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                                                                     EXHIBIT 4.1

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                       STEWART & STEVENSON SERVICES, INC.









                              AMENDED AND RESTATED
                            1996 DIRECTOR STOCK PLAN












                                  APRIL 8, 2002


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                                TABLE OF CONTENTS
                                                                            PAGE


ARTICLE I. PURPOSE.........................................................1

ARTICLE II. ELIGIBILITY....................................................1

ARTICLE III. STOCK SUBJECT TO THE PLAN.....................................1

ARTICLE IV. DIRECTOR STOCK AWARDS..........................................1

ARTICLE V. TERMS, CONDITIONS AND FORM OF OPTIONS...........................1
        SECTION 5.1 NON-STATUTORY STOCK OPTIONS............................2
        SECTION 5.2 OPTION GRANT DATES.....................................2
        SECTION 5.3 TRANSFERABILITY........................................2
        SECTION 5.4 VESTING AND TERM OF OPTION.............................2
        SECTION 5.5 CHANGE OF CONTROL......................................2
        SECTION 5.6 MANNER OF EXERCISE.....................................3
        SECTION 5.7 TERMINATION OF DIRECTORSHIP............................3

ARTICLE VI. OPTION PRICE...................................................4

ARTICLE VII. VALUATION OF STOCK............................................4

ARTICLE VIII. NO RIGHT TO CONTINUE AS A DIRECTOR...........................4

ARTICLE IX. ADJUSTMENT TO STOCK............................................4

ARTICLE X. EFFECTIVE DATE..................................................4

ARTICLE XI. AMENDMENT OF THE PLAN..........................................5

ARTICLE XII. USE OF PROCEEDS...............................................5

ARTICLE XIII. COMPLIANCE WITH APPLICABLE LAWS..............................5

ARTICLE XIV. GOVERNING LAW.................................................5

ARTICLE XV. SUCCESSORS.....................................................5


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                       STEWART & STEVENSON SERVICES, INC.
                              AMENDED AND RESTATED
                            1996 DIRECTOR STOCK PLAN


                               ARTICLE I. PURPOSE

      The purpose of this Amended and Restated 1996 Director Stock Plan (the
"Plan") of Stewart & Stevenson Services, Inc. (the "Company") is to encourage
ownership in the Company by outside directors of the Company whose continued
services are considered essential to the Company's continued progress, to
provide them with a further incentive to continue as directors of the Company,
and to increase the value of the Company.

                           ARTICLE II. ELIGIBILITY

      Each director of the Company is eligible to participate in the Plan,
unless he or she is an officer or employee of the Company or any subsidiary of
the Company ("Eligible Director").

                    ARTICLE III. STOCK SUBJECT TO THE PLAN

      The total number of the Company's authorized but unissued shares of common
stock, without par value, ("Stock") with respect to which Director Stock Awards
and options may be granted shall not exceed in the aggregate 350,000 shares. The
class and aggregate number of shares of Stock which may be subject to Director
Stock Awards and options granted under the Plan shall be subject to adjustment
in accordance with Article IX. In connection with the issuance of shares of
Stock under the Plan, the Company may utilize treasury shares or authorized but
unissued shares. If any Director Stock Award or option under the Plan shall
expire or terminate for any reason without having been exercised in full or if
any Director Stock Award or option shall be forfeited, the shares subject to the
unexercised or forfeited portion of such award or option shall again be
available for purposes of the Plan.

                      ARTICLE IV. DIRECTOR STOCK AWARDS

      On the date of each annual meeting of the Company's shareholders ("Annual
Meeting") after the Effective Date (within the meaning of Article X), the
Company will, without cost to the grantee and without the exercise of the
discretion of any person or persons, award and issue to each Eligible Director
who is elected to serve a term as a director at each such meeting and to each
Eligible Director who is serving as a director for a term that continues after
such meeting, that number of shares of Stock (rounded down to the nearest whole
share) determined by dividing (i) the sum of $15,000 by (ii) the fair market
value (as determined in Article VII) of a share of Stock on the date of such
meeting. If an Eligible Director is elected or appointed to serve a term as a

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director on a date other than the date of the Company's Annual Meeting and has
not otherwise received a Director Stock Award for such year, the Company will,
without cost to the grantee and without the exercise of the discretion of any
person or persons, award and issue to such Eligible Director a prorated Director
Stock Award equal to the product of (X) the quotient of $15,000 divided by the
fair market value (as determined in Article VII) of a share of Stock on the date
of such election or appointment, multiplied by (Y) the quotient of the number of
days remaining until the Company's next Annual Meeting divided by 365 days. With
respect to each Director Stock Award, the Eligible Director shall pay to the
Company all amounts, if any, that the Company is required to collect and remit
to the Internal Revenue Service or any other taxing authority as a result of
such award.

