exv4w1






Execution Version




Exhibit 4.1




SMITH INTERNATIONAL, INC., 




as Issuer




8.625% NOTES DUE 2014




and




9.750% NOTES DUE 2019




 






FIRST SUPPLEMENTAL INDENTURE




Dated as of March 19, 2009




To




INDENTURE




Dated as of September 8, 1997




 






The Bank of New York Mellon,




as Trustee




 









 




FIRST SUPPLEMENTAL INDENTURE, dated as of the 19th day of March, 2009, between SMITH INTERNATIONAL,
INC., a corporation duly organized and existing under the laws of the State of Delaware, as Issuer
(herein called the “Company”), having its principal office at 16740 East Hardy Road, Houston, Texas
77032, and THE BANK OF NEW YORK MELLON (formerly known as The Bank of New York), with its principal
office at 101 Barclay Street, 8W, New York, New York 10286, a banking corporation duly organized
under the State of New York, as trustee (the “Trustee”).




RECITALS OF THE COMPANY




          WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture,
dated as of September 8, 1997 (the “Original Indenture) providing for the issuance by the Company
from time to time of its unsecured debentures, notes or other evidences of indebtedness to be
issued in one or more series (in the Original Indenture and herein called the “Securities”); and



          WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved
to it under the provisions of the Original Indenture, including Section 3.1 thereof, has duly
determined to make, execute and deliver to the Trustee this First Supplemental Indenture to the
Original Indenture as permitted by Sections 3.1 and 9.1 of the Original Indenture in order to
establish the form or terms of, and to provide for the creation and issue of, two series of
Securities under the Original Indenture in the aggregate principal amount of $1,000,000,000; and



          WHEREAS, all things necessary to make the Securities provided for herein, when executed by the
Company and authenticated and delivered by the Trustee or any Authenticating Agent and issued upon
the terms and subject to the conditions hereinafter and in the Original Indenture set forth against
payment therefor, the valid, binding and legal obligations of the Company and to make this First
Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;



          NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:



          That, in order to establish the terms of a series of Securities, and for and in consideration
of the premises and of the covenants contained in the Original Indenture and in this First
Supplemental Indenture and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, it is mutually covenanted and agreed as follows:



ARTICLE I




DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION




          1.01 Definitions. Each capitalized term that is used herein and is defined in the
Original Indenture shall have the meaning specified in the Original Indenture unless that term is
otherwise defined herein.



          1.02 Section References. Each reference to a particular section set forth in this
First Supplemental Indenture shall, unless the context otherwise requires, refer to this First
Supplemental Indenture.



 









 





ARTICLE II




TITLE AND TERMS OF SECURITIES




          2.01 Title of the Securities. This First Supplemental Indenture hereby establishes
(i) a series of Securities designated as the “8.625% Senior Notes due March 15, 2014” of the
Company (the “2014 Notes”) and (ii) a series of Securities designated as the “9.750% Senior Notes
due March 15, 2019” of the Company (the “2019 Notes” and, together with the 2014 Notes, the
“Notes”). For purposes of the Original Indenture, including, but not limited to, Article IX and
Section 10.10 therein, the 2014 Notes and the 2019 Notes shall each constitute a single series of
Securities and shall not have any rights to vote together as a single class or series of
Securities. References to the “Notes” shall be deemed to refer to each series of Notes separately,
and not to the 2014 Notes and the 2019 Notes on any combined basis.



          2.02 Term of the Notes. The 2014 Notes shall mature on March 15, 2014 and the 2019
Notes shall mature on March 15, 2019 (in each case, its “Stated Maturity”). In the event that such
Stated Maturity is not a Business Day, principal and interest payable at maturity shall be paid on
the next succeeding Business Day with the same effect as if that Business Day were the Stated
Maturity and no interest shall accrue or be payable for the period from and after the Stated
Maturity to the next succeeding Business Day.



          2.03 Amount and Denominations; Currency of Payment. The aggregate principal amount in
which the Notes may be issued under this First Supplemental Indenture is initially limited to (i)
$300,000,000 with respect to the 2014 Notes and (ii) $700,000,000 with respect to the 2019 Notes.



          The Notes shall be issued in the form of one or more Global Securities in the name of Cede &
Co., as registered owner and nominee for The Depository Trust Company, New York, New York (“DTC”).
DTC shall initially act as Depositary for the Notes.



          The Notes shall be denominated in United States dollars in denominations of $2,000 and
integral multiples of $1,000 in excess thereof.



          2.04 Interest and Interest Rates. Each 2014 Note shall bear interest at the rate of
8.625% per annum and each 2019 Note shall bear interest at the rate of 9.750% per annum. Interest
shall be payable to the persons in whose name a Note is registered on the fifteenth calendar day
immediately preceding the applicable Interest Payment Date (whether or not a Business Day) (the
“Regular Record Dates”). Interest on each Note shall be computed on the basis of a 360-day year
comprising twelve 30-day months.



          2.05 Interest Payments. The interest payment dates for each Note shall be March 15
and September 15, in each year (the “Interest Payment Dates”), commencing September 15, 2009
payable to the persons in whose name a Note is registered on the Regular Record Dates. Interest
shall also be payable at maturity of any Note.



          If an Interest Payment Date with respect to the Notes would otherwise fall on a day that is
not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business
Day with respect to the Notes and no interest shall accrue or be payable on such next succeeding
Business Day for the period from and after such original Interest Payment Date to such next
succeeding Business Day.



          Except as provided in the immediately preceding paragraph, interest payments shall be in the
amount of interest accrued, from the most recent date to which interest has been paid or, if no
interest has been paid, from March 19, 2009 to, but excluding, the Interest Payment Date.



