**Exhibit3.2**

 

**SEVENTH RESTATEDBYLAWS OFSTEWART & STEVENSON SERVICES, INC.**

**Effective July 9, 2004**

 

**ARTICLE I**

 

***Offices***

 

***Section 1.1. Offices. ***Theprincipal business office of the Corporation shall be at Houston, Texas or atsuch 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 withoutthe State of Texas as the Board of Directors may from time to time establish orthe business of the Corporation may require.

 

**ARTICLE II**

 

***Capital Stock***

 

***Section 2.1. Certificates Representing Shares.***  Certificates representing shares of stock ofthe Corporation shall be consecutively numbered and in such form or forms ascomply with the requirements of law and the Restated Articles of Incorporationand 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 besealed with the seal of the Corporation or a facsimile thereof.  The signatures of the President or VicePresident and the Secretary or Assistant Secretary may be facsimiles, engravedor printed, if the certificate is countersigned by a transfer agent, orregistered by a registrar, other than the Corporation itself or an employee ofthe Corporation.  In case any officer orofficers who have signed or whose facsimile signature or signatures have beenplaced upon such certificate shall have ceased to be such officer or officersbefore such certificate is issued, it may be adopted and issued by theCorporation with the same effect as if he or they had not ceased to be suchofficer or officers as of the date of its issuance, and the issuance anddelivery thereof by the Corporation shall constitute adoption thereof by theCorporation.

 

***Section 2.2.  StockCertificate Register and Shareholders of Record.***  The Secretary of the Corporation shall keepat the registered office of the Corporation, or cause a duly appointed transferagent or registrar to keep at its principal office, a share register showingthe names of the shareholders and their addresses, the number of shares held byeach, the number and date of issue of all certificates representing shares ofthe Corporation, the number and date of cancellation of every certificatesurrendered for cancellation and whether such certificates originated fromoriginal issue or transfer.  Suchinformation may be kept in any medium capable of reproducing the information inclearly legible form and shall be the official list of shareholders of recordof the

 

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Corporation for all purposes. The Corporation shall be entitled to treat the holder of record of anyshares of the Corporation as the owner thereof for all purposes, and shall notbe bound to recognize any equitable or other claim to, or interest in, suchshares or any rights deriving from such shares on the part of any other person,including (but without limitation) a purchaser, assignee, or transferee, unlessand until such other person becomes the holder of record of such shares,whether or not the Corporation shall have either actual or constructive noticeof the interest of such other person.

 

***Section 2.3. Transfer of Stock.***  The shares represented by any share certificates of theCorporation are transferable only on the stock certificate register of theCorporation by the holder of record thereof in person or by a duly authorizedattorney or legal representative upon surrender of the certificate for suchshares properly endorsed or assigned.

 

***Section 2.4. Transfer Agent and Registrar.***  The Board of Directors may appoint one ormore transfer agents or registrars of the shares, or both, and may require allshare certificates to bear the signature of a transfer agent or registrar orboth.

 

***Section 2.5.  Lost,Stolen or Destroyed Certificates.***  The Corporation may issue a new certificatefor shares of stock in the place of any certificate theretofore issued andalleged to have been lost, stolen or destroyed, but the Board of Directors mayrequire the owner of such lost, stolen or destroyed certificate, or his legalrepresentative, to furnish an affidavit as to such loss, theft, or destructionand to give a bond in such form and substance, and with such surety orsureties, with fixed or open penalty, as it may direct, to indemnify theCorporation, and the transfer agents and registrars, if any, against any claimthat may be made on account of the alleged loss, theft or destruction of suchcertificate.  Any such new certificateshall be plainly marked “Duplicate” on its face.

