Document:

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                                                                     EXHIBIT 4.7

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                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                                 by and between

                             STIFEL FINANCIAL CORP.

                                       and

                            WILMINGTON TRUST COMPANY

                        Dated as of _________ ____, 2002

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<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              Page
                                                                              ----
<S>                                                                           <C>
ARTICLE I. DEFINITIONS AND INTERPRETATION...................................   1
           Section 1.1. Definitions and Interpretation......................   1

ARTICLE II. TRUST INDENTURE ACT.............................................   5
           Section 2.1. Trust Indenture Act; Application....................   5
           Section 2.2. The List of Holders of the Securities...............   5
           Section 2.3. Reports by the Preferred Guarantee Trustee..........   5
           Section 2.4. Periodic Reports to the Preferred Guarantee
                        Trustee.............................................   5
           Section 2.5. Evidence of Compliance with Conditions Precedent....   5
           Section 2.6. Events of Default; Waiver...........................   6
           Section 2.7. Event of Default; Notice............................   6
           Section 2.8. Conflicting Interests...............................   6

ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE...   6
           Section 3.1. Powers and Duties of the Preferred Guarantee
                        Trustee.............................................   6
           Section 3.2. Certain Rights of the Preferred Guarantee Trustee...   8
           Section 3.3. Not Responsible for Recitals or Issuance of
                        Guarantee...........................................  10

ARTICLE IV. THE PREFERRED GUARANTEE TRUSTEE.................................  10
           Section 4.1. The Preferred Guarantee Trustee; Eligibility........  10
           Section 4.2. Appointment, Removal and Resignation of the
                        Preferred Guarantee Trustee.........................  10

ARTICLE V. GUARANTEE........................................................  11
           Section 5.1. Guarantee...........................................  11
           Section 5.2. Waiver of Notice and Demand.........................  11
           Section 5.3. Obligations not Affected............................  12
           Section 5.4. Rights of the Holders...............................  12
           Section 5.5. Guarantee of Payment................................  13
           Section 5.6. Subrogation.........................................  13
           Section 5.7. Independent Obligations.............................  13

ARTICLE VI. LIMITATION OF TRANSACTIONS; SUBORDINATION.......................  14
           Section 6.1. Limitation on Transactions..........................  14
           Section 6.2. Ranking.............................................  14

ARTICLE VII. TERMINATION....................................................  14
           Section 7.1. Termination.........................................  14

ARTICLE VIII. INDEMNIFICATION...............................................  15
           Section 8.1. Exculpation.........................................  15
           Section 8.2. Indemnification.....................................  15
</TABLE>

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<TABLE>
<S>                                                                           <C>
ARTICLE IX. MISCELLANEOUS...................................................  15
           Section 9.1. Successors and Assigns..............................  15
           Section 9.2. Amendments..........................................  15
           Section 9.3. Notices.............................................  16
           Section 9.4. Benefit.............................................  16
           Section 9.5. Governing Law.......................................  16
</TABLE>

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                              CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
Section of Trust Indenture                                     Section of
Act of 1939, as amended                                    Guarantee Agreement
-----------------------                                    -------------------
<S>                                                        <C>
310(a)...................................................             4.1(a)

310(b)...................................................        4.1(c), 2.8

310(c)...................................................     Not Applicable

311(a)...................................................             2.2(b)

311(b)...................................................             2.2(b)

311(c)...................................................     Not Applicable

312(a)...................................................             2.2(a)

312(b)...................................................             2.2(b)

313......................................................                2.3

314(a)...................................................                2.4

314(b)...................................................     Not Applicable

314(c)...................................................                2.5

314(d)...................................................     Not Applicable

314(e)...................................................       1.1, 2.5,3.2

314(f)...................................................           2.1, 3.2

315(a)...................................................             3.1(d)

315(b)...................................................                2.7

315(c)...................................................                3.1

315(d)...................................................             3.1(d)

316(a)...................................................      1.1, 2.6, 5.4

316(b)...................................................                5.3

317(a)...................................................                3.1

317(b)...................................................     Not Applicable

318(a)...................................................             2.1(a)

318(b)...................................................                2.1

318(c)...................................................             2.1(b)
</TABLE>

Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.

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                    PREFERRED SECURITIES GUARANTEE AGREEMENT

            This PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred
Securities Guarantee"), dated as of _________ __, 2002, is executed and
delivered by STIFEL FINANCIAL CORP., a Delaware corporation (the "Guarantor"),
and WILMINGTON TRUST COMPANY, a banking corporation organized and existing under
the laws of Delaware, as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of STIFEL FINANCIAL CAPITAL TRUST I, a Delaware
statutory business trust (the "Trust").

                                    RECITALS

      WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of _____________ ___, 2002, among the trustees of the
Trust named therein, the Guarantor, as depositor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof up to 1,150,000 preferred securities, having an
aggregate Liquidation Amount of up to $28,750,000, designated the ___%
Cumulative Trust Preferred Securities (the "Preferred Securities");

      WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein.

      NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.

                                   ARTICLE I.
                         DEFINITIONS AND INTERPRETATION

      SECTION 1.1. DEFINITIONS AND INTERPRETATION. In this Preferred Securities
Guarantee, unless the context otherwise requires:

      (a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;

      (b) terms defined in the Trust Agreement as at the date of execution of
this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee, unless otherwise defined in this Preferred
Securities Guarantee;

      (c) a term defined anywhere in this Preferred Securities Guarantee has the
same meaning throughout;
<PAGE>
      (d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;

      (e) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities Guarantee,
unless otherwise specified;

      (f) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and

      (g) a reference to the singular includes the plural and vice versa.

