DaimlerChrysler Off-Highway Holding GmbH Distributor Agreement

Exhibit 10.3

DaimlerChrysler Off-Highway Holding GmbH

Distributor Agreement

AGREEMENT, effective 1st day of January, 2004 by and between DaimlerChrysler Off-Highway Holding GmbH, a DaimlerChrysler Company, Maybachplatz 1, 88045 Friedrichshafen, Germany hereinafter called COMPANY, and

hereinafter called Distributor.

GENERAL PURPOSE

COMPANY is appointed by MTU Friedrichshafen GmbH, Detroit Diesel Corporation, MTU DDC International GmbH, and DDC MTU Americas Company L.L.C. to renew, modify, extend, terminate in part or in whole, on behalf and on account of these parties, each as applicable in COMPANY’s name, the existing Distributor, Direct Dealer, and Sales Representative Agreements of the parties. This appointment covers also the authorization to conclude new Distributor, Direct Dealer and Sales Representative Agreements. The renewals include the rights and obligations of the Distributors as existing at the date of renewal provided that there is no specific deletion/amendment/modification in the new Agreement.

Furthermore COMPANY is appointed by DaimlerChrysler AG to conclude Distributor, Direct Dealer and Sales Representative Agreements on behalf and on account of DaimlerChrysler AG each as applicable in COMPANY’s name.

COMPANY is in the business of marketing power products, including diesel and gas engines, and parts for these products through its Affiliated Companies. Affiliated Companies sell its products principally to original equipment manufacturers and to Distributors. COMPANY has established a system of independently owned and managed Distributors operating at approved locations to (a) sell directly the engines identified in the Product Addendum, DaimlerChrysler Off-Highway Form No. DA 4, herein called Products, and related Parts, (b) actively and effectively promote the purchase and use of Products and related Parts, (c) render prompt, efficient, and courteous service to owners and users of such Products and (d) complement Sellers’ own direct sales activities.

The purpose of this Distributor Agreement, herein called Agreement, is to appoint Distributor as an authorized Distributor to sell and service Products and Parts, to establish the location(s) from which Distributor will conduct Distributorship Operations, and to identify the principal management and principal owners of Distributor upon whom COMPANY relies in entering into this Agreement. This Agreement sets forth the rights and responsibilities of COMPANY and Distributor relating to the sale and servicing of Products and Parts and the circumstances in which the Agreement may be terminated.

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Accordingly, Distributor and COMPANY hereby agree as follows:

FIRST: Rights Granted by COMPANY and Acceptance and Acknowledgments by Distributor

A                Rights Granted by COMPANY

In reliance on Distributor’s agreement to fulfill the responsibilities and perform the functions described in Paragraph SECOND of this Agreement, COMPANY hereby grants Distributor the non-exclusive rights to:

1                   buy from COMPANY and Affiliated Companies the Products identified in the Product Addendum to this Agreement and related Parts for resale or use by Distributor in its Distributorship Operations;

2                   identify itself as an authorized Distributor and to conduct, at the location(s) approved by COMPANY, herein called Distributorship Locations, all of the Distributorship Operations contemplated by this Agreement; and

3                   execute service dealer agreements with authorized Service Dealers approved by COMPANY.

B                Acceptance and Acknowledgments by Distributor

Distributor hereby accepts from COMPANY the rights specified in this Paragraph FIRST. In doing so, Distributor acknowledges that:

1                   COMPANY and Affiliated Companies have reserved to themselves the rights to select and authorize other businesses to conduct distributorship operations in connection with Products and Parts and to sell Products and Parts directly to any customer;

2                   as an independently owned and managed business, Distributor’s success and enjoyment of profitable operations will be determined substantially by how effectively its Distributorship Operations are conducted and managed;

3                   Distributor has not paid any fee or other consideration for this Agreement. Neither this Agreement nor any right granted by this Agreement is a property right; and

4                   neither this Agreement nor any right or responsibility under this Agreement may be transferred, assigned, delegated or sold by Distributor without the prior written approval of COMPANY.

SECOND: Assumption of Responsibilities by Distributor

Distributor will establish, maintain and effectively conduct the complete Distributorship Operations contemplated by this Agreement in connection with each of the Products described in the Product Addendum. Distributor hereby assumes and will fulfill the functions and responsibilities reflected in this Agreement, including:

1                   sales and sales promotion responsibilities;

2                   service responsibilities on all Products that may at any time be located in the Area of Responsibility; and

3                   performance of all of Distributor’s other obligations under this Agreement.