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# **ARTICLE III**

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***The Shareholders***

 

***Section 3.1.  AnnualMeetings.***  Anannual meeting of the shareholders, for the election of directors to succeedthose whose terms expire and for the transaction of such other business as mayproperly come before the meeting, shall be held at such place, within orwithout the State of Texas, as may be designated by the Board of Directors orofficer calling the meeting at 10:00 in the morning of the second Tuesday inJune, or on such other date and time as the Board of Directors or officercalling 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 beforethe annual meeting.  To be properlybrought before the annual meeting of shareholders, business must be (i)specified in the notice of meeting (or any supplement thereto) given by or atthe direction of the Board of Directors, (ii) otherwise properly brought beforethe meeting by or at the direction of the Board of Directors, or (iii)otherwise properly brought before the meeting by a shareholder of theCorporation who is a shareholder of record at the time of giving of noticeprovided for in this Section 3.1, who shall be entitled to vote

 

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at such meeting and who complies with the notice procedures set forthin this Section 3.1.  For business to beproperly brought before an annual meeting by a shareholder, the shareholder, inaddition to any other applicable requirements, must have given timely noticethereof in writing to the Secretary of the Corporation.  To be timely, a shareholder’s notice must bedelivered to or mailed and received at the principal executive offices of theCorporation not less than ninety (90) days prior to the anniversary date of theimmediately preceding annual meeting of shareholders of the Corporation.  A shareholder’s notice to the Secretaryshall set forth as to each matter the shareholder proposes to bring before theannual meeting: (a) a brief description of the business desired to be broughtbefore the annual meeting and the reasons for conducting such business at theannual meeting, (b) the name and address, as they appear on the Corporation’sbooks, of the shareholder proposing such business, (c) the class and number ofshares of voting stock of the Corporation which are beneficially owned by theshareholder, (d) a representation that the shareholder intends to appear inperson or by proxy at the meeting to bring the proposed business before theannual meeting, and (e) a description of any material interest of theshareholder in such business. Notwithstanding anything in these Bylaws to the contrary, no businessshall be conducted at an annual meeting except in accordance with theprocedures 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 beforethe meeting in accordance with the provisions of this Section 3.1, and if heshould so determine, he shall so declare to the meeting and any such businessnot properly brought before the meeting shall not be transacted.

 

Notwithstanding the foregoing provisions of thisSection 3.1, a shareholder shall also comply with all applicable requirementsof the Securities Exchange Act of 1934, as amended, and the rules andregulations thereunder with respect to the matters set forth in this Section3.1.

 

***Section 3.2.  SpecialMeetings.***  Exceptas otherwise provided by law or by the Restated Articles of Incorporation,special meetings of the shareholders may be called by the Chairman of theBoard, the President, the Board of Directors, or the holders of not less thanone-tenth of all the shares having voting power at such meeting, and shall beheld at the principal office of the Corporation, at such time as is stated inthe notice calling such meeting, or at such other place as the person or bodycalling such meeting may determine and state in such notice.

 

***Section 3.3.  Noticeof Meetings - Waiver.*** Written, electronic or printed notice, stating the place, day and hourof any meeting and, in case of a special shareholders’ meeting, the purpose orpurposes 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 by or at thedirection of the Chairman of the Board, the President, or the officer, body orperson calling the meeting, to each shareholder of record entitled to vote atsuch meeting.  Notice shall be deliveredpersonally, by mail or, subject to receipt by the Corporation of writtenauthorization, electronic transmission. If delivered personally, such notice shall be deemed delivered whenactually received by the shareholder. If delivered by mail, such 

 

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notice shall be deemed delivered when deposited in the United Satesmail addressed to the shareholder at his address as it appears on the stockcertificate register of the Corporation, with postage thereon prepaid.  If delivered by electronic transmission,such notice shall be deemed delivered when the notice or the location fromwhich the notice can be retrieved or otherwise viewed is sent to the electronicmail address specified by each shareholder that authorized electronictransmission.  Such further or earliernotice 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, shallbe equivalent to the giving of such notice. No notice shall be necessary for any adjourned meeting.

 