      "Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.

      "Business Day" means any day other than a Saturday, Sunday, a day on which
federal or state banking institutions in the Borough of Manhattan, the City of
New York, are authorized or required by law, executive order or regulation to
close or a day on which the Corporate Trust Office of the Preferred Guarantee
Trustee is closed for business.

      "Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Preferred Securities Guarantee is located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.

      "Covered Person" means any Holder or beneficial owner of Preferred
Securities.

      "Debentures" means the ____% Junior Subordinated Debentures due ______,
2032, of the Debenture Issuer held by the Property Trustee of the Trust.

      "Debenture Issuer" means Stifel Financial Corp., issuer of the Debentures
under the Indenture.

      "Event of Default" means a default by the Guarantor on any of its payments
or other obligations under this Preferred Securities Guarantee.

      "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Trust: (i) any accrued and unpaid Distributions that are
required to be paid on such Preferred Securities, to the extent the Trust shall
have funds available therefor, (ii) the redemption price, including all accrued
and unpaid Distributions to the date of redemption (the "Redemption Price"), to
the extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of the Debentures to the Holders in exchange
for the Preferred Securities as provided in the Trust Agreement), the lesser

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of (A) the aggregate of the Liquidation Amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the extent
the Trust shall have funds available therefor (the "Liquidation Distribution"),
and (B) the amount of assets of the Trust remaining available for distribution
to Holders in liquidation of the Trust.

      "Guarantor" has the meaning set forth in the Preamble hereto.

      "Holder" means a Person in whose name a Preferred Security is or Preferred
Securities are registered in the Securities Register; provided, however, that,
in determining whether the holders of the requisite percentage of the Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Preferred Guarantee Trustee or any of their
respective Affiliates.

      "Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate
of the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guarantee Trustee.

      "Indenture" means the Indenture, dated as of ____________ ___, 2002, among
the Debenture Issuer and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the
Property Trustee of the Trust.

      "Liquidation Amount" means the stated value of $25 per Preferred Security.

      "Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.

      "List of Holders" has the meaning set forth in Section 2.2 of this
Preferred Securities Guarantee.

      "Majority in Liquidation Amount of the Preferred Securities" means the
Holders of more than 50% of the Liquidation Amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all of the Preferred Securities.

      "Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person, at least one of whom shall be
the principal executive officer, principal financial officer, principal
accounting officer, treasurer or any vice president of such Person. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Preferred Securities Guarantee shall include:

            (a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition relating thereto;

            (b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;

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            (c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

            (d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.

      "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

      "Preferred Guarantee Trustee" has the meaning set forth in the Preamble
hereto, until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee Trustee.

      "Preferred Securities" means the _____% Cumulative Trust Preferred
Securities as referred to in the Recitals hereto, representing undivided
beneficial interests in the assets of the Trust which rank pari passu with
Common Securities issued by the Trust; provided, however, that upon the
occurrence of an Event of Default, the rights of holders of Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights of holders of Preferred Securities.

      "Redemption Price" has the meaning provided therefor in the definition of
Guarantee Payments.

      "Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee with direct responsibility for the administration of this
Preferred Securities Guarantee, including any vice-president, any assistant
vice-president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Preferred Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

      "Securities Register" and "Securities Registrar" have the meanings
assigned to such terms as in the Trust Agreement (as defined in the Indenture).

      "Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.

      "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
as in force at the date of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939, as amended, is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939, as so amended.

                                       4
<PAGE>
                                   ARTICLE II.
                               TRUST INDENTURE ACT

      SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.

      (a) This Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.

      (b) If and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

      SECTION 2.2. THE LIST OF HOLDERS OF THE SECURITIES.

      (a) In the event the Preferred Guarantee Trustee is not also the
Securities Registrar, the Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities (the "List of Holders") (i) within five (5) Business Days after March
15, June 15, September 15 and December 15 of each year, and (ii) at any other
time within thirty (30) days of receipt by the Guarantor of a written request
for a List of Holders as of a date no more than fifteen (15) days before such
List of Holders is given to the Preferred Guarantee Trustee; provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.

      (b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

      SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. On or before
October 15 of each year, commencing October 15, 2002, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.

      SECTION 2.4. PERIODIC REPORTS TO THE PREFERRED GUARANTEE TRUSTEE. The
Guarantor shall provide to the Preferred Guarantee Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.

      SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Preferred
Securities Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion

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<PAGE>
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.

      SECTION 2.6. EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
Liquidation Amount of the Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Preferred Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.

      SECTION 2.7. EVENT OF DEFAULT; NOTICE.

      (a) The Preferred Guarantee Trustee shall, within ninety (90) days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, that, except in the case of a default by the Guarantor on any of its
payment obligations, the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Preferred
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.

      (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guarantee Trustee shall have
received written notice, or a Responsible Officer of the Preferred Guarantee
Trustee charged with the administration of the Trust Agreement shall have
obtained actual knowledge of such Event of Default.

      SECTION 2.8. CONFLICTING INTERESTS. The Trust Agreement shall be deemed to
be specifically described in this Preferred Securities Guarantee for the
purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.

                                  ARTICLE III.
                            POWERS, DUTIES AND RIGHTS
                       OF THE PREFERRED GUARANTEE TRUSTEE

      SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.

