SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number 0-8493
STEWART & STEVENSON SERVICES, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1051605
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2707 North Loop West, Houston, Texas 77008
(Address of principal executive offices) (Zip Code)
(713) 868-7700
(Registrant's telephone number, including area code)
not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, Without Par Value 33,050,088 Shares
(Class) (Outstanding at October 31, 1995)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following information required by Rule 10-01 of Regulation S-X is
provided herein for Stewart & Stevenson Services, Inc. and Subsidiaries
(the "Company"):
Consolidated Condensed Statement of Financial Position -- October 31, 1995
and January 31, 1995.
Consolidated Condensed Statement of Earnings -- Nine Months and Three
Months Ended October 31, 1995 and 1994.
Consolidated Condensed Statement of Cash Flows -- Nine Months Ended October
31, 1995 and 1994.
Notes to Consolidated Condensed Financial Statements.<PAGE>
<TABLE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands)
<CAPTION>
October 31 January 31
1995 1995
(Unaudited)
____________ ____________
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 5,108 $ 3,987
Accounts and notes receivable, net 192,081 186,814
Recoverable costs and accrued profits
not yet billed 303,030 227,467
Inventories:
Engineered Power Systems 244,394 224,729
Distribution 136,255 121,273
Excess of current costs over LIFO values (52,897) (50,135)
____________ ____________
327,752 295,867
Other 1,059 364
____________ ____________
TOTAL CURRENT ASSETS 829,030 714,499
PROPERTY, PLANT AND EQUIPMENT 240,757 230,215
Allowances for depreciation and
amortization (111,811) (98,355)
____________ ____________
128,946 131,860
OTHER ASSETS 31,615 29,257
____________ ____________
$989,591 $875,616
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $115,000 $ 42,000
Accounts payable 144,537 164,474
Billings on uncompleted contracts in
excess of incurred costs 10,281 11,284
Current income taxes 64,235 42,240
Other current liabilities 50,136 51,156
____________ ____________
TOTAL CURRENT LIABILITIES 384,189 311,154
LONG-TERM DEBT 116,833 116,900
DEFERRED INCOME TAXES 7,175 8,038
ACCRUED POSTRETIREMENT BENEFITS 15,251 15,252
DEFERRED COMPENSATION 5,445 5,269
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
and 50,000,000 shares authorized at October
31, 1995 and January 31, 1995, respectively;
33,061,908 and 33,009,635 shares issued at
October 31, 1995 and January 31, 1995,
respectively, including 11,820 shares held
in treasury 163,410 162,057
Retained earnings 297,321 256,979
____________ ____________
460,731 419,036
Less cost of treasury stock (33) (33)
____________ ____________
TOTAL SHAREHOLDERS' EQUITY 460,698 419,003
____________ ____________
$989,591 $875,616
============ ============
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(In thousands, except per share data)
Nine Months Ended Three Months Ended
October 31 October 31
_________________________ _________________________
1995 1994 1995 1994
_________ _________ _________ _________
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $932,641 $850,521 $323,779 $304,248
Cost of sales 786,193 718,584 275,822 257,072
_________ _________ _________ _________
Gross profit 146,448 131,937 47,957 47,176
Selling and administrative
expenses 67,624 54,619 23,445 19,284
Interest expense 9,642 4,103 3,542 1,804
Other income, net (2,518) (1,568) (1,399) (695)
_________ _________ _________ _________
74,748 57,154 25,588 20,393
_________ _________ _________ _________
Earnings before income taxes 71,700 74,783 22,369 26,783
Income taxes 24,021 25,107 7,458 9,014
_________ _________ _________ _________
Earnings of consolidated
companies 47,679 49,676 14,911 17,769
Equity in net earnings (loss)
of unconsolidated affiliates 263 (556) 89 (166)
_________ _________ _________ _________
Net earnings $ 47,942 $ 49,120 $ 15,000 $ 17,603
========= ========= ========= =========
Weighted average number of
shares of Common Stock
outstanding 33,030 32,966 33,045 32,988
========= ========= ========= =========
Net earnings per share $ 1.45 $ 1.49 $ .45 $ .53
========= ========= ========= =========
Cash dividends per share $ .23 $ .20 $ .08 $ .07
========= ========= ========= =========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Nine Months Ended
October 31
___________________________
1995 1994
__________ __________
(Unaudited)
<S> <C> <C>
Operating Activities
Net earnings $ 47,942 $ 49,120
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 18,222 17,233
Deferred income taxes (863) (1,212)
Change in operating assets and liabilities:
Receivables (5,174) (17,377)
Recoverable costs and accrued profits not
yet billed (75,563) (54,024)
Inventories (31,885) (21,390)
Accounts payable (19,937) 21,621
Billings on uncompleted contracts in excess
of incurred costs (1,003) (13,820)
Current income taxes 21,995 9,494
Other current liabilities (1,092) 352
Other--principally long-term assets and liabilities (3,123) (3,189)
__________ __________
Net Cash Used In Operating Activities (50,481) (13,192)
Investing Activities
Expenditures for property, plant and equipment (16,003) (21,919)
Disposal of property, plant and equipment 942 1,215
__________ __________
Net Cash Used In Investing Activities (15,061) (20,704)
Financing Activities
Additions to long-term borrowings 71 35,290
Payments on long-term borrowings (67) (36,212)
Borrowings and payments on short-term notes payable, net 73,000 36,000
Dividends paid (7,600) (6,594)
Exercise of stock options 1,259 1,579
__________ __________
Net Cash Provided By Financing Activities 66,663 30,063
__________ __________
Increase (Decrease) in cash and equivalents 1,121 (3,833)
Cash and equivalents, February 1 3,987 7,788
__________ __________
Cash and equivalents, October 31 $ 5,108 $ 3,955
========== ==========
Supplemental disclosure of cash flow information:
Net cash paid during the period for:
Interest payments $ 8,918 $ 3,880
Income tax payments $ 6,881 $ 16,465
See accompanying notes to consolidated condensed financial statements.
</TABLE>
STEWART & STEVENSON SERVICES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note A--Basis of Presentation and Significant Accounting Policies
The accompanying consolidated condensed financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X for interim
financial statements required to be filed with the Securities and Exchange
Commission and do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, the information furnished reflects all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods. The results of
operations for the nine months and three months ended October 31, 1995 are
not necessarily indicative of the results that will be realized for the
fiscal year ending January 31, 1996.
The accounting policies followed by the Company in preparing interim
consolidated financial statements are similar to those described in the
"Notes to Consolidated Financial Statements" in the Company's January 31,
1995 Form 10-K.
The Company's fiscal year begins on February 1 of the year indicated and
ends on January 31 of the following year. For example, "Fiscal 1995"
commenced on February 1, 1995 and ends on January 31, 1996.
Net earnings per share of Common Stock were computed by dividing net
earnings by the weighted average number of shares outstanding. Common
Stock equivalents (outstanding options to purchase shares of Common Stock)
are excluded from the computations as they are insignificant. The weighted
average number of shares outstanding for the nine and three months ended
October 31, 1995 includes 52,750 and 7,500, respectively, shares issued
pursuant to exercise of stock options.
Note B--Commitments and Contingencies
Major contracts for military systems are performed over extended periods of
time and are subject to changes in scope of work and delivery schedules.
Pricing negotiations on changes and settlement of claims often extend over
prolonged periods of time. The Company's ultimate profitability on such
contracts will depend not only upon the accuracy of the Company's cost
projections, but also the eventual outcome of an equitable settlement of
contractual issues with the U.S. Government.
On May 3, 1995, an indictment was returned by a federal Grand Jury in
Houston, Texas, accusing the Company, a former consultant and four
employees, including the Company's President, of one count of major fraud
against the United States, four counts of false statements and one count of
conspiracy to commit major fraud, make false statements and interfere with
the administration of a foreign military sale. All of the counts arise
from a 1987 subcontract to supply diesel generator sets for installation at
long-range radar sites in Saudi Arabia (the "Peace Shield"). The
indictment alleges that a former employee of the general contractor for the
Peace Shield program, who later became a consultant to the Company,
conspired with the Company and the other defendants to award the
subcontract to the Company. The indictment also alleges that the
government was defrauded out of approximately $5 million in connection with
cost savings from a change order under the Peace Shield contract and that
the Company made false statements relating to cost estimates in connection
with such change order. The Company and each individual have denied all
charges under the indictment and the case is pending in the United States
District Court, Southern District of Texas, Houston Division. The Company
is not able to make a reasonable estimate of the fines or penalties that
could be imposed under the Federal Sentencing Guidelines in the event of a
conviction under the indictment. Such fines and penalties could be
substantial and adversely affect the Company's financial position and
results of operations. A conviction could also adversely affect the
Company's ability to participate in future government contracts. See
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Also in connection with the Peace Shield contract, the Company has been
advised that the former consultant of the Company referred to above filed a
suit in the United States District Court, Southern District of Texas,
Houston Division, for himself and the United States of America alleging
that the Company supplied false information in violation of the False
Claims Act (the "Act"), engaged in common law fraud and misapplied costs.
Under the provisions of the Act, the suit has not been served upon the
Company pending an investigation of the case by the U. S. Department of
Justice and a determination as to whether the Department of Justice will
intervene and pursue the matter on behalf of the United States. The suit
alleges treble damages of $21 million plus unspecified penalties.
Proceedings in this case have been stayed pending resolution of the
criminal matter referred to above. The Company cannot predict the outcome
of this action or the likelihood that substantial damages will result.
However, the Company intends to vigorously defend this case if it is served
upon the Company.
On May 16, 1995, C. Daniel Chill filed a purported class action suit in the
United States District Court, Southern District of Texas, Houston Division,
against the Company and three of its officers and directors on behalf of
himself and all persons that purchased shares of Common Stock between May
2, 1994 and May 3, 1995. An amended complaint was filed on June 7, 1995.
The suit alleges that the Company violated various sections of and rules
under the Securities Exchange Act of 1934 and common law by disseminating
material false and misleading information, failing to disclose material
information and failing to correct earlier statements that were no longer
true, all relating to the Peace Shield investigation and indictment. The
suit claims unspecified compensatory and punitive damages. The Company
cannot predict the outcome of this action or the likelihood that
substantial damages will result. However, the Company will vigorously
defend this case and believes that this case will be resolved without any
material affect on the Company's financial condition or results of
operations.
The Company has not established any reserves or accruals for any potential
liability that may be subsequently found in any of the foregoing cases.
The Company is a defendant in a number of other lawsuits relating to
contractual, product liability, personal injury and warranty matters and
otherwise of the type normally incident to the Company's business.
Management is of the opinion that such lawsuits will not result in any
material liability to the Company.
Note C--Inventories
At January 31, 1995, the Engineered Powered Systems segment's inventory
included approximately $14,789,000 of costs on a certain U.S. Government
contract in excess of contractual authorization. During the second quarter
of Fiscal 1995, the Company recognized $3,500,000 of additional costs under
such contract based upon preliminary settlement discussions and the opinion
of outside legal counsel that the Company will recover a substantial
portion of the amount claimed. At October 31, 1995, the Engineered Power
Systems segment's inventory included $18,855,000 relating to inventory
carrying costs incurred by the Company which management believes will be
collectible upon either contractual amendment or approval of claims
increasing funding.
