Document:

<PAGE>

                                                                Exhibit 10.20

                  Summary of Non-Employee Director Compensation

------------------------------------------------------------------------------
Annual Retainer                       $60,000
                                      Directors are encouraged to consider
                                      acquiring more than minimum 25% of
                                      fee in stock required under
                                      Non-Employee Director Stock
                                      Compensation Plan
------------------------------------------------------------------------------
Meeting Fee                           $1,500

------------------------------------------------------------------------------
Committee Meeting Fee                 $1,000

------------------------------------------------------------------------------
Chair Annual Retainer Fee             $5,000
------------------------------------------------------------------------------
Options                               1,000 shares annually
------------------------------------------------------------------------------
Fee Continuation Plan                 Frozen and discontinued.
                                      For directors in office on December
                                      31, 2004: Upon retirement, will
                                      receive annual cash payment equal to
                                      annual retainer fee of $28,000 for
                                      each year of service at end of 2004,
                                      up to maximum of 10 years.
------------------------------------------------------------------------------
Stock Ownership Guidelines            Directors are expected to own shares of
                                      ATI Common Stock having a market value of
                                      at least two times the annual retainer
                                      amount within five years, or within five
                                      years of first becoming a director,
                                      whichever occurs first, and at least three
                                      times the annual retainer amount within a
                                      reasonable time thereafter.
------------------------------------------------------------------------------<PAGE>

                                                                    EXHIBIT 10.4

                            SMITH INTERNATIONAL, INC.

                POST-2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                       (EFFECTIVE AS OF DECEMBER 31, 2004)

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             PAGE
                                                                                             ----
<S>                                                                                          <C>
ARTICLE ONE               ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN....................    1
   1.1    Establishment of Plan............................................................    1
   1.2    Purpose of Plan..................................................................    1
   1.3    Status of Plan...................................................................    1

ARTICLE TWO               DEFINITIONS......................................................    1
   2.1    Account..........................................................................    1
   2.2    Active Participant...............................................................    1
   2.3    Administrative Committee.........................................................    1
   2.4    Advance Distribution Election....................................................    1
   2.5    Affiliated Entity................................................................    1
   2.6    Beneficiary......................................................................    2
   2.7    Board ...........................................................................    2
   2.8    Bonus ...........................................................................    2
   2.9    Change of Control................................................................    2
   2.10   Code  ...........................................................................    2
   2.11   Company..........................................................................    2
   2.12   Compensation.....................................................................    2
   2.13   Compensation Committee...........................................................    2
   2.14   Deferral Agreement...............................................................    2
   2.15   Deferred Compensation Ledger.....................................................    2
   2.16   Determination Date...............................................................    3
   2.17   Elective Deferral Contribution...................................................    3
   2.18   Employee.........................................................................    3
   2.19   Employment.......................................................................    3
   2.20   Employer.........................................................................    3
   2.21   ERISA ...........................................................................    3
   2.22   Executive Staff Participant......................................................    3
   2.23   Financial Emergency..............................................................    3
   2.24   Funds ...........................................................................    3
   2.25   401(k) Plan......................................................................    4
   2.26   Insolvent........................................................................    4
   2.27   Interest Equivalents.............................................................    4
   2.28   Investment Experience............................................................    4
   2.29   Key Employee.....................................................................    4
   2.30   Participant......................................................................    4
   2.31   Plan  ...........................................................................    4
   2.32   Plan Year........................................................................    4
   2.33   Separation from Service..........................................................    5
   2.34   Subsidiary.......................................................................    5
   2.35   Total and Permanent Disability...................................................    5
   2.36   Trust ...........................................................................    5
   2.37   Trust Agreement..................................................................    5
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                           <C>
   2.38   Trustee..........................................................................    5
   2.39   Valuation Date...................................................................    5

ARTICLE THREE             ADMINISTRATION...................................................    5
   3.1    Composition of Administrative Committee..........................................    5
   3.2    Administration of Plan...........................................................    5
   3.3    Action by Committee..............................................................    6
   3.4    Delegation.......................................................................    6
   3.5    Reliance Upon Information........................................................    6
   3.6    Responsibility and Indemnity.....................................................    6

ARTICLE FOUR              PARTICIPATION....................................................    7
   4.1    Eligibility of Employees.........................................................    7
   4.2    Notification of Eligible Employees...............................................    7
   4.3    Compensation and Bonus Deferral Agreement........................................    7
   4.4    Leave of Absence.................................................................    8
   4.5    Employer Contributions...........................................................    8
   4.6    Vesting..........................................................................   11
   4.7    Election of Manner of Payment....................................................   11

ARTICLE FIVE              DEFERRAL OF COMPENSATION AND ALLOCATION OF INTEREST EQUIVALENTS..   12
   5.1    Deferral of Compensation and/or Bonus............................................   12
   5.2    Allocation of Investment Experience to Accounts..................................   12
   5.3    Investment of Accounts...........................................................   12
   5.4    Interest Equivalents.............................................................   12
   5.5    Participants' Rights Under the Trust.............................................   13
   5.6    Determination of Account.........................................................   13

ARTICLE SIX               DISTRIBUTIONS....................................................   13
   6.1    Amount of Deferred Compensation Subject to Distribution..........................   13
   6.2    Forms of Distribution Following Determination Date Except for Death..............   13
   6.3    Form of Death Distribution.......................................................   14
   6.4    Timing of Distributions..........................................................   14
   6.5    Advance Distribution Election Required...........................................   15
   6.6    Withdrawal due to Financial Emergency............................................   15
   6.7    Trust and Payor of Deferred Compensation.........................................   15
   6.8    Reimbursement of Participant.....................................................   16
   6.9    Facility of Payments.............................................................   16
   6.10   Beneficiary Designations.........................................................   17
   6.11   Withholding of Taxes.............................................................   17

ARTICLE SEVEN             RIGHTS OF PARTICIPANTS...........................................   17
   7.1    Annual Statement to Participants.................................................   17
   7.2    Limitation of Rights.............................................................   18
   7.3    Nonalienation of Benefits........................................................   18
   7.4    Claims Procedures................................................................   18
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                           <C>
ARTICLE EIGHT             MISCELLANEOUS....................................................   19
   8.1    Amendment or Termination of the Plan.............................................   19
   8.2    Powers of the Company............................................................   20
   8.3    Adoption of Plan by Affiliated Entity............................................   20
   8.4    Waiver...........................................................................   20
   8.5    Notice...........................................................................   20
   8.6    Severability.....................................................................   20
   8.7    Gender, Tense and Headings.......................................................   20
   8.8    Governing Law....................................................................   20
   8.9    Effective Date...................................................................   20
</TABLE>

<PAGE>

                            SMITH INTERNATIONAL, INC.
                POST-2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                       (EFFECTIVE AS OF DECEMBER 31, 2004)

                                   ARTICLE ONE

                  ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN

      1.1   ESTABLISHMENT OF PLAN. Smith International, Inc. (the "COMPANY")
hereby establishes an unfunded nonqualified deferred compensation plan to be
known as the "Smith International, Inc. Post-2004 Supplemental Executive
Retirement Plan" (the "PLAN").

      1.2   PURPOSE OF PLAN. The Plan is maintained for the purpose of advancing
the interests of the Company and its stockholders by enhancing the Company's
ability to attract and retain highly qualified executives. The Company
anticipates that accomplishment of those objectives will be facilitated by
providing Participants with a mechanism through which they may provide for their
retirement (or other deferred compensation needs) by electing to defer all or a
portion of their Compensation and/or Bonuses.

      1.3   STATUS OF PLAN. The Plan is intended as an unfunded plan to be
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees within the meaning of
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and as such it is intended that the
Plan be exempt from the participation and vesting, funding, and fiduciary
responsibility requirements of Title I of ERISA. The Plan is also intended to
qualify for simplified reporting under U.S. Department of Labor Regulation
Section 2530.104-23, which provides for an alternative method of compliance for
plans described in such regulation. The Plan is not intended to satisfy the
qualification requirements of Section 401 of the Internal Revenue Code of 1986,
as amended (the "CODE"). The Plan is intended to comply in good faith with the
requirements of Code Section 409A for deferred compensation plans and is to be
construed in accordance with Code Section 409A and the authority issued
thereunder.

                                   ARTICLE TWO

                                   DEFINITIONS

      In addition to the terms defined in the text hereof, each term below shall
have the meaning assigned thereto for all purposes of the Plan unless the
context reasonably requires a broader, narrower or different meaning.

      2.1   ACCOUNT. "Account" means, with respect to each Participant, the
Account reflecting his interest under the Plan under the Deferred Compensation
Ledger, as established and maintained pursuant to Article Five hereof. The
Administrative Committee may establish subaccounts for Participants under their
Accounts as it may deem appropriate from time to time.

      2.2   ACTIVE PARTICIPANT. "Active Participant" means a Participant who is
currently eligible to authorize a Deferral Agreement and to receive an
allocation of Employer contributions to his Account.

      2.3   ADMINISTRATIVE COMMITTEE. "Administrative Committee" means the
committee described in Article Three of the Plan.

      2.4   ADVANCE DISTRIBUTION ELECTION. "Advance Distribution Election" means
a separate written agreement entered into by and between the Employer and a
Participant which specifies the Participant's election as to the method that the
deferred amount is to be paid, such as lump sum or installment payments.

      2.5   AFFILIATED ENTITY. "Affiliated Entity" means an entity which is
affiliated by common ownership or control with the Company as determined and
designated by the Compensation Committee, CEO or the Administrative Committee in
its discretion.

                                        1
<PAGE>

      2.6   BENEFICIARY. "Beneficiary" means the beneficiary or beneficiaries
designated by the Participant to receive any amounts distributable under the
Plan upon his death.

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

      2.8   BONUS. "Bonus" means any amount payable to the Participant during a
Plan Year as an award granted under the Smith International, Inc. Annual
Incentive Plan (or any successor thereto) or under any other bonus program
maintained by the Company or an Adopting Employer.

      2.9   CHANGE OF CONTROL. "Change of Control" means the occurrence of any
of the following:

      (a)   any person (as such term is used in Sections 13(d) and 14(d)(2) of
            the Exchange Act) being or becoming the "beneficial owner" as
            defined in Rule 13d-3 of the Exchange Act) directly or indirectly,
            of securities of the Company representing twenty percent (20%) or
            more of the combined voting power of the then outstanding securities
            of such Employer;

      (b)   the first purchase of the Company's common stock pursuant to a
            tender or exchange offer (other than a tender or exchange offer made
            by the Company);

      (c)   the approval by the Company's stockholders of a merger or
            consolidation, a sale or disposition of all or substantially all of
            the Company's assets or a plan of liquidation or dissolution of the
            Company; or

      (d)   during any period of two consecutive years, individuals who at the
            beginning of such period constitute the Board of Directors of the
            Company ceasing for any reason to constitute at least a majority
            thereof, unless the election or nomination for the election by the
            Company's stockholders of each new director was approved by a vote
            of at least two-thirds of the directors then still in office who
            were directors at the beginning of the period.

