exv4w1





Exhibit 4.1




FIRST AMENDMENT TO RIGHTS AGREEMENT




     This FIRST AMENDMENT (this “Amendment”) dated as of June 3, 2008, to the Rights
Agreement, dated as of May 31, 2002 (the “Rights Agreement”), by and between W-H
Energy Services, Inc., a Texas corporation (the “Company”), and Computershare Trust
Company, N.A., successor-in-interest to Computershare Trust Company, Inc., as rights agent (the
“Rights Agent”).



     WHEREAS, the Company and the Rights Agent are parties to the Rights Agreement; and



     WHEREAS, on June 2, 2008, the Board of Directors of the Company approved the terms of an
Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Smith
International, Inc., a Delaware corporation (“Parent”), and Whitehall Acquisition Corp., a
Texas corporation (“Acquisition”), pursuant to which Parent would commence an exchange
offer (the “Offer”) to purchase shares of the Company’s common stock, par value $.0001 per
share (“Common Stock”), followed by a merger (the “Merger”) in which Acquisition
would be merged with and into the Company and the Company, as the surviving corporation (the
“Surviving Corporation”), would become a direct, wholly owned subsidiary of Parent, and as
soon as practicable following the Merger, Parent would cause the Surviving Corporation to be merged
with an into a wholly owned subsidiary of Parent (the “Second Merger,” and together with
the Merger, the “Mergers”), with such subsidiary surviving the Second Merger; and



     WHEREAS, the Merger Agreement grants Acquisition an irrevocable option to purchase (the
“Top-Up Option”) certain newly-issued shares of Common Stock; and



     WHEREAS, the Board of Directors of the Company has determined that, in connection with the
transactions contemplated by the Merger Agreement, including the Offer and the Mergers, an
amendment to the Rights Agreement as set forth herein is necessary and desirable;



     WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may from time to time in
its discretion supplement or amend the Rights Agreement pursuant to an amendment duly executed by
the Company and the Rights Agent;



     NOW, THEREFORE, pursuant to the terms of the Rights Agreement and in accordance with Section
27 thereof, the following actions are hereby taken prior to executing the Merger Agreement:



     Section 1. Amendments to Rights Agreement. The Rights Agreement is hereby amended as
follows:



     (a) The definition of “Acquiring Person” in Section 1 of the Rights Agreement is amended to
add the following sentence at the end the paragraph: “Notwithstanding the foregoing, neither
Parent, Acquisition nor any of their respective, existing or future Affiliates or Associates shall
be, or be deemed to be, an Acquiring Person, either individually or collectively, by virtue of (i)
the public or other announcement of the Merger Agreement or any transaction contemplated thereby or
arising in connection therewith, including, without limitation, the Offer, the Top-Up Option or the
Mergers, (ii) the acquisition of Common Shares (including, without limitation, any



 









 




options, warrants or other securities and rights to acquire Common Shares and upon the
conversion of shares of common stock of Acquisition into Common Shares of the Company in the
Merger) of the Company pursuant to or in connection with the Merger Agreement or any transaction
contemplated thereby or arising in connection therewith, including without limitation, the Offer,
the Mergers or the Top-Up Option, (iii) the approval, execution or delivery of the Merger Agreement
or (iv) the commencement or consummation of the Offer, the Mergers or the Top-Up Option or any
other transactions contemplated by or arising in connection with the Merger Agreement or any other
agreement, instrument or document contemplated by the Merger Agreement (each of the events
described in clauses (i), (ii), (iii) or (iv) and any combination thereof, an “Exempt Event”).”




     (b) The definition of “Beneficial Owner” and “beneficially owned” in Section 1 of the Rights
Agreement is amended to delete the last sentence in its entirety and replace it with the following:



“Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, (A) the phrase “then outstanding,” when used with reference to a
Person’s Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder and (B) for
purposes of this Agreement, neither Parent, Acquisition nor any of their
respective Affiliates or Associates shall be, or be deemed to be, the
“Beneficial Owner” of, or shall be deemed to “beneficially own,” any
securities as a result of any Exempt Event.”



     (c) The definition of “Final Expiration Date” in Section 1 of the Rights Agreement is amended
to read in its entirety as follows:



“Final Expiration Date” shall mean the earlier to occur of (1) the Board
Appointment Date, as that term is defined in the Merger Agreement, or (2)
June 6, 2012.”



     (d) The following definitions shall be added, in alphabetical order, in Section 1 of the
Rights Agreement:



“Acquisition” shall mean Whitehall Acquisition Corp., a Texas corporation
and a wholly owned subsidiary of Parent, formed by Parent in connection with
its proposed acquisition of the Company.



“Exempt Event” shall have the meaning set forth in the definition of
“Acquiring Person” set forth in this Section 1.



“Mergers” shall have the meaning set forth in definition of such term in the
Merger Agreement.



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“Merger Agreement” shall mean the Agreement and Plan of Merger dated as of
June 3, 2008 entered into by and among the Company, Parent and Acquisition
as the same may be amended from time to time.



“Offer” shall have the meaning set forth in definition of such term in the
Merger Agreement.



“Parent” shall mean Smith International, Inc., a Delaware corporation.



“Top-Up Option” shall have the meaning set forth in definition of such term
in the Merger Agreement.



