EXHIBIT
      4.3

     

    UNLESS
      THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
      TRUST COMPANY 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
      THE
      DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
      SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
      DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
      OR
      OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
      CEDE & CO., HAS AN INTEREST HEREIN. 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 IS EXCHANGEABLE
      FOR
      SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
      ITS
      NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS
      AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE
      FORM,
      THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
      A
      NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
      OR
      ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
      TO A
      SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Ceradyne,
      Inc.

     

    2.875%
      Senior Subordinated Convertible Notes due 2035 

     

    No.
      A1
      CUSIP: 156710 AA 3

     

    
      
        

      

    

     

    Ceradyne,
      Inc., a Delaware corporation, promises to pay to Cede & Co. or registered
      assigns the principal amount of One Hundred Ten Million Dollars
      ($110,000,000.00) on December 15, 2035.

     

    
      	 	
              Interest
                Payment Dates:

            	
              June
                15 and December 15, commencing
                June 15, 2006

            


    

     

     

    
      	 	
              Record
                Dates:

            	
              June
                1 and December 1

            


    

     

    This
      Security shall bear interest as specified on the other side of this Security.
      This Security is convertible as specified on the other side of this
      Security.

     

    Additional
      provisions of this Security are set forth on the other side of this
      Security.

     

    Dated:
      December 19, 2005

     

     

    SIGNATURE
      PAGE FOLLOWS

     

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this instrument to be duly executed
      as
      of December 19, 2005.

     

     

    Ceradyne,
      Inc.

    


    By:

     

    
      
        

      

    

    Joel
      P.
      Moskowitz,

    Chief
      Executive Officer and President

     

     

    By:

     

    
      

    

    Jerrold
      J. Pellizzon,

    Chief
      Financial Officer

     

     

    Trustee’s
      Certificate of Authentication:

     

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

     

    UNION
      BANK OF CALIFORNIA, N.A., as Trustee

     

    By:

    
      

    

    Authorized
      Signatory:

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    Ceradyne,
      Inc.

     

    2.875%
      Senior Subordinated Convertible Notes due 2035 

     

    
      	1.	
              INTEREST

            


    

     

    The
      Company promises to pay interest on the principal amount of this Note at the
      rate of 2.875% per annum. The Company shall pay interest semiannually in arrears
      on June 15 and December 15 of each year (each, an “Interest
      Payment Date”),
      commencing on June 15, 2006. Interest on the Notes shall accrue from the most
      recent date to which interest has been paid or, if no interest has been paid,
      from December 19, 2005; provided,
      however,
      that if
      there is not an existing default in the payment of interest and if this Note
      is
      authenticated between a record date referred to on the face hereof and the
      next
      succeeding interest payment date, such interest payment date. Interest will
      be
      computed on the basis of a 360-day year composed of twelve 30-day
      months.

     

    In
      addition, the Company shall pay contingent interest (“Contingent
      Interest”)
      to the
      Holders during any six-month period (a “Contingent
      Interest Period”)
      from
      June 15 to December 14 and from December 15 to June 14, commencing with the
      six-month period beginning December 20, 2010 and ending on July 14, 2011,
      if the average Trading Price of a Note for the five Trading Day period ending
      on
      the third Trading Day immediately preceding the first day of the relevant
      Contingent Interest Period equals $1,200 (120% of the principal amount of a
      Note) or more.

     

    Upon
      a
      determination by the Company that Holders will be entitled to receive Contingent
      Interest which will become payable during a Contingent Interest Period, on
      or
      prior to the first day of such Contingent Interest Period, the Company shall
      provide notice in the form of an Officer’s Certificate to the Trustee setting
      forth the amount of such Contingent Interest per $1,000 principal amount of
      Notes and shall issue a press release through a public medium as is customary
      for such a press release.

