimbursed by Borrower shall include reasonable attorneys’ fees and expenses incurred in any bankruptcy case or proceeding and in any appeal.

11. APPLICABLE LAW. This Note shall be governed by and construed in accordance with the laws of the State of Texas and applicable federal law.

[SIGNATURE FOLLOWS ON NEXT PAGE]

IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the date first written above.


		BORROWER:

		PDLP DISTRIBUTION, LLC,
		a Texas limited liability company

		By:		LKCM Private Discipline Master
				Fund, SPC, its sole member
		By:		LKCM Private Discipline
				Management, L.P., its manager
		By:		LKCM Alternative Management, LLC,
				its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

EX-3 4 c72770exv3.htm EXHIBIT 3 Filed by Bowne Pure Compliance

EXHIBIT 3

STOCK PLEDGE AND SECURITY AGREEMENT

THIS STOCK PLEDGE AND SECURITY AGREEMENT (this “Agreement”), dated as of March 20, 2008 is made by and among PDLP DISTRIBUTION, LLC, a Texas limited liability company (“Pledgor”) and ENCORE BANK, N.A. (“Lender”).

W I T N E S S E T H:

WHEREAS, Pledgor is the owner of 934,000 common shares and intends to purchase up to an additional 500,000 common shares (collectively, the “Stock”), of issued and outstanding stock of Industrial Distribution Group, Inc. (the “Corporation”), representing all of Pledgor’s right, title and interest in and to the Stock;

WHEREAS, Pledgor is indebted to Lender in the amount of FIVE MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($5,650,000.00), plus such other sums as may be due and owing by Pledgor to Lender at any given time (collectively, the “Debt”), which Debt is evidenced by a Note made by Pledgor for the benefit of Lender (the “Note”); this Agreement, the Note, and all other documents evidencing, securing, guaranteeing or pertaining to the Debt are collectively referred to as the “Credit Documents”; and

WHEREAS, Pledgor will derive substantial benefit from the Lender’s acceptance of the Note; and

WHEREAS, Pledgor has agreed to pledge and assign the Stock to Lender, together with the other collateral hereinafter described.

NOW, THEREFORE, for and in consideration of the premises, the benefits to be realized by Pledgor from the Debt, the mutual covenants hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged Pledgor hereby covenants and agrees with Lender as follows:

1. AGREEMENT.

1.1 Security Interest. Pledgor assigns, pledges and grants to Lender a security interest in and lien upon all of Pledgor’s right, title and interest in and to the Stock (including without limitation, Pledgor’s rights to interim cash and property distributions and to liquidating cash and property distributions with respect thereto) together with all proceeds of the same (collectively, the “Collateral”) to secure the payment and the performance of the Obligations (as hereinafter defined). Prior to or contemporaneously with the execution of this Agreement, or with respect to any Stock acquired after the date hereof, within three (3) business days after acquisition of the Stock by Pledgor, Pledgor shall cause control of the Stock to be transferred to Lender’s Depository Trust Company (“DTC”) account in accordance with the transfer instructions attached hereto as Exhibit “A”. Upon Pledgor’s satisfaction of all the Obligations, Lender shall cause control of the Stock to be transferred back to Pledgor’s DTC account.

2. OBLIGATIONS. The following obligations (the “Obligations”) are secured by this Agreement:

2.1 All payment and performance duties, liabilities, and obligations of the Pledgor to the Lender under the Note, any other Credit Document or any renewal, extension or amendment of any Credit Document.

2.2 All reasonable costs incurred by Lender to obtain, preserve, perfect and enforce this Agreement and security interest, collect the Obligations and maintain, preserve, collect and enforce the Collateral, including but not limited to taxes, assessments, insurance premiums attorneys’ fees and legal expenses, and expenses of sale.

3. PLEDGOR’S REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants as follows:

3.1 Financing Statements. No financing statement covering the Collateral is or will be on file in any public office, except the financing statements relating to this security interest.