               ARTICLE V. TERMS, CONDITIONS AND FORM OF OPTIONS

      Each option granted under this Plan shall be evidenced by a written
agreement which shall be subject to the following terms and conditions:

      SECTION 5.1 NON-STATUTORY STOCK OPTIONS. All options granted under the
Plan shall be nonstatutory options, not entitled to special tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended to date and as may
be further amended from time to time (the "Code").

      SECTION 5.2 OPTION GRANT DATES. On the date of each Annual Meeting after
the Effective Date of the Plan, the Company will, without cost to the grantee
and without the exercise of the discretion of any person or persons, grant to
each Eligible Director who is elected to serve a term as a director at such
meeting and to each Eligible Director who is serving as a director for a term
that continues after such meeting, an option to acquire 5,000 shares of Stock at
an exercise price determined in accordance with Article VI and subject to
adjustment under Article IX; PROVIDED, that the Board of Directors may, in its
discretion by majority vote, increase or decrease the number of shares subject
to the aforementioned option. If an Eligible Director is elected or appointed to
serve a term as a director on a date other than the date of the Company's Annual
Meeting and has not otherwise received an option to acquire shares of Stock for
such year, the Company will, without cost to the grantee and without the
exercise of the discretion of any person or persons, on the date of such
election or appointment, grant to such Eligible Director an option to acquire
5,000 shares of Stock at an exercise price determined in accordance with Article
VI and subject to adjustment under Article IX; PROVIDED, that the Board of
Directors may, in its discretion by majority vote, increase or decrease the
number of shares subject to such option.

      Furthermore, the Board of Directors of the Company may, from time to time,
deem it appropriate and may provide certain Eligible Directors with additional
options to acquire Stock at an exercise price determined in accordance with
Article VI and subject to adjustment under Article IX.


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      SECTION 5.3 TRANSFERABILITY. Each option granted under the Plan by its
terms shall not be transferable by the grantee otherwise than by will or by the
laws of descent and distribution or pursuant to a domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder.

      SECTION 5.4 VESTING AND TERM OF OPTION. Options become exercisable on the
first anniversary date after the date upon which the options were granted. When
an option becomes exercisable, the shares may be purchased at any time, or from
time to time, in whole or in part, until the option term expires; provided,
however, that any option granted pursuant to the Plan shall become exercisable
in full upon the death of the grantee, the failure of such grantee to stand for
re-election or be re-elected, or the retirement of such grantee after serving at
least 60 consecutive months on the Board of Directors. Unless terminated earlier
in accordance with the terms of the Plan, each option shall terminate upon the
expiration of ten years after such option was granted.

      SECTION 5.5 CHANGE OF CONTROL. In the case of any merger, exchange of
shares, consolidation or combination of the Company (other than a transaction in
which the holders of Stock immediately prior to the consummation thereof own 50%
or more of the voting securities eligible to vote for the election of directors
of the surviving entity immediately after the consummation of such transaction)
all options theretofore granted and not fully exercisable shall become
exercisable on the date that is 30 days prior to the record or effective date of
such merger, exchange of shares, consolidation or combination.

      If a tender offer or exchange offer for the Stock (other than such an
offer by the Company) is commenced or if the Company shall set a record date to
approve an agreement providing for a sale or other disposition of all or
substantially all of the assets of the Company, all options theretofore granted
and not fully exercisable shall become exercisable in full upon the commencement
of such tender offer or 30 days prior to such record date and shall remain so
exercisable for a period of 60 days following such date after which they shall
revert to being exercisable in accordance with their terms.

      If any tender offer, exchange offer, or sale or other disposition of all
or substantially all of the assets of the Company results in any grantee ceasing
to be a director of the Company, then all options theretofore granted and not
fully exercisable shall automatically become exercisable in full upon the
termination of such person as a director.

      SECTION 5.6 MANNER OF EXERCISE. Options may be exercised only by written
notice to the Company, which notice must specify the date the stock option is to
be exercised (such date must be on or after the date of the notice) and the
number of shares of Stock covered by the exercise, accompanied by payment of the
full option price of the shares covered by the options being exercised and
payment of all amounts, if any, that the Company is required to collect and
remit to the Internal Revenue Service or any other taxing authority as a result
of such exercise. Such payment shall be made in one or a combination of the
following alternative forms:


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      (i)   cash (including check, bank draft or money order);

      (ii) certificates, duly endorsed or accompanied by appropriate transfer
      instruments, representing shares of Stock previously acquired and standing
      in the name of the grantee, with an aggregate fair market value on the
      date of exercise that is equal to or less than the option price of the
      shares covered by the options being exercised hereunder; or

      (iii) by delivering a properly executed exercise notice together with
      irrevocable instructions to a broker to deliver promptly to the Company
      the total option price in cash.