     

    The
      amount of Contingent Interest payable per $1,000 principal amount of Security
      for any relevant Contingent Interest Period shall equal 0.25% per annum of
      the
      average Trading Price of such Security for the five Trading Day period ending
      on
      the third Trading Day immediately preceding the first day of the relevant
      Contingent Interest Period. Contingent Interest, if any, will accrue and be
      payable to Holders in the same manner as regular interest, and a Holder’s
      obligation to pay the Company Contingent Interest in connection with the
      conversion of a Security will also be the same as regular interest. Regular
      interest will continue to accrue at the rate of 2.875% per year on the principal
      amount of the Securities whether or not Contingent Interest is
      paid.

     

    If
      this
      Security is redeemed pursuant to Section 6 of this Security or the Holder
      elects to require the Company to repurchase this Security pursuant to
      Section 8 of this Security, on a date that is after the Regular Record Date
      and prior to the corresponding Interest Payment Date, interest (including
      Contingent Interest, if any, accrued and unpaid hereon to, but not including,
      the applicable Redemption Date, Put Right Purchase Date or Fundamental Change
      Repurchase Date), will be paid to the same Holder to whom the Company pays
      the
      principal of such Note regardless of whether such Holder was the registered
      Holder on the Regular Record Date immediately preceding the applicable
      Redemption Date, Put Right Purchase Date or Fundamental Change Repurchase
      Date.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    Interest
      (including Contingent Interest, if any) on Securities converted after the close
      of business on a Regular Record Date but prior to the opening of business on
      the
      corresponding Interest Payment Date will be paid to the Holder of the Securities
      on each Regular Record Date but, upon conversion, the Holder must pay the
      Company the interest (including Contingent Interest, if any) which has accrued
      and will be paid on such Interest Payment Date. No such payment need be made
      with respect to Securities which will be converted after a Regular Record Date
      and prior to the corresponding Interest Payment Date after being called for
      redemption by the Company.

     

    
      	2.	
              METHOD
                OF PAYMENT

            


    

     

    The
      Company shall pay interest on this Security (except defaulted interest) to
      the
      person who is the Holder of this Security at the close of business on June
      1 or
      December 1, as the case may be, (each, a “Regular
      Record Date”)
      immediately preceding the related Interest Payment Date. The Holder must
      surrender this Security to a Paying Agent to collect payment of principal.
      The
      Company will pay principal and interest (including Contingent Interest, if
      any)
      in money of the United States that at the time of payment is legal tender for
      payment of public and private debts. The Company may pay principal and interest
      (including Contingent Interest, if any) in respect of any Certificated Security
      by check or wire payable in such money; provided,
      however,
      that a
      Holder with an aggregate principal amount in excess of $5,000,000 will be paid
      by wire transfer in immediately available funds at the election of such Holder
      if such Holder has provided wire transfer instructions to the Trustee at least
      10 Business Days prior to the Payment Date. The Company may mail an interest
      check to the Holder’s registered address. Notwithstanding the foregoing, so long
      as this Security is registered in the name of a Depositary or its nominee,
      all
      payments hereon shall be made by wire transfer of immediately available funds
      to
      the account of the Depositary or its nominee.

     

    Any
      wire
      transfer instructions received by the Trustee will remain in effect until
      revoked by the Holder.

     

    
      	3.	
              PAYING
                AGENT, REGISTRAR AND CONVERSION
                AGENT

            


    

     

    Initially,
      Union Bank of California, N.A. (the “Trustee,”
which
      term shall include any successor trustee under the Indenture hereinafter
      referred to) will act as Paying Agent, Registrar and Conversion Agent. The
      Company may change any Paying Agent, Registrar or Conversion Agent without
      notice to the Holder. The Company or any of its Subsidiaries may, subject to
      certain limitations set forth in the Indenture, act as Paying Agent or
      Registrar.