***Section 3.4.  Closingof Stock Certificate Register and Fixing Record Date. ***For the purpose of determining shareholdersentitled to notice of or to vote at any meeting of shareholders or anyadjournment thereof, or entitled to receive payment of any dividend or in orderto make a determination of shareholders for any other proper purpose, the Boardof Directors of the Corporation may provide that the stock certificate registershall be closed for a stated period but not to exceed, in any case, fifty (50)days.  If the stock certificate registershall be closed for the purpose of determining shareholders entitled to noticeof or to vote at a meeting of shareholders, such registers shall be closed forat least ten (10) days immediately preceding such meeting.  In lieu of closing the stock certificateregister, the Board of Directors may fix in advance a date as the record datefor any such determination of shareholders, such date in any case to be notmore than fifty (50) days and, in case of a meeting of shareholders, not lessthan ten (10) days prior to the date on which the particular action, requiringsuch determination of shareholders, is to be taken.  If the stock certificate register is not closed and no recorddate is fixed for the determination of shareholders entitled to notice of or tovote at a meeting of shareholders, or shareholders entitled to receive paymentof a dividend, the date on which notice of the meeting is mailed or the date onwhich the resolution of the Board of Directors declaring such dividend isadopted, as the case may be, shall be the record date for such determination ofshareholders.  When a determination ofshareholders entitled to vote at any meeting of shareholders has been made, asprovided in this Section, such determination shall apply to any adjournmentthereof except where the determination has been made through the closing of thestock certificate register and the stated period of closing has expired.

 

***Section 3.5.  VotingList.***  The officeror agent having charge of the stock certificate register for shares of theCorporation shall make, at least ten (10) days before such meeting ofshareholders, a complete list of the shareholders entitled to vote at suchmeeting or any adjournment thereof, arranged in alphabetical order, with theaddress of and the number of shares held by each, which list, for a period often (10) days prior to such meeting, shall be kept on file at the registeredoffice of the Corporation and shall be subject to inspection by any shareholderat any time during the usual business hours. Such list shall also be produced and kept open at the time and place ofthe meeting and shall be subject to the inspection of any shareholder duringthe whole time of the meeting.  Failureto comply with this Section shall not effect the validity of any action takenat such meeting.

 

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***Section 3.6.  Quorumand Officers.*** Except as otherwise provided by law, by the Restated Articles ofIncorporation or by these Bylaws, the holders of a majority of the sharesentitled to vote, represented in person or by proxy, shall constitute a quorumat 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 someother day and hour, without notice other than announcement at the meeting.  The vote of the holders of a majority of theshares entitled to vote and thus represented at a meeting at which a quorum ispresent shall be the act of the shareholders’ meeting, unless the vote of agreater number is required by law, the Restated Articles of Incorporation orthese Bylaws.  The Chairman of theBoard, or in his absence, the President, shall preside at and the Secretary, orin his absence, any Assistant Secretary shall keep the records of each meetingof shareholders, and in the absence of all such officers, their respectiveduties shall be performed by persons appointed by the meeting.

 

***Section 3.7. Proxies.***  Ashareholder may vote either in person or by proxy executed in writing by theshareholder, or by his duly authorized attorney-in-fact.  Proxies shall be dated but need not besealed, witnessed or acknowledged.  Noproxy shall be valid after eleven (11) months from the date of its executionunless otherwise provided in the proxy. Each proxy shall be revocable unless provided expressly therein to beirrevocable, and unless otherwise made irrevocable by law.  Proxies shall be filed with the Secretary ofthe Corporation before or at the time of the meeting.

 

***Section 3.8. Balloting.*** Upon the demand of any shareholder, the vote upon any question beforethe meeting shall be by ballot.  At eachmeeting inspectors of election may be appointed by the presiding officer of themeeting, and at any meeting for the election of directors, inspectors shall beso appointed on the demand of any shareholder present or represented by proxyand entitled to vote at the election of directors.  No director or candidate for the office of directors shall beappointed as such inspector.

 

***Section 3.9.  VotingRights; 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 ofshareholders.  No shareholder shall havethe right to cumulate his votes for the election of directors, but each shareshall 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 accordancewith the procedures set forth in these Bylaws and qualify for nominationpursuant to Section 4.1 shall be eligible for election by shareholders as, andto serve as, directors.  Nominations ofpersons for election to the Board of Directors of the Corporation may be madeat a meeting of shareholders (a) by or at the direction of the Board ofDirectors or a duly constituted committee thereof or (b) by any shareholder ofthe Corporation who is a shareholder of record at the time of giving of noticeprovided for in this Section 3.10, who shall be entitled to vote for theelection of directors at the meeting and who complies with the noticeprocedures set forth in this Section 3.10. Such nominations, other than those made by or at the direction of the

 