Note D--Subsequent Events
At October 31, 1995, the Company had borrowings of $105,000,000 under its
revolving bank credit facility and $115,000,000 under uncommitted short-
term bank arrangements. Effective November 30, 1995, the Company entered
into an amended revolving credit facility with its banks to increase the
principal amount of the facility to $200,000,000. Borrowings under the
amended revolving credit facility mature on December 31, 2000. Under the
terms of the amended facility, the commitment fee was reduced from .15 of
1% to .125 of 1% on the daily average unused balance. The Company may
reduce the committed amount of the revolving credit facility at its option.
Borrowings outstanding under the revolving credit loan bear interest at
various formulae at the option of the Company. The maximum rate that may
be charged is the agent's prime rate. The amended revolving credit
facility includes certain financial covenants which, among other things,
impose a minimum net worth requirement on the Company and restrict the
incurrence of indebtedness.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the fiscal
year ended January 31, 1995.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
sales represented by certain items reflected in the Company's Consolidated
Condensed Statement of Earnings.
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
October 31 October 31
1995 1994 1995 1994
_________ _________ _________ _________
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 84.3 84.5 85.2 84.5
_________ _________ _________ _________
Gross profit 15.7 15.5 14.8 15.5
Selling and administrative
expenses 7.3 6.4 7.2 6.3
Interest expense 1.0 .5 1.1 .6
Other income, net (.3) (.2) (.4) (.2)
_________ _________ _________ _________
8.0 6.7 7.9 6.7
_________ _________ _________ _________
Earnings before income taxes 7.7 8.8 6.9 8.8
Income taxes 2.6 2.9 2.3 2.9
_________ _________ _________ _________
Earnings of consolidated
companies 5.1 5.9 4.6 5.9
Equity in net earnings (loss) .0 (.1) .0 (.1)
_________ _________ _________ _________
Net earnings 5.1% 5.8% 4.6% 5.8%
========= ========= ========= =========
</TABLE>
Sales for the first nine months of the year ending January 31, 1996
("Fiscal 1995") increased 9.7% to $932,641,000 compared to sales of
$850,521,000 for the same period in the year ended January 31, 1995
("Fiscal 1994").
The Distribution segment was the primary contributor to the Company's sales
growth with an increase in sales of $60,707,000 (25%) in the first nine
months of Fiscal 1995 compared to the same period in Fiscal 1994. This
increase is primarily attributable to the acquisition of the assets and
business of Power Application & Mfg., Co. ("PAMCO"), a Waukesha distributor
for the western United States, during the fourth quarter of Fiscal 1994.
The distribution of product lines acquired from PAMCO contributed sales of
$37,812,000 in the first nine months of Fiscal 1995. Excluding sales
relating to the PAMCO acquisition, the Distribution segment's increase of
9% in the first nine months of Fiscal 1995 over the same period in Fiscal
1994 reflects the continued economic growth in the territories serviced by
the Company.
The Engineered Power Systems (EPS) segment sales decreased $13,229,000 (3%)
for the first nine months of Fiscal 1995 compared to the same period in
Fiscal 1994. This decline in EPS sales was primarily within the Gas
Turbine product lines which continued to experience sharply reduced
domestic activity, reflecting the U.S. utility market's uncertain response
to deregulation and delays in contract awards in the international markets.
The Tactical Vehicle Systems (TVS) segment sales increased $29,524,000
(22%) for the first nine months of Fiscal 1995 compared to the same period
in Fiscal 1994. The increase in TVS sales reflects the increase in truck
production under the "Family of Medium Tactical Vehicles" (FMTV) contract
to 1,444 trucks in the first nine months of Fiscal 1995 compared to 1,046
trucks in the same period in Fiscal 1994.
Sales for the third quarter of Fiscal 1995 increased $19,531,000 (6.4%) to
$323,779,000 compared to sales of $304,248,000 during the third quarter of
Fiscal 1994. The Distribution segment and Tactical Vehicle segment
contributed to this increase. The Distribution segment sales increased
$23,398,000 (27%) for the third quarter of Fiscal 1995 compared to the same
period in Fiscal 1994. Tactical Vehicle segment sales increased
$24,373,000 (51%) for the third quarter of Fiscal 1995 compared to the same
period in Fiscal 1994.
The gross profit margin of 15.7% for the first nine months of Fiscal 1995
improved as compared to 15.5% for the same period in Fiscal 1994. Gross
profit margins for the third quarter of Fiscal 1995 were 14.8% compared to
15.5% for the third quarter of 1994. Higher gross profit margins
recognized on power generation equipment during the first nine months of
Fiscal 1995 were partially offset by lower gross profit margins on
compression equipment recognized by the Company in the second and third
quarters of Fiscal 1995. Also in the second quarter of Fiscal 1995, the
Company recognized $3,500,000 in gross profits based on initial settlement
discussions relating to a pending contract dispute. See Note C to the
Consolidated Condensed Financial Statements.
Selling and administrative expenses for the first nine months of Fiscal
1995 increased as a percentage of sales to 7.3% compared to 6.4% for the
same period in Fiscal 1994. The significant portion of this increase is
attributable to the acquisition of substantially all of the assets of PAMCO
and of certain assets of Creole International, Inc. during the second half
of Fiscal 1994 and to the increased administrative costs related to the
establishment of an international infrastructure, primarily for gas turbine
product support.
Interest expense for the first nine months of Fiscal 1995 increased to
$9,642,000, up from $4,103,000 for the same period in Fiscal 1994. This
increase is due to an increase in both interest rates and outstanding debt
required to carry increased inventories of turbine-driven equipment,
increased inventories in the Distribution segment necessary to support the
territories and product lines acquired from PAMCO, and other working
capital items.
Net earnings of $47,942,000 ($1.45 per share) for the first nine months of
Fiscal 1995 represents a 2.4% decrease compared to $49,120,000 ($1.49 per
share) for the same period in Fiscal 1994.
GOVERNMENT CONTRACTS STATUS
Initial Operational Test and Evaluation under the FMTV Contract was
completed in the third quarter and the Company received formal approval for
full rate production and type classification of the FMTV on August 25,
1995. Actual fielding of the vehicles to combat troops is scheduled to
begin in January, 1996 at Ft. Bragg, North Carolina. Under the terms of
the FMTV contract, all vehicles produced before the full rate production
decision must be retrofitted with any changes required by test results or
specification changes ordered by the government. The retrofit will begin
during the fourth quarter of Fiscal 1995 and is expected to be completed in
the second quarter of 1996.
The Company is currently in low rate initial production. The current
fiscal year's planned production quantity is scheduled for completion by
the end of the fourth quarter. Full rate production is expected to
commence after completion of the retrofit program. The Company has
received full funding for the production of approximately 7,364 vehicles
through February, 1997. Approximately 3,524 vehicles, scheduled for
production after that date have not been funded due to reductions in the
U.S. Army's budget for acquisition. The Company has entered into
preliminary negotiations with the U.S. Army to modify the existing contract
to provide for steady production at lower rates through December, 1998.
However, the Company is not able to predict whether any such modification
will be forthcoming on terms acceptable to the Company and production of
vehicles pursuant to the FMTV contract may be interrupted after February,
1997.
EFFECT OF CERTAIN LITIGATION
On May 3, 1995, the Company and four employees, including the Company's
President, were indicted by a federal Grand Jury on six counts arising out
of a 1987 subcontract to supply diesel generator sets for installation in
Saudi Arabia. See Note B to the Consolidated Condensed Financial
Statements. On May 12, 1995, the U.S. Air Force suspended the Company from
contracting with any agency of the U.S. Government and from receiving the
benefit of federal assistance programs. This suspension was temporarily
terminated on November 8, 1995, pending the resolution of the charges
covered by the indictment pursuant to an Interim Administrative Agreement
between the Company and the U.S. Air Force. The Interim Administrative
Agreement does not have any effect on the indictment.
The Interim Administrative Agreement requires the Company to maintain
various internal procedures and policies intended to assure the U.S.
Government that the Company is a responsible contractor. In the event that
the Company or any of the indicted employees are convicted of the charges
contained in the indictment, the U.S. Air Force may re-evaluate whether the
Company should be suspended or debarred based on all of the facts and
circumstances then known. An acquittal of all parties of the charges does
not terminate the Interim Administrative Agreement and any failure by the
Company to perform its obligations thereunder may also be grounds for
suspension or debarment.
If the Company is suspended or debarred, either because of a conviction
pursuant to the indictment or as a result of a breach of the Interim
Administrative Agreement, it would be ineligible to enter into new
contracts or subcontracts with agencies of the U.S. Government or receive
the benefit of federal assistance payments for the duration of such
suspension or debarment. Any such suspension could prevent the Company
from receiving a modification to the FMTV to fund additional vehicles or
extend the delivery schedule of funded vehicles unless the Secretary of the
Army finds a compelling need to enter into such modification. The Company
would also be unable to sell equipment and services to customers that
depend on loans or financial commitments from the Export Import Bank ("EXIM
Bank"), Overseas Private Investment Corporation ("OPIC") and similar
government agencies during a suspension or debarment. The EPS segment
frequently sells equipment to customers that rely on financial commitments
from EXIM and/or OPIC. Any such suspension or debarment could have a
material adverse impact on the Company's financial condition and results of
operations.
UNFILLED ORDERS
The Company's unfilled orders consist of written purchase orders, letters
of intent, and oral commitments. These unfilled orders are generally
subject to cancellation or modification due to customer relationships or
other conditions. Purchase options are not included in unfilled orders
until exercised. Unfilled orders at October 31, 1995, and at the close of
Fiscal 1994 were as follows:
<TABLE>
<CAPTION>
October 31 January 31
1995 1995
__________ __________
(Dollars in millions)
<S> <C> <C>
Engineered Power Systems
Equipment $ 261.5 $ 416.0
Operations and Maintenance 294.9 311.6
__________ __________
556.4 727.6
Distribution 41.6 40.0
Tactical Vehicle Systems 859.2 1,017.8
__________ __________
Total $1,457.2 $1,785.4
========== ==========
</TABLE>
Although no assurance can be given, the Company expects sales of the
Engineered Power Systems segment to continue to be weighted in favor of
turbine-driven equipment because of the large number of unfilled orders for
these units, the number of proposals that are presently outstanding and the
current worldwide need for additional electrical generating capacity.
Unfilled orders of the Tactical Vehicle Systems segment consists
principally of the contracts awarded in October 1991, by the United States
Department of the Army, to manufacture medium tactical vehicles. The
contracts are subject to Congressional approval of necessary funding for
future program years. Approximately 3,524 vehicles, representing a backlog
of approximately $350,000,000, have not been funded due to reductions in
the U.S. Army's budget for acquisitions. If funding for such vehicles is
not approved or is limited or delayed, the total number of vehicles
produced may be reduced. The Company has entered into preliminary
negotiations with the U.S. Army to modify the existing contract to provide
for steady production of funded vehicles over a longer period. Any such
modification could affect the number of vehicles produced in each fiscal
year.
During the third quarter, unfilled orders of the Engineered Power Systems
segment were reduced by $37,800,000 as a result of the cancellation of one
order for turbine-driven equipment which was not eligible for EXIM Bank
financing because of the suspension of the Company by the U.S. Air Force.
See "Effect of Certain Litigation".
CAPITAL EXPENDITURES AND COMMITMENTS
Capital spending for property, plant and equipment was $16,003,000 for the
first nine months of Fiscal 1995 compared to $21,919,000 for the same
period in Fiscal 1994.