     

    
      	4.	
              INDENTURE,
                LIMITATIONS

            


    

     

    This
      Security is one of a duly authorized issue of Securities of the Company
      designated as its 2.875% Senior Subordinated Convertible Notes Due 2035 (the
      “Securities”),
      issued under an Indenture dated as of December 19, 2005 (the “Base
      Indenture”),
      as
      supplemented by the First Supplemental Indenture dated December 19, 2005
      (the “First
      Supplemental Indenture”
and
      together with the Base Indenture, the “Indenture”),
      between the Company and the Trustee. The terms of this Security include those
      stated in the Indenture and those required by or made part of the Indenture
      by
      reference to the Trust Indenture Act of 1939, as amended, as in effect on the
      date of the Indenture. This Security is subject to all such terms, and the
      Holder of this Security is referred to the Indenture and said Act for a
      statement of them.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    The
      Securities are senior subordinated unsecured obligations of the Company limited
      to $121,000,000 in aggregate principal amount at maturity. The Indenture does
      not limit the incurrence of other debt of the Company or its existing or future
      Subsidiaries, secured or unsecured.

     

    
      	5.	
              REDEMPTION
                AT THE OPTION OF THE COMPANY

            


    

     

    Prior
      to
      December 20, 2010, the Securities shall not be redeemable. On or after December
      20, 2010, the Company may, at its option, redeem the Securities for cash, as
      a
      whole at any time or from time to time in part, at the Redemption Price
      (expressed as a percentage of the principal amount) set forth below if redeemed
      during the periods described below, plus accrued and unpaid cash interest,
      if
      any, and Contingent Interest, if any, up to but not including the applicable
      Redemption Date (the “Redemption
      Price”);
      provided that if the Redemption Date falls after the close of business on a
      Regular Record Date and before the related Interest Payment Date, then interest
      on the Securities payable on such Interest Payment Date will instead be payable
      to the Holders in whose names the Securities are registered at the close of
      business on such Regular Record Date. Securities or portions of Securities
      called for redemption shall be convertible by the Holder until the close of
      business on the Business Day prior to the relevant Redemption Date.

     

    
      	
              Period

            	 	
              Redemption
                Price

            	 
	
              Beginning
                on December 20, 2010 and ending December 14, 2011

            	 	 	
              100.821

            	
              %

            
	
              Beginning
                on December 15, 2011 and ending December 14, 2012

            	 	 	
              100.411

            	
              %

            
	
              Beginning
                on December 15, 2012 and thereafter

            	 	 	
              100.000

            	
              %

            


    

    


     

    
      	6.	
              NOTICE
                OF REDEMPTION

            


    

     

    Notice
      of
      redemption, as set forth in Section 3.03 of the First Supplemental Indenture,
      will be mailed by first-class mail at least 30 days but not more than 60 days
      before a Redemption Date to each Holder of Securities to be redeemed at its
      registered address. Securities in denominations larger than $1,000 may be
      redeemed in part, but only in whole multiples of $1,000. On and after the
      Redemption Date, subject to the deposit with the Paying Agent of funds
      sufficient to pay the Redemption Price, such Securities or portions of them
      called for redemption will cease to be outstanding, whether or not the Security
      is delivered to the Paying Agent, and the rights of the Holder in respect
      thereof shall cease (other than the right to receive the Redemption
      Price).

     

    
      	
              7.

            	
              PURCHASE
                OF SECURITIES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE
                

            


    

     

    At
      the
      option of the Holder and subject to the terms and conditions of the Indenture,
      the Company shall become obligated to purchase for cash, subject to certain
      exceptions described in the Indenture all or any part specified by the Holder
      (so long as the principal amount of such part is $1,000 or an integral multiple
      of $1,000) of the Securities held by such Holder on a date specified by the
      Company that is no earlier than 15 days and no later than 30 days after the
      date
      of the Fundamental Change Company Notice, at a purchase price equal to 100%
      of
      the principal amount thereof together with unpaid interest, if any, and
      Contingent Interest, if any, accrued to, but excluding, the Fundamental Change
      Repurchase Date. The Holder shall have the right to withdraw any Fundamental
      Change Repurchase Notice (in whole or in a portion thereof that is $1,000 or
      an
      integral multiple of $1,000) at any time prior to the close of business on
      the
      fifth Business Day prior to the Fundamental Change Repurchase Date by delivering
      a written notice of withdrawal to the Paying Agent in accordance with the terms
      of the Indenture.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    
      	8.	
              PURCHASE
                OF SECURITIES AT OPTION OF HOLDER ON SPECIFIED DATES
                