3.2 Ownership. Pledgor owns the Collateral absolutely and free from any setoff, claim, restriction, lien, security interest or encumbrance except for the security interest hereunder, and any restrictions on the transfer thereof under state or federal securities laws.

3.3 Power and Authority. Pledgor has full power and authority to make and deliver this Agreement. Each individual signing on behalf of Pledgor has full power and authority to make and deliver this Agreement on behalf of Pledgor.

3.4 Right to Pledge. Pledgor has the unencumbered and unrestricted right to pledge the Collateral and no consent or approval of any governmental authority or other person which has not been obtained was or is necessary to the validity of this pledge or the enforcement of Lender’s rights and remedies hereunder.

3.5 Binding Agreement. This Agreement constitutes the valid and legally binding obligation of Pledgor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights and except to the extent specific remedies may generally be limited by equitable principles.

4. PLEDGOR’S COVENANTS.

4.1 Obligations and This Agreement. Pledgor shall perform promptly all of its agreements herein or in any other Loan Document.

4.2 Consent to Pledge. So long as any of the Obligations remain outstanding in favor of Lender, Pledgor will not further transfer, sell, pledge, assign or encumber any of the Collateral.

4.3 Dividends and Distributions. If Pledgor shall receive any dividend or distribution of cash or property from the Corporation, Pledgor shall promptly deliver the same to Lender.

4.4 Special Purpose Entity. So long as any of the Obligations remain outstanding, except upon the express prior written consent of Lender, Pledgor shall not hold or acquire, directly or indirectly, any ownership interest (legal or equitable) in any real or personal property other than the Collateral, or become a shareholder of or member or partner in any entity which acquires or holds any property other than the Collateral.

4.5 Anti-Dissolution. So long as any of the Obligations remain outstanding, Pledgor shall not permit its dissolution or termination and shall not take any action towards that end, except upon the express prior written consent of Lender.

4.6 Lender’s Costs. Pledgor, at Pledgor’s sole expense, will defend the Collateral against any claims or demands adverse to Lender’s security interests and will promptly pay, when due, all taxes or assessments levied against Pledgor on the Collateral. Pledgor shall pay all costs necessary to obtain, preserve, perfect, defend and enforce the security interests represented by this Agreement, and preserve, defend, enforce and collect the Collateral.

4.7 Liens. Pledgor shall keep the Collateral free from all liens, claims and encumbrances and security interests (except the Obligations, any restrictions on the transfer thereof under state or federal securities laws, and the security interest hereby created) and will preserve the priority of all security interests in the Collateral in favor of Lender therefor. Lender shall have no duty to preserve such security, but may do so at the expense of Pledgor, without waiving such default.

4.8 Modification of Collateral. So long as any Obligations remain outstanding in favor of Lender, without the express prior written consent of Lender, which consent shall not be unreasonably withheld, Pledgor shall not agree to, or otherwise permit, any modification of any of the terms of any instrument, agreement or document pursuant to which Pledgor is created, organized or operated (collectively, “Operating Documents”), and shall not, without the express written consent of Lender, which consent may be withheld or conditioned in Lender’s sole and absolute discretion, authorize, issue, or permit the authorization or issuance of, any additional ownership interests in Pledgor.

4.9 Right of Lender to Notify Others. At any time upon an Event of Default hereunder, Lender may notify any persons obligated on any Collateral of such Event of Default and request such person to make payments directly to Lender and Lender may take control of all proceeds of any Collateral.

4.10 Power of Attorney. Pledgor appoints Lender as its attorney-in-fact with full power in Pledgor’s name and behalf to do every act which Pledgor is obligated to do or may be required to do hereunder; however, nothing in this section shall be construed to obligate Lender to take any action hereunder. The power of attorney hereby created is a power coupled with an interest, and shall be irrevocable. Notwithstanding the foregoing, Lender shall not exercise the foregoing power of attorney unless (i) an Event of Default shall have occurred hereunder or under any other Credit Document, or (ii) Pledgor has failed to perform any act which Pledgor is obligated to do or may be required to do hereunder within ten (10) days of written notice from Lender to Pledgor.