      Notwithstanding the above provisions of this Section 2.9, Change of
Control shall have the meaning set forth in Code Section 409A(a)(2)(A)(v) and
any regulations issued thereunder, which are incorporated herein by this
reference, but only to the extent inconsistent with the above provisions as
determined by the Compensation Committee.

      2.10  CODE. "Code" means the Internal Revenue Code of 1986, as amended,
and the regulations and other authority issued thereunder by the appropriate
governmental authority. References herein to any Section of the Code shall
include references to any successor Section or provision of the Code.

      2.11  COMPANY. "Company" means Smith International, Inc. or any successor
in interest thereto.

      2.12  COMPENSATION. "Compensation" means the salary and other cash
remuneration that is payable by the Employer to the Employee during a Plan Year
for compensatory services rendered, excluding any Bonuses and reimbursements of
business and other expenses.

      2.13  COMPENSATION COMMITTEE. "Compensation Committee" means the
Compensation and Benefits Committee of the Board.

      2.14  DEFERRAL AGREEMENT. "Deferral Agreement" means a separate written
agreement entered into by and between the Employer and an Active Participant
prior to the commencement of a Plan Year, which agreement describes the terms
and conditions of such Active Participant's deferred compensation arrangement
hereunder for the Plan Year. The Deferral Agreement shall be executed and dated
by the Active Participant and shall specify the amount of Compensation and/or
Bonus related to services to be performed during the Plan Year, by percentage or
dollar amount, to be deferred.

      2.15  DEFERRED COMPENSATION LEDGER. "Deferred Compensation Ledger" means
the appropriate accounting records maintained by the Administrative Committee
which set forth the name of each Participant and his Account transactions
reflecting (a) the amount of Compensation and Bonus deferred pursuant to Article
Four, (b) the amount of Employer contributions made on behalf of the Participant
pursuant to Article Four, (c) the amount of Investment Experience credited or
charged to the Participant's Account pursuant to Article Five, and (d) the
amount of any distributions or

                                        2
<PAGE>

withdrawals pursuant to Article Six. The Deferred Compensation Ledger shall be
utilized solely as a device for the measurement and determination of the
contingent amounts to be paid to Participants under the Plan. The Deferred
Compensation Ledger shall not constitute or be treated as an escrow, trust fund,
or any other type of funded account of whatever kind for Code or ERISA purposes
and, moreover, contingent amounts credited thereto shall not be considered "plan
assets" for ERISA purposes. In addition, no economic benefit or constructive
receipt of income shall be provided to any Participant for purposes of the Code
unless and until cash payments under the Plan are actually made to the
Participant. The Deferred Compensation Ledger merely provides a record of the
bookkeeping entries relating to the contingent benefits that the Employer
intends to provide to Participants and thus reflects a mere unsecured promise to
pay such amounts in the future.

      2.16  DETERMINATION DATE. "Determination Date" means, with respect to a
Participant, the date of his termination of Employment due to his death,
Disability or other Separation from Service.

      2.17  ELECTIVE DEFERRAL CONTRIBUTION. "Elective Deferral Contribution"
means any amount of a Participant's Compensation and/or Bonus which he elects to
defer hereunder and to have such deferred amount credited to his Account.

      2.18  EMPLOYEE. "Employee" means a member of a select group of management
or highly compensated employees of the Employer, as determined by the
Compensation Committee for each Plan Year.

      2.19  EMPLOYMENT. "Employment" means employment as an Employee. In this
regard, neither the transfer of a Participant from employment by the Company to
employment by an Affiliated Entity nor the transfer of a Participant from
employment by an Affiliated Entity to employment by the Company shall be deemed
to be a Separation from Service by the Participant. Moreover, a Participant
shall not be deemed to have incurred a Separation from Service because of his
approved temporary absence from active employment on account of illness or
authorized vacation, or during another approved and temporary leave of absence
granted by the Employer.

      2.20  EMPLOYER. "Employer" means the Company and each Affiliated Entity
which has adopted the Plan with the consent of the Compensation Committee or the
Administrative Committee.

      2.21  ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations and other authority issued thereunder by
the appropriate governmental authority. References herein to any section of
ERISA shall include references to any successor section or provision of ERISA.

      2.22  EXECUTIVE STAFF PARTICIPANT. "Executive Staff Participant" means a
Participant who is designated by the Compensation Committee, in its discretion,
as an Executive Staff Participant. An Executive Staff Participant will generally
be a senior officer of the Employer who is a member of the Employer's Executive
Staff; provided, however, only Participants so designated by the Compensation
Committee shall be deemed Executive Staff Participants for purposes of this
Plan. Executive Staff Participants shall be designated by name in resolutions
adopted by the Compensation Committee from time to time, and any Participant may
be added or deleted from the list of Executive Staff Participants by the
Compensation Committee in its absolute discretion at any time. Executive Staff
Participants are eligible to receive additional Employer contributions in
accordance with Section 4.6.

      2.23  FINANCIAL EMERGENCY. "Financial Emergency" means an unforeseeable
emergency and severe financial hardship to the Participant resulting from an
illness or accident of the Participant, the Participant's spouse, or of a
dependent (as defined in Code Section 152(a)) of the Participant, loss of the
Participant's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.

      Withdrawals of amounts from the Participant's Account due to a Financial
Emergency, pursuant to Section 6.6, shall only be permitted to the extent
reasonably necessary to satisfy the emergency need plus amounts necessary to pay
taxes reasonably anticipated as a result of the distribution, after taking into
account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant's assets (to the extent the liquidation of such assets would not
itself cause severe financial hardship). The Administrative Committee, in its
discretion, shall determine whether a Financial Emergency has occurred and the
amount needed to satisfy the emergency need, and each such determination shall
be made in accordance with the requirements of Code Section 409A. The
Participant must provide the Administrative Committee with the information that
it requests to make these determinations.

      2.24  FUNDS. "Funds" means the investment funds designated from time to
time for the deemed investment of Accounts pursuant to Article Five.

                                        3
<PAGE>

      2.25  401(k) PLAN. "401(k) Plan" means the Smith International, Inc.
401(k) Retirement Plan, as it may be amended from time to time, or any successor
defined contribution plan maintained by the Company which is intended to qualify
under Sections 401(a) and 401(k) of the Code.

      2.26  INSOLVENT. "Insolvent" means either (a) the Employer is unable to
pay its debts as they become due, or (b) the Employer is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.

      2.27  INTEREST EQUIVALENTS. "Interest Equivalents" means the hypothetical
amounts credited as interest to the Participant's Account, as a component of
Investment Experience, pursuant to Section 5.4.

      2.28  INVESTMENT EXPERIENCE. "Investment Experience" means the
hypothetical amounts credited (as income, gains or appreciation on any
hypothetical investments in Funds or other investments permitted by the Trustee)
or charged (as losses or depreciation on any such hypothetical investments) to
the balances in the Participant's Account pursuant to Article Five, including,
without limitation, Interest Equivalents.

      2.29  KEY EMPLOYEE. "Key Employee" means any person employed or formerly
employed by the Company or any corporation that is an Affiliated Entity, the
stock of which is publicly traded on an established securities market (or as
otherwise prescribed by Code Section 409A), who is, at any time during the Plan
Year, any one or more of the following:

            (a)   an officer of the Company or Affiliated Entity having
                  compensation (as defined in Code Section 415(c)(3)) for the
                  applicable Plan Year greater than One Hundred Thirty Thousand
                  Dollars ($130,000), as adjusted under Section 416(i)(1) of the
                  Code;

            (b)   any person owning (or considered as owning within the meaning
                  of Code Section 318) more than five percent (5%) of the
                  outstanding stock of the Company or Affiliated Entity or stock
                  possessing more than five percent (5%) of the total combined
                  voting power of such stock, or if the Company or Affiliated
                  Employer is not a corporation, any person owning more than
                  five percent (5%) of the capital or profits interest of the
                  Company or Affiliated Entity; or

            (c)   a person who would be described in clause (b) above if "one
                  percent (1%)" were substituted for "five percent (5%)" each
                  place it appears in such clause (b), and whose aggregate
                  annual compensation (as defined in Code Section 415(c)(3))
                  from the Company and any Affiliated Entity is more than One
                  Hundred Fifty Thousand Dollars ($150,000).

      For purposes of determining ownership under this Section 2.29, the
aggregation rules of Code Sections 414(b), (c) and (m) shall not apply. For
purposes of clause (a) above, no more than fifty (50) Employees (or, if lesser,
the greater of three (3) or ten percent (10%) of the Employees) shall be treated
as officers.

      Notwithstanding the provisions of this Section 2.29, the term Key Employee
shall have the meaning set forth in Code Section 409A(a)(2)(B)(i) and any
regulations issued thereunder, which are incorporated herein by this reference,
but only to the extent inconsistent with the above provisions as determined by
the Compensation Committee.

      2.30  PARTICIPANT. "Participant" means an Employee who has been selected
by the Compensation Committee to participate in the Plan. An Employee or former
Employee (or a Beneficiary thereof in the event of death) who still has an
Account balance shall be deemed a Participant hereunder regardless of whether he
is an Active Participant.

      2.31  PLAN. "Plan" means the Smith International, Inc. Post-2004
Supplemental Executive Retirement Plan as set forth herein, and as it may be
amended from time to time. This Plan is a separate and distinct plan from the
Smith International, Inc. Supplemental Executive Retirement Plan which was
"frozen" by the Compensation Committee effective as of December 31, 2004.

      2.32  PLAN YEAR. "Plan Year" means the calendar year commencing on January
1 and ending on December 31, with the first Plan Year ending December 31, 2005.

                                        4
<PAGE>

      2.33  SEPARATION FROM SERVICE. "Separation from Service" means the
Participant's termination from Employment with the Employer, and shall have the
same meaning as set forth in Code Section 409A(a)(2)(A)(i).

      2.34  SUBSIDIARY. "Subsidiary" means any subsidiary of the Company as
defined under Code Section 424(f).

      2.35  TOTAL AND PERMANENT DISABILITY. "Total and Permanent Disability"
means the Participant is (a) unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (b) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering Employees of the
Employer. Any determination of Total and Permanent Disability shall be made in
accordance with the requirements of Code Section 409A.