LIQUIDITY AND SOURCES OF CAPITAL
Long-term debt at October 31, 1995 was $116,833,000 compared with
$116,900,000 as of January 31, 1995. During the same period short-term
borrowings increased to $115,000,000 at October 31, 1995 from $42,000,000
at the end of Fiscal 1994. The Company's increased borrowings were
primarily incurred to finance both customer contracts in process and
inventories. The growth in contract cost and profits in excess of customer
billings reflects the absence of customer progress payments and down
payments under certain Gas Turbine contracts. Inventory growth of
$18,230,000 within the Gas Turbine operations was necessitated by both the
expansion of the Gas Turbine product support group's capabilities and the
increase in costs related to unsold production. Inventory growth of
$11,479,000 within the Distribution segment relates to the additional
territories and product lines acquired from PAMCO.
As of October 31, 1995, the Company had fully utilized the $105,000,000 of
available borrowings under its bank credit facility. The Company's
additional borrowings were made pursuant to uncommitted short-term banking
relationships. Effective November 30, 1995, the Company amended its bank
credit facility to increase the principal amount of the facility to
$200,000,000. The purpose of the amendment was to replace a portion of the
Company's uncommitted short-term borrowings. Borrowings under the amended
bank credit facility mature on December 31, 2000. As a result of the
amendment, the commitment fee on the unused portion of the facility was
reduced from 0.15% to 0.125% on the daily unused balance during the
revolving period. The Company may reduce the committed amount of the
revolving credit facility at its option. Borrowings outstanding under the
revolving credit facility bear interest at rates under various rate options
selected by the Company from time to time. The rate options available to
the Company include rates negotiated from time to time with the principal
bank, rates based on certificates of deposit or Eurodollar loans plus a
margin and the agent's prime rate. The amended credit facility includes
certain financial covenants, including covenants which limit the incurrence
of additional indebtedness and require the Company to maintain a minimum
net worth. The Company is in compliance with all such covenants.
The Company's working capital needs can fluctuate significantly depending
on the progress payment streams of contracts-in-process. The Company
regularly bids on large commercial contracts and turnkey construction
contracts that require the Company to finance work-in-process. If awarded
to the Company, these contracts could also affect working capital needs.
The Company may expand its Distribution and EPS segments by selective
acquisition of additional distribution territories and product lines. In
the event that such activities create a need for working capital or capital
expenditures in excess of existing committed lines of credit, the Company
may seek to increase its credit facilities, to borrow from other long-term
financing sources or to issue additional equity securities. The Company
believes its current credit facilities are adequate to meet its foreseeable
capital requirements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
See Note B to the Consolidated Condensed Financial Statements.
Item 2. Changes in Securities.
(a) Inapplicable
(b) Note D to the consolidated condensed financial statements in Part I of
this report is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as a part of this report pursuant to
Item 601 of Regulation S-K.
3(a) Third Restated Articles of Incorporation, effective as of
September 21, 1995.
3(b) Fourth Restated Bylaws, effective as of September 13, 1995.
4(a) Loan Agreement effective September 3, 1993, between Stewart &
Stevenson Services, Inc. and Texas Commerce Bank National
Association, ABN AMRO Bank, N.V., Houston, The Bank of New York
and NationsBank of Texas, National Association (Incorporated by
reference to exhibit 4.1 to the Form 10-K of Stewart & Stevenson
for the fiscal year ended January 31, 1995 under the Commission
File No. 0-8493).
4(b) Agreement and First Amendment to Loan Agreement effective July
31, 1994, between Stewart & Stevenson Services, Inc. and Texas
Commerce Bank National Association, ABN AMRO Bank, N.V., Houston
Agency and The Bank of New York, and NationsBank of Texas,
National Association (Incorporated by reference to exhibit 4.2
to the Form 10-K of Stewart & Stevenson for the fiscal year
ended January 31, 1995 under the Commission File No. 0-8493.
4(c) Agreement and Second Amendment to Loan Agreement effective
December 23, 1994, between Stewart & Stevenson Services, Inc.
and Texas Commerce Bank National Association, ABN AMRO Bank,
N.V., Houston Agency, The Bank of New York, NationsBank of
Texas, National Association, Bank of America Illinois and PNC
Bank, National Association (Incorporated by reference to exhibit
4.3 to the Form 10-K of Stewart & Stevenson for the fiscal year
ended January 31, 1995 under the Commission File No. 0-8493).
4(d) Agreement and Third Amendment to Loan Agreement effective August
1, 1995, between Stewart & Stevenson Services, Inc. and Texas
Commerce Bank National Association, ABN AMRO Bank, N.V., Houston
Agency, The Bank of New York, NationsBank of Texas, National
Association, Bank of America Illinois and PNC Bank, National
Association.
4(e) Agreement and Fourth Amendment to Loan Agreement effective
November 30, 1995, between Stewart & Stevenson Services, Inc.
and Texas Commerce Bank National Association, ABN AMRO Bank,
N.V., Houston Agency, The Bank of New York, NationsBank of
Texas, National Association, Bank of America Illinois and PNC
Bank, National Association.
10 Interim Administrative Agreement dated November 8, 1995 by and
between Stewart & Stevenson Services, Inc. and the United States
Department of the Air Force (Incorporated by reference to
exhibit 99 to the Form 8-K of Stewart & Stevenson for November
8, 1995 under the Commission File No. 0-8493).
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months
ended October 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STEWART & STEVENSON SERVICES, INC.
Date: 12/13/95 By: /s/ Robert L. Hargrave
Robert L. Hargrave
Group Vice President, Chief Financial
Officer & Treasurer
(Principal Financial Officer)
EXHIBIT INDEX
Exhibit Number and Description
3(a) Articles of Incorporation
3(b) By-laws
4(d) Agreement and Third Amendment to Loan Agreement effective August 1,
1995, between Stewart & Stevenson Services, Inc. and Texas Commerce
Bank National Association, ABN AMRO Bank, N.V., Houston Agency, The
Bank of New York, NationsBank of Texas, National Association, Bank of
America Illinois and PNC Bank, National Association.
4(e) Agreement and Fourth Amendment to Loan Agreement effective November
30, 1995, between Stewart & Stevenson Services, Inc. and Texas
Commerce Bank National Association, ABN AMRO Bank, N.V., Houston
Agency, The Bank of New York, NationsBank of Texas, National
Association, Bank of America Illinois and PNC Bank, National
Association.
27 Financial data schedule
THIRD RESTATED ARTICLES OF INCORPORATION
OF
STEWART & STEVENSON SERVICES, INC.
1. Pursuant to the provisions of Article 4.07 of the Texas
Business Corporation Act, Stewart & Stevenson Services, Inc.
hereby adopts these Third Restated Articles of Incorporation
which accurately copy the entire text of the present Second
Restated Articles of Incorporation and all amendments thereto
that are in effect to date and which contain no change in any
provision thereof except that the number of directors now
constituting the board of directors and the names and addresses
of the persons serving as directors have been inserted in lieu of
similar information concerning the initial board of directors and
the name and address of each incorporator has been omitted.
2. These Third Restated Articles of Incorporation were
adopted by resolution of the board of directors of the
corporation on September 13, 1995.
3. The Second Restated Articles of Incorporation and all
amendments and supplements thereto are hereby superseded by the
following Third Restated Articles of Incorporation which
accurately copy the entire text thereof:
I.
The name of the corporation shall be STEWART & STEVENSON
SERVICES, INC.
II.
Section 1. The purpose for which the corporation is organized is
to engage in any lawful business or activity, subject to the
limitations hereinafter set forth in Section 2 of this article.
Section 2. Nothing in this article is to be construed as
authorizing the corporation to transact any business in the State
of Texas expressly prohibited by any law of the State of Texas,
or to engage in any activity in the State of Texas which cannot
lawfully be engaged in by a corporation incorporated under the
Texas Business Corporation Act or which cannot lawfully be
engaged in without first obtaining a license under the laws of
the State of Texas and which license cannot be granted to a
corporation organized under the Texas Business Corporation Act,
or to operate in Texas any of the businesses referred to in
Section B(4) of Article 2.01 of the Texas Business Corporation
Act, or to take any action in violation of any of the laws
referred to in Section C of Article 2.02 of the Texas Business
Corporation Act.
III.
The post office address of the registered office of the
corporation is 400 N. St. Paul, Dallas, Texas 75201, and the name
of its registered agent at such address is The Prentice-Hall
Corporation System, Inc. subject to change as provided in the
Texas Business Corporation Act.
IV.
The names and addresses of the persons serving as directors of
the corporation at the time of the filing of these Third Restated
Articles of Incorporation and who shall serve until their
successors shall be chosen and shall qualify are:
Name Address
C. Jim Stewart II 2707 North Loop West
Houston, Texas 77008
Bob H. O'Neal 2707 North Loop West
Houston, Texas 77008
J. Carsey Manning 2707 North Loop West
Houston, Texas 77008
Donald E. Stevenson 2707 North Loop West
Houston, Texas 77008
Robert H. Parsey 1600 First Interstate Bank Plaza
Houston, Texas 77002
J. W. Lander, Jr. 4200 Westheimer
Houston, Texas 77027
Robert L. Hargrave 2707 North Loop West
Houston, Texas 77008
Jack T. Currie 515 Post Oak
Houston, Texas 77027
Robert S. Sullivan 2815 San Gabriel
Austin, Texas 78705
Brian H. Rowe #1 Neumann Way, M\Stop N178
Cincinnati, Ohio 45215
Orson C Clay One Moody Plaza
Galveston, Texas 77550
Richard R. Stewart 2707 North Loop West
Houston, Texas 77008
The number of directors may be increased or decreased from time
to time by amendment to the bylaws, but no decrease shall have
the effect of shortening the term of any incumbent director, and
the number of directors shall not be decreased to less than three
(3) directors nor increased to more than twenty-five (25)
directors. In the absence of a bylaw fixing the number of
directors, the number shall be six (6).
V.
The period of duration of the corporation is perpetual.
VI.
The aggregate number of shares which the corporation shall have
authority to issue is one hundred million (100,000,000) shares of
common stock, without par value.
VII.
No shareholder shall be entitled as a matter of right to
subscribe for, purchase or receive any shares of stock, rights or
options of the corporation which it may issue or sell, whether
out of the number of shares authorized by these articles of
incorporation or by amendment thereof or out of the shares of
stock of the corporation acquired by it after the issuance
thereof, nor shall any shareholder be entitled as a matter of
right to subscribe for, purchase or receive any bonds, debentures
or other securities which the corporation may issue or sell that
shall be convertible into or exchangeable for stock or to which
shall be attached or appertain any warrant or warrants or other
instrument or instruments that shall confer upon the holder or
owner of such obligation the right to subscribe for, purchase, or
receive from the corporation any shares of its capital stock; but
all such additional issues of stock, rights and options, or of
bonds, debentures or other securities convertible into or
exchangeable for stock or to which warrants shall be attached or
appertain or which shall confer upon the holder the right to
subscribe for, purchase or receive any shares of stock may be
issued and disposed of by the Board of Directors to such persons,
firms or corporations as in their absolute discretion may deem
advisable. The acceptance of stock in the corporation shall be a
waiver of any preemptive or preferential right which in the
absence of this provision might otherwise be asserted by
shareholders of the corporation or any of them.
VIII.
At every meeting of the shareholders, every holder of common
stock of the corporation shall be entitled to one vote for each
share of common stock standing in his name on the books of the
corporation. No shareholder shall have the right to cumulate his
votes for the election of directors, but each share shall be
entitled to one vote in the election of each director.
IX.