4.11 Waivers by Pledgor. Pledgor waives notice of the creation, advance, increase existence, extension or renewal of, and of any indulgence with respect to, the Obligations; waive presentment, demand, notice of dishonor, and protest; waive notice of the amount of the Obligations outstanding at any time, notice of any change in financial condition of any person liable for the Obligations or any part thereof, notice of any event of default, and all other notices respecting the Obligations; and agree that maturity of the Obligations and any part thereof may be accelerated, extended or renewed one or more times by Lender in its discretion, without notice to Pledgor (including notice of intent to accelerate and notice of acceleration).

4.12 Other Parties and Other Collateral. The obligations of Pledgor under this Agreement shall be direct and immediate and not conditional or contingent upon the pursuit of any remedies against any other person or entity or against the security or liens or encumbrances available to Lender or any of its successors and assigns. Pledgor hereby waives any right to require that an action be brought against any other person or entity or to require that resort be had to any security or to any balance of any account or credit on the books of Lender in favor of any other person or entity prior to any exercise of rights or remedies hereunder. No renewal or extension of or any other indulgence with respect to the Obligations or any part thereof, no release of any security, no release of any person (including any maker, endorser, guarantor or surety) liable on the Obligations, no delay in enforcement of payment, and no delay or omission or lack of diligence or care in exercising any right or power with respect to the Obligations or any security therefor or guaranty thereof or under this Agreement shall in any manner impair or affect the rights of Lender under the law, hereunder or under any other agreement pertaining to security for the Obligations. Pledgor waives any right to the benefit of or to require or control application of any other security or proceeds thereof, and agrees that Lender shall have no duty or obligation to Pledgor to apply to the Obligations any such other security or proceeds thereof.

4.13 Indemnification. In any suit, proceeding or action brought by or against Lender relating to the Collateral, Pledgor will save, indemnify and hold Lender harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of any obligor thereunder, arising out of or relating to a breach by Pledgor of any obligation thereunder or arising out of or relating to any other agreement, indebtedness or liability at any time owing to or in favor of such obligor or its successors from Pledgor, and all such obligations of Pledgor shall be and shall remain enforceable against and only against Pledgor and shall not be enforceable against Lender. The foregoing obligation of Pledgor to indemnify Lender shall not extend to any suit, proceeding or action arising out of Lender’s gross negligence or willful misconduct.

5. RIGHTS AND POWERS OF LENDER

5.1 Voting Rights After Event of Default. After an Event of Default and for so long as any of the Obligations remain outstanding, Pledgor covenants and agrees that it will not, without the prior written consent of Lender, exercise any voting rights under the Operating Documents and (i) Lender may, upon prior written notice to Pledgor of its intention to do so, exercise all voting rights, and all other ownership or consensual rights with respect to the Collateral, but under no circumstances is Lender obligated by the terms of this Agreement to exercise such rights, and (ii) in addition to any other grants hereunder, upon such event, Pledgor hereby appoints Lender as its true and lawful attorney-in-fact and irrevocable proxy to vote the Collateral in any manner Lender deems advisable for or against all matters submitted or which may be submitted to a vote of the owners of the Corporation. The power of attorney granted hereby is coupled with an interest and shall be irrevocable for so long as any of the Obligations remain unpaid.

5.2 Voting Rights Prior to Event of Default. Prior to an Event of Default and for so long as any of the Obligations remain outstanding, Pledgor may exercise all voting rights, and all other ownership or consensual rights with respect to the Collateral; provided, however, Pledgor covenants and agrees that it will not, without the prior written consent of Lender (i) vote or take any consensual action with respect to the Collateral which would materially and adversely affect the Collateral or Lender’s secured interest therein; including, without limitation accepting any distributions from the Corporation not permitted under Section 4.3 hereof; or (ii) vote or take any consensual action with respect to the Corporation’s governing documents; provided, however, that Lender shall not unreasonably withhold consent to any proposed action.