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Board of Directors, shall be made pursuant to timely notice in writingto the Secretary of the Corporation.  Tobe timely, a shareholder’s notice shall be delivered to or mailed and receivedat the principal executive offices of the Corporation (i) with respect to anelection to be held at the annual meeting of the shareholders of theCorporation, not less than ninety (90) days prior to the anniversary date ofthe immediately preceding annual meeting of shareholders of the Corporation,and (ii) with respect to an election to be held at a special meeting ofshareholders of the Corporation for the election of directors not later thanthe close of business on the tenth (10th) day following the day on which noticeof the date of the special meeting was mailed to shareholders of theCorporation as provided in Section 3.3 or public disclosure of the date of thespecial meeting was made, whichever first occurs.  Such shareholder’s notice to the Secretary shall set forth (x) asto each person whom the shareholder proposes to nominate for election or re-electionas a director, all information relating to such person that is required to bedisclosed in solicitations of proxies for election of directors, or isotherwise required, pursuant to Regulation 14A under the Securities ExchangeAct of 1934, as amended (including such person’s written consent to being namedin 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 theyappear on the Corporation’s books, of such shareholder and (ii) the class and numberof shares of voting stock of the Corporation which are beneficially owned bysuch shareholder.  At the request of theBoard of Directors, any person nominated by the Board of Directors for electionas a director shall furnish to the Secretary of the Corporation thatinformation required to be set forth in a shareholder’s notice of nominationwhich pertains to the nominee.  In theevent that a person is validly designated as a nominee to the Board ofDirectors in accordance with the procedures set forth in this Section 3.10 andshall thereafter become unable or unwilling to stand for election to the Boardof Directors, the Board of Directors or the shareholder who proposed suchnominee, as the case may be, may designate a substitute nominee.  Other than directors chosen pursuant to theprovisions of Section 4.3, no person shall be eligible to serve as a directorof the Corporation unless nominated in accordance with the procedures set forthin this Section 3.10.  The presidingofficer of the meeting of shareholders shall, if the facts warrant, determineand declare to the meeting that a nomination was not made in accordance withthe procedures prescribed by these Bylaws, and if he should so determine, heshall so declare to the meeting and the defective nomination shall bedisregarded.  Notwithstanding theforegoing provisions of this Section 3.10, a shareholder shall also comply withall applicable requirements of the Securities Exchange Act of 1934, as amended,and the rules and regulations thereunder with respect to the matters set forthin this Section 3.10.

 

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**ARTICLE IV**

 

***The Board of Directors***

 

***Section 4.1.  Numberand Qualifications****.* The business and affairs of the Corporation shall be managed and controlledby the Board of Directors, and subject to any restrictions imposed by law, bythe Restated Articles of Incorporation, or by these Bylaws, the Board ofDirectors may exercise all the powers of the Corporation.  The Board of Directors shall consist ofeight (8) members.  The number thereofmay 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 incumbentdirector.  Directors need not beresidents of Texas and need not be shareholders.  Directors who have attained the age of 73 years at the time theirterm expires shall resign on the expiration of their term.  No person shall be qualified for re-electionas a director of the Corporation if he is an incumbent director and hasattended fewer than fifty (50%) percent of the meetings of the Board ofDirectors held during any fiscal year.”

 

***Section 4.2. Classification and Term****.*  The Board of Directors shall be divided into three classes, eachclass consisting as nearly as possible of one-third (1/3) of the number ofdirectors that make up the full Board of Directors.  At each annual meeting of shareholders, the number of directorsequal to the number of the class whose term expires at the time of such meetingshall be elected to hold office until the third succeeding annual meeting ofshareholders.

 

***Section 4.3. Vacancies.*** Any vacancy on the Board of Directors may be filled by the vote of amajority 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) vacanciescaused 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 theunexpired portion of his predecessor’s term if such vacancy was created by thedeath, resignation, disqualification or removal of a director or until the nextannual meeting of shareholders if such vacancy was created by an increase inthe size of the Board of Directors.

 

***Section 4.4.  Placeof Meeting.*** Meetings of the Board of Directors may be held either within or withoutthe State of Texas, at whatsoever place is specified by the officer or directorcalling the meeting.  In the absence ofother designation, the meeting shall be held at the principal business officeof the Corporation.