A director of the corporation shall not be liable to the
corporation or its shareholders for monetary damages for an act
or omission in the director's capacity as a director, except that
this Article does not eliminate or limit the liability of a
director to the extent the director is found liable for (i) a
breach of the director's duty of loyalty to the corporation or
its shareholders; (ii) an act or omission not in good faith that
constitutes a breach of duty of the director to the corporation
or an act or omission that involves intentional misconduct or a
knowing violation of the law; (iii) a transaction from which the
director received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the director's
office; or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. Any
repeal or amendment of this Article by the shareholders of the
corporation shall be prospective only and shall not adversely
affect any limitation on the liability of a director of the
corporation existing at the time of such repeal or amendment. In
addition to the circumstances in which the director of the
corporation is not liable as set forth in the preceding
sentences, the director shall not be liable to the fullest extent
permitted by any provisions of the statutes of Texas hereafter
enacted that further limits the liability of a director.
Dated this 14th day of September, 1995.
STEWART & STEVENSON SERVICES, INC.
/s/ Lawrence E. Wilson
By: _______________________________
Vice President & Secretary
FOURTH RESTATED
BYLAWS OF
STEWART & STEVENSON SERVICES, INC.
Effective September 13, 1995
ARTICLE I
Offices
Section 1.1. Offices. The principal business office of the
Corporation shall be at Houston, Texas or at such other location
within the State of Texas as the Board of Directors may, from
time to time, establish by resolution. The Corporation may have
such other business offices within or without the State of Texas
as the Board of Directors may from time to time establish or the
business of the Corporation may require.
ARTICLE II
Capital Stock
Section 2.1. Certificates Representing Shares.
Certificates representing shares of stock of the Corporation
shall be consecutively numbered and in such form or forms as
comply with the requirements of law and the Restated Articles of
Incorporation and as the Board of Directors shall approve. Such
certificates shall be signed by the President or a Vice
President, and the Secretary or an Assistant Secretary of the
Corporation, and may be sealed with the seal of the Corporation
or a facsimile thereof. The signatures of the President or Vice
President and the Secretary or Assistant Secretary may be
facsimiles, engraved or printed, if the certificate is
countersigned by a transfer agent, or registered by a registrar,
other than the Corporation itself or an employee of the
Corporation. In case any officer or officers who have signed or
whose facsimile signature or signatures have been placed upon
such certificate shall have ceased to be such officer or officers
before such certificate is issued, it may be adopted and issued
by the Corporation with the same effect as if he or they had not
ceased to be such officer or officers as of the date of its
issuance, and the issuance and delivery thereof by the
Corporation shall constitute adoption thereof by the Corporation.
Section 2.2. Stock Certificate Register and Shareholders of
Record. The Secretary of the Corporation shall keep at the
registered office of the Corporation, or cause a duly appointed
transfer agent or registrar to keep at its principal office, a
share register showing the names of the shareholders and their
addresses, the number of shares held by each, the number and date
of issue of all certificates representing shares of the
Corporation, the number and date of cancellation of every
certificate surrendered for cancellation and whether such
certificates originated from original issue or transfer. Such
information may be kept in any medium capable of reproducing the
information in clearly legible form and shall be the official
list of shareholders of record of the Corporation for all
purposes. The Corporation shall be entitled to treat the holder
of record of any shares of the Corporation as the owner thereof
for all purposes, and shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or any
rights deriving from such shares on the part of any other person,
including (but without limitation) a purchaser, assignee, or
transferee, unless and until such other person becomes the holder
of record of such shares, whether or not the Corporation shall
have either actual or constructive notice of the interest of such
other person.
Section 2.3. Transfer of Stock. The shares represented by
any share certificates of the Corporation are transferable only
on the stock certificate register of the Corporation by the
holder of record thereof in person or by a duly authorized
attorney or legal representative upon surrender of the
certificate for such shares properly endorsed or assigned.
Section 2.4. Transfer Agent and Registrar. The Board of
Directors may appoint one or more transfer agents or registrars
of the shares, or both, and may require all share certificates to
bear the signature of a transfer agent or registrar or both.
Section 2.5. Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new certificate for shares of stock in
the place of any certificate theretofore issued and alleged to
have been lost, stolen or destroyed, but the Board of Directors
may require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to furnish an affidavit
as to such loss, theft, or destruction and to give a bond in such
form and substance, and with such surety or sureties, with fixed
or open penalty, as it may direct, to indemnify the Corporation,
and the transfer agents and registrars, if any, against any claim
that may be made on account of the alleged loss, theft or
destruction of such certificate. Any such new certificate shall
be plainly marked "Duplicate" on its face.
ARTICLE III
The Shareholders
Section 3.1. Annual Meetings. An annual meeting of the
shareholders, for the election of directors to succeed those
whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such
place, within or without the State of Texas, as may be designated
by the Board of Directors or officer calling the meeting at 10:00
in the morning of the second Tuesday in June, or on such other
date and time as the Board of Directors or officer calling such
meeting shall fix and set forth in the notice of the meeting. At
the annual meeting of the shareholders, only such business shall
be conducted as shall have been properly brought before the
annual meeting. To be properly brought before the annual meeting
of shareholders, business must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or
(iii) otherwise properly brought before the meeting by a
shareholder of the Corporation who is a shareholder of record at
the time of giving of notice provided for in this Section 3.1,
who shall be entitled to vote at such meeting and who complies
with the notice procedures set forth in this Section 3.1. For
business to be properly brought before an annual meeting by a
shareholder, the shareholder, in addition to any other applicable
requirements, must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than
ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of shareholders of the Corporation. A
shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual
meeting: (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the shareholder
proposing such business, (c) the class and number of shares of
voting stock of the Corporation which are beneficially owned by
the shareholder, (d) a representation that the shareholder
intends to appear in person or by proxy at the meeting to bring
the proposed business before the annual meeting, and (e) a
description of any material interest of the shareholder in such
business. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this
Section 3.1. The presiding officer of an annual meeting shall, if
the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in
accordance with the provisions of this Section 3.1, and if he
should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not
be transacted.
Notwithstanding the foregoing provisions of this Section
3.1, a shareholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the
matters set forth in this Section 3.1.
Section 3.2. Special Meetings. Except as otherwise
provided by law or by the Restated Articles of Incorporation,
special meetings of the shareholders may be called by the
Chairman of the Board, the President, the Board of Directors, or
the holders of not less than one-tenth of all the shares having
voting power at such meeting, and shall be held at the principal
office of the Corporation, at such time as is stated in the
notice calling such meeting, or at such other place as the person
or body calling such meeting may determine and state in such
notice.
Section 3.3. Notice of Meetings - Waiver. Written or
printed notice, stating the place, day and hour of any meeting
and, in case of a special shareholders' meeting, the purpose or
purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than fifty (50) days before the date
of the meeting, either personally or by mail, by or at the
direction of the Chairman of the Board, the President, or the
officer, body or person calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as
it appears on the stock certificate register of the Corporation,
with postage thereon prepaid. Such further or earlier notice
shall be given as may be required by law. Waiver by a
shareholder of notice in writing of a shareholders' meeting,
signed by him, whether before or after the time stated therein,
shall be equivalent to the giving of such notice. No notice
shall be necessary for any adjourned meeting.
Section 3.4. Closing of Stock Certificate Register and
Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any
dividend or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the
Corporation may provide that the stock certificate register shall
be closed for a stated period but not to exceed, in any case,
fifty (50) days. If the stock certificate register shall be
closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such registers
shall be closed for at least ten (10) days immediately preceding
such meeting. In lieu of closing the stock certificate register,
the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any
case to be not more than fifty (50) days and, in case of a
meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action, requiring such determination
of shareholders, is to be taken. If the stock certificate
register is not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made, as provided in this
Section, such determination shall apply to any adjournment
thereof except where the determination has been made through the
closing of the stock certificate register and the stated period
of closing has expired.
Section 3.5. Voting List. The officer or agent having
charge of the stock certificate register for shares of the
Corporation shall make, at least ten (10) days before such
meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the
registered office of the Corporation and shall be subject to
inspection by any shareholder at any time during the usual
business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the
meeting. Failure to comply with this Section shall not effect
the validity of any action taken at such meeting.
Section 3.6. Quorum and Officers. Except as otherwise
provided by law, by the Restated Articles of Incorporation or by
these Bylaws, the holders of a majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders, but the shareholders present
at any meeting, although less than a quorum, may from time to
time adjourn the meeting to some other day and hour, without
notice other than announcement at the meeting. The vote of the
holders of a majority of the shares entitled to vote and thus
represented at a meeting at which a quorum is present shall be
the act of the shareholders' meeting, unless the vote of a
greater number is required by law, the Restated Articles of
Incorporation or these Bylaws. The Chairman of the Board, or in
his absence, the President, shall preside at and the Secretary,
or in his absence, any Assistant Secretary shall keep the records
of each meeting of shareholders, and in the absence of all such
officers, their respective duties shall be performed by persons
appointed by the meeting.
Section 3.7. Proxies. A shareholder may vote either in
person or by proxy executed in writing by the shareholder, or by
his duly authorized attorney-infact. Proxies shall be dated but
need not be sealed, witnessed or acknowledged. No proxy shall be
valid after eleven (11) months from the date of its execution
unless otherwise provided in the proxy. Each proxy shall be
revocable unless provided expressly therein to be irrevocable,
and unless otherwise made irrevocable by law. Proxies shall be
filed with the Secretary of the Corporation before or at the time
of the meeting.
Section 3.8. Balloting. Upon the demand of any
shareholder, the vote upon any question before the meeting shall
be by ballot. At each meeting inspectors of election may be
appointed by the presiding officer of the meeting, and at any
meeting for the election of directors, inspectors shall be so
appointed on the demand of any shareholder present or represented
by proxy and entitled to vote at the election of directors. No
director or candidate for the office of directors shall be
appointed as such inspector.
Section 3.9. Voting Rights; Voting for Directors. Each
outstanding share of common stock shall be entitled to one (1)
vote upon each matter submitted to a vote at a meeting of
shareholders. No shareholder shall have the right to cumulate
his votes for the election of directors, but each share shall be
entitled to one vote in the election of each director.
Section 3.10 Nominations for Election as a Director. Only
persons who are nominated in accordance with the procedures set
forth in these Bylaws and qualify for nomination pursuant to
Section 4.1 shall be eligible for election by shareholders as,
and to serve as, directors. Nominations of persons for election
to the Board of Directors of the Corporation may be made at a
meeting of shareholders (a) by or at the direction of the Board
of Directors or a duly constituted committee thereof or (b) by
any shareholder of the Corporation who is a shareholder of record
at the time of giving of notice provided for in this Section
3.10, who shall be entitled to vote for the election of directors
at the meeting and who complies with the notice procedures set
forth in this Section 3.10. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be
made pursuant to timely notice in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive
offices of the Corporation (i) with respect to an election to be
held at the annual meeting of the shareholders of the
Corporation, not less than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of
shareholders of the Corporation, and (ii) with respect to an
election to be held at a special meeting of shareholders of the
Corporation for the election of directors not later than the
close of business on the tenth (10th) day following the day on
which notice of the date of the special meeting was mailed to
shareholders of the Corporation as provided in Section 3.3 or
public disclosure of the date of the special meeting was made,
whichever first occurs. Such shareholder's notice to the
Secretary shall set forth (x) as to each person whom the
shareholder proposes to nominate for election or re-election as a
director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named in the
proxy statement as a nominee and to serve as a director if
elected), and (y) as to the shareholder giving the notice (i) the
name and address, as they appear on the Corporation's books, of
such shareholder and (ii) the class and number of shares of
voting stock of the Corporation which are beneficially owned by
such shareholder. At the request of the Board of Directors, any
person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Corporation that
information required to be set forth in a shareholder's notice of
nomination which pertains to the nominee. In the event that a
person is validly designated as a nominee to the Board of
Directors in accordance with the procedures set forth in this
Section 3.10 and shall thereafter become unable or unwilling to
stand for election to the Board of Directors, the Board of
Directors or the shareholder who proposed such nominee, as the
case may be, may designate a substitute nominee. Other than
directors chosen pursuant to the provisions of Section 4.3, no
person shall be eligible to serve as a director of the
Corporation unless nominated in accordance with the procedures
set forth in this Section 3.10. The presiding officer of the
meeting of shareholders shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if
he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded. Notwithstanding
the foregoing provisions of this Section 3.10, a shareholder
shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder with respect to the matters set forth in
this Section 3.10.