5.3 Security Agreement. This Agreement shall constitute a security agreement under the Uniform Commercial Code as in effect in the State of Texas (“UCC”).

6. DEFAULT.

6.1 Events of Default. The following shall be deemed “Events of Default” hereunder:

(a) The failure of Pledgor: (i) to make any payment under the Note when due, or (ii) to make any other payment under the Credit Documents when due or after demand;

(b) Default in the performance or observance of the terms and conditions of Pledgor’s covenants herein;

(c) Any representation or warranty made under this Agreement shall be incorrect or misleading in any material respect when made;

(d) An Event of Default shall occur under the any Credit Document;

(e) A proceeding is instituted by a party other than Corporation or Pledgor or any affiliate of Corporation or Pledgor seeking a decree or order for relief in respect of Corporation or Pledgor in any case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Corporation or Pledgor, or for any substantial part of the property of the Corporation or Pledgor, or for the winding-up or liquidation of the business or affairs of the Corporation or Pledgor, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days, or a decree or order shall be entered granting the relief sought in such proceeding;

(f) The Corporation or Pledgor shall generally fail to pay, or admit an inability to pay, its debts as they become due, or shall voluntarily commence proceedings under the Federal bankruptcy laws, as now or hereafter constituted, or any bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Pledgor or the Corporation shall take any action consenting to or in furtherance of any of the foregoing;

(g) Levy on, seizure or attachment of the Collateral by any person or entity; or

(h) the average trading price of the Stock shall be equal to or less than $7.00 per share for any consecutive ten (10) trading day period.

6.2 Remedies of Lender Upon Default. Upon the occurrence of an Event of Default, or at any time thereafter, Lender without notice or demand may enforce payment of the Obligations then due, whether due by acceleration in whole or part or otherwise, and may exercise any rights under the UCC, rights and remedies of Lender under this Agreement, or otherwise. The proceeds of any disposition of Collateral after an Event of Default shall be applied to the Obligations in such order and in such manner as Lender in its discretion shall decide. Lender may transfer, sell, or otherwise dispose of the Collateral or any portion of the Collateral at a public or private sale or make other commercially reasonable disposition of the Collateral or any portion thereof after twenty (20) days notice to Pledgor, and Lender may purchase the Collateral or any portion thereof at any public or private sale, and any such sale made in good faith by Lender shall be deemed to be “commercially reasonable”. Failure of Lender to exercise any of the above rights, powers and remedies (“Rights”) in the event of any default shall not constitute a waiver of the right to exercise the same in connection with such default or any subsequent default. The aforementioned Rights are cumulative of each other; the resort to any Right or Rights shall not prevent the concurrent or subsequent employment of any other appropriate Rights and no single or partial exercise of any Right shall exhaust it, or preclude any other or further exercise thereof, and every Right may be exercised at any time and from time to time. No failure by Lender to exercise, and no delay in exercising, any Right, shall be deemed a waiver or modification of any Right.

Notwithstanding the foregoing, in the case of an Event of Default under Section 6.1(h) above, Lender shall have the right, after five (5) business days notice of the occurrence of such Event of Default and opportunity to cure (it being agreed among the parties that an increase in the average trading price during such five (5) business day period shall not cure such Event of Default by itself), to sell the Stock and to apply the proceeds towards the Obligations in such order and in such manner as Lender in its discretion shall decide.

7. GENERAL

7.1 Parties Bound. Lender’s rights and interests hereunder shall inure to the benefit of its successors and assigns, and in the event of any assignment or transfer of any of the Obligations or the Collateral, Lender thereafter shall be fully discharged from any responsibility with respect to the Collateral so assigned or transferred, but Lender shall retain all rights and powers hereby given with respect to any of the Obligations or Collateral not so assigned or transferred. All representations, warranties and agreements of Pledgor shall be binding upon the personal representatives, heirs, successors and assigns of Pledgor. Time is of the essence of this Agreement.