          2.06 Paying Agent and Security Registrar. The Company authorizes and appoints the
Trustee as the sole paying agent (the “Paying Agent”) with respect to the Notes represented by
Global Securities, without prejudice to the Company’s authority to appoint additional paying agents
from time to time



 









 







pursuant to the Original Indenture. The Company authorizes and appoints the Trustee as the
sole Security Registrar with respect to the Notes.



          2.07 No Sinking Fund. The Company is not required to make mandatory redemption or
sinking fund payments with respect to the Notes.



          2.08 Redemption at Option of the Company. Each series of Notes shall be redeemable,
in whole or in part, at any time or from time to time, by the Company mailing notice to the
registered address of each Holder of such series of Notes being redeemed at least 30 days but not
more than 60 days prior to the redemption. The Redemption Price shall be equal to accrued interest
thereon to the Redemption Date plus the greater of (1) 100% of the principal amount of such Notes
to be redeemed or (2) the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate (as defined below) plus 50 basis points with respect to any 2014 Notes
being redeemed and at the Treasury Rate plus 50 basis points with respect to any 2019 Notes being
redeemed.



     As used in this First Supplemental Indenture only, the terms set forth below shall have the
following respective meanings:



          “Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such Notes.



          “Comparable Treasury Price” means, with respect to any Redemption Date, as determined by the
Company (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such
quotations.



          “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.



          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer, at 3:30 p.m., New York time on
the third Business Day preceding such Redemption Date.



          “Reference Treasury Dealers” means J.P. Morgan Securities Inc., Banc of America Securities LLC
and the Primary Treasury Dealer selected by Wachovia Capital Markets, LLC and their affiliates
which are primary U.S. Government securities dealers, and their respective successors; provided,
however, that if any of J.P. Morgan Securities Inc., Banc of America Securities LLC and the Primary
Treasury Dealer selected by Wachovia Capital Markets, LLC or any of their respective affiliates
shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary
Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.



          “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated yield (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption
Date.



 









 





          Unless the Company defaults in the payment of the Redemption Price and accrued interest, on
and after the Redemption Date interest will cease to accrue on the Notes thereof called for
redemption. In the event that any Redemption Date is not a Business Day, the Company will pay the
Redemption Price on the next Business Day without any interest or other payment due to the delay.



     2.09 Change of Control Repurchase Event. If a Change of Control Repurchase Event (as
defined below) occurs with respect to a series of Notes, unless the Company has exercised its right
to redeem the Notes pursuant to Section 2.08 hereof, the Company will make an offer to each Holder
of such Notes to repurchase all or any part (in amounts of $2,000 and integral multiples of $1,000
in excess thereof) of that Holder’s Notes at a repurchase price in cash equal to 101% of the
aggregate principal amount of Notes repurchased plus any accrued and unpaid interest on the Notes
repurchased to the date of repurchase (the “Change of Control Payment”). Within 30 days following
the consummation of any Change of Control Repurchase Event or, at the Company’s option, prior to
the consummation of any Change of Control (as defined below), but after the public announcement of
an impending Change of Control, the Company will mail a notice to each Holder, with a copy to the
Trustee, describing the transaction or transactions that constitute or may constitute the Change of
Control Repurchase Event and offering to repurchase such Notes on the payment date specified in the
notice, which date will be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”). The notice shall, if mailed prior to the
date of consummation of the Change of Control, state that the offer to repurchase is conditioned on
the Change of Control Repurchase Event occurring on or prior to the payment date specified in the
notice.



          The Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act
of 1934 (the “Exchange Act”), and any other securities laws and regulations thereunder, to the
extent those laws and regulations are applicable in connection with the repurchase of Notes of such
series as a result of a Change of Control Repurchase Event. To the extent that the provisions of
any securities laws or regulations conflict with the Change of Control Repurchase Event provisions
of the Notes, the Company will comply with the applicable securities laws and regulations and will
not be deemed to have breached the Company’s obligations under the Change of Control Repurchase
Event provisions of the Notes by virtue of such conflict.



          On the Change of Control Repurchase Payment Date, the Company will, to the extent lawful: (i)
accept for payment all Notes or portions of Notes (in amounts of $2,000 and integral multiples of
$1,000 in excess thereof) properly tendered pursuant to the Company’s Change of Control Offer; (ii)
deposit with the Paying Agent an amount equal to the aggregate purchase price in respect of all
Notes or portions of Notes properly tendered and not withdrawn; and (iii) deliver or cause to be
delivered to the Trustee the Notes properly accepted, together with an Officers’ Certificate
stating the aggregate principal amount of Notes being purchased by the Company.



          The Paying Agent will promptly mail to each Holder of properly tendered Notes the repurchase
price for the Notes, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of any Notes surrendered; provided, that each new Note will be in a principal amount of
$2,000 or an integral multiple of $1,000 above that amount.



          The Company will not be required to make a Change of Control Offer upon a Change of Control
Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in
compliance with the requirements for a Change of Control Offer made by the Company, and such third
party purchases all Notes properly tendered and not withdrawn under its Change of Control Offer.
In the event that such third party terminates or defaults on its Change of Control Offer, the
Company will be required to make a Change of Control Offer treating the date of such termination or
default by such third party as though it were the date of the Change of Control Repurchase Event.



 









 





     As used in this Section 2.09, the terms set forth below shall have the following respective
meanings:



          “Below Investment Grade Rating Event” means with respect to a series of the Notes the ratings
on such series of Notes are lowered by each of the Rating Agencies and such series of Notes are
rated below Investment Grade by each of the Rating Agencies on any date from the date of the first
public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of a Change of Control (which period shall
be extended following the consummation of a Change of Control so long as the rating of such series
of Notes is under publicly announced consideration for possible downgrade by any of the Rating
Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a
particular reduction in rating shall not be deemed to have occurred in respect of a particular
Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes
of the definition of Change of Control Repurchase Event hereunder) if any of the Rating Agencies
making the reduction in rating to which this definition would otherwise apply does not announce or
publicly confirm or inform the Trustee in writing at its request that the reduction was the result,
in whole or in part, of any event or circumstance comprised of or arising as a result of, or in
respect of, the applicable Change of Control (whether or not the applicable Change of Control shall
have occurred at the time of the Below Investment Grade Rating Event).