ARTICLE IV
The Board of Directors
Section 4.1. Number and Qualifications. The business and
affairs of the Corporation shall be managed and controlled by the
Board of Directors, and subject to any restrictions imposed by
law, by the Restated Articles of Incorporation, or by these
Bylaws, the Board of Directors may exercise all the powers of the
Corporation. The Board of Directors shall consist of twelve (12)
members. The number thereof may be increased or decreased from
time to time by amendment to these Bylaws, but no decrease shall
have the effect of shortening the term of any incumbent director.
Directors need not be residents of Texas and need not be
shareholders. No person shall be qualified for election or
reelection as a director of the Corporation if: (i) he was
originally elected as a director of the Corporation on or before
June 19, 1981 and has attained the age of 75 years prior to the
date that such qualification is determined; or (ii) he was
originally elected or nominated for election as a director for
the Corporation after June 19, 1981, and has attained the age of
73 prior to the date that such qualification is determined; or
(iii) he is an incumbent director and has attended fewer than
fifty (50%) percent of the meetings of the Board of Directors
held during any fiscal year commencing after January 31, 1981,
which such incumbent was entitled to attend as a director.
Section 4.2. Classification and Term. The Board of
Directors shall be divided into three classes, each class
consisting as nearly as possible of one third (1/3) of the number
of directors that make up the full Board of Directors. At each
annual meeting of shareholders, the number of directors equal to
the number of the class whose term expires at the time of such
meeting shall be elected to hold office until the third
succeeding annual meeting of shareholders.
Section 4.3. Vacancies. Any vacancy on the Board of
Directors may be filled by the vote of a majority of the
remaining directors though less than a quorum of the Board of
Directors; provided, that the Board of Directors may not fill
more than two (2) vacancies caused by an increase in the number
of directors during any period between two (2) successive annual
meetings of shareholders. A director elected to fill a vacancy
shall hold office for the unexpired portion of his predecessor's
term if such vacancy was created by the death, resignation,
disqualification or removal of a director or until the next
annual meeting of shareholders if such vacancy was created by an
increase in the size of the Board of Directors.
Section 4.4. Place of Meeting. Meetings of the Board of
Directors may be held either within or without the State of
Texas, at whatsoever place is specified by the officer or
director calling the meeting. In the absence of other
designation, the meeting shall be held at the principal business
office of the Corporation.
Section 4.5. Regular Meetings. The Board of Directors
shall hold no fewer than four (4) regular meetings in each fiscal
year. One such regular meeting (the "Annual Meeting of
Directors") shall be held immediately following the annual
meeting of shareholders, at the place of such shareholder
meeting, and the other regular meetings shall be held at such
times and places as the Board of Directors shall establish by
resolution at the regular meeting following the annual meeting of
shareholders. No notice of any kind of such regular meetings
shall be necessary to either old or new members of the Board of
Directors.
Section 4.6. Special Meetings. Special meetings of the
Board of Directors shall be held at any time by call of the
Chairman of the Board, the President (if a director) or by a
majority of the directors. The Secretary or officer performing
his duties shall give notice of special meetings to each director
at his usual business or residence address by mailing such notice
at least five (5) days or one hundred twenty (120) hours before
the meeting or by delivering the same at least one (1) day or
twenty-four (24) hours before the meeting. No notice shall be
necessary for any adjourned meeting. A waiver of notice of any
special meeting, in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Such
notice or waiver thereof need not specify the business to be
transacted at, or the purpose of, such meeting. Attendance of a
director at a meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting for the
express and announced purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully
called or convened.
Section 4.7. Quorum. Three-fourths (3/4) of the number of
directors fixed by these Bylaws shall constitute a quorum for the
transaction of business, but any one or more directors, although
less than a quorum, may adjourn the meeting to some other day or
hour. The act of a majority of the directors present at a
meeting at which a quorum is in attendance shall be the act of
the Board of Directors unless a larger number is required by
applicable law, the Restated Articles of Incorporation or these
Bylaws.
Section 4.8. Chairman of the Board. At each Annual Meeting
of Directors, the Board of Directors shall elect from its
membership a Chairman of the Board who shall serve in such
capacity until the next Annual Meeting of Directors or until his
death, resignation, disqualification or removal if sooner. The
Chairman of the Board shall preside at all meetings of the Board
of Directors and at all meetings of the shareholders of the
Company.
Section 4.9. Procedure at Meetings. The Chairman of the
Board shall preside at meetings of the Board of Directors. In
his absence at any meeting, the President (if a director) shall
preside, and in the absence of both the Chairman of the Board and
the President, a member of the Board of Directors selected by the
members present shall preside. The Secretary of the Corporation
shall act as secretary at all meetings of the Board, or in his
absence the presiding officer of the meeting may designate any
person to act as secretary. At meetings of the Board of
Directors, business shall be transacted in such order as from
time to time the Board of Directors may determine.
Section 4.10. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of
the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 4.11. Compensation. Directors as such shall not
receive any stated salary for their service, but by resolution of
the Board of Directors (a) an annual directors fee and (b) a
fixed sum and expenses for attendance, if any, may be allowed to
each director who is not an officer or employee of the
Corporation for attendance at each regular or special meeting of
the Board of Directors or of any Committee thereof; but nothing
herein shall preclude any director from serving the Corporation
in any other capacity or receiving compensation therefor.
Section 4.12. Standing Committees. The Board of Directors
by resolution adopted by a majority of the number of directors
fixed by the Bylaws shall designate from their number an
Executive Committee and an Audit Committee. The Executive
Committee shall consist of five (5) persons. Each member shall
serve until the next annual meeting of shareholders or until such
director's retirement, removal, disqualification, or death. The
Executive Committee shall meet upon the call of the chairman of
such committee or any two (2) members thereof and shall have and
may exercise all of the authority of the Board of Directors in
the business and affairs of the Corporation except (a) the power
to authorize or approve the sale or other transfer of any real
property now owned or hereafter acquired by the Corporation; (b)
the power to vote, direct the vote or grant proxies relating to
any stock owned by the Corporation; (c) the power to authorize or
approve purchases or commitments for goods or services with an
aggregate market value in any single transaction or group of
related transactions exceeding $5,000,000 except for goods and
services purchased in the ordinary course of business for
inventory or pursuant to capital expenditure budgets approved by
the Board of Directors; (d) the power to authorize or approve the
incurrence or guaranty of indebtedness with an original principal
amount in excess of $1,000,000 and a maturity of longer than one
(1) year; (e) the power to make loans, guaranties, investments,
or other commitments outside the ordinary course of business in
excess of $5,000,000 at any time outstanding to any one person or
group of persons; and (f) where action of the Board of Directors
is specified by the Texas Business Corporation Act or by other
applicable law.
The Audit Committee shall consist of four (4) persons, all
of whom shall be independent of management and free of any
relationship that, in the opinion of the Board of Directors,
would interfere with the exercise of independent judgment as a
committee member. Each member shall serve until the next annual
meeting of shareholders or until such director's retirement,
removal, disqualification, or death. The Audit Committee shall
meet no fewer than two (2) times in each fiscal year of the
Corporation upon the call of the chairman of such committee or
any two (2) members thereof and shall have and may exercise such
responsibilities, authority and power as the Board of Directors
specifies.
The designation of Standing Committees and delegation of
authority thereto shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
Section 4.13. Other Committees of the Board of Directors.
The Board of Directors, by resolution adopted by a majority of
the number of directors fixed by the Bylaws, may designate from
their number such compensation, nominating and other committees
as they shall, from time to time, deem necessary and proper. Such
committees shall be composed of not less than three members and
shall have and exercise such of the Board of Directors' authority
as shall by resolution, be delegated to it. The designation of
such other committees and the delegation of authority thereto
shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed upon it or him by
law.
Section 4.14. Meetings and Reports of the Committees. The
Committees shall meet from time to time as set forth in the
Bylaws and on call of the Chairman or any two or more members
thereof. Notice of each such meeting, stating the place, day and
hour thereof, shall be served personally on each member of such
Committee, or shall be mailed, delivered or telephoned to his
address on the books of the Corporation, at least twenty-four
(24) hours before the meeting. No such notice need state the
business proposed to be transacted at the meeting. No notice of
the time or place of any meeting of such Committee need be given
to any member thereof who attends in person or who, in writing
executed and filed with the records of the meeting either before
or after the holding thereof, waives such notice. No notice need
be given of an adjourned meeting of any Committee. Meetings of
the Committees may be held at such place or places, either within
or outside of the State of Texas, as such Committee shall
determine, or as may be specified or fixed in the respective
notices or waivers thereof. Each Committee may fix its own rules
of procedure. They shall keep record of their proceedings and
shall report these proceedings to the Board of Directors at the
regular meetings thereof held next after they have been taken.
Section 4.15. Advisory Directors. The Board of Directors,
by resolution adopted by a majority of the number of directors
fixed by the Bylaws, may appoint from those persons who have
previously served as a director of the Corporation, such advisory
directors as the Board of Directors may, from time to time,
determine to be desirable. Such advisory directors shall be
ex-officio members of the Board of Directors, shall hold office
from the date elected until the next following annual meeting of
the Board of Directors unless sooner removed in the manner
provided for the removal of Directors, shall be entitled to
receive notice of and to attend all meetings of the Board of
Directors and shall be reimbursed for all out-of-pocket expenses
incurred to attend meetings of the Board of Directors. Advisory
directors shall not be a member of any committee of the Board of
Directors, vote on any matter brought before the Board of
Directors for action or be counted for the purposes of
determining whether a quorum exists. Failure to notify the
advisory directors of any meeting shall not render any meeting or
any action taken at such meeting void.
ARTICLE V
Officers
Section 5.1. Number. The officers of the Corporation shall
consist of the President, a Secretary and a Treasurer; and, in
addition, such Vice Presidents, other officers and assistant
officers and agents as may be deemed necessary and elected or
appointed by the Board of Directors. Any two or more offices may
be held by the same person except that the President and
Secretary shall not be the same person.
Section 5.2. Election; Term; Qualification. Officers shall
be chosen by the Board of Directors at the Annual Meeting of the
Directors and may be chosen at any other meeting of the Board of
Directors. Each officer shall hold office until the next
following Annual Meeting of Directors, or until his death,
resignation, retirement or removal.
Section 5.3. Removal. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board
of Directors at its pleasure, but such removal shall be without
prejudice to other contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall
not of itself create any contract rights.
Section 5.4. Retirement. No person may serve as an officer
of the Corporation after the last day of the fiscal year in which
such officer celebrates his sixty-fifth birthday or such later
date as is necessary to comply with applicable laws.
Section 5.5. Vacancies. Any vacancy in any office for any
cause may be filled by the Board of Directors at any meeting.