            


    

     

    At
      the
      option of the Holder and subject to the terms and conditions of the Indenture,
      the Company shall become obligated to purchase for cash all or any part
      specified by the Holder (so long as the principal amount of such part is $1,000
      or an integral multiple of $1,000) of the Securities held by such Holder on
      the
      applicable Put Right Purchase Date at the applicable Put Right Purchase Price.
      The Holder shall have the right to withdraw any Put Right Purchase Notice (in
      whole or in a portion thereof that is $1,000 or an integral multiple of $1,000)
      at any time prior to the close of business on the Business Day prior to the
      Put
      Right Purchase Date by delivering a written notice of withdrawal to the Paying
      Agent in accordance with the terms of the Indenture.

     

    
      	9.	
              CONVERSION

            


    

     

    Subject
      to and upon compliance with the provisions of the Indenture and upon the
      occurrence of the events specified in Section 4.01 of the First
      Supplemental Indenture, a Holder may surrender for conversion any Security
      that
      is $1,000 principal amount or integral multiples thereof. In lieu of receiving
      shares of the Company’s Common Stock, a Holder will receive, for each $1,000
      principal amount of Securities surrendered for conversion:

     

    	·      	
            cash
              in an amount equal to the lesser of (1) $1,000 and (2) the Conversion
              Value, as defined in the Indenture; and

          


     

    	·      	
            if
              the Conversion Value is greater than $1,000, a number of shares of
              the
              Company’s Common Stock (the “Remaining
              Shares”)
              equal to the sum of the Daily Share Amounts, as defined in the Indenture,
              for each of the 10 consecutive Trading Days in the Conversion Reference
              Period, subject to the Company’s right to deliver cash in lieu of all or a
              portion of such Remaining Shares as described in the
              Indenture.

          


     

    No
      fractional share of Common Stock shall be issued upon conversion of a Security.
      Instead, the Company shall pay a cash adjustment as provided in the
      Indenture.

     

    
      	10.	
              SUBORDINATION

            


    

     

    The
      Indebtedness evidenced by this Security is, to the extent and in the manner
      provided in the Indenture, subordinated and subject in right of payment to
      the
      prior payment in full of all amounts then due on all Senior Debt of the Company;
      provided,
      however,
      that
      the Securities, the Indebtedness represented thereby and the payment of the
      principal of and premium, if any, and interest (including Contingent Interest,
      if any) on the Securities in all respects shall rank equally with, or prior
      to,
      all existing and future Indebtedness of the Company that is expressly
      subordinated to any Senior Debt, and this Security is issued subject to such
      provisions of the Indenture with respect thereto. Each Holder of this Security,
      by accepting the same, (a) agrees to and shall be bound by such provisions,
      (b)
      authorizes and directs the Trustee on such Holder’s behalf to take such action
      as may be necessary or appropriate to effectuate the subordination so provided
      and (c) appoints the Trustee such Holder’s attorney-in-fact for any and all such
      purposes.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    
      	11.	
              DENOMINATIONS,
                TRANSFER, EXCHANGE

            


    

     

    The
      Securities are in registered form, without coupons, in denominations of $1,000
      principal amount and integral multiples of $1,000 principal amount. A Holder
      may
      register the transfer of or exchange Securities in accordance with the
      Indenture. The Registrar may require a Holder, among other things, to furnish
      appropriate endorsements and transfer documents and to pay any taxes or other
      governmental charges that may be imposed in relation thereto by law or permitted
      by the Indenture.

     

    
      	12.	
              PERSONS
                DEEMED OWNERS

            


    

     

    The
      Holder of a Security may be treated as the owner of it for all
      purposes.

     

    
      	13.	
              UNCLAIMED
                MONEY

            


    

     

    If
      money
      for the payment of principal or interest (including Contingent Interest, if
      any)
      remains unclaimed for two years, the Trustee and any Paying Agent will pay
      the
      money back to the Company at its written request, subject to applicable
      unclaimed property law and the provisions of the Indenture. After that, Holders
      entitled to money must look to the Company for payment as general creditors
      unless an applicable abandoned property law designates another
      person.