7.2 Waiver. No delay of Lender in exercising any power or right shall operate as a waiver or modification thereof; nor shall any single or partial exercise of any power or right preclude other or further exercise thereof or the exercise of any other power or right. No waiver by Lender of any right hereunder or of any default by Pledgor shall be binding upon Lender unless in writing, and no failure by Lender to exercise any power or right hereunder or waiver of any default by Pledgor shall operate as a waiver of any other or further exercise of such right or power or of any further default.

7.3 Release of Security Interest. Upon payment or performance in full of all Obligations secured hereby, Lender shall release the security interest granted herein, release the Collateral as provided in Section 1.1, and execute any such termination statements as may be necessary therefor.

7.4 Governing Law. The validity, enforcement and interpretation of this Agreement shall, except to the extent expressly provided below, for all purposes be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflicts of law principles, and applicable United States federal law, and is intended to be performed in accordance with, and only to the extent permitted by, such laws. Pledgor acknowledges that the Debt was submitted for review, negotiation and approval to Lender at its principal place of business in the State of Texas, and that any payments due under the Debt shall be made to Lender’s offices in the State of Texas at the address as set forth herein.

7.5 Forum. All obligations of Pledgor hereunder are payable and performable in Harris County, Texas. Pledgor hereby irrevocably submits generally and unconditionally for Pledgor and in respect of Pledgor’s property to the non-exclusive jurisdiction of any local court, or any United States federal court, sitting in or having jurisdiction for the County of Harris, State of Texas, over any suit, action or proceeding arising out of or relating to this Agreement. Pledgor hereby irrevocably waives, to the fullest extent permitted by law, any objection that Pledgor may now or hereafter have to the laying of venue in any such court and any claim that any such court is an inconvenient forum. Pledgor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable law, all services of process in any such suit, action or proceeding in any local court, or any United States federal court, sitting in or having jurisdiction for the County of Harris, State of Texas, may be made by certified or registered mail, return receipt requested, directed to Pledgor at its address stated in Section 8.13, and service so made shall be complete five (5) business days after the same shall have been so mailed. Nothing herein shall affect the right of Lender to serve process in any manner permitted by law or limit the right of Lender to bring proceedings against Pledgor in any other court or jurisdiction.

7.6 Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW, PLEDGOR AND LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT OR IN ANY WAY CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE DEALING OF PLEDGOR AND LENDER WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, PLEDGOR AND LENDER HEREBY AGREE THAT ANY SUCH ACTION CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT LENDER OR PLEDGOR MAY FILE AN EXECUTED COPY OF THIS AGREEMENT WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF PLEDGOR AND LENDER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTION OR PROCEEDINGS INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY PLEDGOR AND PLEDGOR HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY, THAT THEY HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED BY PLEDGOR OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH INDEPENDENT COUNSEL.

7.7 Modifications. No provision hereof shall be modified or limited except by a written agreement expressly referring hereto and to the provisions so modified or limited and signed by Pledgor and Lender. No modification or limitation may be accomplished by course of conduct, usage of trade, or by the law merchant.

7.8 Severability. In the event any provision (or any part of any provision) contained in this Agreement shall for any reason be finally held by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision (or remaining part of the affected provision, or application of the provision to other circumstances) but this Agreement 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.

7.9 Financing Statement. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral shall be sufficient as a financing statement.

7.10 Further Assurances. Pledgor shall execute and deliver, or cause to be executed and delivered, such further assurances, including but not limited to financing statements, as Lender from time to time may reasonably request, to effect the provisions of and to carry out the intent of this Agreement.

7.11 Limitations of Law. If any law prohibits or limits any charge or expense provided for in this Agreement in connection with any Obligations secured hereby, such charge or expense will not be made or incurred in connection with such Obligations beyond the limits permitted by such law.