          “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation,
arrangement or consolidation), in one or a series of related transactions, of all or substantially
all of the properties or assets of the Company and those of its subsidiaries taken as a whole to
any “person” (as that term is used for purposes of Section 13(d)(3) of the Exchange Act), other
than the Company or one or more of its subsidiaries; (2) the consummation of any transaction or
series of related transactions (including, without limitation, any merger, amalgamation,
arrangement or consolidation) the result of which is that any “person” (as that tern is used for
the purposes of Section 13(d)(3) of the Exchange Act), other than the Company or one of its wholly
owned subsidiaries, becomes the beneficial owner, directly or indirectly, of more than 50% of the
then outstanding Voting Stock of the Company, measured by voting power rather than number of
shares; (3) the Company consolidates, amalgamates or enters into an arrangement with, or merge with
or into, any Person, or any Person consolidates, amalgamates or enters into an arrangement with, or
merges with or into, the Company, in any such event pursuant to a transaction or series of
transactions in which any of the Company’s outstanding Voting Stock or the Voting Stock of such
other Person is converted into or exchanged for cash, securities or other property, other than any
such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to
such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock
of the surviving Person immediately after giving effect to such transaction; (4) the first day on
which a majority of the members of the Company’s Board of Directors is not comprised of Continuing
Directors; or (5) the adoption of a plan relating to the Company’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction will not be considered a Change of Control under this
clause (2) if (a) the Company becomes the direct or indirect wholly owned subsidiary of a holding
company and (b) immediately following that transaction (y) the direct or indirect holders of the
Voting Stock of the holding company are substantially the same as the holders of the outstanding
Voting Stock of the Company immediately prior to that transaction or (z) the shares of the
Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, a majority of the Voting Stock of the holding company immediately
after giving effect to such transaction.



          “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.



          “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors of the Company who (1) was a member of such Board of Directors on the date of the
issuance of the Notes; or (2) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of such Board of Directors
at the time of such



 









 







nomination, election or appointment (either by a specific vote or by approval of the Company’s
proxy statement in which such member was named as a nominee for election as a director).



          “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s) and a rating of BBB- or better by S&P (or its equivalent
under any successor rating categories of S&P) or the equivalent investment grade credit rating from
any additional Rating Agency or Rating Agencies selected by the Company.



          “Moody’s” means Moody’s Investors Service Inc.



          “Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or S&P ceases to
rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the
Company’s control, a “nationally recognized statistical rating organization” within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a replacement agency
for Moody’s or S&P, as the case may be, and that is reasonably acceptable to the Trustee.



          “S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.



          “Voting Stock” means all classes of Capital Stock of a Person then outstanding normally
entitled to vote in elections of directors or Persons performing similar functions, whether at all
times or only so long as no senior class of stock has such voting power by reason of any
contingency.



          2.10. Form and Other Terms of the Notes. Attached hereto as Annex A-1 and Annex A-2
are forms of the 2014 Note and the 2019 Note, respectively, denominated in United States dollars,
which forms are hereby established as forms in which the 2014 Notes and the 2019 Notes may be
issued. In addition, any Note may be issued in such other form as may be provided by, or not
inconsistent with, the terms of the Original Indenture and this First Supplemental Indenture.



ARTICLE III




MISCELLANEOUS PROVISIONS




          The Trustee makes no undertaking or representation in respect of, and shall not be responsible
in any manner whatsoever for and in respect of, the validity or sufficiency of this First
Supplemental Indenture or the proper authorization or the due execution hereof by the Company or
for or in respect of the recitals and statements contained herein, all of which recitals and
statements are made solely by the Company.



          Except as expressly amended hereby, the Original Indenture, as heretofore amended and
supplemented, shall continue in full force and effect in accordance with the provisions thereof and
the Original Indenture is in all respects hereby ratified and confirmed. This First Supplemental
Indenture and all its provisions shall be deemed a part of the Original Indenture in the manner and
to the extent herein and therein provided.



          THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.



          This First Supplemental Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.



 









 





          IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be
duly executed as of the day and year first above written.



	 	 	 	 	 
	 	SMITH INTERNATIONAL, INC.

 	 
	 	By:  	/s/
Margaret K. Dorman	 
	 	 	Name:  	Margaret K. Dorman	 
	 	 	Title:  	Executive Vice President, Chief Financial
Officer and Treasurer	 
	 




 









 





	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON,

as Trustee,

 	 
	 	By:  	/s/
Franca M. Ferrera	 
	 	 	Franca M. Ferrera	 
	 	 	Assistant Vice
President	 
	 




 












 





Annex A-1




GLOBAL SECURITY




               THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.



               UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (“DTC”), A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF) DTC, ANY TRANSFER,
PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.



SMITH INTERNATIONAL, INC.




8.625% Notes due 2014




			
	 	 	 
	CUSIP NO.
	 	$______________






     Smith International, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the “Company”, which term includes any successor Person under the
Indenture hereinafter referred to), for value received hereby promises to pay to
               , or registered assigns, the principal sum of                 Dollars ($               ) (which amount
may from time to time be increased or decreased by adjustments made on the records of the Trustee,
as custodian for the Depositary, in accordance with the rules and procedures of the Depositary) on
March 15, 2014, and to pay interest thereon from the most recent Interest Payment Date to which
interest has been paid or duly provided for, or if no interest has been paid, from and including
the date of issuance, semiannually in arrears in cash on March 15 and September 15 in each year,
commencing                 at the rate of 8.625% per annum, until the principal hereof is paid
or made available for payment. Interest will be computed on the basis of a 360 day year comprised
of twelve 30 day months.