      (a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder of Preferred Securities exercising his
or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred Guarantee
Trustee.

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<PAGE>
      (b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.

      (c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.

      (d) No provision of this Preferred Securities Guarantee shall be construed
to relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

            (i) prior to the occurrence of any Event of Default and after the
      curing or waiving of all such Events of Default that may have occurred:

                  (A) the duties and obligations of the Preferred Guarantee
            Trustee shall be determined solely by the express provisions of this
            Preferred Securities Guarantee, and the Preferred Guarantee Trustee
            shall not be liable except for the performance of such duties and
            obligations as are specifically set forth in this Preferred
            Securities Guarantee, and no implied covenants or obligations shall
            be read into this Preferred Securities Guarantee against the
            Preferred Guarantee Trustee; and

                  (B) in the absence of bad faith on the part of the Preferred
            Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
            rely, as to the truth of the statements and the correctness of the
            opinions expressed therein, upon any certificates or opinions
            furnished to the Preferred Guarantee Trustee and conforming to the
            requirements of this Preferred Securities Guarantee; but in the case
            of any such certificates or opinions that by any provision hereof
            are specifically required to be furnished to the Preferred Guarantee
            Trustee, the Preferred Guarantee Trustee shall be under a duty to
            examine the same to determine whether or not they conform to the
            requirements of this Preferred Securities Guarantee;

            (ii) the Preferred Guarantee Trustee shall not be liable for any
      error of judgment made in good faith by a Responsible Officer of the
      Preferred Guarantee Trustee, unless it shall be proved that the Preferred
      Guarantee Trustee was negligent in ascertaining the pertinent facts upon
      which such judgment was made;

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            (iii) the Preferred Guarantee Trustee shall not be liable with
      respect to any action taken or omitted to be taken by it in good faith in
      accordance with the direction of the Holders of not less than a Majority
      in Liquidation Amount of the Preferred Securities relating to the time,
      method and place of conducting any proceeding for any remedy available to
      the Preferred Guarantee Trustee, or exercising any trust or power
      conferred upon the Preferred Guarantee Trustee under this Preferred
      Securities Guarantee; and

            (iv) no provision of this Preferred Securities Guarantee shall
      require the Preferred Guarantee Trustee to expend or risk its own funds or
      otherwise incur personal financial liability in the performance of any of
      its duties or in the exercise of any of its rights or powers, if the
      Preferred Guarantee Trustee shall have reasonable grounds for believing
      that the repayment of such funds or liability is not reasonably assured to
      it under the terms of this Preferred Securities Guarantee or indemnity,
      reasonably satisfactory to the Preferred Guarantee Trustee, against such
      risk or liability is not reasonably assured to it.

      SECTION 3.2. CERTAIN RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE.

      (a) Subject to the provisions of Section 3.1:

            (i) the Preferred Guarantee Trustee may conclusively rely, and shall
      be fully protected in acting or refraining from acting upon, any
      resolution, certificate, statement, instrument, opinion, report, notice,
      request, direction, consent, order, bond, debenture, note, other evidence
      of indebtedness or other paper or document believed by it to be genuine
      and to have been signed, sent or presented by the proper party or parties;

            (ii) any direction or act of the Guarantor contemplated by this
      Preferred Securities Guarantee shall be sufficiently evidenced by an
      Officers' Certificate;

            (iii) whenever, in the administration of this Preferred Securities
      Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
      matter be proved or established before taking, suffering or omitting any
      action hereunder, the Preferred Guarantee Trustee (unless other evidence
      is herein specifically prescribed) may, in the absence of bad faith on its
      part, request and conclusively rely upon an Officers' Certificate which,
      upon receipt of such request, shall be promptly delivered by the
      Guarantor;

            (iv) the Preferred Guarantee Trustee shall have no duty to see to
      any recording, filing or registration of any instrument (or any
      re-recording, refiling or registration thereof);

            (v) the Preferred Guarantee Trustee may consult with counsel, and
      the written advice or opinion of such counsel with respect to legal
      matters shall be full and complete authorization and protection in respect
      of any action taken, suffered or omitted by it hereunder in good faith and
      in accordance with such advice or opinion. Such counsel may be counsel to
      the Guarantor or any of its Affiliates and may include any of its
      employees. The Preferred Guarantee Trustee shall have the right at any
      time to seek instructions

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<PAGE>
      concerning the administration of this Preferred Securities Guarantee from
      any court of competent jurisdiction;

            (vi) the Preferred Guarantee Trustee shall be under no obligation to
      exercise any of the rights or powers vested in it by this Preferred
      Securities Guarantee at the request or direction of any Holder, unless
      such Holder shall have provided to the Preferred Guarantee Trustee such
      security and indemnity, reasonably satisfactory to the Preferred Guarantee
      Trustee, against the costs, expenses (including reasonable attorneys' fees
      and expenses and the expenses of the Preferred Guarantee Trustee's agents,
      nominees or custodians) and liabilities that might be incurred by it in
      complying with such request or direction, including such reasonable
      advances as may be requested by the Preferred Guarantee Trustee; provided
      that, nothing contained in this Section 3.2(a)(vi) shall be taken to
      relieve the Preferred Guarantee Trustee, upon the occurrence and during
      the continuance of an Event of Default, of its obligation to exercise the
      rights and powers vested in it by this Preferred Securities Guarantee;