7.12 Notices. All notices or other communications required or permitted hereunder shall be (a) in writing and shall be deemed to be given when either (i) delivered in person, (ii) three (3) business days after deposit in a regularly maintained receptacle of the United States mail as registered or certified mail, postage prepaid, (iii) when received if sent by private courier service, or (iv) on the day on which the party to whom such notice is addressed refuses delivery by mail or by private courier service and (b) addressed as follows:


		As to Lender:		David Webster
				ENCORE BANK, N.A.
				Nine Greenway Plaza, Suite 1000
				Houston, Texas 77046
				Ph: 713.787.3158
				FX: 713.267.7774

		and to:		David Morrell
				Hoover Slovacek LLP
				5847 San Felipe, Suite 2200
				Houston, Texas 77057
				Ph: 713.735.4134
				FX: 713.977.5395

		As to Pledgor:		PDLP DISTRIBUTION LLC
				301 Commerce Street, Suite 1600
				Fort Worth, Texas 76102
				Ph: 817.332.3235
				FX: 817.332.4630
				Attn: Jacob D. Smith

or to each such party at such other addresses as such party may designate in a written notice to the other parties given at least ten (10) days prior to the date such change becomes effective.

7.13 Interpretation. The term “Lender” shall be deemed to include any subsequent holder(s) of the Note. Whenever the context of any provisions hereof shall require it, words in the singular shall include the plural words in the plural shall include the singular, and pronouns of any gender shall include the other gender. Captions and headings in this Agreement are for convenience only and shall not affect the construction of the Agreement. All references in this Agreement to Schedules, Articles Sections, Subsections, paragraphs and subparagraphs refer to the respective subdivisions of this Agreement, unless such reference specifically identifies another document. The terms “herein” “hereof”, “hereto”, “hereunder” and similar terms refer to this Agreement and not to any particular Section or subsection of this Agreement. The terms “include” and “including” shall be interpreted as if followed by the words “without limitation”. All references in this Agreement to sums denominated in dollars or with the symbol “$” refer to the lawful currency of the United States of America, unless such reference specifically identifies another currency. For purposes of this Agreement, “person” or “persons” shall include firms, associations, partnerships (including limited partnerships), joint ventures, trusts, corporations, limited liability companies and other legal entities, including governmental bodies, agencies, or instrumentalities, as well as natural persons. Unless the context indicates otherwise, definitions in the UCC apply to words and phrases in this Agreement; if UCC definitions conflict, chapter 9 definitions apply.

7.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. Said counterparts shall constitute but one and the same instrument and shall be binding upon, and shall inure to the benefit of, each of the undersigned individually as fully and completely as if all had signed one instrument.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, Pledgor and Lender have caused this Agreement to be executed as of the day and year first above written.


		LENDER:
		ENCORE BANK, N.A.

		By:		/s/ David Webster

				David Webster, Senior Vice President

		PLEDGOR:
		PDLP DISTRIBUTION, LLC,
		a Texas limited liability company

		By:		LKCM Private Discipline Master
				Fund, SPC, its sole member
		By:		LKCM Private Discipline
				Management, L.P., its manager
		By:		LKCM Alternative Management, LLC,
				its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

EX-4 5 c72770exv4.htm EXHIBIT 4 Filed by Bowne Pure Compliance

EXHIBIT 4

INTEREST RESERVE AND SECURITY AGREEMENT

THIS INTEREST RESERVE AND SECURITY AGREEMENT (this “Agreement”) is made as of March 20, 2008, by PDLP DISTRIBUTION, LLC, a Texas limited liability company (“Borrower”), in favor of ENCORE BANK, N.A., its successors, transferees and assigns (“Lender”).

