<PAGE>   1
                                                                     EXHIBIT 4.5

                            SMITH INTERNATIONAL, INC.
                        STOCK PLAN FOR OUTSIDE DIRECTORS

                 AS AMENDED AND RESTATED EFFECTIVE MAY 22, 2001


         WHEREAS, the Company originally adopted the Plan effective as of April
28, 1992; and

         WHEREAS, the Plan was subsequently amended by the Company by Amendment
No. 1 dated April 22, 1998, Amendment No. 2 dated May 1, 1998 and Amendment No.
3 dated December 6, 2000 and Amendment No. 4 dated May 22, 2001; and

         WHEREAS, the Plan is now hereby amended and restated under the form of
this document effective as of May 22, 2001, as follows:


I.       Purposes

         The purpose of the Smith International, Inc. Stock Plan for Outside
Directors (the "Plan") are (i) to provide additional incentive for securing and
retaining qualified non-employee persons to serve on the Board of Directors of
the Company and (ii) to enhance the future growth of the Company by furthering
the Outside Directors' identification with the interests of the Company and its
shareholders.

II.      Definitions

         (a) In this Plan, except where the context otherwise indicates, the
following definitions apply:

                  1. "AWARD" means an award of Common Stock pursuant to Article
         V or a Restricted Stock Award pursuant to Article VI.

                  2. "AWARD DATE" means a date each year during the term of this
         Plan which shall be determined by the Company.(1)

                  3. "BOARD" means the Board of Directors of the Company.

                  4. "INTERNAL REVENUE CODE" means the Internal Revenue Code of
         1986, as amended.



--------
(1) Clause II.(a)(1) - Amendment No. 2 dated 5/1/98.


<PAGE>   2

                  5. "COMMON STOCK" means the common stock, $1.00 par value, of
         the Company.

                  6. "COMPANY" means Smith International, Inc.

                  7. "OUTSIDE DIRECTOR" means a person who as of any applicable
         date is a member of the Board of Directors of the Company, is not an
         officer of the Company or any subsidiary of the Company, and is not a
         full-time employee of the Company or any of its subsidiaries.

                  8. "PARTICIPANT" means an Outside Director who is eligible to
         receive Common Stock or Restricted Stock granted hereunder.

                  9. "RESTRICTED STOCK" means Shares of Common Stock issued or
         transferred to a Grantee pursuant to Article VI of the Plan.

                  10. "RESTRICTED STOCK AGREEMENT" means the written agreement
         entered into between the Company and the Participant setting forth the
         terms and conditions pursuant to which a Restricted Stock Award is
         granted under the Plan.

                  11. "RESTRICTED STOCK AWARD" means an authorization by the
         Board to issue or transfer Restricted Stock to a Participant.

                  12. "RESTRICTION PERIOD" means the period of time determined
         by the Board and set forth in the Restricted Stock Agreement during
         which the transfer of Restricted Stock by the Participant is
         restricted.

                  13. "SERVICE YEAR" means each period of one year during the
         term of this Plan that commences on the date after an Award Date and
         ends on the next succeeding Award Date.

                  14. "SHARE" means a share of Common Stock that has been
         previously (i) authorized but unissued, or (ii) issued and reacquired
         by the Company.

                  15. "TERMINATION OF DIRECTORSHIP" means the date upon which
         any Participant ceases to be an Outside Director for any reason
         whatsoever. The effective date of such Termination of Directorship
         shall be the actual date of such termination (by death, disability,
         retirement, resignation, non-election or otherwise).



<PAGE>   3


III.     Shares of Common Stock Subject to the Plan

         Subject to the provisions of Article VII of the Plan, the aggregate
number of shares of Common Stock that may be issued under the Plan shall not
exceed 60,000.(2) The number of Shares of Common Stock subject of Restricted
Stock Awards that are forfeited, expired, lapsed or terminated, or are settled
in a manner such that all or some of the Shares covered by the Restricted Stock
Award are not issued to a Participant, shall again immediately become available
for Awards hereunder. The Board may from time to time adopt and observe such
procedures concerning the counting of Shares against the Plan maximum as it may
deem appropriate.


IV.      Eligibility

         Awards of Common Stock and Restricted Stock Awards under this Plan may
be granted only to individuals who are Outside Directors.


V.       Stock Award

         Each Outside Director shall receive an award of 400 shares of Common
Stock on each Award Date with respect to service rendered through the respective
Award Date.(3) Such shares shall be authorized but unissued shares or shares of
Common Stock previously issued by the Company that have been purchased by or on
behalf of the Company in open market transactions or otherwise, or that have
otherwise been acquired by the Company. Certificates representing the shares of
Common Stock awarded hereunder shall be delivered to the Outside Director within
thirty (30) days after each respective Award Date. The provisions of this
Section may not be amended more than once every six (6) months other than to
comport with changes in the Internal Revenue Code, as amended, or the rules
thereunder.