            (vii) the Preferred Guarantee Trustee shall not be bound to make any
      investigation into the facts or matters stated in any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document, but the Preferred Guarantee
      Trustee, in its discretion, may make such further inquiry or investigation
      into such facts or matters as it may see fit;

            (viii) the Preferred Guarantee Trustee may execute any of the trusts
      or powers hereunder or perform any duties hereunder either directly or by
      or through agents, nominees, custodians or attorneys, and the Preferred
      Guarantee Trustee shall not be responsible for any misconduct or
      negligence on the part of any agent or attorney appointed with due care by
      it hereunder;

            (ix) no third party shall be required to inquire as to the authority
      of the Preferred Guarantee Trustee to so act or as to its compliance with
      any of the terms and provisions of this Preferred Securities Guarantee,
      both of which shall be conclusively evidenced by the Preferred Guarantee
      Trustee's or its agent's taking such action;

            (x) whenever in the administration of this Preferred Securities
      Guarantee the Preferred Guarantee Trustee shall deem it desirable to
      receive instructions with respect to enforcing any remedy or right or
      taking any other action hereunder, the Preferred Guarantee Trustee (A) may
      request instructions from the Holders of a Majority in Liquidation Amount
      of the Preferred Securities, (B) may refrain from enforcing such remedy or
      right or taking such other action until such instructions are received,
      and (C) shall be protected in conclusively relying on or acting in
      accordance with such instructions.

      (b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent

                                       9
<PAGE>
in accordance with applicable law, to perform any such act or acts or to
exercise any such right, power, duty or obligation. No permissive power or
authority available to the Preferred Guarantee Trustee shall be construed to be
a duty.

      SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The
Recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Preferred Securities
Guarantee.

                                   ARTICLE IV.
                         THE PREFERRED GUARANTEE TRUSTEE

      SECTION 4.1. THE PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.

      (a) There shall at all times be a Preferred Guarantee Trustee which shall:

            (i) not be an Affiliate of the Guarantor; and

            (ii) be a corporation organized and doing business under the laws of
      the United States or any state or territory thereof or of the District of
      Columbia, or a corporation or Person permitted by the Securities and
      Exchange Commission to act as an institutional trustee under the Trust
      Indenture Act, authorized under such laws to exercise corporate trust
      powers, having a combined capital and surplus of at least $50,000,000, and
      subject to supervision or examination by federal, state, territorial or
      District of Columbia authority. If such corporation publishes reports of
      condition at least annually, pursuant to law or to the requirements of the
      supervising or examining authority referred to above, then, for the
      purposes of this Section 4.1(a)(ii), the combined capital and surplus of
      such corporation shall be deemed to be its combined capital and surplus as
      set forth in its most recent report of condition so published.

      (b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

      (c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and the Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

      SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF THE PREFERRED
GUARANTEE TRUSTEE.

      (a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

                                       10
<PAGE>
      (b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

      (c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.

      (d) If no Successor Preferred Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within sixty (60) days
after delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Preferred Guarantee Trustee.

      (e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.

      (f) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guarantee Trustee all fees and expenses
accrued to the date of such termination, removal or resignation.

                                   ARTICLE V.
                                    GUARANTEE

      SECTION 5.1. GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.

      SECTION 5.2. WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of this Preferred Securities Guarantee and of any liability
to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Trust or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.

                                       11
<PAGE>
      SECTION 5.3. OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Preferred Securities Guarantee
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:

      (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;

      (b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures permitted by the Indenture);

      (c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;

      (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;

      (e) any invalidity of, or defect or deficiency in, the Preferred
Securities;

      (f) any failure or omission to receive any regulatory approval or consent
required in connection with the Preferred Securities (or the common equity
securities issued by the Trust);

      (g) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

      (h) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

      There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

      SECTION 5.4. RIGHTS OF THE HOLDERS.

      (a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or

                                       12
<PAGE>
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.

      (b) Any Holder of Preferred Securities may institute and prosecute a legal
proceeding directly against the Guarantor to enforce its rights under this
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Trust, the Preferred Guarantee Trustee or any other Person.

      SECTION 5.5. GUARANTEE OF PAYMENT. This Preferred Securities Guarantee
creates a guarantee of payment and not of collection.

      SECTION 5.6. SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders of the Preferred Securities against the Trust in
respect of any amounts paid to such Holders by the Guarantor under this
Preferred Securities Guarantee; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Preferred Securities Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.

      SECTION 5.7. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.

                                       13
<PAGE>
                                   ARTICLE VI.
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

      SECTION 6.1. LIMITATION ON TRANSACTIONS. So long as any of the Preferred
Securities remain outstanding, if any of the circumstances described in Section
5.6 of the Indenture shall have occurred, then (a) neither the Guarantor nor any
of its Subsidiaries (as defined in the Indenture) shall declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (i) dividends or distributions in common stock of the Guarantor or
any declaration of a non-cash dividend in connection with the implementation of
a shareholder rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(ii) purchases of common stock of the Guarantor related to the rights under any
of the Guarantor's benefit plans for its directors, officers or employees, (iii)
as a result of a reclassification of its capital stock, (iv) dividends or
distributions made by a Subsidiary to the Company, or (v) dividends or
distributions made by a Subsidiary to a Subsidiary), and (b) neither the
Guarantor nor any Subsidiary shall make any payment of principal or interest on
or repay, repurchase or redeem any debt securities issued by the Guarantor or
any Subsidiary which rank pari passu with or junior to the Debentures or make
any guarantee payments with respect to any guarantee by the Guarantor of any
debt securities if such guarantee ranks pari passu or junior in interest to the
Debentures, other than payments under this Preferred Securities Guarantee.