RECITALS

A. Borrower is indebted to Lender in the principal sum of FIVE MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($5,650,000.00) in lawful money of the United States of America as evidenced by its promissory note of even date herewith given to Lender (the note together with all extensions, renewals, modifications, substitutions and amendments thereof shall collectively be referred to as the “Note”) (the indebtedness evidenced by the Note, together with interest accrued thereon, shall collectively be referred to as the “Loan”). The Loan shall be payable in accordance with the terms and conditions provided in the Note.

B. The Loan is secured by, among other things, a Stock Pledge and Security Agreement (the “Pledge Agreement”), dated as of the date hereof (capitalized terms not otherwise defined herein shall have the same meanings as in the Pledge Agreement). The Note, the Pledge Agreement, this Agreement, and all other documents or instruments given by Borrower or any guarantor and accepted by Lender for purposes of evidencing, securing, perfecting, or guaranteeing the Loan may be referred to as the “Loan Documents.”

C. Lender requires as a condition to the making of the Loan that Borrower enter into this Agreement and deposit certain sums with Lender as provided in this Agreement (the “Interest Reserve”) as additional security for the Obligations.

AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower agrees in favor of Lender as follows:

1. Funding of Interest Reserve.

(a) Upon the closing and funding of the Loan, Borrower shall deposit the sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) into the Interest Reserve Account (as hereinafter defined).

(b) The Interest Reserve shall be held and disbursed in accordance with the terms of this Agreement. The obligation of Borrower to deliver the Interest Reserve to Lender is separate from and in addition to all other obligations to pay or deliver funds (whether principal, interest, fees, expenses, deposits, escrows, reserves, or otherwise) to Lender under the Loan Documents.

2. Interest Reserve Account.

(a) Lender shall deposit the Interest Reserve (to the extent it receives the same) in an interest bearing account (the “Interest Reserve Account”) with Lender. As used herein, the “Interest Reserve Account Funds” shall mean the Interest Reserve and all interest on and proceeds thereof. The Interest Reserve Account Funds shall not constitute a trust fund. Lender or a designated agent or representative of Lender shall have the sole right to make withdrawals from the Interest Reserve Account.

(b) The Interest Reserve Account Funds shall be held and/or disbursed by Lender pursuant to the terms of this Agreement.

3. Pledge of Interest Reserve Account Funds as Additional Security. Borrower assigns, pledges, and grants to Lender a security interest in and to the Interest Reserve Account Funds and the Interest Reserve Account as security for all of Borrower’s Obligations.

4. Default.

4.1 Application of Interest Reserve Account Upon Occurrence of Event of Default.

(a) Upon the occurrence of an Event of Default as defined in the Loan Documents, Lender, in its sole and absolute discretion, may use the Interest Reserve Account Funds (or any portion thereof) for (i) repayment and performance of the Loan and other Obligations; provided, however, that such application of funds shall not cure or be deemed to cure any Event of Default; and (ii) the reimbursement of Lender for any expenses, fees or other compensation as otherwise provided in the Loan Documents.

(b) In addition to the foregoing, Lender shall have all rights and remedies set forth in any of the Loan Documents or otherwise as permitted by applicable law pertaining to the Interest Reserve Account Funds and Interest Reserve Account. Without limiting the foregoing, from and after an Event of Default Lender is expressly authorized to apply all or any portion of the Interest Reserve Account Funds against the Loan or the other Obligations in any order that Lender determines, to apply all or any portion of the Interest Reserve Account Funds otherwise as provided herein, or to dispose of any or all of the same in accordance with applicable law.

(c) Lender’s rights to draw upon the Interest Reserve Account Funds shall not be exclusive of any other rights of Lender under the Loan Documents, and each and every right shall be cumulative and concurrent, and may be enforced separately, successively or together, and may be exercised from time to time as often as Lender may deem necessary.

4.2 Borrower’s Other Obligations. Nothing contained in this Agreement shall in any manner whatsoever alter, impair or affect the obligations of Borrower, or relieve Borrower of any of its obligations to make payments and perform all of its other obligations required under the Note, the Pledge Agreement or any of the other Loan Documents.