 

***Section 4.5.  RegularMeetings.***  TheBoard of Directors shall hold no fewer than four (4) regular meetings in eachfiscal year.  One such regular meeting(the “Annual Meeting of Directors”) shall be held immediately following theannual meeting of shareholders, at the place of such shareholder meeting, andthe other regular meetings shall be held at such times and places as the Boardof Directors shall establish by resolution at the regular meeting following theannual meeting of shareholders.  Nonotice

 

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of any kind of such regular meetings shall be necessary to either oldor new members of the Board of Directors.

 

***Section 4.6.  SpecialMeetings.***  Specialmeetings of the Board of Directors shall be held at any time by call of theChairman of the Board, the President (if a director) or by a majority of thedirectors.  The Secretary or officerperforming his duties shall give notice of special meetings to each director athis 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 personallydelivering or, subject to receipt of written authorization, electronicallytransmitting the same at least one (1) day or twenty-four (24) hours before themeeting.  No notice shall be necessaryfor any adjourned meeting.  A waiver ofnotice of any special meeting, in writing, signed by the person or personsentitled to such notice, whether before or after the time stated therein, shallbe equivalent to the giving of such notice. Such notice or waiver thereof need not specify the business to betransacted at, or the purpose of, such meeting.  Attendance of a director at a meeting shall constitute a waiverof notice of such meeting, except where a director attends a meeting for theexpress and announced purpose of objecting to the transaction of any businesson the ground that the meeting is not lawfully called or convened.

 

***Section 4.7.  Quorum.***  Four directors shall constitute a quorum forthe transaction of business.  The act ofa majority of the directors present at a meeting at which a quorum is inattendance shall be the act of the Board of Directors unless a larger number isrequired by applicable law, the Restated Articles of Incorporation or theseBylaws, but any one or more directors, although less than a quorum, may adjournthe meeting to some other day or hour.

 

***Section 4.8.  Chairman of the Board.***  At each Annual Meeting of Directors, theBoard of Directors shall elect from its membership a Chairman of the Board whoshall serve in such capacity until the next Annual Meeting of Directors oruntil his death, resignation, disqualification or removal if sooner.  The Chairman of the Board shall preside atall meetings of the Board of Directors and at all meetings of the shareholdersof the Company.

 

***Section 4.9. Procedure at Meetings.***  The Chairman of the Board shall preside at meetings of the Boardof Directors.  In his absence at anymeeting, the President (if a director) shall preside, and in the absence ofboth the Chairman of the Board and the President, a member of the Board ofDirectors selected by the members present shall preside.  The Secretary of the Corporation shall actas secretary at all meetings of the Board, or in his absence the presidingofficer 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 ofDirectors may determine.

 

***Section 4.10. Presumption of Assent.***  A director of the Corporation who is present at a meeting of theBoard of Directors at which action on any corporate matter is taken shall bepresumed to have assented to the action taken unless his dissent shall beentered in the minutes of the meeting or unless he shall file his writtendissent to such action with the person acting as the secretary of the meetingbefore the adjournment

 

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thereof or shall forward such dissent by registered mail to theSecretary of the Corporation immediately after the adjournment of themeeting.  Such right to dissent shallnot 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 eachdirector who is not an officer or employee of the Corporation for attendance ateach regular or special meeting of the Board of Directors or of any Committeethereof; but nothing herein shall preclude any director from serving theCorporation in any other capacity or receiving compensation therefor.

 

***Section 4.12. Standing Committees.**** *The Board of Directors by resolution adopted by a majority ofthe number of directors fixed by the Bylaws shall designate from their numberan Executive Committee and an Audit Committee.

 

The Executive Committee shall consist of not less thanthree (3) persons.  Each member shallserve until the next annual meeting of shareholders or until such director’sretirement, removal, disqualification, or death.  The Executive Committee shall meet upon the call of the chairmanof such committee or any two (2) members thereof and shall have and mayexercise all of the authority of the Board of Directors in the business andaffairs of the Corporation except (a) the power to authorize or approve thesale or other transfer of any real property now owned or hereafter acquired bythe Corporation; (b) the power to vote, direct the vote or grant proxiesrelating to any stock owned by the Corporation; (c) the power to authorize orapprove purchases or commitments for goods or services with an aggregate marketvalue in any single transaction or group of related transactions exceeding$5,000,000 except for goods and services purchased in the ordinary course ofbusiness for inventory or pursuant to capital expenditure budgets approved bythe Board of Directors; (d) the power to authorize or approve the incurrence orguaranty 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 makeloans, guaranties, investments, or other commitments outside the ordinarycourse of business in excess of $5,000,000 at any time outstanding to any oneperson or group of persons; and (f) where action of the Board of Directors isspecified by the Texas Business Corporation Act or by other applicable law.