      SECTION 6.2. RANKING. This Preferred Securities Guarantee will constitute
an unsecured obligation of the Guarantor and will rank (a) subordinate and
junior in right of payment to all Senior Debt, Subordinated Debt and Additional
Senior Obligations (as defined in the Indenture) of the Guarantor, (b) pari
passu with any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred securities or preference stock of any Affiliate of the
Guarantor and (c) senior to the most senior preferred securities or preference
stock now or hereafter issued by the Guarantor and senior to the Guarantor's
common stock.

                                  ARTICLE VII.
                                   TERMINATION

      SECTION 7.1. TERMINATION. This Preferred Securities Guarantee shall
terminate upon (a) full payment of the Redemption Price of all the Preferred
Securities, (b) full payment of the amounts payable in accordance with the Trust
Agreement upon liquidation of the Trust, or (c) distribution of the Debentures
to the Holders of the Preferred Securities. Notwithstanding the foregoing, this
Preferred Securities Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.

                                       14
<PAGE>
                                  ARTICLE VIII.
                                 INDEMNIFICATION

      SECTION 8.1. EXCULPATION.

      (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Preferred Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.

      (b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to the Holders of the Preferred Securities might properly be
paid.

      SECTION 8.2. INDEMNIFICATION. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Preferred Securities Guarantee.

                                   ARTICLE IX.
                                  MISCELLANEOUS

      SECTION 9.1. SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding.

      SECTION 9.2. AMENDMENTS. Except with respect to any changes that do not
adversely affect the rights of the Holders (in which case no consent of the
Holders will be required), this Preferred Securities Guarantee may only be
amended with the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities. The provisions of Article VI of
the Trust Agreement with respect to meetings of the Holders of the Preferred
Securities apply to the giving of such approval.

                                       15
<PAGE>
      SECTION 9.3. NOTICES. All notices provided for in this Preferred
Securities Guarantee shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:

      (a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):

                        Wilmington Trust Company
                        Rodney Square North
                        1100 North Market Street
                        Wilmington, Delaware 19890-0001
                        Attention: Corporate Trust Administration

      (b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):

                        Stifel Financial Corp.
                        501 North Broadway
                        St. Louis, Missouri 63102
                        Attention: Chief Financial Officer

      (c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Trust.

      All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

      SECTION 9.4. BENEFIT. This Preferred Securities Guarantee is solely for
the benefit of the Holders of the Preferred Securities and, subject to Section
3.1(a), is not separately transferable from the Preferred Securities.

      SECTION 9.5. GOVERNING LAW. THIS PREFERRED SECURITIES GUARANTEE SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF MISSOURI (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).

                                    * * * * *

                                       16
<PAGE>
      This Preferred Securities Guarantee is executed as of the day and year
first above written.

                                        STIFEL FINANCIAL CORP.,
                                        as Guarantor

                                        By: ____________________________________
                                        Name:
                                        Title:

                                        WILMINGTON TRUST COMPANY,
                                        as Preferred Guarantee Trustee

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                       17<PAGE>
                                                                     EXHIBIT 4.5

                          CONSENT AND FOURTH AMENDMENT
                         TO LOAN AND SECURITY AGREEMENT

                  THIS CONSENT AND FOURTH AMENDMENT dated as of December 31,
2001 (this "Amendment") to the Amended and Restated Loan and Security Agreement,
dated as of July 10, 2000 (the "Loan Agreement"; capitalized terms defined
therein shall have the same meanings when used herein unless otherwise defined
herein), among each of the direct and indirect Subsidiaries of Grant Prideco,
Inc. ("GPI") specified on Schedule 1 thereto (the "Borrowers"), the financial
institutions from time to time party thereto as lenders (the "Lenders"),
Transamerica Business Capital Corporation, as successor to Transamerica Business
Credit Corporation, as agent for the U.S. Lenders (the "Agent"), and
Transamerica Commercial Finance Corporation, Canada, as agent for the Cdn.
Lenders (together with the Agent, the "Agents").

                                   WITNESSETH:

                  WHEREAS, the Borrowers, the Lenders and the Agents are parties
to the Loan Agreement, under which the U.S. Borrowers may, subject to the terms
thereof, borrow U.S. Loans of up to US$100,000, 000;

                  WHEREAS, the Borrowers have requested that the Agents and the
Lenders amend the Loan Agreement to increase the maximum amount of U.S. Loans
that the U.S. Borrowers may borrow to US$125,000,000;

                  WHEREAS, GPI proposes to transfer its ownership of
substantially all the outstanding shares of capital stock of Grant Prideco S.A.
de C.V. to Pridecomex Holding S.A. de C.V. (the "Proposed Stock Transfer") and
the Borrowers have requested that the Agents and the Lenders consent to the
Proposed Stock Transfer; and

                  WHEREAS, certain new Subsidiaries and Affiliates of GPI have
been formed since the execution of the Loan Agreement by the parties thereto.