     

    
      	14.	
              AMENDMENT,
                SUPPLEMENT AND WAIVER

            


    

     

    Subject
      to certain exceptions, the Indenture or the Securities may be amended or
      supplemented with the consent of the Holders of at least a majority in aggregate
      principal amount of the Securities then outstanding, and an existing Default
      or
      Event of Default and its consequence or compliance with any provision of the
      Indenture or the Securities may be waived in a particular instance with the
      consent of the Holders of a majority in aggregate principal amount of the
      Securities then outstanding. Without the consent of or notice to any Holder,
      the
      Company and the Trustee may amend or supplement the Indenture or the Securities
      to, among other things, cure any ambiguity, omission, defect or inconsistency
      or
      make any other change that does not adversely affect the rights of the Holders
      in any material respect. The Company may also amend the Indenture, without
      consent of the Holders or the Trustee, for the purpose of surrendering the
      Company’s right to issue shares of Common Stock upon conversion of the
      Securities.

     

    
      	15.	
              SUCCESSOR
                ENTITY

            


    

     

    When
      a
      successor corporation assumes all the obligations of its predecessor under
      the
      Securities and the Indenture in accordance with the terms and conditions of
      the
      Indenture, the predecessor corporation (except in certain circumstances
      specified in the Indenture) shall be released from those
      obligations.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    
      	16.	
              DEFAULTS
                AND REMEDIES

            


    

     

    Under
      the
      Indenture, an Event of Default shall occur if:

     

    
      	 	
              (1)

            	
              the
                Company shall fail to pay when due the Principal or any Redemption
                Price,
                Put Right Purchase Price or Fundamental Change Repurchase Price of
                any
                Security, including any Make-Whole Premium, when the same becomes
                due and
                payable whether at the Final Maturity Date, upon redemption, repurchase,
                acceleration or otherwise; or

            


    

     

    
      	 	
              (2)

            	
              the
                Company shall fail to pay an installment of cash interest or Contingent
                Interest, if any, on any of the Securities, which failure continues
                for 30
                days after the date when due; or

            


    

     

    
      	 	
              (3)

            	
              the
                Company shall fail to deliver when due all cash and shares of Common
                Stock
                deliverable upon conversion of the Securities, which failure continues
                for
                15 days; or

            


    

     

    
      	 	
              (4)

            	
              the
                Company shall fail to perform or observe any other term, covenant
                or
                agreement contained in the Securities or the Indenture upon the Company’s
                receipt of a Notice of Default, and fails to cure such default (or
                obtain
                a waiver thereof) within 30 days after receipt of the Notice of Default;
                or

            


    

     

    
      	 	
              (5)

            	
              default
                in the payment of principal when due or resulting in acceleration
                of other
                Indebtedness of the Company or any significant Subsidiaries for borrowed
                money where the aggregate principal amount with respect to which
                the
                default or acceleration has occurred exceeds $10,000,000 and such
                acceleration has not been rescinded or annulled or such Indebtedness
                repaid within a period of 30 days after receipt of a Notice of Default,
                provided that if any such default is cured, waived, rescinded or
                annulled,
                then the Event of Default by reason thereof would be deemed not to
                have
                occurred; or 

            


    

     

    
      	 	
              (6)

            	
              the
                Company fails to provide a Fundamental Change Company Notice in accordance
                with Section 3.08 of the First Supplemental Indenture;
                or

            


    

     

    
      	 	
              (7)

            	
              the
                Company pursuant to or within the meaning of any Bankruptcy
                Law:

            


    

     

    
      	 	
              (A)

            	
              commences
                as a debtor a voluntary case or proceeding;
                or

            


    

     

    
      	 	
              (B)

            	
              consents
                to the entry of an order for relief against it in an involuntary
                case or
                proceeding or the commencement of any case against it;
                or