 

The AuditCommittee shall consist of not less than three (3) directors who are qualifiedand independent of management and free of any relationship that, in the opinionof the Board of Directors, would interfere with the exercise of independentjudgment as a committee member.  Eachmember shall serve until the next annual meeting of shareholders or until suchdirector’s retirement, removal, disqualification, or death.  The Audit Committee shall meet no fewer thanfour (4) times in each fiscal year of the Corporation upon the call of thechairman of such committee or any two (2) members thereof and shall have andmay exercise such responsibilities, authority and power as the Board ofDirectors specifies.

 

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The designation of Standing Committees and delegationof authority thereto shall not operate to relieve the Board of Directors, orany member thereof, of any responsibility imposed upon it or him by law.

 

***Section 4.13.  OtherCommittees of the Board of Directors.***  The Board of Directors, by resolutionadopted by a majority of the number of directors fixed by the Bylaws, maydesignate from their number such compensation, nominating and other committeesas they shall, from time to time, deem necessary and proper.  Such committees shall be composed of notless 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 ofauthority thereto shall not operate to relieve the Board of Directors, or anymember 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 timeas set forth in the Bylaws and on call of the Chairman or any two or moremembers thereof.  Notice of each suchmeeting, stating the place, day and hour thereof, shall be served personally oneach member of such Committee, or shall be mailed, delivered, telephoned or,subject to receipt of written authorization, electronically transmitted to hisaddress on the books of the Corporation, at least twenty-four (24) hours beforethe meeting.  No such notice need statethe business proposed to be transacted at the meeting.  No notice of the time or place of anymeeting of such Committee need be given to any member thereof who attends inperson or who, in writing executed and filed with the records of the meetingeither before or after the holding thereof, waives such notice.  No notice need be given of an adjournedmeeting of any Committee.  Meetings ofthe Committees may be held at such place or places, either within or outside ofthe State of Texas, as such Committee shall determine, or as may be specifiedor fixed in the respective notices or waivers thereof.  Each Committee may fix its own rules ofprocedure.  They shall keep record oftheir proceedings and shall report these proceedings to the Board of Directorsat 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 ofthe number of directors fixed by the Bylaws, may appoint from those persons whohave previously served as a director of the Corporation, such advisorydirectors as the Board of Directors may, from time to time, determine to bedesirable.  Such advisory directorsshall be ex-officio members of the Board of Directors, shall hold office fromthe date elected until the next following annual meeting of the Board ofDirectors unless sooner removed in the manner provided for the removal ofDirectors, shall be entitled to receive notice of and to attend all meetings ofthe Board of Directors and shall be reimbursed for all out-of-pocket expensesincurred to attend meetings of the Board of Directors.  Advisory directors shall not be a member ofany committee of the Board of Directors, vote on any matter brought before theBoard of Directors for action or be counted for the purposes of determiningwhether a quorum exists.  Failure tonotify the advisory directors of any meeting shall not render any meeting orany action taken at such meeting void.

 

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# **ARTICLE V**

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***Officers***

 

***Section 5.1.  Number.***  The officers of the Corporation shallconsist of the President, Secretary, Treasurer and Controller; and, inaddition, such Vice Presidents, other officers and assistant officers and agentsas may be deemed necessary and elected or appointed by the Board ofDirectors.  The Board of Directors mayby resolution designate any officer as the Chief Executive Officer, ChiefFinancial Officer, Chief Accounting Officer, or other title.  Any two or more offices may be held by thesame person.

 

***Section 5.2. Election; Term; Qualification.***  Officers shall be chosen by the Board ofDirectors at the Annual Meeting of the Directors and may be chosen at any othermeeting of the Board of Directors.  Eachofficer 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 maybe removed by the Board of Directors at its pleasure, but such removal shall bewithout prejudice to other contract rights, if any, of the person soremoved.  Election or appointment of anofficer or agent shall not of itself create any contract rights.