THIRD: Management and Ownership

COMPANY has selected Distributor and has entered into this Agreement in substantial reliance upon:

4                   Distributor’s representation to COMPANY relating to its business organization and financial structure and to its ability to fulfill the functions and responsibilities assumed by Distributor under Paragraph SECOND of this Agreement;

5                   the personal qualifications and business abilities of Distributor’s Principal Manager(s) and Principal Owner(s) who are so designated by Distributor in the Management and Ownership Addendum, DaimlerChrysler Off-Highway Form No. DA 7, furnished by Distributor to COMPANY and accepted by COMPANY by its endorsement thereon and whom Distributor represents will have and actively exercise full managerial authority for the operating management of Distributor; and

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6                   the agreement of Distributor and COMPANY that the person(s) named in the Management and Ownership Addendum as Principal Owner(s) will continue to own both of record and beneficially the percentage of ownership interests in Distributor shown therein.

Distributor shall provide, at the request of COMPANY, a plan for the continuation of Distributor in the event of death, incapacity or withdrawal from the business of any person named as a Principal Manager(s) or Principal Owner(s).

Distributor acknowledges that this Agreement is to be construed as a personal service agreement. Accordingly, Distributor agrees that continuation of the business relationship between Distributor and COMPANY established by this Agreement is conditioned upon Distributor continuing to have principal management and principal owners acceptable to COMPANY. If Distributor desires to make a change in its Principal Manager(s) or sell its principal assets or change its ownership, Distributor will give COMPANY prior written notice of the proposed change or sale. COMPANY will base its approval decision on whether the proposed change is likely to result in a successful distributorship operation with acceptable management and ownership which will provide satisfactory sales, service and facilities for users of Products at the approved location.

FOURTH: Additional Terms

The additional terms set forth in the following appendices and addenda to this Agreement are an integral part of this Agreement:

•                   “Additional Provisions Applicable to Distributor Agreement”, DaimlerChrysler Off-Highway Form No. DA 2

•                   “Area of Responsibility Addendum”, DaimlerChrysler Off-Highway Form No. DA 3

•                   “Product Addendum”, DaimlerChrysler Off-Highway Form No. DA 4

•                   “Sales Representative Addendum”, DaimlerChrysler Off-Highway Form No. DA 5, if applicable

•                   “Locations and Premises Addendum”, DaimlerChrysler Off-Highway Form No. DA 6

•                   “Management and Ownership Addendum”, DaimlerChrysler Off-Highway Form No. DA 7

FIFTH: Term

This Agreement will expire without any action by either Distributor or COMPANY on December 31, 2004 .

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate as of the day and year first above written.

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AREA OF RESPONSIBILITY ADDENDUM TO

DISTRIBUTOR AGREEMENT
WITH

Stewart & Stevenson Services, Inc.

(Distributor)

USA

(Country)

Effective January 1, 2004 , the area described below shall be the Distributor Area of Responsibility.

The counties east of and including the counties of Hardeman, Foard, Knox, Haskell, Throckmorton, Stephenson, Eastland, Comanche, Jills, San Saba, McCullouch, Concho, Menard, Kimble, Edwards and Val Verde in the State of Texas; the parishes south of and including the parishes of Beauregard, Allen, Evangelina, Saint Landry, Pointe Couppe, West Feliciana, East Feliciana, Saint Helena, Tangipahoa and Washington in the State of Lousiana; the counties of Hancock, Harrison and Jackson in the State of Mississippi; the counties of Mobile and Baldwin in the State of Alabama; and all of the United States of America.

Distributor will sell Products for the following off-highway applications:

Marine

Genset

Construction & Industrial

Rail

Such Distributor Area of Responsibility will be used by COMPANY in making evaluations of the effectiveness of Distributor’s performance of its responsibilities under the Distributor Agreement.

The Distributor Area of Responsibility will also be used in the development of sales guides and other matters relating to Distributorship Operations.

The Distributor Area of Responsibility described herein will continue to be used for the foregoing purposes until it is changed in accordance with the Distributor Agreement.

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PRODUCT ADDENDUM TO

DISTRIBUTOR AGREEMENT

WITH

Stewart & Stevenson Services, Inc.

(Distributor)

USA

(Country)

Effective January 1, 2004 .

I                     Distributor has the right to buy the following Products, Parts and remanufactured Products and Parts for use in connection with such Products.

a)               Diesel and gas engines of the series listed below and accessories, except for engine models designated as engines for on-highway vehicle applications only

b)              Generator sets and pumps with above engines and branded “MTU” or “Detroit Diesel” or any other brand used by Sellers.

II                 Distributor has a non-exclusive right to buy Parts and remanufactured Products and Parts for the following out of production engines:

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III             All Products and Parts will be pur