5. Disbursements from the Interest Reserve Account. As used herein, “Interest Obligations” shall mean the interest accrued and owing under the terms of the Note. Provided no Event of Default has occurred under the Note, the Pledge Agreement, this Agreement and the other Loan Documents, Lender shall release to itself sufficient funds from the Interest Reserve Account to cover the Interest Obligations as and when the same become due and payable under the terms of the Note.

6. Remedies Cumulative. In addition to the rights and remedies herein provided, Lender shall have all rights and remedies available under applicable law. None of the rights and remedies herein conferred upon or reserved to Lender under this Agreement is intended to be exclusive of any other rights, and each and every right shall be cumulative and concurrent, and may be enforced separately, successively or together, and may be exercised from time to time as often as may be deemed necessary by Lender.

7. Indemnification. Borrower agrees to indemnify Lender and to hold Lender harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys’ fees and expenses) arising from the holding of the Interest Reserve Account Funds, except to the extent caused by Lender’s gross negligence or willful misconduct.

8. Determinations by Lender. Except as otherwise provided herein, in any instance where the consent or approval of Lender may be given or is required, or where any determination, judgment or decision is to be rendered by Lender under this Agreement, the granting, withholding or denial of such consent or approval and the rendering of such determination, judgment or decision shall be made or exercised by Lender, in good faith and its reasonable discretion.

9. No Third Party Beneficiary. This Agreement is intended solely for the benefit of Borrower and Lender and their respective successors and assigns, and no third party shall have any rights or interest in the Interest Reserve Account, the Interest Reserve Account Funds, or this Agreement. Nothing contained in this Agreement shall be deemed or construed to create an obligation on the part of Lender to any third party, nor shall any third party have a right to enforce against Lender any right that Borrower may have under this Agreement.

10. Termination of this Agreement. Upon payment of the Loan and performance of the Obligations, Lender shall disburse to Borrower all remaining Interest Reserve Account Funds of Borrower.

11. Entire Agreement; Amendment and Waiver. This Agreement contains the complete and entire understanding of Borrower and Lender with respect to the matters covered. No specific waiver of any of the terms of this Agreement shall be considered as a general waiver. If any provision of this Agreement is in conflict with any provision of the Note, the Pledge Agreement or any of the other Loan Documents regarding the Interest Reserve Account or the Interest Reserve Account Funds, the provisions contained in this Agreement shall control.

12. No Agency or Partnership. Nothing contained in this Agreement shall constitute Lender as a joint venturer, partner or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations, or contracts of Borrower.

13. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND THE LAWS OF SAID STATE, WITHOUT REFERENCE OR GIVING EFFECT TO ANY CHOICE OF LAW DOCTRINE.

14. Notices. All notices hereunder shall be given in accordance with the Pledge Agreement.

15. No Oral Change. This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

16. Liability. This Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

17. Inapplicable Provisions. If any term, covenant or condition this Agreement is held to be invalid, illegal or unenforceable this Agreement shall be construed without such provision.

18. Headings, etc. The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

19. Duplicate Originals; Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

20. Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

21. Additional Documents. Borrower shall execute and deliver such additional financing statements, notices to depositories, and other documents and instruments as are reasonably requested by Lender to perfect or protect the interests of Lender hereunder.

[SIGNATURES FOLLOW ON NEXT PAGE]

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


		LENDER:

		ENCORE BANK, N.A.,

		By:		/s/ David Webster

				David Webster, Senior Vice President

		BORROWER:

		PDLP DISTRIBUTION, LLC,
		a Texas limited liability company

		By:		LKCM Private Discipline Master
				Fund, SPC, its sole member
		By:		LKCM Private Discipline
				Management, L.P., its manager
		By:		LKCM Alternative Management, LLC,
				its general partner

		By:		/s/ J. Bryan King

				J. Bryan King, Vice President

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