      2.36  TRUST. "Trust" means a grantor trust, as described in Code Sections
671-677, of the type commonly referred to as a "rabbi trust" which has been
created under the Trust Agreement and pursuant to which the Employer may place
assets to "informally fund" contingent benefits payable under the Plan.

      2.37  TRUST AGREEMENT. "Trust Agreement" means the Smith International,
Inc. Post-2004 Supplemental Executive Retirement Plan Trust Agreement, as it may
be amended from time to time, which embodies the terms and conditions of the
Trust.

      2.38  TRUSTEE. "Trustee" means the duly appointed and acting trustee of
the Trust, and any successor thereto.

      2.39  VALUATION DATE. "Valuation Date" means the last day of each calendar
quarter and any other interim date, as determined by the Administrative
Committee, for the valuation of Participants' Accounts.

                                  ARTICLE THREE

                                 ADMINISTRATION

      3.1   COMPOSITION OF ADMINISTRATIVE COMMITTEE. The Administrative
Committee shall be comprised of such officers of the Employer as chosen by the
Compensation Committee to constitute the Administrative Committee. Each member
of the Administrative Committee shall serve at the pleasure of the Compensation
Committee and the Compensation Committee may remove or replace a member of the
Administrative Committee pursuant to procedures established by the Compensation
Committee.

      A member of the Administrative Committee may also be a Participant. A
member of the Administrative Committee who is also a Participant shall not vote
or otherwise act on any matter relating solely to himself.

      The members of the Administrative Committee shall not receive any special
compensation for serving in their capacities as members of the Administrative
Committee but shall be reimbursed by the Company for any reasonable expenses
incurred in connection therewith. No bond or other security need be required of
the Administrative Committee or any member thereof.

      3.2   ADMINISTRATION OF PLAN. The Administrative Committee shall operate,
administer, interpret, construe and construct the Plan, including correcting any
defect, supplying any omission or reconciling any inconsistency. The
Administrative Committee shall have all powers necessary or appropriate to
implement and administer the terms and provisions of the Plan, including the
power to make findings of fact. The determination of the Administrative
Committee as to the proper interpretation, construction, or application of any
term or provision of the Plan shall be final, binding, and conclusive with
respect to all interested persons.

      In addition, the Trustee may take investment directions from the
Administrative Committee, in which case the Administrative Committee shall
implement the provisions of Section 5.3 regarding investment of Account
balances. The Administrative Committee shall have the authority to select any
Fund or other prudent investment vehicles that are available for hypothetical
investment by Participants of their Account balances in assets held by the
Trust. Furthermore, the

                                        5
<PAGE>

Administrative Committee shall direct the Trustee in matters relating to the
distribution to Participants of amounts credited to their Accounts in accordance
with the terms of the Plan.

      3.3   ACTION BY COMMITTEE. A majority of the members of the Administrative
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting at which a quorum is
present shall decide any question brought before the meeting and shall be the
act of the Administrative Committee. In addition, the Administrative Committee
may take any other action otherwise proper under the Plan by an affirmative
vote, taken without a meeting, of a majority of its members.

      3.4   DELEGATION. The Administrative Committee may, in its discretion,
delegate one or more of its duties to its designated agents or to employees of
an Employer, but may not delegate its authority to make the determinations
specified in the first paragraph of Section 3.2.

      3.5   RELIANCE UPON INFORMATION. No member of the Administrative Committee
shall be liable for any decision, action, omission, or mistake in judgment,
provided that he acted in good faith in connection with the administration of
the Plan. Without limiting the generality of the foregoing, any decision or
action taken by the Administrative Committee in reasonable reliance upon any
information supplied to it by the Board, the Compensation Committee, any
employee of an Employer, the Employer's legal counsel, or the Employer's
independent accountants shall be deemed to have been taken in good faith.

      The Administrative Committee may consult with legal counsel, who may be
counsel for the Employer or other counsel, with respect to its obligations or
duties hereunder, or with respect to any action, proceeding or question at law,
and shall not be liable with respect to any action taken, or omitted, in good
faith pursuant to the advice of such counsel.

      3.6   RESPONSIBILITY AND INDEMNITY. To the full extent permitted by law,
Smith International, Inc. and each other adopting Employer (collectively, the
"EMPLOYER") jointly and severally shall defend, indemnify and hold harmless each
past, present and future member of the Administrative Committee and each other
employee who acts in the capacity of an agent, delegate or representative of the
Administrative Committee under the Plan (hereafter, all such indemnified persons
shall be jointly and severally referred to as "PLAN ADMINISTRATION EMPLOYEE")
against, and each Plan Administration Employee shall be entitled without further
act on his part to indemnity from the Employer for, any and all losses, claims,
damages, judgments, settlements, liabilities, expenses and costs (and all
actions in respect thereof and any legal or other costs and expenses in giving
testimony or furnishing documents in response to a subpoena or otherwise),
including the cost of investigating, preparing or defending any pending,
threatened or anticipated action, claim, suit or other proceeding, whether or
not in connection with litigation in which the Plan Administration Employee is a
party (collectively, the "Losses"), as and when incurred, directly or
indirectly, relating to, based upon, arising out of, or resulting from his being
or having been a Plan Administration Employee; provided, however, that such
indemnity shall not include any Losses incurred by such Plan Administration
Employee (i) with respect to any matters as to which he is finally adjudged in
any such action, suit or proceeding to have been guilty of gross negligence, bad
faith or intentional misconduct in the performance of his duties as a Plan
Administration Employee, or (ii) with respect to any matter to the extent that a
settlement thereof is effected in an amount in excess of the amount approved by
the Company (which approval shall not be unreasonably withheld). The foregoing
right of indemnification shall be in addition to any liability that the Employer
may otherwise have to the Plan Administration Employee.

      The Employer's obligation hereunder to indemnify the Plan Administration
Employee shall exist without regard to the cause or causes of the matters for
which indemnity is owed and expressly includes (but is not limited to) the
Losses, directly or indirectly, relating to, based upon, arising out of, or
resulting from any one or more of the following:

            (a)   the sole negligence or fault of any Plan Administration
                  Employee or combination of Plan Administration Employees;

            (b)   the sole negligence or fault of the Employer;

            (c)   the sole negligence or fault of third parties;

            (d)   the concurrent negligence of fault or any combination of the
                  Plan Administration Employee and/or the Employer and/or any
                  third party; and

                                        6
<PAGE>

            (e)   Any other conceivable or possible combination of fault or
                  negligence, it being the specific intent of the Employer to
                  provide the maximum possible indemnification protection
                  hereunder, but excluding any such Losses that are found by a
                  court of competent jurisdiction to have resulted from the
                  gross negligence, bad faith or intentional misconduct of the
                  Plan Administration Employee.

      The Plan Administration Employee shall have the right to retain counsel of
its own choice to represent it provided that such counsel is acceptable to the
Employer, which acceptance shall not be unreasonably withheld. The Employer
shall pay the fees and expenses of such counsel, and such counsel shall to the
full extent consistent with its professional responsibilities cooperate with the
Employer and any counsel designated by it. The Employer shall be liable for any
settlement of any claim against the Plan Administration Employee made with the
written consent of the Employer which consent shall not be unreasonably
withheld.

      The foregoing right of indemnification shall inure to the benefit of the
successors and assigns, and the heirs, executors, administrators and personal
representatives of each Plan Administration Employee, and shall be in addition
to all other rights to which the Plan Administration Employee may be entitled as
a matter of law, contract, or otherwise.

                                  ARTICLE FOUR

                                  PARTICIPATION

      4.1 ELIGIBILITY OF EMPLOYEES. The Compensation Committee shall have the
sole and exclusive authority and discretion to designate Employees who are
eligible to participate in the Plan as Active Participants. Only Employees who
are members of a select group of management or highly compensated Employees for
purposes of ERISA shall be eligible for selection by the Compensation Committee.

      The Compensation Committee shall also have the authority and discretion to
deem any Employee as no longer an Active Participant effective as of any
designated date; provided, however, such action shall not be effective before
the date that the Participant receives written notice of same. Any Participant
whose Employment is terminated, for whatever reason, shall not be an Active
Participant effective as of his Separation from Service date. A person who is no
longer an Active Participant shall still be considered a Participant for other
purposes hereunder until he has received a total distribution of his Account
balance.

      4.2 NOTIFICATION OF ELIGIBLE EMPLOYEES. Within thirty (30) days prior to
the beginning of each Plan Year, the Administrative Committee, as directed by
the Compensation Committee, shall notify in writing each of the Employees who
are eligible to elect to defer Compensation under the Plan. The Compensation
Committee shall also have the right to designate Employees as Active
Participants at any time during a Plan Year. Each Employee who has been
designated as an Active Participant by the Compensation Committee in any Plan
Year shall remain eligible to defer Compensation and/or Bonuses hereunder unless
and until the Compensation Committee determines that he is no longer eligible to
authorize such deferrals and notifies Employee of same. An Employee (or in the
event of his death, his Beneficiary) shall be a Participant hereunder as long as
he has any balance credited to his Account, regardless of whether he is eligible
to authorize Compensation and/or Bonus deferrals hereunder as an Active
Participant. Only Employees who are designated as Active Participants for a Plan
Year may authorize deferrals or have Employer contributions made on their
behalf.

      4.3 COMPENSATION AND BONUS DEFERRAL AGREEMENT. After an Employee has been
notified by the Administrative Committee that he is eligible to participate in
the Plan for the relevant Plan Year as an Active Participant, he must, in order
to defer Compensation and/or Bonus with respect to services to be performed
during such Plan Year, notify the Administrative Committee of his deferral
election by completing and executing a Deferral Agreement prior to the end of
the Plan Year which precedes the Plan Year to which such Deferral Agreement
relates. The Employee may elect to defer up to one hundred percent (100%) of his
Compensation and/or Bonus for a Plan Year or the portion thereof that he is an
Active Participant. Any Deferral Agreement that is not completed and signed by
the Employee, and received and accepted by the Administrative Committee (or its
delegate), on or prior to the last day of the Plan Year immediately preceding
the Plan Year for which the Employee is notified that he may make a deferral
election, shall be treated as the Employee's election not to defer Compensation
or Bonus for that Plan Year.

      If, after the commencement of a Plan Year, an Employee is designated by
the Compensation Committee as an Active Participant for the first time, the
newly eligible Active Participant, in order to defer Compensation hereunder,
must

                                       7
<PAGE>

complete and execute a Deferral Agreement and return it to the Administrative
Committee (or its delegate) within thirty (30) days of the effective date on
which the Employee first became an Active Participant. Such Deferral Agreement
shall only apply to defer Compensation and/or Bonus for services to be performed
for the remainder of the Plan Year by the Active Participant, provided that such
services are to be performed subsequent to receipt and approval of his Deferral
Agreement by the Administrative Committee.