     (e) Section 2 of the Rights Agreement is amended to add the following language at the end
thereof:



“, upon ten (10) days’ prior written notice to the Rights Agent. The Rights Agent
shall have no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such Co-Rights Agent.”



     (f) Section 3(a) of the Rights Agreement is amended to add the following sentence at the end
thereof:



“Notwithstanding anything in this Agreement to the contrary, neither a
Shares Acquisition Date nor a Distribution Date shall be deemed to have
occurred as the result of any Exempt Event.”



     (g) Section 7(a) of the Rights Agreement is amended to read in its entirety as follows:



“The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for each one
one-hundredth of a Preferred Share as to which the Rights are exercised, at
or prior to the earliest of (i) the Close of Business on the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the “Redemption Date”), or (iii) the time at which
such Rights are exchanged as provided in Section 24 hereof. Notwithstanding
anything to the contrary in this Agreement, no Exempt Event shall be, or be
deemed to be, an event that causes the Rights to become exercisable under
the provisions of this Section 7 or otherwise and this Section 7 shall not
apply to any Exempt Event.”



     (h) Section 11(a)(ii) of the Rights Agreement is amended by adding the following sentence at
the end thereof:



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“Notwithstanding anything to the contrary in this Agreement, no Exempt Event
shall constitute, or be deemed to constitute, an event of the type described
in this Section 11(a)(ii) and this Section 11 shall not apply to any Exempt
Event.”



     (i) Section 13 of the Rights Agreement is amended by adding the following sentence at the end
thereof:



“Notwithstanding anything to the contrary in this Agreement, no Exempt Event
shall be, or be deemed to be, an event of the type described in this Section
13 and this Section 13 shall not apply to any Exempt Event.”



     (j) Section 18 of the Rights Agreement is amended by deleting the term “negligence” in the
second sentence thereof and replace it with “gross negligence.”



     (k) Section 20(c) of the Rights Agreement is amended by deleting the term “negligence” and
replace it with “gross negligence.”



     (l) Section 21 of the Rights Agreement is amended to add the following new sentence after the
existing first sentence thereof:



“In the event the transfer agency relationship in effect between the Company and the
Rights Agent terminates, the Rights Agent will be deemed to have resigned
automatically and be discharged from its duties under this Agreement as of the
effective date of such termination, and the Company shall be responsible for sending
any required notice.”



     (m) Section 21 of the Rights Agreement is further amended to add the term “, along with its
Affiliates,” at the end of the fifth sentence thereof after the term “$50 million”.



     (n) Section 30 of the Rights Agreement is amended by adding the following sentence at the end
thereof:



“Notwithstanding the foregoing, nothing in this Agreement shall be construed
to give any registered holder of Right Certificates (or, prior to any
Distribution Date, the Common Shares) any legal or equitable rights, remedy
or claim under this Agreement in connection with any Exempt Event.”



     (o) Section 31 of the Rights Agreement is amended by adding the following language at the end
thereof:



“except that the rights, duties and obligations of the Rights Agent shall be governed
by and construed in accordance with the laws of the Commonwealth of Massachusetts.”



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     (p) The Rights Agreement is amended by adding the following new section at the end thereof:



“Section 34. Force Majeure. Notwithstanding anything to the contrary contained
herein, the Rights Agent shall not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control including, without
limitation, acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunction of computer facilities, or loss of data
due to power failures or mechanical difficulties with information storage or
retrieval systems, labor difficulties, war, or civil unrest.”



     Section 2. Effectiveness; Termination of the Merger Agreement. This Amendment shall be
effective as of the date first written above, and except as expressly set forth herein, the Rights
Agreement shall remain in full force and effect in accordance with the provisions thereof on the
date hereof. If for any reason the Merger Agreement is terminated in accordance with its terms,
then this Amendment shall be of no further force and effect and the Rights Agreement shall remain
as it existed immediately prior to the effectiveness of this Amendment. The Company agrees to
notify the Rights Agent promptly in the event of the occurrence of the Board Appointment Date
resulting in the Final Expiration Date prior to June 6, 2012.



     Section 3. Governing Law. This Amendment shall be governed by and construed in
accordance with the law of the State of Texas applicable to contracts to be made and performed
entirely within such State.



     Section 4. Agreement as Amended. The term “Agreement” as used in the Rights Agreement
shall be deemed to refer to the Rights Agreement as amended hereby, and all references to the
Rights Agreement shall be deemed to include this Amendment.



     Section 5. Counterparts. This Amendment may be signed in one or more counterparts, all
of which shall be considered one and the same instrument.



*   *   *   *   *





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     IN WITNESS WHEREOF, the Company and the Rights Agents have caused this Amendment to be duly
executed as of the day and year first above written.



	 	 	 	 	 
	 	W-H ENERGY SERVICES, INC.

 	 
	 	By:  	/s/ Ernesto Bautista, III
 	 
	 	 	Name:  	Ernesto Bautista, III 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 
	 	COMPUTERSHARE TRUST COMPANY, N.A.

as Rights Agent

 	 
	 	By:  	/s/  Ian Yewer
 	 
	 	 	Name:  	Ian Yewer 	 
	 	 	Title:  	Branch President