               The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the fifteenth calendar day (whether or not a Business Day),
immediately preceding such Interest Payment Date. In the event that any Interest



 









 







Payment Date is not a Business Day, interest shall be paid on the next Business Day without any
interest or other payment due to the delay. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a subsequent record date for the payment of such defaulted
interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not
less than 10 days prior to such subsequent record date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such exchange, all as more fully provided
in said Indenture. Payment of the principal of and interest on this Security will be made at the
office or agency of the Company maintained for that purpose in The City of New York, in such coin
or currency of the United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register. If this Security is a Global Security, then notwithstanding
the foregoing, each such payment will be made in accordance with the procedures of the Depositary
as then in effect.



               Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.



               Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.



2









 





          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.




Dated: March 19, 2009




	 	 	 	 	 
	 	SMITH INTERNATIONAL, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	Attest:

 	 
	
 	 
	Name:  	 	 
	Title:  	 	 



3









 






	 	 	 	 	 


This is one of the Securities of the series designated herein referred to in the within-mentioned
Indenture.




	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON,

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 



Dated: March 19, 2009




4









 








Annex A-1




REVERSE OF GLOBAL SECURITY





               This Security is one of a duly authorized issue of Securities of the Company designated as its
8.625% Senior Notes due 2014 (herein called the “Securities”), initially limited in aggregate
principal amount to $300,000,000, issued under an indenture dated as of September 8, 1997 (herein
called the “Original Indenture”), between the Company and The Bank of New York Mellon (formerly The
Bank of New York), as Trustee (herein called the “Trustee”, which term includes any successor
trustee under the Indenture), as supplemented by a first supplemental indenture, dated as of March
19, 2009, between the Company and the Trustee (the “First Supplemental Indenture” and, together
with the Original Indenture, the “Indenture”), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and delivered.



               The Securities will bear interest, payable on each Interest Payment Date to Holders of record
on the fifteenth calendar day (whether or not a Business Day) immediately preceding such Interest
Payment Date, at 8.625% per annum until March 15, 2014 or the cancellation of the Securities. In
the event that any Interest Payment Date is not a Business Day, interest shall be paid on the next
Business Day without any interest or other payment due to the delay.



               The Securities are the Company’s unsecured senior obligation and rank equally with the
Company’s other existing and future unsecured senior indebtedness. The Securities are redeemable,
in whole or in part, at any time or from time to time, by the Company mailing notice to the
registered address of each Holder of Securities at least 30 days but not more than 60 days prior to
the redemption. The Redemption Price will be equal to the accrued interest thereon to the
Redemption Date plus the greater of (1) 100% of the principal amount of the Securities to be
redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and
interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the
Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months),
at the Treasury Rate (as defined below) plus 50 basis points.



               “Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Securities being redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Securities.



               “Comparable Treasury Price” means, with respect to any Redemption Date, as determined by the
Company (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such
quotations.



5









 





               “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.



               “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer, at 5:00 p.m., New York City
time, on the third Business Day preceding such Redemption Date.



               “Reference Treasury Dealers” means J.P. Morgan Securities Inc., Banc of America Securities LLC
and the Primary Treasury Dealer selected by Wachovia Capital Markets, LLC and their affiliates
which are primary U.S. Government securities dealers, and their respective successors; provided,
however, that if any of J.P. Morgan Securities Inc., Banc of America Securities LLC and the Primary
Treasury Dealer selected by Wachovia Capital Markets, LLC or any of their respective affiliates
shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary
Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.



               “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated yield (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for that Redemption
Date.



               Unless the Company defaults in the payment of the Redemption Price and accrued interest, on
and after the Redemption Date interest will cease to accrue on the Securities thereof called for
redemption. In the event that any Redemption Date is not a Business Day, the Company will pay the
Redemption Price on the next Business Day without any interest or other payment due to the delay.



               The Securities do not have the benefit of a sinking fund.



               If a Change of Control Repurchase Event (as defined below) occurs with respect to the
Securities pursuant to Section 2.09 of the First Supplemental Indenture, unless the Company has
exercised its right to redeem such Securities pursuant to Section 2.08 of the First Supplemental
Indenture, the Company will make an offer to each Holder of the Securities to repurchase all or any
part (in amounts of $2,000 and integral multiples of $1,000 in excess thereof) of the Securities
held by such Holder at a repurchase price in cash equal to 101% of the aggregate principal amount
of Securities repurchased, plus any accrued and unpaid interest on the Securities repurchased to
the date of repurchase. Within 30 days following the consummation of any Change of Control
Repurchase Event or, at the Company’s option, prior to any Change of Control (as defined below),
but after the public announcement of an impending Change of Control, the Company will mail a notice
to each Holder, with a copy to the Trustee, describing the transaction or transactions that
constitute or may constitute the Change of Control Repurchase Event and offering to repurchase the
Securities on the payment date specified in the notice, which date will be no earlier than 30 days
and no later than 60 days from the date such notice is mailed (the “Change of Control Payment
Date”). The notice shall, if mailed prior to the



6









 







date of consummation of the Change of Control, state that the offer to repurchase is
conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date
specified in the notice.



               The Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act
of 1934 (the “Exchange Act”), and any other securities laws and regulations thereunder, to the
extent those laws and regulations are applicable in connection with the repurchase of the
Securities as a result of a Change of Control Repurchase Event. To the extent that the provisions
of any securities laws or regulations conflict with the Change of Control Repurchase Event
provisions of the Securities, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the Change of Control
Repurchase Event provisions of the Securities by virtue of such conflict.