      The amount of Compensation elected to be deferred pursuant to a Deferral
Agreement shall be withheld on a pro rata basis from the Active Participant's
regular payments of Compensation for each pay period during the Plan Year or
portion thereof during which such Deferral Agreement is in effect, unless
otherwise designated by the Active Participant in his Deferral Agreement. In the
event that a Trust is maintained, Compensation deferrals shall promptly be
delivered to the Trustee by the Employer.

      Regardless of any services performed during a year on behalf of the
Company, no Participant will accrue any right to receive any Bonus until it is
actually awarded to him. An Active Participant's election to defer all or any
portion of his Bonus that may be awarded with respect to any Plan Year must be
made prior to the first day of the Plan Year in which services will be performed
for which such Bonus amount is to be paid.

      The dollar amount or percentage of a Bonus elected to be deferred under
this Section 4.3 shall be deferred in one lump sum and shall be deemed to have
been deferred on the date the deferred portion of the Bonus would otherwise have
been paid to the Active Participant in the absence of his deferral election. Any
Bonus deferral election made hereunder shall be void and ineffective to the
extent that no Bonus is awarded to the Active Participant with respect to
services performed during the Plan Year.

      To the extent required under payroll tax law or regulation, the deferred
amount of any Compensation or Bonus elected hereunder may be reduced by the
Administrative Committee in order to provide taxable, non-deferred wages
sufficient to cover required withholding taxes.

      4.4 LEAVE OF ABSENCE. If an Active Participant is authorized by his
Employer for any reason to take a paid leave of absence from Employment, the
Participant shall continue to be considered in Employment and his Elective
Deferral Contributions shall continue to be withheld during such paid leave of
absence. If an Active Participant is authorized by his Employer for any reason
to take an unpaid leave of absence from Employment, the Participant shall
continue to be considered in Employment and the Participant shall be excused
from making Elective Deferral Contributions from his Compensation until the
Participant returns to a paid Employment status. Upon his return from the unpaid
leave, Elective Deferral Contributions shall resume for the remaining portion of
the Plan Year in which the expiration or return occurs, based on the
Participant's Deferral Agreement, if any, as in effect for that Plan Year, i.e.,
the same percentage or dollar amount that was being withheld prior to the unpaid
leave of absence shall resume after return to active service, but no make-up
contributions shall be made for the unpaid leave period. A leave of absence
shall not affect any previously elected Bonus deferral.

      4.5 EMPLOYER CONTRIBUTIONS.

            (1) Age-Weighted Contributions. Subject to the following provisions
      of this subsection that apply to Executive Staff Participants, effective
      as of the last day of each 3-month quarter during a Plan Year, an
      Age-Weighted Contribution shall be allocated and credited by the
      Administrative Committee to the Account of each Active Participant who has
      entered into a Deferral Agreement covering that quarter. The Age-Weighted
      Contribution shall be based on the Active Participant's Age-Weighted
      Contribution Percentage ("AWCP") as determined based on the schedule set
      forth below:

<TABLE>
<CAPTION>
  AGE AS OF ANNIVERSARY OF
PARTICIPANT'S DATE OF BIRTH           AWCP
---------------------------           ----
<S>                                   <C>
        Under Age 40                  2.00%
        40-44                         2.50%
        45-49                         3.00%
        50-54                         4.00%
        55-59                         5.00%
        60 or older                   6.00%
</TABLE>

                                       8
<PAGE>

      An Active Participant's AWCP shall change as of the first payroll period
beginning in the month following the month in which the anniversary of the
Active Participant's date of birth occurs. To compute an Active Participant's
Age-Weighted Contribution for a Plan Year, his AWCP shall be multiplied by the
difference between, for the Plan Year, the Active Participant's (i) "Total
401(k) Compensation" (defined below) and his (ii) "Net 401(k) Compensation"
(defined below).

      "Total 401(k) Compensation" means the total of all cash amounts payable by
the Employer to or for the benefit of an Active Participant for services
rendered or labor performed while an Active Participant during the Plan Year
(including overtime pay, Bonuses, "perq pay," and incentive or other
supplemental pay and amounts that he could have received in cash (i) in lieu of
an Elective Deferral Contribution to this Plan or a 401(k) salary deferral
contribution made under the 401(k) Plan and (ii) had he not entered into a
salary reduction agreement pursuant to a cafeteria plan under Section 125 of the
Code), excluding, however, severance pay and the proceeds from the Active
Participant's exercise of any stock options. The Total 401(k) Compensation of
any Active Participant taken into account for purposes of the Plan shall be
prorated for (i) a Plan Year of less than twelve months (other than the first
Plan Year) or (ii) in the case of an Active Participant who is either an Active
Participant for less than the entire Plan Year or receives Compensation for less
than the entire Plan Year. Total 401(k) Compensation shall not be reduced or
otherwise affected by any limits that apply under the 401(k) Plan.

      "Net 401(k) Compensation" means the total of all cash amounts payable by
the Employer to or for the benefit of an Active Participant for services
rendered or labor performed while an Active Participant during a Plan Year
(including overtime pay, Bonuses, "perq pay," and incentive or other
supplemental pay and amounts which he could have received in cash (i) in lieu of
a 401(k) salary deferral contribution made under the 401(k) Plan and (ii) had he
not entered into a salary reduction agreement pursuant to a cafeteria plan under
Section 125 of the Code), excluding, however, (i) severance pay, (ii) the
proceeds from the Active Participant's exercise of any stock options, and (iii)
the Active Participant's Elective Deferral Contributions to this Plan or to
another deferred compensation program other than 401(k) salary deferral
contributions made under the 401(k) Plan. The "Net 401(k) Compensation" of any
Active Participant taken into account for purposes of the Plan shall be limited
to $210,000 for the Plan Year with such amount to be (i) adjusted automatically
to reflect any cost-of-living increases authorized by Section 401(a)(17) of the
Code and (ii) prorated for (a) a Plan Year of less than twelve months or (b) in
the case of an Active Participant who is either an Active Participant for less
than the entire Plan Year or receives Compensation for less than the entire Plan
Year.

      Notwithstanding the preceding provisions of this subsection, the
Employer's Age-Weighted Contribution ("AWC") with respect to each Executive
Staff Participant shall be determined by the Administrative Committee or its
delegate for each 3-month quarter during each Plan Year in accordance with the
provisions of this paragraph. The Age-Weighted Contribution Percentage ("AWCP")
shall be six percent (6%) for each Executive Staff Participant. The AWC of each
Executive Staff Participant shall be computed in accordance with the following
formula: (6% x A) - B = AWC. For purposes of this formula, A equals the
Executive Staff Participant's Total 401(k) Compensation, and B equals the dollar
amount of the age-weighted, profit sharing contribution, if any, for the
applicable 3-month quarter that has been or will be contributed by the Employer
on behalf of the Executive Staff Participant under the terms of the 401(k) Plan.
Effective as of the last day of each 3-month quarter during a Plan Year, the AWC
for each Executive Staff Participant shall be allocated and credited by the
Administrative Committee to his account under the Deferred Compensation Ledger.

      (2) Make-up Matching Contributions. The provisions of this subsection
4.5(2) shall apply only to those Active Participants who (i) have authorized
elective deferral contributions under the 401(k) Plan during the Plan Year and
(ii) have entered into a Deferral Agreement hereunder for the Plan Year. To the
extent that an Active Participant authorized elective deferral contributions
under the 401(k) Plan during a Plan Year but his account thereunder is precluded
from receiving an allocation of any matching contributions under the 401(k) Plan
that it otherwise would have been eligible to receive, as the result of
non-discrimination limits imposed by the average deferral percentage ("ADP")
test or the actual contribution percentage ("ACP") test under the Code, then
such Active Participant shall be eligible to receive a "Make-up Matching
Contribution" under this Plan for that Plan Year. The Make-up Matching
Contribution shall be equal to the difference between (i) the total matching
contributions that the Active Participant's account under the 401(k) Plan would
have been allocated for the Plan Year without regard to the ADP and ACP tests,
and (ii) the amount of matching contributions actually allocated to his account
under the 401(k) Plan for the Plan Year. The Make-up Matching Contributions
shall be allocated and credited by the Administrative Committee to the affected
Active Participant's Account, effective as of the last day of the Plan

                                       9
<PAGE>

Year. Notwithstanding the preceding provisions of this subsection, no Make-up
Matching Contribution shall be credited by the Administrative Committee on
behalf of any Active Participant who is not in Employment on the last day of
such Plan Year for any reason.

            (3)   Matching Contributions.

                  (a) Non-Executive Staff Participants. The provisions of this
            subsection 4.5 (3)(a) shall apply only (i) to those Active
            Participants who (a) have entered into a Deferral Agreement for the
            Plan Year and (b) are not Executive Staff Participants and (ii) to
            Plan Years in which a matching contribution is made to eligible
            participants under the 401(k) Plan. The Matching Contribution ("MC")
            of such an eligible Participant for a Plan Year shall be computed as
            follows:

        MC = The lesser of: [.015A + (.985A x B)] or [(6% x C) - (D + E)]

                  For purposes of this formula: A equals the aggregate dollar
            amount of elective deferral contributions that the Active
            Participant made to this Plan for the Plan Year, pursuant to his
            Deferral Agreement, that were credited to his account under the
            Deferred Compensation Ledger; B equals the matching contribution
            percentage designated under section 3.03(b) (or its successor) of
            the 401(k) Plan for the Plan Year; C equals the Active Participant's
            Total 401(k) Compensation (as defined in Section 4.5(1)) but
            excluding therefrom any (i) Bonus paid during the Plan Year and (ii)
            retention or similar payments paid during the Plan Year; D equals
            the matching contributions, if any, that were credited to the Active
            Participant's account under the 401(k) Plan for the Plan Year; and E
            equals the Make-up Matching Contributions, if any, that were
            credited to the Active Participant's Account for the Plan Year
            pursuant to subsection 4.5(2) above. For example, assume that for a
            Plan Year (i) the Active Participant's Account was credited with
            elective deferral contributions of $8,000 under this Plan, (ii) the
            matching contribution percentage under Section 3.03(b) (or its
            successor) of the 401(k) Plan for such Plan Year was 50%, (iii) the
            Active Participant's Total 401(k) Compensation (excluding his Annual
            Incentive Plan Bonus, if any) was $125,000, (iv) his account was
            credited with a $2,000 matching contribution under the 401(k) Plan,
            and (v) his Account under this Plan was credited with a $1,000
            Make-up Matching Contribution.