Section 5.6. Duties. The officers of the Corporation shall
have such powers and duties, except as modified by the Board of
Directors, as generally pertain to their offices, respectively,
as well as such powers and duties as from time to time shall be
conferred by the Board of Directors and by these
Bylaws.
Section 5.7. The President. The President shall, subject
to the control of the Board of Directors, have general
supervision and control over all of the business, assets and
affairs of the Corporation. All other officers shall report as
directed by the President. In the absence of the Chairman of the
Board, the President shall perform all of the duties of the
Chairman of the Board, and when so acting shall have all of the
powers of, and be subject to all restrictions upon, the Chairman
of the Board.
Section 5.8. Secretary. The Secretary shall: (a) keep the
minutes of all meetings of the shareholders, of the Board of
Directors, and of all committees of the Board of Directors, in
one or more books provided for that purpose and shall distribute
a copy of all such minutes to the members of the Board of
Directors immediately on receipt thereof, (b) see that all
notices are duly given in accordance with the provisions of these
Bylaws or as required by law, (c) be custodian of the corporate
records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly
authorized, (d) have general charge of the stock certificate
register, transfer books and stock ledgers, and such other books
and papers as the Board of Directors may direct, of the
Corporation, all of which shall, at all reasonable times, be open
to the examination of any director, upon application at the
office of the Corporation during business hours, and (e) in
general perform all duties and exercise all powers incident to
the office of the Secretary and such other duties and powers as
the Board of Directors or the President from time to time may
assign to or confer on him.
Section 5.9. Treasurer. The Treasurer shall be the Chief
Financial Officer and shall keep complete and accurate records of
account, showing accurately at all times the financial condition
of the Corporation. He shall be the legal custodian of all
monies, notes, securities, and other valuables which may from
time to time come into the possession of the Corporation. He
shall furnish at meetings of the Board of Directors, or whenever
requested, a statement of the financial condition of the
Corporation, and shall perform such other duties as the Bylaws
may require or the Board of Directors may prescribe. The
Treasurer shall have the power and authority to incur or guaranty
indebtedness on behalf of the Corporation without the prior
approval of the Board of Directors provided that the original
principal amount thereof is less than $1,000,000 and the original
maturity is less than one year.
Section 5.10. The Vice Presidents. The Board of Directors
may from time to time elect such Vice Presidents as the Board of
Directors deems appropriate and assign thereto such general or
specific powers, authority and responsibility as the Board of
Directors deems appropriate. The Board of Directors may specify
the order in which the Vice Presidents may act in the absence of
the President. Any action taken by a Vice President in the
performance of the duties of President shall be conclusive
evidence of the absence of the President. The Vice Presidents
shall perform such other duties as may, from time to time, be
assigned to them by the Board of Directors or the President. A
Vice President may also sign with the Secretary or an Assistant
Secretary certificates of stock of the Corporation.
Section 5.11. Assistant Officers. Any Assistant Secretary
or Assistant Treasurer appointed by the Board of Directors shall
have power to perform, and shall perform, all duties incumbent
upon the Secretary or the Treasurer of the Corporation,
respectively, subject to the general direction of such officers,
and shall perform such other duties as the Bylaws may require or
the Board of Directors may prescribe.
Section 5.12. Salaries. The salaries or other compensation
of the officers shall be fixed from time to time by the Board of
Directors. No officer shall be prevented from receiving such
salary or other compensation by reason of the fact that he is
also a director of the Corporation.
Section 5.13. Bonds of Officers. The Board of Directors
may secure the fidelity of any or all of such officers by bond
or otherwise, in such terms and with such surety or sureties,
conditions, penalties or securities as shall be required by the
Board of Directors.
Section 5.14. Delegation. The Board of Directors may
delegate temporarily the powers and duties of any officer of the
Corporation, in case of his absence or for any other reason, to
any other officer, and may authorize the delegation by any
officer of the Corporation of any of his powers and duties to any
agent or employee subject to the general supervision of such
officer.
ARTICLE VI
Miscellaneous
Section 6.1. Contracts. The Board of Directors may
authorize any officer or officers, agent or agents, of the
Corporation to enter into any contract or execute and deliver any
instrument in the name of or on behalf of the Corporation, and
such authority may be general or confined to specific instances;
and, unless so authorized by the Board of Directors or by these
Bylaws, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement,
or to pledge its credit or to render it liable pecuniarily for
any purpose or to any amount.
Section 6.2. Checks, Drafts, etc. All checks, drafts, or
other orders for the payment of money, notes, or other evidences
of indebtedness issued in the name of the Corporation shall be
signed by such officers or employees of the Corporation as shall
from time to time be authorized pursuant to these Bylaws or by
resolution of the Board of Directors.
Section 6.3. Depositories. All funds of the Corporation
shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies, or other depositories
as the Board of Directors may from time to time designate, upon
such terms and conditions as shall be fixed by the Board of
Directors. The Board of Directors may from time to time
authorize the opening and keeping with any such depository as it
may designate of general and special bank accounts, and may make
such special rules and regulations with respect thereto, not
inconsistent with the provisions of these Bylaws, as it may deem
expedient.
Section 6.4. Endorsement of Stock Certificates. Subject to
the specific directions of the Board of Directors, any share or
shares of stock issued by any corporation and owned by the
Corporation (including reacquired shares of the Corporation) may,
for sale or transfer, be endorsed in the name of the Corporation
by the President or any Vice President, and attested or witnessed
by the Secretary or any Assistant Secretary either with or
without affixing the corporate seal.
Section 6.5. Voting of Shares Owned by the Corporation.
Subject to the direction of the Board of Directors, the
President, the Secretary and the Treasurer, or any of them, shall
have the power and authority on behalf of the Corporation to
attend and to vote and to grant proxies to be used at any meeting
of shareholders of any corporation in which the Corporation may
hold stock. The Board of Directors may confer like powers upon
any other person or persons.
Section 6.6. Corporate Seal. The corporate seal shall be
in the form of a five pointed star surrounded by the words
"Stewart & Stevenson Services, Inc.," and such seal, or a
facsimile thereof, may be impressed on, affixed to, or in any
manner reproduced upon, instruments of any nature required to be
executed by officers of the Corporation.
Section 6.7. Fiscal Year. The fiscal year of the
Corporation shall begin on February 1 and end on January 31 of
the next following year, or on such other dates as the Board of
Directors at any time shall determine.
Section 6.8. Resignations. Any director or officer may
resign at any time. Such resignations shall be made in writing
and shall take effect at the time specified therein, or, if no
time be specified, at the time of its receipt by the Chairman of
the Board, President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
Section 6.9. Indemnification of Officers and Directors.
The Corporation shall indemnify any person against any judgment,
penalty, fine, settlement and reasonable expenses incurred by him
in connection with any threatened, pending or completed action,
suit or proceeding in which such person is or is threatened to be
made a party because he is or was serving as an officer or
director of the Corporation or at the request of the Corporation
as an officer, director, partner, venturer, proprietor, trustee,
employee, agent or other functionary of another entity and (i)
such person is wholly successful in the defense thereof, or (ii)
it is determined in the manner required by law that such person
conducted himself in good faith, reasonably believed that his
conduct was in the best interest of the Corporation and had no
reasonable cause to believe that his conduct was unlawful;
provided, however, that no person shall be indemnified with
respect to any matter as to which such person is found liable to
the Corporation. Any such indemnification shall be reported in
writing to the shareholders of the Corporation on or before the
notice or waiver of notice of the next shareholders' meeting and
in any event within twelve (12) months of the indemnification.
The right of indemnification under this Section 6.9 shall be in
addition to any other rights to which such persons may be
entitled.
Section 6.10. Loans to and Guaranties for Officers and
Directors. The Corporation shall not lend money to or guaranty
the indebtedness of any of its officers or directors unless such
loan or guaranty is approved by the number of directors equal to
a majority of the full Board of Directors none of whom are then
or will become as a result of such action indebted to the
Corporation and on the express finding by such directors that
such loan or guaranty is reasonably expected to directly or
indirectly benefit the Corporation.
ARTICLE VII
Amendments
Section 7.1. Amendments. The Board of Directors, by the
affirmative vote of the number of directors which is equal to
three-fourths (3/4) of the number who would constitute a full
Board of Directors at the time of such action, may alter, amend
or repeal these Bylaws or adopt new Bylaws. The shareholders by
affirmative vote of two-thirds (2/3) of the issued and
outstanding shares entitled to vote may alter, amend or repeal
these Bylaws or adopt new Bylaws, without notice at any regular
meeting, or if notice of the proposed amendment be contained in
the notice of any special meeting.
TO LETTER OF CREDIT AGREEMENT
(November 30, 1995)
THIS AGREEMENT AND THIRD AMENDMENT TO LETTER OF CREDIT
AGREEMENT (this "Amendment"), dated as of November 30, 1995, is
made and entered into by and among STEWART & STEVENSON SERVICES,
INC. (the "Borrower"), a Texas corporation; the financial
institutions listed on the signature pages hereto (collectively,
the "Lenders"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association domiciled in Houston, Harris County,
Texas acting in its capacity as agent for the Lenders (in such
capacity, the "Agent"). The Borrower, the Lenders and the Agent
are herein sometimes called the "Parties".
Recitals:
1. The Parties entered into a Letter of Credit Agreement
dated as of September 3, 1993 (which Letter of Credit Agreement,
as amended to the date hereof, is herein called the "Letter of
Credit Agreement").
2. The Parties desire to amend the Letter of Credit
Agreement to extend the Letter of Credit Termination Date.
Agreements:
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the Parties, the Parties
agree as follows:
1. Letter of Credit Termination Date Amended. The
following definition in Section 1 of the Letter of Credit
Agreement is amended as follows:
"Letter of Credit Termination Date" means the date
which is the earlier of (a) December 31, 2000 or (b) the date of
which the Agent gives written notice to the Borrower that no
additional Letters of Credit may be requested hereunder.
2. Conditions Precedent. This Amendment shall be
effective November 30, 1995 subject to the satisfaction, in a
manner satisfactory to the Agent, of each of the following
conditions precedent:
(a) The Agent shall have received the following, each of
which shall be in form and substance satisfactory to the Agent in
its sole discretion and duly and validly executed:
(1) A certificate of the Secretary or any Assistant
Secretary of the Borrower, dated as of the date hereof, as to (A)
the resolutions of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of this
Amendment (a copy of such resolutions to be attached to such
certificate), such certificate to state that said copy is a true
and correct copy of such resolutions and that such resolutions
were duly adopted and have not been amended, superseded, revoked
or modified in any respect and remain in full force and effect as
of the date of such certificate, and (B) the absence of any
change since September 3, 1993, in any of (x) the incumbency and
signatures of the officer or officers of the Borrower; (y) the
Articles of Incorporation of the Borrower, or (z) the Bylaws of
the Borrower;
(2) this Amendment, duly executed by the Borrower, the
Lenders and the Agent; and
(3) a current certificate from the Secretary of State
or other appropriate official of the State of Texas as to the
continued existence and good standing of Borrower.
(b) Borrower shall have paid all accrued and unpaid fees
and other amounts in connection with this Amendment.
(c) No Default shall have occurred and be continuing.
(d) Such effectiveness shall not violate any legal
requirement applicable to the Agent or any Lender.