 

***Section 5.4. Vacancies.*** Any vacancy in any office for any cause may be filled by the Board ofDirectors at any meeting.

 

***Section 5.5.  Duties.***  The officers of the Corporation shall havesuch powers and duties, except as modified by the Board of Directors, asgenerally pertain to their offices, respectively, as well as such powers andduties as from time to time shall be conferred by the Board of Directors and bythese Bylaws.

 

***Section 5.6.  ThePresident.***  ThePresident shall, subject to the control of the Board of Directors, have generalsupervision and control over all of the business, assets and affairs of theCorporation.  All other officers shallreport as directed by the President.  Inthe absence of the Chairman of the Board, the President shall perform all ofthe duties of the Chairman of the Board, and when so acting shall have all ofthe powers of, and be subject to all restrictions upon, the Chairman of theBoard.

 

***Section 5.7. Secretary.*** The Secretary shall:  (a) keepthe minutes of all meetings of the shareholders, of the Board of Directors, andof all committees of the Board of Directors, in one or more books provided forthat purpose and shall distribute a copy of all such minutes to the members ofthe Board of Directors immediately on receipt thereof, (b) see that all noticesare duly given in accordance with the provisions of these Bylaws or as requiredby law, (c) be custodian of the corporate records and of the seal of theCorporation and see that the seal of the Corporation is affixed to alldocuments the execution of which on behalf of the Corporation under its seal isduly authorized, (d) have

 

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general charge of the stock certificate register, transfer books andstock ledgers, and such other books and papers as the Board of Directors maydirect, of the Corporation, all of which shall, at all reasonable times, beopen to the examination of any director, upon application at the office of theCorporation during business hours, and (e) in general perform all duties andexercise all powers incident to the office of the Secretary and such otherduties and powers as the Board of Directors or the President from time to timemay assign to or confer on him.

 

***Section 5.8. Treasurer.*** The Treasurer shall be legal custodian of all monies, notes, securities,and other valuables which may from time to time come into the possession of theCorporation and shall perform such other duties as the Bylaws may require orthe Board of Directors may prescribe. The Treasurer shall have the power and authority to incur or guarantyindebtedness on behalf of the Corporation without the prior approval of theBoard of Directors provided that the original principal amount thereof is lessthan $1,000,000 and the original maturity is less than one year.

 

***Section 5.9. Controller.*** The Controller shall keep complete and accurate books and records ofaccount showing accurately at all times the financial condition of theCorporation.  He shall furnish at meetingsof the Board of Directors, or whenever requested, a statement of the financialcondition of the Corporation, and shall perform such other duties as the Bylawsmay require or the Board of Directors may prescribe.

 

***Section 5.10.  TheVice Presidents.*** The Board of Directors may from time to time elect such Vice Presidentsas the Board of Directors deems appropriate and assign thereto such general orspecific powers, authority and responsibility as the Board of Directors deemsappropriate.  The Board of Directors mayspecify the order in which the Vice Presidents may act in the absence of thePresident.  Any action taken by a VicePresident in the performance of the duties of President shall be conclusiveevidence of the absence of the President. The Vice Presidents shall perform such other duties as may, from time totime, be assigned to them by the Board of Directors or the President.  A Vice President may also sign with theSecretary or an Assistant Secretary certificates of stock of the Corporation.

 

***Section 5.11. Assistant Officers.***  Any Assistant Secretary, Assistant Treasurer or AssistantController appointed by the Board of Directors shall have power to perform, andshall perform, all duties incumbent upon the Secretary, the Treasurer or theController of the Corporation, respectively, subject to the general directionof such officers, and shall perform such other duties as the Bylaws may requireor the Board of Directors may prescribe.

 

***Section 5.12. Salaries.*** The salaries or other compensation of the officers shall be fixed fromtime to time by the Board of Directors. No officer shall be prevented from receiving such salary or othercompensation by reason of the fact that he is also a director of theCorporation.

 

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***Section 5.13.  Bondsof Officers.***  TheBoard of Directors may secure the fidelity of any or all of such officers bybond 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 ofany 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 Corporationof any of his powers and duties to any agent or employee subject to the generalsupervision of such officer.