                  MC = The lesser of: [$120 + ($7880 x 50%)] or [(6% x 125,000)
                       - ($2,000 + $1,000)]

                  MC = The lesser of: $4,060 or $4,500 (i.e., $7,500 - $3,000)

                  MC = $4,060

                  The MC shall be computed, allocated and credited by the
            Administrative Committee to the Active Participant's Account
            effective as of the last day of the Plan Year. Notwithstanding the
            preceding provisions of this subsection, no Matching Contribution
            shall be credited for a Plan Year on behalf of any Active
            Participant who is not in Employment on the last day of such Plan
            Year for any reason.

                  (b) Executive Staff Participants. The Company's Matching
            Contribution ("MC") with respect to each Executive Staff Participant
            shall be determined in accordance with the provisions of this
            subsection 4.6(3)(b) which shall apply regardless of whether or not
            (i) the Executive Staff Participant is also a member of the 401(k)
            Plan or has entered into a Deferral Agreement under this Plan, or
            (ii) any matching contributions were credited to his 401(k) Plan
            account during the Plan Year. The MC of an Executive Staff
            Participant for a Plan Year shall be computed as follows:

                  X = The lesser of: (A + B) or (6% x C).

                  MC = X - (D + E).

            For purposes of this formula: A equals the aggregate dollar amount
            of elective deferral contributions that the Executive Staff
            Participant made to this Plan for the Plan Year, pursuant to his
            Deferral Agreement, that were credited to his account under the
            Deferred Compensation Ledger; B equals the aggregate dollar amount
            of elective deferral contributions that were credited to the
            Executive Staff Participant's Account under the 401(k) Plan for the
            Plan Year; C equals the Executive Staff Participant's Total 401(k)

                                       10
<PAGE>

            Compensation (as defined in Section 4.5(1)) for the Plan Year; D
            equals the matching contributions, if any, that were credited to the
            Executive Staff Participant's Account under the 401(k) Plan for the
            Plan Year; and E equals the Make-up Matching Contributions, if any,
            that were credited to the Executive Staff Participant's Account for
            the Plan Year pursuant to subsection 4.5(2) above. For example,
            assume that for a Plan Year an Executive Staff Participant (i)
            earned Total 401(k) Compensation of $300,000, (ii) authorized and
            was credited with elective deferral contributions of $9,000 under
            the 401(k) Plan and $11,000 under this Plan, (iii) his account was
            credited with a $4,500 matching contribution under the 401(k) Plan,
            and (iv) his Account under this Plan was not credited with any
            Make-up Matching Contributions for the Plan Year.

                  X  = the lesser of: ($9,000 + $11,000) or (6% x $300,000)

                  X  = $18,000

                  MC = $18,000 - ($4,500 + 0)

                  MC = $13,500.

                  The MC shall be computed, allocated and credited by the
            Administrative Committee to the Executive Staff Participant's
            Account effective as of the last day of the Plan Year.
            Notwithstanding the previous provisions of this subsection, no MC
            shall be credited by the Administrative Committee for a Plan Year on
            behalf of any Executive Staff Participant who is not in Employment
            on the last day of such Plan Year for any reason.

                  The Compensation Committee may, in its discretion, determine
            that the matching contribution percentage for purposes of the
            preceding provisions of this subsection 4.5(3)(b) shall not be 100%
            as described above (i.e., a dollar-for-dollar match but not in
            excess of 6% of the Executive Staff Participant's Total 401(k)
            Compensation); for example, the Compensation Committee may determine
            that the matching contribution percentage under the 401(k) Plan for
            the Plan Year shall also apply under this subsection 4.5(3)(b) for
            Executive Staff Participants. In such event, the formula at
            subsection 4.5(3)(a) which incorporates a 100% match of the first
            1.50% of elective deferral contributions shall apply for the Plan
            Year for Executive Staff Participants. Any such determination made
            by the Compensation Committee shall be recorded in a duly adopted
            resolution and communicated in writing to the Executive Staff
            Participants prior to the beginning of each applicable Plan Year.

            (4) Discretionary Profit Sharing Contributions. The Compensation
      Committee may, in its discretion, determine the amount, if any, of the
      Employer's profit sharing contribution for a Plan Year and how such amount
      is to be allocated and credited between and among the Participants'
      Accounts. A Participant shall not be entitled to share in the allocation
      of any such Employer profit sharing contribution for a Plan Year if he is
      not in Employment on the last day of the Plan Year for any reason. The
      Compensation Committee shall have no obligation to authorize any such
      profit sharing contributions hereunder for any Plan Year.

      4.6 VESTING. All contributions made by Participants and the Employer
hereunder shall be fully vested and nonforfeitable at all times. All Investment
Experience credited on all contributions shall also be fully vested and
nonforfeitable at all times.

      4.7 ELECTION OF MANNER OF PAYMENT. At the time that a Participant makes a
deferral election under Section 4.3, the Participant shall also elect (on an
Advance Distribution Election form) the manner in which his distribution shall
be paid following his Determination Date after Separation from Service from
among the following options:

            (a)   Lump sum payment; or

            (b)   If the distributable portion of the Account balance is at
                  least $25,000 on the Determination Date, annual installments
                  to be paid during a period specified by the Participant of not
                  less than two (2) nor more than twenty (20) years. If the
                  distributable amount is less than $25,000, it shall
                  automatically be paid in a lump sum distribution without
                  regard to any installment option that may have been elected by
                  the Participant.

                                       11
<PAGE>

                                  ARTICLE FIVE

                     DEFERRAL OF COMPENSATION AND ALLOCATION
                             OF INTEREST EQUIVALENTS

      5.1 DEFERRAL OF COMPENSATION AND/OR BONUS. If an Active Participant has
elected to defer Compensation and/or a Bonus hereunder for a Plan Year, the
deferred amounts shall not be paid when they otherwise would have been paid in
the absence of such election. A bookkeeping entry to reflect the deferred
amounts shall be credited by the Administrative Committee to the Active
Participant's Account under the Deferred Compensation Ledger. With respect to
Compensation and Bonuses deferred hereunder for a Plan Year, each such deferred
amount shall be credited to the Active Participant's Account under the Deferred
Compensation Ledger as of the date it otherwise would have been paid to the
Active Participant and shall reflect a mere unsecured promise by the Employer to
pay such amount in the future.

      5.2 ALLOCATION OF INVESTMENT EXPERIENCE TO ACCOUNTS. As of each Valuation
Date, the Administrative Committee or its delegate shall determine the
Investment Experience for the applicable accounting period and, as soon as
practicable after such period, shall post and credit the amount of Investment
Experience to each Participant's Account effective as of the end of such period.
Each Account for which there was a positive balance at any time during the
applicable valuation period shall be entitled to an allocation and crediting of
Investment Experience for that valuation period regardless of whether the
Participant is still an Active Participant.

      5.3 INVESTMENT OF ACCOUNTS. The Administrative Committee shall permit each
Participant to request that the amounts credited to his Account under the
Deferred Compensation Ledger be invested in any one or a combination of Funds
(or other investment vehicles) which have been designated by the Administrative
Committee as available for hypothetical investment under the Plan. However,
except as provided in the next sentence, the Trustee shall make the final
investment decision, which may or may not correspond to the Participant's
request. In the event that a Participant is serving as Trustee, the
Administrative Committee, and not the Trustee, shall make the final decision
with respect to the hypothetical investment of such Participant's Account.
Subject to Section 5.4 for Interest Equivalents, the Investment Experience
posted and credited to each Participant's Account shall be based upon the
Investment Experience of the actual investments made by the Trustee in which the
Participant's Account balance is hypothetically invested. Notwithstanding any
contrary provision of the Plan or Trust Agreement, no direct investment in
securities issued by the Company or its Affiliated Entities shall be permitted
under the Plan or Trust.

      Except as otherwise provided below, each Participant shall advise the
Administrative Committee, or any agent appointed by such Committee, of his
request with respect to the hypothetical investment of the amounts credited to
his Account. Each Participant's investment request shall be in a form and
manner, and in the minimum increments, as prescribed by the Administrative
Committee. Each Participant may, on any business day on which the applicable
financial markets are open, communicate directly with any appointed mutual fund
company, financial consultant, or other appropriate agent or delegate of the
Administrative Committee to request a change in the combination of Funds (or
other investment vehicle) in which his Account is hypothetically invested. The
Administrative Committee may direct the Trustee concerning the Funds in which
the Participant's Account shall be hypothetically invested in the absence of an
investment request from such Participant, or in the event that any such request
is not followed by the Administrative Committee or Trustee for whatever reason.

      In addition, notwithstanding any contrary provision of the Plan or Trust
Agreement, neither the Administrative Committee nor Trustee shall be bound to
follow the investment request of any Participant. Subject to Section 5.4, the
Investment Experience posted to each Participant's Account shall be based solely
on the Investment Experience of the actual Funds or other investments authorized
by the Administrative Committee or Trustee, as applicable, in which the
Participant's Account balance was hypothetically invested. Investment Experience
shall be allocated to the Participant's Account as directed by the
Administrative Committee.

      5.4 INTEREST EQUIVALENTS. To the extent that all or any portion of a
Participant's Account is deemed to have been hypothetically invested in a Fund
that is a money market mutual fund, the Participant's Account will be credited
with the Interest Equivalent described below in this Section 5.4 instead of the
actual investment return generated by the deemed investment in the money market
mutual fund. In addition, if a Trust is maintained, all deferrals of
Compensation and Bonus authorized by Participants shall be credited with
Interest Equivalents by the Employer from the date otherwise payable by the
Employer to the Participants until the date that such amounts are paid to the
Trustee for investment in Funds or other investment vehicles. Compensation and
Bonuses being deferred during a calendar quarter shall be considered to be
invested

                                       12
<PAGE>

on the mid-point day of the calendar quarter during which such amounts would
otherwise have been payable to the Participant and shall be credited with
Interest Equivalents accordingly for that calendar quarter. Interest Equivalents
shall be computed by the Administrative Committee pursuant to non-discriminatory
procedures maintained by the Administrative Committee from time to time, and
such amounts shall be posted and credited to each affected Participant's Account
by the Administrative Committee.

      Crediting of Interest Equivalents hereunder shall be made only to the
Accounts of those affected Participants who are current Employees. Therefore,
for example, if a Participant has terminated Employment but has not yet received
a distribution of the entire amount credited to his Account by the end of the
month in which he is terminated, the Investment Experience that is deemed to be
credited to such Participant's Account (to the extent of the portion of the
Account that is hypothetically invested in the money market mutual fund) after
the last day of such month shall only be the actual investment return realized
by the deemed investment in the money market mutual fund, and not the greater
Interest Equivalent.