3. Representations True; No Default. The Borrower
represents and warrants to the Agent and each Lender that (a) the
representations and warranties contained in the Letter of Credit
Agreement and in the other Loan Documents are true and correct on
and as of the date hereof as though made on and as of such date
(except to the extent such representations and warranties are
expressly stated to be made solely as of an earlier date) and (b)
no event has occurred and is continuing which constitutes an
Event of Default under the Letter of Credit Agreement or any of
the other Credit Documents or which upon the giving of notice or
the lapse of time or both would constitute such an Event of
Default.
4. Ratification. Except as expressly amended hereby, the
Letter of Credit Agreement, as hereby amended, and the other
Credit Documents are in all respects ratified and confirmed and
are, and shall continue to be, in full force and effect. The
Borrower hereby agrees and acknowledges that all of its
liabilities and obligations under the Letter of Credit Agreement,
the other Credit Documents, or otherwise, remain in full force
and effect as of the date of this Amendment.
5. Definitions and References. Unless otherwise defined
herein, terms used herein which are defined in the Letter of
Credit Agreement or in the other Credit Documents shall have the
meanings therein ascribed to them. The term "Agreement" as used
in the Letter of Credit Agreement and the term "Letter of Credit
Agreement" as used in the other Loan Documents or any other
instrument, document or writing furnished to the Agent or any
Lender by or on behalf of the Borrower shall mean the Letter of
Credit Agreement as hereby amended.
6. Expenses; Additional Information. The Borrower shall
pay to the Agent on demand all expenses (including reasonable
counsel's fees) incurred in connection with the preparation,
reproduction, execution and delivery of this Amendment and with
respect to advising the Agent as to its rights and
responsibilities under the Letter of Credit Agreement, as hereby
amended. In addition, the Borrower shall pay all costs and
expenses of the Agent, the Issuer and each Lender (including
counsel's fees) in connection with the enforcement of this
Amendment.
7. Severability. If any term or provision of this
Amendment or the application thereof to any person or
circumstances shall, to any extent, be deemed invalid or
unenforceable, the remainder of this Amendment, or the
application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and this Amendment shall be valid
and enforced to the fullest extent permitted by applicable law.
Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
thereof or affecting the validity or enforceability of such
provision in any other jurisdiction and, to this end, the
provisions of this Amendment are severable.
8. BORROWER'S INDEMNITY. The Borrower hereby
indemnifies and holds harmless the Issuer, the Agent and each
Lender from and against any and all claims and damages, losses,
liabilities, costs or expenses which the Issuer, the Agent or any
Lender may incur (or which may be claimed against the Issuer, the
Agent or any Lender by any Person whatsoever) BY REASON OF ITS
OWN NEGLIGENCE OR OTHERWISE, in connection with the execution and
delivery of any Letter of Credit or transfer of or payment or
failure to pay under any Letter of Credit; provided that the
Borrower shall not be required to indemnify the Issuer, the Agent
or any Lender for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by the
willful misconduct or gross negligence of the Issuer, the Agent
or the applicable Lender. Any amount to be paid under this
Section by the Borrower shall bear interest until paid at the
Past Due Rate.
9. DTPA WAIVER. The Borrower hereby waives all rights,
remedies, claims, demands and causes of action based upon or
related to the Texas Deceptive Trade Practices-Consumer
Protection Act as described in Sections 17.41 et seq. of the
Texas Business & Commerce Code, as the same pertains or may
pertain to any Credit Document or any of the transactions
contemplated therein, to the maximum extent that such rights,
etc. may lawfully and effectively be waived. In furtherance of
this waiver, the Borrower hereby represents and warrants to the
Agent, the Issuer and the Lenders that (a) the Borrower is
represented by legal counsel in connection with the negotiations,
execution and delivery of this Amendment; (b) the Borrower has a
choice other than to enter into this waiver in that it can obtain
the Letters of Credit from another institution or institutions,
and (c) the Borrower does not consider itself to be in a
significantly disparate bargaining position relative to the
Agent, the Issuer and the Lenders with respect to this Amendment.
10. RELEASE OF CLAIMS. The Borrower hereby releases,
discharges and acquits forever the Agent, the Issuer and the
Lenders and their respective officers, directors, trustees,
agents, employees and counsel (in each case, past, present or
future) from any and all Claims existing as of the date hereof
(or the date of actual execution hereof by the Borrower, if
later). As used herein, the term "Claim" shall mean any and all
liabilities, claims, defenses, demands, actions, causes of
action, judgments, deficiencies, interest, liens, costs or
expenses (including court costs, penalties, attorneys' fees and
disbursements, and amounts paid in settlement) of any kind and
character whatsoever, including claims for usury, breach of
contract, breach of commitment, negligent misrepresentation or
failure to act in good faith, in each case whether now known or
unknown, suspected or unsuspected, asserted or unasserted or
primary or contingent, and whether arising out of written
documents, unwritten undertakings, course of conduct, tort,
violations of laws or regulations or otherwise.
11. Miscellaneous. This Amendment (a) shall be binding
upon and inure to the benefit of the Borrower, the Agent, the
Issuer and the Lenders and their respective successors, assigns,
receivers and trustees (however, the Borrower may not assign its
rights hereunder without the express prior written consent of the
Lenders); (b) may be modified or amended only by a writing signed
by each party; (c) SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES) AND OF THE UNITED
STATES OF AMERICA; (d) may be executed in several counterparts,
and by the Parties on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an
original agreement, and all such separate counterparts shall
constitute but one and the same agreement, and (e) embodies the
entire agreement and understanding between the Parties with
respect to the subject matter hereof and supersedes all prior
agreements, consents and understandings relating to such subject
matter. The headings herein shall be accorded no significance in
interpreting this Amendment.
12. THIS AMENDMENT TOGETHER WITH ALL OTHER CREDIT DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AS TO THE SUBJECT
MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
IN WITNESS WHEREOF, the Parties have caused this Amendment
to be executed by their respective duly authorized officers
effective as of the date written above.
STEWART & STEVENSON SERVICES, INC.,
a Texas corporation
/s/ Robert L. Hargrave
By:______________________________
Robert L. Hargrave
Chief Executive Officer
The undersigned legal counsel for the Borrower signs this
Amendment not as a party to it but solely for the purpose of
complying with the provisions of Section 17.42(a)(3) of the Texas
Deceptive Trade Practices-Consumer Protection Act described in
Section 9.
/s/ Lawrence E. Wilson
_________________________________
Lawrence E. Wilson
Vice President and General Counsel
Texas Bar No.: 21704000
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking
association acting in its
individual capacity and as the
Agent for the Lenders named herein
/s/ Mona M. Foch
By:_______________________________
Mona M. Foch
Vice President
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION, a national banking
association
/s/ C. Todd Kulp
By:____________________________
C. Todd Kulp
Vice President
ABN AMRO BANK, N.V.,
HOUSTON AGENCY
/s/ Timothy M. Schneider
By:_______________________________
Timothy M. Schneider
Corporate Banking Officer
/s/ Ronald A. Mahle
By:_______________________________
Ronald A. Mahle
Group Vice President
THE BANK OF NEW YORK,
a New York banking corporation
/s/ Alan F. Lyster, Jr.
By:_______________________________
Alan F. Lyster, Jr.
Vice President
BANK OF AMERICA ILLINOIS,
an Illinois banking association
/s/ Claire Liu
By:________________________________
Claire Lui
Vice President
PNC BANK, NATIONAL ASSOCIATION,
a national banking association
/s/ Greg Gaschler
By:_____________________________
Greg Gaschler
Vice President
AGREEMENT AND FOURTH AMENDMENT
TO LOAN AGREEMENT
(November 30, 1995)
THIS AGREEMENT AND FOURTH AMENDMENT TO LOAN AGREEMENT (this
"Amendment"), dated as of November 30, 1995, is made and entered
into by and among STEWART & STEVENSON SERVICES, INC. (the
"Borrower"), a Texas corporation; the financial institutions
listed on the signature pages hereto (collectively, the
"Lenders") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association domiciled in Houston, Harris County,
Texas, acting in its capacity as agent for the Lenders (in such
capacity, the "Agent"). The Borrower, the Lenders and the Agent
are herein sometimes called the "Parties".
Recitals:
1. The Parties have entered into a Loan Agreement dated as
of September 3, 1993 (which Loan Agreement, as amended to the
date hereof, is herein called the "Loan Agreement").
2. The Parties desire to amend the Loan Agreement in
certain respects to extend the maturity date of the Notes
thereunder; to increase the amount of credit available
thereunder; to change certain financial covenants; to permit
Borrower to repurchase a limited amount of its own stock; to
change the basis for computing applicable interest rates and to
change the basis for computing the commitment fee.
Agreements:
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the Parties, the Parties
agree as follows:
1. Amendment of Certain Definitions in Section 1 of the
Loan Agreement. The following definitions in Section 1 of the
Loan Agreement are hereby amended as follows:
Margin Percentage means, on any day, the per annum
percentage corresponding to the Interest Bearing Debt to Total
Capitalization Ratio (determined as of the most recent
Calculation Date) on such day as provided below:
Interest Bearing Debt Per Annum
to Total Capitalization Ratio Percentage
40% or greater 40.0 basis points
20% to, but not including, 40% 32.5 basis points
less than 20% 25.0 basis points
Maturity Date means the maturity of the Notes, December
31, 2000, as the same may hereafter be accelerated pursuant to
the provisions of any of the Credit Documents.
Maximum Commitment means Two Hundred Million Dollars
($200,000,000).
Permitted Investments means: (a) readily marketable
securities issued or fully guaranteed by the United States of
America with maturities of not more than one year, (b) financial
instruments (including commercial paper) with maturities of not
more than 270 days of Persons, in each case, rated "Prime 2" or
better by Moody's Investors Service, Inc. or "A-2" or better by
Standard and Poor's Corporation; (c) certificates of deposit,
eurodollar deposits or repurchase obligations having a maturity
of not more than one year from the date of issuance thereof, or
tax exempt bonds backed by letters of credit, in each case,
issued by any U.S. domestic bank having capital surplus of at
least $100,000,000 or by any other financial institution
acceptable to Majority Lenders, all of the foregoing; (d) readily
marketable shares of any money market fund having total assets in
excess of $250,000,000 and not disapproved in writing by Majority
Lenders; and (e) common stock of the Borrower, not to exceed
$50,000,000 in aggregate cost; provided, that the aggregate value
of the assets subject to Section 7(a) consisting of "margin
stock" (as defined from time to time in or pursuant to Regulation
U of the Board of Governors of the Federal Reserve System, or any
successor regulation) shall never exceed 25% of the aggregate
value of all assets subject to Section 7(a).
2. Amendment of Section 2(c) of the Loan Agreement.
Section 2(c) of the Loan Agreement is amended to provide as
follows:
"(c) Commitment Fee. In consideration of the
Commitment, Borrower agrees to pay a commitment fee (computed on
the basis of the actual number of days elapsed in a year composed
of 365 or 366 days, as the case may be) equal to 12.5 basis
points per annum on the daily average difference between the
Commitment and the aggregate principal balance of the Notes, such
fee to be due and payable to Agent for the account of Lenders on
each Interest Payment Date for Base Rate Borrowings before the
Termination Date, and on the Termination Date, in addition to the
installments of interest on the Notes. All past due commitment
fees shall bear interest at the Past Due Rate. Lenders and
Borrower agree that Chapter 15 of the Texas Credit Code shall not
apply to this Agreement, the Notes or any Loan."
3. Amendment of Section 6(c) of the Loan Agreement.
Section 6(c) of the Loan Agreement is amended to provide as
follows:
"(c) Borrower and its Subsidiaries shall have and
maintain, on a consolidated basis, at all times:
(1) an Interest Bearing Debt to Total
Capitalization Ratio for Borrower of not greater than 0.50 to
1.00.