 

**ARTICLE VI**

 

***Miscellaneous***

 

***Section 6.1. Contracts.*** The Board of Directors may authorize any officer or officers, agent oragents, of the Corporation to enter into any contract or execute and deliverany instrument in the name of or on behalf of the Corporation, and suchauthority may be general or confined to specific instances; and, unless soauthorized by the Board of Directors or by these Bylaws, no officer, agent oremployee shall have any power or authority to bind the Corporation by anycontract or engagement, or to pledge its credit or to render it liablepecuniarily for any purpose or to any amount.

 

***Section 6.2.  Checks,Drafts, etc.***  Allchecks, drafts, or other orders for the payment of money, notes, or otherevidences of indebtedness issued in the name of the Corporation shall be signedby such officers or employees of the Corporation as shall from time to time beauthorized 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 thecredit of the Corporation in such banks, trust companies, or other depositoriesas the Board of Directors may from time to time designate, upon such terms andconditions as shall be fixed by the Board of Directors.  The Board of Directors may from time to timeauthorize the opening and keeping with any such depository as it may designateof general and special bank accounts, and may make such special rules andregulations with respect thereto, not inconsistent with the provisions of theseBylaws, as it may deem expedient.

 

***Section 6.4. Endorsement of Stock Certificates.***  Subject to the specific directions of theBoard of Directors, any share or shares of stock issued by any corporation andowned by the Corporation (including reacquired shares of the Corporation) may,for sale or transfer, be endorsed in the name of the Corporation by the Presidentor any Vice President, and attested or witnessed by the Secretary or anyAssistant Secretary either with or without affixing the corporate seal.

 

***Section 6.5.  Votingof Shares Owned by the Corporation.***  Subject to the direction of the Board ofDirectors, the President, the Secretary and the Treasurer, or any

 

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of them, shall have the power and authority on behalf of theCorporation to attend and to vote and to grant proxies to be used at any meetingof shareholders of any corporation in which the Corporation may holdstock.  The Board of Directors mayconfer 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 surroundedby the words “Stewart & Stevenson Services, Inc.,” and such seal, or afacsimile thereof, may be impressed on, affixed to, or in any manner reproducedupon, instruments of any nature required to be executed by officers of theCorporation.

 

***Section 6.7.  FiscalYear.***  The fiscalyear of the Corporation shall begin on February 1 and end on January 31 of thenext following year, or on such other dates as the Board of Directors at anytime shall determine.

 

***Section 6.8. Resignations.*** Any director or officer may resign at any time.  Such resignations shall be made in writingand shall take effect at the time specified therein, or, if no time bespecified, at the time of its receipt by the Chairman of the Board, Presidentor Secretary.  The acceptance of aresignation shall not be necessary to make it effective, unless expressly soprovided in the resignation.

 

***Section 6.9. Indemnification of Officers and Directors.***  The Corporation shall indemnify any personagainst any judgment, penalty, fine, settlement and reasonable expensesincurred 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 partybecause he is or was serving as an officer or director of the Corporation or atthe 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 isdetermined in the manner required by law that such person conducted himself ingood faith, reasonably believed that his conduct was in the best interest ofthe Corporation and had no reasonable cause to believe that his conduct wasunlawful; provided, however, that no person shall be indemnified if suchindemnity is prohibited by applicable law. Any such indemnification shall be reported in writing to theshareholders of the Corporation on or before the notice or waiver of notice ofthe next shareholders’ meeting and in any event within twelve (12) months ofthe indemnification.  The right ofindemnification under this Section 6.9 shall be in addition to any other rightsto which such persons may be entitled and is intended to provide the broadestbenefits permitted by law.

 

# **ARTICLE VII**

# ** **

***Amendments***

 

***Section 7.1. Amendments.*** The Board of Directors, by the affirmative vote of seven directors mayalter, amend or repeal these Bylaws or adopt new Bylaws.  The shareholders by affirmative vote oftwo-thirds (2/3) of the issued and outstanding shares entitled to vote mayalter, amend or repeal these Bylaws or adopt new Bylaws, without notice at anyregular meeting, or if notice of the proposed amendment be contained in thenotice of any special meeting.

 

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