      All amounts credited to a Participant's Account, to the extent such
amounts are either (i) deemed to have been invested in a Fund that is a money
market mutual fund or (ii) withheld by the Employer from a Participant's
Compensation or Bonus but not yet paid to the Trustee for investment in any Fund
(or other investment vehicle), shall be credited quarterly with Interest
Equivalents. The rate of Interest Equivalents shall be equal to 120% of the
long-term, applicable federal rate (AFR) for quarterly compounding for the last
month of the calendar quarter immediately preceding the calendar quarter in
which the Interest Equivalents are to be credited. For example, for purposes of
crediting Interest Equivalents for the 3-month quarter ending December 31 of a
given Plan Year, 120% of the AFR rate for September of that Plan Year will be
used.

      Allocations of Interest Equivalents shall be computed and credited by the
Administrative Committee based on the balances credited to the Participant's
Account as of the last day of each calendar quarter during a Plan Year, i.e.,
March 31, June 30, September 30 and December 31. In the event of a distribution
following a Determination Date, the applicable portion of the Participant's
Account balance deemed to be invested in a Fund that is a money market fund
shall be credited with Interest Equivalents based on such applicable portion as
of the last day of the month which includes the Determination Date.

      Interest Equivalents credited to the Participant's Account shall be
compounded quarterly and shall increase the contingent benefits receivable by
the Participant in the future.

      5.5 PARTICIPANTS' RIGHTS UNDER THE TRUST. The assets of the Trust shall be
held for the benefit of the Participants in accordance with the terms of the
Plan and the Trust Agreement. In accordance with applicable provisions of the
Trust Agreement, the assets of the Trust shall remain subject to the claims of
the general creditors of the Employer, and the rights of the Participants to the
amounts in the Trust shall be limited as provided in the Plan and Trust
Agreement in the event that the Employer becomes Insolvent.

      5.6 DETERMINATION OF ACCOUNT. The aggregate amount credited to a
Participant's Account under the Deferred Compensation Ledger shall consist of
(i) the aggregate amount of deferred Compensation and/or Bonuses and Employer
Contributions made pursuant to Article Four, plus (or minus) (ii) the aggregate
amount of Investment Experience credited or charged to such Account pursuant to
Article Five, minus (iii) the aggregate amount of any distributions or
withdrawals made from such Account pursuant to Article Six.

                                   ARTICLE SIX

                                  DISTRIBUTIONS

      6.1 AMOUNT OF DEFERRED COMPENSATION SUBJECT TO DISTRIBUTION. As of the
Participant's Determination Date, the aggregate amount credited to his Account
maintained under the Deferred Compensation Ledger shall become distributable in
accordance with the provisions of Section 6.2.

      6.2 FORMS OF DISTRIBUTION FOLLOWING DETERMINATION DATE EXCEPT FOR DEATH.
Upon the occurrence of a Determination Date (except due to the Participant's
death) and prior to a Change of Control, the Participant's Account balance shall
become distributable in the form of payment prescribed in Section 4.7. All
distributions shall be paid in cash.

                                       13
<PAGE>

      If there is no form of distribution election for the Participant pursuant
to Section 4.7, the form of distribution following a Determination Date shall
automatically be a lump sum payment. A Participant cannot elect to retain his
distributable Account balance in the Plan following his Determination Date
except for any remaining unpaid installments during the installment period.

      Notwithstanding any provision hereof to the contrary, with respect to any
Determination Date resulting from a Separation from Service within the 12-month
period following a Change of Control, all distributions under the Plan shall
automatically be paid in lump sum payments, and no installment payments may be
elected and no prior installment election shall be honored. Following a Change
of Control, a lump sum payment shall be made to each Participant who incurs a
Separation from Service within 12 months from the Change of Control date. In
such event, the lump sum distribution shall be paid within thirty (30) days from
the Participant's Separation from Service date.

      Notwithstanding any previous installment payment election that may have
been made by the Participant, the aggregate of any remaining installment
payments due to a Participant who had incurred a Separation from Service at any
time prior to the Change of Control shall be paid to such Participant in a lump
sum within thirty (30) days from the Change of Control date.

      6.3 FORM OF DEATH DISTRIBUTION. If the Determination Date results from the
death of the Participant, or if he dies before receiving all elected installment
payments, his designated Beneficiary (pursuant to Section 6.10) shall
automatically be entitled to receive a lump sum cash distribution of the
Participant's remaining Account balance within sixty (60) days following the
date that the Administrative Committee is notified of Participant's death and,
therefore, installment payments, or continued installment payments, shall not be
available as a distribution option following the Participant's death, even if
previously elected by the Participant or Beneficiary.

      Notwithstanding the preceding paragraph of this Section 6.3, if (a) the
Participant's Account balance at the time of his death is at least one million
dollars ($1,000,000) and (b) the Participant had an installment distribution
election in effect at the time of his death, then the Participant's installment
election shall be honored and his designated Beneficiary shall receive
installment payments over the installment period, or remaining installment
period, that had been elected by the Participant prior to his death; provided,
however, if the elected installment period or remaining installment period, as
applicable, is longer than five (5) years from the date of Participant's death,
the installment payments shall be made over an installment period that ends on
the last day of the year that is five years from the end of the year in which
the Participant's death occurred. In this event, the installment payment period
shall be automatically shortened pursuant to this provision and the maximum
installment period shall thus not exceed the 5-year period specified in the
immediately preceding sentence. All installment payments shall be made in
substantially equal annual payments over the installment period.

      6.4   TIMING OF DISTRIBUTIONS.

            (a)   Lump Sum Distribution. Lump sum distributions shall be made as
                  soon as administratively feasible following the end of the
                  calendar quarter in which the Participant's Determination Date
                  occurs.

                  Notwithstanding the above, any distribution payable to a Key
                  Employee due to the Key Employee's Separation from Service
                  (for any reason except due to his death) shall not be made
                  before the earlier of the date which is six (6) months after
                  the date of his Separation from Service.

            (b)   Installment Payments. Annual installment payments shall
                  commence as soon as administratively feasible following the
                  end of the calendar quarter in which the Participant's
                  Determination Date occurs. Thereafter, the remaining
                  installment payments shall be made as of the annual
                  anniversary of the first installment date.

                  Notwithstanding the above, any distribution payable to a Key
                  Employee due to the Key Employee's Separation from Service
                  (for any reason except due to his death) shall not commence
                  earlier than the date which is six (6) months after the date
                  of his Separation from Service.

            (c)   Changes in Time and Form of Distribution. If a Participant has
                  not commenced receiving payments under this Section 6.4, the
                  Participant may petition the Administrative Committee in
                  writing to request that the form of distribution be changed
                  from a lump sum distribution to an

                                       14
<PAGE>

                  installment payment option; provided, however, any such
                  election to delay his distribution or change the form of
                  payment:

                  (1)   will not be effective until at least 12 months after the
                        date on which the election is made; and

                  (2)   in the case of an election related to a payment other
                        than a payment made due to the Participant's death,
                        Total and Permanent Disability, or Financial Emergency,
                        the first payment with respect to which such election is
                        made is deferred for a period of not less than five (5)
                        years from the date such payment would otherwise have
                        been made.

      6.5 ADVANCE DISTRIBUTION ELECTION REQUIRED. The Participant's election as
to the form of his distribution hereunder with respect to any Plan Year must be
made prior to the first day of the Plan Year in which the services will be
performed for which the Compensation or Bonus relates. If the Participant or
Beneficiary, as applicable, validly elects annual installment payments, then
Investment Experience shall continue to be credited by the Administrative
Committee to undistributed amounts allocated to the Participant's Account.
Pending receipt of any distribution from the Plan, the Participant or
Beneficiary shall remain subject to Section 7.2 and other applicable provisions
of the Plan.

      6.6 WITHDRAWAL DUE TO FINANCIAL EMERGENCY. A Participant who believes he
has suffered a Financial Emergency may in writing request a distribution of the
portion of his Account balance needed to satisfy the emergency need. The
Administrative Committee will review the Participant's request to determine
whether, in its discretion, a Financial Emergency has occurred and, if so, the
amount reasonably needed to satisfy the emergency need.

      If the Administrative Committee, in its discretion, determines that a
Participant has suffered a Financial Emergency, the Administrative Committee may
direct payment to the Participant of only that portion, if any, of his Account
balance which is attributable to his Compensation and Bonus deferral
contributions and is necessary to satisfy the emergency need.

      A Participant requesting a withdrawal for Financial Emergency must
petition the Administrative Committee in writing and provide such information as
the Administrative Committee may request to support the withdrawal request. The
Administrative Committee, in its discretion, shall determine whether a Financial
Emergency under the Plan has occurred and the minimum amount needed to satisfy
the emergency need, plus amounts necessary to pay taxes reasonably anticipated
as a result of the distribution, after taking into account the extent to which
such hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant's assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship).

      Only one withdrawal for a Financial Emergency may be made by Participant
in any 24-month period. If, subject to the sole discretion of the Administrative
Committee, the petition for payout is approved, the payout shall be made within
60 days of the date of approval. A request for a withdrawal under this Section
6.6 must be accompanied by (a) a letter signed by the Participant describing all
the circumstances and the resources he has available to meet the need and a
certification that the resources listed in the definition of Financial Emergency
and all others are unavailable/insufficient/non-existent to meet the need, (b)
copies of the appropriate official documentation (e.g., bills, eviction or
foreclosure notices or documents showing that such are impending), and (c)
statement of monthly household income and expenses (with explanations for
unusual items).

      If the withdrawal is approved in its discretion, the Administrative
Committee shall authorize a distribution to the Participant in the amount
reasonably necessary to satisfy the Financial Emergency. No Interest Equivalents
shall be credited to the Participant's Account during a calendar quarter with
respect to the amount distributed to satisfy the Financial Emergency.

      6.7 TRUST AND PAYOR OF DEFERRED COMPENSATION. Benefits payable under the
Plan with respect to a Participant's Account shall be the obligation of, and
payable by, the Company; provided, however, the Company may, in its complete
discretion, obtain reimbursement from any adopting Employer which employed the
Participant. Adoption and maintenance of the Plan by the Employer shall not, for
that reason, create a joint venture or partnership relationship between or among
such entities for purposes of payment of benefits under the Plan or for any
other purpose.