(2) a Tangible Net Worth for Borrower of not less
than $350,000,000.
(3) an Interest Coverage Ratio for Borrower of
not less than 2.00 to 1.00."
4. Amendment of Exhibit D to the Loan Agreement. Exhibit
D to the Loan Agreement is amended to be identical to Exhibit D
to this Amendment.
5. Conditions Precedent. This Amendment shall be
effective November 30, 1995, subject to the satisfaction, in a
manner satisfactory to the Agent, of each of the following
conditions precedent:
(a) The Agent shall have received the following, each of
which shall be in form and substance satisfactory to the Agent in
its sole discretion and duly and validly executed:
(1) A certificate of the Secretary or any Assistant
Secretary of the Borrower, dated as of the date hereof, as to (A)
the resolutions of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of this
Amendment and the Notes (a copy of such resolutions to be
attached to such certificate), such certificate to state that
said copy is a true and correct copy of such resolutions and that
such resolutions were duly adopted and have not been amended,
superseded, revoked or modified in any respect and remain in full
force and effect as of the date of such certificate, (B) the
incumbency and signatures of the officer or officers of the
Borrower; and (C) true and correct copies the Articles of
Incorporation of the Borrower, and the Bylaws of the Borrower;
(2) this Amendment, duly executed by the Borrower, the
Lenders and the Agent;
(3) Notes (the "New Notes"), in the aggregate
principal amount of $200,000,000, payable to the order of each
Lender in the amount of its Percentage of the Maximum Commitment;
(4) a current certificate from the Secretary of State
or other appropriate official of the State of Texas as to the
continued existence and good standing of Borrower; and
(5) a legal opinion from the general counsel for
Borrower acceptable to Agent and Majority Lenders.
(b) Borrower shall have paid all accrued and unpaid fees
and other amounts in connection with this Amendment.
(c) No Default shall have occurred and be continuing.
(d) Such effectiveness shall not violate any legal
requirement applicable to the Agent or any Lender.
6. Percentages. The dollar amount of each Lender's
interest in the Maximum Commitment as of the date hereof is set
forth opposite such Lender's name on the signature pages of this
Amendment. As defined in the Loan Agreement, each Lender's
Percentage is such Lender's interest in the Maximum Commitment.
7. Representations True; No Default. The Borrower
represents and warrants to the Agent and each Lender that (a) the
representations and warranties contained in the Loan Agreement
and in the other Credit Documents are true and correct on and as
of the date hereof as though made on and as of such date (except
to the extent such representations and warranties are expressly
stated to be made solely as of an earlier date); (b) the most
recent financial statements for Borrower and its Subsidiaries
furnished to Lenders as of the date hereof fairly present the
financial condition of Borrower and its Subsidiaries as of their
date and for the period then ended in accordance with GAAP; (c)
the proceeds of the Loans will be used to refinance existing
debt, to fund ongoing working capital requirements and for
general corporate purposes; and (d) no event has occurred and is
continuing which constitutes an Event of Default under the Loan
Agreement or any of the other Credit Documents or which upon the
giving of notice or the lapse of time or both would constitute
such an Event of Default.
8. Ratification. Except as expressly amended hereby, the
Loan Agreement, as hereby amended, and the other Credit Documents
are in all respects ratified and confirmed and are, and shall
continue to be, in full force and effect. The Borrower hereby
agrees and acknowledges that all of its liabilities and
obligations under the Loan Agreement, the other Credit Documents,
or otherwise, remain in full force and effect as of the date of
this Amendment.
9. Definitions and References. Unless otherwise defined
herein, terms used herein which are defined in the Loan Agreement
or in the other Credit Documents shall have the meanings therein
ascribed to them. The term "Agreement" as used in the Loan
Agreement and the term "Loan Agreement" as used in the other
Credit Documents or any other instrument, document or writing
furnished to the Agent or any Lender by or on behalf of the
Borrower shall mean the Loan Agreement as hereby amended. The
term "Notes" as used in the Loan Agreement and in the other
Credit Documents or any other instrument, agreement, document or
writing furnished to the Agent or any Lender by or on behalf of
the Borrower shall mean the New Notes executed pursuant to this
Amendment.
10. Expenses; Additional Information. The Borrower shall
pay to the Agent on demand all expenses (including reasonable
counsel's fees) incurred in connection with the preparation,
reproduction, execution and delivery of this Amendment and the
new Notes and with respect to advising the Agent as to its rights
and responsibilities under the Loan Agreement, as hereby amended.
In addition, the Borrower shall pay all costs and expenses of the
Agent and each Lender (including counsel's fees) in connection
with the enforcement of this Amendment and the New Notes.
11. Severability. If any term or provision of this
Amendment or the application thereof to any person or
circumstances shall, to any extent, be deemed invalid or
unenforceable, the remainder of this Amendment, or the
application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and this Amendment shall be valid
and enforced to the fullest extent permitted by applicable law.
Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
thereof or affecting the validity or enforceability of such
provision in any other jurisdiction and, to this end, the
provisions of this Amendment are severable.
12. INDEMNIFICATION. The Borrower shall indemnify the
Agent, the Lenders and each Affiliate thereof and their
respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses,
liabilities (including Environmental Liabilities), claims
(including Environmental Claims), expenses (including reasonable
attorneys' fees) or damages to which any of them may become
subject, insofar as such losses, liabilities, claims, expenses or
damages arise out of or result from (a) any actual or proposed
use by the Borrower of the proceeds of any Loan made or Letter of
Credit issued by any Lender or growing out of or resulting from
any Credit Document or any transaction or event contemplated
therein; (b) violation by the Borrower or any of its Subsidiaries
of any law, rule, regulation or order including those relating to
Hazardous Substances, petroleum, petroleum products or petroleum
wastes; (c) any Lender or the Agent being deemed an operator of
any of the Borrower's real or personal Property by a court or
other regulatory or administrative agency or tribunal or other
third party, to the extent such losses, liabilities, claims or
damages arise out of or result from any Hazardous Substance,
petroleum, petroleum product or petroleum waste located in on or
under such property, or (d) any investigation, litigation or
other proceeding (including any threatened investigation or
proceeding) relating to any of the foregoing. The obligations of
the Borrower under this Section shall survive the termination of
the Loan Agreement (as amended by this Amendment and as it may
otherwise be amended, restated, modified and supplemented from
time to time) and the repayment and expiry of the Loans and all
Letter of Credit Liabilities. Any amount to be paid under this
Section by the Borrower to the Agent or any Lender shall be a
demand obligation owing by the Borrower to the Agent or such
Lender and shall bear interest from the date of expenditure until
paid at the Past Due Rate.
13. DTPA WAIVER. The Borrower hereby waives all rights,
remedies, claims, demands and causes of action based upon or
related to the Texas Deceptive Trade Practices-Consumer
Protection Act as described in Sections 17.41 et seq. of the
Texas Business & Commerce Code, as the same pertains or may
pertain to any Credit Document or any of the transactions
contemplated therein, to the maximum extent that such rights,
etc. may lawfully and effectively be waived. In furtherance of
this waiver, the Borrower hereby represents and warrants to the
Agent and the Lenders that (a) the Borrower is represented by
legal counsel in connection with the negotiations, execution and
delivery of this Amendment; (b) the Borrower has a choice other
than to enter into this waiver in that it can obtain the Loans
from another institution or institutions, and (c) the Borrower
does not consider itself to be in a significantly disparate
bargaining position relative to the Agent and the Lenders with
respect to this Amendment.
14. RELEASE OF CLAIMS. The Borrower hereby releases,
discharges and acquits forever the Agent and the Lenders and
their respective officers, directors, trustees, agents, employees
and counsel (in each case, past, present or future) from any and
all Claims existing as of the date hereof (or the date of actual
execution hereof by the Borrower, if later). As used herein, the
term "Claim" shall mean any and all liabilities, claims,
defenses, demands, actions, causes of action, judgments,
deficiencies, interest, liens, costs or expenses (including court
costs, penalties, attorneys' fees and disbursements, and amounts
paid in settlement) of any kind and character whatsoever,
including claims for usury, breach of contract, breach of
commitment, negligent misrepresentation or failure to act in good
faith, in each case whether now known or unknown, suspected or
unsuspected, asserted or unasserted or primary or contingent, and
whether arising out of written documents, unwritten undertakings,
course of conduct, tort, violations of laws or regulations or
otherwise.
15. Miscellaneous. This Amendment (a) shall be binding
upon and inure to the benefit of the Borrower, the Agent and the
Lenders and their respective successors, assigns, receivers and
trustees (however, the Borrower may not assign its rights
hereunder without the express prior written consent of the
Lenders); (b) may be modified or amended only by a writing signed
by each party; (c) SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES) AND OF THE UNITED
STATES OF AMERICA; (d) may be executed in several
counterparts, and by the Parties on separate counterparts, and
each counterpart, when so executed and delivered, shall
constitute an original agreement, and all such separate
counterparts shall constitute but one and the same agreement, and
(e) embodies the entire agreement and understanding between the
Parties with respect to the subject matter hereof and supersedes
all prior agreements, consents and understandings relating to
such subject matter. The headings herein shall be accorded no
significance in interpreting this Amendment.
16. THIS AMENDMENT AND THE NEW NOTES, TOGETHER WITH ALL OF
THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the Parties have caused this Amendment
to be executed by their respective duly authorized officers
effective as of the date written above.
STEWART & STEVENSON SERVICES, INC.,
a Texas corporation
/s/ Robert L. Hargrave
By:_______________________________
Robert L. Hargrave
Chief Executive Officer
The undersigned legal counsel for the Borrower signs this
Amendment not as a party to it but solely for the purpose of
complying with the provisions of Section 17.42(a)(3) of the Texas
Deceptive Trade Practices-Consumer Protection Act described in
Section 13.
/s/ Lawrence E. Wilson
__________________________________
Lawrence E. Wilson
Vice President and General Counsel
Texas Bar No.: 21704000
Interest in Maximum Commitment: TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national
banking association,
$50,000,000.00 acting in its individual
capacity and as the Agent for
the Lenders named herein
/s/ Mona M. Foch
By:_____________________________
Mona M. Foch
Vice President
Interest in Maximum Commitment: NATIONSBANK OF TEXAS,NATIONAL
ASSOCIATION, a national
banking association
$40,000,000.00
/s/ C. Todd Kulp
By:__________________________
C. Todd Kulp
Vice President
Interest in Maximum Commitment: ABN AMRO BANK N.V. HOUSTON
AGENCY
$30,000,000.00
/s/ Timothy M. Schneider
By:______________________________
Timothy M. Schneider
Corporate Banking Officer
/s/ Ronald A. Mahle
By:______________________________
Ronald A. Mahle
Group Vice President
Interest in Maximum Commitment: BANK OF AMERICA ILLINOIS,
an Illinois banking
association
$30,000,000.00
/s/ Claire Liu
By:________________________________
Claire Liu
Vice President
Interest in Maximum Commitment: THE BANK OF NEW YORK
a New York banking
Corporation
$30,000,000.00
/s/ Alan F. Lyster, Jr.
By:________________________________
Alan F. Lyster, Jr.
Vice President
Interest in Maximum Commitment: PNC BANK, NATIONAL ASSOCIATION,
a national banking
association
$20,000,000.00
/a/ Greg Gaschler
By:______________________________
Greg Gaschler
Vice President
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