               On the Change of Control Payment Date, the Company will, to the extent lawful:




	 	•	 	accept for payment all Securities or portions of Securities (in amounts of $2,000
and integral multiples of $1,000 in excess thereof) properly tendered pursuant to
the Company’s Change of Control Offer;
	 
	 	•	 	deposit with the Paying Agent an amount equal to the aggregate purchase price in
respect of all Securities or portion of Securities properly tendered and not
withdrawn; and
	 
	 	•	 	deliver or cause to be delivered to the Trustee the Securities properly accepted,
together with an Officers’ Certificate stating the aggregate principal amount of
Securities being purchased by the Company.





               The Paying Agent will promptly mail to each Holder of properly tendered Securities the
repurchase price for the Securities, and the Trustee will promptly authenticate (upon its receipt
of executed Securities from the Company) and mail (or cause to be transferred by book-entry) to
each Holder a new Security equal in principal amount to any unpurchased portion of any Securities
surrendered; provided, that each new Security will be in a principal amount of $2,000 or an
integral multiple of $1,000 above that amount.



               The Company will not be required to make a Change of Control Offer upon a Change of Control
Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in
compliance with the requirements for a Change of Control Offer made by the Company, and such third
party purchases all Securities properly tendered and not withdrawn under its offer. In the event
that such third party terminates or defaults on its Change of Control Offer, the Company will be
required to make a Change of Control Offer treating the date of such termination or default by such
third party as though it were the date of the Change of Control Repurchase Event.



               “Below Investment Grade Rating Event” means the ratings on the Securities are lowered by each
of the Rating Agencies and the Securities are rated below Investment Grade by each of the Rating
Agencies on any date from the date of the first public notice of an



7









 







arrangement that could result in a Change of Control until the end of the 60-day period
following public notice of the occurrence of a Change of Control (which period shall be extended so
long as the rating of the Securities is under publicly announced consideration for possible
downgrade by any of the Rating Agencies); provided that a Below Investment Grade Rating Event
otherwise arising by virtue of a particular reduction in rating shall not be deemed to have
occurred in respect of a particular Change of Control (and thus shall not be deemed a Below
Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event
hereunder) if any of the Rating Agencies making the reduction in rating to which this definition
would otherwise apply does not announce or publicly confirm or inform the Trustee in writing at its
request that the reduction was the result, in whole or in part, of any event or circumstance
comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether
or not the applicable Change of Control shall have occurred at the time of the Below Investment
Grade Rating Event).



               “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation,
arrangement or consolidation), in one or a series of related transactions, of all or substantially
all of the properties or assets of the Company and those of its subsidiaries taken as a whole to
any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than the Company
or one or more of its subsidiaries; (2) the consummation of any transaction or series of related
transactions (including, without limitation, any merger, amalgamation, arrangement or
consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), other than the Company or one of its wholly owned subsidiaries, becomes the
beneficial owner, directly or indirectly, of more than 50% of the then outstanding Voting Stock of
the Company, measured by voting power rather than by number of shares; (3) the Company
consolidates, amalgamates or enters into an arrangement with, or merge with or into, any Person, or
any Person consolidates, amalgamates or enters into an arrangement with, or merges with or into,
the Company, in any such event pursuant to a transaction or series of transactions in which any of
the Company’s outstanding Voting Stock or the Voting Stock of such other Person is converted into
or exchanged for cash, securities or other property, other than any such transaction where the
shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute,
or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person
immediately after giving effect to such transaction; (4) the first day on which a majority of the
members of the Company’s Board of Directors is not comprised of Continuing Directors; or (5) the
adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the
foregoing, a transaction will not be considered a Change of Control if (a) the Company becomes
direct or indirect wholly owned subsidiary of a holding company and (b) immediately following that
transaction (y) the direct or indirect holders of the Voting Stock of the holding company are
substantially the same as the holders of the outstanding Voting Stock immediately prior to that
transaction or (z) the shares of the Company’s Voting Stock immediately prior to such transaction
constitute, or are converted into or exchanged for, a majority of the Voting Stock of the holding
company immediately after giving effect to such transaction.



               “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.



8









 





               “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors of the Company who (1) was a member of such Board of Directors on the date of the
issuance of the Securities; or (2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination, election or appointment (either by a specific vote or by
approval of the Company’s proxy statement in which such member was named as a nominee for election
as a director).



               “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s); a rating of BBB- or better by S&P (or its equivalent under
any successor rating categories of S&P); or the equivalent investment grade credit rating from any
additional Rating Agency or Rating Agencies selected by the Company.



               “Moody’s” means Moody’s Investors Service Inc.



               “Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or S&P ceases to
rate the Securities or fails to make a rating of the Securities publicly available for reasons
outside of the Company’s control, a “nationally recognized statistical rating organization” within
the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement agency for Moody’s or S&P, as the case may be, and that is reasonably acceptable to the
Trustee.



               “S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.



               “Voting Stock” means all classes of Capital Stock of a Person then outstanding entitled to
vote in elections of directors or Persons performing similar functions, whether at all times or
only so long as no senior class of stock has such voting power by reason of contingency.



               The Company may, from time to time, without the consent of the existing Holders of the
Securities, issue additional securities under the Indenture having the same terms as the Securities
in all respects, except for the issue date, the issue price and the initial interest payment date.
Any such additional securities will be consolidated with and form a single series with the
Securities.



               In addition to the Securities, the Company may issue other series of debt securities under the
Indenture. There is no limit on the total aggregate principal amount of debt securities that the
Company may issue under the Indenture.