VI.      Restricted Stock Awards

         In its discretion, the Board shall from time to time designate those
Outside Directors to be granted Restricted Stock Awards under the Plan, the
number of Shares subject to each Restricted Stock Award, and the other terms or
conditions relating to the Restricted Stock as it deems appropriate. An Outside
Director who has been granted a Restricted Stock Award may, if otherwise
eligible, be granted additional Restricted Stock Awards at any time.

--------
(2) Clause III - Amendment No. 1 (shares increased from 20,000 to 40,000) dated
4/22/98. Amendment No. 4 (shares increased from 40,000 to 60,000) dated 5/22/01.

(3) Clause V - Amendment No. 2, dated 5/1/98. Amendment No. 3 dated 12/6/00
increased the number of shares from 200 to 400.




<PAGE>   4

         Restricted Stock Awards may be granted with such restrictions during
the Restriction Period as the Board designates in its discretion, any of which
restrictions may differ with respect to any particular Participant or group of
similarly situated Participants. The terms and conditions of each Restricted
Stock Award shall be evidenced by a Restricted Stock Agreement.

         Unless otherwise specified in the Participant's Restricted Stock
Agreement, each Restricted Stock Award shall constitute an immediate transfer of
the record and beneficial ownership of the Shares of Restricted Stock to the
Participant in consideration of the performance of services as an Outside
Director, entitling such Participant to all voting and other ownership rights in
such Shares subject to the restrictions thereon.

         As determined by the Board, Shares awarded pursuant to a grant of
Restricted Stock may be issued in the name of the Participant and held, together
with a stock powers endorsed by the Participant in blank, by the Board or the
Secretary of the Company (or their delegates) as a depository for safekeeping
until such time as the forfeiture restrictions and restrictions on transfer have
lapsed. All such terms and conditions shall be set forth in the particular
Participant's Restricted Stock Agreement. The Board (or its delegate) shall
issue to the Participant a receipt evidencing the certificates held by it which
are registered in the name of the Participant.

         Restricted Stock Awards may be subject to the following restrictions
until the expiration of the Restriction Period: (i) a restriction that
constitutes a "substantial risk of forfeiture" (as defined in Section 83 of the
Internal Revenue Code), or a restriction on transferability under Section 83,
and (ii) any other restrictions that the Board determines are appropriate. Any
such restrictions shall be set forth in the Participant's Restricted Stock
Agreement.

         Coincident with or promptly after the grant date of a Restricted Stock
Award, the Company shall cause to be issued a stock certificate, registered in
the name of the Participant to whom such Restricted Stock was granted,
evidencing such Shares; provided, however, the Company shall not cause to be
issued such a stock certificate unless it has received a stock power duly
endorsed in blank by the Participant with respect to such Shares. Each such
stock certificate shall bear the following legend or any other legend approved
by the Company:

        THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
        STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS,
        TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS
        AGAINST TRANSFER) CONTAINED IN THE SMITH INTERNATIONAL, INC.
        STOCK PLAN FOR OUTSIDE DIRECTORS AND A RESTRICTED STOCK
        AGREEMENT DATED JANUARY 28, 1999 BETWEEN THE REGISTERED OWNER
        OF SUCH SHARES AND SMITH INTERNATIONAL, INC. RESTRICTIONS ON
        THE RIGHT TO OWN OR TRANSFER THE SHARES OF STOCK REPRESENTED
        BY THIS CERTIFICATE HAVE BEEN IMPOSED PURSUANT TO SAID
        RESTRICTED STOCK AGREEMENT. A COPY OF THE





<PAGE>   5

         RESTRICTED STOCK AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
         OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE
         HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS
         PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN
         REQUEST FROM THE HOLDER REQUESTING SUCH COPY.

         Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock until such Shares vest pursuant to the terms of the
Restricted Stock Agreement.

         The Board, in its discretion, shall have the authority to remove any or
all of the restrictions on the Restricted Stock if it determines that, by reason
of a change in applicable law or another change in circumstance arising after
the grant date of the Restricted Stock Award, such action is appropriate.

         Subject to any applicable withholding taxes, a stock certificate
evidencing the Shares of Restricted Stock with respect to which the restrictions
in the Restricted Stock Agreement have lapsed shall be delivered to the
Participant (or other appropriate recipient) free of restrictions.

         Each Participant to whom a Restricted Stock Award is granted shall be
required to enter into a Restricted Stock Agreement with the Company in such a
form as is provided by the Board. The Restricted Stock Agreement shall contain
specific terms as determined by the Board, in its discretion, with respect to
the Participant's particular Restricted Stock Award. The Restricted Stock
Agreement may include, without limitation, vesting and forfeiture provisions.