            


    

     

    
      	 	
              (C)

            	
              consents
                to the appointment of a Receiver of it or for all or substantially
                all of
                its property; or

            


    

     

    
      	 	
              (D)

            	
              makes
                a general assignment for the benefit of its creditors;
                

            


    

     

    
      	 	
              (E)

            	
              files
                a petition in bankruptcy or answer or consent seeking reorganization
                or
                relief; or

            


    

     

    
      	 	
              (F)

            	
              consents
                to the filing of such a petition or the appointment of or taking
                possession by a Receiver; or

            


    

     

    
      	 	
              (8)

            	
              a
                court of competent jurisdiction enters an order or decree under any
                Bankruptcy Law that:

            


    

     

    
      	 	
              (A)

            	
              grants
                relief against the Company in an involuntary case or proceeding or
                adjudicates the Company insolvent or
                bankrupt;

            


    

     

    
      	 	
              (B)

            	
              appoints
                a Receiver of the Company or for all or substantially all of the
                property
                of the Company; or

            


    

     

    
      	 	
              (C)

            	
              orders
                the winding up or liquidation of the Company; and in each case the
                order
                or decree remains unstayed and in effect for 60 consecutive
                days.

            


    

     

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    The
      term
“Bankruptcy
      Law”
means
      Title 11 of the United States Code (or any successor thereto) or any similar
      federal or state law for the relief of debtors. The term “Receiver”
means
      any receiver, trustee, assignee, liquidator, sequestrator or similar official
      under any Bankruptcy Law.

     

    Notwithstanding
      the above, no Event of Default under clauses (4) or (5) above shall occur until
      the Trustee notifies the Company in writing, or the Holders of at least 25%
      in
      aggregate principal amount of the Securities then outstanding notify the Company
      and the Trustee in writing, of the Default (a “Notice
      of Default”),
      and
      the Company does not cure the Default within the time specified in clause (4)
      or
      (5), as applicable, after receipt of such notice.

     

    If
      an
      Event of Default (other than an Event of Default specified in clause (7) or
      (8)
      above) occurs and is continuing with respect to the Company, the Trustee may,
      by
      notice to the Company, or the Holders of at least 25% in aggregate principal
      amount of the Securities then outstanding may, by notice to the Company and
      the
      Trustee, declare the principal amount and accrued and unpaid interest, if any,
      and accrued and unpaid Contingent Interest, if any, through the date of
      declaration on all the Securities to be immediately due and payable. Upon such
      a
      declaration, such principal amount and such accrued and unpaid interest, if
      any,
      and such accrued and unpaid Contingent Interest, if any, shall be due and
      payable immediately. If an Event of Default specified in clauses (7) or (8)
      occurs in respect of the Company and is continuing, the principal amount and
      accrued but unpaid interest, if any, and accrued and unpaid Contingent Interest,
      if any, on all the Securities shall become and be immediately due and payable
      without any declaration or other act on the part of the Trustee or any Holders
      of Securities. The Holders of a majority in aggregate principal amount of the
      Securities then outstanding by notice to the Trustee may rescind an acceleration
      and its consequences if (a) all existing Events of Default, other than the
      nonpayment of the principal of the Securities which have become due solely
      by
      such declaration of acceleration, have been cured or waived; (b) to the extent
      the payment of such interest is lawful, interest (calculated at the rate per
      annum borne by the Securities) on overdue installments of interest and overdue
      principal, which has become due otherwise than by such declaration of
      acceleration, has been paid; (c) the rescission would not conflict with any
      judgment or decree of a court of competent jurisdiction; and (d) all payments
      due to the Trustee and any predecessor Trustee under the Indenture have been
      made. No such rescission shall affect any subsequent Default or impair any
      right
      consequent thereto. Holders may not enforce the Indenture or the Securities
      except as provided in the Indenture. The Trustee may require indemnity
      satisfactory to it before it enforces the Indenture or the Securities. Subject
      to certain limitations, Holders of a majority in aggregate principal amount
      of
      the Securities then outstanding may direct the Trustee in its exercise of any
      trust or power. The Trustee may withhold from Holders notice of any continuing
      Default (except a Default in payment of principal or interest) if and so long
      as
      it determines that withholding notice is in their interests. The Company is
      required to file periodic certificates with the Trustee as to the Company’s
      compliance with the Indenture and knowledge or status of any Default.