               If an Event of Default shall occur and be continuing, the principal amount of the Securities
may be declared due and payable in the manner and with the effect provided in the Indenture.



               The Indenture contains provisions for defeasance at any time, upon compliance with certain
conditions set forth therein, of (i) the entire Indebtedness evidenced by this Security or (ii)
certain restrictive covenants and Events of Default with respect to this Security.



9









 





               The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the Outstanding Securities.
The Indenture also contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Outstanding Securities, on behalf of the Holders of all the Securities, to
waive compliance by the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.



               As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless (i) such Holder
shall have previously given the Trustee written notice of a continuing Event of Default with
respect to the Securities, (ii) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to the
Trustee and (iii) the Trustee shall not have received from the Holders of a majority in principal
amount of Outstanding Securities a direction inconsistent with such request, and shall have failed
to institute any such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for
the enforcement of any payment of principal hereof or interest hereon on or after the respective
due dates expressed herein.



               No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.



               As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in The City of New York, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.



               The Securities are issuable only in registered form without coupons in denominations of $2,000
and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like aggregate principal
amount of Securities of a different authorized denomination, as requested by the Holder
surrendering the same.



10









 





               No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.



               Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.



               In the event of a deposit or withdrawal of an interest in this Security, including an
exchange, transfer, or redemption of this Security in part only, the Trustee, as custodian of the
Depositary, shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the rules and procedures of the Depositary. The depository shall initially be The
Depository Trust Company.



               All defined terms used in this Security but not defined herein shall have the meanings
assigned to them in the Indenture or the First Supplemental Indenture, as applicable.



11









 





Annex A-1




ASSIGNMENT FORM




          If you want to assign this Security, fill in the form below and have your signature
guaranteed:




          I or we assign and transfer this Security to:




           





           





           




(Print or type name, address and zip code and social security or tax ID number of assignee)



and irrevocably appoint                                          agent to transfer this Security on the books of
the Company. The agent may substitute another to act for him.




	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 
	 	Signed:
	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 	 
	(Sign exactly as your name appears on the other side of this Security)
	 
	 	 	 	 	 	 	 	 	 	 
	Signature Guarantee:                                                                       
                              





          NOTICE: To be executed by an executive officer




 









 








Annex A-2




GLOBAL SECURITY




          THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.




          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (“DTC”), A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF) DTC, ANY TRANSFER,
PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.




SMITH INTERNATIONAL, INC.




9.750% Notes due 2019




			
	 	 	 
	CUSIP NO.
	 	$______________







               Smith International, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the “Company”, which term includes any successor Person under the
Indenture hereinafter referred to), for value received hereby promises to pay to                , or registered assigns, the principal sum of                 Dollars ($               ) (which
amount may from time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, in accordance with the rules and procedures of the
Depositary) on March 15, 2019, and to pay interest thereon from the most recent Interest Payment
Date to which interest has been paid or duly provided for, or if no interest has been paid, from
and including the date of issuance, semiannually in arrears in cash on March 15 and September 15 in
each year, commencing                 at the rate of 9.750% per annum, until the principal
hereof is paid or made available for payment. Interest will be computed on the basis of a 360 day
year comprised of twelve 30 day months.




               The interest so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the fifteenth calendar day (whether or not a Business Day),
immediately preceding such Interest Payment Date. In the event that any Interest



 









 







Payment Date is not a Business Day, interest shall be paid on the next Business Day without any
interest or other payment due to the delay. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a subsequent record date for the payment of such defaulted
interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not
less than 10 days prior to such subsequent record date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such exchange, all as more fully provided
in said Indenture. Payment of the principal of and interest on this Security will be made at the
office or agency of the Company maintained for that purpose in The City of New York, in such coin
or currency of the United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register. If this Security is a Global Security, then notwithstanding
the foregoing, each such payment will be made in accordance with the procedures of the Depositary
as then in effect.



               Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.



               Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.



2









 





          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.




Dated: March 19, 2009




	 	 	 	 	 
	 	SMITH INTERNATIONAL, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	Attest:

 	 
	
 	 
	Name:  	 	 
	Title:  	 	 



3









 






	 	 	 	 	 


This is one of the Securities of the series designated herein referred to in the within-mentioned
Indenture.




	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON,

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 



Dated: March 19, 2009





4











 





Annex A-2




REVERSE OF GLOBAL SECURITY





               This Security is one of a duly authorized issue of Securities of the Company designated as its
9.750% Senior Notes due 2019 (herein called the “Securities”), initially limited in aggregate
principal amount to $700,000,000, issued under an indenture dated as of September 8, 1997 (herein
called the “Original Indenture”), between the Company and The Bank of New York Mellon (formerly The
Bank of New York), as Trustee (herein called the “Trustee”, which term includes any successor
trustee under the Indenture), as supplemented by a first supplemental indenture, dated as of March
19, 2009, between the Company and the Trustee (the “First Supplemental Indenture” and, together
with the Original Indenture, the “Indenture”), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and delivered.




               The Securities will bear interest, payable on each Interest Payment Date to Holders of record
on the fifteenth calendar day (whether or not a Business Day) immediately preceding such Interest
Payment Date, at 9.750% per annum until March 15, 2019 or the cancellation of the Securities. In
the event that any Interest Payment Date is not a Business Day, interest shall be paid on the next
Business Day without any interest or other payment due to the delay.




               The Securities are the Company’s unsecured senior obligation and rank equally with the
Company’s other existing and future unsecured senior indebtedness. The Securities are redeemable,
in whole or in part, at any time or from time to time, by the Company mailing notice to the
registered address of each Holder of Securities at least 30 days but not more than 60 days prior to
the redemption. The Redemption Price will be equal to the accrued interest thereon to the
Redemption Date plus the greater of (1) 100% of the principal amount of the Securities to be
redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and
interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the
Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months),
at the Treasury Rate (as defined below) plus 50 basis points.