      In order to meet its contingent obligations under the Plan, the Employer
shall not set aside any assets or otherwise create any type of fund in which any
Participant, or any person claiming under such Participant, has an interest
other than that

                                       15
<PAGE>

of an unsecured general creditor of the Employer or which would provide any
Participant, or any person claiming under such Participant, with a legally
enforceable right to priority over any general creditor of the Employer in the
event that the Employer becomes Insolvent.

      The Employer intends for the Plan to recognize the value to the Employer
of the past and present services of Participants and to encourage and assure
their continued service with the Employer by making more adequate provision for
their future retirement security. The maintenance of the Plan is, in part, made
necessary by certain benefit limitations which are imposed on the 401(k) Plan by
the Code. The Plan is intended to constitute an unfunded, unsecured plan of
deferred compensation for a select group of management or highly compensated
employees of the Employer. Plan benefits herein provided are to be paid out of
the Employer's general assets. Nevertheless, subject to the terms hereof and of
the Trust Agreement, the Employer may transfer money or other property to the
Trustee and the Trustee shall pay Plan benefits to Participants and their
beneficiaries out of the Trust fund. To the extent the Employer transfers assets
to the Trustee, the Administrative Committee may, but need not, establish
procedures for the Trustee to invest the Trust assets in Funds or otherwise in
accordance with each Participant's designated deemed investments pursuant to
Article Five, but only with respect to the portion of the Trust assets equal to
such Participant's Account balance.

      The Compensation Committee or Board may establish the Trust and direct the
Company to enter into the Trust Agreement. In such event, the Company shall
remain the owner of all assets in the Trust Fund and the assets shall be subject
to the claims of the Employer's creditors if the Employer ever becomes
Insolvent. The Chief Executive Officer of the Company and the Board shall each
have the duty to inform the Trustee in writing if the Employer becomes
Insolvent. Such notice given under the preceding sentence by any party shall
satisfy all of the parties' duty to give notice. When so informed, the Trustee
shall suspend payments to the Participants and hold the assets for the benefit
of the Employer's general creditors. If the Trustee receives a written
allegation that the Employer is Insolvent, the Trustee shall suspend payments to
the Participants and hold the Trust fund for the benefit of the Employer's
general creditors, and shall determine within the period specified in the Trust
Agreement whether the Employer is Insolvent. If the Trustee determines that the
Employer is not Insolvent, the Trustee shall resume payments to the
Participants. No Participant or Beneficiary shall have any preferred claim to,
or any beneficial ownership interest in, any assets of the Trust Fund.

      During any period in which a Trust is in existence, benefits payable under
the Plan shall be payable by the Trustee in accordance with the terms,
provisions, conditions and limitations of the Plan and Trust Agreement. To the
extent that any distribution described in the immediately preceding sentence
does not fully satisfy the obligation for any benefit due under the Plan, the
Employer shall remain fully liable and obligated for full payment of any unpaid
benefit due and payable under the Plan.

      6.8 REIMBURSEMENT OF PARTICIPANT. The Company agrees to pay as incurred,
to the full extent permitted by law, all legal fees and other expenses which the
Participant (or any Beneficiary thereof) may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Employer, the Participant or
others concerning the validity or enforceability of, or liability under, any
provision of this Plan or any guarantee of performance thereof (including,
without limitation, as a result of any contest by the Participant about the
amount of any benefits due pursuant to the Plan), plus in each case interest on
any delayed payment at the applicable interest rate specified in Section 5.4 for
Interest Equivalents. To the extent that the Employer is found under a final
decree of a court of competent jurisdiction to have engaged in an intentional
breach of contract without good cause, bad faith or fraudulent conduct hereunder
in delaying or failing to make any payment due under this Plan, then the amount
found due to any Participant shall be doubled and fully paid to the Participant
within thirty (30) days of such determination. The Company authorizes
Participant to engage counsel of his choice to represent him in any such
dispute. This Section 6.8 shall not be construed to limit or foreclose any court
or arbitrator from imposing any other awards or remedies.

      6.9 FACILITY OF PAYMENTS. If the Administrative Committee determines that
any person entitled to payments under the Plan is physically or mentally
incompetent to receive or properly receipt for such payments, the Company shall
make such payments or, if applicable, the Administrative Committee shall direct
the Trustee to make the payments, to the legal guardian or other personal
representative of such person for the use and benefit of such person. If the
Administrative Committee for any reason is unable to determine with reasonable
certainty the proper person to pay pursuant to the immediately preceding
sentence, the Company shall pay or, if applicable, the Administrative Committee
shall direct the Trustee to pay, any amounts due hereunder into a court of
competent jurisdiction in an interpleader proceeding for purposes of being
directed by such court as to the proper disposition of such amounts. Any such
payments so made by the Company or the Trustee, to the extent of the amounts
thereof, shall be a full and complete discharge of any liability or obligation
of the Plan, Trust, Employer, Administrative Committee, Compensation Committee,
Board and other interested parties, therefor.

                                       16
<PAGE>

      6.10 BENEFICIARY DESIGNATIONS. Each Employee, upon becoming a Participant,
shall file with the Administrative Committee (or its delegate) a designation of
one or more Beneficiaries to whom benefits otherwise payable to the Participant
shall be made in the event of his death prior to the complete distribution of
his Account balance. A Beneficiary designation shall be on the form prescribed
by the Administrative Committee and shall be effective when received and
accepted by the Administrative Committee. A Participant may, from time to time,
revoke or change his Beneficiary designation by filing a new designation form
with the Administrative Committee. The last valid designation received by the
Administrative Committee shall be controlling; provided, however, that no
Beneficiary designation, or change or revocation thereof, shall be effective
unless received prior to the Participant's death, and shall not be effective as
of a date prior to its receipt by the Administrative Committee

      If no valid and effective Beneficiary designation exists at the time of
the Participant's death, or if no designated Beneficiary survives the
Participant, or if such designation conflicts with applicable law, the payment
of the Participant's Account balance shall be made to the Participant's
surviving lawful spouse, if any. If there is no surviving spouse, then payment
of the Account balance shall be made to the executor or administrator of the
Participant's estate, or if there is no administration on Participant's estate,
in accordance with the laws of descent and distribution as determined by the
Company. If the Administrative Committee is in doubt as to the right of any
person to receive such amount, it may direct that the amount be paid into any
court of competent jurisdiction in an interpleader action, and such payment
shall be a full and complete discharge of any liability or obligation under the
Plan or Trust Agreement to the full extent of such payment.

      6.11 WITHHOLDING OF TAXES. The Administrative Committee shall direct the
Employer or, if appropriate, the Trustee, to withhold from the amount of
benefits payable under the Plan all federal, state and local taxes required to
be withheld under any applicable law or governmental regulation or ruling.

      For each payroll period in which an Elective Deferral Contribution is
being withheld, the Employer shall ratably withhold from that portion of the
Active Participant's Compensation or Bonus that is not being deferred, the
Active Participant's share of FICA, FUTA other applicable employment taxes that
are required to be withheld with respect to such Elective Deferral
Contributions.

      With respect to Employer contributions pursuant to Section 4.5, the
Employer shall withhold the Active Participant's required share of FICA, FUTA or
and other applicable employment taxes from the Active Participant's Compensation
or Bonus that is not being deferred. Such taxes shall be withheld at the same
time that the Employer contributions are credited to the Deferred Compensation
Ledger.

                                  ARTICLE SEVEN

                             RIGHTS OF PARTICIPANTS

      7.1 ANNUAL STATEMENT TO PARTICIPANTS. As soon as practicable after the end
of each Plan Year, or at such other time as the Administrative Committee
determines to be appropriate, the Administrative Committee shall cause to be
prepared and delivered to each Participant a written statement showing the
following information and such other information that the Administrative
Committee decides is appropriate:

            (a)   The beginning balances in the Participant's Account under the
                  Deferred Compensation Ledger as of the first day of the Plan
                  Year;

            (b)   The amount of Compensation and Bonuses deferred for the Plan
                  Year and credited to the Participant's Account for the Plan
                  Year;

            (c)   The amount of Employer contributions for the Plan Year that
                  were credited to the Participant's Account for the Plan Year;

            (d)   The adjustments to the Participant's Account to reflect the
                  crediting of Investment Experience and any distributions or
                  withdrawals made during the Plan Year; and

            (e)   the ending balances in the Participant's Account as of the
                  last day of the Plan Year.

                                       17
<PAGE>

      7.2   LIMITATION OF RIGHTS. Nothing in this Plan shall be construed to:

            (a)   Give any individual who is employed by an Employer any right
                  to be a Participant unless and until such person is selected
                  by the Compensation Committee.

            (b)   Give any Participant any rights, other than as an unsecured
                  general creditor of the Employer, with respect to the
                  Compensation, Bonuses, Employer contributions and Investment
                  Experience credited to his Account under the Deferred
                  Compensation Ledger until such amounts are actually
                  distributed to him;

            (c)   Limit in any way the right of the Employer to terminate a
                  Participant's Employment with the Employer;

            (d)   Give a Participant or any other person any interest in any
                  fund or in any specific asset of the Employer;

            (e)   Give a Participant or any other person any interests or rights
                  other than those of an unsecured general creditor of the
                  Employer;

            (f)   Be evidence of any agreement or understanding, express or
                  implied, that the Employer will employ a Participant in any
                  particular position, at any particular rate of remuneration,
                  or for any particular time period; or

            (g)   Create a fiduciary relationship between the Participant and
                  the Employer, Compensation Committee, and/or Administrative
                  Committee.

      7.3 NONALIENATION OF BENEFITS. No right or benefit under this Plan shall
be subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
or charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same will be void and without effect. No right or
benefit hereunder shall in any manner be liable for or subject to any debts,
contracts, liabilities or torts of the person entitled to such benefits. If any
Participant or Beneficiary hereunder shall become bankrupt or attempt to
anticipate, alienate, assign, sell, pledge, encumber, or charge any right or
benefit hereunder, or if any creditor shall attempt to subject the same to a
writ of garnishment, attachment, execution, sequestration, or any other form of
process or involuntary lien or seizure, then such right or benefit shall be held
by the Company for the sole benefit of the Participant or Beneficiary, his
spouse, children, or other dependents, or any of them, in such manner as the
Administrative Committee shall deem proper, free and clear of the claims of any
party.

      The withholding of taxes from benefit payments hereunder; the recovery
under the Plan of overpayments of benefits previously made to a Participant; the
transfer of benefit rights from the Plan to another plan; the direct deposit of
benefit payments to an account in a banking institution (if not actually part of
an arrangement constituting an assignment or alienation); or an in-service
distribution under Section 6.6, shall not be construed as an assignment or
alienation for purposes of the first paragraph of this Section.