         Nothing in the Plan or in any instrument executed pursuant hereto shall
create any rights with respect to continued service as an Outside Director.

         The Company shall not be obligated to cause to be issued or delivered
any certificates evidencing Shares unless and until the Company is advised by
its legal counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authorities,
and the requirements of any securities exchange on which Shares are traded.


VII.     Adjustment

         If as a result of recapitalization (or other adjustment in the stated
capital of the Company), or as a result of a stock split, merger, consolidation,
or other reorganization, the Common Stock of the Company is increased, reduced,
or otherwise changed, the number of shares available to be awarded hereunder in
the aggregate and on each Award Date, shall be appropriately adjusted.




<PAGE>   6

VIII.    Termination of Directorship

         If Termination of Directorship occurs as to an Outside Director prior
to the expiration of a Service Year, such Outside Director shall be entitled to
receive such number of Shares of Common Stock as equal the nearest whole number
of Shares obtained by multiplying 200 by a fraction, the numerator of which is
the number of days of such Service Year up to and including the date of the
Termination of Directorship and the denominator of which is the number of days
in such Service Year. Such shares shall be delivered to such Outside Director
within thirty (30) days following the date of Termination of Directorship.


IX.      Restriction on Resale

         Shares delivered to Participants under the Plan shall be subject to
such restrictions on transferability and disposition as shall be required by
Rule 16b-3 of the Securities Exchange Act of 1934 ("Exchange Act") or any
successor rule. Each Participant shall not sell or transfer any shares awarded
or any shares or other securities issued on account of the shares awarded for at
least six (6) months after acquisition except as permitted under the provisions
of the Exchange Act or Rule 16b-3 promulgated thereunder.


X.       Effective Date and Term

         The Plan was originally effective on April 28, 1992, and was amended
and restated effective as of January 1, 1999. Unless sooner terminated in
accordance with its terms, the Plan shall terminate on April 25, 2011.(4)

XI.      Requirements of Laws

         The Company shall not be required to issue any shares thereunder if the
issuance of such shares shall constitute or result in a violation by the
Participant or the Company of any provisions of any law, statute or regulation
of any governmental authority. Specifically, in connection with the Securities
Act of 1933, the Company shall not be required to issue such shares unless the
Company has received evidence satisfactory to it to the effect that the holder
of such Shares will not transfer such shares except pursuant to a registration
statement in effect under such Act or unless an opinion of counsel satisfactory
to the Company has been received by the Company to the effect that such
registration is not required. Any determination in this connection by the
Company shall be final, binding and conclusive. The Company may, but shall in no
event be obligated to, register any securities covered hereby pursuant to the
Securities Act of 1933. The Company shall not be obligated to take any other
affirmative action in order to cause the issuance of shares pursuant hereto to
comply with any law or regulation of any government authority.


----------
(4) Clause X - Amendment No. 2, dated 5/1/98 and Amendment No. 4 dated 5/22/01.



<PAGE>   7

XII.     Restriction on Transfers

         Rights of Participants to receive Shares hereunder are not assignable
or transferable, except by will or by the laws of descent and distribution. Such
rights are not subject, in whole or in part, to attachment, execution or levy of
any kind but are subject to forfeiture pursuant to the terms of a Restricted
Stock Agreement. Upon the death of a Participant, Shares awarded as set forth in
Articles V and VI shall be delivered to such person as is entitled thereto by
will or by the laws of descent and distribution. Any such determination
regarding entitlement to Shares shall be made by the Board or its delegate.


XIII.    Amendment and Termination

         Subject to Article V hereof, the Board of Directors may modify, revise
or terminate this Plan at any time and from time to time; provided, however,
that any such amendment to the Plan that would require the vote or approval of a
specified percentage of the Company's shareholders in order to assure that the
Plan complies with Rule 16b-3 promulgated by the Securities and Exchange
Commission, or any successor or similar provisions thereto, shall only be made
upon obtaining such required shareholder vote, or taking such other action in
connection with such amendment as the Board deems advisable to operate the Plan
in accordance with Rule 16b-3 or such successor or similar rule; provided
further that such action shall not adversely affect any Participant's rights
under Article V of the Plan related to Services rendered prior to such action.

         IN WITNESS WHEREOF, this amended and restated Plan is hereby approved
and executed by an authorized officer of the Company, effective as of May 22,
2001.

                              SMITH INTERNATIONAL, INC.


                              By:  /s/  Neal S. Sutton
                                 -----------------------------------------

                              Name:    Neal S. Sutton
                                   ---------------------------------------
                              Title:   Sr. VP-Admin., General Counsel
                                    --------------------------------------
                                         and Secretary