                  NOW, THEREFORE, the Borrowers, the Lenders and the Agents
agree as follows:

                  SECTION 1. CONSENT. Section 7.2(e) of the Loan Agreement and
Section 4(c) of the Pledge Agreement prohibit the Borrowers and the Pledgors,
respectively, from transferring any assets or Collateral (as defined in the
Pledge Agreement) other than as specified therein, and the Borrowers request
that the Lenders and the Agent consent to the Proposed Stock Transfer
thereunder. Effective as of the date hereof, but subject to the satisfaction of
the conditions to effectiveness set forth in Section 3 hereof, the Lenders and
the Agents consent to the Proposed Stock Transfer.

<PAGE>

                  SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT. Effective as of
the date hereof, but subject to the satisfaction of the conditions to
effectiveness set forth in Section 3 hereof, the Loan Agreement is amended as
follows:

                  (a) Section 2.4(a)(ii) of the Loan Agreement is amended by
deleting "US$100,000,000" and substituting therefor "US$125,000,000."

                  (b) Section 4.4(a)(i) of the Loan Agreement is amended by
deleting "US$100,000,000" and substituting therefor "US$125,000,000."

                  (c) Section 7.2(e)(v) of the Loan Agreement is amended by
deleting the entire text thereof and substituting therefor the following text:

         "the license of patents, trademarks or copyrights to (a) any other Loan
Party or Subsidiary thereof, or (b) any third party, so long as such license is
non-exclusive;"

                  (d) Section 7.2(l) of the Loan Agreement is amended by
deleting "the pledgor" each time it appears in clause (x) thereof and
substituting therefor "such Borrower or Subsidiary".

                  (e) Section 11.1 of the Loan Agreement is amended by deleting
"Transamerica Business Credit Corporation" each time it appears and substituting
therefor "Transamerica Business Capital Corporation".

                  (f) Section 11.5 is amended by inserting in clause (i) of the
first proviso thereto after "the Pro Rata Share" the following:

         "(other than as a result of an increase in the Commitments to an amount
up to $150,000,000, which increase shall not require any further consent of the
Lenders)".

                  (g) Schedule 2 (Commitments of Lenders) to the Loan Agreement
is amended and restated in the form of Annex I hereto.

                  (h) Schedule 3 (Guarantors) to the Loan Agreement is amended
and restated in the form of Annex II hereto.

                  (i) Schedule 6.1(g) (Ownership; Subsidiaries) to the Loan
Agreement is amended by (1) deleting the names "Drill Tube International, Inc.",
"Petro-Drive, Inc." and information relating to such names, and (2) adding the
following to the end of such Schedule 6.1(g):

                                      -2-
<PAGE>

<Table>
<Caption>
            Entity                   State or Country                % of Shares                  Shareholder
            ------                   ----------------                -----------                  -----------
<S>                                  <C>                             <C>                  <C>
Intellipipe, Inc.                        Delaware                       100%              Grant Prideco, Inc.

Intelliserve, Inc.                       Delaware                        50%              Intellipipe, Inc.

Grant Prideco PC Composites              Delaware                       100%              Grant Prideco Holding, LLC
Holdings, LLC

PC Composites, L.P.                        Texas                         1%               Grant Prideco PC
                                                                                          Composites Holdings, LLC

PC Composities, L.P.                       Texas                         49%              Grant Prideco USA, LLC

Plexus Deepwater                           Texas                         1%               Grant Prideco Holding, LLC
Technologies, Ltd.

Plexus Deepwater                           Texas                         99%              Grant Prideco USA, LLC
Technologies, Ltd.
</Table>

         SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall not be
effective unless and until each of the following conditions shall have been
satisfied, in the Agent's reasonable determination, on or before December 31,
2001:

                  (a) The Agent shall have received the following, each dated
the date of delivery thereof or as of an earlier date acceptable to the Agent,
in form and substance acceptable to the Agent:

                  (i) a counterpart of this Amendment, duly executed by each
         Borrower and acknowledged by each Guarantor;

                  (ii) an amended and restated promissory note payable to the
         order of each Lender, substantially in the form of Exhibit A, duly
         executed by each U.S. Borrower;

                  (iii) an amendment to the Pledge Agreement, duly executed by
         the Pledgors and Grant Prideco PC Composites Holdings, LLC, a Delaware
         limited liability company ("PC Composites LLC") and Intellipipe, Inc.,
         a Delaware corporation ("Intellipipe"), pledging to the Agent for the
         ratable benefit of the Lenders (A) all the shares of capital stock of
         Intellipipe, and fifty percent (50%) of the shares of capital stock of
         Intelliserve, Inc., a Delaware corporation, together with all
         certificates representing such shares and undated stock powers
         therefor, duly executed in blank, (B) a one-hundred percent (100%)
         limited liability company interest in PC Composites LLC, (C) a one
         percent (1%) general partnership interest and a forty-nine percent
         (49%) limited partnership interest in PC Composites, L.P., a Texas
         limited

                                      -3-
<PAGE>

         partnership, and (D) and a one percent (1%) general partnership
         interest and a ninety-nine percent (99%) limited partnership interest
         in Plexus Deepwater Technologies, Ltd., a Texas limited partnership
         ("Plexus");

                  (iv) a Supplement to the Guaranty in the form of Annex I
         thereto (the "Guaranty Supplement"), duly executed by Intellipipe, PC
         Composites LLC and Plexus (collectively, the "New Loan Parties");

                  (v) a Supplement to the Contribution Agreement in the form of
         Annex I thereto (the "Contribution Agreement Supplement"), duly
         executed by each New Loan Party;

                  (vi) a good standing certificate for Intellipipe and PC
         Composites LLC from the Secretary of State of Delaware;