     

    
      	17.	
              TRUSTEE
                DEALINGS WITH THE COMPANY

            


    

     

    Union
      Bank of California, N.A., the initial Trustee under the Indenture, in its
      individual or any other capacity, may make loans to, accept deposits from and
      perform services for the Company or an Affiliate of the Company, and may
      otherwise deal with the Company or an Affiliate of the Company, as if it were
      not the Trustee.

     

    
      	18.	
              NO
                RECOURSE AGAINST OTHERS

            


    

     

    A
      director, officer, employee or shareholder, as such, of the Company shall not
      have any liability for any obligations of the Company under the Securities
      or
      the Indenture nor for any claim based on, in respect of or by reason of such
      obligations or their creation. The Holder of this Security by accepting this
      Security waives and releases all such liability. The waiver and release are
      part
      of the consideration for the issuance of this Security.

     

    
      	19.	
              AUTHENTICATION

            


    

     

    This
      Security shall not be valid until the Trustee or an authenticating agent
      manually signs the certificate of authentication on the other side of this
      Security.

     

    
      	20.	
              ABBREVIATIONS
                AND DEFINITIONS

            


    

     

    Customary
      abbreviations may be used in the name of the Holder or an assignee, such as:
      TEN
      COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
      joint tenants with right of survivorship and not as tenants in common), CUST
      (=
      Custodian) and UGMA (= Uniform Gifts to Minors Act). 

     

    All
      terms
      defined in the Indenture and used in this Security but not specifically defined
      herein are defined in the Indenture and are used herein as so
      defined.

     

    
      	21.	
              INDENTURE
                TO CONTROL; GOVERNING LAW

            


    

     

    In
      the
      case of any conflict between the provisions of this Security and the Indenture,
      the provisions of the Indenture shall control. This Security and the Indenture
      shall be governed by, and construed in accordance with, the laws of the State
      of
      New York.

     

    The
      Company will furnish to any Holder, upon written request and without charge,
      a
      copy of the Indenture. Requests may be made to: Ceradyne, Inc. 3169 Red Hill
      Avenue, Costa Mesa, California 92626, Attention: Chief Financial Officer,
      Facsimile No.: (714) 556-0361, Telephone No.: (714) 549-0421.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

     

    To
      assign
      this Security, fill in the form below:

     

    I
      or we
      assign and transfer this Security to

     

     

    
      
        

      

    

    (Insert
      assignee’s soc. sec. or tax I.D. no.) 

     

     

    
      
        

      

    

     

      
        

      

    

     

      
        

      

    

    (Print
      or
      type assignee’s name, address and zip code) and irrevocably appoint

     

     

    
      
        

      

    

    Agent
      to
      transfer this Security on the books of the Company. The agent may substitute
      another to act for him or her.

     

     

    
      	
              Date:

            	   
              	
              Your
                Signature:

            	  

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


    

     

     

    *
      Signature guaranteed by:

     

    By:________________________________________

     

     

     

      
        

      

    

    
      	
              *

            	
              The
                signature must be guaranteed by an institution which is a member
                of one of
                the following recognized signature guaranty programs: (i) the Securities
                Transfer Agent Medallion Program (STAMP); (ii) the New York Stock
                Exchange
                Medallion Program (MSP); (iii) the Stock Exchange Medallion Program
                (SEMP); or (iv) such other guaranty program acceptable to the
                Trustee.

            


    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    CONVERSION
      NOTICE

     

    To
      convert this Security, check the box:

     

     ̈ 

     

    To
      convert only part of this Security, state the principal amount to be converted
      (must be $1,000 or a integral multiple of $1,000): $____________.