               “Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Securities being redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Securities.




               “Comparable Treasury Price” means, with respect to any Redemption Date, as determined by the
Company (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such
quotations.



5









 






               “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.




               “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer, at 5:00 p.m., New York City
time, on the third Business Day preceding such Redemption Date.




               “Reference Treasury Dealers” means J.P. Morgan Securities Inc., Banc of America Securities LLC
and the Primary Treasury Dealer selected by Wachovia Capital Markets, LLC and their affiliates
which are primary U.S. Government securities dealers, and their respective successors; provided,
however, that if any of J.P. Morgan Securities Inc., Banc of America Securities LLC and the Primary
Treasury Dealer selected by Wachovia Capital Markets, LLC or any of their respective affiliates
shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary
Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.




               “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated yield (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for that Redemption
Date.




               Unless the Company defaults in the payment of the Redemption Price and accrued interest, on
and after the Redemption Date interest will cease to accrue on the Securities thereof called for
redemption. In the event that any Redemption Date is not a Business Day, the Company will pay the
Redemption Price on the next Business Day without any interest or other payment due to the delay.




               The Securities do not have the benefit of a sinking fund.




               If a Change of Control Repurchase Event (as defined below) occurs with respect to the
Securities pursuant to Section 2.09 of the First Supplemental Indenture, unless the Company has
exercised its right to redeem such Securities pursuant to Section 2.08 of the First Supplemental
Indenture, the Company will make an offer to each Holder of the Securities to repurchase all or any
part (in amounts of $2,000 and integral multiples of $1,000 in excess thereof) of the Securities
held by such Holder at a repurchase price in cash equal to 101% of the aggregate principal amount
of Securities repurchased, plus any accrued and unpaid interest on the Securities repurchased to
the date of repurchase. Within 30 days following the consummation of any Change of Control
Repurchase Event or, at the Company’s option, prior to any Change of Control (as defined below),
but after the public announcement of an impending Change of Control, the Company will mail a notice
to each Holder, with a copy to the Trustee, describing the transaction or transactions that
constitute or may constitute the Change of Control Repurchase Event and offering to repurchase the
Securities on the payment date specified in the notice, which date will be no earlier than 30 days
and no later than 60 days from the date such notice is mailed (the “Change of Control Payment
Date”). The notice shall, if mailed prior to the



6









 







date of consummation of the Change of Control, state that the offer to repurchase is
conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date
specified in the notice.




               The Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act
of 1934 (the “Exchange Act”), and any other securities laws and regulations thereunder, to the
extent those laws and regulations are applicable in connection with the repurchase of the
Securities as a result of a Change of Control Repurchase Event. To the extent that the provisions
of any securities laws or regulations conflict with the Change of Control Repurchase Event
provisions of the Securities, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the Change of Control
Repurchase Event provisions of the Securities by virtue of such conflict.




               On the Change of Control Payment Date, the Company will, to the extent lawful:




	 	•	 	accept for payment all Securities or portions of Securities (in amounts of $2,000
and integral multiples of $1,000 in excess thereof) properly tendered pursuant to
the Company’s Change of Control Offer;
	 
	 	•	 	deposit with the Paying Agent an amount equal to the aggregate purchase price in
respect of all Securities or portion of Securities properly tendered and not
withdrawn; and
	 
	 	•	 	deliver or cause to be delivered to the Trustee the Securities properly accepted,
together with an Officers’ Certificate stating the aggregate principal amount of
Securities being purchased by the Company.






               The Paying Agent will promptly mail to each Holder of properly tendered Securities the
repurchase price for the Securities, and the Trustee will promptly authenticate (upon its receipt
of executed Securities from the Company) and mail (or cause to be transferred by book-entry) to
each Holder a new Security equal in principal amount to any unpurchased portion of any Securities
surrendered; provided, that each new Security will be in a principal amount of $2,000 or an
integral multiple of $1,000 above that amount.




               The Company will not be required to make a Change of Control Offer upon a Change of Control
Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in
compliance with the requirements for a Change of Control Offer made by the Company, and such third
party purchases all Securities properly tendered and not withdrawn under its offer. In the event
that such third party terminates or defaults on its Change of Control Offer, the Company will be
required to make a Change of Control Offer treating the date of such termination or default by such
third party as though it were the date of the Change of Control Repurchase Event.




               “Below Investment Grade Rating Event” means the ratings on the Securities are lowered by each
of the Rating Agencies and the Securities are rated below Investment Grade by each of the Rating
Agencies on any date from the date of the first public notice of an



7









 







arrangement that could result in a Change of Control until the end of the 60-day period
following public notice of the occurrence of a Change of Control (which period shall be extended so
long as the rating of the Securities is under publicly announced consideration for possible
downgrade by any of the Rating Agencies); provided that a Below Investment Grade Rating Event
otherwise arising by virtue of a particular reduction in rating shall not be deemed to have
occurred in respect of a particular Change of Control (and thus shall not be deemed a Below
Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event
hereunder) if any of the Rating Agencies making the reduction in rating to which this definition
would otherwise apply does not announce or publicly confirm or inform the Trustee in writing at its
request that the reduction was the result, in whole or in part, of any event or circumstance
comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether
or not the applicable Change of Control shall have occurred at the time of the Below Investment
Grade Rating Event).