      The first paragraph of this Section shall not preclude (a) the Participant
from designating a Beneficiary to receive any benefit payable hereunder upon his
death, or (b) the executors, administrators, or other legal representatives of
the Participant or his estate from assigning any rights hereunder to the person
or persons entitled thereto.

      In the event that any Participant's or Beneficiary's benefits hereunder
are garnished or attached by order of any court, the Company or Trustee may
bring an action or a declaratory judgment in a court of competent jurisdiction
to determine the proper recipient of the benefits to be paid under the Plan.
During the pendency of said action, any benefits that become payable shall be
held as credits to the Participant's Account or, if the Company prefers, paid
into the court as they become payable, to be distributed by the court to the
recipient as the court deems proper at the close of said action.

      7.4 CLAIMS PROCEDURES. When a benefit is due and payable under the Plan, a
claim should be submitted to the Administrative Committee or Trustee, as
applicable, by the Participant or by his Beneficiary in the event of
Participant's death (referred to as the "Claimant" for purposes of this Section
7.4). A decision on a Claimant's claim for benefits shall be made by the
Compensation Committee within twenty (20) days after receipt of the claim. In
the event there is a disagreement concerning the amount payable to the Claimant,
the Claimant shall receive written notification of the amount in dispute and

                                       18
<PAGE>

shall be entitled to a full and fair review of his claim. A Claimant desiring a
review must submit a written request to the Compensation Committee requesting
such a review, which request should include whatever comments or arguments that
the Claimant wishes to make. Incident to the review, the Claimant may represent
himself or appoint a representative to do so, and he shall have the right to
inspect all documents pertaining to the issue. The Compensation Committee, in
its discretion, may schedule any meeting with the Claimant and/or the Claimant's
representative that it deems to be necessary or appropriate to facilitate or
expedite its review of the amount in dispute.

      A request for a review must be filed with the Compensation Committee
within sixty (60) days after notice of the disputed amount is received by the
Claimant. If no request is received within the 60-day time limit, the
determination of the amount due by the Administrative Committee or Trustee, as
applicable, will be final. However, if a request for review of a disputed amount
is timely filed, the Compensation Committee must render its decision under
normal circumstances within thirty (30) days of its receipt of the request for
review. In special circumstances the decision may be delayed if, prior to
expiration of the initial 30-day period, the Claimant is notified of the
extension, but must in any event be rendered no later than sixty (60) days after
receipt of the Claimant's request. All decisions of the Compensation Committee
shall be in writing and shall include specific reasons for whatever action has
been taken, as well as the pertinent Plan provisions on which its decision is
based.

                                  ARTICLE EIGHT

                                  MISCELLANEOUS

      8.1 AMENDMENT OR TERMINATION OF THE PLAN. The Compensation Committee or
the Administrative Committee may amend or terminate the Plan at any time
effective as of the date specified by said Committee, including amendments with
a retroactive effective date; provided, however, the provisions of Section 8.2
may not be amended without the consent of at least two-thirds (2/3) of all
affected Participants and no amendment may be made which affects the rights or
duties of the Compensation Committee hereunder without its consent. In addition,
unless the particular Participant (or his Beneficiary in the event of death)
consents in writing, no such amendment or termination shall adversely affect any
rights of such Participant or Beneficiary to any amounts which are required to
be allocated and credited hereunder to his Account at such time.

      Notwithstanding the immediately preceding paragraph, the Plan may be
amended by the Compensation Committee or the Administrative Committee at any
time prior to a Change of Control if required to ensure that the Plan is
characterized as a "top-hat plan" of deferred compensation maintained for a
select group of management or highly compensated employees as described under
ERISA Sections 201(2), 301(a)(3), and 401(a)(1), or to conform the Plan to the
requirements of ERISA, for "top-hat plans" or "supplemental executive retirement
plans" or the requirements of the Code for deferred compensation plans including
Code Section 409A. No such amendment for this exclusive purpose shall be
considered prejudicial to the interest of a Participant or a Beneficiary
hereunder.

      Following a Change of Control, any amendment or termination of the Plan
(which is proposed by the Compensation Committee or Administrative Committee
pursuant to the immediately preceding paragraph) shall require the written
consent of a majority of the then Participants. For purposes of this Plan, when
the consent of a majority of the Participants is required, the determination of
majority consent shall be based upon receiving the consent of any combination of
Participants whose sum of Account balances under the Plan as of the time of
determination is greater than fifty percent (50%) of the sum of all Account
balances for all Participants at such time, rather than upon receiving the
consent of a majority of the number of Participants. For purposes of this
determination, Beneficiaries of deceased Participants shall be considered
Participants.

      If the consent of a majority of the Participants is required for the
amendment or termination of the Plan, then the Administrative Committee shall be
responsible for securing such Participant consents in a timely and confidential
fashion and, unless ordered by a court of competent jurisdiction, shall not
reveal to the Company, the Board, Compensation Committee or any other interested
party any information concerning such consents, except whether the required
majority has been achieved. The decision whether or not to consent is the
responsibility of the Participant in the exercise of his judgment, and notice of
such consent or failure to consent shall be administered in a confidential
manner to protect the identity of the Participant. Any consent of a Participant
required under this Section 8.1 shall be deemed given if no written objection
from such Participant is received by the person soliciting such consents on
behalf of the Participants within fifteen (15) days after a written notice
requesting such consent and indicating such 15-day response period has been sent
postpaid by United States registered or certified mail with return receipt
requested, and such return receipt has been returned indicating receipt of such
notice by the Participant.

                                       19
<PAGE>

      In the event of termination of the Plan, there shall be no Active
Participants, and the Account balance of each Participant shall not be
distributable except in accordance with Article Six. In accordance with Code
Section 409A, termination of the Plan shall not, by itself, create a
distribution event for Participants.

      8.2 POWERS OF THE COMPANY. The existence of outstanding and unpaid
benefits under the Plan shall not affect in any way the right or power of the
Employer to make or authorize any adjustments, recapitalization, reorganization
or other changes in the Employer's capital structure or in its business, or any
merger or consolidation of the Employer, or any issue of bonds, debentures,
common or preferred stock, or the dissolution or liquidation of the Employer, or
any sale or transfer of all or any part of their assets or business, or any
other act or corporate proceeding, whether of a similar character or otherwise.

      Should the Employer (or any successor thereto) elect to dissolve, enter
into a sale of its assets, or enter into any reorganization incident to which it
is not the surviving entity, unless the surviving or successor entity shall
formally agree to assume and continue the Plan, and Trust if applicable, the
Plan shall terminate with respect to the Employer (or any successor thereto) on
the earlier of the date of closing or the effective date of such transaction. In
such event, there shall be no Active Participants of that Employer, and the
Account balance of each affected Participant shall not be distributable except
in accordance with Article Six.

      Should any successor to the Company assume and continue the Plan, and
Trust if applicable, incident to a transaction described in the immediately
preceding paragraph, the affected Participants' Account balances shall not be
distributable except in accordance with Article Six.

      8.3 ADOPTION OF PLAN BY AFFILIATED ENTITY. Any Affiliated Entity may adopt
the Plan with the consent of the Compensation Committee or the Administrative
Committee, effective as of the date specified by the respective Committee. Any
Affiliated Entity which has adopted the Plan shall not be responsible for the
administration of the Plan, and its Employees who are eligible to participate
herein shall be selected as provided herein.

      8.4 WAIVER. No term or condition of this Plan shall be deemed to have been
waived, nor shall there be an estoppel against the enforcement of any provision
of this Plan, except by written instrument of the party charged with such waiver
or estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than that specifically
waived. Any waiver by either party hereto of a breach of any provision of the
Plan by the other party shall not operate or be construed as a waiver by such
party of any subsequent breach thereof.

      8.5 NOTICE. Except as provided in Section 8.1, any notice required or
permitted to be given under this Plan shall be sufficient if in writing and
delivered via telecopier, messenger, or overnight courier with appropriate proof
of receipt, or sent by U.S. registered or certified or registered mail, return
receipt requested, to the appropriate person or entity at the address last
furnished by such person or entity. Such notice shall be deemed given as of the
date of delivery to the recipient or, if delivery is made by mail, as of the
date shown on the receipt for registration or certification.

      8.6 SEVERABILITY. In the event that any provision of the Plan is declared
invalid and not binding on the parties hereto in a final decree or order issued
by a court of competent jurisdiction, such declaration shall not affect the
validity of the other provisions of the Plan to which such declaration of
invalidity does not relate and such other provisions shall remain in full force
and effect.

      8.7 GENDER, TENSE AND HEADINGS. Whenever the context requires, words of
the masculine gender used herein shall include the feminine and neuter, and
words used in the singular shall include the plural. The words "hereof,"
"hereunder," "herein," and similar compounds of the word "here" shall refer to
the entire Plan and not to any particular term or provision of the Plan.
Headings of Articles and Sections, as used herein, are inserted solely for
convenience and reference and shall not affect the meaning, interpretation or
scope of the Plan.

      8.8 GOVERNING LAW. The Plan shall be subject to and governed by the laws
of the State of Texas (other than such laws relating to choice of laws), except
to the extent preempted by ERISA, the Code or other controlling federal law.

      8.9 EFFECTIVE DATE. The effective date of the Plan is December 31, 2004,
and therefore the Plan is in existence, and shall be construed as being in
existence, on or before December 31, 2004 for all purposes including, without
limitation, Code Section 409A. The Plan shall be applicable only with respect
to:

                                       20
<PAGE>

      (a) Compensation and Bonuses deferred by Participants to the extent
related to (i) services performed on or after January 1, 2005, or (ii) services
performed prior to January 1, 2005, for which the Compensation or Bonus
attributable thereto was not earned and vested until after 2004; and

      (b) Employer contributions to the extent related (i) services performed on
or after January 1, 2005, or (ii) services performed prior to January 1, 2005,
for which Employer contributions attributable thereto were not earned and vested
until after 2004.

                            [Signature page follows.]

                                       21
<PAGE>

      IN WITNESS WHEREOF, this Plan is approved and executed by a duly
authorized officer of the Company, on this 30th day of December, 2004, to be
effective as of December 31, 2004.

ATTEST:                                    SMITH INTERNATIONAL, INC.

By: /s/ VIVIAN M. CLINE                    By: /s/ NEAL S. SUTTON
    -------------------                        ---------------------------------

Name: Vivian M. Cline                      Name: Neal S. Sutton
Title: Assistant Secretary                 Title: Senior Vice President-
                                           Administration
                                           General Counsel and Secretary

Date: December 30, 2004                    Date: December 30, 2004

                                       22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]