     

    If
      you
      want the cash paid to another person or the stock certificate made out in
      another person’s name, fill in the form below:

     

     

    
      
        

      

    

    (Insert
      assignee’s soc. sec. or tax I.D. no.) 

     

     

      
        

      

    

     

      
        

      

    

     

      
        

      

    

    (Print
      or
      type assignee’s name, address and zip code)

     

    


    
       

      
        	
                Date:

              	   
                	
                Your
                  Signature:

              	  

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


      

       

    

     

    *
      Signature guaranteed by:

     

    By:__________________________________

     

     

     

      
        

      

    

    
      	*	
              The
                signature must be guaranteed by an institution which is a member
                of one of
                the following recognized signature guaranty programs: (i) the Securities
                Transfer Agent Medallion Program (STAMP); (ii) the New York Stock
                Exchange
                Medallion Program (MSP); (iii) the Stock Exchange Medallion Program
                (SEMP); or (iv) such other guaranty program acceptable to the
                Trustee.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    FUNDAMENTAL
      CHANGE REPURCHASE NOTICE

     

    To: Ceradyne,
      Inc.

     

    The
      undersigned registered owner of this Security hereby irrevocably acknowledges
      receipt of a notice from Ceradyne, Inc. (the “Company”)
      as to
      the occurrence of a Fundamental Change with respect to the Company and requests
      and instructs the Company to purchase the entire principal amount of this
      Security, or the portion thereof (which is $1,000 or an integral multiple
      thereof) below designated, in accordance with the terms of the Indenture
      referred to in this Security at the Fundamental Change Repurchase Price,
      together with accrued and unpaid interest and Contingent Interest, if any,
      to,
      but excluding, such date, to the registered Holder hereof.

     

    
      
        	
                Date:

              	   
                	
                Your
                  Signature:

              	  

	 	 	 	 


      

    

    Signature(s)
      must be guaranteed by a qualified guarantor institution with membership in
      an
      approved signature guarantee program pursuant to Rule 17Ad-15 under the
      Securities Exchange Act of 1934.

     

     

    
      
        

      

    

    Signature
      Guaranty

     

    Principal
      amount to be redeemed (in an integral multiple of $1,000, if less than
      all):

     

     

      
        

      

    

    NOTICE:
      The signature to the foregoing Election must correspond to the Name as written
      upon the face of this Security in every particular, without any alteration
      or
      change whatsoever.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    OPTION
      TO ELECT PURCHASE

    ON
      SPECIFIED DATES

     

    To: Ceradyne,
      Inc.

     

    The
      undersigned hereby requests and instructs Ceradyne, Inc. to purchase the entire
      principal amount of this Security, or the portion thereof (which is $1,000
      or an
      integral multiple thereof) below designated, on ________________ in accordance
      with the terms of the Indenture referred to in this Security at the Put Right
      Purchase Price for the next occurring Put Right Purchase Date to the registered
      Holder hereof.

     

    
      
        	
                Date:

              	   
                	
                Your
                  Signature:

              	  

	 	 	 	 


      

    

    Signature(s)
      must be guaranteed by a qualified guarantor institution with membership in
      an
      approved signature guarantee program pursuant to Rule 17Ad-15 under the
      Securities Exchange Act of 1934.

     

     

    
      
        

      

    

    Signature
      Guaranty

     

    Principal
      amount to be redeemed (in an integral multiple of $1,000, if less than
      all):

     

     

      
        

      

    

    NOTICE:
      The signature to the foregoing Election must correspond to the Name as written
      upon the face of this Security in every particular, without any alteration
      or
      change whatsoever.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
      OF EXCHANGES OF SECURITIES

     

    The
      following exchanges, purchase, redemptions, purchases or conversions of a part
      of this Global Security have been made:

     

    
      	
              Date
                of Exchange

            	 	
              Amount
                of Decrease in Principal Amount of this Security

            	 	
              Amount
                of Increase in Principal Amount of this Security

            	 	
              Principal
                Amount of this Global Security following Each Increase or
                Decrease

            	 	
              Signature
                of Authorized Officer of Trustee