      If the grantee desires that the shares of Stock be registered in his or
her name and that of another as joint tenants with rights of survivorship, he or
she should so state in the notice. In no case may fewer than 100 of such shares
be purchased at any one time, except to purchase a residue of fewer than 100
shares. An option may not be exercised for a fractional share.

      SECTION 5.7 TERMINATION OF DIRECTORSHIP. All rights of a grantee in an
option, to the extent that such rights have not been exercised, shall lapse and
be forfeited one year after the termination of his or her services as a director
of the Company or, if earlier, on the original expiration date of the option. In
the case of retirement, whether by reason of disability or age, such grantee's
option may be exercised within the period set forth in the preceding sentence by
such grantee or his or her legal representative. In the case of death, such
grantee's option may be exercised within the period set forth in the preceding
sentence by the personal representative of the grantee's estate or by the person
or persons to whom the option is transferred pursuant to the grantee's will or
in accordance with the laws of descent and distribution.

                           ARTICLE VI. OPTION PRICE

      The option price per share for the shares covered by each option shall be
the fair market value (as determined in Article VII) of one share of Stock as of
the date of grant of the option; PROVIDED, that the Board of Directors may, in
its discretion by majority vote, set the option price per share for the shares
covered by each option in excess of the fair market value of one share of Stock
as of the date of grant of the option.

                       ARTICLE VII. VALUATION OF STOCK

      For all valuation purposes under the Plan, the fair market value of a
share of Stock shall be the last reported sale price as of the close of trading
activity on the day for which such fair market value is to be determined, as
reported on the Nasdaq National Market system, or any similar system then in
use, or the principal securities exchange on which the Stock is listed on such
date. If there is no trade on such day, then the last trade price on the next
preceding day for which there does exist such a trade shall be determinative of
fair market value.


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               ARTICLE VIII. NO RIGHT TO CONTINUE AS A DIRECTOR

      Neither the Plan nor the granting of a Director Stock Award or an option
nor any other action taken pursuant to the Plan shall constitute or be evidence
of any agreement or understanding, express or implied, that the Company will
retain a director for any period of time or at any particular rate of
compensation.

                       ARTICLE IX. ADJUSTMENT TO STOCK

      In the event any change is made to the Stock subject to the Plan or
subject to any outstanding option granted under the Plan (whether by reason of
merger, exchange of shares, consolidation, reorganization, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, change
in corporate structure or otherwise), then appropriate adjustments shall be made
to the number of shares and option price per share of Stock subject to
outstanding options. The grant of Stock or options under the Plan shall not
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

                          ARTICLE X. EFFECTIVE DATE

      The Plan originally became effective on June 10, 1997, the date of the
first Annual Meeting after the adoption of the Plan by the Board of Directors of
the Company (the "Effective Date").

                      ARTICLE XI. AMENDMENT OF THE PLAN

      The Board of Directors of the Company may suspend or discontinue the Plan
or revise or amend it in any respect whatsoever; provided that no such amendment
shall adversely affect a grantee's rights under any Director Stock Award
previously issued or option previously granted without the grantee's consent.

                         ARTICLE XII. USE OF PROCEEDS

      The cash proceeds received by the Company from the issuance of shares
pursuant to options under the Plan shall be used for general corporate purposes.

                ARTICLE XIII. COMPLIANCE WITH APPLICABLE LAWS

      All transactions pursuant to terms of the Plan, including, without
limitation, grants of Stock and grants and vesting of options, shall only be
effective at such time as counsel to the Company shall have determined that such
transaction will not violate federal or state securities or other laws or
regulations.


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                          ARTICLE XIV. GOVERNING LAW

      The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Texas and construed accordingly.

                            ARTICLE XV. SUCCESSORS

      The Plan shall be binding upon the successors and assigns of the Company.




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                       DIRECTOR NON-STATUTORY STOCK OPTION


      This stock option ("Stock Option") has been granted this _____ day of
_______________, 200__, by STEWART & STEVENSON SERVICES, INC., a Texas
corporation, with its principal office in Houston, Texas ("Company"), to
_____________________________________ ("Optionee"), an Eligible Director under
the Company's Amended and Restated 1996 Director Stock Plan ("Plan"). The
Optionee is entitled to purchase _______ shares of the Company's common stock,
no par value, at an option price of $__________ per share, pursuant to the Plan
as in effect on the date hereof, the terms of which are incorporated herein by
reference and are hereby made a part of this Stock Option, and a copy of which
has been given to Optionee.



                                    STEWART & STEVENSON SERVICES, INC.



                                    By:   ________________________________
                                          Name:___________________________
                                          Title:__________________________


                                                        "Company"


Agreed and Accepted by:



________________________________

Name:___________________________


            "Optionee"