                  (vii) a good standing certificate for Plexus from the
         Secretary of State of Texas;

                  (viii) a certificate of a Responsible Officer of the
         Administrative Borrower certifying that (A) the representations and
         warranties of the Loan Parties contained in the Loan Agreement and the
         other Loan Documents are true and correct in all material respects (and
         subject to the delivery to the Agent of updated schedules to the Loan
         Agreement as provided in Section 6.3 thereof) on and as of the date of
         such certificate as if then made, other than representations and
         warranties that expressly relate solely to an earlier date, in which
         case they are true and correct as of such earlier date, and (B) no
         Default or Event of Default has occurred and is continuing;

                  (ix) copies of the Governing Documents of each New Loan Party
         and a copy of the resolutions of the Board of Directors (or similar
         evidence of authorization) of each New Loan Party authorizing the
         execution, delivery and performance of the Guaranty Supplement and the
         Contribution Agreement Supplement, and the transactions contemplated
         thereby, attached to which is a certificate of the Secretary or an
         Assistant Secretary of the applicable New Loan Party certifying (A)
         that such copies of the Governing Documents and resolutions (or similar
         evidence of authorization) of such New Loan Party are true, complete
         and accurate copies thereof, have not been amended or modified since
         the date of such certificate and are in full force and effect and (B)
         the incumbency, names and true signatures of the officers of such New
         Loan Party authorized to sign the Loan Documents to which such Loan
         Party is a party; and

                  (x) such other agreements, instruments, documents and evidence
         as the Agent deems necessary in its sole and absolute discretion in
         connection with the transactions contemplated hereby;

                                      -4-
<PAGE>

                  (b) the Agent shall have filed (i) Uniform Commercial Code
amendments naming the Agent as secured party and each of GPI, Grant Prideco
Holding, LLC and Grant Prideco USA, LLC as debtors and (ii) Uniform Commercial
Code financing statements naming the Agent as secured party and each of
Intellipipe and PC Composites LLC as debtors in all jurisdictions that the Agent
deems necessary or desirable to perfect and protect the Liens created under the
Pledge Agreement; and

                  (c) the Borrowers shall have reimbursed the Agent for all
fees, costs and expenses (including, without limitation, the fees and expenses
of Luskin, Stern & Eisler LLP) incurred by the Agent in connection with the
preparation, negotiation, approval, execution and delivery of this Amendment.

         SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS.

                  (a) On and after the date hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein" and words of like
import, and each reference in the other Loan Documents to the Loan Agreement
shall mean and be a reference to the Loan Agreement as amended hereby.

                  (b) Except as specifically amended above, the Loan Agreement
shall remain in full force and effect and is hereby ratified and confirmed.

                  (c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
or an amendment to any right, power or remedy of the Agent or any Lender under
any of the Loan Documents, or constitute a waiver of or an amendment to any
provision of any of the Loan Documents.

                  (d) This Amendment shall constitute a Loan Document.

         SECTION 5. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment may be
executed in counterparts and by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together shall constitute one and the same instrument. This
Amendment may be executed and delivered by telecopier or other facsimile
transmission all with the same force and effect as if the same was a fully
executed and delivered original, manual counterpart.

         SECTION 6. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the internal laws (as opposed to the conflicts of
law provisions other than section 5-1401 of the New York General Obligations
Law) and decisions of the State of New York.

                                      -5-
<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed by its (or its general partner's or managing member's)
proper and duly authorized officer as of the date first set forth above.

                                        U.S. BORROWERS

                                        GRANT PRIDECO, LP

                                        By:   Grant Prideco Holding, LLC,
                                              its general partner

                                        By: /s/ PHILIP A. CHOYCE
                                           -------------------------------------
                                           Philip A. Choyce
                                           Vice President

                                        XL SYSTEMS, L.P.

                                        By: Grant Prideco Holding, LLC,
                                        its general partner

                                        By: /s/ PHILIP A. CHOYCE
                                           -------------------------------------
                                           Philip A. Choyce
                                           Vice President

                                        TEXAS ARAI, INC.

                                        By: /s/ PHILIP A. CHOYCE
                                           -------------------------------------
                                           Philip A. Choyce
                                           Vice President

                                        TUBE-ALLOY CORPORATION

                                        By: /s/ PHILIP A. CHOYCE
                                           -------------------------------------
                                           Philip A. Choyce
                                           Vice President

                                      -6-
<PAGE>

                                        STAR OPERATING COMPANY

                                        By: /s/ PHILIP A. CHOYCE
                                           -------------------------------------
                                           Philip A. Choyce
                                           Vice President

                                        CDN. BORROWER

                                        GRANT PRIDECO CANADA LTD.

                                        By: /s/ PHILIP A. CHOYCE
                                           -------------------------------------
                                           Philip A. Choyce
                                           Secretary

                                        U.S. LENDERS

                                        TRANSAMERICA BUSINESS CAPITAL
                                         CORPORATION, as successor to
                                        Transamerica Business Credit Corporation

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Name:
                                           Title:

                                        BANK OF AMERICA, N.A.

