exv10w3





EXHIBIT 10.3


SECOND AMENDMENT TO THE
SMITH INTERNATIONAL, INC.
THIRD AMENDED AND RESTATED

1989 LONG-TERM INCENTIVE COMPENSATION PLAN
(As Amended and Restated Effective as of January 1, 2008)


W I T N E S S E T H


     WHEREAS, Smith International, Inc. (the “Company”) maintains the Smith International, Inc.
Third Amended and Restated 1989 Long-Term Incentive Compensation Plan, as Amended and Restated
effective as of January 1, 2008 (the “Plan”), for the purpose of providing additional incentives to
officers and other valued employees of the Company; and


     WHEREAS, in Section 9.7 of the Plan, the Board of Directors of the Company (the “Board”)
reserved the discretionary right to amend the Plan at any time; and


     WHEREAS, the Board now desires to amend the Plan to permit Grantees to elect to defer the
receipt of Shares payable upon the vesting of Restricted Stock Unit Awards;


     NOW, THEREFORE, effective as December 1, 2009, the Plan is hereby amended by this Second
Amendment thereto, as follows:


     1. A new Section 5.2(d) is added to the Plan and the existing Section 5.2(d) is deleted in its
entirety:


(d) Initial Deferral of Restricted Stock Unit Awards. As permitted in the
discretion of the Committee and subject to such terms and conditions as required by the
Committee, a Grantee may elect in writing to defer the receipt of Shares that become payable
upon vesting of a Restricted Stock Unit Award; provided, however, that such election be made
by the Grantee not later than by the end of the calendar year that immediately precedes the
calendar year during which the applicable performance period begins. Notwithstanding the
previous sentence, at the discretion of the Committee and subject to such terms and
conditions as required by the Committee, a Grantee who is first eligible to participate in
the Plan under Section 1.7 may elect in writing to defer receipt of his initial
Restricted Stock Unit Award under the Plan within thirty (30) days after the grant date of
such Restricted Stock Unit Award. Any deferral election made by the Grantee pursuant to
this Section 5.2(d) must be consistent with the requirements of Code Section 409A
and shall be construed accordingly.


     2. A new Section 5.2(e) is hereby added to the Plan:


(e) Subsequent Deferrals. As permitted in the discretion of the Committee and
subject to such terms and conditions as required by the Committee, if a Grantee has
previously made an initial deferral election pursuant to Section 5.2(d), the Grantee
may elect in writing to defer the receipt of Shares payable upon vesting of the outstanding
Restricted Stock Unit Award; provided, however, that (i) such election will not take effect
until at least twelve (12) months after the date upon which the election is made by the
Grantee, (ii) except in the case of payment on account of the Grantee’s death or Disability,
the payment with respect to which such election is made must be deferred for a period of not
less than five (5) years from the date the payment would otherwise have been paid, and (iii)
such election may not be made less than twelve (12) months prior to the date the payment was
otherwise scheduled to be made. Any subsequent deferral election made by the Grantee
pursuant to this Section 5.2(e) must be consistent with the requirements of Code
Section 409A and shall be construed accordingly.


     3. Section 9.6 is hereby deleted in its entirety and replaced with the following:


          9.6 [RESERVED].


     IN WITNESS WHEREOF, this Second Amendment to the Plan is hereby approved and executed on this
___day of ___, 2009, to be effective as of December 1, 2009.


	 	 	 	 	 	 	 
	ATTEST:	 	SMITH INTERNATIONAL, INC.
	 
	 	 	 	 	 	 
	By:
	 	 	 	By:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name:
	 	 	 	Name:	 	 
	 
	 	 	 	 	 	 




 







 






	 	 	 	 	 	 	 
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