               “Change of Control” means the occurrence of any of the following: (1) the direct or indirect
sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation,
arrangement or consolidation), in one or a series of related transactions, of all or substantially
all of the properties or assets of the Company and those of its subsidiaries taken as a whole to
any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than the Company
or one or more of its subsidiaries; (2) the consummation of any transaction or series of related
transactions (including, without limitation, any merger, amalgamation, arrangement or
consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), other than the Company or one of its wholly owned subsidiaries, becomes the
beneficial owner, directly or indirectly, of more than 50% of the then outstanding Voting Stock of
the Company, measured by voting power rather than by number of shares; (3) the Company
consolidates, amalgamates or enters into an arrangement with, or merge with or into, any Person, or
any Person consolidates, amalgamates or enters into an arrangement with, or merges with or into,
the Company, in any such event pursuant to a transaction or series of transactions in which any of
the Company’s outstanding Voting Stock or the Voting Stock of such other Person is converted into
or exchanged for cash, securities or other property, other than any such transaction where the
shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute,
or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person
immediately after giving effect to such transaction; (4) the first day on which a majority of the
members of the Company’s Board of Directors is not comprised of Continuing Directors; or (5) the
adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the
foregoing, a transaction will not be considered a Change of Control if (a) the Company becomes
direct or indirect wholly owned subsidiary of a holding company and (b) immediately following that
transaction (y) the direct or indirect holders of the Voting Stock of the holding company are
substantially the same as the holders of the outstanding Voting Stock immediately prior to that
transaction or (z) the shares of the Company’s Voting Stock immediately prior to such transaction
constitute, or are converted into or exchanged for, a majority of the Voting Stock of the holding
company immediately after giving effect to such transaction.




               “Change of Control Repurchase Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event.



8









 






               “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors of the Company who (1) was a member of such Board of Directors on the date of the
issuance of the Securities; or (2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination, election or appointment (either by a specific vote or by
approval of the Company’s proxy statement in which such member was named as a nominee for election
as a director).




               “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating categories of Moody’s); a rating of BBB- or better by S&P (or its equivalent under
any successor rating categories of S&P); or the equivalent investment grade credit rating from any
additional Rating Agency or Rating Agencies selected by the Company.




               “Moody’s” means Moody’s Investors Service Inc.




               “Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or S&P ceases to
rate the Securities or fails to make a rating of the Securities publicly available for reasons
outside of the Company’s control, a “nationally recognized statistical rating organization” within
the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement agency for Moody’s or S&P, as the case may be, and that is reasonably acceptable to the
Trustee.




               “S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.




               “Voting Stock” means all classes of Capital Stock of a Person then outstanding entitled to
vote in elections of directors or Persons performing similar functions, whether at all times or
only so long as no senior class of stock has such voting power by reason of contingency.




               The Company may, from time to time, without the consent of the existing Holders of the
Securities, issue additional securities under the Indenture having the same terms as the Securities
in all respects, except for the issue date, the issue price and the initial interest payment date.
Any such additional securities will be consolidated with and form a single series with the
Securities.




               In addition to the Securities, the Company may issue other series of debt securities under the
Indenture. There is no limit on the total aggregate principal amount of debt securities that the
Company may issue under the Indenture.




               If an Event of Default shall occur and be continuing, the principal amount of the Securities
may be declared due and payable in the manner and with the effect provided in the Indenture.




               The Indenture contains provisions for defeasance at any time, upon compliance with certain
conditions set forth therein, of (i) the entire Indebtedness evidenced by this Security or (ii)
certain restrictive covenants and Events of Default with respect to this Security.



9









 






               The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the Outstanding Securities.
The Indenture also contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Outstanding Securities, on behalf of the Holders of all the Securities, to
waive compliance by the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.




               As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless (i) such Holder
shall have previously given the Trustee written notice of a continuing Event of Default with
respect to the Securities, (ii) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to the
Trustee and (iii) the Trustee shall not have received from the Holders of a majority in principal
amount of Outstanding Securities a direction inconsistent with such request, and shall have failed
to institute any such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for
the enforcement of any payment of principal hereof or interest hereon on or after the respective
due dates expressed herein.




               No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.




               As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in The City of New York, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.




               The Securities are issuable only in registered form without coupons in denominations of $2,000
and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like aggregate principal
amount of Securities of a different authorized denomination, as requested by the Holder
surrendering the same.



10









 






               No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.




               Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.




               In the event of a deposit or withdrawal of an interest in this Security, including an
exchange, transfer, or redemption of this Security in part only, the Trustee, as custodian of the
Depositary, shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the rules and procedures of the Depositary. The depository shall initially be The
Depository Trust Company.




               All defined terms used in this Security but not defined herein shall have the meanings
assigned to them in the Indenture or the First Supplemental Indenture, as applicable.



11









 





Annex A-2



ASSIGNMENT FORM




          If you want to assign this Security, fill in the form below and have your signature
guaranteed:




          I or we assign and transfer this Security to:




 





 





 

(Print or type name, address and zip code and social security or tax ID number of assignee)



and irrevocably appoint
                    
                    
                    
                    
agent to transfer this Security on the books of
the Company. The agent may substitute another to act for him.




	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 
	 	Signed:
	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 	 
	(Sign exactly as your name appears on the other side of this Security)
	 
	 	 	 	 	 	 	 	 	 	 
	Signature Guarantee:         
                    
                    
                    
                    
            






          NOTICE: To be executed by an executive officer




 









 








Reference Treasury Dealer 

Contact Information




J.P. Morgan Securities Inc.

270 Park Avenue

New York, New York 10017

Attention: Investment Grade Syndicate Desk

Tel: 212-834-4533




Banc of America Securities LLC

One Bryant Park

NY1-100-03-01

New York, NY 10036

Attention: Syndicate Desk

Tel: 646-855-6433




Wachovia Capital Markets, LLC

One Wachovia Center

301 S. College Street, 6th Floor

Charlotte, NC 28288-0613

Attention: High Grade Syndicate

Tel: 704-383-7727