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Louis M. Alexander
                                           Senior Vice President

                                        THE CHASE MANHATTAN BANK

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Robert J. Arth
                                           Vice President

                                      -7-
<PAGE>

                                        FLEET CAPITAL CORPORATION

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Dennis M. Hansen
                                           Senior Vice President

                                        CDN. LENDER

                                        TRANSAMERICA COMMERCIAL
                                        FINANCE CORPORATION, CANADA

                                        By: Transamerica Business Capital
                                        Corporation, as Attorney-in-Fact

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Name:
                                           Title:

                                        AGENT

                                        TRANSAMERICA BUSINESS CAPITAL
                                        CORPORATION, as successor to
                                        Transamerica Business Credit Corporation

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Name:
                                           Title:

                                        CDN. AGENT

                                        TRANSAMERICA COMMERCIAL
                                        FINANCE CORPORATION, CANADA

                                        By: Transamerica Business Capital
                                        Corporation, as Attorney-in-Fact

                                        By: /s/ AUTHORIZED SIGNATORY
                                           -------------------------------------
                                           Name:
                                           Title:

                                      -8-
<PAGE>

ACKNOWLEDGED AND AGREED AS OF
THE DATE FIRST SET FORTH ABOVE:

GRANT PRIDECO, INC.

By: /s/ PHILIP A. CHOYCE
   ---------------------------------
   Philip A. Choyce
   Vice President

GRANT PRIDECO USA, LLC

By: /s/ DAVE WEIGEL
   ---------------------------------
   Name: Dave Weigel
   Title: President

XL SYSTEMS INTERNATIONAL, INC.

By: /s/ PHILIP A. CHOYCE
   --------------------------------
   Philip A. Choyce
   Vice President

TA INDUSTRIES, INC.

By: /s/ PHILIP A. CHOYCE
   ---------------------------------
   Philip A. Choyce
   Vice President

GRANT PRIDECO HOLDING, LLC

By: /s/ PHILIP A. CHOYCE
   ---------------------------------
   Philip A. Choyce
   Vice President

GP EXPATRIATE SERVICES, INC.

By: /s/ PHILIP A. CHOYCE
   ---------------------------------
   Philip A. Choyce
   Vice President

                                      -9-
<PAGE>

TUBE-ALLOY CAPITAL CORPORATION

By: /s/ PHILIP A. CHOYCE
   -----------------------------------------
Philip A. Choyce
Vice President

INTELLIPIPE, INC.

By: /s/ PHILIP A. CHOYCE
   -----------------------------------------
Philip A. Choyce
Vice President

GRANT PRIDECO PC COMPOSITES HOLDINGS, LLC

By: /s/ PHILIP A. CHOYCE
   -----------------------------------------
Philip A. Choyce
Vice President

PLEXUS DEEPWATER TECHNOLOGIES, LTD.

By: Grant Prideco Holding, LLC,
its general partner

By: /s/ PHILIP A. CHOYCE
   -----------------------------------------
Philip A. Choyce
Vice President

                                      -10-
<PAGE>

                                                                       EXHIBIT A

                               [Form of U.S. Note]

<PAGE>

                                                                         ANNEX I

                                                                      SCHEDULE 2

                             COMMITMENTS OF LENDERS

<Table>
<Caption>
                                                                                                   Cdn. Loan and Cdn.
                                                               U.S. Loan and U.S. Letter            Letter of Credit
                        Lenders                                   of Credit Commitment                Commitment
--------------------------------------------------------- ---------------------------------- -------------------------------
<S>                                                       <C>                                <C>
Transamerica Business Credit Corporation                            US$40,000,000                         -0-
Address:
555 Theodore Fremd Avenue
Suite C-301
Rye, New York  10580
Telecopier: (914) 921-0110
Attn.: Mr. Steven R. Fischer

Bank of America, N.A.                                               US$35,000,000                         -0-
Address:
40 East 52nd Street
New York, New York  10022
Telecopier: (212) 836-5169
Attn.: Mr. Louis Alexander

The Chase Manhattan Bank                                            US$25,000,000                         -0-
Address:
600 Fifth Avenue, Fourth Floor
New York, New York  10020-2302
Telecopier: (212) 332-4299
Attn.: Mr. Robert J. Arth

Fleet Capital Corporation                                            US$25,000,000                        -0-
5950 Sherry Lane, Suite 300
Dallas, TX  75225
Telecopier: (214) 706-7066
Attn.: Loan Administration Manager
</Table>

<PAGE>
<Table>
<S>                                                         <C>                                <C>
Transamerica Commercial Finance Corporation, Canada                      -0-                        US$7,000,000(1)
Address:201 City Centre Drive,                                                                   (or Equivalent Amount)
Suite 500
Mississauga, Ontario
CANADA L5B 2T4
Telecopier: (905) 273-7864
Attn.: Mr. Peter D. Kelley
</Table>

--------
(1) The Cdn. Commitments are a sublimit of the U.S. Commitments.

                                      -2-
<PAGE>

                                                                        ANNEX II

                                                                      SCHEDULE 3

                                   Guarantors

1.       Grant Prideco, Inc., a Delaware corporation.

2.       Grant Prideco Holding, LLC, a Delaware limited liability company.

3.       XL Systems International, Inc., a Delaware corporation.

4.       TA Industries, Inc., a Delaware corporation.

5.       Tube-Alloy Capital Corporation, a Texas corporation.

6.       GP Expatriate Services, Inc., a Delaware corporation.

7.       Grant Prideco USA, LLC, a Delaware limited liability company.

8.       Intellipipe, Inc., a Delaware corporation.

9.       Grant Prideco PC Composites Holdings, LLC, a Delaware limited liability
         company.

10.      Plexus Deepwater Technologies, Ltd., a Texas limited partnership.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]